______________________________________________________________________

1

HDFC Bank Research

Presentation

May 2019

______________________________________________________________________

2

Aggressive Moderate Conservative

Equity Funds 75% 55% 25%

Debt Funds 20% 40% 70%

Gold 5% 5% 5%

Equity MF Strategy & Recommended Asset Allocation

The Indian equity markets have seen strong upmove in the last few months on the back of strong liquidity flows. The

largecap indices have moved closer to their all time highs in the process, while the midcap and small cap indices have seen

some correction after a smart runup from lows.

Key focus of the markets in the near term is on the election results which would be announced on 23rd May, which may

decide the near term trend.

In India, focus on infra spending by the government, improved urban consumption, rebounding exports and better farm

income has the potential to shore up the economy in the medium term.

Macro indicators continued with mixed signals as lower inflation, improved domestic liquidity conditions, indications of

steady volume growth continuing in many sectors seem to be offset by weak IIP and GDP on the other. Stagnation of

consumer demand and lower corporate margins needs to reverse for stronger earnings growth to emerge.

The GDP data for Q3FY19 showed weakness but improving capex trends suggest CY19 could be marked by improving

investment demand from corporates. Rising government spending holds the key

While many factors look positive, events like the general elections, Weak monsoon and trade wars can have sentimental

impact on the markets which can give rise to sharp volatility in the near term

From an Equity Mutual Fund perspective, investors should look at Large cap Fund for fresh investments and SIP into

Midcap and Small caps funds can begin with a longer horizon. Considering the event heavy period, for the Equity MF

investment strategy, we are recommending 30% Lumpsum and rest 70% staggered over the next 3-4 months. Investors

could also use options like Daily SIP/Monthly SIP for investing.

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3

Debt Mutual Fund Strategy

Investments into Short Duration Funds can be considered with an investment

horizon of 12 months and above.

Investments in Medium Duration Funds can be considered by moderate and

aggressive investors with a horizon of 15 months and above.

Investors looking to invest with a horizon of up to 3 months can consider Liquid

Funds, while Ultra Short Duration Funds and Arbitrage can be considered for a

horizon of 3 months and above.

Investors who are comfortable with intermittent volatility, can also look at

strategies that focus at the longer end of the yield curve. i.e. Long duration

funds, with a horizon of 24 months and above.

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4

Research Presentation – Contents May

Globally money supply likely to remain in plenty…as central banks globally have turned dovish

Brent crude oil prices inches up to USD 75/bbl in April 2019…while Trump kept calling for lower oil prices

Most of the EMs continue to see FPI inflow in April as well…with Indian equity indices and currency witnessing outperformance

Easy money supply in the global market leading to Strong FPI inflow…. driving the domestic equity markets to all time high levels despite subdued DII flows

Rise in the Indian markets drove valuation to higher levels… earnings growth is needed for improvement in valuation

Q4FY19 result announced so far are in line with estimates… revenues continue to grow at steady pace while PAT impacted by one offs

Macro indicators are showing mixed picture with a weakening bias…

While, consumption demand continued to see weakness, steady growth continued in investment demand…Rise in govt. spending may further boost the investment demand

While Skymet predicts below normal monsoon, IMD‟s prediction of near-normal monsoon and well distributed rainfall scenario may bring cheer to consumption demand

Outcome of General Election is a key for markets… as it may have huge sentimental and fundamental impact

Key concerns to watch out ….

Large Cap and Midcap have converged

Nifty 50 rolling returns for last 15 years

S&P BSE Sectoral Indices monthly performance for April 2019

Market Round Up – April 2019

Market Outlook

Fixed Income

G-sec yields turned volatile in April 2019…close on a marginally negative note

Minutes of MPC‟s April 2019 monetary policy meeting…while some members were concerned about growth; others wanted to wait and watch

CPI inflation rises to five months high in March 2019…Core inflation declined and neared the 5% mark

Crude oil price rise – a spoilsport for bond markets

Monsoon – A Joker in the Pack?

Government expected to meet FY19 Fiscal Deficit Target…controlled fiscal deficit and rising GST collections positive for bond markets

Other macro variables turned marginally negative in April 2019…

System liquidity deficit rose in April 2019…

While rates at the very short end rose tracking liquidity conditions…Short term rates remained largely anchored

Bond Spreads contracted…

Yields rose across the yield curve…While term spreads declined marginally

Fixed Income Outlook

Equity Mutual Funds

Fixed Income Fund Options

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5

Most of the central banks in developed nations have changed the monetary policy stance to dovish in their latest monetary policy outlook, on the

back of slower global growth dynamics.

Apart from slower growth, the spread between the 3-month US Treasury bill and the 10-year US note went into negative territory in March 2019, first

time since 2007, which is considered to be a key indicator of an economic recession.

The US Fed in its recent monetary policy meeting suggested that it may not look to hike interest rates in CY19 vs earlier forecast of two hikes for

the year. The US Fed also said that it would start slowing the shrinking of its balance sheet in May 2019 from USD 50 bn per month to USD 35 bn

and halt the drawdown by the end of September 2019.

European Central Bank (ECB) also recently announced stimulus to propel growth apart from keeping interest rates ultra-low until the end of CY19.

The Chinese Premier Li Keqiang has also announced new stimulus measures to prop up the economy.

RBI has also cut its policy rate by total of 50 bps in last two monetary policies to drive the growth.

Bank of England also in its recently concluded monetary policy meet kept the interest rates on hold at 0.75% and maintained its

GBP 435 bn quantitative easing scheme.

Post the slowdown seen for most of the global economy in the past few quarters, the Central Banks worldwide — have all reacted

decisively to bring back the economic growth for the economy by pushing any policy tightening plans to the backburner and infusing

liquidity into the system. Moreover, the dovish monetary policy stance has been beneficial for emerging markets, including India, as

inflows into Emerging market (EM) on Risk on aversion have benefitted currencies, equity markets and to some extent debt yields.

Globally money supply likely to remain in plenty…

…as central banks globally have turned dovish

Source: Media Reports, HDFC Bank

260028003000320034003600380040004200440046004800

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Jan

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Ap

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-13

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-14

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Jul-

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5A

pr-

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l-15

Oct

-15

Jan

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8Ja

n-1

9A

pr-

19

(USD

in B

n.)

US Fed Balance Sheet

Source: US Federal Reserve

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6

Brent crude oil prices inches up to USD 75/bbl in April 2019…

…while Trump kept calling for lower oil prices

Brent crude oil prices has inched up sharply in the last few months and has breached USD75/bbl for the first time in April 2019, thus up by

~35% on CYTD basis.

The sharp up move in Brent crude oil prices can be mainly attributed to supply cuts by OPEC and concerns of US sanctions on Venezuela

and Iran Energy sector leading to sharp fall in crude production from these two countries.

Also, recent announcement by US of not extending the waiver given to eight countries including India, China and Japan to import crude oil

from Iran has also resulted in sharp up move in last few weeks.

On the other hand, US President Donald Trump has been constantly urging OPEC nations to increase the oil production to bring the prices

down. He recently tweeted that “Very important that OPEC increase the flow of oil. World markets are fragile, price of oil getting too

high. Thank you”

Going ahead, expectation of slowdown in global economy forecasted by various multilateral agencies are weighing down on oil demand

growth forecast. Also increase in US shale gas production are also likely to keep the prices under check.

On India, Care ratings expects that a 10% spike in crude prices (from USD 75/bbl levels) can result in a 0.4% widening of the CAD, which

can consequently play out into a 3-4% depreciation in the rupee and also push up inflation by 0.24%.

Going ahead, oil supply by OPEC and Non OPEC member nations and political conditions in Middle East on one hand and global

growth trajectory and U.S. Shale gas production on the other are likely to direct the crude oil prices in the near to medium term.

45

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ay

-18

Ma

y-1

8M

ay

-18

Jun

-18

Jun

-18

Jun

-18

Jul-

18

Jul-

18

Jul-

18

Au

g-1

8A

ug

-18

Au

g-1

8S

ep

-18

Se

p-1

8S

ep

-18

Oct-

18

Oct-

18

Oct-

18

No

v-1

8N

ov-1

8N

ov-1

8D

ec-1

8D

ec-1

8D

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9Ja

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n-1

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eb

-19

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b-1

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Ma

r-1

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ar-

19

Ma

r-1

9A

pr-

19

Ap

r-1

9A

pr-

19

US

D/b

bl

Brent Crude oil prices hits USD 75/bbl for first time in 2019

Source: Bloomberg

(in 000' b/d) Oct'18 Nov'18 Dec'18 Jan'19 Feb'19 Mar'19

Change in

Mar'19 over

Oct'18

Algeria 1,057 1,056 1,051 1,019 1,026 1,018 -39

Angola 1,515 1,500 1,490 1,444 1,448 1,454 -61

Congo 321 310 329 315 321 344 23

Ecuador 521 522 524 520 524 524 3

Equatorial Guinea 124 121 108 112 121 124 0

Gabon 185 170 197 195 204 214 29

Iran, I.R. 3,330 2,928 2,769 2,731 2,726 2,698 -632

Iraq 4,654 4,626 4,714 4,712 4,647 4,522 -132

Kuwait 2,753 2,772 2,800 2,723 2,709 2,709 -44

Libya 1,118 1,100 928 883 902 1,098 -20

Nigeria 1,760 1,739 1,750 1,733 1,723 1,733 -27

Saudi Arabia 10,637 11,021 10,553 10,179 10,118 9,794 -843

UAE 3,177 3,283 3,218 3,075 3,068 3,059 -118

Venezuela 1,206 1,181 1,148 1,151 1,021 732 -474

Total OPEC 32,358 32,328 31,578 30,793 30,557 30,022 -2,336

OPEC crude oil production

Source: OPEC Monthly Oil Market Report

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7

Most of the EMs continue to see FPI inflow in April as well…

…with Indian equity indices and currency witnessing outperformance

With the US Fed turning dovish and other major central banks globally planning to improve liquidity conditions, the Emerging Markets

(EMs) assets have continued to see positive FPI inflows in April 2019 as well.

The positive news flow on the US-China trade negotiations has also improved the sentiments globally, thus offering some support to

the EMs equity markets.

As a result, most of the EMs equity indices have gained during the last two months mainly driven by strong liquidity inflows.

While India underperformed its peers during the first two months of the year, it has recently (in Mar-April 2019) been one of the

outperformers.

Amongst the EMs, Indian Rupee has appreciated against USD by 1.7% in last two months and equity indices - S&P BSE Sensex and

Nifty50 have gained 8.8% and 8.9% respectively in the last two months.

Going ahead, continued easy liquidity scenario globally, may result in money continuing to flow into EMs. Additionally, any

positive outcome from US China trade talks and Brexit resolution may also boost sentiments for global equity indices, especially

for large trading countries with China and UK.

-249

28 107 194

1,672 1,6762,252

3,740

-500

0

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4000

Bra

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FPI inflows continue to remian positive for most of the EMs during April 2019 (in USD mn)

Source: Bloomberg, *Data for April 2019

1.7%

1.4%

-0.3%

-0.4%

-0.4%

-0.6%

-1.0%

-1.3%

-3.9%

-11.8%

-14.0% -12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%

Indian Rupee

Dollar Index

Vietnamese Dong

Taiwan Dollar

Philippines peso

Chinese Yuan

Thailand Bhat

Indonesia Rupiah

Korea Won

Turkish Lira

Indian Rupee has appreciated against USD during Mar'19-April'19

Source: Bloomberg

8.9%8.8%

5.6%4.7%

4.1%3.2%

1.5%1.2%

0.8%0.4%

0.2%0.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Nifty (India)Sensex (India)

TWSE Index (Taiwan)Shanghai (China)Mexbol (Mexico)

Pcomp (Philippines)VNINDEX (Vietnam)

SET (Thailand)Ibov (Brazil)

Kospi (Korea)JCI (Indonesia)Micex (Russia)

Indian Equity Indices have outperformed most of the EMs indices in last two months

Source: Bloomberg

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8

Many multilateral agencies have trimmed the global growth

projection, owing to weakness seen in major developed

and developing economies.

Weakness in major advanced economies pushed their

central banks to resort to easy monetary policies to drive

their economic growth.

EM economies like India, which witnessing higher growth

compared to other economies are witnessing strong FPI

inflows.

Strong FPI inflows have helped Indian equity markets to

scale to new all time high levels.

Easy money supply in the global market leading to Strong FPI inflow…. driving the

domestic equity markets to all time high levels despite subdued DII flows

-400

-300

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-100

0

100

200

300

400

Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19

Foreign Portfolio Investment flow trend (Rs in Bn)

Source: NSDL, Data as on 26 April 2019

-100

-50

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50

100

150

200

250

Oct

-18

No

v-1

8

Dec

-18

Jan

-19

Feb

-19

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-19

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r-1

9

Trend in Domestic Institutional Investors flow (Rs in Bn)

Source: SEBI, Data as on 26 April 2019

30000

31000

32000

33000

34000

35000

36000

37000

38000

39000

40000

Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19

S&P BSE Sensex near all time high levels

Source: Bloomberg

Sensex reached to all time high levels …. … mainly due to sharp rise in FPI inflow

… despite weakness seen in DII flows

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9

Easy liquidity scenario in global market led to strong FPI inflows into Indian equity markets, which in turn pushed major indices to move to all time

high levels.

Currently, the S&P BSE Sensex is trading at 27.9x FY19E Bloomberg consensus EPS of Rs.1400 and 23.0x FY20E Bloomberg consensus EPS

of Rs.1700. (S&P BSE Sensex price as on 30.4.2019).

Going ahead, improvement in earnings trajectory, steady growth in investment demand and revival in consumption demand especially urban

demand would be needed for the further up move.

Early announcement of Q4FY19 indicating steady growth in revenue with the improvement in EBITDA growth. However, PAT impacted by one-

offs in few sectors. A clearer picture is likely to emerge once majority of the results come out.

While investment demand is growing steadily, consumption demand has seen moderation in recent past. We believe that rate cuts by RBI may

give some impetus to consumption demand and if corporates are able to manage the cost then revenue and earnings growth should improve over

the time.

Given the steady improvement capacity utilisation, Investment led sectors could gradually come in focus as the earnings in this space could see

better performance

Rise in the Indian markets drove valuation to higher levels…

… earnings growth is needed for improvement in valuation

1385 1360

15401400

1700

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1200

1400

1600

1800

FY16 FY17 FY18 FY19E FY20E

S&P BSE Sensex Consensus EPS (Rs.)

Source: Bloomberg

14

6.5

52

.06

95

.3

95

.3

54

.5

68

.6

60

.8

83

.6

74

.2

74

.1

10

4.9

76

.6

80

.5

0

20

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120

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De

c-0

7

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De

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Mkt Cap to India GDP (curr prices)

Source: Bloomberg

Bubble Territory -Previous peak with Sensex at ~21000

Mkt cap to GDP highest in last

seven year

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10

Q4FY19 result announced so far are in line with estimates… revenues continue to

grow at steady pace while PAT impacted by one offs

The Q4FY19 aggregate corporate earnings announced so far were in-line with market expectation, however, it continued to see mixed

picture.

The net sales of 32 companies in CNX 200 index, which have declared results so far, grew by 17.8% YoY. The EBITDA of these

companies grew at 27.4% YoY, at a faster pace as compared to Q3FY19 and Q4FY18. This was mainly due to recent correction seen in

commodity prices driving the margin improvement. However, Reported PAT fell by 18.2% YoY in Q4FY19, mainly impacted by one off

items in Metal & Mining sector and Healthcare sector. Ex Metal & Mining and Healthcare sector, PAT would have grown by 18.3% YoY.

IT sector has reported numbers in-line with the expectations while FMCG and Auto sector failed to improve their performance during the

quarter. However, Banking, Cement and Capital Goods sector continued report improvement in earnings performance.

While early results have built some optimism about improvement in earnings going ahead, clearer picture is likely to emerge once a major

part of the index companies announced their results.

While two consecutive rate cut by the RBI and incentives given in interim budget for consumption demand related sectors are

expected to drive demand conditions. However actual translation into substantial earnings growth would be a factor of revival

of pricing power.

Q4FY19 Q3FY19 Q4FY18 Q4FY19 Q3FY19 Q4FY18 Q4FY19 Q3FY19 Q4FY18

Auto & Auto Anc (1.6) 2.2 16.6 (22.4) (25.5) 23.3 (10.6) (11.8) 16.3

BFSI 22.8 27.3 19.1 41.5 33.5 4.2 35.7 20.2 (20.0)

Capital Goods 111.6 59.8 20.9 44.7 44.7 33.1 46.9 61.6 63.7

Cement & Pdts 14.8 16.0 27.0 46.3 7.9 11.7 98.0 70.0 (25.7)

Chem & Fert 9.4 11.5 6.8 38.1 (7.3) (32.0) 23.2 (14.5) (37.9)

FMCG & Retail 5.2 10.5 0.4 15.2 (11.9) 0.8 (61.5) (47.3) 89.3

Healthcare 25.7 27.7 24.6 42.3 42.0 32.8 (81.5) 36.6 724.3

IT 16.9 18.7 5.4 16.2 17.9 (0.0) 18.1 4.9 0.3

Metal & Mining 23.8 15.2 (0.3) 88.9 41.0 63.8 (84.4) 54.3 (1348.5)

Oil & Gas 18.6 56.7 37.8 12.8 21.3 51.0 9.8 8.8 17.3

Telecomm 0.2 2.2 4.2 (0.9) 3.0 (1.0) 0.3 10.8 1.6

Grand Total 17.8 30.7 19.2 27.4 23.7 15.6 (18.2) 11.4 57.9

Ex Metals & Healthcare 17.1 32.7 21.7 23.6 22.2 13.4 18.3 9.6 (0.5)

Source: Capitaline

Net sales EBITDA Reported PATYoY Changes in %

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11

Macro indicators are showing mixed picture with a weakening bias…

While certain key economic data like declining GDP growth, higher level of Fiscal deficit and Current Account Deficit are showing some weakness

Also, certain high frequency data like declining IIP and core sector growth and lower export growth and lower Manufacturing PMI are also concerning

3.3%

3.4% 3.4%

3.0%

3.1%

3.2%

3.3%

3.4%

3.5%

3.6%

2018-19 BE 2018-19 RE 2019-20 BE

Fiscal Deficit Estimates

Source: Ministry of Finance, BE: Budget Estimates, RE: Revised Estimates

1.1%

2.1%1.9%

2.4%

2.9%

2.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19

Current Account Deficit rises sharply on YoY basis to 2.5% in Q3FY19 (as % of GDP)

Source: RBI

6.8

6.1 6.0

6.8

7.7 7.78.0

7.06.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19

in %

India's GDP growth sliding down to 6.6% YoY in Q3FY19 vs 7% YoY growth seen in Q2FY19

Source: MoSPI

0.0

2.0

4.0

6.0

8.0

10.0

Jan-

18

Feb-

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-18

Apr

-18

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IIP and core sector growth data indicating slowdown in industrial activity (YoY %)

Source: MoSPI, Min of Commerce

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10

15

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25

Mar

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Apr-

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8

Aug-

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Sep-

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Nov

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Dec-

18

Jan-

19

Feb-

19

Mar

-19

% Y

oY

Export growth showing weakness in last few months (Change YoY%)

Source: Ministry of Commerce & Industry

64

66

68

70

72

74

76

Jul-1

8

Jul-1

8

Aug-

18

Aug-

18

Aug-

18

Sep-

18

Sep-

18

Oct-1

8

Oct-1

8

Nov-

18

Nov-

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Dec-

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Dec-

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Jan-

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Jan-

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Jan-

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Feb-

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Feb-

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Mar

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Apr-1

9

Apr-1

9

Rs./

USD

Rupee has stabalized at ~Rs70/USD levels in last few months

Source: Bloomberg

0

2

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14

16

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18

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-18

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-18

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8

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-18

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18

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Feb-

19

Mar

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-19

Chan

ge Y

oY %

Credit growth increasing at a steady pace in last few months (YoY %)

Source: RBI

However, certain macro data continue to remain steady–stable rupee, increasing GST revenue collection and continued double digit credit growth data

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940 944

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947

1025

972

1066

1139

800

850

900

950

1000

1050

1100

1150

Jul-

17

Au

g-1

7

Se

p-1

7

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17

No

v-1

7

De

c-1

7

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b-1

8

Ma

r-1

8

Ap

r-1

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y-1

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-18

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18

Au

g-1

8

Se

p-1

8

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No

v-1

8

De

c-1

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-19

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b-1

9

Ma

r-1

9

Ap

r-1

9

GST revenue collection increasing by 10% YoY in April 2019 (Rs. Bn)

Source: Ministry of Finance

51.251.250.3

52.6

54.7

52.452.1

51.051.6

51.2

53.152.3

51.752.2

53.154

53.253.9

54.3

52.651.8

47

48

49

50

51

52

53

54

55

56

Au

g-17

Sep

-17

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-17

No

v-17

Dec

-17

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-18

Feb

-18

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-18

Ap

r-18

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-18

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-18

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g-18

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-18

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-18

No

v-18

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-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-19

Manufacturing PMI seen coming off in last few months

Source: Bloomberg

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12

While, consumption demand continued to see weakness, steady growth continued in

investment demand…Rise in govt. spending may further boost the investment demand

Indian economy continued to see steady growth in investment demand. A lot of lead indicators like capacity utilization (at 11 quarters high), improvement in

credit growth (for 27 consecutive months), cement demand (expected to grow at 8% in FY20), improvement in order book for capital goods companies and rising

GFCF are indicating that capex cycle is reviving.

While the central government had kick started the capex cycle which was later on joined by companies in smaller sectors, the spending from the government have

slowed down a bit in last few months ahead of general election. Hence, increase in government spending post-election and participation from large

corporates would be important for acceleration in investment demand.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Q3

FY1

6

Q4

FY1

6

Q1

FY1

7

Q2

FY1

7

Q3

FY1

7

Q4

FY1

7

Q1

FY1

8

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

(in

Yo

Y %

)

Trend in GFCF growth

Source: MOSPI Source: RBI

82.00%

83.00%

84.00%

85.00%

86.00%

87.00%

88.00%

89.00%

90.00%

91.00%

Apr-Feb2013

Apr-Feb2014

Apr-Feb2015

Apr-Feb2016

Apr-Feb2017

Apr-Feb2018

Apr-Feb2019

Total Expenditure (% of Actuals to Revised Estimates)

Source: cga.nic.in

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

21.00

De

c-1

4

May

-15

Sep

-15

Jan

-16

May

-16

Sep

-16

Feb

-17

Jun

-17

Oct

-17

Feb

-18

Jun

-18

No

v-1

8

Mar

-19

% Growth in Personal loan (YoY)

Source: RBI

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Ma

y-1

7

Ju

n-1

7

Ju

l-1

7

Au

g-1

7

Se

p-1

7

Oct-

17

No

v-1

7

De

c-1

7

Ja

n-1

8

Fe

b-1

8

Ma

r-1

8

Ap

r-1

8

Ma

y-1

8

Ju

n-1

8

Ju

l-1

8

Au

g-1

8

Se

p-1

8

Oct-

18

No

v-1

8

De

c-1

8

Ja

n-1

9

Fe

b-1

9

Ma

r-1

9

Yo

Y %

Domestic airline passenger growth data

Source: DGCA

Consumption demand continued to see slowdown with subdued growth with PV in April, declining growth rate in domestic airline traffic and in personal loan.

The weakness was largely due to the liquidity issues, regulatory changes (especially in automobile) and high base effect. However, this could be a temporary

phenomenon as it may start to improve once again as liquidity scenario improves significantly. In addition to this, cuts in interest rate by RBI, infusion

of liquidity in the system by RBI, recent announcement in the interim budget and if monsoon turns out to be normal then it is likely to be beneficial for

consumption demand.

-22.0%-20.0%

-9.0%-10.0%

-26.0%-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

Toyota Maruti M&M Hyundai Tata Motors

Domestic PV sales fell in April 2019

Source: Media Reports

______________________________________________________________________

13

While Skymet predicts below normal monsoon, IMD’s prediction of near-normal monsoon

and well distributed rainfall scenario may bring cheer to consumption demand

After two consecutive years of normal monsoon, year 2018 saw marginally below normal monsoon.

For the preliminary estimate for Monsoon 2019, while Skymet predicts below normal monsoon, India Meteorological

Department (IMD) is predicting near-normal monsoon.

According to weather forcaster Skymet, Monsoon 2019 is likely to be „below normal‟ to the tune of 93% (with an error margin of

+/-4%) of the long period average (LPA) of 887 mm.

Earlier, Australia‟s weather office had warned that there is a 70% chance of El Nino climate cycle forming towards the second

half of this year.

In its long-range forecast, the IMD predicted a 39% probability of the rains to be 96% of the LPA with a model error of ± 5%.

The IMD in its latest prediction also said that rain during the monsoon season would be well distributed throughout the country.

According to the latest global forecasts, weak El Nino conditions have developed over equatorial Pacific Ocean and they are

likely to persist this summer. However, IMD officials have maintained that these conditions would weaken after summer.

The persistence of El Nino phenomenon could negatively impact the June to September southwest monsoon season which

delivers 70% of the country's annual rainfall.

Degree and severity El-Nino would be one of the key for revival in consumption demand as a below normal monsoon may

impact the rural demand and impact food inflation.

80

85

90

95

100

105

110

115

2016 2017 2018

Monsoon Rainfall (% of LPA) : Actual vs Forecast

Skymet - 1st Forecast IMD - 1st Forecast Actual Rainfall

Source: IMD, Skymet, Media reports

Below Normal (90-96% of LPA), 32%

Excess (>110% of LPA), 2%

Deficient (<90% of LPA), 17%

Above Normal (104-110% of

LPA), 10%

Near Normal (96-104% of

LPA), 39%

IMD Monsoon projection - June to September 2019

Source: IMD, Media Reports

Below Normal, 55%

Excess, 0%

Drought, 15%

Above Normal, 0%

Normal, 30%

Skymet Monsoon projection - June to September 2019

Source: skymetweather.com

______________________________________________________________________

14

Outcome of General Election is a key for markets …

… as it may have huge sentimental and fundamental impact

The NDA led by the BJP had received strong majority in 2014 general election and BJP itself had got simple majority in the

Lok Sabha.

Opinion polls conducted by various agencies depicts mixed picture. Hence, the outcome of general election would

be a key event to watch out for as the new government may come out with policies and announcement that may

have both sentimental and fundamental impact on domestic markets in near term.

Vote share by Parties, 2014 (%)

Source: Election Commission

March Data ABP News - C Voter India TV - CNX Times Now-VMR Zee 24 Taas News Nation

NDA 264 285 282 264 270

UPA 141 126 136 165 134

Others 138 132 125 114 139

Seat allocation: Opinion Polls taken by various agencies in March 2019

Source: Media Reports

Voter Turnout 2014 2019

Phase - I 68.8% 69.5%

Phase - II 69.6% 69.4%

Source: Election Commission of India

______________________________________________________________________

15

Key concerns to watch out ….

Domestic factors

Escalation in geo political tension between India and Pakistan may lead to sharp volatility

Outcome of general election would be one of the key event to watch out for markets in CY19.

If Rupee starts to depreciates, then it may impact the country‟s twin deficit.

Tightening of corporate credit cycle may lead to delay in capex cycle due to funding requirement

Weakening of discretionary consumption demand

Global factors

Return to Quantitative tapering by the US and Europe leading to tightening of global liquidity, impacting global

currencies while strengthening USD.

US Fed starts to hike interest rate, leading to rise in bond yield thereby resulting in shift of capital from Emerging

markets to Developed markets.

Rising trend of protectionism across economies leading to trade war situation could pose a risk to overall

global growth.

Slowdown in growth in key developed (Europe) and developing (China) economies

Worsening in geo-political situations (Brexit, trade wars, etc) across globe.

Rise in volatility in commodity prices could put pressure on the global financial markets.

______________________________________________________________________

16

Large Cap and Midcap valuations have converged

0.0

10.0

20.0

30.0

40.0

50.0Ja

n-0

8

Jun

-08

No

v-0

8

Mar

-09

Au

g-0

9

Jan

-10

May

-10

Oct

-10

Mar

-11

Jul-

11

Dec

-11

Ap

r-1

2

Sep

-12

Feb

-13

Jun

-13

No

v-1

3

Ap

r-1

4

Au

g-1

4

Jan

-15

Jun

-15

Oct

-15

Mar

-16

Jul-

16

Dec

-16

May

-17

Sep

-17

Feb

-18

Jul-

18

No

v-1

8

Ap

r-1

9

Valuation differential between Large Cap and Midcap Indices corrected

Trailing P/E S&P BSE Midcap Trailing P/E S&P BSE Sensex

Source: Capitaline

0.70.7 0.8 0.8

1.0

0.9

1.3 1.3

1.4

1.9

1.0

0.0

0.5

1.0

1.5

2.0

Jan

-08

Jun

-08

No

v-0

8

Mar

-09

Au

g-0

9

Jan

-10

May

-10

Oct

-10

Mar

-11

Jul-

11

De

c-1

1

Ap

r-1

2

Sep

-12

Feb

-13

Jun

-13

No

v-1

3

Ap

r-1

4

Au

g-1

4

Jan

-15

Jun

-15

Oct

-15

Mar

-16

Jul-

16

De

c-1

6

May

-17

Sep

-17

Feb

-18

Jul-

18

No

v-1

8

Ap

r-1

9

Valuation Premium of Midcap over Sensex

Source: Capitaline

______________________________________________________________________

17

Nifty 50 rolling returns for last 15 years

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

-80

-60

-40

-20

0

20

40

60

80

100

120

Ap

r-0

5

Ap

r-0

6

Ap

r-0

7

Ap

r-0

8

Ap

r-0

9

Ap

r-1

0

Ap

r-1

1

Ap

r-1

2

Ap

r-1

3

Ap

r-1

4

Ap

r-1

5

Ap

r-1

6

Ap

r-1

7

Ap

r-1

8

Ap

r-1

9

Nifty 50: 1-year rolling return (%) for last 15 years

1 YearSource: ICRA Online

-10

0

10

20

30

40

50

60

70

Ap

r-0

5

Ap

r-0

6

Ap

r-0

7

Ap

r-0

8

Ap

r-0

9

Ap

r-1

0

Ap

r-1

1

Ap

r-1

2

Ap

r-1

3

Ap

r-1

4

Ap

r-1

5

Ap

r-1

6

Ap

r-1

7

Ap

r-1

8

Ap

r-1

9

Nifty 50: 3-year rolling return (%) for last 15 years

3 YearsSource: ICRA Online

-10

0

10

20

30

40

50

Ap

r-0

5

Ap

r-0

6

Ap

r-0

7

Ap

r-0

8

Ap

r-0

9

Ap

r-1

0

Ap

r-1

1

Ap

r-1

2

Ap

r-1

3

Ap

r-1

4

Ap

r-1

5

Ap

r-1

6

Ap

r-1

7

Ap

r-1

8

Ap

r-1

9

Nifty 50: 5-year rolling return (%) for last 15 years

5 YearsSource: ICRA Online

______________________________________________________________________

18

S&P BSE Sectoral Indices monthly performance for April 2019

______________________________________________________________________

19

Market Round Up – April 2019

Indices 30 Apr 2019 29 Mar 2019 Chg %

S&P BSE Sensex 39,032 38,673 0.9

S&P BSE Mid Cap 14,889 15,480 (3.8)

S&P BSE Small Cap 14,625 15,027 (2.7)

S&P BSE 100 11,868 11,809 0.5

S&P BSE 500 15,294 15,305 (0.1)

Net Flow (Rs. Bn) FPI DII

CY19* 681 (35)

CY18 (340) 1204

CY17 513 1188

CY16 151 475

Source: BSE, NSDL (CY19 FPI data and DII data as on 26 Apr 2019)

Indian equity markets ended on a positive note during the month as S&P

BSE Sensex and Nifty 50 ended with the gain of 0.9% MoM and

1.1% MoM, respectively.

However, the S&P BSE Midcap index and the S&P BSE Smallcap index

ended on a negative note with a loss of 3.8% MoM and 2.7% MoM,

respectively.

On the sectoral indices front, the S&P BSE IT index and S&P BSE Metal

index were the top two outperformers, as they rose by 6.4% MoM and

1.4% MoM, respectively. The S&P BSE Realty index and S&P BSE

Power index were top two underperformers as they fell by 3.3% MoM

and 3.2% MoM, respectively.

During the month of Apr‟19, Foreign Portfolio Investors (FPIs) were net

buyers to the tune of ~Rs.212 bn while Domestic Institutional Investors

(DIIs) were net sellers to the tune of ~Rs.54 bn as of 26 April 2019.

20000

23000

26000

29000

32000

35000

38000

41000

May

-15

Oct

-15

Mar

-16

Jul-1

6

Dec-

16

May

-17

Sep-

17

Feb-

18

Jul-1

8

Nov-

18

Apr-1

9

S&P

BSE

Sens

ex L

evel

s

BSE Sensex Price Earning (PE) 1 year forward

19x

21x

17x

23x

Source: Bloomberg

______________________________________________________________________

20

Market Outlook Globally money supply is likely to remain in plenty as central banks in developed nations have changed the monetary policy stance to dovish in their latest monetary policy

outlook, on the back of slower global growth dynamics.

In commodities, the Brent crude oil prices have inched up to USD 75/bbl in April 2019 as the OPEC continued to undertake supply cuts while Trump kept calling for lower prices.

As global central banks starts to ease liquidity, EMs started to witness positive flows from FPI in the month of April 2019 as well. India was amongst the major beneficiary of FPI

flows and saw outperformance in currency as well as equity markets.

Given the easy money supply in the global market, India had witnessed strong FPI inflow in the last few months, thus driving the domestic equity markets to all time high levels

despite subdued DII flows.

Given the continued upmove for Indian equity markets, valuation also continued to move at higher levels. Going ahead, earnings growth is needed for improvement in valuation.

The Q4FY19 aggregate corporate earnings announced so far were in-line with market expectation, as revenues continued to grow at steady pace while PAT was impacted by

one offs.

On macro indicators, economic data are showing mixed picture with a weakening bias where certain data points like declining GDP growth, higher level of Fiscal deficit and

Current Account Deficit are showing weakness. Apart from these, certain high frequency data like declining IIP and core sector growth and lower export growth and lower

Manufacturing PMI are also concerning.

While investment demand is showing signs of improvement, consumption demand continued to see weakness due to the liquidity issues and high base. However, this could be a

temporary phenomenon as it may start to improve once again as liquidity scenario improves significantly.

Going ahead, while Skymet predicts below normal monsoon, IMD‟s prediction of near-normal monsoon and well distributed rainfall scenario may bring cheer to consumption

demand growth. However, persistence of El Nino phenomenon indicated by MET department could negatively impact southwest monsoon season.

Opinion polls conducted by various agencies depicts mixed picture. Hence, the outcome of general election would be a key event to watch out for as the new government may

come out with policies and announcement that may have both sentimental and fundamental impact on domestic markets in near term.

Currently, the S&P BSE Sensex is trading at 27.9x FY19E Bloomberg consensus EPS of Rs.1400 and 23.0x FY20E Bloomberg consensus EPS of Rs.1700. (S&P BSE Sensex

price as on 30.4.2019). Going ahead, improvement in earnings trajectory, steady growth in investment demand and revival in consumption demand especially urban demand

would be needed for the further up move.

In long term India is likely to see a steady growth on the back of improvement in Rural economy, rising government expenditure, revival of private capex and higher disposable

income in the hands of consumers. With strong demographic dividend that India is seeing, we expect the economic growth and demand conditions in the country to remain

strong for a long period. This is likely to augur well for investment in equities.

Hence, investors should use any major volatility in the equity markets as an opportunity to adding into their exposure in line with their risk profile with a 2-3 years investment

horizon.

Some of the key global events like Return to Quantitative tapering, Rising trend of protectionism across economies, Slowdown in global growth and rise in volatility in commodity

prices amongst few other reason would be key events to watch out for in CY19. Apart from these key events, certain domestic events like escalation in geo political tension

between India and Pakistan, outcome of general election, rupee movement, corporate credit cycle tightening and weakening of discretionary consumption demand are the key

events to watch out for in the near term.

Given that we have big events like General elections, looming Trade negotiations between large economies, which can have a huge sentimental and fundamental impact on the

markets, we continue to recommend mutual fund investment strategy at 30% Lumpsum and rest 70% staggered over the next 3-4 months. Investors could also use options like

Daily SIP/Monthly SIP for investing. From investment perspective, focus should be on Large cap/Hybrid funds or SIP in Midcaps funds where the valuations are reasonable

considering their long term averages and growth outlook.

______________________________________________________________________

21

Fixed Income

______________________________________________________________________

22

G-sec yields turned volatile in April 2019… …close on a marginally negative note

Domestic G-sec yields turned volatile during April 2019 and closed on a negative note.

Yield on the new 10 year bond 7.26% G-sec 2029 closed at 7.41% on 30 April 2019 compared to 7.35% on 29 March 2019.

Initially G-sec yields declined sharply tracking expectations of a rate cut by the RBI in the April 2019 monetary policy along with a dovish stance.

However, post the monetary policy outcome, bond yields rose, as the RBI kept the stance unchanged at Neutral and also did not give further guidance on liquidity

support measures.

Sentiments continued to remain muted tracking higher CPI inflation data for March 2019; however decline in Core CPI inflation soothed market nerves.

Dovish monetary policy meeting minutes also provided some support to sentiments.

Towards the later part of the month bond yields rose tracking a sharp rise in crude oil prices following reports that US is looking to end the waivers on export of

crude oil from Iran.

Further rise in yields was prevented, tracking RBI‟s announcement of Open Market Operations (OMO) of G-secs to the tune of Rs.250 bn in May 2019.

______________________________________________________________________

23

Minutes of MPC’s April 2019 monetary policy meeting… …while some members were concerned about growth; others wanted to wait and watch

The RBI reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis

points to 6.0% from 6.25% in April 2019 monetary policy.

The MPC also decided to maintain the ‘neutral’ monetary policy stance.

Source:-RBI

Source:-RBI

Shri Shaktikanta Das – RBI Governor

“With the inflation outlook looking benign and headline inflation expected to remain below target in the

current year, it becomes necessary to address the challenges to sustained growth of the Indian economy.

Hence, I vote for reducing the policy repo rate by 25 basis points.”

Dr. Chetan Ghate

“maintaining status quo on rates at the current juncture would be consistent with sustainable growth in the

economy and achieving the inflation target over the medium-term. Contrary to some of my colleagues in

the MPC, I feel that frequent changes in policy rates and stance runs the risk of introducing uncertainty

and volatility because of our own actions.”

Dr. Pami Dua

“In view of the global growth slowdown and a benign global and domestic inflation outlook, I vote for

decreasing the policy repo rate by 25 basis points and maintaining the neutral stance.”

Dr. Ravindra H. Dholakia

“This is the right time to act decisively. When the pitch is favourable and no possibility of bouncers or

googlies coming in, a well set batsman has to score and not miss the opportunity to build the total by

defending unnecessarily. I would, therefore, continue to cut the policy rate by 25bps and change the

stance to accommodative indicating that any hikes in the rates are off the table for the time being.”

Dr. Michael Debabrata Patra

“With inflation being quiescent and growth at risk, I vote for a reduction in the policy rate by 25 basis

points while maintaining a neutral policy stance. I will, however, remain watchful about the upturn in food

prices that usually precedes the onset of the monsoon.”

Dr. Viral V. Acharya

“On balance, therefore, notwithstanding signs of weakness in growth evinced in high frequency economic

indicators, I am inclined to wait for some more time for incoming data to resolve several important

uncertainties that will shape the Indian economy in the coming one or two years.”

______________________________________________________________________

24

CPI inflation rises to five months high in March 2019… …Core inflation declined and neared the 5% mark

Domestic inflation based on Consumer Price Index (CPI) for March 2019 came in at 5 months

high on the back of pickup in retail food as well as fuel prices.

CPI inflation, for March 2019, stood at 2.86% YoY compared to 2.57% YoY.

After witnessing contraction for five months, food prices rose by 0.30% YoY in March 2019, as

against a deflation of 0.73% YoY in February 2019.

Core CPI inflation on the other hand, continued to witness a decline in March 2019 and came in at

5.04% YoY compared to 5.34% YoY in February 2019.

Despite the rise in the CPI inflation in March 2019, it has continued to remain within the RBI‟s

comfort zone of 4%(+-2%) range.

Source:-Ministry of Statistics and Program Implementation

Description Feb-19 Mar-19

Cereals and products 1.25 1.25

Meat and fish 5.92 6.55

Egg 0.86 1.45

Milk and products 0.92 0.78

Oils and fats 1.33 1.08

Fruits -4.55 -5.88

Vegetables -7.69 -1.49

Pulses and products -3.82 -2.25

Sugar and Confectionery -6.92 -6.12

Spices 1.75 1.23

Non-alcoholic beverages 3.89 3.56

Prepared meals, snacks, sweets etc. 3.54 3.26

Food and beverages -0.07 0.66

Pan, tobacco and intoxicants 5.49 4.61

Clothing 2.71 2.49

Footwear 3.02 2.72

Clothing and footwear 2.73 2.59

Housing 5.10 4.93

Fuel and light 1.24 2.42

Household goods and services 6.29 6.05

Health 8.82 8.86

Transport and communication 3.08 2.98

Recreation and amusement 5.54 5.60

Education 8.13 7.58

Personal care and effects 5.01 4.06

Miscellaneous 6.02 5.68

General Index (All Groups) 2.57 2.86

Consumer Food Price Index -0.73 0.30

Core CPI 5.34 5.04

CPI Inflation (%) YoY

______________________________________________________________________

25

Crude oil price rise – a spoilsport for bond markets

Brent Crude oil price rose by about 6.4% MoM in April 2019, versus a rise of about 2.6% MoM in March 2019.

After declining to a level of ~USD 50/ barrel in December 2018, prices of Brent crude oil touched ~USD 74/barrel in April 2019.

Rise in the crude oil prices has been on account of factors like geo-political tensions in the oil producing countries, supply cuts by the OPEC

nations as well as U.S. sanctions on Iran.

Rise in crude oil prices has led to volatility in the domestic bond yields, as higher crude oil prices have the potential to impact inflation and Current

Account Balance amongst others.

RBI in its April 2019 monetary policy has also highlighted its concerns on rising crude oil prices, which may influence the interest rate decisions of

the RBI.

______________________________________________________________________

26

Monsoon – A Joker in the Pack?

Weather forecaster agencies have been reporting about the rising

risk of an El Niño event in 2019.

Skymet, has estimated an 80% chance of an El Niño occurrence this

year during March-May and 60% chance in June-August.

However, El Niño does not always result into draught; that being said

out of the 25 years of El Nino between 1902 and 2009, 13 years have

witnessed draught.

Majority of Indian agricultural sector depends on rainfall for irrigation.

Thus, if the rainfall is below normal in the current year, it could lead to

sharp turnaround in the food prices.

With Food items, comprising over 50% of the weight in CPI inflation,

a sharp rise in food inflation could lead to rise in the overall CPI

inflation.

Draught conditions Source: IMD, Skymet, HDFC Bank

Source: IMD, Skymet, HDFC Bank

______________________________________________________________________

27

Government expected to meet FY19 Fiscal Deficit Target… …controlled fiscal deficit and rising GST collections positive for bond markets

The government is likely to meet its fiscal deficit target of 3.4% of GDP for FY19, as highlighted by the Finance Minister.

The fiscal deficit target is likely to be met by cuts in states‟ expenditures as well as higher borrowings from Small Savings Funds.

Rolling over of Subsidies also seems to have helped the government in its fiscal deficit target.

Government's divestment target has also exceeded by Rs. 5000 crs to aggregated at Rs. 85000 crs.

GST collections hit the highest level of ~Rs.1.13 trillion since the launch of the GST regime.

The continuation of the fiscal deficit discipline by the government is likely to be positive for bond yields.

Source:- PIB.Nic

______________________________________________________________________

28

Other macro variables turned marginally negative in April 2019…

Source:-Bloomberg

Trade deficit data for March 2019 came at USD 10.9 bn compared to USD 9.6 bn in

February 2019 and USD 13.51 bn in March 2018. Imports stood at USD 43.44 bn

(growth of 1.44% YoY). Exports stood at USD 32.55 bn a growth of 11.02% YoY.

Trade deficit for FY19 stood at USD 176 bn.

Volatility in Rupee, political uncertainty and concerns on fiscal deficit, resulted in

FPIs shying away from Indian bonds. FPIs turned net sellers in April 2019.

Rupee turned volatile during April 2019, tracking volatility in crude oil prices.

Value of Rupee against the USD closed lower by ~0.6% MoM in April 2019.

Source:-Bloomberg

IIP for the month of February 2019 came in at twenty month low of 0.1% YoY

compared to 1.43% YoY in January 2019. The decline was mainly on account of

contraction in the manufacturing sector growth. IIP for the period April-February 2019

came in at 4% compared to 4.3% during the same period last year.

______________________________________________________________________

29

System liquidity deficit rose in April 2019…

Source:- RBI

After staying in the neutral zone in March 2019, system liquidity deficit increased in April 2019 following rise in currency in circulation.

While deposit growth has improved, it continues to lag credit growth, which also added to pressure on liquidity conditions.

Banks‟ credit growth stood at 14.2% YoY as against deposits growth of 10.6% YoY as on 12 April 2019.

Currency in Circulation (CIC) also continued to rise sharply with an increase of ~2.4% in April 2019 till 19 April 2019.

Since pre-demonitisation levels (CIC) has risen by ~21.7%.

Liquidity as measured by the RBI‟s Liquidity Adjustment Facility (LAF) stood at a daily average deficit of ~Rs.733 bn in April 2019 compared to

deficit of ~Rs.530 bn in the previous month.

RBI‟s active liquidity management continued with another long term USD/INR Buy/Sell Swap auction, infusing Rupee liquidity of Rs.348.74 bn.

The RBI also announced Open Market Operations (OMO) purchase of G-secs for an aggregate amount of Rs.~250 billion for May 2019.

Source:- RBI Source:- RBI

______________________________________________________________________

30

While rates at the very short end rose tracking liquidity conditions… …Short term rates remained largely anchored

Yields at the very shorter end of the yield curve increased during the month tracking liquidity conditions.

However on a MoM basis short term corporate bond yield remained almost flat, with some uptick seen during the month.

Yields on the 3 months, 6 months and 1 year CD increased between 5-23 bps on a MoM basis in April 2019.

______________________________________________________________________

31

Bond Spreads contracted…

Corporate bond spreads declined across most of the tenures, baring very the very short end.

While the NBFC and the Housing Finance sector continued to grapple with downgrades and defaults, credit spreads have been

contracting.

Though the spreads have contracted, the risk-reward does not seem to favor the low credit ratings‟ space.

Note:- Spread between AAA corporate bonds and G-secs of similar tenure Source:- IDFC MF

Feb-19 Mar-19 Apr-19

1 Years 121 97 111

2 Years 114 108 86

3 Years 97 90 81

5 Years 114 90 74

10 Years 101 102 101

Spreads in Bps

______________________________________________________________________

Source:- IDFC Mutual Fund

While the shorter end of the yield curve rose tracking increase in liquidity deficit; the longer end rose tracking domestic and global

cues.

While the short to medium term segment steepened further, the short to long and the medium to long end of the yield curve

witnessed some flattening.

With the steepening of the short to medium term segment of the yield curve, risk-reward has become more favourable for this

segment.

Yields rose across the yield curve… …While term spreads declined marginally

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33

Systemic liquidity conditions are likely to improve after the elections are over, as the rise in currency in circulation is likely to come down. RBI has demonstrated

yet again that it is likely to keep supporting liquidity to ensure that liquidity remains in the neutral zone; though temporary spikes cannot be ruled out.

With higher crude oil prices and possibility of El Nino event, inflation trajectory could get altered. Though the Government has ensured that the prices of food

grains do not rise even in years of below normal monsoons, supply shock has the potential of throwing the government‟s supply management out of gear.

That being said, the global growth slowdown and benign/muted inflation scenario that is building up could come to the rescue as far as domestic inflation is

concerned. Thus, inflation will be a very important variable that needs to be tracked very closely.

Though the government is likely to meet its FY19 fiscal deficit target, rolling over of subsidies to the next financial year and possibility of increased social

spending by the newly elected government could mean revision of fiscal deficit on the higher side for FY20. Thus, the upcoming election has created a fair

amount of uncertainty on the fiscal deficit front.

Crude oil prices have been at the forefront giving direction to domestic bond yields. With uncertainties surrounding crude oil prices, it will be an important

variable to watch out for. If the crude oil price rise continues, it could have negative implications on domestic macro economic variables and thus on the

domestic bond yields.

Higher supply of bonds coupled with RBI‟s choice of liquidity infusion tools have also created a fair amount of uncertainty regarding the Demand-Supply

dynamics for bond markets. While the recent advance announcement of OMO Purchase of G-secs for May 2019 by the RBI seems like a ray of hope, relatively

lower OMO purchases could be a negative of bond markets.

Global as well as domestic economic growth forecasts have been revised downwards. This could pave way for either loose monetary policies or refrainment

from tightening. Domestically, RBI‟s MPC members (majority of them) have shown concerns over economic growth and are of the view that in muted inflation

scenario, economic growth should be given and impetus. Thus, expectations of further rates could still stay strong preventing the bond yields from rising. Also

the RBI governor stated that guidelines could be released to ensure effective transmission of interest rate cuts; which could also lead the yields to decline.

Overall, the short and the medium term end of the yield curve is likely to benefit from likely improvement in liquidity conditions post elections, expected interest

rate cuts by the RBI and improved transmission of the rate cuts. The longer end of the yield curve may trade in a range in the near term given the looming

uncertainties relating to elections, monsoons, crude oil prices and G-secs demand-supply.

Conservative investors who do not wish to see volatility in returns should continue to look at debt funds that invest at the short end of the yield curve. Aggressive

investors want to benefit from the decline in the longer end of the yield curve could look at the strategies that run at the longer of the yield curve.

Thus , investments into Short Duration Funds can be considered with an investment horizon of 12 months and above.

Investments in Medium Duration Funds can be considered by moderate and aggressive investors with a horizon of 15 months and above.

Investors looking to invest with a horizon of up to 3 months can consider Liquid Funds, while Ultra Short Duration Funds and Arbitrage can be considered for a

horizon of 3 months and above.

Investors who are comfortable with intermittent volatility, can also look at strategies that focus at the longer end of the yield curve. i.e. Long duration funds, with

a horizon of 24 months and above.

Fixed Income Outlook

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34 34

We recommend investors to rebalance/realign the portfolios according to the recommended asset allocation

On Equity Funds:

The Indian equity markets have seen strong upmove in the last few months on the back of strong liquidity flows. The largecap indices have

moved closer to their all time highs in the process, while the midcap and small cap indices have seen some correction after a smart runup

from lows.

Key focus of the markets in the near term is on the election results which would be announced on 23rd May, which may decide the near

term trend.

In India, focus on infra spending by the government, improved urban consumption, rebounding exports and better farm income has the

potential to shore up the economy in the medium term.

Macro indicators continued with mixed signals as lower inflation, improved domestic liquidity conditions, indications of steady volume growth

continuing in many sectors seem to be offset by weak IIP and GDP on the other. Stagnation of consumer demand and lower corporate

margins needs to reverse for stronger earnings growth to emerge.

The GDP data for Q3FY19 showed weakness but improving capex trends suggest CY19 could be marked by improving investment demand

from corporates. Rising government spending holds the key

While many factors look positive, events like the general elections, Weak monsoon and trade wars can have sentimental impact on the

markets which can give rise to sharp volatility in the near term

From an Equity Mutual Fund perspective, investors should look at Large cap Fund for fresh investments and SIP into Midcap and Small

caps funds can begin with a longer horizon. Considering the event heavy period, for the Equity MF investment strategy, we are

recommending 30% Lumpsum and rest 70% staggered over the next 3-4 months. Investors could also use options like Daily SIP/Monthly

SIP for investing.

On Fixed Income Funds:

Investments into Short Duration Funds can be considered with an investment horizon of 12 months and above.

Investments in Medium Duration Funds can be considered by moderate and aggressive investors with a horizon of 15 months and above.

Investors looking to invest with a horizon of up to 3 months can consider Liquid Funds, while Ultra Short Duration Funds and Arbitrage can

be considered for a horizon of 3 months and above.

Investors who are comfortable with intermittent volatility, can also look at strategies that focus at the longer end of the yield curve. i.e. Long

duration funds, with a horizon of 24 months and above.

Investment Strategy

______________________________________________________________________

35

Equity Mutual Funds

Large/Multi Cap Oriented Funds

1. HDFC Top 100 Fund – An actively managed large cap equity fund

2. Reliance Large Cap Fund – An actively managed large cap equity fund

3. ICICI Prudential Bluechip Fund - A conservative large cap fund

4. Kotak Standard Multicap Fund - An actively managed multi cap fund investing across select sectors with large cap bias

5. UTI Equity Fund – An actively managed multi cap equity fund

Mid/Small Cap Oriented Funds

1. HDFC Small Cap Fund - The fund is a small cap fund that invests predominantly in small cap companies

2. SBI Focused Equity Fund – An actively managed focused equity fund

Balanced / Hybrid Funds

1. HDFC Balanced Advantage Fund - A hybrid fund that dynamically manages exposure to equity and debt within a certain range

2. ICICI Prudential Balanced Advantage Fund – A hybrid fund that dynamically manages exposure to equity and debt

Equity Savings Funds

1. Kotak Equity Savings Fund - The un-hedged equity exposure is maintained in the range of 20% to 40% of the portfolio

2. HDFC Equity Savings Fund – The un-hedged equity exposure of the fund is maintained upto 40% of the portfolio with flexibility to invest across market capitalisation

______________________________________________________________________

36

Top Sectoral Allocation of Large/Multi Cap Funds Compared to Nifty 50 Index Sectoral Benchmark Indices Performance

Portfolio as of 29 March 2019. Returns (%) as on 30 April 2019. Returns are Absolute for < = 1year and Compounded Annualized for > 1 year.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

Over the last 3 months, the Indian equity markets were volatile and closed on a positive note. The benchmark index - S&P BSE Sensex closed up by 9.67%. The S&P

BSE Oil & Gas, S&P BSE Realty and S&P BSE Bankex index have delivered returns of 14.77%, 13.83% and 10.30%, respectively during the same period,

outperforming the benchmark index. S&P BSE FMCG and S&P BSE AUTO indices amongst other underperformed the benchmark index, up by 2.60% and 3.07%,

respectively during the period.

Equity Benchmark – Over the last 1 year, Indian equity markets closed on a positive note with S&P BSE Sensex index rising by 11.01%.

Over the last 1 year, IT and Banking sectors‟ indices amongst other have outperformed the S&P BSE Sensex index, whereas, Auto, Metals and Realty sectors‟

indices amongst other have underperformed the S&P BSE Sensex index. Amongst the sectoral indices (mentioned in above table), S&P BSE IT index was major

gainer, up by 19.87% during the period.

Most of the large cap oriented equity funds continue to have exposure in Banking & Finance, IT, Oil & Gas, FMCG and Auto & Auto Ancillaries.

Funds like HDFC Top 100, ICICI Prudential Bluechip Fund and Kotak Standard Multicap Fund are overweight on Oil & Gas and Energy sector as compared to Nifty 50

index. Funds like Axis Focused 25 Fund and ICICI Prudential Bluechip Fund are overweight on Auto and Auto Ancillaries as compared to Nifty 50 index.

Except Axis Focused 25 Fund all the other funds (mentioned above) are underweight on Banking & Finance sector as compared to Nifty 50 index.

Sectoral Indices Performance

Indices 3 Mths 6 Mths 1 Yr 2 Yrs 3 Yrs 5 Yrs

S&P BSE IT 8.82 15.86 19.87 29.95 12.79 13.19

S&P BSE HC 4.39 -0.48 1.51 -2.19 -2.67 5.95

S&P BSE FMCG 2.60 6.79 4.06 11.77 15.17 11.70

S&P BSE Bankex 10.30 19.55 16.32 14.68 20.34 17.77

S&P BSE CG 5.32 5.01 -7.74 0.46 10.94 8.27

S&P BSE AUTO 3.07 -4.21 -27.07 -9.04 0.66 7.09

S&P BSE METAL 6.46 -9.37 -19.36 0.92 13.08 2.90

S&P BSE Oil & Gas 14.77 18.02 6.43 3.07 17.95 9.97

S&P BSE Realty 13.83 20.57 -17.35 2.17 13.96 7.53

S&P BSE Sensex 9.67 15.17 11.01 14.18 15.07 11.72

______________________________________________________________________

37

Top 10 Stocks Allocation (%) of Large/Multi Cap Funds Compared to Nifty 50 Index

Portfolio as of 29 March 2019. Source: Nifty 50 Index - www.nseindia.com

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

Amongst the above funds, Kotak Standard Multicap Fund, HDFC Top 100 Fund and ICICI Prudential Bluechip Fund have higher

allocation to top Banking stocks. It can be seen that amongst the top stock allocation, other funds are also holding higher allocation to

Banking sector stocks.

Kotak Standard Multicap Fund, Reliance Large Cap Fund and HDFC Top 100 Fund are overweight on Larsen & Toubro Ltd whereas,

ICICI Prudential Bluechip Fund is underweight on it as compared to Nifty 50 index. Axis Focused 25 Fund has no exposure in Larsen &

Toubro Ltd.

ICICI Prudential Bluechip Fund and Kotak Standard Multicap Fund are underweight on Kotak Mahindra Bank Ltd whereas, HDFC Top

100 Fund and Reliance Large Cap Fund has no exposure in it. Axis Focused 25 Fund is overweight on Kotak Mahindra Bank Ltd.

All the above funds are underweight or having no exposure in stocks like HDFC Banks Ltd, Reliance Industries Ltd, HDFC Ltd and ITC

Ltd as compared to Nifty 50 index.

Stocks Axis Focused

25 Fund

Reliance

Large Cap

Fund

ICICI Prudential

Bluechip Fund

Kotak

Standard

Multicap

Fund

HDFC Top 100

Fund

Nifty 50

Index

HDFC Bank Ltd. 7.27 6.54 7.17 7.10 7.34 10.67

Reliance Industries Ltd. 0.00 0.00 2.47 7.14 8.45 9.98

Housing Development Finance Corporation Ltd. 6.36 0.00 3.86 1.48 2.42 6.94

Infosys Ltd. 0.00 4.66 4.86 4.28 7.28 6.04

ICICI Bank Ltd. 3.30 4.55 6.31 6.47 8.72 5.52

I T C Ltd. 0.00 4.67 4.00 2.43 4.52 5.45

Tata Consultancy Services Ltd. 7.61 1.41 0.27 3.35 3.91 4.50

Kotak Mahindra Bank Ltd. 7.81 0.00 1.26 2.24 0.00 3.81

Larsen & Toubro Ltd. 0.00 6.51 3.15 4.64 6.05 3.66

Axis Bank Ltd. 0.00 6.39 3.84 5.63 3.91 3.25

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38

Recommended Equity MF’s: Asset Allocation & Market Capitalization

Portfolio as of 29 March 2019. Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

Most of the multicap funds continue to remain fully invested into equities except fund like ICICI Prudential Multicap Fund which has

around 8% exposure in Debt & Cash in the portfolio as of March 2019.

Most of the equity funds (mentioned above) have witnessed marginal decrease in exposure to equities during the month of March 2019.

Sundaram Large and Mid Cap Fund and SBI Magnum Multi Cap Fund have exposure of around 41% and 36% respectively to mid &

small cap stocks, whereas, ICICI Prudential Multicap Fund has relatively lower exposure of around 19% to mid & small cap stocks.

______________________________________________________________________

39

Risk – Return Matrix of Large Cap & Multi Cap Oriented Equity Funds

Invesco India Contra Fund and HDFC Capital

Builder Value Fund are the best funds in terms

of risk to return matrix in the Multi Cap

category.

HDFC Top 100 Fund and Kotak Standard

Multicap Fund from large cap category have

been able to balance the risk to reward over

the last 3 years period.

In terms of corpus size, Kotak Standard

Multicap Fund is the largest large cap

recommended fund (mentioned in the graph)

with the corpus size of around Rs.23,881 Crs.

(as on March 2019).

Bubble chart displays the positioning of the

schemes‟ on risk (standard deviation) and

return parameters. The size of the bubble

indicates the corpus of the schemes. Funds

closer to X-Axis and away from Y-axis have

better risk adjusted returns.

Data – Rolling Returns.(3 Years, 3 Months) as

on 30 April 2019.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

______________________________________________________________________

40

Performance of Mid/Small Cap Oriented Funds

The Mid Cap oriented recommended funds have outperformed not only the Mid Cap Index but also the broader indices like

Nifty 500 index and Nifty 50 index over the longer period of 5 years.

Over the last 3 years, the recommended mid cap oriented funds have outperformed the Nifty Midcap 100 index. The

recommended funds delivered an average returns of around 14% (CAGR) against the Nifty Midcap 100 index which delivered

close to 10% (CAGR) returns.

Currently, the mid/small cap indices are trading at similar valuations to large cap indices and are expected to remain volatile

over the near term, however, the mid/small cap indices are expected to perform better over longer period.

Returns (%) as on 30 April 2019. Returns are absolute for < = 1year and CAGR for > 1 year.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

______________________________________________________________________

41

Invest in Balanced / Hybrid Funds for diversification

Scheme Name YTM

(%)*

Average*

Maturity

(years)

Modified*

Duration

(years)

1 Y % 3 Y % 5 Y %

HDFC Balanced Advantage Fund - Growth 9.60 3.00 2.40 11.57 15.98 15.41

Sundaram Equity Hybrid Fund - Reg - Growth 8.76 2.01 1.73 9.52 14.61 10.96

Aditya Birla Sun Life Equity Hybrid 95 Fund -

Growth 9.31 2.31 1.63 3.16 11.81 14.18

L&T Hybrid Equity Fund - Reg - Growth 8.37 3.57 2.66 2.13 11.24 14.57

ICICI Prudential Balanced Advantage Fund -

Reg - Growth 8.70 1.01 0.80 6.72 11.87 12.06

ICICI Prudential Equity & Debt Fund - Growth 8.91 1.86 1.46 7.63 15.22 15.23

SBI Equity Hybrid Fund - Growth 8.24 3.03 2.17 9.37 12.92 15.40

HDFC Hybrid Equity Fund - Growth 8.10 3.05 2.38 7.16 14.27 16.17

NIFTY 50 Hybrid Composite Debt 65:35

Index -- -- -- 13.14 13.65 11.77

The primary investment objective of Balanced / Hybrid funds is to invest in equities which broadly remains in the range of 65% to 80%, while the balance is

invested in debt securities.

During the bull run, the funds might underperform the pure equity diversified funds as these funds tend to have some exposure into debt instruments. The

funds maintain a balance between equity and debt investment and thereby help in reducing the overall risk of the portfolio as compared to equity funds.

In general, the equity investment strategy can be an active management strategy across market capitalization. The debt investment strategy can be across

fixed income securities including G-secs. Certain funds dynamically manages the equity and debt exposure. The debt portfolio helps the funds during the fall

in equity market and reduces the overall beta of the portfolio. Also, the bond portfolio is expected to generate capital gains in a falling interest rate scenario.

The recommended balanced / hybrid funds have outperformed Nifty 50 index and NIFTY 50 Hybrid Composite Debt 65:35 index over the last 5 years period.

The recommended balanced funds on an average have delivered around 14% returns over the past 5 years, whereas both Nifty 50 and NIFTY 50 Hybrid

Composite Debt 65:35 indices have delivered average returns of around 12% each during the same period.

Balanced / Hybrid funds are subject to equity taxation.

*Portfolio data as on 28 February 2019. Returns (%) as on 30 April 2019. Returns are absolute for < = 1year and CAGR for > 1 year.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

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42

Arbitrage Funds: Introduction and Advantages

Buying the securities in one market and selling the same in another market simultaneously to take advantage of

a temporary price differential is called arbitrage.

E.g. Assume stock price of ABC Ltd is at Rs.190/‐ in the cash

market. This stock is also traded in the derivatives segment,

where its future price is Rs.197/‐ In such a case, one can

make a risk‐free profit by selling a futures contract of ABC Ltd

at Rs.197/‐ and simultaneously buy an equivalent number of

shares in the equity market at Rs190/-.

On settlement day, it wouldn‟t matter which direction the stock

price has taken in the interim. Because on the expiry day

(settlement date) the price of equity shares and their futures

tend to converge.

The cash market price converges with the futures price at the end of the month.

Note: The above simulation is for illustration purposes only and should not be constructed as a promise or minimum returns or safeguard of capital.

Source: HDFC Mutual Fund

Advantages:

Generate income through arbitrage opportunities arising out

of pricing mismatch in a security between different markets

or as a result of special situations.

Completely hedged positions, neutralizes market risk

(volatility) and targets absolute returns irrespective of market

conditions.

Enhance portfolio returns using different trading strategies

within derivatives segment.

Balance of safety, returns and liquidity

______________________________________________________________________

43

Equity Savings Fund - Positioned Between MIP & Balance Fund

Key Advantages of Equity Savings Fund:

Introduction:

The Equity Savings funds endeavors to provide moderate volatility and regular income through investment into arbitrage

opportunities and fixed income securities. At the same time, to provide a higher growth potential as compared to an arbitrage

fund or a debt fund, the fund also invests some exposure into equity stocks. Thus, the equity exposure including equity

arbitrage allocation would be more than 65%, hence equity taxation would be applicable.

However, with higher equity allocation, the volatility of these funds are higher as compared to MIP or pure debt

funds.

Tactical Equity Allocation: Potential capital

appreciation through tactical allocation in Equity

Market

Aims at Regular Income: Regular income through

investments in Fixed Income and Arbitrage

Opportunities

Tax Advantage: The Equity Savings fund are

applicable for equity taxation even with moderate

participation in pure equity.

Diversification: The Equity Savings fund have well

diversified portfolio by investing in different asset

classes like Equities, Equity Arbitrage Opportunities,

and Fixed income.

Equity Savings Fund

______________________________________________________________________

44

Recommended Equity Mutual Funds – Performance

Theme Scheme Name SEBI Categorisation 1M 3M 6M 1Y 2Y 3Y

Large Cap, Aggressive HDFC Top 100 Fund - Growth Large Cap Fund 10.13 8.20 9.65 17.11 12.19 18.54

Large Cap, Aggressive Reliance Large Cap Fund - Growth Large Cap Fund 9.10 6.68 8.99 14.23 13.59 17.66

Large Cap, Aggressive Axis Focused 25 Fund - Growth Focused Fund 5.28 1.00 1.49 7.73 13.57 18.20

Large Cap, Conservative ICICI Prudential Bluechip Fund - Growth Large Cap Fund 6.22 4.13 4.12 9.16 10.97 16.16

Large Cap, Conservative Kotak Standard Multicap Fund - Reg - Growth Multi Cap Fund 8.60 6.63 8.38 11.48 11.54 17.90

Multi Cap, Aggressive Invesco India Contra Fund - Growth Contra Fund 8.96 5.46 5.94 8.50 14.10 18.86

Multi Cap, Aggressive ICICI Prudential Multicap Fund - Growth Multi Cap Fund 7.15 4.86 4.18 9.79 8.49 16.00

Multi Cap, Aggressive SBI Large & Midcap Fund - Growth Large & Mid Cap Fund 7.80 4.59 6.88 6.81 10.37 14.87

Multi Cap, Conservative Aditya Birla Sun Life Equity Fund - Growth Multi Cap Fund 7.83 4.20 7.70 6.13 8.40 17.06

Multi Cap, Conservative HDFC Capital Builder Value Fund - Growth Value Fund 9.52 5.88 5.92 6.34 11.07 16.82

Multi Cap, Conservative SBI Magnum Multi Cap Fund - Growth Multi Cap Fund 8.13 6.20 7.58 5.89 10.17 15.18

Multi Cap, Conservative UTI Equity Fund - Growth Multi Cap Fund 6.91 6.24 6.81 12.08 12.29 15.14

Mid Cap, Aggressive HDFC Small Cap Fund - Growth Small cap Fund 9.40 5.57 6.75 0.92 16.44 21.73

Mid Cap, Aggressive L&T Midcap Fund - Reg - Growth Mid Cap Fund 8.34 2.32 4.63 -2.52 8.36 18.71

Mid Cap, Aggressive SBI Focused Equity Fund - Growth Focused Fund 8.68 6.63 10.13 7.85 15.75 16.65

Infra Sector, Aggressive L&T Infrastructure Fund - Reg - Growth Sectoral 8.53 1.82 0.81 -6.46 7.23 17.90

Aggressive Balanced/Hybrid HDFC Balanced Advantage Fund - Growth Dynamic Asset Allocation

or Balanced Advantage 9.42 6.68 9.85 11.57 9.21 15.98

Aggressive Balanced/Hybrid L&T Hybrid Equity Fund - Reg - Growth Aggressive Hybrid Fund 5.94 2.42 3.13 2.13 6.69 11.24

Conservative Balanced/Hybrid ICICI Prudential Balanced Advantage Fund - Reg - Growth Dynamic Asset Allocation

or Balanced Advantage 3.82 2.85 5.71 6.72 8.27 11.87

Conservative Balanced/Hybrid SBI Equity Hybrid Fund - Growth Aggressive Hybrid Fund 6.58 4.96 7.98 9.37 11.37 12.92

Equity Savings Fund Kotak Equity Savings Fund - Reg - Growth Equity Savings 2.26 2.50 3.72 7.55 8.09 9.20

Nifty 50 7.70 6.96 6.31 14.89 12.75 15.23

Nifty Midcap 100 9.19 2.59 6.40 -2.65 3.47 13.76

S&P BSE 200 7.56 5.51 5.93 10.69 11.17 15.39

Nifty Infrastructure 9.95 0.95 8.06 -3.62 2.17 8.70

NIFTY 50 Hybrid Composite Debt 65:35 Index 5.68 5.47 6.95 13.14 11.51 13.65

Returns (%) as on 30 April 2019. Returns are absolute for < = 1year and CAGR for > 1 year.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

______________________________________________________________________

45

Fixed Income Mutual Fund Options

______________________________________________________________________

46

Performance of recommended Long Duration/Dynamic Bond Funds

Please note that returns data for Crisil indces is not available.

Returns (%) as on 30 April 2019. Returns are absolute for < = 1year and CAGR for > 1 year. Portfolio as of 29 March 2019.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

Scheme Name SEBI Categorisation AAA &

Equivalent

Avg. Maturity

(Yrs)

Portfolio

Yield (%)

Returns (%)

3 Mths 6 Mths 1 Year 2 Years 3 Years

Aggressive Funds

IDFC D B F - Reg - Growth Dynamic Bond 100.00% 8.07 8.09 2.05 5.30 8.57 5.07 7.35

ICICI Prudential Long Term Bond Fund - Growth Long Duration Fund 92.18% 11.63 8.24 2.11 5.78 8.79 6.13 7.76

IDFC Bond Fund - Income Plan - Reg - Growth Medium to Long

Duration Fund 100.00% 8.29 8.12 1.94 5.14 8.36 4.80 7.07

Aditya Birla Sun Life Income Fund - Reg - Growth Medium to Long

Duration Fund 96.23% 5.42 7.98 2.04 5.21 8.10 5.23 6.60

Reliance Dynamic Bond Fund - Growth Dynamic Bond 100.00% 10.33 8.01 2.04 4.78 6.64 4.68 6.45

Conservative Funds

Kotak Dynamic Bond Fund - Reg - Growth Dynamic Bond 76.32% 5.55 8.54 2.48 6.18 9.28 7.21 8.36

SBI Dynamic Bond Fund - Growth Dynamic Bond 100.00% 9.92 7.95 2.66 4.96 7.45 5.27 7.70

ICICI Prudential Bond Fund - Growth Medium to Long

Duration Fund 100.00% 4.71 8.19 2.10 4.95 7.06 5.65 6.77

NIFTY Short Duration Debt Index -- -- -- 2.04 4.97 7.86 6.91 7.37

ICRA Composite Bond Fund Index -- -- -- 2.18 5.91 8.96 6.47 7.73

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47

Performance of recommended Short Duration Funds

Please note that returns data for Crisil indces is not available

Returns (%) as on 30 April 2019. Returns are absolute for < = 1year and CAGR for > 1 year. Portfolio as of 29 March 2019.

Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer http://www.icraonline.com/legal/standard-disclaimer.html)

Scheme Name SEBI Categorisation AAA &

Equivalent

Avg.

Maturity

(Yrs)

Portfolio

Yield (%)

Returns (%)

3 Mths 6 Mths 1 Year 2 Years 3 Years

Aggressive Funds

DSP Banking & PSU Debt Fund - Reg - Growth Banking and PSU Fund 100.00% 4.32 7.73 1.96 4.66 7.73 6.46 7.25

HDFC Corporate Bond Fund - Growth Corporate Bond Fund 100.00% 3.81 8.11 2.39 5.31 8.21 7.02 7.80

Kotak Banking and PSU Debt Fund - Reg - Growth Banking and PSU Fund 73.28% 3.92 8.27 2.12 5.20 8.12 6.88 7.61

Reliance Banking & PSU Debt Fund - Reg - Growth Banking and PSU Fund 100.00% 4.25 7.86 2.10 5.05 7.83 6.69 7.34

IDFC Bond Fund - Medium Term Plan - Reg - Growth Medium Duration Fund 100.00% 3.69 7.89 2.02 4.66 7.66 5.94 6.93

ICICI Prudential Banking & PSU Debt Fund - Reg - Growth Banking and PSU Fund 78.93% 3.60 8.30 2.12 4.41 7.02 6.35 7.56

Conservative Funds

HDFC Short Term Debt Fund - Growth Short Duration Fund 93.59% 1.73 9.37 1.97 4.56 7.74 6.95 7.48

Kotak Corporate Bond Fund - Std - Growth Corporate Bond Fund 95.14% 1.09 8.01 2.13 4.70 8.22 7.43 7.93

Aditya Birla Sun Life Corporate Bond Fund - Reg - Growth Corporate Bond Fund 90.68% 2.24 8.24 2.19 5.02 8.38 7.20 7.80

IDFC Bond Fund - Short Term Plan - Reg - Growth Short Duration Fund 100.00% 1.96 7.67 2.15 5.02 7.97 6.62 7.04

Aditya Birla Sun Life Banking & PSU Debt Fund - Reg - Growth Banking and PSU Fund 86.62% 3.23 7.98 1.93 4.58 7.78 6.82 7.71

ICICI Prudential Corporate Bond Fund - Reg - Growth Corporate Bond Fund 100.00% 2.76 8.14 2.26 4.75 7.77 6.82 7.42

SBI Banking and PSU Fund - Growth Banking and PSU Fund 87.25% 3.60 7.93 2.02 4.33 7.57 6.93 7.16

NIFTY Short Duration Debt Index -- -- -- 2.04 4.97 7.86 6.91 7.37

ICRA Composite Bond Fund Index -- -- -- 2.18 5.91 8.96 6.47 7.73

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