Monthly Market Update (India) August 2017 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 2017 Yr 2018 Yr (%) 2018 (%) Asia ex Japan (MSCI Asia ex Japan) 4.90% 27.55% 2.90% % 11.20% Emerging Markets (MSCI EM) 5.48% 23.65% 8.60% % 12.30% Europe (Stoxx 600) -0.40% 4.55% -1.20% % 9.40% Japan (Nikkei 225) -0.54% 4.24% 0.40% % 7.80% USA (S&P 500) 1.93% 10.34% 9.50% % 11.70% Brazil (IBOV) 4.80% 9.45% 38.90% % 12.90% China (HS Mainland 100) 6.47% 23.22% -1.30% % 11.10% Hong Kong (HSI) 6.05% 24.20% 0.40% % 9.10% India (SENSEX) 5.15% 22.12% 1.90% % 23.50% Indonesia (JCI) 0.19% 10.27% 15.30% % 14.60% Malaysia (KLCI) -0.21% 7.21% -3.00% % 5.90% Russia (RTSI$) 0.62% % 52.20% % 11.10% Singapore (STI) 3.19% 15.58% -0.10% % 7.30% South Korea (KOSPI) 0.46% 18.57% 3.30% % 8.00% Taiwan (Taiwan Weighted) 0.31% 12.69% 11.00% % 7.90% Thailand (SET Index) 0.09% 2.15% 19.80% % 10.60% *Returns are as at 31 July Source: Bloomberg, ifast Compilations All returns are in respective local currency terms and MSCI Index returns are in USD

3 ECONOMIC INDICATORS Trade (June 17) Markets & Valuations Inflation (June 17) During the month of June 2017, India s exports recorded a growth of 4.39% year-on-year to USD billion. Imports grew by 19.01% and to USD billion. Overall trade deficit for June 2017 is estimated at USD billion as against a deficit of USD 8.12 billion in June Taking merchandise and services together, overall trade deficit for April-June is estimated at USD 28.6 billion as compared to USD 8.0 billion during April-June (As on July 24, 2017) The benchmark Index (Sensex) was at 32, Estimated PE & earnings growth for BSE Sensex. Price/Earnings Earnings Growth FY 2018 FY 2019 FY % 22.74% 15.22% Consumer price Index (CPI) India s Consumer Price Index (CPI) for the month of June came in at 1.54% vis-à-vis 2.18% for the month of May. The biggest contributor to this fall was the Food and Beverages prices which stood at -1.17% and within this category, vegetables and Pulses and Products declined by % and % respectively. This is the lowest inflation number witnessed since 2012 when the new series of CPI was released. This inflation number is also way below the RBI target of 4%. Industrial Production (May 17) India s May 2017 IIP data came in lower at 1.7% below estimates of 2.0% and lower than April s data of 2.8%. The decline in IIP is attributed to slowdown in manufacturing activity post demonetisation and before the introduction of GST. Mining, Manufacturing and Electricity sectors recorded yearly growth rates of -0.9%, 1.2% and 8.7% respectively. As per use based classification, Basic Goods, Capital Goods and Intermediate Goods recorded growth rates of 3.4%, - 3.9% and 0.7% respectively in May Consumer durables and non-durables grew by -4.5% and 7.9% respectively. The slowdown in IIP figures is attributed to negative growth rates recorded in manufacture of beverages, motor vehicles and electrical equipment. Declining IIP figures can slow down the pace of GDP growth during the year. Wholesale price Index (WPI) India s Wholesale price Index (WPI) declined to 0.90% year-on-year for the month of June 2017 as compared to 2.17% in the previous month and -0.09% during the corresponding period month of the previous year. A look into the numbers revealed the index for Fuel & power group declined by 1.2% due to lower prices of LPG, Naptha and ATF. The index for manufactured products declined by 0.1% in June On the other hand, the index for primary articles rose marginally by 0.3%.

4 EQUITY MARKET As on July 24, 2017, the benchmark Index (Sensex) stood at 32, The earnings estimates for HDFC bank, the highest weighted stock in the index stood at 18.37% and 18.55% for FY18 and FY19. Housing Development Finance Corp Ltd, the next stock with the highest weightage, has an earnings estimate of 14.62% and 20.50% for FY18 and FY19 respectively. The top performers in the index during the month were Bharti Airtel (15%), Wipro Ltd (14%) and Reliance Industries (13%) while the top losers included ITC (-6%) HDFC (-1%) and Bajaj Auto (0.08%). Broader Indices (Performance % in July 2017)* Nifty Index 5.84 BSE Sensex 5.15 BSE MID CAP 5.09 BSE SMALL CAP Our view Indian markets rebounded in the month of July and the benchmark indices that is S&P BSE Sensex and Nifty 50 registered a return of 5.15% and 5.84% respectively. The markets were in euphoria mode with the Nifty 50 touching the psychological mark of 10,000 for the first time. The positive sentiments were on account of the successful implementation of GST, good monsoons, better than expected corporate earnings and the continuing upbeat domestic inflows into the market. The market participants were also expecting a rate cut in the Third Bi-Monthly Monetary policy review that was to be held in August and this was on the back of inflation falling below the RBI target of 4%. Today, with our benchmark indices touching an all-time high, the question we are asked is: Are you still bullish on India? The answer is in the affirmative and it is wise to remember that it is only a handful of stocks that are fuelling this rally. While we thought that India Inc s earnings would improve, demonetization, GST reform and cleaning up the mess in the banking system has led to concerns on the recovery of earnings in the near future. However, we believe that the long term impact of these reforms would be positive for India Inc and we will start to see the denominator of the PE ratio finally taking off. BSE Bankex BSE Realty BSE IT BSE AUTO BSE CD BSE FMCG Sectoral Indices (Performance % in July 2017)* Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms We maintain status quo on our Strategy Report released in March 2017 and would advise our investors to continue taking exposure into the market via the SIP or the STP route. We are not experts to predict the next correction but we have the confidence that the robust DII inflows will bring stability if the market decides to go into a roller coaster ride.

5 30-Jun-17 2-Jul-17 4-Jul-17 6-Jul-17 8-Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul-17 DEBT MARKET OUTLOOK Our view We saw the 10 year G-Sec yield moving in a southward direction from 6.56% by the beginning of the month to 6.47% by July 31, The biggest positive for the market was the decline in inflation (CPI) which came in lower at 1.54% and this was way below the RBI target of 4%. This gave the market participants hope that RBI would go in for a rate cut in the policy review meeting that was to be held in August. In the Third Monetary Policy Statement, , the Monetary Policy Committee (MPC) cut the policy rate by 25 basis points in line with market expectations continuing to maintain a neutral stance on monetary policy. The reason for the easing in the policy rate today was on account of the fact that the upside risks to inflation had either reduced or not materialised due to the following: (1) The baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4% by Q4,(2) Inflation excluding food and fuel has fallen significantly over the past three months and (3) The roll-out of the GST has been smooth and the monsoon has been normal. However, the MPC continued to be neutral as far as the policy stance is concerned because they still believe that inflation is going to show an upward movement from here. We maintain status quo on our recommendations in the fixed income space. We continue to recomemend short term funds to our Investors who have a time horizon of 1-3 years. On the other hand our moderately aggressive and aggressive investors can still take exposure into dynamic bond funds Year G-sec Yield Curve

6 GLOBAL MARKET UPDATE GROUP 7 COUNTRIES G7 Countries - Performance in July 2017* Germany (DAX) Japan (Nikkei 225) France (CAC-40) Canada (S&P/TSX) UK (FTSE 100) USA (S&P 500) Italy (FTSE MIB) -1.68% -0.54% -0.53% -0.21% 0.81% *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms 1.93% 4.39% -2% 0% 2% 4% 6% Despite the decline in both Germany s and France s preliminary composite PMIs in July, they remain firmly in expansionary territory, with momentum in both manufacturing and services robust. The European Central Bank (ECB) left its key rates unchanged in its July meeting, and made no amendments to its current asset purchasing programme. The move was widely expected by the consensus, with the central bank reiterating that its current programme will continued until end- December 2017 or beyond if necessary until a sustained adjustment in the path of inflation consistent with its inflation aim is achieved. We maintain a 2.5 Stars Neutral rating for Europe, and advocate investors to remain an underweight exposure to European equities in their portfolios. Our View U.S June nonfarm payrolls print came in stronger than expected (at 222,000), with the largest gains coming from the health care sector and professional and business services. We maintain our view that the pace of job creation is expected to moderate lower as the business cycle matures in the US. Unemployment levels rose marginally from 4.3% in May 17 to 4.4% in June 17. Corporate earnings are projected to grow by 9.9% this year and by 11.7% in Consequently, the expected return of the US is now the lowest among the markets that we cover. Implementation of fiscal expansion by the Trump administration could provide strength to domestic growth in the US. However, concerns remain with regards to the protectionist trade policies of the Trump administration and its relations with emerging economies. We continue to monitor the overall valuations of the US markets at the moment and may review our rating of 2.5 Stars Neutral for the US market going forward. USA EUROPE The latest poll in July shows Prime Minister Abe s average approval rate is in mid-30%, with Japan Macro advisors report figures of 34.2% after grouping up poll result of 7 Medias (Including Nikkei, whose poll came up with 39% approval rate). Considering the approval rate were at 57% in year start, it is true to say that support for prime minister Abe has dropped a lot in recent months. That being said, we do not see strong political risk as of yet regarding the possibility that Abe may losses his political status and fail to push on with supportive economic policies. As at 25 July 2017, the estimated PE ratios of Japan s Nikkei 225 Index are at 17.1X for FY 2017 and 15.9X for FY Valuations remain rather attractive compared with other markets. We maintain our star ratings of the Japanese market at an Attractive rating of 3.5 stars. Nonfarm payrolls rose by 222,000 in Jun 17, after an upward-revised 152,000 increase in May 17. Unemployment rate rose to 4.4% in Jun 17 from 4.3% in May 17. Germany-Advance composite PMI at 55.1 in Jul 17, down from a finalised 56.4 in Jun 17. France- Preliminary PMI composite at 55.7 in Jul 17, down from a finalised 56.6 in Jun 17.

7 GLOBAL MARKET UPDATE ASIA PACIFIC (Ex-JAPAN) Hong Kong (HSI) Singapore (STI) Indonesia (JCI) South Korea (KOSPI) Taiwan (Taiwan Weighted) Thailand (SET Index) Australia (S&P/ASX 200) Malaysia (KLCI) Asia Pacific (Ex Japan) - Performance in July 2017* -0.02% -0.21% 0.19% 0.46% 0.31% 0.09% *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms 3.19% 6.05% -2% 0% 2% 4% 6% 8% Nikkei Hong Kong Manufacturing PMI increased to 51.1 in June from 50.5 in May, signalling that manufacturing output is still in expansion mode. Furthermore, foreign exchange reserves in Hong Kong increased to USD 408,000 million in June, reaching an all-time high since We maintain our 4.5 Stars Very Attractive rating for Hong Kong. Indonesian equities, represented by JCI Index, had its current year and next year s earnings forecasts revised downwards by -2.0% and -3.3% respectively, bringing its earnings growth to 15.0% and 14.7% for 2017 and 2018 respectively. Looking into sectors, analysts remain pessimistic towards Materials and continues to slash its earnings estimate this month by -0.2%. As macroeconomic conditions and growth story remains intact, we maintain the star rating for Indonesia at 3.0 stars (Attractive). Our View Singapore s advance estimates of 2Q 2017 GDP numbers showed the city s GDP to have grown 2.5% year-on-year, falling short of economist expectations of a 2.7% growth and coming on par with 1Q 2017 s GDP growth. The primary driver of growth continued to be the country s manufacturing sector, which recorded an 8.0% year-on-year growth in output. Industrial output rose 13.1% year on year in June 17 up from 4.4% rise in May 17. Headline inflation (gauged by the CPI) rose 0.5% year-on-year in June, down from a prior 1.4% year-on-year increase. The manufacturing sector is expected to support economic growth going ahead. We continue to maintain a 4.0 Stars Very Attractive rating on the Singapore equity market at this juncture. Malaysia's industrial production accelerated by 4.6% year-on-year in May, beating consensus estimates for a 4.1% growth and previous month's 4.2% year-on-year expansion. Malaysia s June inflation moderated to 3.6% growth year-on-year from the previous month s 3.9%. We continue to have a positive view on the equity market underpinned by ameliorating corporate earnings and improving fundamental of the economy. With the current fair valuation, the stock market is expected to deliver a rather reasonable return for investment horizon over the next 3 years on a relative basis. As such, we maintained the star ratings for Malaysia at 3.0 stars Attractive. SINGAPORE Singapore s GDP grew 2.5% y-o-y (advance estimates) in 2Q 17, on par with 1Q 17 s GDP growth. Industrial production rose 13.1% y-o-y in Jun 17, up from a 4.4% y-o-y increase in May 17. CPI rose 0.5% y-o-y in Jun 17, down from a 1.4% y-o-y increase in May 17. MALAYSIA Industrial Production grew by 4.6% y-o-y in May. CPI moderated to 3.6% y-o-y in Jun 2017 as compared to the prior 3.9% y-o-y in May. HONG KONG Nikkei Hong Kong Manufacturing PMI increased to 51.1 in June from 50.5 in May. Foreign exchange reserves in Hong Kong increased to USD 408,000 million in June, reaching an all-time high since 1993.

8 GLOBAL MARKET UPDATE BRIC (Ex-India) BRIC (Ex-India) - Performance in July 2017* China (HS Mainland 100) Brazil (IBOV) 4.80% 6.47% BRAZIL Manufacturing PMI stood at 50.5 in Jun 17, down from 52.0 in May 17 IPCA inflation came in at 3.0% y-o-y in Jun 17, easing from a 3.6% y-o-y increase in May 17. Russia (RTSI$) 0.62% 0% 1% 2% 3% 4% 5% 6% 7% *Source: Bloomberg, ifast Compilations. All returns are in respective local currency terms RUSSIA Industrial production grew 3.5% y-o-y in Jun 17, down from a 5.6% gain in May 17. CPI came in at 4.4% y-o-y in Jun 17, up from 4.1% y-o-y in May 17. Our View Brazil's June Markit Manufacturing PMI came in at a 50.5 reading, down from the prior month's 52.0 reading. The figure however, has continued to come in above the 50.0 neutral reading for the third consecutive month, signalling continued manufacturing expansion and a strong quarter for the country's manufacturing sector. In June, consumer price inflation came in at 3.0% year-on-year, down from May's 3.6% and was slightly below the consensus estimate of 3.05%. While political stability in the economy has weakened, multiple economic indicators have continued to point towards a gradual turnaround and it remains likely that Brazil's economy would see positive growth for the whole of We believe that a star rating of 3.5 Stars Attractive continues to be warranted for Brazil s equity market at this juncture. Russia s June s industrial production rose 3.5% year-on-year, on par with market expectations and easing from prior month s 5.6%, which was the highest year-onyear growth rate in more than 5 years. A look into other economic data released over the month revealed a slight increase in CPI to 4.40% year-on-year in June from 4.10% in May amid the increase in the prices of vegetables. While some economic indicators had dipped in June, it remains likely that the country s economic growth would turn positive this year. We retain Russia s star ratings at 4.0 Stars Very Attractive. China reported 6.9% second-quarter GDP growth year-on-year, surpassing expectations. With GDP expansion at 6.9% for two consecutive quarters, the government will have more leeway for slower growth in the second half of year. CPI in June remained the same as that in May at 1.5% year-on-year, as a smaller drop in food prices was offset by slower growth in non-food prices. We believe that the current monetary policy will remain stable and easy fiscal policy will be maintained. We maintain our 4.5 Stars Very Attractive rating for the offshore Chinese equity market. CHINA China reports 6.9% second-quarter GDP growth y-o-y, surpassing expectations. CPI in June remained the same as that in May at 1.5% y-o-y, as a smaller drop in food prices was offset by slower growth in non-food prices SS.

9 FUND CATEGORY RETURNS Fund Category Returns (As on July 2017) 1 Month 1 Year Equity: Large Cap 5.43% 19.21% Equity: Multi Cap 5.09% 20.74% Equity: Mid Cap 3.72% 23.53% Equity: ELSS 4.79% 21.18% Equity: Index 5.84% 17.38% Equity: Global 2.95% 9.43% Hybrid: Balanced 2.81% 13.18% Hybrid: MIP 1.49% 9.90% Debt: Gilt Long Term 0.59% 9.86% Debt: Gilt Short Term 0.74% 9.84% Debt: Income 0.85% 8.73% Debt: Short Term 0.90% 7.98% Debt: Ultra Short Term 0.77% 7.26% Debt: Liquid 0.59% 6.49% Debt: Floating Rate 0.72% 7.73% Source: NAV India, ifast Compilations

10 TOP & BOTTOM EQUITY FUNDS Top and Bottom Performing Equity Funds on our Platform as on 31st July 2017 Large Cap Multi-Cap Scheme 1 Month 1 Year Scheme 1 Month 1 Year JM Core 11 Fund (G) 9.10% 24.15% Birla Sun Life India Reforms Fund (G) 9.40% 26.27% Sahara Super 20 Fund (G) 7.86% 16.12% JM Basic Fund (G) 8.13% 27.51% NSE Nifty 50 Index (Benchmark) 5.84% 16.56% NSE Nifty 500 Index (Benchmark) 5.54% 19.84% Indiabulls Value Discovery Fund (G) 1.44% 21.78% UTI-Wealth Builder Fund (G) 1.80% 8.88% IDBI Diversified Equity Fund (G) 1.53% 11.43% Escorts Leading Sectors Fund (G) 2.45% 17.07% Midcap & Small Cap Scheme 1 Month 1 Year Scheme 1 Month 1 Year Reliance Growth Fund - (G) 6.10% 25.01% Sahara Tax Gain Fund (G) 7.60% 21.68% Tata Mid Cap Growth Fund - (G) 5.89% 23.18% HDFC Long Term Advantage Fund (G) 7.00% 26.71% Nifty Free Float Midcap 100 Index (Benchmark) 4.43% 25.18% NSE Nifty 500 Index (Benchmark) 5.54% 19.84% IDBI Small Cap Fund (G) 0.20% - IDBI Equity Advantage Fund - Regular (G) 1.77% 13.99% DSP BR Micro-Cap Fund (G) 0.60% 23.50% Peerless Long Term Advantage Fund (G) 1.89% 19.31% ELSS Overseas Scheme 1 Month 1 Year DSP BR World Mining Fund (G) 11.75% 8.65% HSBC Brazil Fund (G) 9.55% 6.50% MSCI World Index (in INR) (Benchmark) 1.67% 9.56% ICICI Pru US Bluechip Equity Fund (G) -0.47% 8.49% ICICI Pru Global Stable Equity Fund - Regular (G) -0.30% - Source: NAV India, ifast Compilations

11 TOP & BOTTOM DEBT/HYBRID FUNDS Top and Bottom Performing Debt and Hybrid Funds on our Platform as on 31st July 2017 Short Term Income Scheme 1 Month 1 Year Scheme 1 Month 1 Year Taurus Short Term Income Fund (G) 4.04% -2.44% Taurus Dynamic Income Fund (G) 4.26% -3.85% Franklin India Short Term Income (G) 1.07% 10.62% DHFL Pramerica IIB Fund (G) 1.09% 9.49% Crisil Short-Term Bond Fund Index 0.81% 8.37% Crisil Composite Bond Fund Index 0.98% 9.94% Mahindra MF Alp Samay Bachat Yojana - Reg (G) 0.59% - L&T Flexi Bond Fund (G) 0.37% 8.27% Escorts Short Term Debt Fund (G) 0.61% 7.22% Kotak Bond - Regular (G) 0.43% 7.79% Gilt - Long Term MIP Scheme 1 Month 1 Year Scheme 1 Month 1 Year DHFL Pramerica Gilt Fund (G) 0.90% 8.95% Birla Sun Life MIP II - Wealth 25 (G) 2.71% 14.50% Franklin India G-Sec Fund - Composite (G) 0.89% 8.16% DSP BR MIP Fund (G) 2.69% 10.53% Crisil Composite Bond Fund Index 0.98% 9.94% Crisil MIP Blended Index 1.70% 11.00% Indiabulls Gilt Fund (G) 0.25% 9.52% Principal Debt Savings Fund - Retail (G) 0.62% 8.62% Sundaram Gilt Fund - (G) 0.26% 8.20% SBI Regular Savings Fund (G) 0.72% 12.21% Balanced Scheme 1 Month 1 Year UTI-CCP Advantage Fund - (G) 6.07% 23.56% HDFC Retirement Savings Fund-Hybrid Equity (G) 5.44% 24.03% CRISIL Balanced Fund - Aggressive Index 4.12% 14.36% Escorts Income Bond - (G) 0.30% 7.39% Tata Regular Saving Equity Fund - (App) 0.52% 6.76% Source: NAV India, ifast Compilations

12 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.