Equity Update December 2018

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Bernadette Butler
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1 Market Overview (as on November 30, 2018) Flows Nov-18 Oct-18 Sep-18 FIIs (Net Purchases / Sales) (Rs cr) MFs (Net Purchases / Sales) (Rs cr) Domestic Markets Macro Indicators GDP (YoY%) IIP (YoY%) Crude ($ bbl) Core Sector Growth (YoY%) Trade Deficit ($ mn) 6,223-27,623-9,623 4,896 23,906 11,400 Nov-18 (%) Latest Update 7.1 (2QFY19) 4.5 (Sept) 61.6 (Nov 30) 4.8 (Oct 2018) -17,130 (Oct 2018) (15.8) (1QFY19) 21.7 Current PE 10 Yr Average S&P BSE Sensex NSE Nifty S&P BSE Auto S&P BSE Bankex S&P BSE Capital Goods S&P BSE Consumer Durables S&P BSE FMCG S&P BSE Healthcare (2.7) S&P BSE IT (1.6) S&P BSE Metals (5.5) S&P BSE Mid Cap S&P BSE Oil & Gas (0.0) S&P BSE PSU (3.4) S&P BSE Realty Global Markets Nov-18 (%) Current PE 10 Yr. Avg. US UK (2.1) Japan Hong Kong Singapore China Earnings Growth (%) FY18 FY19E FY20E Sensex Previous Update 8.2 (1QFY19) 4.7 (Aug) 58.4 (Oct 31) 4.3 (Oct 2017) -13,979 (Sept 2018) (13.1) Current Account Deficit ($ bn) (4QFY18) FII Holding in Indian 21.5 Equities (%) # (1QFY19) (4QFY18) Note: # FII hldg includes ADR/GDR (BSE500 Index); Data Source: Crisil Research; * Data till Nov 30, 2018; CAD:Current Account Deficit; GDP: Gross Domestic Product, IIP: FII: Foreign Institutional Investors; MF-Mutual Fund Global Market Update US Economy: The US Federal Reserve (Fed) kept interest rates steady in its monetary policy statement at the start of the month and signaled that it would continue to move the rates up at a gradual pace in the coming months. The US Commerce Department s second estimate of third-quarter GDP growth, meanwhile, reiterated that the US economy expanded by an annualised 3.5% in Q3 compared with 4.2% growth in GDP in Q2. This was in line with its earlier estimate released in October. European Union: European Central Bank (ECB) President Mario Draghi said the Eurozone's gradual economic slowdown is normal and temporary to some extent, and underlying inflation is expected to rise in the coming months. The region s inflation rate rose 2.2% on-year in October after a 2.1% increase in September, driven mainly by higher energy prices. UK: The UK s GDP grew at an annualised 1.5% in Q3 compared with 1.2% growth in Q2, clocking its fastest quarterly growth rate in two years. The Bank of England (BoE) voted unanimously to hold rates at 0.75% and hinted that a smooth Brexit could quicken the bank's rate-hiking cycle. Japan: Japan s economy contracted 1.2% on an annualised basis in Q3 following a 3% jump in the previous quarter, owing largely to natural disasters such as a devastating typhoon and earthquake, and declining exports. Emerging Markets: The People s Bank of China stated in its quarterly monetary policy report that it would preemptively adjust and fine-tune policies according to the changing conditions given that external conditions are undergoing profound changes and downward pressures are increasing. Source: CRISIL Research Indian Market Update Index Performance: Indian equity indices entered positive territory in November 2018 after two months of consecutive fall. Benchmarks S&P BSE Sensex and Nifty 50 rose around 5% each in November 2018 owing to several positive domestic and global cues. Domestic Developments: Key market drivers were strengthening of the rupee against the dollar and encouraging quarterly earnings of some index heavyweights. Optimism ahead of the outcome of the RBI s board meeting also supported the local indices. Meanwhile, in its board meet, the RBI agreed to ease liquidity for the financial sector and increase credit to small businesses. Reports of the government likely to infuse Rs 420 billion in the state-owned banks by March-end also aided the local indices. Global Developments: Globally, easing of crude oil prices amid oversupply worries and rising hopes of a trade deal between the US and China also augured well for the local indices. More gains were seen after Fed Chair Jerome Powell said that US interest

rates are close to neutral, which was perceived by investors as dovish. Sectoral Impact: Most of the S&P BSE sectoral indices ended higher in November 2018.

2 rates are close to neutral, which was perceived by investors as dovish. Sectoral Impact: Most of the S&P BSE sectoral indices ended higher in November Consumer durables, realty, finance and banking stocks witnessed massive buying interest. S&P BSE Consumer Durables index, S&P BSE Realty index, S&P BSE Finance index, and S&P BSE Bankex index rose 7.23%, 6.66%, 6.58% and 5.60%, respectively. S&P BSE FMCG index gained 4.67% on buying in the defensive counters amid intermittent market volatility. Metal stocks ended lower as prices fell globally on weak demand in China; S&P BSE Metal index was the top laggard plunging 5.53%. IT and pharma stocks witnessed heavy selling pressure amid rupee s gains against the dollar, S&P IT index lost 1.62% while S&P BSE Healthcare index dropped 2.67%. Source: NSE, BSE; Crisil Research Market Outlook and Triggers Equities markets regained their vigour in November 2018 with the broader indices rising by about 5 per cent during the month. The unexpected fall in crude prices helped the rupee stabilise and led to higher FPI flows lending strength to the markets. The S&P BSE Sensex and Nifty 50 rose by about 5.1% and 4.7% respectively. Lower-than-expected GDP numbers for the July-Sept 2018 quarter at 7.1% dented market sentiments a bit but they recovered as oil dropped to below USD 60/bbl towards the end of the month. After the heavy declines seen in the month of October 2018, markets were buoyant in November on account of the festive season sales, as witnessed in the rise in the consumer durables (7.2%) and auto sector (5.1%) indices. The banking, finance, and energy sectors were also up by over 4% each after sharp declines seen in the previous month. However, lower oil prices and the appreciating rupee turned negative for the IT (-1.6%) and healthcare (-2.7%) which had been soaking in the positive cues of higher crude oil prices and a depressed currency. Foreign investors turned net-buyers at Rs. 5,981 crore, after two months of heavy selling. But they are still net-sellers for the first 11 months of the year at Rs 36,157 crores. If crude oil prices continue to remain subdued, foreign inflows could come under further pressure. While markets recovered in November, we believe that it would look for cues from volatility in crude oil prices, upcoming state & central elections, and the widening fiscal deficit affecting growth. Further, we believe that any sign of nervousness in the US markets could cause the US Federal Reserve to change its stance on rate hikes which could have a positive effect on Indian equities. For now, the US Fed has indicated at a slowdown in rate hikes. However, even though the US and China have called for a truce in early December at the G20 summit, markets could continue to remain nervous on possibilities of further escalation of trade wars. Domestic institutional investors (DIIs) turning net-sellers of Indian equities could make valuations in the market attractive, an indication that it is an opportune time add more equities into the portfolio. As of November, DIIs have been net-buyers at Rs 800 crore, the 20th straight month of net-buying by DIIs. Given the current scenario, we believe that valuations are moderate and therefore recommend investors to participate in equities through SIPs and STPs. We believe that largecap valuations are reasonable and we would recommend largecap schemes for those looking for pure equity exposure. However, we also believe that there are pockets of opportunities across marketcaps and would recommend investors to consider schemes that invest across the large-, mid-, and small-cap space such as ICICI Prudential Multicap Fund. In the mid- and small-cap segment, we recommend investors to participate through SIPs. Equity Valuation Index Equity valuations show that the market valuations are in the zone where investors are recommended to invest in asset allocation schemes.

3 Equity valuation index is calculated by assigning equal weights to Price to equity (PE), Price to book (PB), G-Sec*PE and Market Cap to Gross Domestic Product (GDP) None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to consult their financial advisors before investing. Our Recommendations Investors may continue with their investments in pure equity schemes. As uncertainty regarding global events and run-up to the elections cannot be ruled out, we believe market could be volatile in the near-term. Hence, for new investors we recommend investing in asset allocation schemes. Investors looking for long-term exposure could consider investing systematically in small and midcap schemes. Investors looking for tactical allocation could invest in thematic schemes encompassing export and services, pharma, and manufacturing sectors. Our Recommendations Equity Schemes Pure Equity Schemes Long-Term SIP Schemes Asset Allocation Schemes Thematic/Sectoral schemes ICICI Prudential Bluechip Fund (An open ended equity scheme predominantly investing in large cap stocks) ICICI Prudential Multicap Fund (An open ended equity scheme investing across large cap, mid cap and small cap stocks) ICICI Prudential Value Discovery Fund (An open ended equity scheme following a value investment strategy) ICICI Prudential Smallcap Fund (An open ended equity scheme predominantly investing in small cap stocks) ICICI Prudential Midcap Fund (An open ended equity scheme predominantly investing in mid cap stocks) ICICI Prudential Large & Mid Cap Fund (An open ended equity scheme investing in both large cap and mid cap stocks) ICICI Prudential Balanced Advantage Fund (An open ended dynamic asset allocation fund) ICICI Prudential Equity & Debt Fund (An open ended hybrid scheme investing predominantly in equity and equity related instruments) ICICI Prudential Multi-Asset Fund (An open ended scheme investing in Equity, Debt, Gold/Gold ETF/units of REITs & InvITs and such other asset classes as may be permitted from time to time) ICICI Prudential Equity Savings Fund (An open ended scheme investing in equity, arbitrage and debt) ICICI Prudential Regular Savings Fund (An open ended hybrid scheme investing predominantly in debt instruments) ICICI Prudential Exports and Services Fund (An open ended equity scheme following Exports & Services theme) ICICI Prudential Pharma Healthcare and Diagnostics(P.H.D) Fund (An open ended equity scheme following Pharma, Healthcare, Diagnostic and allied Theme) ICICI Prudential Manufacture In India Fund (An open ended equity Scheme following manufacturing theme) These Schemes aim to generate capital appreciation through participation in equities. These schemes aim to generate long term wealth creation over a full market cycle. These schemes aim to benefit from volatility and can be suitable for investors aiming to participate in equities with low volatility. Investors could invest in this thematic scheme for tactical allocation. It would be a high risk investment option.

Disclaimer & Riskometers ICICI Prudential Bluechip Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme predominantly investing in large cap stocks.

4 Disclaimer & Riskometers ICICI Prudential Bluechip Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme predominantly investing in large cap stocks. ICICI Prudential Large & Mid Cap Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme investing in both largecap and mid cap stocks ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme following a value investment strategy. ICICI Prudential Equity & Debt Fund is suitable for investors who are seeking*: Long term wealth creation solution A balanced fund aiming for long term capital appreciation and current income by investing in equity as well as fixed income securities. ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*: Long term wealth creation solution An equity fund that aims for growth by investing in equity and derivatives. ICICI Prudential Multicap Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme investing across largecap, mid cap and small cap stocks. ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*: Long term wealth creation An Open ended scheme that seeks to generate regular income through investments in fixed income securities, arbitrage and other derivative strategies and aim for long term capital appreciation by investing in equity and equity related instruments.

5 ICICI Prudential Exports and Services Fund is suitable for investors who are seeking*: Long term wealth creation An open-ended equity scheme that aims for growth by predominantly investing in companies belonging to Exports & Services industry. ICICI Prudential Multi-Asset Fund is suitable for investors who are seeking*: Long term wealth creation An open ended scheme investing in at least three asset classes with minimum allocation of 10% to each asset class. ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*: Medium to Long term regular income solution A hybrid fund that aims to generate regular income through investments primarily in debt and money market instruments and long term capital appreciation by investing a portion in equity. ICICI Prudential Pharma Healthcare and Diagnostics(P.H.D) Fund is suitable for investors who are seeking*: Long term wealth creation An equity scheme that predominantly invests in pharma, healthcare, hospitals, diagnostics, wellness and allied companies. ICICI Prudential Midcap Fund is suitable for investors who are seeking*: Long term wealth creation An open-ended equity scheme that aims for capital appreciation by investing in diversified mid cap companies. ICICI Prudential Smallcap Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme that seeks to generate capital appreciation by predominantly investing in equity and equity related securities of small cap companies. ICICI Prudential Manufacture In India Fund is suitable for investors who are seeking*: Long term wealth creation An open ended equity scheme that aims to provide capital appreciation by investing in equity and equity related securities of companies engaged in manufacturing theme Mutual Fund investments are subject to market risks, read all scheme related documents carefully. In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. Information gathered and material used in this document is believed to be from reliable sources. The Fund however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. All recipients of this material should before dealing and or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice and carefully read the scheme information document. We have included statements in this document, which contain words, or phrases such as "will", "expect", "should", "believe" and similar expressions or variations of such expressions that are "forward looking statements". Actual results may differ materially from those

6 suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monitory and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry. All data/information used in the preparation of this material is dated and may or may not be relevant any time after the issuance of this material. The AMC takes no responsibility of updating any data/information in this material from time to time. he AMC (including its affiliates), the Fund and any of its officers directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material.

Equity Update October 2018

Equity Update October 2018 Market Overview (as on September 28, 2018) Flows Sept-18 Aug-18 July-18 FIIs (Net Purchases / Sales) (Rs cr) MFs (Net Purchases / Sales) (Rs cr) Domestic Markets Macro Indicators GDP (YoY%) IIP (YoY%)