icici july 19 issue

Vijay Chandok, MD & CEO, ICICI Securities Ltd.

Mutual funds in India have been

in ex is tence for over f ive

decades. The industry has

evolved through the years, with

c u r r e n t a s s e t s u n d e r

management (AUM) being over

Rs. 25 lakh crores. However,

AUM as a percentage of GDP

(gross domestic product) still

remains low. Mutual fund industry AUM has increased 2.5 times in a

year's span i.e. from Rs. 10.11 trillion (2014) to Rs. 25.94 trillion

(2019).

Only a small portion of Indian households' savings get channelized

into financial assets such as equity, mutual funds, etc. For instance,

during Q2 FY18 only 13.6 per cent of the total savings was in

financial instruments. The rest is largely invested into physical

assets such as gold and real estate. Out the total financial assets,

mutual funds form even a smaller portion at just 1.2 per cent.

Mutual funds are one of the best investment vehicles especially for

retail investors. The collective benefit that they offer - professional

management, diversification, liquidity, variety, etc., - is their unique

feature. Whether you are a new investor or have spent time in the

market, they are an ideal investment option for you, to meet your

financial goals.

Just name a goal, and there is an appropriate mutual fund for you. It

is important to first match the investment objectives to the type of

funds. For Long-term investments like retirement and children's

education and marriage, equity diversified funds or hybrid funds

make a great proposition. This is because, in the long run, equities

tend to outperform all other asset classes. For your medium and

ICICIdirect Money Manager July 20191

near-term investment, such as arranging an amount for down

payment of your car or a home, say within next six months to one

year, there are short to medium-term debt funds available. If you

want to save on taxes, there are mutual funds available for that as

well - Tax-saving Equity Linked Savings Schemes (ELSS). And if you

desire to take exposure into overseas companies, there are

international funds available too. ICICIdirect enables you to buy

mutual funds across asset classes and fund managers. The One

Click investment makes it easy to create a portfolio and invest in

multiple funds to suit your objectives.

Once you have identified the broad fund categories that are

appropriate for your requirement, you would want to zero down on

the individual funds in each of the categories. Performance of a fund

over a period of time compared to its benchmark and peers is

usually an important factor, but not the only consideration. Other

factors that you may are: fund manager's track record, his total

experience, fund's expense ratio, etc. At ICICIdirect, we provide you

with comprehensive research on Mutual funds on our website. In

addition, if you have bought funds through your account, we keep

you updated with the research on the portfolio page.

If you have not started investing in mutual funds already, now is the

time to do so. You can start with as low as Rs. 500 a month, by

investing through systematic investment plan (SIP). Investing in

mutual funds through SIP is an ideal investment strategy to achieve

your goals.

Our message remains the same - 'Keep investing and stay invested

for your life goals.' Through this magazine and our website

www.icicidirect.com we want to make an earnest attempt to partner

with you in setting and achieving your financial goals.

Your magazine is now also available on www.magzter.com, a digital newsstand.


Editor & Publisher : Abhishake Mathur, CFA

Editorial Board : Sameer Chavan, CWM®, Pankaj Pandey

Coordinating Editor : Rhea Miranda CMEditorial Team : Nithyakumar VP CFP , Sachin Jain, Research Team

2

Investing directly in equities can be an overwhelming experience, but not

everyone has the time or expertise to research so many individual stocks

available. Mutual funds offer a good alternative here, as you let the fund

manager do much of the work for you. But among mutual funds also, the

selection is wide with thousands of funds to choose from. How do you

know which ones are right for you?

In general, when investors select mutual funds, they take into account only

past performance. However, there are multiple factors you should

consider, such as fund manager's expertise, his track record, risk-adjusted

rate of return, size of the fund, expense ratio, and so on.

Choosing the right funds based on your needs is an integral part of building

a good mutual funds portfolio. Our cover story explains you how to narrow

down the multitude of funds.

Adding to this month's interview we have experts giving their insights on

Mutual fund industries performance, Mr. Peshotan Dastoor, National Sales

Director, Franklin Templeton Asset Management (India) Pvt. Ltd, Mr. Pankaj

Tibrewal, Sr. Vice President & Fund Manager (Equity), Kotak AMC and Mr.

Vinay Paharia, Chief Investment Officer (CIO), Union Asset Management

Company Private Limited.

This month edition is about Mutual Funds and all the basic elements that an

investor needs to know. Adding to this edition we have highlighted the

Union Budget 2019-20, so you can plan your investments simultaneously.

The July edition of Money Manager also offers comprehensive review of

mutual funds recommended by our research team. The top two stock picks

of the month are also selected by some of our finest research analysts. So

stay updated, manage taxes and keep reading to stay financially fit. Do

write us back at [email protected] for any queries or

feedback.


MD Desk........................................................................................................ 1

Editorial.......................................................................................................... 2

Contents......................................................................................................... 3

News............................................................................................................. 4

Stock ideas: Axis Bank and Sagar Cements................................................. 5

Flavour of the Month: Basics and all that you need to know about mutual fund

An ideal investment vehicle that is well-diversified, low cost and

tax efficient way of growing your savings. Funds' performance is

compared from its actual vs the benchmark showing its growth, risk

parameters to analyse the risk in the fund. A comparison is done

between mutual funds against other investment avenues, read the

article to know more.................................................................................... 13

Highlights on Union Budget

Are you anxious to know why the Union budget was termed Investment

friendly budget? Read to know…....................................................................... 25

Tête-à-tête

In the current situation with debt market, it's likely the conservative

investors are affected. A question arises that investment in fixed deposit

would have been safer than the debt fund. Let's take a look at our Fund

managers take on this matter…..................................................................... 29

Ask Our Planner

Our financial expert answers your personal finance queries …................ 39

Mutual Fund Analysis

Which are the top performing mutual funds in current market scenario?

Check these top infrastructure funds recommended by our research team... 44

This month on iCommunity

Look out for an extraordinary financial platform for traders and investors... 58

Equity Model Portfolio................................................................................ 59

Quiz Time........................................................................................................ 63

Prime Numbers............................................................................................... 64


Deadline for filing income tax returns extended to 31 August

The government on 23rd July extended the deadline for filing income-tax returns for the

FY20 assessment year by individuals and certain non-corporate assessees by one month

to 31 August. This applies to assessees other than corporate taxpayers and a few others,

including non-corporate entities, the books of which need not be audited, said the

Central Board of Direct Taxes (CBDT). The move is part of an effort to reduce ambiguity in

filing returns and to make assessment easier by capturing finer details. The Union budget

for FY20 also proposed that return filing will be compulsory for even those who fall below

the basic exemption limit of �2.5 lakh annual income, if they get into specified high-value

transactions such as spending on foreign travel.

Courtesy: Live Mint

K M Birla consolidates group companies under Birla Group Holdings

Kumar Mangalam Birla is consolidating group investment/holding companies under a

few heads. He is planning to merge Trapti Trading, TGS Investments, Turquoise

Investments and Finance, and a few other entities with Birla Group Holdings (BGH). The

investment companies that would be merged into BGH have substantial stake in major

group entities like Grasim, Hindalco, Aditya BirlaNSE -0.62 % Capital, Century Enka,

Aditya Birla Fashion and Retail. These companies do not have any stake only in Century

TextilesNSE 0.78 % & Industries, which is one of the companies Kumar inherited from his

grandfather, Basant Kumar (B K) Birla. Pilani Investments is a major shareholder in that

entity.

Courtesy: Economic Times

Indian passport will get you a free visa-on-arrival in Sri Lanka

Sri Lanka has granted approval to issue on-arrival visa to tourists from countries,

including India and China, aiming to revive its flagging tourism sector after the deadly

Easter bombings. On July 10, the Sri Lankan government planned to revive the visa on

arrival and free visa programme for 39 countries with effect from August 1. But the

programme then, however, excluded Sri Lanka's top source markets, namely India and

China, according to Colombopage.

Courtesy: Live Mint

Jolt to housing projects; housing finance cos to stay away from subvention

schemes

Several ongoing and soon-to-be-launched housing projects in metros and other major

cities could take a hit as a National Housing Bank (NHB) directive has circumscribed the

developers' ability to raise low-cost funds for construction under the schemes where

they service the loans taken by homebuyers to make down payments, till the projects are

completed. In a circular dated July 19, NHB asked the housing finance companies (HFCs)

to stop funding such 'subvention schemes', including in cases where the loans have been

sanctioned but disbursements are yet to commence.

Courtesy: Financial Express

STOCK IDEAS


AXIS Bank – RoE progression on track, valuation to sustain

Company Background

Axis Bank is the third largest

private sector bank in India.

The Bank offers the entire

spectrum of financial services

t o c u s t o m e r s e g m e n t s

covering Large and Mid-

C o r p o r a t e s , M S M E ,

A g r i c u l t u r e a n d R e t a i l

Businesses. The Bank has a

la rge footpr in t o f 4 ,050

domestic branches (including

extension counters) with

11,801 ATMs & 4,917 cash

recyclers spread across the

country as on 31st March,

2019. Recently, Mr. Amitabh

C h o u d h a r y h a s b e e n

appointed as the new MD and

CEO w.e.f January 1st 2019.

Investment Rationale

Focus on deposits, retail liability to

capture credit growth

Axis Bank has a strong liability

franchise. CASA deposits at `

243394 crore, account for

~44% of deposits while CASA

ratio has been ~44-45% for

almost a decade. However, the

recent slower deposit growth

in industry and also for Axis

Bank, remains a key focus area

to ensure prof i table and

sustainable credit growth. Axis

bank advances grew by 12.5%

Yo Y t o 4 9 4 7 9 8 c r o r e . `

Current ly, the loan book

comprises ~50% retail, 37%

corporate and 13% SME

segment, which is largely as

they would like. However, they

have kept no boundary rules to

keep any proportion fixed and

can vary on the basis of

opportunities.

Credit cost to be contained via

better risk assessment...

Of the incremental lending,

~95% was to corporates with

rating 'A- & above'. The bank's

'BB & below' rated book

continuously declined to `

7467 crore; 1.3% of gross

customer assets vs. 7.3% peak

in June 2016. Corporate

slippages were at 1369 `

crore, of which ~72% came

from 'BB & below' account.

Hence , c red i t cos ts a re

expected to moderate from

3.7% to 1.1% by FY21E. With


STOCK IDEAS

6

bulk of the pain recognized,

lower exposure to IL&FS &

anticipated recovery of large

stressed cases referred to

NCLT, we expect GNPA ratio to

improve to ~4% by FY21E.

Earnings recovery on track;

Maintain BUY

The focus of new CEO is on loans offering higher return on risk-weighted basis and tight cont ro l on cos t i s seen enhancing return rat ios. Contingent provision of 600 `crore in Q3 provides comfort. Recovery from NCLT cases

could act as positive surprise. We expect credit & deposit CAGR of 18.6% & 15.2% respectively & PAT CAGR of 48% over FY19-21E with RoA and RoE of 1.3% and 14.8%, respectively, by FY21E. We also build in value for its subsidiaries at 35 per share, `post 20% holding company discount. We have not factored recent fund raising of 18000 `crore through QIP/ Depository receipts/bonds etc . We remain positive on the bank with price target of 880, `valuing core bank at 2.9x FY21E ABV. We maintain our BUY rating.


STOCK IDEAS

7

Key Financials

Valuations Summary

Stock Data

` Crore FY18 FY19 FY20E FY21E

NII 18,618 21,707 24,746 29,894

PPP 15,594 19,004 21,812 26,991

PAT (263) 5,697 9,816 12,539

FY18 FY19 FY20E FY21E

BV (`) 247 263.2 303 347

ABV (`) 183 219 256 293

P/ABV (x) 4.0 3.4 2.9 2.5

EPS (`) (1.0) 22.2 37.5 47.9

P/E (x) NA 33.1 19.6 15.3

RoE (%) (0.4) 8.7 13.4 14.8

RoA (%) (0.0) 0.8 1.1 1.3

Particular Amount

Market Capitalisation ` 192436 crore

Networth ` 66676 crore

52 week H/L (`) 827 / 519

Face Value ` 2

DII Holding (%) 21.2

FII Holding (%) 49.6

Key risks include:

1) Deterioration of asset

quality to increase provision

r e q u i r e m e n t i m p a c t i n g

profitability.

2) Slower credit off take in the

economy


STOCK IDEAS

8

ANALYST CERTIFICATION I/We, Kajal Gandhi, CA, Vishal Narnolia, MBA and Harsh Shah, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all

of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our

compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above

mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not

serve as an officer, director or employee of the companies mentioned in the report.

Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited Sebi Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India's largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.

Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.


STOCK IDEAS

9

Sagar Cements Ltd. (SAGCEM) – Expanding footprints…

Company Background

Sagar Cement (SCL) is one of the low cost cement producer in the South region with total capacity of 5.8 MT. SCL sells cement in Telangana and Andhra Pradesh (51% of volumes), Tamil Nadu (14% of volumes), Karnataka (15% of volumes), Maharashtra (11% of volumes) and others (9% of volumes) Investment Rationale

Expanding its capacity steadily...Sagar Cement' production capacity in 2014 stood at 2.75 MT. In 2015, the company acquired 1 MT unit from BMM Cements and further acquired 0.3 MT Bayyavaram unit in 2016. Later it announced capacity additions of ~1.5 MT at its existing plants and completed the same in CY18, thus ending FY19 with an installed capacity of 5.75 MT. All these capacities are located in the states of AP & Telangana. T h e c o m p a n y n o w i s diversifying its geographical presence and would be setting up capacit ies in Madhya

Pradesh and Odisha thus adding 2.5 MT. These projects would be implemented at an outlay of ~ 730 crore and the `company would mark an entry in Central India and enhance its presence in eastern India from FY22E.

Cost efficiencies to improve, leading the EBITDA margins expansion… The company had installed a waste heat recovery unit at its Mat tampa l ly p lan t . I t i s c u r r e n t l y e x p e c t i n g commissioning of a captive thermal power plant of 18 MW in August 2019. Its total power generation capacity would reach ~61 MW post addition of the TPP. This will enable the company to become ~70% self-sufficient for its power consumpt ion. A lso post ramping up the capacity of its Bayyavaram unit to 1.5 MT, the c o m p a n y h a s b e e n reallocating its sales from Mattampally unit to this unit which will further rationalize its lead distance, thus optimizing i ts freight costs. Led by savings in power costs and optimization of lead distance flowing down to lower freight expenses, we expect margins


STOCK IDEAS

10

to expand to 16.9% by FY21E and EBITDA to grow at a 30.7% CAGR over FY19-21E to 255 `crore

Valuation & Outlook…Led by expectations of stable realisations post Q3FY20E and rationalization of costs, Sagar Cements ' prof i tabi l i ty is expected to remain healthy.

Also the company would be raising debt for funding the e x p a n s i o n , h o w e v e r Debt/EBITDA is expected to remain at comfortable levels of ~3.1x. We thus maintain BUY rating on the company valuing it at ~9.5x EV/EBITDA arriving at a target price of `800/share (implying EV/t of $76 per tonne).


STOCK IDEAS

11

Key Financials

Valuations Summary

Stock Data

` Crore FY18 FY19 FY20E FY21E

Revenues 1,038.1 1,217.6 1,359.2 1,512.9

EBITDA 151.3 149.4 222.0 255.1

Adjusted PAT 26.3 13.6 52.5 69.5

EPS (`) 12.9 6.7 25.7 34.1

FY18 FY19 FY20E FY21E

PE (x) 50.5 97.6 25.2 19.1

M.Cap/ Revenues (x) 1.3 1.1 1.0 0.9

EV to EBITDA (x) 11.5 12.0 8.8 8.3

P/B (x) 1.7 1.6 1.4 1.2

ROE (%) 3.4 1.6 5.4 6.2

RoCE (%) 8.1 6.4 9.7 10.2

Particulars Amount

Market Capitalisation ` 1326 crore

Debt (FY19) ` 499 crore

Cash (FY19) ` 30 crore

EV ` 1795 crore

52 week H/L ` 830/ ` 529

Equity capital ` 20.4 crore

Face value ` 10

Key risks include:

1. Significant reduction in

cement prices could impede

the company's profitability

and cashflows

2. The company is also exposed to crude as freight

(diesel) and petcoke form more than 50% of operational costs.

3. Delay in implementation of the planned expansion can create stress on the balance sheet


STOCK IDEAS

12

ANALYST CERTIFICATION I/We, Rashesh Shah, CA, Romil Mehta, CA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.

Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India's largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.

Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

FLAVOUR OF THE MONTH


‘Basics and all that you need to know about mutual fund'

Mutual funds are the best investment option for beginners as well as

busy and seasoned investors. They offer diversification, professional

money management, liquidity, convenience, and a wide range of

options to choose from. Today, there are more than 2,000 mutual fund

schemes in the market, managed by 44 fund houses. How does one sift

through such a vast selection and pick the winners?

Most investors choose the funds solely on the basis of past

performance without giving much attention to other factors. What are

those factors one should consider while assessing a fund? Here we

discuss...

Why Mutual Funds?

Over a period of time, mutual

f u n d s h a v e b e e n e a s y

i n v e s t m e n t v e h i c l e t o

investors, with the benefits of

higher returns, diversification

and support of professional

e x p e r t s , m o v i n g a w a y

gradually from the traditional

investments. The investor gets

the opportunity to invest in

different stocks through the

MF medium. There is a pool of

investment that ensures the

risk is diversified especially

when some stocks are not

performing well and has

ut i l i zed d i f ferent market

segment.

There is transparency in the

investments as one can view

the fund manager's investment

strategies and there is flexibility

available to the investors in

entry and exit. The funds not

just have these features but

they perform well too. Average

size of an AUM is not less than a

crore and today's total size of

the Indian AUMs is up to Rs. 25

lakh crore. Right from the time

SIPs came into existence the

numbers for SIP mutual fund

doubled making a rise of 2.74

crore SIP accounts in Indian

Mutual Fund segment data

taken from AMFI. SIPs got

handy to investors as there was

periodic amount debited,

compounding effect and no

s t r e s s o f r e s e a r c h o n

i n v e s t m e n t a s t h e f u n d

manager would take care of it.

Mutual fund has caught all the



sectors and industry so far making its existence essential. And now the traditional mode of investment in FDs, real-estate, gold, bonds, and commodities are less utilized as compared to the sector/ industry specific Funds that give better returns.

Depending on the duration and

the type of fund, long and short

term capital gains are charged.

Most investors use the mutual

fund tax saving schemes to

avail tax benefit on their

income. Due to dif ferent

opportunities provided by

mutual funds, investors tend to

think of investing in MF than

any other investment options.

Let's do a quick background check on mutual funds, MF is a pool of investment done by fund managers in different investment avenues. Different funds have different purpose. Let's take a look at the various types of funds. Let's take a look at the various terminologies in mutual funds.

Types of Mutual fund:Equity funds: These funds typically have maximum allocation in equity shares. Their main objective is capital appreciation with investment mainly in sectors of growth and value.Debt funds: These funds invest in debt and money market especially the deposits, bonds or corporate debentures. Duration is mostly long term investment.Hybrid Funds: These funds have a balance of equity-debt that enables a conservative investor to keep a balance of risk diversification and capital appreciation.Arbitrage Funds: An Arbitrage funds are similar to hybrid funds the only advantage the funds gets is utilizing the opportunity of different market segments. Thus, balancing the risk gets easier for an arbitrage funds.ETFs Funds: These funds are index based funds traded on the exchange and holds assets in bonds, commodities, stocks, etc.Small Cap, Mid Cap, Large Cap and Multi Cap are all companies size based investment.



New Fund Offer (NFO): A New Fund Offer is introduction of a new fund. An IPO is similar to an NFO where you get to purchase before getting listed on the exchange, here the difference is an IPO comes up with new company's share and NFO with a new fund. Asset Management Company comes up with an NFO to complete their product basket or when there is a demand for a specific investment category. There is a specific duration for issuing an NFO. Investing in an NFO is easy as you can contact the broker or invest online through your trading account. Investors looking for liquidity could invest in open-ended NFOs, as they could purchase and sell units innumerous times.

Investment Style:Value based funds: This investment strategy has stocks trading in selected stocks that trade less than its intrinsic value.Growth based funds: This investment strategy has stocks that are above average growth i.e. stocks that are expensive.Dividend based funds: These investments invest in companies offering higher dividends.Open-ended funds: These funds enable an investor to issue and redeem shares at any time.Close-ended funds: These funds enable investors to issue in fixed number of shares but cannot redeem them at any point until its lock-in period.Interval Funds: These funds have a combination of open and closed ended funds that investors could choose to switch in those types. Especially investors seeking to invest in unconventional asset.Systematic Investment Plan (SIP): A SIP is a regular investment plan that enables you to invest in your preferred choice of fund. Every month an amount is deducted towards this fund that compounds the value and fetches higher returns. Minimum of Rs. 500 can be invested in an SIP.Systematic Transfer Plan (STP): An STP enables you to transfer the units from the existing fund to another fund but under the same



fund name. There is a limit to switch funds in a year that is different for every company fund.Systematic Withdrawal Plan (SWP): A SWP allows you to withdraw part of the amount from the units periodically. This plan is effective for the retired individuals as it benefits them by staying invested and utilizing a fixed amount for their daily requirements.

Understanding the performance of

mutual fund:

Parameters to be looked up on:

Performance: The funds' past

performance determines the

f o r e c a s t o f t h e i r f u t u r e

performance. Relying only on

past performance is not the

right option as the future is

uncertain. Past performance

could give only 10% of the

performance review, so the

other elements mentioned

below, have to be looked over.

Comparison: Compare the funds'

actual performance with the

performance of its benchmark,

to understand how better it has

fared. You can also compare

the performance of a fund

against the performance of

other funds. While comparing,

make sure you do it between

the same categories, and don't

compare a large cap fund to a

small cap fund.

Duration: When considering the

type of investment, time period

plays an important role.

Investors with a long term

perspective choose equity

oriented funds that will give

higher returns in the period of

3-5 years. Short term investors

are for liquidity thus the risk is

higher, investors need to

choose the right funds.

Returns: A fund that performs

well gives good returns is the

assumption of every investor,

it's true. But relying only on the

returns generated in those

funds is not the best strategy,

investor has to check the risk

involved in those funds against

the adjusted returns.

Risk: Every investment has risk

attached to it. Risk refers to the

uncer ta in ty o f the pr ice

f luctuat ion due to the



env i ronmenta l impact

(political, social, economic),

foreign investments, fund

managers performance scale,

etc; risk that the actual returns

earned should match the

expected returns; portfolio risk

that the assets are rightly

allocated in equity-debt or

various sectors The capacity of

risk needs to be measured by

the investor before selecting a

fund.

Risk Parameters:

a. Standard deviation

Standard dev ia t ion i s a

measure of volatility of returns

on funds that is it tells us how

much the return of a fund can

deviate from its historical

mean. For example, if the

average rate of return is 15 %

and standard deviation is 15%,

then the likely range of the

returns would be -15% to

+30%.

b. Beta

Beta refers to the sensitivity of

t h e i n v e s t m e n t r e t u r n

compared to the market as a

whole. Hence, the beta of a

benchmark would always be 1,

wh ich denotes abso lu te

sensitivity to itself. Hence, a

fund with a beta greater than 1,

is more volati le than the

benchmark and less than 1 is

less volati le than the

benchmark.

c. Sharpe ratio

In Sharpe Ratio the returns are

c o m p a r e d w i t h t h e r i s k

involved in the fund. The ratio

is the average return earned in

excess of the risk-free rate, per

unit of volatility. If Sharpe ratio

of a fund is 0.5, it means that for

every unit of risk taken the fund

has generated half amount of

return. Hence more the Sharpe

ratio is better. Any fund with a

Sharpe ratio near 1 indicates

that return is at par with the risk

it is taking.

d. R Squared

R-sqaured explains the

correlation of a fund's

performance with that of its

benchmark. The value ranges

from 0-100. For example, a

mutual fund with an R-squared

value between 85 and 100 has

a performance record that is

closely correlated to the index.



e. Alpha

Alpha is the excess returns

provided by a fund over its

relevant benchmark on a risk-

adjusted basis. Between two

funds in the same category, a

fund having a higher alpha

gives you an edge over the

other.

Riskometer:

A riskometer is a meter that

indicates the risk involved in

the fund. I t enables the

investors to understand the

level of risk the fund has and

can calculate his risk capacity

accordingly. The risk was

measured in 3 levels but to get

more clarity of the funds'

performance SEBI introduced

5 levels. Now the investors

cou ld check the i r funds

whether it falls into: low,

moderately low, moderate,

moderately high and high

category.

Low: The indicator implies that the fund is the safest and conservative investor would choose this fund.

Moderately low: The indicator for this fund is safe investment and could be invested for a period of 1-3 years. This category implies short to medium term bonds.

Moderate: The indicator implies that the fund has moderate risk, investors with medium to long term investment horizon could choose these funds. The fund includes investments in Arbitrage funds, Monthly investment plan funds, Hybrid debt-oriented funds. Here, the f u n d s a r e f o r s e m i -conservative investors who wish to keep a balance of risk and returns.

Moderate high: The indicator i m p l i e s t h e f u n d h a s a modera te h igh r i s k and investment would be in large-cap segment. These investors are seeking to create wealth and have a long term duration in the investment. These funds include Diversified Equity funds , ba lanced equ i ty-oriented, Index funds, Gold ETFs, etc.



High: The indicator states that

the fund is very risky and

investors that wish to stay for a

long period could go for this

fund. This fund includes

International funds, sectorial

funds, thematic funds and

micro-cap funds.

O t h e r A s p e c t s t o b e

considered:

Fund manager's expertise: The

duration that the fund manager

has been handling the fund.

With regards to the fund; the

way the portfolio is diversified,

the areas of investment, as per

the fund name is the

investment d iversi f ied

accordingly like balance fund

should have approx. equal

ratio of debt-equity, recovery

ratio if the fund has been

undervalued in the past, every

investment decision needs to

be justified in the portfolio.

Funds Objective: Every Fund has an objective and an investment s ty l e to pe r fo rm. When choosing a fund, investor needs to first list the AMC. Of w h i c h i n v e s t o r h a s t o determine whether he wishes

to go for a long term investment or a short term investment. For investment style there are variety option available to the investor i.e. a comple te equ i ty based , complete debt based, mix of both balanced or hybrid, ETF based, sector based funds to its more bifurcation there is g r o w t h , d i v i d e n d , e t c . available to the investor. Based on the goals, risk appetite, financial conditions, time period of the investor all has to match the funds objective.

Expense Ratio: While the fund manager is handling your p o r t f o l i o t h e r e a r e management charges applied to it such as administrative cost, management salary, overheads and the fund managers separate brokerage charges. All of these charges are c lubbed in the NAV invested. One needs to check for the expense ratio as it should not eat up the returns earned. Also, an investor s h o u l d k n o w t h a t t h e distribution costs is excluded in a direct plan so it's cheaper than a regular plan.



Exit load: An exit load is the expense to be paid for exiting the fund i.e. selling the fund. This expense is charged at the time of selling the fund within a year as per the duration of the fund. Getting a low expense ratio and invested for long duration in the fund is a better decision.

Portfolio Allocation: Funds with specific focus on a particular stock or sector seems to be risky and volatile. Investors who have a high risk appetite could go for these funds. The top 10 stock holding in a fund matters as the performance of each could change the returns earned. A well-diversified portfolio shows the fund is going to last for long and has

the growth potential.

Funds Turnover: Turnover states

the times the fund manager

has purchased and sold the

stocks. Higher the turnover,

higher will be the volatility of

the funds' performance.

Mutual Fund vs other investment

Fixed Deposit v/s Debt Funds

The comparison of investment

is happening with the

conservative investors seeking

to have a fixed income based

investment. Both have their

a d v a n t a g e o u s a n d

disadvantage but one being

the traditional form investors

l ikely switch to the new

investment style.

Features

Fixed deposit

Debt funds

Aim of

Investment

Safe & fixed return providing

investment Relatively safe investment providing a

slightly higher return

Return on

Investment

Returns range between 6 -8%, based

on the duration and is fixed for a

duration

Debt funds returns could range to 7 -9%.

Investment

Objective

Objective of a fixed deposit is to

provide the fixed interest rate for

the duration, irrespective of the

interest provided in the market.

Debt funds have different categories,

based on duration and funds with

complete allocation in bonds, and

government securities.

Taxes applied

on interest /

capital gains

Interest Income earned Up to Rs.

50,000 from bank fixed deposits is

exempt from tax, for senior citizens.

Otherwise, interest is taxable.

For debt fund long term (more than 36

months), capital gains are taxed at 20%

with indexation and for short term (upto

36 months) , capital gains are added to

income and taxed as per income slab.

For dividends declared in Debt funds

dividend distribution tax is applied at

29.12%



Tax Benefit

on

investment

Tax benefit under section 80C up to

1.5 lacs for 5 -year bank FDs.

No tax benefit on debt funds

Tenure/ Lock -

in-period

Except for 5 -year tax saving bank

FD, no lock in period for other FDs.

There is no

lock-in period, except for

fixed maturity plans and closed-ended

funds

Liquidity Liquidable; however, on premature

withdrawal, the interest paid would

be based on the rate offered for the

actual period of holding, instead of

the rate offered for the original

period intended to hold. In

addition, there could be a penalty

too for premature withdrawal.

Liquidable but taxes will be applied on

withdrawal. There could be exit load, if

withdrawn before the specified period

Risk Credit risk, specifically in case of

corporate fixed deposits.

Interest rate risk and credit risk, based

on the fund invested into.

Which one to choose would

end of the day depend on one's

risk appetite. If one cannot take

any risk, FD would suit better.

However, if one is fine with low

risk, but with chances of a

slightly better return, then debt

funds would suit better. Also,

for investors in the highest tax

bracket, for long-term, debt

funds of fer a bet ter tax

treatment on the capital gains.

Physical gold vs Gold funds

Performance of gold has not

been structural from the

beginning. Gold has been

performing only for a short

duration especially when the

markets are down or during a

global recession.

Features

Physical Gold

Gold funds

Aim of

Investment

Purchasing physical gold was the

main investment in traditional times

and at present too. Women consider

physical gold as a part of their

marriage goals.

Gold funds are open-ended funds that

invest in units of gold ETFs. It is

purchasing gold in digital format. This

investmen t could be on -going

purchase where you could purchase

and sell repeatedly.

Return on

Investment

Based on the value in the market at

the time of selling the gold.

Returns are uncertain as the value

fluctuates but in ETF due to multiple

buyers and sellers the returns could be

certainly ranged.

Investment

Objective

Physical gold is for long term

investment.

Gold ETF/ Funds could be for short,

medium and long term investment



Charges

Implied

Physical gold has making charges

implied on it.

Gold funds has minimum charges of

expense ratio, portfolio managers

expenses, etc.

Taxes applied

on capital

gains

For long term (more than 36

months), capital gains are taxed at

20% with indexation and for short

term (upto 36 months), capital gains

are added to income and taxed as

per income slab.

Same as physical gold. For long term

(more than 36 months), capital gains

are taxed at 20% with indexation and

for short term (upto 36 months) ,

capital gains are added to income and

taxed as per income slab.

Liquidity In case of Physical gold, it requires to

be personally sold at the seller’s end.

Liquidity is higher in Gold funds as

investors could sell at any point.

Risk There is a risk of theft & price

uncertainty

Price uncertainty

Which one is better may depend on the objective of the investment. While gold funds provide features like investing

in small amounts regularly through SIP and liquidity, physical gold loses out on these points.

Public Provident Fund (PPF) vs Equity Linked Saving Scheme (ELSS)

Features Public Provident Fund

(PPF )

ELSS (Mutual Fund)

Aim of

Investment

To avail tax benefit and earn

steady returns with capital

protection

To avail tax benefit and

higher returns.

Return on

Investment

Rates in an PPF is revised

every quarter so the returns

could be lower or higher but

stays in the range of approx.

8%

Returns received in ELSS

is flexible and much more

than PPF, in the long term

Investment

Objective

PPF is a long term

investment strategy.

ELSS

is a medium-large

term investment. The

main objective of an ELSS

is to fetch higher returns

Taxes

applied on

The interest and maturity

proceeds of PPF are exempt

For ELSS funds, long term

(more than 12 months),



Investment in PPF and ELSS both have their own benefits. While PPF offers a secured steady return, ELSS offers a

higher return, with higher risk. One may invest into both as w e l l t o d i v e r s i f y t h e investments and risk.

Stocks vs Equity funds

Features

Stocks

Equity funds

Aim of

Investment To earn higher returns

To earn higher returns

and diversify the

investments

Return on

Investment

Could vary according to the

market volatility and your

trading style; generally

higher than other asset

Could vary depending on

market volatility, the

funds’ performance;

generally higher than

classes over long term The

last 10 years’ return of Nifty

is 9.45% p.a.

other asset classes over

long term. The average

returns of large cap

interest /

capital gains

from tax under the EEE tax

regime.

capital gains are taxed at

10% beyond Rs.1 lakh

and short term (upto 12

months), capital gains are

taxed at

15%.

Tax Benefit

on

investment

Tax benefit is available

under section 80C up to 1.5

lakh

Tax benefit is available

under section

80C up to

1.5 lakh

Tenure/

Lock-in-

period

The duration for a PPF is 15

years, which can be

extended further in blocks

of 5 years

The lock -in period for an

ELSS is 3 years; however,

the fund can be

redeemed any time after

the completion of the

lock-in pe riod .

Liquidity

There is restriction in

withdrawal, but investors

could withdraw partial

amount, post 7 thyear of the

investment.

There is liquidity in ELSS

as investors could

withdraw whenever they

feel the need, but only

post the completion of

Risk

It is risk free, as it is backed by

Government of India

The risk is higher as the

money is invested in

stocks.



Summing up:Trading in the market requires expertise and time, of which mutual fund investment seems to go well. Performance of mutual funds have been consistent but do check the risk parameters on timely

equity funds over last 10

years large is 10.56% p.a.

Taxes

applied on

capital gains

/ dividends

For Equity shares long term

(more than 12 months)

capital gains are taxed at

10%, above Rs.1 lakh and

short term ( upto 12

months) capital gains are

taxed at 15% . Dividends

upto Rs.10 lakh in a year are

exempt from tax.

For Equity funds long

term (more than 12

months) capital gains are

taxed at 10%, above Rs.1

lakh and short term (upto

12 months) capital gains

are taxed at 15%.

Dividend distribution tax

applicable is 11.648%.

Liquidity

Can be redeemed any time.

Within T+2 days, the

amount is credited to your

account.

Open -ended funds can be

redeemed any time

subject to exit load.

Within T+2 days, the

amount is credited to

your account.

Risk

Market risk is high. And

diversification risk is high in

equity share if you are

investing in only one or few

stocks.

Though the risk is

diversified among the

portfolio assets, the

overall risk in equity

funds is high due to

market risk

The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities

basis. Mutual funds seem to be better than other investments as in long term they fetch better returns and secure risk of the portfolio by means of diversification than any other investments.


HIGHLIGHTS ON UNION BUDGET

Key highlights of the Budget:

Due to a slew of measures •taken by government, the

d i rec t tax revenue has

increased 78.2%, from Rs.

6.38 lakh crore in FY14 to Rs.

11.37 crore in FY19. It is

growing at a double digit rate

every year

R a i l w a y i n f r a s t r u c t u r e •requirement is estimated at

Rs. 50 lakh crore in 2018-30.

Current annual spend hovers

around Rs. 1.5-1.6 lakh crore.

Therefore, the government

proposes to use public-

private partnership model for

faster development and

completion of tracks, rolling

stock manufacturing and

delivery of passenger freight

services

T h e g o v e r n m e n t h a s •announced its intention to

invest Rs. 100 lakh crore in

infrastructure over the next

five years

Currently, the lower rate of •25% is only applicable to

companies having annual

Highlights on Union Budget 2019-20

This year's union budget was titled investment friendly Budget

where the purpose was to create conducive ecosystem that

focuses on raising intellectual, financial capital and labour. The

shift from traditional template of focusing more on headline

revenue and expenditure segment to a segmental detailed plan

of action was a welcome change and reflected as an apt mix of

reform focus, pragmatic and inclusive strategic intent. The key

positive areas were the re-capitalization allocation for PSUs of Rs.

70, 000 and the fiscal deficit to the target to 3.3% of GDP (vs. 3.4%

built in interim Budget). Along with the changes in the tax

segment, focus on EV (Electric Vehicles) manufacturing and oil

prices. The government proposal has set to raise public

shareholding threshold from 25% to 35% in listed companies,

this potential amount could be raised from private companies up

to Rs. 2 lakh crore.



turnover up to Rs. 250 crore.

The government proposes to

widen this to include all

companies having annual

turnover up to Rs. 400 crore.

This will cover 99.3% of

companies

P r o p o s e d l e v y o f t a x •deduction at source (TDS) at

the rate of 2% on cash

withdrawal by a person in

excess of Rs. 1 crore in a year

from a bank account

P r o p o s e d t o e n h a n c e •surcharge on individuals

having taxable income from

Rs. 2 crore to Rs. 5 crore and

Rs. 5 crore and above so that

effective tax rates for these

two categories will increase

a r o u n d 3 % a n d 7 % ,

respectively

In order to discourage the •practice of avoiding dividend

d i s t r i b u t i o n t a x ( D D T )

through buy back of shares

by listed companies, the

government proposes to

provide that listed companies

shall also be liable to pay

additional tax at 20% in case

of buy back of share, as is the

case currently for unlisted

companies.

The government is setting an •enhanced target of Rs. 1, 05,

000 crore of disinvestment

receipts for the financial year

2019-20. It will undertake

strategic sale of PSUs. The

g o v e r n m e n t w i l l a l s o

continue to consolidate PSUs

in the non-financial space as

well

Proposed to give relief in levy •of securities transaction tax

(STT) by restricting it only to

the d i f ference between

settlement and strike price in

case of exercise of options

Proposed that one woman in •every self-help group (SHG)

will be made eligible for a

loan up to Rs. 1 lakh under the

M U D R A S c h e m e .

Fur thermore , for every

v e r i f i e d w o m e n S H G

member having a Jan Dhan

Bank Account, an overdraft of

Rs. 5000 shall be allowed

For ease of access to credit •for MSMEs, the government

has introduced providing of

loans up to 1 crore for

MSMEs within 59 minutes

through a dedicated online


portal. Under the Interest

Subvention Scheme for

MSMEs, Rs. 350 crore has

been allocated for FY20 for

2% interest subvention for all

GST registered MSMEs, on

fresh or incremental loans

Regulation of HFCs has been •moved from NHB to RBI.

Propose to consider issuing •Aadhaar card for Non-

Resident Indians with Indian

Passports after their arrival in

India without waiting for 180

days

To resolve the 'angel tax' •issue the start-ups and their

investors who file requisite

declarations and provide

information in their returns

will not be subjected to any

kind of scrutiny in respect of

valuations of share premiums

Pr o p o s e t h a t b u s i n e s s •establishments with annual

turnover more than Rs. 50

crore shall offer such low cost

digital modes of payment to

their customers and no

c h a r g e s o r m e r c h a n t

d i s c o u n t r a t e s h a l l b e

imposed on customers as

well as merchants

A public sector enterprise viz. •New Space India (NSIL) has

been incorporated as a new

c o m m e r c i a l a r m o f

Department of Space to tap

the benefits of the research &

development (R&D) carried

out by ISRO

T h e g o v e r n m e n t i s •developing 17 iconic tourism

sites into world class tourist

destinations and to serve as a

model for other tourism sites

G o v e r n m e n t p l a n s t o •promote more 'Zero Budget

farming'. In turn, this reduces

consumption of chemical

fertilizer and agro chemicals

while increasing the usage of

organic manures

It is proposed to make PAN •and Aadhaar interchangeable

and allow those who do not

have PAN to file Income tax

returns by quoting their

Aadhaar number

To facilitate on-shoring of •in ternat iona l insurance

transactions and enable

opening of branches by

foreign reinsurers in the

I n t e r n a t i o n a l F i n a n c i a l

S e r v i c e s C e n t r e , t h e



government proposes to

reduce net owned fund

requirement from Rs. 5000

crore to Rs. 1000 crore

T h e g o v e r n m e n t h a s •p r o p o s e d a d d i t i o n a l

deduct ion of up to Rs.

1,50,000 (total Rs. 3,50,000)

for interest paid on loans

borrowed up to March 31,

2020 for purchase of an

affordable house valued up to

Rs. 45 lakh. This move will

boost demand for affordable

housing and will be positive

for leading real estate players

D e d u c t i o n f o r i n t e r e s t •payment on electric vehicle (EV) purchase up to Rs. 1.5 lakh per annum for loan taken t i l l F Y 2 3 . Fu r t h e r, t h e government has proposed to

the GST Council to reduce GST rate on EV from 12% to 5% and lowered customs d u t y o n c e r t a i n E V components

Hiked customs duty on •imported gold from existing 10% to 12.5%. Gold prices are already prevailing near all-time highs. An increase in customs duty would increase the price of gold jewellery for the customer, which can negatively impact volume growth for jewellery sector

T o p r o m o t e d i g i t a l •transactions, the government has proposed that no charges or merchant discount rate (MDR) shall be imposed on customers as well as on merchants as RBI and banks will absorb these costs


For more details you could click here:

http://content.icicidirect.com/mailimages/IDirect_BudgetRevie

w_2019-20.pdf

Source: ICICIdirect research reports (Union Budget Review 2019-20)

Tête-à-tête


Expert's insights on Market Scenario

Declining interest rates on traditional products are likely to push savers

towards market linked products like mutual funds which have the

potential to provide higher inflation adjusted returns, says Mr. Peshotan

Dastoor. Mr. Pankaj Tibrewal believes, from a market cap point of view

small and mid-market cap segment provides potential upside for long

term investors who have an ability to withstand higher volatility. Mr.

Vinay Paharia tells us that investors desirous of compounding their

wealth should consider Growth plan, while those needing income

payouts from time to time should invest in Dividend plans. Likewise to

know more about other aspects and market insights, read our expert's

views on mutual funds….

Mr. Peshotan Dastoor,National Sales Director,

Franklin Templeton Asset Management (India) Pvt. Ltd

Q. Could you give us an outlook on the mutua l f und i ndus t ry ' s performance?

A. India's mutual industry's growth has been fast paced in recent years with over 20% annualized growth seen over the last 5 years as the AUM crossed Rs.25 lakh crore as of June 2019 from Rs.10 lakh crore in July 2014. Despite this

growth, mutual funds form less than 5% of India's financial savings with only about 2 crore investors vis-a-vis over 6 crore individuals filing income tax returns. This lower base indicates a great potential to improve penetration.

Further, declining interest rates

on traditional products are

likely to push savers towards

market linked products like

mutual funds which have the

potential to provide higher

inflation adjusted returns.

Other reasons in favour of

mutual funds include rising

middle class incomes, a large

millennial population which is

aspirational and willing to try

out modern financial products

Tête-à-tête


besides the 'Mutual Funds Sahi

H a i ' i n v e s t o r e d u c a t i o n

campaign by AMFI which has

helped to improve awareness

about the investment vehicle.

Other than these factors,

technology will play the role of

an enabler in improving

penetration with rising internet

and mobile phone penetration

which will help mutual funds

build scale through the online

route. Technology being

geography agnostic will not

only help improve distribution

reach across the country but

will also reduce costs and

improve ease of investing.

Higher growth will continue to

come from tier 2 cities (called

B-30) vis-à-vis their larger

c o u n t e r p a r t s . W i t h t h e

industry AUM at only 13% of

our GDP compared to the

global average of 55%, AMFI's

target of Rs.95 lakh crore

industry AUM by 2025 at a

growth rate of 20% annually,

seems to be on the right track.

Q. Growth or Dividend, which type

of plan should an investor go for in

the long-term investment?

A . T h e m a j o r d i f f e r e n c e

between growth and dividend

option is the cash flows. The

growth option has only a

t e r m i n a l c a s h f l o w o n

redemption while the dividend

option has intermittent cash

f l o w s b a s i s a v a i l a b l e

distributable surplus with the

fund. Hence investors desiring

intermittent cash flows may

choose the dividend option

while those whose goal is long

term wealth creation may

choose the growth option

which helps to create wealth

u s i n g t h e p o w e r o f

compounding. Let us also look

at the myths associated with

the dividend option –

· Dividends received do not impact

the value of holding - Many

investors are not aware that

dividends are paid out of the

fund's corpus and the NAV of

the dividend option reduces to

the extent of the dividend

distributed to investors. Unlike

mutual funds, a stock dividend

does not impact the share

price.

· Dividends are a source of regular

income – This is not true

b e c a u s e d i v i d e n d s a r e

Tête-à-tête


declared only if there is a

distributable surplus available

in the fund's corpus. Such a

surplus is formed when the

markets are in a secular

uptrend. The surplus may dry

up when the markets are in a

bear phase.

· Dividends are tax free – While

investors do not pay any tax on

dividends, the fund house

d e d u c t s a d i v i d e n d

distribution tax at source

b e f o r e t r a n s f e r r i n g t o

investors.

Q. What's the current outlook for

d e b t f u n d s ? D o y o u t h i n k

investments in FDs would be safer

than debt funds?

A. It is important to know that

there is little similarity between

FDs and debt funds. Further,

neither FDs nor debt funds are

completely risk free. From an

investor's point of view, it is

important to be well-versed

w i t h t h e r i s k - r e t u r n

propositions offered by FDs

and debt funds as risk and

returns go hand in hand

(higher risk often leads to

higher returns and vice versa).

While FDs provide assured

returns, the principal in case of

a default is guaranteed only to

the extent of Rs.1 lakh per

investor per account. On the

other hand, debt funds carry a

relatively higher risk but they

have the potential to provide

relatively higher market linked

returns. They are associated

with one or a combination of

risks, viz., Interest rate risk,

Credit risk and Liquidity risk.

The recent credit events

related to non-banking finance

compan ies (NBFCs) and

housing finance companies

(HFCs) have put the focus on

credit and liquidity risk faced

by debt funds. Debt funds offer

the following advantages vis-

à-vis FDs –

· Indexation benefit – Debt funds

offer tax efficiency in the form

of indexation benefits wherein

only those returns earned over

and above the inflation rate are

t a x e d , p r o v i d e d t h e

investment is for more than 3

years. FDs on the other hand

are taxed at slab rates on the

total returns.

· Taxed only on redemption –

Unlike bank deposits which are

taxed for accrued interest

every year at slab rates till

Tête-à-tête


maturity, debt mutual funds

are taxed only if there is a

redemption, that too on the

amount redeemed and not on

the entire corpus.

· Tax Efficient Regular Income via

SWP – One can choose regular

withdrawals from debt funds

via systematic withdrawal

plans or SWPs. The cash flows

here are more tax efficient than

regular income via FDs.

· Easy liquidity – FDs have a

premature withdrawal penalty

and the minimum lock-in is 7

days. On the other hand, there

are several open-ended debt

funds which have no exit load

and one can invest even for

one single day.

While debt funds have had

issues, the fact is that when

you invest in a corporate

credit, the possibility of an

upgrade or downgrade exists.

Such a downgrade is not an

accident but a part and parcel

of investing in debt funds

(much like volatility due to

market movements in equity

funds). However, if you hold a

well-diversified portfolio then

the impact of a particular paper

being stressed is such that the

net residual yield on the

portfolio still compensates the

investor for the risks taken. But

if you hold large concentrated

portfolios then obviously it will

c h a n g e t h e r i s k r e w a r d

equation unfavorably.

The aim of debt funds is to

maximize returns in multiple

ways - buy corporate bonds

vis-à-vis government bonds

for a better yield (spread); buy

AA and A rated bonds to gain

from their higher yields;

increase or decrease portfolio

maturity basis expectation of

rise or fall in interest rates to

gain from interest rate risk. An

investor could lose returns in

case these calls go wrong, but

the impact may often only be

transient.

Investors who lack the appetite

for credit risk can look at

categories like Banking & PSU

Debt funds, overnight, liquid

and money market funds

which often have shorter

d u r a t i o n s , a n d l o w e r

exposures to co rpora te

credits. Investors wishing to

benefit from the potential for

Tête-à-tête


higher returns in debt funds,

must be resilient, understand

the risks, and learn to mitigate

these. Ultimately investors

should choose the fund that

matches their goals and risk

appetite.

Q. In the coming few years, which

sector is going to perform well?

Which sector would you suggest

and why?

A. T h e r e h a v e b e e n

considerable improvements in

the asset quality. The PSU

Bank recap i ta l i za t ion a t

Rs700bn is ahead of street

expectations by almost 30-

40%. This should help provide

some growth capital to these

entities hopefully kick starting

credit f low. Banking and

Finance sector is expected to

perform well.

Q. Do you think parking money in

one fund for 10 years is profitable

or there is a need to switch your

f u n d s e s p e c i a l l y w i t h

underperforming funds?

A. Historically it is proven that

the potential to create wealth

from equity funds increases

with the increase in investment

horizon. Hence it is crucial for

an investor to stay invested for

a longer time periods to benefit

f r o m t h e p o w e r o f

compounding. Investment

horizons of above 5 years are

generally suggested for equity

funds but longer periods of 10

years and above are always

better.

When it comes to reviewing a

fund's performance, it should

not only be done at regular

intervals but also in a holistic

way. One of the common

mistakes, investors make

while reviewing a fund's

performance is that they look

a t o n l y r e c e n t u n d e r

performance and not its track

record across market cycles.

Besides, investors must also

look at the risk taken to

genera te those re tu rns .

Performance of other funds

managed by the fund manager

is also another useful input.

Apar t f rom quant i t a t i ve

factors, one must also look at

qualitative aspects like fund

house pedigree, quality of

p o r t f o l i o t e a m , r i s k

management processes ,

investor communicat ion,

Tête-à-tête


among others. Based on this

holistic approach, one can

decide to switch or not.

Q. Based on what factors should

one choose a New Fund Offer?

How good is it in comparison to

other existing schemes?

A. The rule of thumb is that an

existing fund with a track

record will have preference

over an NFO without a track

record. However, one may

consider the NFO if is launched

under a new category which is

not available with other fund

houses.

There are some important

factors that an investor can

consider while evaluating an

N F O. A p a r t f r o m g o i n g

through the basic information

s u c h a s i t s i n v e s t m e n t

o b j e c t i v e , r i s k f a c t o r s ,

investment strategy, etc. an

investor must look at the fund

house's pedigree in terms of its

p a r e n t a g e , i n v e s t m e n t

processes, track record of its

funds, etc. Another useful

input would be to also look at

the performance of funds

managed by the same fund

manager.

Q. Could you give us an outlook on the mutual fund industry's performance?

A. The QAAUM in the industry has grown 77% in the last 3 years as on the quarter ending June 2019. This growth has come on the back of increasing focus on investor a w a r e n e s s , i n c r e a s i n g financialisation of savings and assets, regulatory changes, digital technology increasing efficiency and convenience. The industry still remains underpenetrated INC comparison to global peers and is yet to see its full potential.

Q. Growth or Dividend, which type of fund should an investor go for in the long term investment?

A. That purely depends on the individual investors need. If it is important for the investor to receive some kind of cash flows every year then dividend plans

Mr. Pankaj Tibrewal, Sr. Vice President & Fund Manager (Equity), Kotak Mahindra

Asset Management Co. Ltd.

Tête-à-tête


could make sense. However, if the investor is only looking to compound his or her investments over a long period of time, growth plans are more appropriate.

Q. What's the current outlook for debt funds? Do you think investments in FDs would be safer than debt funds?

A. FDs have an insurance upto Rs 1 lakh and are thus guaranteed to an extent. Debt funds carry market risks such as interest rate risks and credit risk in varying degrees depending on the category of the debt fund. However, historically debt funds have shown to have higher potential than traditional deposits such as FDs in the long run. Thus, depending on the risk appetite, time horizon and returns potential expected, investors can choose a suitable debt fund for the short to medium term goals.

Q. In the coming few years, which sector is going to perform well? Which sector would you suggest and why?A. There is significant divergence in performance of large caps and mid-small caps. Within large caps also it's the top 15 stocks which have added significantly to Nifty 50 returns. The broader markets have not done well so far. We believe that from a market cap point of view small and mid-market cap segment provides

potential upside for long term investors who have an ability to withstand higher volatility. Within mid and small caps, in terms of sectors, we like pro-cyclical sectors tilted towards economic recovery in the medium to long t e r m s u c h a s I n d u s t r i a l Manufacturing, Ferti l izers & Pesticides, Cement, Chemicals and Textiles. Reducing borrowing costs due to RBI rate cuts, capital infusion in state run banks should help provide ample money to industries at reasonable cost which would help restart growth. M o n s o o n s e e m s t o b e progressing well and if July and August rains are good one could see pick up in the rural economy.

Q. Do you think parking money in one fund for 10 years is profitable or there is a need to switch your funds especially with underperforming funds?

A. In the context of equity funds parking money in one fund for 10 years is more suitable as the full potential of equity funds is only realized over a long period of time. Every fund may underperform for a brief period of time as there is divergence in var ious fund h o l d i n g s . H o w e v e r, i f t h e underperformance continues through 2-3 different market cycles, switching could be warranted

Tête-à-tête


Q. Based on what factors should one choose a New Fund Offer? How good is it in comparison to other existing schemes?A. In the absence of any history, NFOs have to be judged purely b a s e d o n t h e m e r i t & differentiation of the strategy to other existing diversified funds, the institutional strength & credibility of the fund house and the track record of the fund manager if he or she has past experience of managing funds.

Mr. Vinay Paharia,Chief Investment Officer (CIO),

Union Asset Management Company Private Limited.

Q. Growth or Dividend, which type of fund should an investor go for in the long term investment?

A. In a Fund's Growth plan, the Fund does not payout anything to the investors by way of dividends. All the gains and p r o f i t s o f t h e f u n d a r e reinvested in the fund and t h e r e f o r e y o u r w e a l t h compounds. On the other hand, the dividend plan pays

dividends out of the Fund's profits earned and income generated. Hence, investors desirous of compounding their w e a l t h s h o u l d c o n s i d e r Growth plan, while those needing income payouts from time to time should invest in Dividend plans.

Q. What's the current outlook for d e b t f u n d s ? D o y o u t h i n k investments in FDs would be safer than debt funds?

A. Fixed Income offers a tool to manage investors short to medium term investment needs in a tax efficient manner. There are various types of fixed income funds which vary in terms of potential risks and returns. Investors can choose their allocation to products which suit their risk taking appetite, which will ultimately determine the returns that they can earn from the product.

Q. In the coming few years, which sector is going to perform well? Which sector would you suggest and why?A. We are currently overweight Industrials (due to expectation

Tête-à-tête


of a cyclical turnaround), Consumer Discretionary (due to attractive valuation) and Utilities (due to attractive valuation) and underweight on Materials (due to lack of adequate good businesses in the sector) and Consumer Staples (due to expensive valuation).

Q. Do you think parking money in one fund for 10 years is profitable or there is a need to switch your funds especially with underperforming funds?A. Investors need to carefully choose the fund they wish to invest in by judging the future potential. Past performance is not a very good indicator of future outcomes. However,

once you invest in a fund, stay invested in it through good and bad times, while monitoring for any material changes in the fund philosophy, style drift, etc. I n v e s t o r s s h o u l d m a k e portfolio changes only if the original reason for investment is no longer valid.

Q. Based on what factors should one choose a New Fund Offer? How good is it in comparison to other existing schemes?

A. To evaluate a New Fund Offer, investor's need to look at t h e F u n d ' s i n v e s t m e n t objective. If it aligns with the investors financial plan and goals, then they can consider investing in the offer.

Disclaimer from Franklin Templeton Asset Management (India) Pvt. Ltd.

The information contained in this document is not a complete representation of every

material fact regarding any industry, sector, security or the fund and is neither an offer for

units nor an invitation to invest. This communication is meant for use by the recipient and

not for circulation/reproduction without prior approval. The views expressed are based on

current market conditions and information available to them and do not constitute

investment advice. We have relied on third party data or information which, we believe to be

correct but, we do not offer any assurance as to the accuracy or the correctness of the same

and would not accept any liability for any loss or damage arising directly or indirectly from

action taken, or not taken, in reliance on material or information contained herein

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, 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.

Tête-à-tête


Mutual Fund investments are subject to market risks, read all scheme related documents carefully

*****************

Disclaimer from Union Asset Management Company Private Limited:

The views expressed or statements made in this document are purely the views of the

author and do not necessarily represent the views of either Union Asset Management

Company Private Limited or its affiliates.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED

DOCUMENTS CAREFULLY.

Statutory Details: Constitution: Union Mutual Fund has been set up as a Trust under the

Indian Trusts Act, 1882; Sponsors: Union Bank of India and Dai-ichi Life Holdings, Inc.;

Trustee: Union Trustee Company Private Limited, [Corporate Identity Number (CIN):

U65923MH2009PTC198198], a company incorporated under the Companies Act, 1956 with

a limited liability; Investment Manager: Union Asset Management Company Private

Limited, [Corporate Identity Number (CIN): U65923MH2009PTC198201], a company

incorporated under the Companies Act, 1956 with a limited liability. Registered Office: Unit

503, 5th Floor, Leela Business Park, Andheri Kurla Road, Andheri (East), Mumbai -

400059.Toll Free No. 18002002268 ∙ Non Toll Free. 022-67483333 ∙ Fax No: 022-67483401 ∙

Website: www.unionmf.com · Email: [email protected].

ASK OUR PLANNER


When in doubt, ask us.

Q. I have a pension plan for last

twelve years, and I am depositing

Rs. 10,000 per annum towards its

premium. By now I have deposited

Rs. 1, 50, 000 and the entire corpus

is amounting Rs. 2, 56, 000 now. I

know that since it is a pension plan,

the annuity will be taxable. One of

the life insurance agents told me

the following:

If I transfer this corpus into another

existing/new ULIP plan (non -

pension) of the same insurance

company through TOF (transfer of

fund) facility, after the maturity of

this new ULIP, the whole maturity

amount may be non-taxable under

section 10(10(D). I need to Know

that does proceedings from the

above plan will attract capital

gains, if yes how this will be

calculated and what documents do

I get after transferring of fund for

submitting to income tax auditing.

Does it be calculated as long term

capital gains? Please clarify.

- Srinivas

A. The insurance company may

be offering such facility to shift

the proceeds to a new policy.

However, from taxation point

of view, your existing policy

ceases to exist as you are

surrendering the plan / the plan

is maturing and accordingly,

t h e t a x a t i o n w i l l a p p l y,

irrespective of how you utilize

the funds. Hence, even if you

wish to buy a new policy from

t h e s a m e c o m p a n y, t h e

taxation of the existing policy

will remain as it is. The maturity

proceeds of the new policy

may be exempt from tax, if it

meets the criteria as per

Section 10(10D) of the Income

Tax Act.

If the existing pension policy is

m a t u r i n g , t h e n y o u c a n rdwithdraw upto 1/3 of the

maturity proceeds, which is

exempt from tax. You will start

receiving annuity from the

remaining amount, which

would be added to your

income every year and taxed as

per your income slab. If you are

surrendering the existing

pension policy before its

maturity, then you would

receive the entire amount as

lumpsum; however, the entire

amount will be added to your

ASK OUR PLANNER


lakh through other options

under Section 80C, then you

can claim Rs.50,000 out of your

NPS contribution as deduction

under Section 80CCD(1b).

A. My wife Rita Jain is having the

following life stage pension policies

from ICICI Prudential life insurance.

The vesting date of these policies is

in December 2019.

Pl advise me the following:

1.On maturity how much amount

will be paid as tax free as per latest

guidelines and how much will be

invested in a pension plan.

2. If we decide to surrender the

policies then what are the income

tax implications? I may add here

that Rita Jain is income tax

assessed and is in the tax bracket of

20% to 30%.

3. Will there be any TDS deduction

at the time of surrender.

- NC JAIN

A. 1. On maturity, a maximum

of 1/3rd of the maturity amount

can be withdrawn as lumpsum,

which is exempt from tax. The

r e m a i n i n g 2 / 3 r d w i l l b e

converted to annuity and your

wife will start receiving pension

as per the frequency and

income and taxed as per your

income slab, if you have

claimed deduction for the

premiums you have paid; if

not, the difference between the

surrender proceeds and the

total premiums paid will be

added to your income and

taxed as per your income slab.

Q. I am govt employee. Being

deduction of 10% of basic and from

my salary towards NPS tire 1

account. My question is that can I

claim this deduction amount

towards 80CCD (1B) instead of 80 C

and 80 CCD (1) as I am having

saving of 150000 already in PF

account under 80 C. Please clarify.

- Nitil

A. Employee's contribution

(maximum 10% of basic salary

+ DA) into NPS can be claimed

under Section 80CCD (1),

which is included in the overall

limit of Rs.1.5 lakh (Section

80C, 80CCC & 80CCD (1) put

together). Any contribution

towards NPS which has not

been claimed under this overall

limit of Rs.1.5 lakh, can be

claimed under Section 80CCD

(1b) upto a limit of Rs.50, 000.

Hence, if you are already

claiming deduction of Rs.1.50

ASK OUR PLANNER


income tax under section 80 C then

only the net gain would be taxable.

We have not taken any such benefit

as we are having a PPF account for

this purpose. In that case how to

convince the income tax authorities

or do we need to mention in the ITR

or we file the ITR after including the

excess portion.

- NC JAIN

A. To clarify further, The Income

Tax Act only says that if any

amount available in a pension

policy, in respect of which

deduction has been allowed,

together with interest or bonus,

is received on account of

surrender, then such amount is

added to your income and

taxed as per your income slab.

It does not explicitly say how it

is taxed, if deduction was not

claimed.

Our interpretation is that if

deduction was not claimed for

the premiums paid, then the

accumulated gains (Surrender

Value less Total Premiums Paid)

will be added to your income

and taxed as per the tax slab. If

that's the case, then only the

accumulated gains can be

shown as 'Income from Other

Sources' in the return.

choice opted by her. Please

ensure to approach your

insurer atleast a week before

maturity and inform how much

you would like to withdraw as

lumpusm; if not, the entire

maturi ty amount may be

converted to annuity once the

policy matures.

2. If your wife surrenders the

policies before their maturity,

then the entire surrender

proceeds shall be added to her

income and taxed as per the

income slab, if she has claimed

a n y d e d u c t i o n o n t h e

premiums paid for the policies.

However, if she has not claimed

a n y d e d u c t i o n o n t h e

premiums paid for the policies,

then the gains (i.e. surrender

p r o c e e d s l e s s t h e t o t a l

premiums paid) shall be added

to her income and taxed as per

the income slab.

3. Yes, TDS will be applicable at

the time of surrender, as the

proceeds are taxable. If your

wife has provided PAN to the

insurer, then TDS will be 2%;

else, it will be 20% of the

surrender proceeds.

Q. You have mentioned that in case

we have not taken the benefit of

ASK OUR PLANNER


However, we suggest you to

hire a Chartered Accountant to

understand the intricacies of

the section and how it has to be

filed in the income return.

Q. My life stage pension plan is

going to mature in Nov, 2019. I

bought it in Nov, 2009. I do not want

to opt pension and would like to

surrender it. Pl advice how to

proceed. What are the charges?

Will this amount be taxable?

- Surendra Harsha

A. If you surrender a pension policy, before its maturity, then the entire surrender proceeds shall be added to your income and taxed as per the income slab, if you have claimed any deduction on the premiums paid for the policy. However, if you have not claimed any deduction on the premiums paid for the policy, then the gains (i.e. surrender proceeds less the total premiums paid) shall be added to your income and taxed as per the income slab. TDS will be also be applicable at the t ime of surrender, as the proceeds are taxable. If you have provided PAN to the insurer, the TDS will be 2%; else, it will be 20% of the surrender proceeds.

P l e a s e r e f e r t h e p o l i c y document regard ing the surrender charges, if any.

Q. I have a surplus of Rs. 2, 00,000, I want to make a surplus of Rs. 4, 00,000 for the end of financial year 2019-20 to meet my personal goals. Please advise me how can I allocate my finances to accomplish my requirements?

A . To grow your exist ing savings of Rs.2 lakh to 4 lakh in a year, you would also have to invest additional amount of around Rs.15, 000 p.m., in addit ion to investing the existing Rs.2 lakh. As the duration is only 1 year, we suggest you not to take any risk and invest majorly into low / short duration debt mutual funds.

For knowing the top picks in this space, please visit

ICICIdirect.com>Research>Mutual Funds>Top picks. If the funds provide you a post-tax return of around 6% p.a., then you would be able to increase your total savings to Rs.4 lakh by the end of 1 year from now.

For a better financial plan, you may write to us at

[email protected].

ASK OUR PLANNER


Also avai l our service of

financial planning to know

more, follow this link:

https://www.icicidirect.com/idi

rectcontent/Home/InvAdvSvc.

aspx or visit to

ICICIdirect.com>Advisory

Service>Financial Planning

Q. Sir, my father Mr. Ramrao

mahadev Salunkhe. He has a Life

stage Pension cover cessation date

30/02/2019. I want to surrender.

Full amount to my father's account.

What is the procedure?

- MOHINI SALUNKHE

A. Please check the maturity date, seems to be incorrect. If the policy is being surrendered before the maturity date, then your father would receive the entire amount; but the amount will be taxable. If he has claimed deductions for the premium paid under Section 80C, then the entire surrender

proceeds will be added to income and taxed as per his income slab; else, the gains (i.e. surrender proceeds less total premiums paid) would be added to income and taxed as per his income slab.

However, if your father is getting the amount on maturity, then he can receive only a

rdmaximum of 1/3 of maturity amount as lumpsum, which will be exempt from tax. The

rdremaining 2/3 amount would be converted into annuity and your father will receive pension as per the f requency he c h o o s e s . T h e p e n s i o n receivable will be added to income and taxed as per his income slab every year.

Please ask your father to visit any branch of ICICI Prudential Life Insurance with the original policy document, identity proof & cheque book for applying for surrender.

Do you also have similar queries to ask our experts? Write to us at: [email protected].

MUTUAL FUND ANALYSIS


Investing in infrastructure funds

The government, in its election

manifesto, had proposed an

a m b i t i o u s i n f r a s t r u c t u r e

investment plan to the tune of

`100 lakh crore by 2024. Out of

this, the majority of spending is

expected on transport (roads,

railways, river linking & ports),

energy ( including renewal

energy), urban infrastructure &

housing, and modernisation of

defence. In our v iew, the

government is looking to focus

on ease of l iving through

a m b i t i o u s i n v e s t m e n t i n

infrastructure, which would act

as facilitator to debottleneck

logistics issues rather than

giving big sops in the current

Budget. The huge investment in

infrastructure would also act as

an enabler to stimulate the

investment cycle and job

creation over the long term.

With the completion of the

Seventeenth General Elections

and re-election of the incumbent

party at the Centre, the key

positive takeaway is consistency

i n e c o n o m i c g o v e r n a n c e

framework for the next five

years. Most importantly, a

comfortable majori ty also

ensures no impediments of

coalition pressures in case of

tough decisions for long term

growth. Therefore, attention

shifts to areas of focus for the

next five years, which can be

gauged through the manifesto

o f t h e B J P. T h e b r o a d e r

takeaway is the manifesto

envisages inclusive growth

s p a n n i n g i n f r a s t r u c t u r e ,

rural/agri population, industries

and basic necessities such as

housing and healthcare that

could be a catalyst for a decade

of robust economic growth

ahead.

Infrastructure remains the key

thrust area of this government

with focus on railway, road & air

connectivity, housing, etc. Most

diversified funds are linked to

the consumption or financial

part of the economy in which

most stocks are richly valued.

Infrastructure funds offer a good

diversification to the diversified

funds.

The manifesto of the ruling party

envisages overall infrastructure

investment to the tune of 100 `lakh crore by 2022, implying an

annual investment of 20 lakh `crore. To meet this, we believe

the government will have to step



up tendering & awarding activity

exponentially from 9.6 lakh `crore & 3 .3 lakh crore , `respectively, in FY19. This could

offer huge opportunities to all

infra and allied industries and

see a significant rise in the order

book from the current level over

next three years.

In terms of verticals, it plans to

construct 60,000 km of national

highways in the next five years.

I n o u r v i e w, t h e m a j o r

component of 60,000 km would

involve Bharatmala 1.0 and

balance road work under NHDP

aggregating 34,800 km at an

estimated cost of 5.35 lakh `crore. EPC players could reap

g o o d b e n e f i t s f r o m t h i s

opportunity.

On the urban infrastructure

front, it aims to cover 50 cities

with the metro network. With

400 km of metro lines currently

operational, the government

could have to add additional

~700 km of metro line to cover

50 cities, which could entail

investment of 2.8-3.5 lakh `crore. Assuming 50% as civil

work, i t could present an

opportunity of 1.4-1.85 lakh `crore.

In terms of airport, it aims to

double the number of functional

airports in the next five years

( 1 0 1 a i r p o r t s f u n c t i o n a l

currently). As per media reports,

the construction of 100 new

airports could entail investment

of US$60 billion ( 4.2 lakh `crore).

On the housing front, by 2022, it

plans to ensure a pucca house to

every family who are either

living in a kuchha house or have

no access to housing.

All these augurs well for efficient

and well managed companies

operating in infrastructure and

allied activities. We believe the

Inf rastructure sector may

outperform and lead the next

market rally.

I n v e s t o r s m a y i n v e s t i n

infrastructure funds as part of

their thematic allocation with an

investment horizon of more than

two to three years.

Being thematic in nature,

allocation to infrastructure funds

should not exceed 5-10% of an

i n v e s t o r ' s o v e r a l l e q u i t y

portfolio. Our preferred funds in

this sector are Sundaram Infra

A d v a n t a g e F u n d , Ta t a

Infrastructure Fund and UTI

Infrasturcture Fund.



Sundaram Infrastructure Advantage Fund

Fund Objective:To generate long-term returns by investing predominantly in e q u i t y / e q u i t y - r e l a t e d instruments of companies engaged either directly or indirectly in infrastructure - and infrastructure related activities or expected to benefit from the growth and development of infrastructure.

NAV as on July 03, 2019 ( )` 34.0Inception DateFund Manager S. KrishnakumarMinimum Investment ( )` Lumpsum 5000

SIP 250Expense Ratio (%) 2.58Exit Load 1% on or before 12MBenchmark S&P BSE 100 - TRILast declared Quarterly AAUM( cr)` 627

Key Information

September 29, 2005

Product Label:

THIS PRODUCT IS SUITABLE FOR INVESTORS WHO ARE SEEKING· Long term capital wealth creation

solution· An equity fund that predominantly

invests in equity and equity related securities of companies engaged in banking and financial services.

Performance:The fund is among the oldest funds in the infrastructure sector space. The funds recent performance has lagged its benchmark as it shied away from few of the expensive stocks which continued to rally in last few months. However we believe that the fund is well positioned to outperform the benchmark going forward. As

rdof July 3 , it has generated CAGR of 10% and 8.9% over three years and five years vs. 13.8% and 10.4% returns by benchmark, respectively.

Performance vs. Benchmark

8

10

8.9 9.311

.1 13.8

10.4

N.A

.

0

5

10

15

1 Year 3 Year 5 Year Since InceptionCA

GR

Retu

rns

%

Fund Benchmark



Portfolio:The portfolio comprises 42 stocks. Currently, the portfolio is tilted towards large caps (~64%) while midcap and small cap stocks make up the rest. The fund has significant exposure to large private corporate centr ic banks,

indicating a play on capex cycle revival. However, the fund also has stocks catering to the retail segment. The fund has handpicked public sector banks (non PCA) with relatively better capital adequacy poised to benefit from a revival in the credit cycle.

%

5.2

5.1

4.9

3.9

3.9

3.8

3.5

3.5

3.3

3.2

Top 10 Holdings Asset Type

The Ramco Cements Ltd. Domestic Equities

Larsen & Toubro Ltd. Domestic Equities

ICICI Bank Ltd. Domestic Equities

Timken India Ltd. Domestic Equities

Grindwell Norton Ltd. Domestic Equities

Kalpataru Power Transmission Ltd. Domestic Equities

HDFC Bank Ltd. Domestic Equities

Praj Industries Ltd. Domestic Equities

Honeywell Automation India Ltd. Domestic Equities

Shree Cement Ltd. Domestic Equities

%13.4

13.1

12.5

8.1

6.0

4.9

3.9

3.8

3.5

3.1

Top 10 Sectors Asset Type

Engineering - Industrial Equipments Domestic Equities

Bank - Private

Engineering - Construction Domestic Equities

Cement & Construction Materials Domestic Equities

Refineries Domestic Equities

Transmission Towers / Equipments Domestic Equities

Consumer Durables - Electronics Domestic Equities

Domestic Equities

Bearings Domestic Equities

Construction - Real Estate Domestic Equities

Abrasives Domestic Equities

%

1

Whats out

Dixon Technologies (India) Ltd.



Our View:

The fund's strong performance

since inception and a long

history are comforting factors

even though the performance

in recent times has been

mediocre. With a good mix of

stocks that are a play on

corporate lending and private

lending, we feel investors can

consider the fund from a three-

year perspective.

You can view performance of other schemes being managed

by the fund manager of this scheme on the following link:

https://www.sundarammutual.com/uploaddir/consolidated_fa

ctsheet/Consolidated_Factsheet_6_2019_120719_174808.pdf

Data as on July 3, 2019; Portfolio details as on May- 2019 Source: ACE MF, ICICI Direct Research



Tata Infrastructure Fund

Product Label:

Fund Objective:The scheme aims to provide income d is t r ibut ion and medium to long term capital g a i n s b y i n v e s t i n g predominantly in equity or equity related instruments of t h e c o m p a n i e s i n t h e infrastructure sector.

NAV as on July 03, 2019 ( )` 59.1Inception DateFund Manager Rupesh PatelMinimum Investment ( )` Lumpsum 5000

SIP 150Expense Ratio (%) 2.57Exit Load 0.25% on or before 3MBenchmark S&P BSE India Infrastructure Index - TRILast declared Quarterly AAUM( cr)` 572

Key Information

December 31, 2004

Investors understand that their principal will be at high risk

THIS PRODUCT IS SUITABLE FOR INVESTORS WHO ARE SEEKING

Long term capital wealth creation •solution

An equity fund that predominantly •invests in equity and equity related securities of companies engaged in banking and financial services.

Performance

The fund has consistently been

among the top performing

funds in the sector over shorter

as well as longer timeframes. It

has delivered 10% CAGR and

9 . 6 % C A G R r e t u r n s ,

respectively, for three and five-rd

year time frames as of July 3 .

The historical performance the

benchmark is not available as

i t ' s a newly constructed

benchmark.

Performance (Benchmark returns not available)

12

.3

10

9.6

13

0

5

10

15

1 Year 3 Year 5 Year Since Inception

CA

GR

Re

turn

s %

Fund Benchmark



PortfolioThe fund 's port fo l io has exposure to a diverse mix of businesses within the banking and financial services space – banks (private as well public), NBFCs as well as insurance. Its focus on corporate facing private banks is accentuated by recent additions to the portfolio. Currently, there are

34 stocks in the portfolio, making it less concentrated than some other funds and with a larger tail than most peers. The fund has lower exposure to its top picks than some other peers. It has ~60% of its portfolio invested in large cap stocks with the rest invested in midcaps and small caps.

%

11.8

6.3

5.9

5.4

5.1

4.3

4.1

3.6

3.2

3.1



Astral Poly Technik Ltd. Domestic Equities


KNR Construction Ltd. Domestic Equities


Sadbhav Engineering Ltd. Domestic Equities

Repo Instruments Cash & Cash Equivalents and Net Assets

Power Grid Corporation Of India Ltd. Domestic Equities

Voltas Ltd. Domestic Equities

AIA Engineering Ltd. Domestic Equities

%25.9

8.1

8.0

6.3

5.9

5.0

4.1

3.6

3.0

2.9


Power Generation/Distribution Domestic Equities

Plastic Products Domestic Equities

Bank - Private Domestic Equities


Bearings Domestic Equities

Domestic Equities

Port Domestic Equities



Air Conditioners Domestic Equities

Oil Exploration

%

0.9

Whats In

Vedanta Ltd.



Our View:The port fo l io is wel l const ruc ted in te rms o f

diversification. Investors can consider the fund from a three-year perspective.

You can view performance of other schemes being managed by the fund manager of this scheme on the following link:http://www.tatamutualfund.com/our-funds/equity/ sectoral /tata-infrastructure-fund




Product Label:

UTI Infrastructure Fund

Fund Objective:The investment objective of the Scheme is to provide long term capital appreciation by investing predominantly in equity and equity related secur i t ies o f companies engaged either directly or indirectly in the infrastructure areas of the Indian economy. However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

NAV as on July 03, 2019 ( )` 56.0Inception DateFund Manager

Sanjay Ramdas DongreMinimum Investment ( )` Lumpsum 5000

SIP 0Expense Ratio (%) 2.23Exit Load 1% on or before 1Y, Nil after 1YBenchmark NIFTY INFRA - TRILast declared Quarterly AAUM( cr)` 1400

Key Information

April 19, 2004

Investors understand that their principal will be at high risk

THIS PRODUCT IS SUITABLE FOR

INVESTORS WHO ARE SEEKING

• Long term capital wealth creation

solution

• An equity fund that predominantly

invests in equity and equity related

securities of companies engaged in

banking and financial services.

Performance

The fund has consistently been

among the top performing

funds in the sector over shorter

as well as longer timeframes. It

has delivered 10.3% CAGR and

7 . 3 % C A G R r e t u r n s ,

respectively, for three and five-

year time frames vs. 7.7%

C A G R a n d 1 . 5 % C A G R

performance of the benchmark

over these time frames (as of rdJuly 3 ).

Performance vs. Benchmark

12

.5

10

.3

7.3

12

.7

14

.4

7.7

1.5

8.3

0

5

10

15

20

1 Year 3 Year 5 Year Since Inception

CA

GR

Re

turn

s %

Fund Benchmark



PortfolioThe fund 's port fo l io has

exposure to a diverse mix of

businesses within the banking

and financial services space –

banks (private as well public),

NBFCs as well as insurance. Its

focus on corporate facing

private banks is accentuated

by recent additions to the

portfolio. Currently, there are

44 stocks in the portfolio,

making it less concentrated

than some other funds and

with a larger tail than most

peers. The fund has lower

exposure to its top picks than

some other peers. It has ~60%

of its portfolio invested in large

cap stocks with the rest

invested in midcaps and small

caps.

%

8.1

7.1

6.3

6.1

5.5

3.5

3.4

3.2

3.0

3.0


Axis Bank Ltd. Domestic Equities

Adani Ports and Special Economic Zone Ltd. Domestic Equities

Ultratech Cement Ltd. Domestic Equities

Blue Star Ltd. Domestic Equities

KEC International Ltd. Domestic Equities


State Bank Of India Domestic Equities


Bharti Airtel Ltd. Domestic Equities


%19.9

13.7

12.6

6.2

6.1

6.0

4.0

3.8

3.6

3.5

Logistics Domestic Equities

Power Generation/Distribution Domestic Equities

Telecommunication - Service Provider Domestic Equities

Domestic Equities

Bank - Public Domestic Equities

Air Conditioners Domestic Equities



Bank - Private Domestic Equities



Industrial Gases & Fuels



Our View:The port fo l io is wel l const ruc ted in te rms o f

diversification. Investors can consider the fund from a three-year perspective.

You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://docs.utimf.com/v1/AUTH_5b9dd00b-8132-4a21-a800-711111810cee/UTIContainer/UTI%20Fund%20Watch%20July%20201920190705-101650.pdf




Performance of other schemes managed by these fund managers:

1. Sundaram Infrastructure Advantage Fund

16.57 15.52 12.9926.92 24.23 17.7611.41 13.43 --

-- -- --11.36 13.42 --

-- -- --

-- -- --6.44 11.61 9.21

-- -- --

-9.32 -- ---- -- --

-9.32 -- --

Performance of other schemes managed by the fund manager - S. Krishnakumar

Sundaram World Brand Fund-Sr II-Reg(G)MSCI ACWI IndustrialsSundaram World Brand Fund-Sr III-Reg(G)MSCI ACWI Industrials

Fund Name 1 Year 3 Years 5 Years

Top 3 Performing Schemes Sundaram Fin Serv Opp Fund(G)Nifty Financial Services - TRI

S&P BSE 250 Small Cap

Bottom 3 Performing SchemesSundaram Multi Cap Fund-Sr II-Reg(G)S&P BSE 500Sundaram Emerging Small Cap-Sr-VI-Reg(G)S&P BSE 250 Small CapSundaram Emerging Small Cap-Sr-VII-Reg(G)

Note : The schemes may or may not have been managed by the same Fund Manager since its

inception

Note : The concerned Fund Manager manages 40 other schemes of the concerned Mutual Fund

7.98 9.99 8.8911.07 13.80 10.395.81 13.15 --6.44 11.61 9.215.79 13.12 --6.44 11.61 9.21

1.30 -- --1.94 9.33 8.25-0.50 9.78 13.517.88 12.88 10.52

-- -- ---- -- --

S&P BSE 500

Bottom 3 Performing SchemesSundaram Smart NIFTY 100 Eq Weight Fund-Reg(G)NIFTY 100 Equal Weight Index - TRISundaram Rural and Consumption Fund(G)NIFTY 500 - TRI

Top 3 Performing Schemes Sundaram Infra Advantage Fund(G)S&P BSE 100 - TRISundaram Value Fund-II-Reg(G)S&P BSE 500Sundaram Value Fund-III-Reg(G)

Performance of other schemes managed by the fund manager - S. Bharath

Fund Name

Sundaram Equity Savings Fund-Reg(G)NIFTY 50 Equity Savings Index

1 Year 3 Years 5 Years


inception




2. Tata Infrastructure Fund

13.14 11.43 10.1113.94 15.00 10.5112.30 10.00 9.63

-- -- --11.14 12.72 14.2113.94 15.00 10.51

11.07 11.10 12.89-1.37 9.59 10.620.75 6.38 8.31

1.08 11.09 10.96

Performance of other schemes managed by the fund manager - Rupesh Patel

Tata Infrastructure Fund-Reg(G)S&P BSE India Infrastructure Index - TRITata India Tax Savings Fund-Reg(DP)S&P BSE SENSEX - TRI


Top 3 Performing Schemes Tata Large Cap Fund(G)S&P BSE SENSEX - TRI

Bottom 3 Performing SchemesTata Mid Cap Growth Fund(G)Nifty Midcap 100 - TRITata Ethical Fund(G)Nifty 500 Shariah - TRI


inception


12.30 10.00 9.63-- -- --S&P BSE India Infrastructure Index - TRI

Performance of other schemes managed by the fund manager - Abhinav Sharma


Top 3 Performing Schemes Tata Infrastructure Fund-Reg(G)

Note : The schemes may or may not have been managed by the same Fund Manager since its inception Note : The concerned Fund Manager manages 1 other schemes of the concerned Mutual Fund



3. UTI Infrastructure Fund

12.47 10.30 7.2814.44 7.74 1.486.85 11.21 10.1211.07 13.80 10.39


Top 3 Performing Schemes UTI Infrastructure Fund-Reg(D)NIFTY INFRA - TRI

Performance of other schemes managed by the fund manager - Sanjay Ramdas Dongre

UTI MEPUSS&P BSE 100 - TRI

Note : The schemes may or may not have been managed by the same Fund Manager since its inceptionNote : The concerned Fund Manager manages 1 other schemes of the concerned Mutual Fund



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EQUITY MODEL PORTFOLIO


Our indicative large-cap equity model portfolio is delivering an impressive

return (inclusive of dividends) of 162.65% till date (as on June 30, 2019) since

its inception (June 21, 2011) vis-à-vis the benchmark index (S&P BSE Sensex)

return of 123.45% during the same period, an outperformance of 39.2. This

validates our thesis of selecting companies with sound business

fundamentals that forms the core theme of our portfolio. We have revised

stocks in our midcap portfolio. It continues to outperform, delivering 264.60%

(inclusive of dividends) till date (as on June 30, 2019) vis-à-vis the benchmark

index (CNX Midcap) return of 128.31%, an outperformance of 136.29. Our

consistent outperformance demonstrates our superior stock picking ability as

markets aligned to our view of favourable risk reward, good franchisee vs.

reward-at-any-risk businesses.

We have always suggested the SIP mode of investment and still find a lot of

merit in it as the preferred mode of deployment given the market conditions

and volatility associated since the inception of the portfolio. We highlight that

the SIP return of our portfolio has consistently outperformed the indices.

Following the same pace and opportunities in the market, our latest portfolio

(large caps) remains overweight on BFSI sector – HDFC Bank (10%), HDFC

Limited (9%), Axis Bank (6%) Bajaj Finance (6%) and SBI (6%). Tech Mahindra

Limited is the latest addition to the large-cap portfolio, given 6% weightage.

Maruti Suzuki and EICHER Motors have been removed from the large-cap and

diversified model portfolio. Please note that the weightage for State Bank of

India and Divis Laboratories have been revised. Affirming our view on

consumption demand, Dabur (5%) and Marico (4%) continue to be part of our

large cap portfolio.

Brigade Enterprises given 6% weightage and Somany Ceramics given 6%

weightage are the latest addition to the mid-cap portfolio. Exide Industries

and Graphite India have been removed from the mid-cap and diversified

model portfolio.

We remain positive on auto, IT and pharma. We remain overweight to neutral

on pure play defensives (IT, FMCG) as secular earnings coupled with sector

rotation could lead to consolidation in near term valuations and offer stock

specific opportunities.

We continue to remain underweight on metals and oil & gas with our only pick

being Gail Ltd., which has a better risk reward opportunity. Among individual

names, we recommend TCS in the IT space, HDFC and HDFC Bank in the BFSI

space and ITC in consumer space.



Name of the company

Largecap Stocks

Model Portfolio

Largecap(%)

Midcap(%)

Diversified(%)

Mahindra & Mahindra (M&M) 4.0 2.8

HDFC Bank 10.0 7.0

Axis Bank 6.0 4.2

HDFC Limited 9.0 6.3

Bajaj Finance 6.0 4.2

State Bank of India 8.0 5.6

Larsen & Toubro 6.0 4.2

UltraTech Cement 4.0 2.8

Dabur India 5.0 3.5

Marico 4.0 2.8

ITC 6.0 4.2

Nestle India 4.0 2.8

Tata Consultancy Services 6.0 4.2

Tech Mahindra Limited 6.0 4.2

Hindustan Zinc 6.0 4.2

GAIL Ltd. 5.0 3.5

Divis Laboratories 5.0 3.5

Total 100.0

Largecap share in diversified 70.0



Bharat Forge 6.0 1.8

Bajaj Finserve 8.0 2.4

Indian Bank 6.0 1.8

AIA Engineering 6.0 1.8

Kalpataru Power transmission 6.0 1.8

Ramco Cement 6.0 1.8

Kansai Nerolac 6.0 1.8

Pidilite Industries 6.0 1.8

Tata Chemicals 6.0 1.8

Bata India 6.0 1.8

Brigade Enterprises 6.0 1.8

Somany Ceramics 6.0 1.8

Firstsource Solutions 6.0 1.8

Container Corporation of India 6.0 1.8

Syngene International 8.0 2.4

Arvind Fashions 6.0 1.8

Total 100.0

Midcap share in diversified 30

TOTAL 100.0

ICICI Securities has received an Investment Banking mandate from Mahindra & Mahindra.



Performance so far since inception*

162.6530194

264.5951775

190.3760664

123.449302 128.3133309 122.932527

0

100

200

300

Large Cap Midcap Diversified

%

Portfolio Benchmark

*Returns (in %) as on June 30, 2019

Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio Benchmark:

CNX Midcap; Diversified Portfolio Benchmark: Combination of BSE Sensex and

CNX Midcap

Value of Rs 1,00,000 invested via SIP at end of every month

9700000

9700000

9700000

15648280.8

9

23191115.4

7

16628037.1

2

13807290.2

9

14432469.7

2

13128522.4

1

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

Largecap Midcap Divesified

|

Investment Value of Investment in Portfolio Value if invested in Benchmark

Start date of SIP: June 30, 2011; *Value as on June 30, 2019

QUIZ TIME


1. A meter that indicates the risk involved in a fund?

2. Asset Management Company comes up with a ______ when there

is a demand for a specific investment category.

3. You can redeem units of mutual fund at any time, if you have

invested in_________ scheme.

4. A measure of volatility of returns on funds that tells us how much

the return of a fund can deviate from its historical mean.

5. There is no tax implication on Physical Gold. State True or False?

6. Which investment has restriction in withdrawal, but investors

could withdraw partial amount, post 7th year of the investment?

Note: You may send in your answers at:[email protected]. The answers will be published

in our next edition. The names of the earliest all correct entries will be

published too. So jog your grey cells and be quick to send in your

entries.

Correct answers for the June 2019 Quiz is:

1. A document that transfers ownership from a seller to the buyer. -

Sale Deed

2. Without the Commencement certificate the property would be

termed illegal, levy penalties and could attract an eviction notice

3. Under which section can an individual receive tax benefit against

interest payment and up to what limit? - Section 24 and up to Rs. 2

lakh

4. An Act that is implemented to protect the home buyers and boost

investments in real estate. - RERA

5. A Power of Attorney document gives the rights to a person or an

agent to act on the behalf of the property owner.

6. Letter that is required by the bank which states the amount of

money the buyer has already paid and confirms the loan amount is

reasonable. - Allotment letter

PRIME NUMBERS

Equity Markets


Domestic Equity Indices

Global Equity Indices

Sectoral Indices

64

28-Jun-19 31-May-19 Change (%)

CNX Nifty 11789.0 11922.8 -1.1%

CNX Midcap 17654.1 17959.1 -1.7%

S&P BSE Sensex 39394.6 39714.2 -0.8%

S&P BSE 100 11909.7 12044.1 -1.1%

S&P BSE 200 4926.6 4986.6 -1.2%

S&P BSE 500 15291.7 15517.9 -1.5%


Dow Jones 26,600.0 24,815.0 7.2%

S&P 500 2,941.8 2,752.1 6.9%

Nasdaq 8,006.2 7,453.1 7.4%

FTSE 7,425.6 7,161.7 3.7%

DAX 12,398.8 11,726.8 5.7%

CAC 40 5,539.0 5,207.6 6.4%

Nikkei 21,275.9 20,776.1 2.4%

Hang Seng 28,542.6 26,761.5 6.7%

Shanghai Composite 2,978.9 2,890.1 3.1%

Taiwan Weighted 10,730.8 10,500.1 2.2%

Straits Times 3,372.3 3,117.8 8.2%


S&P BSE Auto 17,904.2 18,446.0 -2.9%

S&P BSE Bankex 34,971.9 35,264.0 -0.8%

S&P BSE FMCG 19,855.4 19,939.3 -0.4%

S&P BSE Healthcare 12,889.3 13,305.1 -3.1%

S&P BSE Metals 11,107.2 10,756.4 3.3%

S&P BSE Oil & Gas 14,803.3 15,734.4 -5.9%

S&P BSE Power 2,093.9 2,010.1 4.2%

S&P BSE Realty 2,201.4 2,200.7 0.0%

S&P BSE Teck 7,674.2 7,767.1 -1.2%

PRIME NUMBERS


Debt Markets

Volatility Index (VIX)

65

28-Jun-19 31-May-19

VIX 14.95 16.07

Government Securities Yield (in %) Jun-19 May-19 Change (bps)

10 year 6.88 7.03 -15

5 year 6.77 6.84 -8

3 year 6.58 6.68 -10

1 year 6.19 6.26 -7

Corporate Bond Yields (in %) Jun-19 May-19 Change (bps)

AAA 10 year 8.35 8.38 -2

AAA 5 year 8.09 8.05 4

AAA 3 year 7.84 7.92 -8

AAA 1 year 7.61 7.72 -11

AA 10 year 8.63 8.75 -12

AA 5 year 8.50 8.53 -3

AA 3 year 8.43 8.41 2

AA 1 year 8.17 8.24 -6

Commercial Paper (in %) Jun-19 May-19 Change (bps)

12 Months 0

6 Months 0

3 Months 0

1 Month 0

Note : Data not available on Bloomberg for 3,6 and 12 month CP post 1/15/19 and for 1 month CP post 3/27/18

T-Bills Yields (in %) Jun-19 May-19 Change (bps)

91D TB 0

182D TB 0

364D TB 0

Note : Data not available on Bloomberg for 3,6 and 12 month Tbill post 3/28/18

PRIME NUMBERS

10-year benchmark yields (%) across countries


Macro-economic Indicators

Consumer price index (CPI)

Wholesale price index (WPI)Month

66

Countries 28-Jun-19 31-May-19 Change in bps

US 2.005 2.125 (12)

UK 0.833 0.886 (5)

Japan (0.158) (0.094) (6)

Spain 0.392 0.712 (32)

Germany (0.327) (0.202) (13)

France (0.007) 0.207 (21)

Italy 2.102 2.670 (57)

Brazil 7.452 8.196 (74)

China 3.236 3.259 (2)

India 6.879 7.038 (16)

MF Investment Jun-19 May-19 Fy19

Equity 6232 5163 87667

Debt 45371 31340 389356

FII Investment Jun-19 May-19 Fy19

Equity 1033 9826 9722

Debt 8265 3788 -39425

Items Weights(%) Apr-19 May-19 Jun-19

Food&bev. 45.86 1.38 2.03 2.37

Pan,tob& intox. 2.38 4.27 3.93 4.11

Cloth & Foot 6.53 2.01 1.80 1.52

Housing 10.07 4.76 4.82 4.84

Fuel & light 6.84 2.56 2.48 2.32

Misc. 28.31 5.10 4.62 4.45

CPI 100 2.92 3.05 3.18

Weights Apr-19 May-19 Jun-19WPI 100.0 3.07 2.45 2.02 Primary Articles 22.6 6.50 6.16 6.72 Fuel & Power 13.2 3.84 0.98 -2.20 Manufactured Goods 64.2 1.72 1.28 0.94

*WPI numbers are based on new series with 2011-12 as the base year'

PRIME NUMBERS

Commodities


Mutual Funds: Category Average Returns

Equity Funds Returns (in %)

Debt Funds Returns (in %)

Index of industrial production (IIP) Sector-wise growth rate (%)

Currencies and Commodities

Currencies

67

Sources for above data: Bloomberg, Reuters, CRISIL, MOSPI, ICICIdirect.com Research

Categories 31-May-19 30-Apr-19 31-Mar-19 Weight(%)Mining 3.0 -18.7 17.9 14.4Manufacturing 4.1 -9.3 8.0 77.6Electricity 8.6 1.7 16.1 8.0Overall 4.5 -9.6 10.0 100.0

*IIP numbers are based on new series with 2011-12 as the base year'

28-Jun-19 31-May-19 Change (%) StatusUSDINR 69.0 69.7 -1.0% AppreciatedEURINR 78.5 77.7 1.1% DepreciatedGBPINR 87.6 87.7 -0.1% AppreciatedAUDINR 48.3 48.2 0.4% DepreciatedCHFINR 70.8 69.3 2.1% DepreciatedJPYINR 0.6 0.6 -0.7% AppreciatedCNYINR 10.1 10.1 -0.4% Appreciated

28-Jun-19 31-May-19 Change (%)Crude ($/barrel) 66.6 64.5 3.2%Gold ($/ounce) 1,409.5 1,305.6 8.0%

Multicap Midcap Large Cap Small cap ELSS6 months 4.63 1.56 7.89 1.18 4.921 year 5.09 0.86 9.38 -4.39 4.783 year 11.51 9.17 11.92 8.81 11.975 year 10.94 12.01 10.49 12.40 11.50

Returns as on June 28, 2019

Liquid Debt ST Ultra ST Debt LT

6 months 6.85 2.13 6.32 16.81

1 year 6.83 4.76 5.68 14.95

3 year 6.80 5.98 6.52 9.15Returns as on June 28, 2019

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icici july 19 issue

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