mutual fund review -...

Mutual FundReview

October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund

November 19, 2009 | Mutual Fund Mutual Fund Review

October 17, 2017

ICICI Securities Ltd. | Retail MF Research

Note: Whenever, returns for the scheme are shown in the report, they are for the growth option of the scheme.

Mutual Fund Review

Equity Markets .................................................................................................... 2 Debt Markets ....................................................................................................... 3 MF industry synopsis .......................................................................................... 4 MF Category Analysis ......................................................................................... 5

Equity funds..................................................................................................... 5 Event update : Sebi circular on categorisation and rationalisation of mutual

fund schemes ...................................................................................................... 6 Equity diversified funds ...................................................................................... 7 Equity infrastructure funds ................................................................................. 8 Equity banking funds .......................................................................................... 8 Equity FMCG Funds ............................................................................................ 8 Equity Pharma funds ........................................................................................... 9 Equity Technology Funds .................................................................................... 9

Exchange Traded Funds (ETF) ....................................................................... 10 Balanced funds ............................................................................................. 11 Monthly Income Plans (MIP) ........................................................................ 12 Arbitrage Funds ............................................................................................. 12 Debt funds ..................................................................................................... 13

Liquid Funds 14 Income funds .................................................................................................... 15 Gilt Funds 16 Gold: Outlook anchored to geopolitical worries, Fed movement ..................... 17 Model Portfolios ................................................................................................ 18

Equity funds model portfolio ......................................................................... 18 Debt funds model portfolio ............................................................................ 19

Top Picks ........................................................................................................... 20

October 17, 2017


Page 2

Equity Markets

Update

Indian equity market regained momentum in October to record a fresh

all-time high after having witnessed some profit booking in the later part

of September. Broader markets continued their upward trajectory as

midcaps and small caps continued to outperform large caps

Historically, bull markets tend to undergo periodic phases of secondary

correction. This, in turn, creates fresh buying opportunities. We believe

the index is undergoing a secondary corrective phase that forms part of

the larger degree uptrend. Therefore, investors should utilise this as an

opportunity to accumulate quality stocks in a staggered manner

Going forward, we expect the index to extend the time wise corrective

phase in the coming month while price wise correction will be limited.

We expect the index to hold the 9650-9700 support base in the present

scenario and extend the ongoing consolidation between 9650 and

10000 in the coming month. Only a decisive close below 9650 will

warrant extended profit booking towards 9450-9500, which will again

present an attractive buying opportunity

Broader markets outperformed the benchmark by a healthy margin

during the up move since the August 2017 bottom. The NSE midcap

and small cap indices surged to new life-time highs well ahead of the

benchmark. The ensuing market wide correction has seen the Nifty

wipe off the entire gains whereas the NSE midcap and small cap indices

have so far retraced the August-September rise by about 61.8%. The

relative outperformance of broader markets during the up move as well

as the corrective phase highlights the stock specific action in market

amid the broader consolidation on the benchmark front

Outlook

Structurally, broader markets have consistently outperformed the

benchmark in the entire up move since January 2017 till date barring

just one instance in May 2017. It highlights the overall robust price

structure and augurs well for the benchmark, going forward

Indian markets are witnessing a structural shift in terms of

financialisation of domestic savings. The same is evident through

robust mutual fund inflows with recent monthly inflow into equity

oriented schemes at a record high of ~| 29,000 crore. Average monthly

inflow into equity oriented schemes in YTD FY18 was at | 22,500 vs. the

monthly average of ~| 11,000 crore in FY17. Such has been the fund

flows that entire FII outflows in recent times have been more than

absorbed by domestic fund flows. Demonetisation acted as a catalyst

channelising financial savings, which coupled with diminishing returns

across other asset classes has resulted in buoyant inflows into Indian

equity markets

We reiterate our positive stance on the equity market over the medium

term perspective. Our positive stance on equity continues to be backed

by expectations of a pick-up in earnings and continuity of fund flows.

Subdued earnings, over the last four years, have led index valuations to

inch up. However, we believe the impact of one-offs like

demonetisation and GST on corporate earnings will go through in the

first half of FY18. From the second half onwards, earnings growth may

accelerate

However, given the sharp rally in recent months, it is better to avoid

lumpsum investment and continue with the staggered buying approach

Nifty 50: Markets scale new highs

7500

8000

8500

9000

9500

10000

10500

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Source: Bloomberg, ICICIdirect.com Research

Smallcap index outperformers sharply

2.5

0.8

0.8

0.6

0.6

0.3

0

1

2

3

BS

E S

mall cap

BS

E 5

00

Sensex

BS

E 2

00

BS

E 1

00

BS

E M

idcap

Source: Bloomberg

One month returns till October 13, 2017

Previous laggards IT and Healthcare enjoy a good

month; Real estate and Capital Goods underperform

4 4

3 3

2

0

-1

-4

-4-6

-4

-2

0

2

4

6

IT

Healthcare

Metals

Oil n G

as

Auto

FM

CG

Bankin

g

Real Estate

CG

Source: Bloomberg

One month returns till October 13, 2017

Research Analyst

Sachin Jain

[email protected]

Jaimin Desai

[email protected]


Page 3

Debt Markets

Update

RBI in its monetary policy on October 4, kept policy rates unchanged as

was widely expected. The RBI lowered the statutory liquidity ratio (SLR)

to be maintained by banks by 50 bps from 20% to 19.5%

RBI acknowledged that food prices are likely to remain largely stable but

outlined building up of pricing pressures in fuel (largely from crude oil).

It mentioned that upside risks to the inflation trajectory could arise from

fiscal slippages due to farm loan waivers and state’s implementation of

salary and allowances. Factors like increased likelihood of US Fed rate

hike later in the year and quantitative easing (QE) retreat relatively soon

could have prevented a rate cut or change of policy stance

The 10-year benchmark G-sec yield hardened slightly by 7 bps to

~6.7% following the policy announcement and is currently trading at

around 6.75%

Foreign portfolio investors (FPI), who remained net sellers in 2016, have

turned significant buyers since February 2017, investing ~US$20 billion

thus far in calendar year 2017. The 10-year benchmark G-Sec yield had

softened to below 6.5% during this period

As per RBI, inflation is expected to rise from its current level and range

between 4.2% and 4.6% in the second half of FY18, marginally higher

than its projection of 4-4.5% for Q4FY18, made in its last policy

meeting. The upward revision in inflation outlook was largely

unexpected. The MPC acknowledged the likelihood of a growth

slowdown continuing but “requires more data to better ascertain the

transient versus sustained headwinds in the recent growth prints”

The policy statement did not include a softening of stance and delivered

a balanced commentary, perhaps disappointing some market quarters

who expected a slight dovish outlook on the back of slowing economic

growth. In the absence of fresh triggers and the slightly hawkish tone in

the inflation trajectory, the G-sec yield may trade in a narrow range in

the near term as participants wait on the sidelines

Outlook

In the last two months since the monetary policy on August 2, 2017, the

10 year benchmark G-Sec yield has hardened around 30 bps from

6.45% to 6.75% currently. Globally, the US 10 year yield has also

hardened around 30 bps to 2.36%. Corporate bond yields, however,

remained stable despite profit booking in G-Sec during the same period

Although the overall view on the Indian debt market remains positive,

exhaustion of the investment limit of foreign portfolio investors and

concerns over additional spending by the government to support

weakening growth may prevent yields from coming down meaningfully

in the near term

The India debt market is almost at the end of the interest rate cycle,

which started in January 2015 with the repo rate at 8%. RBI has since

then cut benchmark rates by 200 bps. The 10 year G-sec has corrected

from 9.1% in April 2014 to 6.45% currently. Therefore, room for further

downside remains narrow

System liquidity continues to remain in surplus leading to persistent

lower yields at the shorter end of the yield curve. With bank credit

growth remaining subdued, we expect rates to remain low in near term

G-sec funds or duration funds should be avoided. Credit opportunities

funds with stable asset quality offer the best investment opportunity in

the current market environment

G-sec yields rise marginally in days following

October RBI policy meet

5.5

5.8

6.0

6.3

6.5

6.8

7.0

7.3

7.5

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Source: Bloomberg

G-sec yield curve: Yields steepens for most

maturities

6.13

6.35

6.54

6.58

6.22

6.42

6.696.75

6.0

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

1yr 3yr 5yr 10yr

Yie

ld (%

)

12-Oct-17 13-Sep-17


AAA corporate bond yield curve steepens for 10

year maturity

6.82

7.137.12

7.66

6.997.13

7.35

7.78

6.4

6.8

7.2

7.6

8.0

1yr 3yr 5yr 10 yr

Yie

ld (%

)

12-Oct-17 13-Sep-17



Page 4

MF industry synopsis

Mutual fund assets have shown remarkable growth over the last three

years, driven by record inflows into equity schemes and strong

performance. Total assets managed by mutual funds touched a record

high of | 20.59 lakh crore in August 2017, declining slightly by ~0.9% in

September 2017 to | 20.40 lakh crore. This represents a ~29.13%

increase YoY and an ~24% increase from December 2016. Of the total

MF corpus, ~40% was held by income funds and ~32% by equity and

ELSS funds

According to Amfi data, systematic investment plans (SIPs) inflows for

September were at ~| 5500 crore, up from ~| 5200 crore previously.

SIP inflows averaged ~ | 3600 crore per month in FY17

In the trailing 12 months, the mutual fund industry saw a net inflow of

| 3.43 lakh crore. Out of the total net inflow, | 1.13 lakh crore came into

equity and ELSS funds, about 33%

Despite volatility in equity markets, inflows in equity mutual funds have

remained steady. September saw a net inflow of ~| 26603 crore in

equity and equity-oriented funds, which is slightly below the multi-year

high seen in August. This trend reflects the increasing participation of

investors in mutual funds and use of correction as an opportunity to

deploy capital

Exhibit 1: While all equity-oriented schemes saw second largest monthly

inflow ever, large outflows from income schemes put net September

inflows at (-) |16604 crore

1000000

1200000

1400000

1600000

1800000

2000000

2200000

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Total AUM

Source: AMFI

Exhibit 2: AUM of Top 10 AMCs

271,094

268,245

225,811

222,900

183,622

141,427

110,847

95,758

78,472

65,000

50000

100000

150000

200000

250000

300000

350000

AUM

Source: ACE MF

Exhibit 3: Fraklin Templeton has highest proportion of equity AUM as

percentage of its AUM

48%

48%

41%

41%

37%

36%

35%

33%

31%

29%

0%

20%

40%

60%

80%

Equity % Debt% Others%

Source: ACE MF. Data as of September 2017

Exhibit 4: Within retail category, equity funds witness significant inflows

in FY17…

-2000

4000

10000

16000

22000

28000

34000

40000

46000

52000

58000

EQ

UITY

BA

LA

NC

ED

OTH

ER

ETFs

ELS

S -

EQ

UITY

GO

LD

ETFs

GILT

FY16

Source: ACE MF. Data as on March 2017


Page 5

MF Category Analysis

Equity funds

Infrastructure funds emerged as the best performing category of equity

funds for a second consecutive month. This category along with

banking as well as FMCG funds continued to outperform information

technology (IT) and pharma funds by wide margins. Pharma funds were

in the red to the tune of ~9.7%

In terms of market cap-based funds, midcap funds continued their

dominance over large cap funds. Overall, midcap funds were among

the best performing equity fund categories on a one year basis

Structural industry-wide problems continue to plague pharma and

technology funds. Pharma stocks delivered a severely disappointing

Q1FY18 amid persistent pressure over pricing, compliance issues and a

fear of shrinking growth in the large US market. H1B visa issues and US

government action fears persisted on overhangs over technology

stocks and consequently, technology funds

Exhibit 5: Infrastructure funds outperform other categories while pharma funds continue to be

under pressure (returns as on October 13, 2017)

S

25.3

23.2

22.1

21.8

18.8

17.9

7.3

-9.7

15.4

15.0

15.5 1

9.8

14.4

12.0

3.2

4.0

15.8

14.0

14.9

24.9

18.0

15.3

16.0

15.2

-15

-10

-5

0

5

10

15

20

25

30

Infrastructure Banking FMCG Mid cap Multi cap Large Cap Technology Pharma

Returns (%

)

1 year 3 Year 5 year

Source: Crisil, ICICIdirect.com Research ; Returns over one year are compounded annualised returns

Exhibit 6: Strong flows continue into equity and ELSS schemes

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Net In

flow

( |

Cr )

Equity + ELSS

Source: AMFI, ICICIdirect.com Research

Exhibit 7: Robust inflow in equity funds pushes up AUM to record high of

| 6.6 lakh crore

350000

400000

450000

500000

550000

600000

650000

700000

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

| lakh C

rore

Equity +ELSS


Reshuffling of portfolio was seen post Union Budget with

beaten down sectors rallying sharply outperforming

defensive sectors


Page 6

Event update : Sebi circular on categorisation and rationalisation of

mutual fund schemes

Sebi in its October 6 circular on ‘Categorisation and rationalisarion of

mutual fund schemes’ brought out several far reaching changes to the

existing operations of the mutual fund industry. It appears that the

proposed changes will bring greater uniformity in practice across asset

management companies (AMCs) and standardise categorisation of

schemes with respect to asset allocation, investment strategy, etc

The changes are expected to benefit investors by making their decision

making process clearer through better evaluation of the different

options available

From a research perspective, prima facie it appears that the changes

will enable more appropriate comparison and simplify identification and

tracking of mutual fund scheme performance

AMCs are required to analyse their existing schemes in light of the

proposed changes and submit their proposals (including course of

action viz. winding up, merger, fundamental attribute change, etc.) to

Sebi within two months from the date of the circular. After receiving

Sebi’s feedback and observations on the proposals, mutual funds would

have to carry out the necessary changes within a maximum period of

three months. Thus, the entire exercise would be completed within a

maximum period of five months

The circular is applicable to all open ended schemes currently in

existence and sought to be issued in the future.

Exhibit 8: Summary of changes proposed by circular

Section Prevailing Change proposed Comment

Scheme

Categorization

Presently schemes only mention whether

schemes are open/close ended and whether they

invest in equity, debt or a combination of both.

5 distinct categories

• Equity – 10 sub categories including Large cap, Mid cap, Small cap among others

• Debt – 16 sub categories including Liquid, Corporate Bond, Credit Risk among others

• Hybrid - 6 sub categories including Aggressive Hybrid Fund, Dynamic Asset Allocation

among others

• Solution Oriented – 2 sub categories : Retirement Fund, Children’s Fund

• Others – 2 sub categories : Index Funds/ETFs and Fund of Funds (FoFs)

Category based definition demarcates funds distnctly, thus enabling

investors to better select funds before investment and better compare

performance after investment. Additionally, there will now be limits on the

scope to stray from investment mandate.

Investment Universe

No standardization on investment universe of

schemes, lack of well-defined investment

uniiverses

Clear definition of what constitutes a large cap/mid cap/small cap stock on the equity side

and several duration-based ranges for debt schemes

• Large Cap: 1st-100th company based on full market cap

• Mid Cap: 101st-250th company based on full market cap

• Small Cap: 251st company onwards based on full market cap

Threshold limits have also been set for minimum investment into defined

universes for applicable schemes. For instance, a large cap fund would

need to maintain minimum 80% of its corpus in large cap stocks at all

times. In the case of equity funds, the list of stocks based on market cap

would be updated twice a year (June and December) and schemes would

have to carry out necessary rebalancing in their portfolios within one

month from the change.

Rationalization

No current provision on number of schemes

allowed per category Only one scheme allowed per sub-category, except Index funds/ETFs, FoFs with different

underlying schemes and sectoral/thematic funds with different underlying sectors/themes.

The move could narrow down the existing universe of schemes and make

available fewer but well defined, distinct schemes.


Page 7

Equity diversified funds

Equity diversified funds witnessed robust growth over the last three

years, with AUM within each sub-category rising substantially. In the

last three years in FY14-17, the AUM of large cap funds rose 121%,

multi cap funds AUM rose 99% while midcap funds AUM rose 204%

Over this period, while all three sub-categories have delivered a strong

performance (Exhibit 9), midcap funds have done exceedingly well and

outperformed. This is reflected in the trend of broader indices

outperforming bellwether indices over this time frame. However, large

cap funds have reversed that trend at some points during the past few

months

Multicap funds are relatively more market cap agnostic and hold

positions in a wider range of companies than pure large cap funds or

pure midcap/small cap funds. Multicap funds generally hold around 50-

60% of their portfolio in large cap stocks and 30-40% in midcap stocks.

They have benefited by capturing a part of the midcap rally during this

period and, thus, outperformed pure large cap funds

In the present market scenario, bottom up stock picking across the

market segment is more important than allocation to a particular

segment or sub sector. Multicap funds offer fund managers flexibility to

allocate funds across all market segment and are, therefore, relatively

better placed

Exhibit 9: Robust AUM growth across all equity diversified fund sub-categories from 2014

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

|crs

Large Caps Multi Caps Mid Caps

Source: ACE MF

Recommended funds

Large cap

Birla Sunlife Frontline Equity

ICICI Prudential Focused Bluechip Equity

SBI Bluechip Fund

Multi cap

Franklin India Prima Plus Fund

Kotak Select Focus Fund

Midcap

HDFC Mid-Cap Opportunities Fund

Franklin India Smaller Companies Fund

(Refer to www.icicidirect.com for details of the fund)

View

Short term: Positive

Long-term: Positive

http://content.icicidirect.com/newsiteContent/Research/MutualFunds.asp


Page 8

Equity infrastructure funds

Government spending and focused push towards sectors such as

roads, railways, housing and power could lead to greater opportunities

to infrastructure players, apart from the benefit of increased

transparency in the system

A number of infrastructure related government schemes and the

introduction of new regulatory measures are expected to help

organised players in the infrastructure space over the medium to long

term, placing infrastructure and ancillary stocks on an attractive footing

Preferred Picks

Aditya Birla SL Infrastructure Fund Refer

www.icicidirect.com for

details of the fund

L&T Infrastructure Fund

Reliance Diversified Power Sector Fund

Equity banking funds

Q1FY18 results showed that operating earnings increased decently.

However, there was no respite from asset quality concerns especially

for PSU banks. Of late, enhanced credit quality concerns and related

haircuts and credit costs apart from slower credit growth have put the

sector under some stress. However, increase in gross NPA of private

sector banks in absolute terms was lower than previous quarters, giving

some respite with further support expected from treasury gains and

sale of non-core assets

We remain optimistic on the banking sector keeping in mind the

anticipated pick-up in credit offtake. Steady margins and peaking out of

the NPA cycle is expected to further aid profitability

From a long term point of view, the continued government push on

financial inclusion is structurally positive for the financial industry.

Demonetisation-led reduction in the black economy, enhanced

awareness and increased usage of digital or electronic payments will be

positives for the banking industry from an operating cost perspective

Preferred Picks

ICICI Prudential Banking & Financial Services Refer to


details of the fund

Reliance Banking Fund

UTI Banking Sector Fund

Equity FMCG Funds

Several companies from the consumer-oriented and FMCG space

witnessed GST led destocking impact in Q1FY18. This came on the

back of an improvement due to receding demonetisation-led disruption.

Many companies had reported decent earnings growth with an

improvement in margins and sequential improvement in volume growth

in Q4FY17

We maintain our positive outlook on the FMCG sector backed by the

rural consumption revival led by largely normal monsoons and the

government’s focus on increasing farm incomes. We also expect GST

implementation to eventually provide a big boost to FMCG companies,

particularly those present in personal care and household categories

Preferred Picks

ICICI Prudential FMCG Fund Refer


details of the fund

SBI FMCG Fund

View

Short-term: Positive

Long-term: Positive

View


Long-term: Positive

View


Long-term: Positive





Page 9

Equity Pharma funds

Q1FY18 was quite poor for pharmaceutical companies on the back of

concerns such as destocking necessitated by GST implementation,

higher-than-expected price pressure in the US generic space, high base

effect and rupee appreciation. Leading players in the US market

continue to face threats from price erosion borne out of intense

competition and client consolidation. Besides, other issues in the US

like pricing probe by the Department of Justice, adapting to the bidding

process and imposition of border tax on imported drugs are other near

term overhangs. An additional headwind for the sector has emerged in

the form of channel disturbances due to GST implementation. Pharma,

being a largely export-oriented sector, faces additional pressure from

emergence of a stronger rupee

However, despite these apprehensions, in the long term, we remain

optimistic about the sector’s prospects on the back of attractive

valuations and earnings momentum pick-up led by incremental product

launches in the US besides normalising Indian formulations growth

Preferred Picks

Reliance Pharma Fund Refer to

www.icicidirect.com

for details of the fund

SBI Pharma Fund

UTI-Pharma & Healthcare

Equity Technology Funds

Technology companies report muted results as expected. Subdued

corporate results demonstrate the pain in the technology sector. Future

expectations would be centred around management guidance. In the

short-term, persistent rupee strength, wage hikes and visa costs would

continue to weigh on the sector

We maintain our neutral stance on the sector as the industry faces

challenges related to US immigration rules and growing protectionism

around the world leading to marginal IT spending by companies. The

industry would continue to witness pricing pressure in its traditional

business, which is currently unable to offset newer revenue streams

from digital areas that enjoys higher margins

Preferred Picks

ICICI Prudential Technology Fund Refer to


details of the fund

DSPBR Technology fund

View

Short-term: Neutral

Long-term: Neutral

View

Short-term: Neutral

Long-term: Positive




Page 10

Exchange Traded Funds (ETF)

In India, three kinds of ETFs are available: Equity index ETFs, liquid

ETFs and gold ETFs

An equity index ETF tracks a particular equity index such as the BSE

Sensex, NSE Nifty, Nifty Junior, etc

An equity index ETF scores higher than index funds on several grounds.

The expense of investing in ETFs is relatively less by 0.50-0.75% in

comparison to an index fund. The expense ratio for equity ETFs is in the

range of 0.05-0.25% while for index funds the expense ratio varies in

the range of 0.50-1.25%. However, brokerage (which varies) is

applicable on ETFs while there are no entry loads now on index funds

Tracking error, which explains extent of deviation of returns from the

underlying index, is usually low in ETFs as it tracks the equity index on

a real time basis whereas it is done only once in a day for index funds

ETFs also provide liquidity as they are traded on stock exchanges and

investors may subscribe or redeem them even on an intra-day basis.

This is unavailable in index funds, which are subscribed/redeemed only

on a closing NAV basis

In August 2015, the Labour Ministry decided to invest 5% of

Employees’ Provident Fund Organisation’s (EPFO) incremental corpus

in ETFs. The investment in equities is split between the Nifty ETF (75%)

and Sensex ETFs 25%. EPFO chose two ETF schemes of SBI Mutual

Fund—SBI ETF Nifty and SBI Sensex ETF

In 2016, the EPFO hiked the limit from 5% to 10% of its incremental

corpus of investment in equities, which was further increased to 15% of

its incremental corpus in May 2017. This is a positive move since

retirement savings, which are long term in nature, will be invested in

equities that have the potential to generate higher returns. So far, EPFO

has invested a total of ~| 22,000 crore in exchange traded funds as of

April 2017

Over 400 ETFs are traded globally. ETFs are transparent and cost

efficient. The decision on which ETF to buy should be largely governed

by the decision on getting exposure to that asset class

Exhibit 10: Sensex/Nifty ETFs receiving consistently higher inflows…

1866

71

7661009

387

892

1533

940

2830

4349

6748

930

3599

456584

13651753

15131968

-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

Mar-16

Jun-16

Sep-1

6

Dec-16

Mar-17

Jun-17

Sep-1

7

Net Inflo

w ( | C

r )


Exhibit 11: …leading to consistent increase in AUM

22740

23943

25211

28834

37412

40147

44436

45899

47584

48359

52823

53734

55166

0

10000

20000

30000

40000

50000

60000

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

| C

rore

Other ETFs


Traded volumes should be the major criterion that is used

while deciding on investment in ETFs. Higher volumes

ensure lower spread and better pricing to investors...

Tracking error, though it should be considered, is not the

deciding factor as variation among funds is not huge...

..traded volume should be the major criteria to be

considered while deciding on investment in ETFs.

Higher volumes ensure lower spread and better

pricing to investors...

..tracking error though should be considered but is

not the deciding factors as variation among funds

is not huge...


Page 11

Balanced funds

The balanced funds category continued to receive significant flows,

with the average monthly inflow (net) for 12 months to September 2017

amounting to ~ | 8500 crore

The AUM of balanced funds has witnessed a stellar increase during this

period, more than doubling to | 134868 crore in September 2017 from

| 56816 crore in the year ago period

Over the last two or three years, the balanced space has emerged as

one of the fastest growing equity categories and offers an ideal gateway

for first time retail equity investors. In FY17, balanced funds AUM

growth outpaced all other categories bar non-gold ETFs

Balanced funds are hybrid funds. More than 65% of the overall portfolio

is invested in equities. Hence, as per provisions of the Income Tax Act,

1961, any capital gains over a year become tax free. Also, dividends

declared by funds are tax free in the hands of the investor

In case one separately invests 35% of one’s investible corpus in a debt

fund, the same will be subject to higher taxation. However, if the whole

corpus is invested in balanced funds, 100% shall have lower taxation

applicable as mentioned above. Thus, balanced funds offer the benefit

of equity taxation on debt component

After a sharp rally in equity markets, the funds can be a preferred

investment avenue as the debt proportion serves to protect on

intermediate relief rallies or the downturn while providing minimum

65% participation on further upsides

Exhibit 12: Strong inflow into balanced funds

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Sep-1

5

Nov-15

Jan-16

Mar-16

May-16

Jul-16

Sep-1

6

Nov-16

Jan-17

Mar-17

May-17

Jul-17

Sep-1

7

Net Inflo

w ( | C

r )


Exhibit 13: YoY 137% growth in AUM of balanced funds

56816

61107

62907

64954

71021

77126

84763

93530

102156

109513

121243

128320

134868

13000

33000

53000

73000

93000

113000

133000

153000

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

| C

rore

Balanced


Preferred Picks

ICICI Prudential Balanced Fund

HDFC Balanced Fund

Birla Sun Life Balanced 95 Fund

DSP Blackrock Balanced Fund

L&T India Prudence Fund


Investors with a limited investible surplus and a lower risk

appetite but with a willingness to invest in equities can

look to invest in these funds

View


Long-term: Positive



Page 12

Monthly Income Plans (MIP)

An MIP offers investors the option to invest in debt with some

participation in equity, ~10-25% of the portfolio. They are suitable for

investors who seek higher returns from a debt portfolio and are

comfortable taking nominal risk. The debt corpus of the portfolio

provides regular income while the equity portion of the fund provides

alpha. However, returns can also get eroded by a fall in equities

MIPs can be classified into aggressive MIP and conservative MIP based

on its equity allocation. Risk averse investors should invest in MIPs with

lower equity allocation to avoid capital erosion

The change in taxation announced in the Union Budget 2014, shall be

applicable to MIP funds (refer to debt funds section for details)

Preferred Picks

Aditya Birla Sun Life MIP II - Wealth 25 Plan

ICICI Prudential MIP 25

SBI Magnum MIP Fund

SBI Magnum MIP Floater Fund

(Refer www.icicidirect.com for details of the fund)

Arbitrage Funds

Arbitrage funds seek to exploit market inefficiencies that get manifested

as mispricing in the cash (stock) and derivative markets

Availability of arbitrage positions depends very much on the market

scenario. A directional movement in the broader index attracts

speculators in the market while cost of funding makes futures positions

biased

Arbitrage funds are classified as equity funds as they invest into equity

share and equity derivative instruments. Since these are classified as

equity funds for taxation, dividends declared by the funds are tax free.

No capital gains tax will be applicable if they are sold after a year

These funds can be looked upon as an alternative to liquid funds.

However, for these funds, returns totally depend on arbitrage

opportunities available at a particular point of time and investors should

consider reviewing the same before investing. Returns of arbitrage

funds are non-linear and, therefore, unsuitable for investors who want

consistent return across time period

Arbitrage funds should be used as a liquid investment and should not

be a major part of the investor’s portfolio. A range bound market does

not give ample room to create arbitrage positions

Preferred Picks

ICICI Prudential Equity - Arbitrage Fund – Regular

IDFC Arbitrage Fund - (Regular)

Kotak Equity Arbitrage Fund

SBI Arbitrage Opportunities Fund


View

Short-term: Neutral

Long-term: Positive

View

Short-term: Neutral

Long-term: Neutral

MIP should be a preferred debt investment for funds that

need to be parked for over two years




Page 13

Debt funds

Exhibit 14: Category average returns

7.7

7.0

7.6

7.1

6.8

8.0

7.5

6.4

10.3

7.7

6.3

9.3

6.3

6.2

7.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

6 months 1 year 3year

%

Gilt Funds Income LT Income ST Income UST Liquid

Source: ACE MF, ICICIdirect.com Research

Note : Returns as on October 13, 2017; All returns are compounded annualised

Exhibit 15: G-sec yield curve

6.13

6.35

6.54

6.58

6.22

6.42

6.696.75

6.0

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

1yr 3yr 5yr 10yr

Yie

ld (%

)

12-Oct-17 13-Sep-17


Exhibit 16: Corporate bond curve

6.82

7.137.12

7.66

6.997.13

7.35

7.78

6.4

6.8

7.2

7.6

8.0

1yr 3yr 5yr 10 yr

Yie

ld (%

)

12-Oct-17 13-Sep-17


Benchmark 10 year G-Sec has witnessed yields

softening by ~20 bps since the end of April

Interest rates moved up on the longer end of the G-Sec and

corporate bond category


Page 14

Liquid Funds

Yields on money market instruments viz. less than one year CDs and

CPs in which liquid fund predominantly invest, remain stable at lower

levels due to ample liquidity

In an uncertain environment, liquid funds remain well placed to park

money with low volatility

For less than a year, individuals in the higher tax bracket should opt for

dividend option as the dividend distribution tax @ 28.325% is

marginally lower. Also, though the tax arbitrage has reduced, they still

earn better pre-tax returns over bank savings (3-4%) and current

accounts (0-3%)

Changes in taxation rules announced in Union Budget 2014 are also

applicable to liquid funds, as post tax returns in less than a three-year

period get reduced for individuals in the higher tax bracket (30% tax

slab) and for corporate

Exhibit 17: Call rates below repo rate

5

5.4

5.8

6.2

6.6

7

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

%

Call rate


Exhibit 18: CP/CD yields

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

%3M CD 3M CP


Exhibit 19: Flows into liquid funds remain volatile on institutional activity

19630

-34,813

1,350

26,943

10,541

8,227

-15,147

99,403

-64,692

-12,739

-19,511

21,352

4,833

-200,000

-160,000

-120,000

-80,000

-40,000

0

40,000

80,000

120,000

160,000

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Net Inflo

w ( | C

r )


Exhibit 20: AUM remains healthy

468022

484802

468668

469675

496696

520020

543541

568770

583557

591377

629456

643926

659182

300000

400000

500000

600000

700000

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

| la

kh C

rore

Money Market


Preferred Picks

HDFC Cash Management Fund - Savings Plan

SBI Magnum InstaCash

Reliance Liquid Fund - Treasury Plan


View

Neutral



Page 15

Income funds

RBI held the status quo on policy rates and maintained a neutral stance

in its October 4 policy meet. This followed consecutively higher inflation

readings in July (2.36% YoY) and August (3.28% YoY) than the series-

low June headline CPI print of 1.54%. The policy document outlined

aspects such as rebound in core & fuel inflation and the possibility of

fiscal slippages as some factors influencing its decision. Food prices

rose in July and August while the percolation effects of GST and HRA

implementation for government employees showed up in September

CPI as well. Core inflation rose to a six-month high in September.

Further, persistent stickiness could lead the RBI to maintain a prolonged

pause on rates. The RBI revised upwards its inflation projection for

H2FY18 to 4.2-4.6% from 3.5-4.5%. The policy statement was less

dovish in its commentary than was perhaps expected by the market.

The benchmark 10 year G-sec yield witnessed some pressure in the

following weeks, climbing by ~15 bps from end-September levels to

~6.73% (October 13)

Dynamic bond funds or short-term funds with some dynamic allocation

to G-Sec should be preferred over pure G-Sec funds or long-term

duration funds

Short-term debt funds remain a stable performing category, especially

in the current volatile environment. Credit funds with reasonable credit

quality should be preferred over an aggressive credit fund

Exhibit 21: Income funds witness significant outflow in September

-11,0

24

52,1

25

18,3

06

-33,1

82

28,5

88

10,8

64

-56,2

47

34,6

47

5,1

24

-20,6

85

60,0

84

8,3

90

-50,0

90

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

Sep-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Net In

flow

s

(| .

Cr)


Exhibit 22: AUM remains stable on consistent inflows 698418

754662

784305

748071

783778

794679

743783

780797

792734

778266

845484

858188

809965

400000

500000

600000

700000

800000

900000

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

| C

rore

Income


Recommended funds

Ultra Short Term Funds

Birla Sun Life Savings Fund

ICICI Prudential Flexible income

Short Term Funds

Birla Sunlife short term fund

HDFC Short Term Fund

ICICI Pru Short Term Plan

Short Term Funds – Credit opportunities

Birla Sunlife Short Term opportunities term

HDFC Corporate debt opportunities

ICICI Prudential Regular Savings

Long term/Dynamic

Birla Sunlife income plus

ICICI Prudential Dynamic Bond Fund

IDFC dynamic bond fund


View

Ultra-short term: Neutral


Long-term: Neutral



Page 16

Gilt Funds

Yield on the benchmark 10 year government bond had hardened

appreciably post the shift in RBI’s monetary policy stance from

‘accommodative to ‘neutral’. Softer than expected inflation prints in

April, May and June combined with strong institutional flows into debt

markets combined to push down benchmark 10 year G-sec yield by

~45-50 points in the period from May-July. The markets were not

enthused by the widely expected rate cut in August and the lesser than

expected dovish RBI commenatry in October. A significant rebound in

July, August and September CPI readings was followed by rise in yields

by ~25 bps from ~6.50% (end-June) to 6.73% (October 13). The yield

at 6.73% currently is up ~29 bps YTD. It briefly tested 6.95% in April

RBI held status quo on policy rates and maintained neutral stance in its

October 4 policy meet. This followed consecutively higher inflation

readings in July (2.36% YoY) and August (3.28% YoY) than the series-

low June headline CPI print of 1.54%. The policy document outlined

aspects such as rebound in core and fuel inflation and the possibility of

fiscal slippages as some factors influencing its decision. Food prices

rose in July and August while the percolation effects of GST and HRA

implementation for government employees showed up in September

CPI as well. Core inflation rose to a six-month high in September.

Further persistent stickiness could lead the RBI to maintain a prolonged

pause on rates. The RBI revised upwards its inflation projection for

H2FY18 to 4.2-4.6% from 3.5-4.5%

Given how inflation seems to be edging higher post June driven by

higher fuel prices, GST, HRA implementation and increasing likelihood

of a third 2017 rate hike by the Fed in December, there appears quite

limited scope for yields to soften. Allocation to pure G-Sec or duration

funds should be avoided given their historical outperformance and G-

sec yield trading at the lower end of its historical range. Historically, it

has been observed that years of good returns in G-sec are followed by

lower returns

Exhibit 23: Historical trend in return from G-Sec indicates, going forward, returns likely to be lower

-15

-10

-5

0

5

10

15

20

25

30

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 YTD

Crisil 10 Yr Gilt Index

%

Source: ACE MF

Preferred Picks

Aditya Birla Sun Life Gilt Plus – PF Plan

ICICI Pru LT Gilt Fund – PF Option


Allocation to pure G-Sec or duration funds should be

avoided given their historical outperformance and G-sec

yield trading at the lower end of its historical range. Crisil

10 year Gilt index has delivered 38% return in the last

three years. It is likely the return will be significantly

lower, going forward

View

Short-term: Neutral

Long-term: Neutral



Page 17

Gold: Outlook anchored to geopolitical worries, Fed

movement

Global prices see-sawed in September. Starting from a base of

~US$1321 per ounce, prices gained smartly towards ~US$1349 per

ounce (September 7) before a sharp decline initially below US$1300 per

ounce and then bottoming out at ~US$1270 per ounce on October 3.

The metal bounced back in the second week of October towards

~US$1304/ounce (October 13). This represents a ~13.2% YTD return

The strong rupee appreciation during this period of ~4.2% has

prevented similar gains in Indian gold prices. Domestic rise has been

limited to just ~6.8% YTD as of October 12

Geopolitical concerns surrounding the US-North Korea situation had

provided buying interest in gold during much of August and early

September. However de-escalation of tensions in September helped

spark the sell-off, which reflected in prices. Firming of the US dollar

index also pushed gold prices lower

Gold has historically been looked at as a relatively risk-free asset. Its

price movement both in India and globally, is impacted by any actual or

perceived risk build-up on economic, political or natural fronts. The US

Dollar Index rose for most of September and further still in October,

touching a high of 93.96 on October 5. Dollar hardness leads to a fall in

gold prices as the metal is denominated in that currency

Fresh strength in gold prices in October was caused by weaker than

expected US inflation data, which cast some doubts on the Fed’s

interest hike trajectory. Further, geoplotical worries from Iraq also lent

support

There are growing expectations surrounding a Fed rate hike in

December. Apart from risk-off investment demand, gold direction

would continue to be impacted by developments on this front. The Fed

had last hiked rates twice thus far in 2017. Persistent undershooting of

inflation prints from the targeted level could impact this stated

trajectory. If US bond yields rise slower than expected, non-interest

bearing assets like gold could attract investment demand

Exhibit 24: Gold prices come off September highs

1100

1200

1300

1400

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Price ($/ounce)


Exhibit 25: Indian prices rise relatively less due to currency appreciation

26000

28000

30000

32000

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-1

7

Oct-17

Price (|/10 grams)



Page 18

Model Portfolios

Equity funds model portfolio

Investors who are wary of investing directly into equities can still get

returns almost as good as equity markets through the mutual fund route.

We have designed three mutual fund model portfolios, namely,

conservative, moderate and aggressive mutual fund portfolios. These

portfolios have been designed keeping in mind various key parameters like

investment horizon, investment objective, scheme ratings, and fund

management.

Exhibit 26: Equity model portfolio

Particulars Aggressive Moderate Conservative

Review Interval Monthly Monthly Quarterly

Risk Return High Risk- High

Return

Medium Risk -

Medium Return

Low Risk - Low

Return

Funds Allocation % Allocation

Franklin India Prima Plus 20 20 20

Birla Sunlife Frontline Equity - 20 20

ICICI Prudential Dynamic Plan - - 20

SBI Bluechip Fund 20 20 20

Kotak Select Focus Fund 20 20 -

HDFC Midcap Opportunities 20 10 -

Franklin India High Growth Companies Fund 20 - -

Birla SL Dynamic Bond Fund - 10 20

Total 100 100 100

Source: ICICIdirect.com Research

Exhibit 27: Model portfolio performance: One year performance (as on September 30, 2017)

14.1%

13.0%

12.7%

15.5%

10%

11%

12%

13%

14%

15%

16%

Aggressive Moderate Conservative BSE 100

%

Aggressive Moderate Conservative BSE 100

Source: Crisil Fund Analyser, ICICIdirect.com Research


Page 19

Debt funds model portfolio

We have designed three different mutual fund model portfolios for different

investment duration viz. less than six months, six months to one year and

above one year. These portfolios have been designed keeping in mind

various key parameters like investment horizon, interest rate scenarios,

credit quality of the portfolio and fund management, etc.

Exhibit 28: Debt funds model portfolio

Particulars

0 – 6 months 6months - 1 Year Above 1 Year

Objective Liquidity

Liquidity with

moderate return Above FD

Review Interval Monthly Monthly Quarterly

Risk Return

Very Low Risk -

Nominal Return

Medium Risk -

Medium Return

Low Risk - High

Return

Funds Allocation

Ultra Short term Funds

Birla SL Savings Fund 20

ICICI Pru Flexible Income Plan 20

Short Term Debt Funds

Axis Regular Savings Fund 20

Birla Sunlife Short Term Fund 20 20

Birla Sunlife Short Term Opportunites Fund 20 20

Reliance Regular Savings Fund 20

HDFC Short Term Opportunities Fund 20 20

ICICI Prudential Regular Savings 20

ICICI Prudential Short Term Fund 20

IDFC SSI Short Term 20

UTI Short Term Income Fund 20

HDFC Corporate Debt opportunities fund 20

Total 100 100 100

Time Horizon

% Allocation

Source: ICICIdirect.com Research

Exhibit 32: Model portfolio performance: One year performance (as on September 30, 2017)

7.70

8.40

8.10

7.10

8.008.10

6.0

6.5

7.0

7.5

8.0

8.5

0-6 Months 6Months - 1Year Above 1yr

%

Portfolio Index

Source: Crisil Fund Analyser, ICICIdirect.com Research

*Index: 0-6 month’s portfolio – Crisil Liquid Fund Index; 6 months-1 year – Blended Index with 50% weight to Crisil

Liquid Index, 50% weight to Crisil Short Term Index; Above 1 year: Crisil Short Term Index


Page 20

Top Picks

Exhibit 33: Category wise top picks

Largecaps Birla Sun life Frontline Equity Fund

ICICI Pru Focused Bluechip Fund

SBI Bluechip Fund

Midcaps HDFC Midcap Opportunities Fund

Franklin India Smaller Companies Fund

Multicaps Franklin India Prima Plus Fund

Kotak Select Focus Fund

ELSS Axis Long Term Equity Fund

ICICI Pru Tax Plan

Reliance Tax Saver Fund

Franklin India Taxshield

Balanced HDFC Balanced Fund

ICICI Pru Balanced Fund

Birla Sun Life Balanced 95 Fund

DSP Blackrock Balanced Fund

L&T India Prudence Fund

Liquid HDFC Cash Mgmnt Saving Plan

ICICI Pru Liquid Plan

Reliance Liquid Treasury Plan

Ultra Short term Birla Sunlife Savings Fund

ICICI Pru Flexible Income Plan

UTI Treasury Advantage Fund-Inst

Short term Birla SL Short term Fund

HDFC Medium Term opportunities Fund

Kotak Banking and PSU Debt Fund

Credit Opportunities Axis Regular Savings Fund

Birla Sun Life Medium Term Plan

L&T Short Term Income Fund

Income Funds ICICI Pru Income Fund

Birla SL Income Plus - Regular Plan

IDFC Dynamic Bond Fund

Equity Funds & Equity-oriented Funds

Debt Funds




Page 21

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk,

ICICI Securities Limited,

1st

Floor, Akruti Trade Centre,

Road No. 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]

Disclaimer

ANALYST CERTIFICATION

We, Sachin Jain, CA, and Jaimin Desai, 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 Funds. 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.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) AMFI Regn. No.: ARN-0845. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990.Registered office of I-

Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate,Mumbai - 400020, India. ICICI Securities is a full-service, integrated investment banking and is, inter alia, engaged in the

business of stock broking and distribution of financial products. ICICI Securities is a wholly-owned 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, distribution of financial products etc. (“associates”), the details in

respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading distributors of Mutual Funds and participate in distribution of Mutual Fund Schemes of almost all AMCs in India.

The selection of the Mutual Funds for the purpose of including in the indicative portfolio does not in any way constitute any recommendation by ICICI Securities Limited (hereinafter referred to as ICICI

Securities) with respect to the prospects or performance of these Mutual Funds. The investor has the discretion to buy all or any of the Mutual Fund units forming part of any of the indicative portfolios

on icicidirect.com. Before placing an order to buy the funds forming part of the indicative portfolio, the investor has the discretion to deselect any of the units, which he does not wish to buy. Nothing in

the indicative portfolio constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the investor's specific circumstances.

The details included in the indicative portfolio are 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. The funds included in the indicative portfolio may not be suitable for all investors, who must make their own investment decisions, based on their own

investment objectives, financial positions and needs.

This may not be taken in substitution for the exercise of independent judgement by any investor. The investor should independently evaluate the investment risks. ICICI Securities and affiliates accept

no liabilities for any loss or damage of any kind arising out of the use of this indicative portfolio.

Past performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. ICICI Securities may be holding all or any of the units included

in the indicative portfolio from time to time as part of our treasury management. ICICI Securities Limited is not providing the service of Portfolio Management Services (Discretionary or Non

Discretionary) to its clients.

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

Kindly note that such research recommended funds in indicative portfolio are not based on individual risk profile of each customer unless a customer has opted for a paid Investment Advisory Service

offered by I-Sec.

Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

The 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 Limited. The contents of this mail are solely for informational purpose and may 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 or any other product. While due care has been taken in

preparing this mail, I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance

thereon. This mail/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 I-Sec and affiliates to any registration or licensing requirement within such jurisdiction.

ICICI Securities and/or its associates receive compensation/ commission for distribution of Mutual Funds from various Asset Management Companies (AMCs). ICICI Securities host the details of the

commission rates earned by ICICI Securities from Mutual Fund houses on our website www.icicidirect.com. Hence, ICICI Securities or its associates may have received compensation from AMCs

whose funds are mentioned in the report during the period preceding twelve months from the date of this report for distribution of Mutual Funds or for providing marketing advertising support to these

AMCs. ICICI Securities also provides stock broking services to institutional clients including AMCs. Hence, ICICI Securities may have received brokerage for security transactions done by any of the

above AMCs during the period preceding twelve months from the date of this report.

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 AMCs whose funds are 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.

It is confirmed that Sachin Jain, CA, and Jaimin Desai, CA, Research Analysts of this report have not received any compensation from the Mutual Funds house whose funds are mentioned in the report

in the preceding twelve months.

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

ICICI Securities or is associates may be holding all or any of the units included in the indicative portfolio from time to time as part of our treasury management. Hence, ICICI Securities or its associates

may own 1% or more of the units of the Mutual Funds mentioned in the report as of the last day of the month preceding the publication of the research report.

Research Analysts or their relatives of this report do not own 1% or more of the units of the Mutual Funds 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/ AMCs including the AMCs

whose funds are mentioned in this report or may have invested in the funds mentioned in this report .

ICICI Securities also distributes Mutual Fund Schemes of ICICI Prudential Asset Management Company which is an ICICI Group Company, scheme details of which might also be appearing in the report

above. However, the transactions are executed at Client's sole discretion and Clients make their own investment decisions, based on their own investment objectives, financial positions and needs..

It is confirmed that Sachin Jain, Research Analysts do not serve as an officer, director or employee of the AMCs whose funds mentioned in the 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/funds mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting 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 funds

described herein may or may not be eligible for subscription 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.

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