The Principles

of profit taking

FII Flows driving the Markets
1. FII flows were strong in both cash and futures markets. The FII flows for the month were the
largest ever, at US$5.8 billion. The derivative market received a record FII inflow during
September.
2. Year to date, FIIs have purchased securities worth US$18.2 billion through these two market
segments.
3. Domestic institutions were net sellers during September after making near record purchases in
August.
FII Flows
Sensex in September
Q. When is the right time to sell
my fund?
Proposed Checklist
Is the fund a core holding?
Does the fund add
diversification to your
portfolio?
Is the funds volatility more
than what you can bear?
Is your portfolio overly
concentrated in this asset
class or region?
Has the fund undergone a
fundamental shift in its
strategy?
Suggested Response
Hold and ride through market
gyration
Hold and allow diversification
benefits to play out over the
longer term
Consider switching to a lower
volatility fund that matches
your risk tolerance
Bring in new money to
balance out portfolios asset
mix and take advantage of
new market opportunities
Reassess the funds
fundamentals
IF YES
1. Rebalance: Book Profit based
on your financial goals
Asset Allocation of portfolio(without rebalancing)
(1998-2007)
Bonds Crisil fund dx
Equities- Sensex.
The charts are for illustrative purposes only and does not constitute as a recommendation for the purchase or sale of any security. Past
performance is not indicative of future performance.

Financial goals:
The asset allocation mix must
be regularly reviewed and fine-
tuned
The rebalancing must be done
based on the financial goals.
In order to rebalance, you will
need to buy the asset that has
performed less well and is
therefore relatively cheap.
Rupee Cost Averaging:
Active rebalancing is similar to
rupee cost averaging as it
imposes a discipline of investing
at a lower cost, but without
having to make market timing
decisions.

Take out profit, not capital
50
100
150
200
250
300
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06
% in Equity % in Bond
-
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
2002 2003 2004 2005 2006
2. Harness the power of
compounding
BSE SENSEX (2002-2006)
In case you dont need income re-invest your dividends which will mean that your
capital can even grow faster.This show how Rs 100 invested in BSE Sensex in the
Year 2002 grows over 5 Years
New base amount
Profit
Source: Bloomberg. For illustration only. Does not constitute a recommendation for the sale of any products. Past results do not guarantee future returns.
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07
3. Take profit in stages
(Systematic Withdrawal Plans)
Sensex (March05 March06)
Taking profit in stages reduces your reliance on market timing!
Source: Bloomberg. For illustration only. Does not constitute a recommendation for the sale of any products. Past results do not guarantee future returns.
In either an up or down
market, profit taking at
regular time intervals allows
you to average out your
potential gains.
In this case, selling in 3-
month phases since June 06
would have increased your
average selling price from
9193 to 12031.
A: Av selling price: 9193
A+B+C: Av Selling Price: 12031
A:9193
B:11892
C:14919
4. Dont trade in mutual
funds
Remember the Principles
Source: Bloomberg. For illustration only. MSCI World Index used as a proxy for an Equity Mutual Fund. Does not constitute a recommendation for the sale of any
products. Past results do not guarantee future returns.
1. Rebalance: Book Profit based on your financial
goals.Take out profit, not capital out your profits, not
your capital, to stay balanced.
2. Harness the power of compounding re-investment helps
boost returns in a slowly and steadily rising market
3. Take profit in stages to average out your selling price
4. Dont trade in mutual funds. Trading in mutual funds can
eat into your profits
Source: Citibank, N.A.


This presentation is provided for general information only and nothing contained in the material constitutes a
recommendation for the purchase or sale of any security and/or currency. Although the statements of fact in this
report are obtained from sources that Citibank consider reliable, we do not guarantee their accuracy and any such
information may be incomplete or condensed. Any person considering an investment should seek independent
advice on the suitability or otherwise of the particular investment. Investments are not deposits or other
obligations of, guaranteed or insured by Citibank N. A. , Citigroup Inc., or any of their affiliates/subsidiaries (unless
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