MULTIPLE ‐STRATEGY TREND RATED 

AUTOMATIC TRADING SYSTEM

Portfolio Management Services (PMS) Performance Update

31 March 201131 March 2011

Vivek Mavani – Vice President and Senior Portfolio Manager

BRICS Growth Synopsis

BRICS Growth is a Long only Diversified Equity Product aimed at generating Absolute Returns

The Objective is :

To generate Steady & Consistent returns over medium to long term

Maintain Low Volatility

Margin of Safetyg y

The Focus is therefore on Stock Picking with a Buy and Hold philosophy

Invest in high quality and high growth companies at reasonable valuations and hold themover a period of time. (Not trade in & out frequently)

Our conservative approach to managing investments, (especially during periods of volatility) isreflected in our superior performance.

Market Update and OutlookTh ti h f N b 2010 F b 2011 d b tt i th l t k f F bThe corrective phase of November 2010-February 2011, made a bottom in the last week of February. March 2011 witnessed a sharp rally in most indices on the back of short squeeze and significant FII flows. Interest rate sensitive sectors (Banking, Auto & Real Estate) which had fallen the sharpest in the correction were the first and fastest to rally from the lows

$FII’s driven liquidity had dried up during the corrective phase. Surprisingly FII’s poured in over $2 billion during March 2011 (largely through ETF funds) driving up the index and large caps stocks sharply. Participation from the broader markets came in only towards the end of the month

Going forward, the stocks from the broad markets offer the best opportunity as they catch up with the larger cap peers on back of valuations having corrected significantly and some degree of clarity on earnings growth closer to the earnings season

We did manage to limit the downside, which is always a huge challenge when markets correct sharply across the board. Selectively, we did bottom fishing at lower levels to participate in the eventual upsidey g p p p

Index Fall from Peak

Fall YTD 2011

Gains from the Lows Index Fall from

PeakFall YTD

2011Gains from the Lows

Nifty -7.58% -4.90% 11.63% Sensex -7.43% -5.19% 11.35%Bank Nifty -11 78% -0 73% 16 19% BSE Auto -10 81% -9 23% 13 15%Bank Nifty -11.78% -0.73% 16.19% BSE Auto -10.81% -9.23% 13.15%S&P 500 -11.00% -6.37% 11.10% BSE Capital Goods -20.76% -14.15% 6.90%CNX Mid Cap -17.81% -9.22% 10.36% BSE FMCG -5.20% -2.39% 12.62%CNX IT -5.27% -4.58% 6.36% BSE Metals -10.02% -8.15% 6.06%CNX Realty 41 06% 17 54% 14 34% BSE Oil & Gas 8 42% 3 40% 12 05%CNX Realty -41.06% -17.54% 14.34% BSE Oil & Gas -8.42% -3.40% 12.05%

Portfolio Update and Outlook (Cont’d)Dil d i th ti h i th k tDilemma during the corrective phase in the markets:

Sell the portfolio and stay liquid and attempt to re-enter at lower levels

Stay put holding the portfolio and see a temporary erosion in value

We did both selectively

During the month:

We started the month of March with ~20% cash levels. We added little to our existing positions and more or l t d t Thi ft h i d l d i ifi t h b l i F b t l l l Thless stayed put. This was after having deployed significant cash balances in February at lower levels. The significant cash balances (30+% at the peak) helped us limit the large downsides as well as helped us in bottom fishing at lower levels

Our conviction in the Technology sector (Infosys & TCS), and Capital Goods Sectors (BHEL), reiterated several times earlier helped us in the upside participation as they being index heavy weights were amongseveral times earlier, helped us in the upside participation as they being index heavy weights were among the fast gainers in the rally during March

Selectively Mid-Caps continue to be an attractive space as individual performances are likely to shine in the medium-long term. We added marginally to our mid-cap holdings where risk return scenario is favourable. Mid-caps have yet to participate in a meaningful manner but we hold a very high degree of conviction in them and willcaps have yet to participate in a meaningful manner but we hold a very high degree of conviction in them and will stay put

Markets in 2011 are more likely to test Conviction & Patience. Stock picking is likely to be the key in generating superior returns

However, Credo of Sticking to Quality will always remain and will never be compromised

Absolute Performance – 31 March 2011

Weekly Monthly Quarterly Half Yearly Annual Since Inceptionp

BRICS Growth 4.23% 5.41% -7.09% -5.65% 23.07% 40.30%

NIFTY 5.64% 9.38% -4.90% -3.25% 11.14% 14.76%

SENSEX 5.96% 9.10% -5.19% -3.11% 10.94% 13.48%

S&P CNX 500 4.99% 8.93% -6.37% -6.06% 7.26% 12.32%

S&P CNX MIDCAP 3 78% 9 09% 9 22% 12 27% 4 35% 20 04%

Inception Date: 1 October, 2009 Portfolio returns are audited and after deducting fees (including performance fees) & other expenses

S&P CNX MIDCAP 3.78% 9.09% -9.22% -12.27% 4.35% 20.04%

( g p ) p

Performance keeping pace, if not ahead of the Indices

Month BRICS Growth Nifty Sensex S&P CNX 500 CNX Mid CapOct-09 -0.67% -7.31% -7.23% -6.46% -1.77%

Nov-09 2.79% 6.81% 6.48% 7.59% 8.65%

Dec-09 6.27% 3.35% 3.18% 4.43% 3.97%

Jan-10 -1.84% -6.13% -6.34% -4.00% -3.11%

Feb-10 0.75% 0.82% 0.44% -0.69% -0.48%

Mar-10 6.24% 6.64% 6.68% 4.50% 7.50%

A 10 3 % 0 % 0 18% 1 2 % 4 62%Apr-10 3.77% 0.55% 0.18% 1.27% 4.62%

May-10 1.86% -3.63% -3.50% -3.24% -3.79%

Jun-10 5.81% 4.45% 3.83% 4.59% 4.83%

Jul-10 3.84% 1.04% 1.56% 1.23% 3.50%

Aug-10 7.25% 0.65% 0.58% 1.39% 3.14%

Sep-10 4.13% 11.35% 11.30% 8.06% 4.88%Oct-10 4.03% 0.44% 0.38% 0.95% 1.68%N 10 4 26% 2 58% 2 55% 3 85% 4 84%Nov-10 -4.26% -2.58% -2.55% -3.85% -4.84%Dec-10 2.02% 4.64% 5.06% 3.34% -0.56%Jan-11 -9.47% -10.25% -10.64% -10.45% -10.55%Feb-11 -2.78% -3.14% -2.75% -4.01% -6.97%Mar-11 5.41% 9.38% 9.10% 8.93% 9.09%

Ranked on 1 year returns

Compared to Top 20 Mutual Funds as of 31 March 2011Ranked on 1 year returns

Rank Scheme Name Performance1 Year %

1 BRICS Growth 23.072 ICICI Prudential Focused Blue chip Equity Fund IP I Growth 19 972 ICICI Prudential Focused Blue-chip Equity Fund - IP I - Growth 19.973 HDFC Equity Fund - Growth 19.894 Reliance Quant Plus Fund - Ret - Growth 19.705 Quantum Long-Term Equity Fund - Growth 19.036 Escorts High Yield Equity Plan - Growth 19.037 HDFC Long Term Equity Fund - Growth 18.488 HDFC Growth Fund - Growth 18.049 Fidelity Equity Fund - Growth 18.0210 Fidelity India Growth Fund - Growth 17.8811 ING Dividend Yield Fund - Growth 17.4611 ING Dividend Yield Fund Growth 17.4612 Canara Robeco FORCE Fund - Ret - Growth 17.3613 HDFC Top 200 - Growth 17.1514 IDFC Strategic Sector (50-50) Equity Fund - Plan B - Growth 16.7015 UTI Master Value Fund - Growth 16.5516 Birla S n Life Di idend Yield Pl s Gro th 16 3316 Birla Sun Life Dividend Yield Plus - Growth 16.3317 UTI Dividend Yield Fund - Growth 16.0318 Reliance NRI Equity Fund - Growth 15.9119 Kotak Lifestyle Fund - Growth 15.7220 ICICI Prudential Dynamic Plan - FII Growth 15.67

The comparison includes 250 Diversified Equity Funds across all Fund Houses

BRICS Growth NAV Trend

Performance has been a result of our: Stock PickingLow churn in the portfolio, andConservative attitude (not taking

150

155

160

BRICS Growth NAV v/s Indices (normalised)

excessive risks)

Our Strategy has been to :Buy during panics/declinesUse sharp rallies to partially book 130

135

140

145

150

Use sharp rallies to partially book profitsOpportunistically ride the momentum for a part of the portfolio (<15%)Remain adequately liquid at all times

105

110

115

120

125

Adequate liquidity helps :Protect against volatilityProvides enough courage and conviction to buy into panics 85

90

95

100

105

y p

Current cash/liquid balances at ~17% of the Portfolio

1‐Oct‐09

1‐Nov‐09

1‐Dec‐09

1‐Jan‐10

1‐Feb‐10

1‐Mar‐10

1‐Apr‐10

1‐May‐10

1‐Jun‐10

1‐Jul‐1

0

1‐Aug

‐10

1‐Sep‐10

1‐Oct‐10

1‐Nov‐10

1‐Dec‐10

1‐Jan‐11

1‐Feb‐11

1‐Mar‐11

BRICS Growth Nifty Sensex

S&P 500 CNX Midcap

BRICS Growth has delivered absolute & consistent returns across different market phases

BRICS Growth Outperformance TrendBRICS Growth has delivered absolute & consistent returns across different market phases

Significant out-performance in a range bound volatile market, (Stock Picking was the Key)Kept pace even during the sharp rally (Buy and Hold, Profit booking at higher levels)The fall in NAV during the corrective phase was in line with the Indices (in spite of having several high beta stocks in the portfolio, banking, mid-caps etc.). Large cash balances helped limit the downside)Rise in NAV lower than Large Cap Indices, (Stocks from broad markets, Mid-caps etc. lagged in upside participation. They are expected to catch up in the coming weeks)

Date 1 Oct. 2009 ─25 May 2010

25 May 2010 ─5 Nov. 2010

5 Nov. 2010 ─ 31 March 2011

5 Nov. 2010 - 10 Feb.2011

10 Feb 2011 –31 March 2011

Market Scenario Range bound market

Rally across the board

Fall from the Peak Peak to Trough Rise from the

Low’smarket board Peak Low s

BRICS Growth 15.70% 36.73% -11.31% -17.76% 7.84%

Nifty -5.44% 31.32% -7.58% -17.21% 11.63%

Sensex -6.50% 31.10% -7.43% -16.86% 11.35%

S&P 500 -2.84% 29.86% -10.98% -19.87% 11.10%

CNX Mid-Cap 10.32% 31.54% -17.29% -24.66% 10.36%

Bank Nifty -0.10% 49.90% -11.78% -24.08% 16.19%

How did we do during periods of Volatility

How much a portfolio falls during acorrection / sharp downturn is asimportant as how much it gains in abull market Date

Points Fall -Nifty

% Fall -Nifty

Points Fall -

Sensex

% Fall -Sensex

% Fall -BRICS Growth

12 Biggest Falls between Oct.-’09 – Mar.-’11

Protecting capital is often moreimportant during periods of volatility

Downside protection equallycontributes to superior returns over a

24-Feb-2011 -174.65 -3.21% -545.92 -3.00% -2.01%

27-Jan-2010 -159.65 -3.19% -490.64 -2.92% -2.29%

03-Nov-2009 -147.80 -3.14% -491.34 -3.09% -0.36%pperiod of time

We have managed to fall less thanthe indices during each of the sharpfalls / panics since our inception

19-May-2010 -146.55 -2.89% -467.27 -2.77% -0.84%

25-May-2010 -137.20 -2.78% -447.07 -2.71% -1.62%

05-Feb-2010 -126 70 -2 61% -434 02 -2 68% -0 47%

Large liquidity during periods ofvolatility & a low beta portfolio helped.

CNX

05 Feb 2010 126.70 2.61% 434.02 2.68% 0.47%

27-Oct-2009 -124.20 -2.50% -387.10 -2.31% -0.65%

21-Jan-2010 -127.55 -2.44% -423.35 -2.42% -1.32%

10 J 2011 141 75 2 40% 467 69 2 38% 1 92%

*Beta measures the volatility of the

Against Nifty Sensex CNX Midcap

Beta * 0.5341 0.5341 0.5365

10-Jan-2011 -141.75 -2.40% -467.69 -2.38% -1.92%

07-Jan-2011 -143.65 -2.38% -492.93 -2.44% -1.48%

04-Feb-2011 -131.00 -2.37% -441.16 -2.39% -1.18%y

portfolio relative to the index 09-Dec-2010 -137.20 -2.32% -454.12 -2.31% -2.18%

Portfolio Breakup

Cash17.15%

Market Cap Breakup

Automobiles 6.62%

Banking &Infrastructure

Oil & Gas 11.69%

Sectoral Allocation

Large Cap49.65%

17.15% Banking & Finance 6.65%

Branded Garments &

Retail

Infrastructure & Capital Goods 18.79%

Mid C

Small Cap23.74%

Retail 13.34%

Cash 17.15%Consumer G d

Information Technology

12.57%

Mid Cap9.46%

Goods13.19%

Large Cap. More than Rs 5,000 crores

Mid-Cap. Rs 1,000 - 5,000 crores

Small Cap. Less than Rs 1,000 crores

Low Portfolio Turnover (Buy & Hold at work)

0 90

1.00

Portfolio Turnover Re-deployed part of liquid balances by buying on declines

Re-deployed part of liquid balances by buying on declines

0.70

0.80

0.90

Turnover increased as we partly booked

profits at higher levels

Turnover increased as we partly booked

profits at higher levels

0.50

0.60

0.20

0.30

0.40

0.00

0.10

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

Market Outlook

Global macro economic scenario and higher commodity prices likely to pose risks and have repercussions on India. However, risks now seem to be receding. Commodities are nearing peak, if not peaked out already

Domestic concerns (macro economic issues, inflation on the back of rising commodity prices etc.) progressively easing off. Focus back on corporate performances and earnings growth and outlook

Continued high inflation could result in further tightening of liquidity. Although there is still some way to go before the interest rate cycle peaks out later this year, higher cost of capital (on back of higher interest rates) already factored in

Global liquidity (driver for FII flows) have resumed in March 2011 after a brief withdrawal during December 2010Global liquidity (driver for FII flows) have resumed in March 2011 after a brief withdrawal during December 2010-February2011 when FII’s were net sellers

Valuations have corrected significantly in the last four-five months, they are now beginning to look reasonable and cheap when seen in light of growth outlook. Earnings could surprise on the positive side especially for non-index (mid-cap) companies(mid cap) companies

As long as earnings don’t disappoint going forward, its going to be a market of buying opportunities on declines. However, one would have to be careful about earnings slowing down due to:

Increasing interest rates and tight liquidity, making capital raising both difficult and expensive

Higher commodity prices across the board, pressure already beginning to be felt

Little flexibility in revising the end product prices, thus putting pressure on margins

If any the above three factors play out, earnings estimates for FY12 could be revised down especially forIf any the above three factors play out, earnings estimates for FY12 could be revised down especially for sectors/stocks that are sensitive to interest rates and commodities cycle

Market Outlook (cont’d)

The key Investment Theme in 2011

Focus on stocks/sectors where growth in sales and earnings is not sensitive to:

Interest rates (both for themselves as well as their end customers)

They have reasonable pricing power to pass on higher costs and, thus protect margins

Valuations v/s growth favour bottom up stock picking across the spectrum (large and mid-cap), rather than top-down approach. Individual performances will have a wide variance compared to the peer

ll I digroup as well Indices

Stocks/Sectors to avoid are those where growth is dependent on fresh issue of capital (both debt and equity). Tight liquidity and inability to raise capital effectively could have serious implications on growth. Focus on Free Cash-flows

Pockets of opportunities are where growth is steady and sustainable, are adequately funded and valuations leave room for upside

It is quite possible, that in 2011 will see indices in a broad range but individual stocks could give excellent t St k i ki ill b th kreturns. Stock picking will be the key

It is a good time to build a high quality long term portfolio by Buying on Declines

However, Markets in 2011 are likely to Test Conviction & Patience as returns may not come fast and easyeasy

Our Strategy

“Time” in the markets is more important than “Timing” the markets

Superior long-term sustainable returns are not made by timing the markets in terms of selling at thepeaks. They are a result of purchase prices that are attractive in terms of valuations with adequatep y p p qMargin of Safety

Our strategy going ahead would continue to be, bottom up stock picking and be extremely selective:B d liBuy on declinesUse sharp rallies to partially book profitsOpportunistically ride the momentum for only a small part of the portfolioRemain adequately liquid at all timesq y q

The sectors that we are bullish and continue to be over weight are:Technology (Software Services),Capital Goods and Infrastructure ConstructionOil and Gas including Gas Transportation & Distribution,Domestic Consumption themes like Consumer Goods, Paints, Branded Garments, etc.

Happy Investing

Thank You

Vivek Mavani – Vice President & Senior Portfolio Managervivek.mavani@bricssecurities.com

BRICS SECURITIES LIMITEDBRICS SECURITIES LIMITED1st Floor, Sadhana House,570, P. B. Marg,Behind Mahindra Towers,Worli, Mumbai – 400 018.Tel: 91 22 6636 0000Tel: 91-22-6636 0000.