Monthly Market Update (India) June 2018 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 2018 Yr 2019 Yr (%) 2019 (%) Asia ex Japan (MSCI Asia ex Japan) -1.63% -0.61% 38.70% % 10.90% Emerging Markets (MSCI EM) -3.75% -3.26% 34.30% % 11.00% Europe (Stoxx 600) -0.59% -1.57% 7.70% % 8.60% Japan (Nikkei 225) -1.18% -2.47% 19.10% % 14.60% USA (S&P 500) 2.16% 1.18% 19.40% % 10.00% Brazil (IBOV) % 0.46% 26.90% % 13.60% China (HS Mainland 100) -0.43% 3.43% 39.50% % 13.00% Hong Kong (HSI) -1.10% 1.84% 36.00% % 10.50% India (SENSEX) 0.46% 3.72% 27.90% % 20.60% Indonesia (JCI) -0.18% -5.85% 20.00% % 11.70% Malaysia (KLCI) -6.94% -3.13% 9.40% % 6.90% Russia (RTSI$) 0.78% 0.74% 0.20% % 0.70% Singapore (STI) -5.14% 0.74% 18.10% % 8.60% South Korea (KOSPI) -3.67% -1.80% 21.80% % 8.10% Taiwan (Taiwan Weighted) 2.04% 2.18% 15.00% % 5.60% Thailand (SET Index) -2.99% -1.52% 13.70% % 8.80% *Returns are as at 31 May Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms and MSCI Index returns are in USD

3 ECONOMIC INDICATORS Trade (April 18) Exports during April 2018 were valued at USD billion as compared to USD billion during April 2017 exhibiting a positive growth of 5.17% year-on-year. While imports during April 2018 were valued at USD billion which was 4.6% year-on-year higher in USD terms over the level of imports valued at USD billion in April Major commodity groups of export showing positive growth over the corresponding month of last year are Engineering Goods (17.63%), Organic & In-organic Chemicals (38.48%), Drugs & Pharmaceuticals (13.56%), Cotton Yarns/ Fabs/ Made-ups, Handloom Products (15.66%) and Plastic & Linoleum (30.03%). Major commodity groups of import showing high growth in April 2018 over the corresponding month of last year are Petroleum, Crude & products (41.49%), Machinery, electrical & non electrical (9.11%), Coal, Coke & Briquettes, etc. (20.43%), Organic & inorganic Chemicals (18.36) and Transport & Equipment (33.18%). In effect, the Trade Deficit for the month stood at US $ billion vis-a-vis the deficit of US $ billion during April Markets & Valuations (As on May 31, 2018) The benchmark Index (Sensex) was at 35, Estimated PE & earnings growth for BSE Sensex Price/Earnings Earnings Growth -2.94% 25.42% 22.29% Inflation (Mar 18) India s CPI came higher at 4.58% year-on-year during the month of April 2018 as against 4.28% during the previous month. Food and Beverages which have a holding of 54.18% in the CPI basket reported increase in prices by 3% in April 18. Within the food and beverages segment, prices of cereals increased 2.56%, prices of milk products increased by 3.21% and vegetable prices increased 7.29%. Housing and Fuel & light prices increased by 8.50% and 5.24% respectively which also contributed to the increase in inflation during the month of April Rise in inflation makes it more difficult for a rate cut in the near future. Industrial Production (March 18) IIP stood at 4.4% year-on-year in March compared to revised growth rate of 7.0% year-on-year in February. The major sectors like Mining, Manufacturing and Electricity registered growth rates of 2.8%, 4.4% and 5.9% respectively. As per Use-based classification, the growth rates in March 2018 over March 2017 are 2.9% in Primary goods, -1.8% in Capital goods, 2.1% in Intermediate goods and 8.8% in Infrastructure/ Construction Goods. Further, the Consumer durables and Consumer non-durables have recorded growth of 2.9% and 10.9% respectively.

4 EQUITY MARKET BSE Sensex - Top & bottom performers in May (As on May 31, 2018) Top Performers MTD Bottom Performers MTD Kotak Mahindra Bank Ltd 10% Tata Motors Ltd -17% HDFC Bank Ltd 10% Sun Pharmaceutical Industries Ltd -9% State Bank of India 9% Bharti Airtel Ltd -8.7% Broader Indices (Performance % in May 2018)* BSE SMALL CAP BSE MID CAP Nifty Index Earnings growth estimates of top weighted stocks: Stock FY-18 FY-19 FY-20 HDFC Bank Ltd % 20.64% 23.37% Housing Development Finance Corp Ltd -2.00% 18.75% 21.61% BSE Sensex Sectoral Indices (Performance % in May 2018)* Our view The Indian market ended on a tepid note in the month of May with the benchmark index that is S&P BSE Sensex giving a return of 0.46%. The outcome of the elections in Karnataka and the uncertainty that surrounded the Government formation in the state kept the market on tenterhooks. The positives for the market were good corporate results, fall in oil prices during the course of the month, and a robust GDP number for the 4th quarter of FY18 which came out on the last day of the month. However, the high drama that followed the government formation in Karnataka along with the rising inflation numbers (both WPI and CPI) dented the confidence of the market participants. If the first event created some uneasiness around the General elections that is to take place in 2019, then the second event hinted towards a high probability that the Central Bank would increase policy rates in the review that was to be held in the first week of June. If this was not enough, global concerns like the US-China negotiations along with the fear of a rate hike by the US Fed negatively impacted market sentiments. BSE Realty BSE AUTO BSE METAL BSE TECK BSE FMCG BSE Bankex Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms Going forward, we would advise our investors to take advantage of this volatility and take exposure into equity funds via the SIP or STP route depending on their risk profiles. The long term story of India is intact and hence we should not get bothered by the noise created on the domestic or the global front.

5 2-May-18 4-May-18 6-May-18 8-May May May May May May May May May May May-18 DEBT MARKET OUTLOOK Our view During the month of May, we saw the 10 year G-Sec yield move up from 7.74% and end the month at 7.78%. The rising inflation numbers in terms of both CPI and WPI made the market participants nervous as they believed that there was a high probability that RBI might tighten the monetary policy rates in the review meeting that was to take place in the first week of June. Some of the other negatives that impacted the market were the rising oil prices that have a bearing on our fiscal deficit along with the fear of a rate hike by the US Fed. For a change, the central bank did not disappoint the market participants and increased the policy repo rate by 25 bps to 6.25%, citing upside risk to inflation in the Second Bi-Monthly Monetary Policy Review meeting held on June 6th. We maintain that the easing of the monetary policy will take more time and hence it is advisable to stay invested in ultra short term funds and short term funds Year G-sec Yield Curve

6 GLOBAL MARKET UPDATE GROUP 7 COUNTRIES *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms Our View G7 Countries - Performance in May 2018* Canada (S&P/TSX) UK (FTSE 100) USA (S&P 500) Germany (DAX) Japan (Nikkei 225) France (CAC-40) Italy (FTSE MIB) -2.21% -1.18% -0.06% 2.16% 2.97% 2.25% -4% -2% 0% 2% 4% 6% 8% In terms of employment numbers, April s nonfarm payrolls came in at 164,000 as compared to a March s upward-revised 135,000. The unemployment rate fell to 3.9%, while wages rose 2.6% year-on-year, similar to the prior downward-revised 2.6% yearon-year gain (wages rose 0.1% month-on-month). We maintain our view that the pace of job growth in the US will gradually moderate to a lower pace, as the US enters the later stages of its business cycle. We acknowledge the near-term benefits of the recent fiscal package, but are cognisant of relatively stretched valuations that limit the potential upside to any long term investor. We maintain our rating of 2.0 Stars Unattractive for the US equity market. In terms of economic data, Eurozone advance GDP estimates for 1Q 18 came in at a 2.5% year-on-year rate, down from a prior upward-revised 2.8% year-on-year increase. On a quarter-on-quarter basis, the economy grew by 0.4% (in line with consensus estimates), slowing from 4Q 17 s upward-revised 0.7% growth rate. On a per-country basis, the Eurostat s data showed that growth slowed in Germany, France and in Britain, while Italy and Spain saw a similar quarter-on-quarter growth rate in 1Q 18 as compared to 4Q 17. Leading indicators such as the preliminary PMIs from Markit for the month of May were softer than expected across the core countries such as Germany and France, while Britain s composite PMI reading stabilised in the month of April. With USA EUROPE JAPAN data generally weaker than expected, investor optimism has declined correspondingly, and this is reflected in lower ZEW readings in Germany and lower Sentix readings for the Eurozone. We do not think that overall growth will slow down significantly at this juncture, and as such, any positive surprise going into the second half of 2018 will benefit risk assets given that investors expectations have been lowered. We maintain a 2.5 Stars Neutral rating for Europe, and advocate investors to remain an underweight exposure to European equities in their portfolios. Volatility once again struck Japanese equities in May, where Japanese equities spend first half of the month rising, followed by a downward correction starting on 23 May Interestingly, besides the political instability of Italy, the majority of recent downside catalysts is a reversal of previous upside drivers. US Treasury bond yields fell from 3.11% to as low as 2.78% on 29 May, pressuring Japanese equities as the JPY strengthened. We have been expecting a correction in rate hike expectation as we are skeptical for quicker US rate hikes, but we also see no reason that the US Fed will give up their own plan of raising rates three times this year; the fact that future implied probability of two rate hikes in 2018 has risen significantly points to possible market over-reaction in face of Italy uncertainties, this could potentially provide treasury yield some correction momentum later on.we maintain our star ratings of the Japanese market at an Attractive rating of 3.5 stars. Nonfarm payrolls rose 164,000 in Apr 18, after an upward-revised 135,000 gain in Mar 18 Private payrolls rose 168,000 in Apr 18, after an upward-revised 135,000 gain in Mar 18 Unemployment rate unchanged at 3.9% in Apr 18 Advance reading of Eurozone PMI composite at 54.1 in May 18, as compared to a finalised 55.1 in Apr 18 Advance Consumer Confidence at 0.2 in May 18, decreasing from a finalised 0.3 reading in Apr 18 Apr Consumer Confidence Index fell to 43.6 from Mar s 44.3 May Manufacturing PMI s preliminary figure fell to 52.5, down from 53.8 in Apr

7 Indonesia (JCI) Australia (S&P/ASX 200) Taiwan (Taiwan Weighted) *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms Our View GLOBAL MARKET UPDATE ASIA PACIFIC (Ex-JAPAN) Asia Pacific (Ex Japan) - Performance in May 2018* Malaysia (KLCI) Singapore (STI) South Korea (KOSPI) -3.67% Thailand (SET Index) -2.99% Hong Kong (HSI) -1.10% -0.18% 0.49% 2.04% -4% -2% 0% 2% 4% 6% 8% CPI rose 0.1% year-on-year, cooling from a prior 0.2% year-on-year increase and falling short of the consensus forecast of a 0.4% year-on-year rise. On a month-on-month basis, CPI fell -0.5% as compared to the consensus estimate of a -0.1% decline, and declining from a prior -0.2% decrease. Core CPI, which excludes energy, private transport and accommodation costs, rose 1.3% year-on-year in April (consensus was for a 1.4% year-on-year gain), easing from a prior 1.5% year-on-year increase. The decrease was seen across most categories, with recreation articles the only exception, registering a 0.7% year-on-year rise as compared to a 0.6% year-on-year increase in March. Healthcare, clothing and education all registered slower year-on-year increases. While the Monetary Authority of Singapore (MAS) did not make any changes to its inflation forecasts, policy-makers now believe that inflation in 2018 will come in within the current upper range of the targeted 1.0% - 2.0% range. We maintain a 4.0 Stars Very Attractive rating on the Singapore equity market. Across the month of May, the SET Index had its 2018 earnings forecasts upgraded by 1.5%, while 2019 earnings estimates remain unchanged. These brings the Thai equities earnings growth to 9.9% and 8.8% respectively over 2018 and Energy (+0.7%) received earnings upgrades from analysts, with PTT PCL contributing most of the earnings upgrades. Market participants expect the company s earnings to remain resilient on the back of robust gas business (renewals on gas block concessions) and higher earnings contribution from downstream affiliates. Similarly, Industrials got its earnings estimates revised upwards by 0.6%. Synergetic Auto Performance, a Thailand car rental business is expected to generate higher revenues by higher volume of used car sales and a boost in rental rates by increasing tourist arrivals towards the end of Other sectors who witnessed an upgrade in earnings estimates are Health Care (+0.2%), Utilities (+0.2%) and Telecommunication. We maintain the star rating for Indonesia at 3.0 stars (Attractive). As for South Korea, it suffered from a sell-off on 29 May 2018 as fears over US-China Trade War rose. It is however interesting that pure semi-conductor manufacturer SK Hynix are not influenced by market drop at all, potentially result of still strong semiconductor demand throughout 1Q and possibly extending to 2Q 18 of the year.the financial sector within South Korea faced consistent downward pressure in May despite a recovery in April. We continue to see opportunity and potential within the banking sector despite recent weakness. Current market interest remain consistently higher than 2017, with another rate hike by the central bank still on the table for rest of the year. A better interest rate environment is now translating into better earnings for banks, where 8 out of 9 banks who are under KOSPI index and have reported quarterly earnings posted an earnings surprise for their 1Q results, and financial report results shows that multiple players have demonstrated visible improvement in interest margins within 1Q of the year. Fundamentals seem to be solid for Korean banks under current scenario.. Thus we remain bullish on south Korea financials and maintain our star ratings of 4.5 stars Very Attractive. SINGAPORE Core CPI came in at 1.3% y-o-y in Apr 18, as compared to a 1.5% y-o-y rise in Mar 18 Industrial production rose 9.1% y-o-y in Apr 18, after an upward-revised 6.1% rise in Mar 18 INDONESIA Exports grew to 9.01% y-o-y in Apr, after an upward-revised 6.14% y-o-y expansion in Mar 18 Imports grew by 34.68% y-o-y in Apr, after an upward-revised 9.07% y-o-y growth in Mar 18 SOUTH KOREA KRW depreciated by -1.3% against USD month-to-date (as of 29 May 2018), as compared to -0.9% depreciation seen in Apr Apr Manufacturing PMI fell to 48.4, down from 49.1 in Mar

8 China (HS Mainland 100) GLOBAL MARKET UPDATE BRIC (Ex-India) *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms Our View BRIC (Ex-India) - Performance in May 2018* Brazil (IBOV) Russia (RTSI$) -0.43% 0.78% -10% -8% -6% -4% -2% 0% 2% In terms of recently-released economic data for Brazil, industrial production slowed again, rising 1.3% year-on-year in March as compared to a prior downward-revised 2.4% year-on-year increase. However, retail sales surprised to the upside, registering a 6.5% year-on-year gain in March as compared to an upward-revised 1.5% gain in February. We were cognisant of stretched valuations of Brazilian equities and have lowered its star ratings from a prior 3.0 Stars Attractive to 2.5 Stars Neutral in the middle of May. Over in Russia, economic data was strong in April, with industrial production coming in above expectations at a 1.3% year-on-year increase for the month of April, rising from a prior 1.0% year-on-year rise. Real retail sales also was robust, meeting the consensus forecast for a 2.4% year-on-year increase and increasing from a prior 2.0% year-on-year rise. Inflation-adjusted wages and disposable income continue to register better-thanexpected increases, suggesting that the current recovery in consumer purchasing power has been intact and that domestic consumption has been resilient despite the rise in geopolitical tensions between the US and Russia. While fundamentals are better as compared to the situation back in 2014 and 2015 following the annexation of the Crimea and the plunge in crude oil prices, It remains to be seen if the recent weakening of the Rouble and any possible decrease in business investment due to the spill over effects of sanctions will affect overall growth momentum. We believe that a star rating of 3.5 Stars Attractive continues to be warranted for Russia. The Caixin China General Manufacturing PMI stood at 51.1 in April 2018, little-changed from the previous month's figure of 51.0 and above market consensus of 50.9, which still remained above the boom-or-bust line of 50 that separates expansion from contraction. China s April exports rose 12.9% from a year earlier, beating analysts forecasts for a 6.3% increase. We believe that strong April exports showing was mostly seasonal and that a multi-year global trade recovery may have topped out. Besides, imports to China also beat expectations, growing 21.5% year-on-year, beating forecasts of 16.0% growth, and accelerating from a 14.4% rise in March. The strong readings suggest China s domestic demand remains resilient despite rising corporate borrowing costs and cooling property sales. China's consumer price inflation fell to -1.8% year-on-year in April 2018, from 2.1% in the previous month and missing market consensus of 1.9%. China's producer price index (PPI), which measures costs for goods at the factory gate, rose 3.4% year on year in April. Last but not least, China's retail sales increased by 9.4% from a year earlier in April, missing market consensus of 10.0% and following a 10.1% rise in the previous month. We maintain our 4.5 Stars Very Attractive rating for the offshore Chinese equity market. BRAZIL Industrial production rose 1.3% y-o-y in Mar 18, slowing from a downward-revised 2.4% y-o-y increase in Feb 18 IPCA inflation came in at 2.8% y-o-y in Apr 18 as compared to a 2.7% y-o-y increase in Mar 18 RUSSIA Industrial production rose 1.3% y-o-y in Apr 18, down from 1.0% in Mar 18 CPI rose 2.4% y-o-y in Apr 18 unchanged from Mar 18 CHINA Caixin China Manufacturing PMI stood at 51.1 in Apr 18, little-changed from the previous month's figure of 51.0 China s April exports rose 12.9% from a year earlier, beating analysts forecasts for a 6.3% y-o-y increase Imports to China also beat expectations, growing 21.5% y-o-y, beating forecasts of 16.0% growth

9 FUND CATEGORY RETURNS Fund Category Returns (As on May 2018 end) 1 Month 1 Year Equity: Large Cap Equity: Multi Cap Equity: Mid Cap & Small Cap Equity: ELSS Equity: Index Hybrid: Aggressive Hybrid Funds Hybrid: Conservative Hybrid Fund Debt: Gilt Debt: Medium to Long Duration Fund Debt: Short Duration Fund Debt: Ultra Short Duration Fund Debt: Liquid Other: FOF Overseas Solution Oriented Fund Source: NAV India, ifast Compilations

10 TOP & BOTTOM EQUITY FUNDS Top and Bottom Performing Equity Funds on our Platform as on 31st May 2018 Large Cap Funds Multi Cap Funds Scheme 1 Month 1 Year Scheme 1 Month 1 Year AXIS Bluechip Fund (G) AXIS Multicap Fund (G) Sahara Super 20 Fund (G) JM Multicap Fund (G) Escorts Growth Plan (G) Principal Multi Cap Growth Fund - (G) Taurus Largecap Equity Fund (G) Taurus Starshare (Multi Cap) Fund (G) Mid and Small Cap Funds ELSS Funds Scheme 1 Month 1 Year Scheme 1 Month 1 Year AXIS Midcap Fund (G) AXIS Long Term Equity Fund (G) Motilal Oswal Midcap 30 Fund (G) Franklin India Taxshield - (G) HSBC Small Cap Equity Fund (G) Principal Tax Savings Fund SBI Magnum Midcap Fund (G) Reliance Tax Saver (ELSS) Fund - (G)

11 TOP & BOTTOM DEBT and HYBRID FUNDS Top and Bottom Performing Debt and Hybrid Funds on our Platform as on 31st May 2018 Aggressive Hybrid Funds Conservative Hybrid Funds Scheme 1 Month 1 Year Scheme 1 Month 1 Year Franklin India Equity Hybrid Fund - (G) AXIS Regular Saver Fund (G) JM Equity Hybrid Fund - (G) DHFL Pramerica Hybrid Debt Fund (G) Escorts Opportunities Fund (G) BOI AXA Conservative Hybrid Fund (G) BOI AXA Mid & Small Cap Equity & Debt Fund (G) SBI Debt Hybrid Fund - (G) Medium to Long Duration Funds Gilt Scheme 1 Month 1 Year Scheme 1 Month 1 Year Aditya Birla SL Income Fund (Displine Advant Plan) SBI Magnum Constant Maturity Fund (G) Aditya Birla SL Income Fund (G) Aditya Birla SL Govt Securities Fund (G) Tata Income Fund - (AO) Tata Gilt Retirement Plan ( ) (G) UTI-Bond Fund (G) Tata Gilt Securities Fund - Regular (G) Short Duration Funds Scheme 1 Month 1 Year Escorts Short Term Debt Fund (G) JM Short Term Fund - Regular (G) DSP BR Short Term Fund (G) Mirae Asset Short Term Fund - Regular (G)

12 TOP & BOTTOM OTHER & SOLUTION ORIENTED FUNDS Top and Bottom Performing Other Funds on our Platform as on 31st May 2018 FOF Overseas Funds Scheme 1 Month 1 Year Franklin India Feeder - Franklin U.S. Opp. (G) Edelweiss GCE Off-Shore Fund(G) Edelweiss ASEAN Equity Off-Shore Fund (G) HSBC Brazil Fund (G) Top and Bottom Performing Solution Oriented Funds on our Platform as on 31st May 2018 Solution Oriented Funds Scheme 1 Month 1 Year Franklin India Pension Plan - (G) Tata Retirement Savings Fund - Conservative (G) ICICI Pru Child Care Fund-Gift Plan HDFC Retirement Savings Fund - Equity (G)

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.