13th Jun 2019 11:35
(Alliance News) - Aberdeen New India Investment Trust PLC said Thursday it underperformed against its benchmark in its recently ended financial year mainly due to the trust's underweight position in the energy sector and certain financial stocks.
For the year to the end of March, Aberdeen New India's net asset value total return was 8.6%, compared to the MSCI India Index, which returned 14.9%.
Net asset value per share as at March 31 was 531.90 pence, up from 490.00p the same date the year before.
The trust's share price at the end of March was 461.00p, reflecting a 13.3% discount to net asset value.
Shares in Aberdeen New India was down 0.4% on the day Thursday at 488.00 pence, having improved further since the year-end.
The trust said that despite reporting positive returnsits performance was held back mainly by its lack of exposure to upstream and oil-marketing companies.
In particular, Aberdeen New India referred to Reliance Industries, which rallied due to positive contribution from its petrochemicals business, while its telecoms unit continued to make market share gains.
There was also an underweight position in financials, as the trust did not have exposure to Axis Bank and ICICI Bank, the share prices of which recovered on optimism over leadership changes at both lenders.
Looking ahead, Aberdeen New India said it is encouraged by the structural reforms being pushed forward by Indian Prime Minister Narendra Modi.
The trust expects Modi to continue with his capital expenditure programmes, which is expected to provide a cushion from the impact of a tougher external environment, including rising oil prices, US-China trade tensions and domestic issues.
"Under these circumstances, your manager's investment approach should bode well for your company. I am certain that the long-term focus on quality companies and the bottom-up active approach of identifying emerging prospects with good growth potential should continue to stand the company in good stead," said Chairman Hasan Askari.
"Given the strength of the business models and financials of the underlying holdings, your manager is confident that the portfolio is able to withstand the inevitable gyrations of stock market," Askari added.