29th May 2020 11:08
(Alliance News) - JPMorgan Indian Investment Trust PLC on Friday said it underperformed its benchmark for the first half of financial 2020, with its performance further hurt by the emergence of the Covid-19 pandemic.
The stock was trading flat at 516.00 pence each on Friday morning in London.
The FTSE 250-listed investment company said its net asset value total return for the six months ended March 31 was negative 34%, while its benchmark the MSCI India Index in sterling terms returned negative 28% over the same period.
The return to shareholders was negative 41%, reflecting a significant widening of the discount of the share price to NAV over the first half to 19% from 9.3% as at the end of financial 2019.
JPMorgan Indian said its net asset value per share fell 32% to 544.7p as at March 31 compared to 812.0p the year prior.
"The six month period was challenging for the company. The key overweight position in financials was among the largest detractors as the sector struggled in a period of extreme macro turbulence. IndusInd Bank was the biggest detractor as, following the collapse of Yes Bank, there were fears that IndusInd was also vulnerable, due to its exposure to certain stressed borrowers. The underweight position in index heavyweight Hindustan Unilever was the other key detractor as the stock was remarkably resilient during the macro turmoil, despite its exceptionally rich valuation," JPMorgan Indian said.
"The overweight positions in other cyclical stocks such as Tata Motors, Larsen & Toubro and Maruti Suzuki, amongst others, also contributed negatively. This was only partially offset by the underweight positions in index heavyweights such as Infosys Technologies and Bajaj Finance, while select overweight holdings in Tata Consultancy Services and a few small caps, such as Jubilant Foodworks and Multi Commodity Exchange, outperformed and contributed positively to relative performance," the trust added
Looking ahead, JPMorgan Indian Investment Trust said the economic impact of the pandemic is likely to be severe as the lockdown has led to a complete freeze in economic activity in India. It added that while it is still a long way off pre-Covid-19 market levels, the company believes that when the Indian economy eventually recovers, its holdings in companies such as HDFC Bank Ltd and HDFC Bank Ltd have the potential to gain significant market share from severely handicapped public sector banks, impaired private banks, and weaker non-bank financial companies.
By Ife Taiwo; [email protected]
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