Monthly Market Update (India) · Bharti Airtel Ltd 9% Oil & Natural Gas Corp Ltd -15.4% Mahindra & Mahindra Ltd 7% Tata Steel Ltd -7.0% Earnings growth estimates of top weighted stocks:

Monthly Market Update (India) – February2020 |iFAST Research


2020 2019-20 2019

MTD 1Y (%) Return (%)

Asia ex Japan (MSCI Asia ex Japan) -4.47% 2.73% 15.37%

Emerging Markets (MSCI EM) -4.69% 1.18% 15.42%

Europe (Stoxx 600) -1.23% 14.51% 23.16%

Japan (Nikkei 225) -1.91% 11.71% 18.20%

USA (S&P 500) -0.16% 19.28% 28.88%

Brazil (IBOV) -1.63% 16.80% 31.58%

China (HS Mainland 100) -7.94% -5.19% 12.12%

Hong Kong (HSI) -6.66% -5.83% 9.07%

India (SENSEX) -1.29% 12.32% 14.38%

Indonesia (JCI) -5.71% -9.08% 1.70%

Malaysia (KLCI) -3.63% -9.06% -6.02%

Russia (RTSI$) 1.01% 22.04% 28.55%

Singapore (STI) -2.14% -1.14% 5.02%

South Korea (KOSPI) -3.58% -3.89% 7.67%

Taiwan (Taiwan Weighted) -4.18% 15.73% 23.33%

Thailand (SET Index) -4.16% -7.77% 1.02%

*Returns are as at 31 January 2020. Source: Bloomberg, iFAST Compilations All returns are in respective local currency terms and MSCI Index returns are in USD

MARKETS ACROSS THE GLOBE


Trade (December’19)

India’s exports during December 2019 were valued at USD

27.36 billion registering a negative growth of -1.80% in

dollar terms as compared to USD 27.86 billion during the

month of December 2018. Imports during December 2019

were valued at USD 38.61 billion which was 8.83% lower

in dollar terms as compared to imports which were valued

at USD 42.35 billion in December 2018.

For exports, the major commodity groups showing

positive growth over the corresponding month of last year

are Engineering Goods (30.36%), Marine Products (7.84%),

RMG of all Textiles (2.42%) and Drugs & Pharmaceuticals

(13%).

For imports, major commodity groups showing high

changes in December 2019 over the corresponding month

of last year are Transport Equipment (-30.12%), Electronic

Goods (-1.42%) and Petroleum, Crude & Products (-

11.98%). The trade deficit for the month of December

2019 stood at USD 11.45 billion vis-à-vis a deficit of USD

14.49 billion during December 2018.

Industrial Production (November‘19)

IIP was down 1.8% y-o-y in November 19 as compared to

3.8% y-o-y in October 19. The major sectors like Mining,

Manufacturing and Electricity registered year-on-year

contraction rates of 1.7%, 2.7% and -5.0% respectively. As

per Use-based classification, the growth rates in

November 2019 over November 2018 are (-) 0.3 % in

Primary goods, (-) 8.6 % in Capital goods, 17.1 % in

Intermediate goods and (-) 3.5 % in Infrastructure/

Construction Goods. The Consumer durables and

Consumer non-durables have recorded growth of (-) 1.5 %

and 2.0 % respectively.

Markets & Valuations

(As on January 31, 2020)

The benchmark Index (Sensex) was at 40,723.49

Estimated PE & earnings growth for BSE Sensex

Inflation (December’19)

India’s CPI came up at 7.35% during the month of

December 2019 as against 5.54% during the previous

month. Food and Beverages which have a weightage of

54.18% in the CPI basket reported increased in prices by

12.16% in December 19. Within the food and beverages

segment, prices of Cereals increased 4.36%, prices of milk

products increased by 4.22%, vegetable prices increased

60.50% and pulses & products prices increased

15.44%.Housing and Fuel & light prices increased by 4.30%

and 0.70% respectively.

2019-20 2020-21 2021-22

Price/Earnings 22.78 18.40 15.34

Earnings Growth 15.81% 23.77% 19.95%

ECONOMIC INDICATORS


BSE Sensex - Top & bottom performers in January 2020.

Top Performers MTD Bottom Performers MTD

UltraTech Cement Ltd 9% -16.7% IndusInd Bank Ltd

Bharti Airtel Ltd 9% Oil & Natural Gas Corp Ltd -15.4%

Mahindra & Mahindra Ltd 7% Tata Steel Ltd -7.0%

Earnings growth estimates of top weighted stocks:

Stock FY-20 FY-21 FY-22

HDFC Bank Ltd. 17.22% 20.92% 20.28%

Reliance Industries Ltd. 11.47% 33.94% 16.88%

Equity View

In January 2020 we saw the BSE S&P Sensex give a negative return of -1.29%,

declining from last month’s positive return of 1.13%. Markets started the month

with record highs on upbeat economic data and a good start to the earnings

season. India’s industrial output showed growth after three months of

contraction. Market sentiment also received some support from the government

announcing investments worth Rs. 100 lakh crore in roads, railways, airports and

agricultural projects over the next five years to boost slowing economic growth.

The U.S. and China signing a phase one trade deal buoyed sentiment. On the

other hand, the finance minister’s budget for FY 2020-21 did not fulfill investors’

expectations; rise in custom duty in most sectors, marginal relief for income

taxpayers, and less than expected rise in infrastructure spending played on their

minds. The U.S.-Iran tensions dominated market sentiment throughout the

second week, fresh on the heels of the U.S. attack in Iraq killing a top Iranian

military general on January 3, 2020.

We advise our investors to stay invested in large cap funds. Small and midcap

funds are at reasonably lower valuations and one can gain an advantage by

entering at lower prices. Investors should enter the market via STP or SIP route depending on their

risk profile and time horizon.

Source: Bloomberg, iFAST Compilations. All returns are in respective local currency terms

-1.70

-1.29

3.30

7.07

-5 0 5 10

Nifty Index

BSE Sensex

BSE MID CAP

BSE SMALL CAP

Broader Indices (Performance % in January 2020)*

-8.96 -5.57 -3.77 -1.75 -1.40

2.07 2.52 2.56 3.06 3.93 4.54 10.77

-4 -2 0 2 4 6 8 10 12 14

BSE METAL BSE Oil & Gas

BSE Bankex BSE AUTO

BSE Power BSE FMCG

BSE TECK BSE IT

BSE CG BSE-HC BSE CD

BSE Realty

Sectoral Indices (Performance % in January 2020)*

EQUITY MARKET


Fixed Income View

During January 2020, the 10-year G-Sec yield increased from 6.51% at the

beginning of the month to 6.60% by the end of the month. Bond yields rose

during the month under review as concerns over fiscal slippage weighed on

sentiment. However, there were some positives for the markets as well; prices of

10-year G-sec bonds rose on speculations of a fourth round of special open

market operation by the RBI ahead of the federal budget, and a steep fall in

global crude oil prices amid fears about the spread of the coronavirus affecting

global economic growth.

We advise investors to stay invested in ultra short duration, short duration and

corporate bond funds.

6.00

6.20

6.40

6.60

6.80

7.00

7.20

7.40

1-J

an-2

0

3-J

an-2

0

5-J

an-2

0

7-J

an-2

0

9-J

an-2

0

11

-Jan

-20

13

-Jan

-20

15

-Jan

-20

17

-Jan

-20

19

-Jan

-20

21

-Jan

-20

23

-Jan

-20

25

-Jan

-20

27

-Jan

-20

29

-Jan

-20

31

-Jan

-20

10 Year G-sec Yield Curve

DEBT MARKET OUTLOOK


*Source: Bloomberg, iFAST Compilations. All returns are in respective local currency terms

Our View

USA

Economic growth for the US is still holding up at the current juncture, underpinned by

resilient domestic consumption .The robust consumer spending and tight labour market

have helped to offset the weaker manufacturing and business sectors Yet, with the US

economy progressing further into its economic cycle, we expect greater late cycle

headwinds which may weigh on the US labour market Business sentiment has been

fragile (due to the trade conflict) and can remain weak under the political uncertainty

from the general election .This can mount immense stress on household expenditure,

thereby unravelling the domestic consumption that is single handedly buttressing

economic growth. While services PMI improved, manufacturing PMI has dipped. This

signals that the US is still facing external weakness while the domestic economy

remains resilient. Industrial production continues its downtrend, highlighting a

contraction in business activities .It continues to contract due to external weaknesses as

suggested by the manufacturing PMI.US remains unattractive. We maintain our rating

of 2.0 Stars “Unattractive” for the US equity market.

Europe

The downtrend in economic momentum has likely bottomed for Europe but a recovery is expected. It

is likely to be gradual as the larger economies (i e Germany) are still struggling to recover .Germany’s

exposure to China has taken a toll on its economy, with its manufacturing activities deteriorating

drastically across last year .While the export dependent .German economy faces the growing threat of

a recession, its neighbour France and Italy are less exposed and have been more willing to use fiscal

levers .Strong fiscal stimulus is helping the consumption driven France offset impacts of a global

demand slowdown, while Italy aims to boost growth through investment and lower labour taxes We

expect European corporate earnings growth to be lacklustre this year while economic growth slowly

recovers Yet, Europe’s premium valuation is simply not justifiable with such an unimpressive outlook..

At the current juncture, we are maintaining a 2.5 Stars “Neutral” rating for Europe.

Japan

Economic growth in the North Asian region had been hampered in 2019 as headwinds dragged down

exports .This arose due to a combination of slowdown in China’s demand (their biggest trading

partner), the global semiconductor down cycle and uncertainties brought forth by the US China trade

war .However, we believe a rebound in Asian exports is imminent as the global semiconductor

industry goes back to an upcycle and new orders continue to be re directed into existing production

capacity in other Asian economies .The export heavy Asian markets have started to see a rebound in

exports and manufacturing activities over the past few months .We believe this recovery will swing

economic momentum positively and potentially drive corporate earnings higher for North Asian

equities. Business condition for Japanese small, medium and large enterprises continue to fall.

Valuations remained cheap and Japan remains attractive.We maintain our star ratings of the

Japanese market at an “Attractive” rating of 3.5 stars.

-3.40%

-2.87%

-2.02%

-1.91%

-1.15%

-0.16%

1.33%

-4% -2% 0% 2%

UK (FTSE 100)

France (CAC-40)

Germany (DAX)

Japan (Nikkei 225)

Italy (FTSE MIB)

USA (S&P 500)

Canada (S&P/TSX)

G7 Countries - Performance in January 2020*

GLOBAL MARKET UPDATE – GROUP 7 COUNTRIES



Our View

Asia ex Japan

The recovery in the global semiconductor cycle and recent positive developments in

trade talks are two key drivers for a rebound in economic growth among SEA

economies .Prior weakness in exports and manufacturing have gradually recovered

over the past few months .SEA economies are also primed to be one of the biggest

beneficiaries of the trade war .With the US China trade war expected to persist in a

truce, firms have started to relocate production lines to South East Asian economies,

where cost of land and labour are lower .We expect the influx of foreign investment

dollars to continue accelerating, especially as the infrastructure within the region

gradually improve .Valuation for ASEAN equities are still attractive and earnings outlook

is progressively more optimistic as several positive earnings catalysts materialise. We

maintain a 4.5 Stars “Very Attractive” rating.

-6.66%

-5.71%

-4.18%

-4.16%

-3.63%

-3.58%

-2.14%

4.98%

-8% -6% -4% -2% 0% 2% 4% 6%

Hong Kong (HSI)

Indonesia (JCI)

Taiwan (Taiwan Weighted)

Thailand (SET Index)

Malaysia (KLCI)

South Korea (KOSPI)

Singapore (STI)

Australia (S&P/ASX 200)

Asia Pacific (Ex Japan) - Performance in January 2020*

GLOBAL MARKET UPDATE – ASIA PACIFIC (Ex-JAPAN)


GLOBAL MARKET UPDATE – BRIC (Ex-India)


Our View

China

While China’s GDP growth has slipped amid domestic and external challenges,

we think investors are overly pessimistic about the economy .Looking ahead,

the economy has already started to improve with the series of supportive fiscal

and monetary policies from the central government .Several leading indicators

have bottomed and rebounded in recent months, pointing to a possible

recovery in economic activity, despite the ongoing Coronavirus .While external

demand gradually recovers, domestic demand continues to display robust signs

of resiliency .With economic growth expected to hold up ahead, corporate

earnings in China are set to expand at a robust double digit pace in the next

two years. We maintain for China A-‘4.0 stars’, China H-‘4.5 stars’ “Very Attractive”.

-7.94%

-2.06%

-1.63%

-10% -8% -6% -4% -2% 0%

China (HS Mainland 100)

Russia (RTSI$)

Brazil (IBOV)

BRIC (Ex-India) - Performance in January 2020*


Fund Category Returns (As on January 2020 end)

1 Month 1 Year

Equity: Large Cap -0.29 12.42

Equity: Multi Cap 1.31 12.88

Equity: Mid Cap 5.51 13.91

Equity: Small Cap 7.48 11.71

Equity: ELSS 0.95 11.71

Equity: Index -0.94 10.04

Hybrid: Aggressive Hybrid Funds 0.73 10.36

Hybrid: Conservative Hybrid Fund 0.25 6.87

Debt: Gilt 0.34 11.16

Debt: Medium to Long Duration Fund 0.11 7.76

Debt: Short Duration Fund 0.57 4.36

Debt: Ultra Short Duration Fund 0.36 6.84

Debt: Liquid 0.42 6.22

Other: FOF Overseas -1.68 12.36

Solution Oriented Fund 0.83 9.96

Source: NAV India, iFAST Compilations

FUND CATEGORY RETURNS


Top and Bottom Performing Equity Funds on our Platform as on 31st January 2020

Large Cap Funds Multi Cap Funds

Scheme 1 Month 1 Year Scheme 1 Month 1 Year

Canara Robeco Bluechip Equity Fund (G) 1.36 17.36 Invesco India Multicap Fund (G) 4.55 13.19

Edelweiss Large Cap Fund (G) 1.04 13.68 UTI-Equity Fund (G) 3.46 17.53

Indiabulls Bluechip Fund (G) -1.73 11.68 ICICI Pru Multicap Fund - (G) -0.25 8.38

HDFC Top 100 Fund (G) -2.78 4.35 HDFC Equity Fund - (G) -1.93 4.79

Mid Cap Funds ELSS Funds


SBI Magnum Midcap Fund (G) 8.04 10.81 BOI AXA Tax Advantage Fund (G) 3.55 23.67

Tata Mid Cap Growth Fund - (G) 6.91 18.87 Kotak Tax Saver Fund (G) 3.38 17.98

Franklin India Prima Fund - (G) 3.10 9.19 Nippon India Tax Saver (ELSS) Fund - (G) -1.66 4.50

Mirae Asset Midcap Fund (G) 2.48 0.00 HDFC Tax Saver Fund (G) -1.86 2.92

Small Cap Funds

Scheme 1 Month 1 Year

BOI AXA Small Cap Fund (G) 10.70 17.07

Canara Robeco Small Cap Fund - Regular (G) 10.17 0.00

HDFC Small Cap Fund (G) 4.52 -3.22

L&T Emerging Businesses Fund (G) 3.50 0.15


TOP & BOTTOM EQUITY FUNDS


Top and Bottom Performing Debt and Hybrid Funds on our Platform as on 31st January 2020

Aggressive Hybrid Funds Conservative Hybrid Funds


BOI AXA Mid & Small Cap Equity & Debt Fund (G) 6.83 6.65 DSP Regular Savings Fund (G) 1.19 9.55

DSP Equity & Bond Fund - (G) 2.60 19.26 Canara Robeco Conservative Hybrid Fund (G) 1.07 11.38

ICICI Pru Equity & Debt Fund - (G) -1.09 9.80 UTI-Regular Savings Fund (G) -1.52 1.50

JM Equity Hybrid Fund - (G) -1.57 -9.42 Nippon India Hybrid Bond Fund (G) -3.93 -1.90

Medium to Long Duration Funds Gilt


SBI Magnum Income Fund - (G) 0.82 12.40 HDFC Gilt Fund (G) 0.56 8.68

Tata Income Fund - (Growth) 0.64 9.69 IDFC GSF Constant Maturity Plan (G) 0.52 14.93

Nippon India Income Fund - (G) 0.22 11.76 Edelweiss Govt Securities Fund (G) 0.08 10.77

UTI-Bond Fund (G) -4.50 -8.01 IDBI Gilt Fund (G) 0.08 7.65

Short Duration Funds


Edelweiss Short Term Fund (G) 1.01 -0.88

BNP Paribas Short Term Fund - Regular (G) 0.95 7.47

PGIM India Short Maturity Fund (G) 0.13 -1.10

Franklin India Short Term Income (G) -3.39 -0.06


TOP & BOTTOM DEBT and HYBRID FUNDS


Top and Bottom Performing Other Funds on our Platform as on 31st January 2020

FOF Overseas Funds


Motilal Oswal Nasdaq 100 FOF - Regular (G) 5.09 33.42

PGIM India GEO Fund (G) 4.45 22.29

Franklin India Feeder - FEG Fund (G) -6.60 -1.51

HSBC Brazil Fund (G) -8.03 -3.28

Top and Bottom Performing Solution Oriented Funds on our Platform as on 31st January 2020

Solution Oriented Funds


UTI-CCF Investment Plan - (G) 1.81 11.55

AXIS Retirement Savings Fund - AP - Reg (G) 1.70 0.00

Nippon India Retirement Fund-IG (G) -0.25 9.13

Nippon India Retirement Fund-WC (G) -0.95 7.14


TOP & BOTTOM OTHER & SOLUTION ORIENTED FUNDS


DISCLAIMER: THIS REPORT IS NOT TO BE CONSTRUED AS AN OFFER OR SOLICITATION FOR THE SUBSCRIPTION, PURCHASE OR SALE OF ANY MUTUAL FUND. ANY ADVICE HEREIN IS MADE

ON A GENERAL BASIS AND DOES NOT TAKE INTO ACCOUNT THE SPECIFIC INVESTMENT OBJECTIVE OF THE SPECIFIC PERSON OR GROUP OF PERSONS. PAST PERFORMANCE AND ANY

FORECAST IS NOT NECESSARILY INDICATIVE OF THE FUTURE OR LIKE PERFORMANCE OF THE MUTUAL FUND. THE VALUE OF UNITS AND THE INCOME FROM THEM MAY FALL AS WELL AS

RISE. OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

Documents

Monthly Market Update (India) · Bharti Airtel Ltd 9% Oil & Natural Gas Corp Ltd -15.4% Mahindra & Mahindra Ltd 7% Tata Steel Ltd -7.0% Earnings growth estimates of top weighted stocks: