Equity Update October 2018

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Brianna Higgins
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1 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%) Crude ($ bbl) Core Sector Growth (YoY%) Trade Deficit ($ mn) (9623) (2029) ,905* 4,087 3,995 Sept-18 (%) Latest Update 8.2 (1QFY19) 6.6 (July) 83.2 (Sept 31) 6.6 (Aug) (17,395) (Aug) (15.8) (1QFY19) 21.6 Current PE 10 Yr Average S&P BSE Sensex (6.2) NSE Nifty (6.4) S&P BSE Auto (13.1) S&P BSE Bankex (11.8) S&P BSE Capital Goods (9.9) S&P BSE Consumer Durables (11.8) S&P BSE FMCG (9.9) S&P BSE Healthcare (5.8) S&P BSE IT S&P BSE Metals (3.9) S&P BSE Mid Cap (12.5) S&P BSE Oil & Gas (1.5) S&P BSE PSU (9.3) S&P BSE Realty (20.5) Global Markets Sept-18 Current 10 Yr. (%) PE Avg. US UK Japan Hong Kong (0.4) Singapore China Earnings Growth (%) FY18E FY19E FY20E Sensex Previous Update 7.7 (4QFY18) 7.0 (June) 77.4 (Aug 31) 7.6 (June) (18020) (July) (13.1) Current Account Deficit ($ bn) (4QFY18) FII Holding in Indian 22.0 Equities (%) # (1QFY19) (4QFY18) Note: # FII hldg includes ADR/GDR (BSE500 Index); Data Source: Crisil Research; * Data till 27 th Sept, 2018; CAD:Current Account Deficit; GDP: Gross Domestic Product, IIP: FII: Foreign Institutional Investors; MF-Mutual Fund Global Market Update US Economy: The Federal Open Market Committee increased its forecast for US gross domestic product (GDP) growth to 3.1% in 2018 from its forecast of 2.8% in June. However, the Fed cautioned that rising trade tensions and the consequent potential of rising prices continued to pose risks. European Union: The European Central Bank (ECB) left interest rates unchanged and reiterated its plan to scale down the size of its bond-buying programme in October and to end purchases in December. UK: UK s central bank held interest rates at 0.75% in September, after raising them in the previous month.. The BoE also raised its forecast for third-quarter growth to 0.5% from 0.4%, partly due to stronger consumer spending over an unusually warm summer Japan: The Bank of Japan maintained its short-term interest rate target at -0.1% Emerging Markets: The People s Bank of China kept interest rates unchanged in contrast to the US Fed, which increased rates in September. Source: CRISIL Research Indian Market Update Index Performance: Indian equity indices plummeted in September 2018 owing to persistent depreciation of the rupee, global trade friction worries and rising crude oil prices. Benchmarks S&P BSE Sensex and Nifty 50 plunged 6.26% and 6.42%, respectively, in September Domestic Developments: Major dampeners at home were continued weakening of the rupee against the dollar and a massive sell-off in financial firms on liquidity concerns after a non-banking financial company defaulted on interest payment of its commercial papers. Benchmarks were also impacted by rising crude oil prices, widening of the domestic current account deficit and nervousness about the likely foreign investor outflows amid proposed changes in KYC norms for foreign portfolio investments (FPI). Global Developments: Volatility in global equities amid US Fed s decision to raise the interest rates, escalating Sino-US trade tensions after China called off planned trade talks with the US and rising uncertainty over Brexit negotiations between UK and European Union also pulled down the local indices Sectoral Impact: All the S&P BSE sectoral indices analysed fell sharply in September 2018 except for the IT index. S&P BSE Finance index and S&P BSE Bankex index plunged around 13% and 12%, respectively, on liquidity fears. S&P BSE IT index rose 0.5% aided by the falling rupee. Source: NSE, BSE; Crisil Research

2 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Equity Update Market Outlook and Triggers Indian equities witnessed heavy selling in the month of September as the rupee continued its downward trend while crude oil prices kept inching higher triggering further concerns about the widening fiscal deficit. Sentiment was also marred by the sharp declines seen in the NBFC sector stocks, on the back of liquidity and credit quality concerns. Largecaps performed relatively better with the S&P BSE Sensex falling by 6.3 per cent compared to mid and smallcaps which fell 12.5 and 16.1 per cent, respectively. Among sectors, IT was the only sector in the green (up 0.5 per cent) while the rest of the sector indices were down anywhere between 0.4 and 20.5 per cent. The monsoon season of 2018 also ended below normal further denting sentiments. On the global front, markets remained nervous as the US Federal Reserve hiked interest rates for the third time in 2018 and the eighth time since late The Fed is likely to raise interest rates one more time in December this year. Trade wars between US and China continued to escalate with US announcing trade tariffs on additional Chinese imports worth USD 200bn. The Turkish and Argentinian currency depreciation further turned market sentiment negative on fears of contagion effect on other emerging market currencies. Going forward, we would continue to watch out for cues from volatile crude oil prices, rationalisation of the bond-buying programme by central banks, and the run-up to the general elections in We continue to maintain our stance and believe that largecaps are the way forward to mitigate the current market volatility for investors who are looking at a pure equity exposure. We remain positive on the exports and manufacturing ideas which could benefit from the deteriorating macro factors such as currency depreciation, worsening CAD, higher oil prices as these could turn beneficial for this theme. Given valuations are not cheap, investors are recommended asset allocation schemes or conservative hybrid schemes which could benefit out of this volatility. For those looking at long-term equity exposure, we recommend investing in midcaps and smallcaps in a staggered manner 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 Invest in Equities Book Partial Profits Incremental Money to Debt Asset Allocation Aggressively invest in Equities 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.

3 Our Recommendations Investors may continue with their investments in pure equity schemes. As uncertainty regarding global events and run-up to elections cannot be ruled out, we believe the markets could be volatile in the near term. Hence for new investors we recommend investing in asset allocation schemes. Investors looking for long-term exposure with an appetite for volatility could consider investing systematically in small and midcap schemes. Investors looking for tactical allocation could invest in thematic schemes encompassing export and services and Pharma sectors. Our Recommendations Equity Schemes Pure Equity Schemes ICICI Prudential Bluechip Fund (An open ended equity scheme predominantly investing in large cap stocks) ICICI Prudential Large & Mid Cap Fund (An open ended equity scheme investing in both large cap and mid cap stocks) ICICI Prudential Multicap Fund (An open ended equity scheme investing across large cap, mid cap and small cap stocks) These Schemes aim to generate capital appreciation through participation in equities. Long-Term SIP Schemes 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) These schemes aim to generate long term wealth creation over a full market cycle. Asset Allocation Schemes 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) These schemes aim to benefit from volatility and can be suitable for investors aiming to participate in equities with low volatility. Thematic/Sectoral schemes 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) 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. 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 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

6 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 December 2018

Equity Update December 2018 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