Monthly Market Update (India) October 2016 ifast Research

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2 MARKETS ACROSS THE GLOBE P/E P/E P/E Earnings Growth Earnings Growth MTD YTD Return (%) Yr 206 Yr 207 Yr (%) 207 (%) Asia ex Japan (MSCI Asia ex Japan).42% 0.20% -.30% % 2.20% Emerging Markets (MSCI EM).09% 3.77% -7.00% % 4.30% Europe (Stoxx 600) -0.8% -6.26% 6.80% % 2.70% Japan (Nikkei 225) -2.59% -.30% 9.0% % 6.20% USA (S&P 500) -0.2% 6.08% -0.70% % 3.50% Australia (S&P/ASX 200) 0.05% 2.64% -2.0% % 9.00% Brazil (IBOV) 0.80% 34.64% -3.30% % 2.50% China (HS Mainland 00) 0.3% 3.7% -0.60% %.90% Hong Kong (HSI).39% 6.3% -7.20% % 9.70% India (SENSEX) -2.06% 6.69% -5.00% % 8.00% Indonesia (JCI) -0.40% 6.80% -2.0% % 7.70% Malaysia (KLCI) -.52% -2.36% -3.90% % 8.00% Russia (RTSI$) 4.28% 30.89% -4.30% % 5.0% Singapore (STI).73% -0.46% -4.30% % 4.50% South Korea (KOSPI) 0.44% 4.20% 2.40% % 3.50% Taiwan (Taiwan Weighted).08% 9.94% -0.40% % 9.90% Technology Heavy (NASDAQ 00) 2.9% 6.5% 8.40% % 3.80% Thailand (SET Index) -4.2% 5.5% -4.00% % 2.0% *Returns are as at 30 September 206. Source: Bloomberg, ifast Compilations All returns are in respective local currency terms and MSCI Index returns are in USD

3 ECONOMIC INDICATORS Trade (August 6) India s exports recorded a negative growth of 0.30% year-on-year to USD 2.52 billion. Imports also continued to contract by and to USD 29.9 billion as against USD in August 205. Overall trade deficit for August is estimated at USD 3. billion which is -63.6% lower in USD terms than the USD 36.0 billion in August 205. Industrial Production (July 6) The Index of Industrial Production (IIP) contracted by - 2.4% year-on-year in July 206, as compared to the level in the month of July 205. Growth rates in major sectors like mining, manufacturing and electricity were at 0.8%, -3.4% and.6% respectively on a year-on-year basis. On a use-based classification, the growth rates of basic goods, capital goods and intermediate goods were at 2%, -29.6% and 3.4% respectively Price/Earnings Earnings Growth 5.39% 20.40% 2.38% Markets & Valuations (As on September 30, 206) The benchmark Index (Sensex) was at 27, Estimated PE & earnings growth for BSE Sensex Inflation (August 6) - CPI (Consumer Prices): stood at 5.05% y-o-y in August 206, as against 6.07% y-o-y in July 6. - Food inflation, which was the key driver for the recent upward movement in CPI, has actually cooled down to 5.83% in August from 7.96% in July 206. The sharp decline was led mainly by a low inflation rate of vegetables, which saw a sharp decline to.02% from 4.06% in the previous month. - Fuel inflation declined further to 2.49% from 2.75% in the previous month. WPI (Wholesale Prices): increased by 3.74% year-onyear in August 206, as compared to a 3.55% increase in July Higher WPI was led by higher inflation in the fuel and power component, which grew by.62%, up from a -% decline in July The inflation of manufactured products also rose to 2.42% in August 206, up from.82% in July 206.

4 BSE Sensex - Top & bottom performers in September206. (As on Sep. 30, 206) Top Performers MTD Bottom Performers MTD Oil & Natural Gas Corp Ltd 8.52% Axis Bank Ltd -9.2% Maruti Suzuki India Ltd 8.32% ITC Ltd -7.3% Reliance Industries Ltd 5.5% NTPC Ltd -6.40% Earnings growth estimates of top weighted stocks: EQUITY MARKET Stock FY-7 FY-8 FY-9 HDFC Bank Ltd. 5.08% 22.20% 24.36% Housing Development Finance Corp Ltd -0.8% 20.44% -2.59% global desk reiterates that the exact timing of the Fed s move is difficult to ascertain given their data-dependent guidance, and that the trajectory of interest rate normalisation remains gradual and paced-out.going forward, the market participants would be keeping a watch on the India and Pakistan tensions, the second quarter results of India Inc.,the FED rate hike and the US presidential elections. From the valuations point of view, although the current PE is stretched, we continue to maintain our view that the forward PE looks attractive. Hence, investors should consider entering equity markets with an outlook of 5 years. Our View The Indian benchmark that is Sensex ended lower by -2.06%, mainly on account of mixed news throughout the month. On the domestic front, macro-economic indicators like the cooling of the Consumer Price Index (CPI) and the narrowing of the Current Account Deficit (CAD) were the positive triggers for the market. On the other hand, the market nosedived the most on the day when the Indian Army carried out surgical strikes along the LOC. This escalated tensions between India and Pakistan which lead to panic selling in the market towards the end of the month. On the global front, the FED kept the policy rate unchanged, however, Yellen hinted that the economic data in the US has started showing improvement. The cooling of inflation saw the newly appointed 6 member Monetary Policy Committee (MPC) members go in for a 25 bps cut in the repo rate during the monetary policy review held in the first week of October. A quick glance through the document showed a Central Bank overly concerned about getting the economy back on the growth trajectory, which means that we can expect further rate cuts if the inflation gets into the comfort zone of RBI. As far as the US FED policy is concerned,our Broader Indices (Performance in September 206)* BSE Sensex -2.06% Nifty Index BSE MID CAP BSE SMALL CAP -.99% -0.38%.04% -3% -2% -2% -% -% 0% % % 2% Sectoral Indices (Performance in September 206)* BSE Power -5.9% BSE CG -4.4% BSE FMCG -4.0% BSE Bankex BSE TECK BSE IT BSE Realty BSE METAL BSE-HC BSE CD BSE AUTO BSE Oil & Gas -2.70% -2.3% -2.0% -.94% -.77% 0.2% 0.5%.02% 2.75% -6% -4% -2% 0% 2% 4% *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms

5 -Sep-6 3-Sep-6 5-Sep-6 7-Sep-6 9-Sep-6 -Sep-6 3-Sep-6 5-Sep-6 7-Sep-6 9-Sep-6 2-Sep-6 23-Sep-6 25-Sep-6 27-Sep-6 29-Sep Sep -6 DEBT MARKET OUTLOOK Our view The 0 year G-Sec which started the month at 7.2% over the period of 30 days, ended the month at 6.82%.The market participants were initially worried about the outcome of the US policy meet; and the concerns on inflation continued as it would have an impact on the easing of the monetary policy stance. However, Yellen s decision to maintain status quo on the FED rate along with the cooling of inflation, boosted the sentiments in the market Year G-sec Yield Curve The first monetary policy meet after Dr.Rajan s exit has given the market participants the confidence that RBI will be more accommodative in its monetary policy stance. This was the first monetary policy meet after the formation of the Monetary Policy Committee (MPC) and all the six members had unanimously voted in favour of a rate cut which was a big relief to the markets. The MPC had clearly stated in the policy document that the decision to follow an accommodative monetary policy stance is consistent with the objective of achieving of CPI at 5% by Q4 of 206-7;and the medium target is 4% within a band of +/-2% while supporting growth. The emphasis that the MPC has given to growth along with controlling inflation means that we can expect further rate cuts in the current fiscal. However, we would like to read the minutes of the MPC s meeting which is expected to be released on October 8th, as this should be able to throw light on the thought process of this eminent committee of veterans regarding the direction of the monetary policy We continue to maintain our stand on our recommendations on funds from the fixed income space.

6 GLOBAL MARKET UPDATE GROUP 7 COUNTRIES Italy (FTSE MIB) Japan (Nikkei 225) Germany (DAX) USA (S&P 500) France (CAC-40) Canada (S&P/TSX) UK (FTSE 00) *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms Our View G7 Countries - Performance in September206* -3.20% -2.59% -0.77% -0.2% Earnings estimates for American companies (as represented by the S&P 500 Index) on aggregate saw little changes over the month with 206 s estimated earnings revised -0.3% lower while 207 s estimated earnings were lowered - 0.2% (as of 26 September 206). In the Federal Open Market Committee s (FOMC) September s meeting, the Federal Reserve held benchmark interest rates unchanged (at 0.25% %), which is a move largely expected by the consensus. We reiterate that the exact timing of the Fed s move is difficult to ascertain given their data-dependent guidance, and that the trajectory of interest rate normalisation remains gradual and paced-out. We maintain a 2.0 Stars Unattractive rating we advocate investors to underweight the US in their portfolios and to consider adopting defensive strategies like equity long short funds in their US equity exposure. 0.23% 0.92%.74% -4% -2% 0% 2% European companies on aggregate (as represented by the benchmark Stoxx 600 Index) saw minor changes to their earnings estimates month-to-date, with 206 s estimated earnings upgraded 0.2% higher while 207 s estimated earnings was lowered by -0.% (as of 27 September 206). We maintain our 2.5 Stars Neutral rating on the European market at this juncture. Earnings of Japanese equities are expected to increase by 7.5% in FY 207 and 6.3% in FY 208. Thus, we maintain our star ratings of the Japanese equities at an Attractive rating of 3.5. USA Unemployment rate remained at 4.9% in Aug 6 Nonfarm payrolls rose by 5,000 in Aug 6, after an upward-revised 275,000 increase in Jul 6 Industrial production rose 0.7% m-o-m in Jul 6, after a downward-revised 0.4% m-o-m increase in Jun 6 ISM Manufacturing PMI came in at 49.4 in Aug 6, down from 52.6 in Jul 6 ISM Non-Manufacturing composite came in at 5.4 in Aug 6, down from a 55.5 reading in Jul 6 EUROPE Advance Eurozone PMI composite at 52.6 in Sep 6, down from a finalised 52.9 reading in Aug 6 Adv Consumer Confidence rose to -8.2 in Sep 6 from a -8.5 reading in Aug 6 Retail sales rose 2.9% y-o-y in Jul 6, from an upward-revised.7% growth rate in Jun 6 ZEW survey (expectations) rose to 5.4 in Sep 6, up from 4.6 in Aug 6 Sentix Investor Confidence rose to 5.6 in Sep 6, up from 4.2 in Aug 6 JAPAN Consumer Confidence Index increased to 42.0 in Aug, up from 4.3 in Jul Sep Manufacturing PMI s preliminary figure rose slightly to 50.3, above 50 neutral-level, up from 49.5 in Aug,

7 *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms Our View On current estimates (as of 26 September 206), the Singapore equity market trades at estimated PE ratios of 3.6X and 3.0X for 206 and 207 respectively, representing a significant discount to our fair PE estimate of 6.0X for the Singapore market. We think a 4.0 Stars Very Attractive rating on the Singapore equity market continues to be warranted at this juncture. As for Indonesia, various fiscal initiatives implemented by the Indonesian government, along with pro-growth monetary policy measures, are likely to be positive for economic growth and supportive of corporate earnings. As of 26 September 206, the Indonesian equity market, as represented by the JCI Index, was trading at a PE ratio of 7.6X, significantly higher as compared to our fair PE estimate of 4.0X. As such, we maintain our 2.5 Stars Neutral rating for Indonesia equities. GLOBAL MARKET UPDATE ASIA PACIFIC (Ex-JAPAN) Thailand (SET Index) Malaysia (KLCI) Indonesia (JCI) Australia (S&P/ASX 200) South Korea (KOSPI) Taiwan (Taiwan Weighted) Hong Kong (HSI) Singapore (STI) Asia Pacific (Ex Japan) - Performance in September 206* -4.2% The Hong Kong equity market is currently trading at 2.7X and.6x based on 206 s and 207 are estimated earnings. Therefore, we maintain our 5.0 Stars Very Attractive rating for Hong Kong. -.52% -0.40% 0.05% 0.44%.08%.39%.73% -6% -4% -2% 0% 2% 4% Valuations in South Korea remain rather attractive as compared to other markets. Thus, we maintain our star ratings of the South Korean equity market at a Very Attractive rating of 4.5 stars. SINGAPORE CPI fell -0.3% y-o-y in Aug 6, after a -0.7% y-o-y decline in Jul 6 Core CPI rose.0% y-o-y in Aug 6, on par with the.0% y-o-y increase in Jul 6 Industrial production rose 0.% y-o-y in Aug 6, up from a revised -3.5% decrease in Jul 6 INDONESIA Indonesia posted a trade surplus of USD 294 million in Aug 6, after a downward-revised surplus of USD 54 million in Jul 6 CPI increased by 2.8% y-o-y in Aug 6, after a 3.2% y-o-y increase in Jul 6 Bank Indonesia cut its 7-day reverse repo rate to 5.00%, from 5.25% HONG KONG GDP in 2Q 6 grew by.7% y-o-y, up from a 0.8% y-o-y increase in Q 6 CPI stood at 4.3% y-o-y in Aug 6, down slightly from 2.3% y-o-y in Jul 6 Exports slumped by -0.8% y-o-y in Aug 6, as compared to a -5.% y-o-y in Jul 6 Seasonal-adjusted unemployment rate remained at 3.4% in Aug 6 SOUTH KOREA Korean Won (KRW) appreciated against USD by.76% in Sep (data as of 27 Sep), up from a 0.42% depreciation seen in Aug Aug Manufacturing PMI dropped to 48.6, compared to 50. in Jul Export ended its 9-month consecutive shrinkage, the export figure increased by 2.6% y-o-y in Aug, compared to 0.3% decline in Jul Imports increased by -0.% y-o-y in Aug 6, higher than -4.0% in Jul

8 Our View GLOBAL MARKET UPDATE BRIC (Ex-India) Manufacturing PMI stood at 45.7 in Aug 6, down slightly from 46.0 in Jul 6 BRIC (Ex-India) - Performance in September 206* Services PMI came in at 42.7 in Aug 6, down from 45.6 in Jul 6 China (HS Mainland 00) 0.3% Composite PMI at 44.4 in Aug 6, down from 46.4 in Jul 6 Industrial production slumped -6.6% y-o-y in Jul 6, down from the revised -5.8% fall in Brazil (IBOV) 0.80% Jun 6 IPCA inflation came in at 8.97% y-o-y in Aug 6, up slightly from a 8.74% y-o-y increase Russia (RTSI$) 4.28% in Jul 6 Selic rate remained unchanged at 4.25% in Aug 6 0% % % 2% 2% 3% 3% 4% 4% 5% *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms With markets having priced in a change of government and looking beyond the political turmoil, the investment case for Brazil now hinges upon its economy. While there are tentative signs of a recovery, it may be premature at this juncture to call a bottom to Brazil s economic troubles. We maintain a 3.0 Stars Attractive rating for the Brazilian market. The estimated earnings of Russian companies (as represented by the RTSI$ Index) on aggregate saw upward revisions over the month of September, with 206 s estimated earnings revised 4.0% higher month-to-date, while 207 s estimated earnings were revised 3.% higher (as of 26 September 206). While we retain Russia s star ratings at 4.0 Stars Very Attractive, we are keeping an eye on overall valuations should there be continued gains in stock prices without overall improving fundamentals. We continue to favour H-shares relative to the onshore market. We maintain our 5.0 Stars Very Attractive rating for the offshore Chinese equity market. BRAZIL RUSSIA Industrial production rose 0.7% y-o-y in Aug 6, up from a -0.3% decrease in Jul 6 CPI increased by 6.9% y-o-y in Aug 6, down slightly from the 7.2% increase in Jul 6 Retail sales fell -5.% y-o-y in Aug 6, down from a downward-revised -5.2% decline in Jul 6 CBR rate at 0.0% in Sep 6, down from 0.5% in Aug 6 CHINA GDP in 2Q 6 increased by 6.7% y-o-y, same rate as Q 6 Industrial production rebounded to a 6.3% y-o-y increase in Aug 6, up from 6.0% y-o-y in Jul 6 Manufacturing PMI rebounded to 50.4 in Aug 6, as compared to 49.9 in Jul 6 Exports rebounded to -2.8% y-o-y in Aug 6, as compared to a -4.4% y-o-y in Jul 6 CPI dropped slightly to.3% y-o-y in Aug 6, as compared to.8% y-o-y in Jul 6

9 INDIAN MUTUAL FUND INDUSTRY - ASSET TRENDS,800,000,600,000,400,000,200,000,000, , , , ,000 0 Average Assets Under Management (AAUM) in INR Crores Rs.,66,290 Source: AMFI, ifast Compilations Top and Bottom Five AMCs - By Absolute Change in Assets (Q-o-Q), July - Sep 206 Scheme Name Q-o-Q Absolute Change in Assets (INR in Crores) % Change in Assets Top 5 AMCs ICICI Prudential Mutual Fund 22, % HDFC Mutual Fund 20, % Birla Sun Life Mutual Fund 9, % Reliance Mutual Fund 6, % UTI Mutual Fund 5, % Bottom 5 AMCs Taurus Mutual Fund (532.56) -6.66% JPMorgan Mutual Fund (59.43) -9.30% IIFL Mutual Fund (24.76) -6.27% Sahara Mutual Fund (2.84) -2.55% Shriram Mutual Fund % Source: AMFI, ifast Compilations

10 FUND CATEGORY RETURNS Fund Category Returns ( as on September 206 ) Year Equity: Large Cap -0.86%.60% Equity: Multi Cap -0.52% 3.02% Equity: Mid Cap 0.49% 6.38% Equity: ELSS -0.36% 3.04% Equity: Index -.75% 9.55% Equity: Global -0.3% 5.96% Hybrid: Balanced 0.0% 0.70% Hybrid: MIP 0.78% 9.83% Debt: Gilt Long Term.28%.30% Debt: Gilt Short Term.05% 0.38% Debt: Income.04% 9.55% Debt: Short Term 0.86% 9.35% Debt: Ultra Short Term 0.70% 8.55% Debt: Liquid 0.55% 7.62% Debt: Floating Rate 0.7% 8.50% Source: NAV India, ifast Compilations

11 TOP & BOTTOM EQUITY FUNDS Top & Bottom Performing Equity funds on our Platform as on 30 September 206 Large Cap Scheme Multi-Cap Year Scheme Indiabulls Value Discovery Fund (G) 2.42% 8.57% Birla Sun Life Equity Fund (G) 2.00% 2.56% Birla Sun Life Manufacturing Equity Fund (G) 2.27% 9.80% L&T India Value Fund (G).94% 5.96% CNX Nifty Index (Benchmark) -.99% 8.3% CNX 500 Index (Benchmark) -.28%.23% BNP Paribas Equity Fund (G) -2.52% 6.22% Reliance Regular Savings Fund - Equity (G) -2.20% 9.3% LIC MF Equity Fund - (G) -2.48% 4.7% AXIS Equity Fund (G) -2.02% 8.29% Year Midcap & Small Cap Scheme ELSS Year Scheme LIC MF Mid Cap Fund - Regular (G) 3.72% 20.40% Motilal Oswal Most Focused Long Term Fund (G) 2.6% 8.39% L&T Emerging Businesses Fund (G) 2.99% 23.74% IDBI Equity Advantage Fund - Regular (G).4% 9.39% CNX Midcap Index (Benchmark) 0.27% 8.65% CNX 500 Index (Benchmark) -.28%.23% Sahara Star Value Fund (G) -.7% 9.05% Escorts Tax Plan-(G) -.99% 32.7% UNION KBC Small & Midcap Fund (G) -.58% 8.5% BNP Paribas Long Term Equity Fund (G) -.94% 6.02% Year Overseas Scheme Year DSP BR World Mining Fund (G) 6.80% 4.00% DSP BR World Gold Fund (G) 4.34% 85.28% MSCI World Index (in INR) (Benchmark) -0.27% 0.72% DHFL Pramerica Global Agri Offshore Fund (G) -5.70% -2.6% Birla Sun Life CEF - Global Agri Plan (G) -4.7% 9.9% Source: NAV India, ifast Compilations

12 TOP & BOTTOM DEBT/HYBRID FUNDS Top & Bottom Performing Debt/Hybrid funds on our Platform as on 30 September 206 Short Term Scheme ICICI Pru Banking & PSU Debt Fund - Regular (G).26%.29% Income Year Scheme Baroda Pioneer Dynamic Bond Fund - Plan A (G) Year.53%.04% Kotak Income Opportunities Fund (G).24% 0.85% Baroda Pioneer Income Fund - Plan A (G).49% 9.93% Crisil Short-Term Bond Fund Index 0.85% 9.28% Crisil Composite Bond Fund Index.3%.47% JPMorgan India Short Term Income-Segregeted Ass(G) 0.52% 6.78% Canara Robeco InDiGo Fund (G) 0.58% 7.85% Escorts Short Term Debt Fund (G) 0.54% 8.3% Invesco India Credit Opportunities Fund (G) 0.58% 8.0% Gilt - Long Term Scheme Year IDFC G Sec Fund - PF (G).56% 0.69% Birla Sun Life Const Maturity 0Y Gilt (G).54% 0.60% Crisil Composite Bond Fund Index.3%.47% Franklin India G-Sec Fund - LTP (G) 0.80%.95% Franklin India G-Sec Fund - Composite (G) 0.83%.68% Balanced Scheme MIP Year Scheme LIC MF Balanced Fund - (G).3% 9.08% Birla Sun Life MIP II - Wealth 25 (G).7% 5.80% ICICI Pru Blended - Plan B Option I (G).0% 0.33% SBI Regular Savings Fund (G).5% 0.88% CRISIL Balanced Fund - Aggressive Index -0.84% 9.65% Crisil MIP Blended Index 0.8%.3% ICICI Pru Child Care Plan-Gift Plan -.86% 6.4% Franklin India ly Income Plan - (G) 0.0% 0.72% SBI Dynamic Asset Allocation Fund (G) -.84% 0.02% UTI-MIS Advantage Plan (G) 0.29% 0.04% Year Source: NAV India, ifast Compilations

13 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.