Equity Update

March 2019

Global Market Update

Market Overview (as on February 28, 2019)
US Economy: The US economy expanded 2.6% in Q4 2018 after
Flows Feb - 19 Jan -19 Dec -18 a 3.4% rise in Q3 2018 due to slower consumer spending.The
central bank also indicated it would continue to remain “patient”
FIIs (Net Purchases / in considering future interest rate hikes.
17,219 -4,262 3,143
Sales) (Rs cr)
MFs (Net Purchases / Eurozone: The Eurozone’s GDP rose 1.2% annually in the fourth
7,020 6,995 2,736 quarter of 2018. This was the weakest pace of growth since
Sales) (Rs cr)
2013. A recession in Italy and increasing risks at home and
Domestic Markets Feb -19 Current 10 Yr
abroad has turned the outlook sluggish for the Eurozone
(%) PE Average
economy.
S&P BSE Sensex (1.1) 27.1 19.7
UK: The Bank of England (BoE) voted unanimously to keep its
NSE Nifty (0.4) 24.4 20.0 key interest rate unchanged at 0.75%. The UK’s economy
S&P BSE Auto 1.7 NA 19.0 registered its weakest rate of expansion since 2012, growing by
S&P BSE Bankex (2.3) 45.5 15.8 1.3% in the fourth quarter of 2018 as against its annual growth
S&P BSE Capital rate of 1.6% in the third quarter.
Goods (1.3) 22.1 29.7 Japan: Japan’s economy grew at an annualised rate of 1.4% in
S&P BSE Consumer the October-December 2018 quarter. The rebound was led by a
Durables 0.7 38.5 27.5 recovery in consumer spending and capital expenditure after the
S&P BSE FMCG (2.3) 39.8 37.7 disruption caused by natural disasters in the third quarter.
S&P BSE Healthcare (0.9) 28.2 29.1 However, export growth remained sluggish owing to weak
S&P BSE IT (0.1) 21.1 19.9 demand from China.
S&P BSE Metals (1.8) 6.8 13.1 Emerging Markets: The Purchasing Managers’ Index (PMI)-
S&P BSE Mid Cap (1.7) 34.5 21.7 official guage of manufacturing activity, contracted to hit a three-
S&P BSE Oil & Gas year low of 49.2 in February this was mainly because export
1.4 10.4 12.7
orders continued to decline amidst a weakening global economy
S&P BSE PSU (2.4) 40.2 13.7 and uncertainty over the trade war with the US. However, some
S&P BSE Realty 1.2 13.3 23.5 positive signs emerged as domestic demand expanded and
Feb -19 Current 10 Yr. inventories of finished goods declined.
Global Markets
(%) PE Avg.
US 3.7 16.5 15.5 Source: CRISIL Research
UK 1.5 16.7 18.7
Japan 2.9 15.9 20.2 Indian Market Update
Hong Kong 2.5 11.0 11.1
Index Performance: Indian equity indices recorded disappointing
Singapore 0.7 13.3 12.3
performance in February 2019. Benchmarks S&P BSE Sensex
China 3.0 8.9 8.7 and Nifty 50 fell 1.07% and 0.36%, respectively.
Earnings Growth (%) FY18 FY19E FY20E
Sensex 5 9 29 Domestic Developments:
Latest Previous Headwinds:
Macro Indicators  Escalating tensions between India and Pakistan post
Update Update
6.6 7.1 Pulwama terror attack and air strikes from both sides of the
GDP (YoY%) border.
(3QFY19) (2QFY19)
2.4 0.5  Muted domestic corporate earnings and intermittent
IIP (YoY%) weakness in the rupee against the dollar.
(Dec) (Nov)
66.03 61.89 Tailwinds:
Crude ($ bbl)  Investors cheered the RBI’s unexpected decision to slash the
(Feb 28) (Jan 31)
Core Sector Growth 1.8 2.6 repo rate by 0.25% to 6.25%.
(YoY%) (Jan 2019) (Dec 2018)  Easing of the domestic inflation, value buying in the recently
-14,726 -13,077 battered stocks and inflows by FIIs.
Trade Deficit ($ mn)
(Jan 2019) (Dec 2018)
Current Account Deficit (19.1) (15.9) Global Developments:
($ bn) (2QFY19) (1QFY19) Headwinds:
FII Holding in Indian 21.7 21.7  Uncertainties surrounding the US-China trade relation after
Equities (%)# (3QFY19) (2QFY19) cautious comments from the US trade representative.
Note: # FII hldg includes ADR/GDR (BSE500 Index);  Weak economic cues from US and China also dampened
Data Source: Crisil Research; * Data till Feb 28, 2019; CAD: Current investors mood.
Account Deficit; GDP: Gross Domestic Product, IIP: FII: Foreign Tailwinds:
Institutional Investors; MF-Mutual Fund  Dovish tone of the US Fed after the central bank in its latest
meeting minutes said it will remain “patient” on further
 Equity Update
March 2019

interest rate hikes weak economic cues from US and China
also dampened investors mood.
 Rising hopes of US-China trade truce after the US President
Donald Trump said he would delay a planned tariff hike on
Chinese imports thanks to progress in trade talks and also
seal a deal if the progress continued between two countries
Sectoral Impact: Most of the S&P BSE sectoral indices ended
lower in February 2019.
 Power and PSU stocks saw heavy selling pressure.
 S&P BSE Power index and S&P BSE PSU index fell 2.78% and
2.43%, respectively.
 S&P BSE BANKEX index fell 2.29% due to decline in the
index majors.
 Defensive counters such as FMCG and healthcare also ended
lower;
 S&P BSE FMCG index and S&P BSE Healthcare index fell
2.26% and 0.87%, respectively.
 S&P BSE Auto index was the top gainer – up 1.68% due to
buying in few auto stocks on upbeat January sales data.
 S&P BSE Realty index rose 1.23% after GST council cut the
tax rate on under-construction properties to 5% from 12%
and on affordable homes to 1% from 8% earlier effective
from April 1, 2019.

Market Outlook and Triggers

Indian equities ended a very volatile month of February down 1.1% from the previous month on account of the Interim Budget, a pre-
emptive military strike by India, slow recovery in earnings growth over the last two quarters, buzz around general elections, and
receding tensions between US and China.
Market sentiment remained nervous through the month as expected in the run-up to the general elections to be held in April-May this
year. Foreign flows were volatile through the month with heavy-selling seen during the military stand-off between India and Pakistan.
Foreign Portfolio Investors (FPIs) were net buyers of equity at Rs 17,222 cr in February 2019.
Even though earnings for Q3FY19 were in-line with expectations, earnings growth is expected to pick up going forward. The recovery
could be primarily led by some of the leading names in the banking sector shedding some of the NPA-baggage, pharma companies
benefitting from revival in US generic revenues, and relatively strong growth in companies of the consumption sector.
On the sector front, the auto, Oil & Gas, telecom, and realty indices rose more than 1 % during the month while power, banking,
FMCG, and metal indices were down by about 2% each.
Globally, markets remained watchful of the US Federal Reserve’s stance to pause rate hikes for now and signal flexibility in the rate-
hike process. Further, smoothening out of tensions between US and China, slowing growth in the Chinese economy also kept
markets worried.
We maintain our neutral stance and would like to remain nimble footed at this juncture, as the valuations looks completely priced in
and lots of macro plus political noise is expected over the next few months. To pen down some of the noises like: on-going debate
around global slowdown, monetary policy actions of global central banks, Global trade tensions, and national elections in India.
We continue to believe that, we are in the accumulation phase of investing. Equity accumulation, particularly mid-and small-caps,
should be in a staggered manner through SIP/STP. For lump-sum, we recommend asset allocation and/or large-cap and multi-cap
oriented schemes. There continues to remain large disconnect between price and value in many ‘Growth’ and ‘Value” stocks. Due to
such valuation divergence, Value and special situation themes are expected to play out during 2019. Themes such as banking and
infrastructure could also be explored in 2019, post the recent oil price correction.

Equity Valuation Index

Equity valuations show that the market valuations are in the zone where investors are recommended to invest in asset allocation
schemes.

170

150 Book Partial Profits

130
Incremental Money to Debt
110 Asset Allocation
114.81
90 Invest in Equities
70
Aggressively invest in Equities
50
Feb-06

Feb-07

Feb-08

Feb-09

Feb-10

Feb-11

Feb-12

Feb-13

Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Feb-19

Equity valuation index is calculated by assigning equal weights to Price to equity (PE), Price to book (PB), G-Sec*PE and Market Cap to Gross
Domestic Product (GDP)
 Equity Update
March 2019

Our Recommendations
Our recommendations for various investor types are as follows:-
 Long Term Horizon – SIPs/STPs in Mid and Small Cap schemes
 Underweight On Equity – Large and Multi Cap schemes
 Moderately invested in equities – Asset Allocation schemes
 For existing investors, continue with their SIPs in pure equity schemes.

Our Recommendations – Equity Schemes

ICICI Prudential Bluechip Fund
(An open ended equity scheme predominantly investing in large These Schemes aim to
Pure Equity cap stocks) generate capital
Schemes ICICI Prudential Multicap Fund appreciation through
(An open ended equity scheme investing across large cap, mid cap participation in equities.
and small cap stocks)
ICICI Prudential Value Discovery Fund
(An open ended equity scheme following a value investment
strategy)
ICICI Prudential Smallcap Fund
(An open ended equity scheme predominantly investing in small These schemes aim to
Long-Term SIP cap stocks) generate long term wealth
Schemes ICICI Prudential Midcap Fund creation over a full market
(An open ended equity scheme predominantly investing in mid cap cycle.
stocks)
ICICI Prudential Large & Mid Cap Fund
(An open ended equity scheme investing in both large cap and mid
cap stocks)
ICICI Prudential Balanced Advantage Fund
(An open ended dynamic asset allocation fund)
ICICI Prudential Equity & Debt Fund These schemes aim to
(An open ended hybrid scheme investing predominantly benefit from volatility and
in equity and equity related instruments) can be suitable for
ICICI Prudential Multi-Asset Fund investors aiming to
(An open ended scheme investing in Equity, Debt, Gold/Gold participate in equities with
ETF/units of REITs & InvITs and such other asset classes as may be
Asset Allocation low volatility.
permitted from time to time)
Schemes
ICICI Prudential Equity Savings Fund
(An open ended scheme investing in equity, arbitrage and debt)
ICICI Prudential Regular Savings Fund
(An open ended hybrid scheme investing predominantly in debt
instruments)
ICICI Prudential Asset Allocator Fund
(An open ended fund of funds scheme investing in equity oriented
schemes, debt oriented schemes and gold ETFs/ schemes)
ICICI Prudential Banking & Financial Services Fund
(An open ended equity scheme investing in banking & financial services Investors could invest in
sector) these thematic schemes for
Thematic/Sectoral
ICICI Prudential Infrastructure Fund tactical allocation. It would
schemes (An open ended equity scheme following infrastructure theme) be a high risk investment
ICICI Prudential India Opportunities Fund option.
(An open ended equity scheme following special situation theme)

None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to
consult their financial advisors before investing.
 Equity Update
March 2019

Disclaimer & Riskometers

ICICI Prudential Bluechip Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme predominantly investing in large cap stocks.

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Large & Mid Cap Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme investing in both largecap and mid cap stocks

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme following a value investment strategy.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Equity & Debt Fund is suitable for investors who are seeking*:

 Long term wealth creation solution

 A balanced fund aiming for long term capital appreciation and current income
by investing in equity as well as fixed income securities.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*:

 Long term wealth creation solution

 An equity fund that aims for growth by investing in equity and derivatives.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.

ICICI Prudential Multicap Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme investing across largecap, mid cap and small
cap stocks.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An Open ended scheme that seeks to generate regular income through
investments in fixed income securities, arbitrage and other derivative strategies
and aim for long term capital appreciation by investing in equity and equity
related instruments.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
 Equity Update
March 2019

ICICI Prudential Multi-Asset Fund is suitable for investors who are seeking*:

• Long term wealth creation

• An open ended scheme investing in at least three asset classes with minimum
allocation of 10% to each asset class.

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*:
 Medium to Long term regular income solution
 A hybrid fund that aims to generate regular income through investments
primarily in debt and money market instruments and long term capital
appreciation by investing a portion in equity.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Midcap Fund is suitable for investors who are seeking*:
 Long term wealth creation
 An open-ended equity scheme that aims for capital appreciation by investing in
diversified mid cap companies.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Smallcap Fund is suitable for investors who are seeking*:
 Long term wealth creation
 An open ended equity scheme that seeks to generate capital appreciation by
predominantly investing in equity and equity related securities of small cap
companies.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Banking & Financial Services Fund is suitable for investors who are
seeking*:
 Long Term Wealth Creation
 An open-ended equity scheme that predominantly invests in equity and equity
related securities of companies engaged in banking and financial services.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Infrastructure Fund is suitable for investors who are seeking*:
 Long Term Wealth Creation
 An open-ended equity scheme that aims for growth by primarily investing in
companies belonging to infrastructure and allied sectors
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Asset Allocator Fund is suitable for investors who are seeking*:
 Long Term Wealth Creation
 An open ended fund of funds scheme investing in equity oriented schemes,
debt oriented schemes and gold ETFs/ schemes.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential India Opportunities Fund is suitable for investors who are seeking*:
 Long Term Wealth Creation
 An equity scheme that invests in stocks based on special situations theme.

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
 Equity Update
March 2019

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information
developed in-house. Information gathered and material used in this document is believed to be from reliable sources. The Fund however does
not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no
such party will assume any liability for the same. All recipients of this material should before dealing and or transacting in any of the products
referred to in this material make their own investigation, seek appropriate professional advice and carefully read the scheme information
document. We have included statements in this document, which contain words, or phrases such as "will", "expect", "should", "believe" and
similar expressions or variations of such expressions that are "forward looking statements". Actual results may differ materially from those
suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to,
exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our
services and / or investments, the monitory and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign
exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and
foreign laws, regulations and taxes and changes in competition in the industry. All data/information used in the preparation of this material is
dated and may or may not be relevant any time after the issuance of this material. The AMC takes no responsibility of updating any
data/information in this material from time to time. he AMC (including its affiliates), the Fund and any of its officers directors, personnel and
employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary,
consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully
responsible/are liable for any decision taken on the basis of this material.