icic pru market ppt

MARKET OUTLOOK

NOVEMBER 3, 2008

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 presentation.

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APOLOGY WE COULDNOT

PREDICT THIS FALL

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FOR WE COULDN’T PREDICT THE FALL OF…

THE SUBPRIME CRISIS HAS GOBBLED UP A GENERATION OF FINANCIAL ICONS

� BEAR STERNS

� FANNIE MAC

� FREDDIE MAC

� AIG

� WACHOVIA

� LEHMAN BROTHERS

� AND MANY OTHERS…

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WHAT HAPPENED ?� LIQUDITY WAS PLENTY

� INTEREST RATES WERE LOW

� INVESTORS WANTED HIGHER RETURN

� THEY INVESTED IN INDIA AND OTHER

EMERGING MARKETS FOR HIGHER RETURN

� WITH THEIR MONEY SENSEX STARTED

MOVING UP

� HEDGE FUNDS CAME WITH BORROWED MONEY

TO MAKE RETURN

� MONEY MUSCLE WON IN TAKING SENSEX TO

21000 IN JAN 2008

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WHAT HAPPENED ?

� BANKS INCURRED HUGE LOSSES BY LENDING

TO SUBPRIME BORROWERS

� IN SEARCH OF HIGHER RETURNS, THEY

MISPRICED RISK

� HEDGE FUNDS HAD TO SELL TO PAY FOR

RECALLED LOANS

� GLOBALLY, INVESTORS BECAME RISK AVERSE

AS BANKS STARTED GOING DOWN

� THEY STARTED SELLING IN OUR MARKET

� DOMESTIC INVESTORS BOUGHT, BUT NOT

AGGRESSIVELY

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HOW IS INDIA IMPACTED ?

� HEDGE FUNDS SELL

� TO REDUCE LEVERAGE AND MEET CALLS

� TO MEET REDEMPTIONS

� SHORT – TO MAKE RETURN

� MONEY GOES OUT

� RUPEE DEPRECIATES

� LIQUIDITY TIGHTENS

� INTEREST RATE GOES UP

� GROWTH SLOWS DOWN

� SELLING BY EVEN LONG ONLY FIIS AS

MACRO DETERIORATES

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FII SELLING

FIIS : -12 BN USD IN CY 2008RELATIVELY SMALL BUYING BY MFS

Source: Kotak Institutional Equity Research

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Source: Bloomberg

SHARP DEPRECIATION IN RUPEE

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INDIA : EQUITYMARKET OUTLOOK

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INDIA MARKET

JAN 08 OCT 08

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GLOBAL TURMOIL + LOCAL PROBLEMS� HIGHER OIL PRICE

� HIGH IMPORT BILL

� HIGHER TRADE DEFICIT

� WEAKER RUPEE

� HIGHER INFLATION

� HIGHER SUBSIDY

� HIGHER FISCAL DEFICIT

� HIGHER INTEREST RATES

� LOWER GROWTH

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IMPORTS – RISING OIL, FALLING RUPEE LEAD TO SURGE

Source: B&K Research

POL = Petroleum, Oil & Lubricants

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Source: HSBC Research

HIGH INFLATION, HIGH INTEREST RATES

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Source: Morgan Stanley Research

HIGH COST OF FUNDS

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GDP estimates being revised down…


REDUCTION IN GDP FORECASTS

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CORPORATE EARNINGS UNDER STRESS

Source: Citigroup

Research

SALES VOLUMES HAVE GROWN BUT PROFITABILITY TAKES A HIT

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SOME POSITIVES� MONSOON

� NUCLEAR DEAL

� FDI USD 10 BILLION FOR LAST TWO QUARTERS

� FALLING OIL PRICES

� INTEREST RATES DECLINE

� INFLATION TO EASE OFF BY 1 Q CY 2009

� VALUATION – NEGATIVES ALREADY IN THE PRICE ?

� POLICY ACTIONS ?

Source: www.rbi.org.in

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GOOD MONSOON

� LOWER FOOD PRICES

� AUGURS WELL FOR INFLATION CONTROL

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OIL AND OTHER COMMODITIES CORRECTION – HUGE RELIEF


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INFLATION

INFLATION STARTS DECLINE, BASE EFFECT TO KICK IN GOING AHEAD


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INTEREST RATE ACTIONS BY RBI

RBI HAS CUT CRR AFTER ~4 YEARS, REPO RATE AFTER ~3 YEARS


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VALUATION – HUGE DEFLATION Source: Kotak Institutional Equity Research

GLOBAL TURMOIL + LOCAL CYCLICITY –ALREADY IN THE PRICE?

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VALUATIONS – SHARP FALL

Source: Morgan Stanley Research

MARKET CAP NEARING HISTORIC LOWS,

REMEMBER LARGE LISTINGS AND PRIVATIZATION

IN LAST 5 YEARS

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MARKET OUTLOOK

� INDIAN FUNDAMENTALS ARE UNDER

PRESSURE, LIKE PEERS

� BUT VALUATION IS FAIR

� MARKETS AT FAIR VALUE OF 9~10

TIME FY 2010.

� PREMIUM TO EMERGING MARKET PEERS

BUT REASONABLE IN CONTEXT TO GROWTH

RATES; US SLOWDOWN IMPACT

� CAN BECOME CHEAP IN SHORT TERM

� EVENTS WILL SHAPE FUTURE


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IMPACT OF GLOBAL SLOWDOWN

DIRECT IMPACT OF GLOBAL / USA SLOWDOWN SHOULD BE LOW VS. PEERS


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SCOPE FOR POLICY INTERVENTION

� REFORM

� LIBERALISE MORE ON FOREIGN DIRECT

INVESTMENTS

� RELAX EXTERNAL COMMERCIAL

BORROWING GUIDELINES

� ENCOURAGE FOREX INFLOWS

� CREATE CAPACITY / BUILD INFRASTRUCTURE

� CONTROL IMPORTED INFLATION

THROUGH CURRENY STRENGTHENING

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� EXECUTION

� INCREASE SUPPLY / INCREASE

EXPORT

�MAINTAIN ECONOMIC GROWTH

RATES

�MAINTAIN LIQUIDITY

SCOPE FOR POLICY INTERVENTION

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POLICY INTERVENTION – WE

HAVE DONE IT IN PAST

�WE DID IT IN MID 70S , EARLY

90S AND EARLY PART OF THIS

DECADE

� FOOD CRISIS : GREEN REVOLUTION

� FOREX CRISIS : IT AND SOFTWARE

INDUSTRY

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� IN 2009-10 INDIAN GDP WILL BE UP

BY MORE THAN 1.5 % FROM JUST

THREE PROJECT STARTS

� RELIANCE REFINERY – JAMNAGAR

� CAIRN INDIA – OIL PRODUCTION AT

RAJASTHAN

� RELIANCE GAS PRODUCTION – KG

BASIN

DID U KNOW ?

SOURCE: INTERNAL ESTIMATES

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???? 20091000 2010 *

20,287 20089202009 *

13,790 2007875 2008

9,397 2006750 2007

SensexYearEPSYear

SHOULD PRICE GO UP WITH EARNINGS EXPECTATION?

SOURCE: INTERNAL ESTIMATES

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YEH KYA HO RAHA HAI???

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SOME BLUE CHEAPS…

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INFOSYS – STEADY REVENUE GROWTH, BUT…

Source: www.infosys.com, BloombergThe Stock (s) mentioned in this presentation do not constitute any recommendation of the same and the

portfolios of the Scheme may or may not have any future positions in this Stock(s).

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BHARTI – HIGH PRODUCTIVITY AND EFFICIENY WITH FAST INCREASING REVENUES, BUT…

Source: www.airtel.in, Bloomberg, Merrill Lynch research

The Stock (s) mentioned in this presentation do not constitute any recommendation of the same and the


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TATA STEEL – LOWEST COST, GLOBAL SCALE STEEL PRODUCER, BUT…

Source:

www.tatasteel.com,

Bloomberg. The Stock (s)

mentioned in this

presentation do not

constitute any

recommendation of the

same and the portfolios of

the Scheme may or may

not have any future

positions in this Stock(s).

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HINDALCO – CONSISTENT GROWTH, BUT…

Source: www.hindalco.net, Bloomberg

The Stock (s) mentioned in this presentation do not constitute any recommendation of the same and the


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RECOVERY

FALL

RISE

STABILITYFALL

AFTER CONSOLIDATION… SLOW AND STEADY… AS IN PAST

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SUMMARY

� IF YOU ARE INVESTED

� BEAR THE PAIN

� LOCKING THE BARN DOOR AFTER THE HORSE HAS BOLTED???

� IF YOU WANT TO INVEST

� BUY GRADUALLY AT EVERY DIP

� BE OPTIMISTIC

� BE DISCIPLINED

� KEEP LONG TERM GROWTH IN MIND

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AND THE WINNER IS…

Past Performance is no guarantee of future results.

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Risk Factors

Statutory Details: ICICI Prudential Mutual Fund (the Fund) was set up as a Trust sponsored by Prudential plc (through its wholly owned subsidiary namely Prudential Corporation Holdings Ltd) and ICICI Bank Ltd. ICICI Prudential Trust Limited (the Trust Company), a company incorporated under the Companies Act, 1956, is the Trustee to the Fund. ICICI Prudential Asset

Management Company Ltd (the AMC). a company incorporated under the Companies Act, 1956, is the Investment Manager to the Fund. ICICI Bank Ltd and Prudential Plc (acting through its wholly owned subsidiary namely Prudential Corporation

Holdings Ltd) are the promoters of the AMC and the Trust Company. Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Schemes will be achieved. As with any securities investment, the NAV of the Units issued under the

Schemes can go up or down, depending on the factors and forces affecting the capital markets. Past performance of the Sponsors, AMC/Fund does not indicate the future performance of the Schemes of the Fund. The Sponsors are not

responsible or liable for any loss resulting from the operation of the Schemes beyond the contribution of an amount of Rs.22.2 lacs, collectively made by them towards setting up the Fund and such other accretions and additions to the corpus set up by

the Sponsors.In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including information developed in-house. Some of the material used in the

document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be

from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. We have included statements / opinions / recommendations 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 monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates,

equity prices or other rates or prices etc.

ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust 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 this material.

. .

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Ranking MethodologyName of the Category: NDTV Profit Business Leadership Award 2008. No. of Asset Management Companies in thecategory: 5 (Five). Name of Ranking Entity: NDTV Profit: Award Period: 2007-2008. Award Methodology/Criteria: Step 1: Identify "Award Categories" and design award process: Step 2: Develop "Nomination Universe" and short list companies

in each category. Step 3: Interaction with "Short listed Companies". Step 4:Identify "Nominees": Assess the performance of the short listed companies using ranking parameters to identify the Nominees (typically top 5 ranks) Step 5: Jury meeting :

Prepare jury docket , Participate in jury meeting.Ascertain the winner in each category based on the votes received. Loads were not taken into account for this award. Source: NDTV Profit. For further details visit www.ndtvprofit.com.

Readers Digest Award: ICICI Prudential AMC received the Trusted Brands ‘Gold Award’ in the Investment Fund

Company Category for the year 2006 from Reader’s Digest. The Gold Trusted Brand award goes to brands that score well above their competitors. Reader's Digest assigned its awards based on 7,000 consumer responses to questionnaires and

telephone interviews from across Asia. Respondents were asked to assign a score for each brand for the six core qualities: trustworthiness, credibility of image, quality, value, how well each brand understands consumers' needs, and its ability to innovate. (For detailed methodology and questionnaire kindly refer

http://www.rdasiatrustedbrands.com/2007/survey/meth.html). Past Performance is no guarantee of future of results.

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Ranking Methodology

ICRA Overall: Past performance is no guarantee of future results. ICICI Prudential Mutual Fund has been judged Fund House of the Year by ICRA Mutual Fund Awards 2008 in the Debt Category. The award is for performance in the period 2005-2007. There were 32 Mutual Funds in the category. The rank indicates top overall performance within the eligible

fund houses. The average performance of the entire scheme in a sub-category for a particular mutual fund house is multiplied by the weight of that category. These weights are derived by expressing the average asset under management

that the sub-category collectively holds as a percentage of the total industry corpus. The scores in the sub-categories are then added to arrive at the collective performance score for the fund house. The rank is an outcome of an objective and

comparative analysis against various parameters, including: risk adjusted return, fund size, company concentration, sector concentration and portfolio turnover. Ranking Source & Publisher: ICRA Online Limited. The ranking methodology did not take into account entry and exit loads imposed by the Fund.

Lipper Fund Awards India 2007: ICICI Prudential Asset Management Company (erstwhile Prudential ICICI Asset Management Company) has been awarded the ‘Best Overall Fund Group over 3 years’ in the category ‘Overall Group (3 years). The award is for performance in the period year 2004-2006. There were 9 Asset Management Companies in the

category. The funds that were considered for the award were funds registered for sale in the respective country as of the end of the evaluation year with at least 36 months of performance history as of the end of the evaluation year. Fund

groups with at least five equity, five bond, or three mixed-asset portfolios in the respective asset classes are eligible for a group award. An overall group award will be given to the group with the lowest average decile1 ranking of its respective

asset class results based on the methodology described above. In cases of identical results the lower average percentile rank will determine the winner. The decile ranking is obtained by the percentile ranking according to the formula: INT(((( Percentile Rank - 1 ) * ( 1 - 4.3.21 )) / 10 ) +1 ) in order to eliminate the percentile ranking bias within very small and very

large sectors by number of funds. The ranking methodology did not take into account entry and exit loads imposed by the Fund. A detailed methodology is available at www.lipperweb.com. Ranking and award Source: Lipper.

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THANK YOU

icic pru market ppt

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