Market Outlook February 2018 1 Equity Markets 2 Key Events - - PowerPoint PPT Presentation

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Market Outlook

February 2018

Equity Markets

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Key Events – January 2018

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• In its latest outlook, the IMF raised its forecasts for global growth to the fastest since 2011, upgrading

projections for major economies including the U.S., Germany and China. India to reclaim its tag as the fastest growing major economy at 7.4% and 7.8% in FY 18 and FY 19 respectively.

• Government announced the much awaited details of the Rs2.11tn bank recapitalization plan unveiled in Oct-

17 with capital infusion of ~Rs880bn (~$13.8bn) into public sector banks in this fiscal year.

• GST Council cut tax rate on 29 goods, including second-hand vehicles, confectionery and bio-diesel, while

veering around to simplifying return filing process for businesses.

• The government collects Rs 86,703 crore as GST for December as against Rs 80,808 crore in November.
• Nov IIP surged to 8.4% vs 2.2% in Oct led by manufacturing sector. Capital goods output improved further to

9.4% vs 6.6% in Oct. Electricity production inched up to 3.9% vs 3.2% and mining also rose marginally to 1.1% in Nov

• Dec trade deficit rose to 3 year high to $14.88bn vs $13.8bn in the previous month led by rally in crude, and

gold prices.

• Indian equities (+4.7%) started the year on a strong note with Nifty crossing the 11100 mark

Union Budget: Rural development and ‘Make In India’

Fiscal deficit roadmap: 3.3% in FY19E, 3.1% in FY20E; 3% in FY20E

Key budget themes

• Rural and agriculture focus: The budget focuses on the revival of the rural and agricultural sectors and gives a

boost to social sector spend; Hike in Minimum Support Prices; Announcement of a National Healthy Scheme

• Make in India : There is a significant support for “Make in India” in terms of increase in custom duties in

selected products. The products have also been selected, where Indian Industry already has or can develop manufacturing capacities in reasonably short time.

• Infrastructure thrust: Public spend on infrastructure continues (mainly in the areas of road and railways)
• Fiscal consolidation but only over the medium term : The budget tries to strike a midway path between fiscal

prudence and the needs of the economy. The fiscal deficit target of 3.3% of GDP for FY19E signals a 20bps reduction over FY18RE; Budget also lays out a path towards reaching 3% fiscal deficit by 2021.

• Revenue assumptions: Net tax revenue growth in FY19BE has been assumed at 16.6%YoY with Indirect tax

growth at 19.2%; GST revenue collections remains the key

• Nominal GDP growth assumptions appears reasonable: Assumes a nominal GDP growth of 11.5% in FY19E

Challenges

• Long term capital gains tax : The imposition of long term capital gains tax (LTCG) of 10% (without indexation)
• n equity markets and equity mutual fund units is a negative for market sentiments. The impact of LTCG

however, could be contained due to the grandfathering clause which exempts long term capital gains on purchases upto Jan 31, 2018.

Sustained Focus on Infrastructure

• Government’s estimated budgetary and extra budgetary expenditure on infrastructure for FY19 is being increased to

INR5.97t against estimated expenditure of INR4.94t in FY18.

• Railways sector investment target is increased to INR1.46t, up 22% YoY. Key plans include a) 18,000 kilometers of

2/3/4 lining and 5000 kilometers of gauge conversion works, b) procure 12000 wagons, 5160 coaches and 700 locomotives, c) electrify 4000 km of tracks, d) 3600 km of track renewal in FY19, elimination of 4267 unmanned crossings on broad gauge in next 2 years and e) Redevelopment of 600 major railway stations.

• Targeted spend under Pradhan Mantri Awas Yojana (PMAY) of INR525b, vs INR290b for FY18. This comprises of

PMAY-Rural spending down from INR230b to INR210b. PMAY-Urban spending at INR315b, vs INR60b. This includes INR5b increase in GBS and off-budgetary resources at INR250b(vs NIL in FY18 RE).

• Urban Infrastructure development GBS is up from INR418b from FY18RE to INR550b, though same as FY18BE.

While allocation to Smart Cities project (up 22%) and AMRUT (up 10%) has gone up, allocation towards Metro project is down 16.7%.

Source: Budget documents

Infrastructure : Higher Spending Continues

Focus on roads, railways and social infrastructure Thrust to build infrastructure continues, execution is key

Capital Outlay (INR Bn) FY16A FY17A FY18RE FY19BE Incr. Railways 350 450 418 551 31.8% National Highways 230 196 239 297 24.1% Metro 93 99 180 150

• 16.7%

Rural & Border Roads 205 209 169 190 12.4% Irrigation 79 58 74 94 27.6% Affordable Housing 116 201 290 275

• 5.1%

Power 55 85 149 151 0.9% Urban development 42 294 349 326

• 6.6%

Telecom 22 27 271 358 32.1% Total 1302 1759 2139 2396 12.0%

Positive Implications for agriculture/rural sectors – key highlights

– Adequate provisioning for fertiliser subsidy at INR 700bn to take care of estimated FY19 requirement of INR 600Bn as well as past backlog of INR 100Bn. This number is unchanged from previous year. – Significant increase in allocation for MGNREGS to INR 550bn as compared to last years budget number of INR 480bn – Increase in coverage of Crop insurance with FY19 allocation of INR 130bn for the same vs FY18 allocation of INR 90bn – Articulation of MSP strategy to get farmers to realise 50% more than the cost of produce. The coverage of National Agricultural Market(e-NAM) to be expanded to enable farmers to get better prices for their produce. In addition the goal of doubling farmers income by 2022 has been reiterated. – Increase in the volume of institutional credit for agriculture sector from INR 10 trillion in 2017-18 to INR 11 trillion for the year 2018-19. – Setting up of a Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector. Total Corpus of these two new Funds would be INR 100bn.

Source: Budget documents

Rural : Focus On Agriculture And Rural Infrastructure

Significant increase in allocation towards many specific schemes/purposes

Increased Outlay Towards Rural And Agriculture

“In the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the Ministries will be `14.34 lakh crore, including extra-budgetary and non-budgetary resources of `11.98 lakh crore. “ Shri Arun Jaitley, Finance Minister

Provision/Allocation for Rural Sector, Agriculture and Farmer's welfare FY18BE FY18RE FY19BE % Change YoY Allocation towards MGNREGS 480 550 550 15% Allocation to Pradhan Mantri Krishi Sinchai Yojana 74 74 94 27% Allocation to Pradhan Mantri Gram Sadak Yojana 190 169 190 0% Allocation to Green, White and Blue revolution 157 131 167 6% Allocation under Pradhan Mantri Fasal Bima Yojana 90 107 130 44% Allocation under Pradhan Mantri Kisan Sampada Yojana 7 6 13 81%

Focus on Make in India to reduce imports

• Government has increased custom duties for products where India has capability to become a large scale

manufacturer but still dependent on imports

• Custom duty increased for Truck and Bus radial tyres increased from 10% to 15%.
• Increase in custom duty for CKD imports increased to 15% from 10% and for CBU imports from 20% to 25%.

This should incentivize manufacturing of luxury cars in India.

• Increase in custom duty for Lithium ion batteries other than those used for mobile phones increased from 10%

to 20%. Lithium ion batteries would be the largest component of an EV in terms of value. Manufacturing of Lithium ion batteries in India would significantly reduce import dependence going forward.

• Custom duty on mobile phones increased to 20% from 15% and on TVs increased to 15% from 10%.

Consumer electronics is one of the biggest imports for the country. India has a very large and fast growing market for consumer electronics with cheap skilled labour making it ideal location for manufacturing.

• Custom duty has been increased on fruit and vegetable juices from 30% to 50%. This would boost domestic

production and also improve farm incomes

• Custom duty on crude edible vegetable oils increased from 12.5% to 30% and on refined edible vegetable oils

increased from 20% to 35%. This should encourage domestic production of oil seeds in India and aid in improving farm income.

Source: Budget documents

Make In India : Increase In Custom Duty To Support Manufacturing

Focus on consumer electronics, food processing, tyres, batteries and automobiles

No Change In Corporate Tax Rates; Reduction For MSMEs

No change in tax rates for individuals, cess increases

Corporate tax: – Corporate tax rate unchanged; Will reduce corporate tax rate to 25% over a period; – Corporate tax reduced for companies with turnover of upto INR2500mn reduced to 25% from 30% Individual tax – No change in individual tax rates – Standard deduction for salaried class with INR 40,000 replacing medical bill and transportation allowance – Senior Citizens interest income deduction allowance increased from INR 10,000 to INR 50,000. – Senior Citizens S.80 D deduction raised from INR 30,000 to INR 50,000

Source: Budget documents

No changes in tax rates

FY18 FY19 Individual Income Tax Upto INR 250,000 - Nil Upto INR 250,000 - Nil Above INR 250,000 - 500,000 - 5% Above INR 250,000 - 500,000 - 5% Above INR 500,000 - 10,00,000 - 20% Above INR 500,000 - 10,00,000 - 20% Above INR 10,00,000 - 30% Above INR 10,00,000 - 30% Senior Citizens (60 years+) exemption limit INR 300,000 exemption limit INR 300,000 Super rich 10% surcharge on total income exceeding INR 5mn but not exceeing INR 10mn 10% surcharge on total income exceeding INR 5mn but not exceeing INR 10mn Super rich 15% surcharge on income exeeding INR 10mn 15% surcharge on income exeeding INR 10mn Corporate Tax Tax rates 30% 30% Surcharge 12% 12% Cess 3% Education cess 4% Health and Education cess MAT 18.5% of book profits 18.5% of book profits

Capital Market Related Proposals

Key provisions related to capital markets:

Capital Gains:

• Long Term Capital Gains Tax (LCTG) on shares and equity mutual funds introduced at 10%; No LTCG on ULIPs (Unit

Linked Products of Life insurance companies)

• Dividend Distribution Tax (DDT) on dividends by equity mutual funds introduced at 10%
• All LTCG gains upto Jan 31, 2018 grandfathered
• Short term Capital Gains and Securities Transaction Tax left unchanged.

Corporate Tax:

• Tax rate for companies with annual turnover of less than INR 2500Mn reduced to 25%. Last year this figure was INR 500Mn

Divestment:

• Divestment target of INR800Bn for FY19
• More ETFs like Bharat-22. Even debt ETFs to be issued

Debt Markets:

• SEBI to consider mandating, beginning with large Corporates, to meet about one-fourth of their financing needs from the

bond market.

• Government to ask regulators to allow investments into instruments with ratings upto ‘A’ (earlier allowed upto AA)

Gold:

• Formulate a comprehensive Gold policy. Gold Monetization Scheme will be revamped to enable people to open a hassle-

free Gold Deposit Account

• Thrust given to IFSCs (International Financial Services Centre) by clearing some taxation ambiguities
• Benefit of withdrawal of upto 40% from National Pension Scheme extended to all subscribers and not only to employees
• Thrust given to M&A in respect of companies under IBC (Indian Bankruptcy Code) by allowing carry forward of losses by the acquirer

Financial sector: Positive for Life and General Insurance companies

Higher G-sec yields negative for wholesale funded entities

• PSU banks: Recapitalization bonds for FY19 budgeted at INR650Bn as compared to INR550Bn earlier. No direct

budgetary allocation this year (INR100bn direct equity replaced by bonds).

• Insurance: Positive
• Long term capital gains tax not applicable for ULIPs : positive for Life insurance companies
• No change in corporate tax rate for Life Insurance: to be taken up by the Direct tax Committee
• Implementation of National health policy : positive for General Insurance companies
• Crop Insurance outlay increased to INR130Bn from INR90Bn
• Merger of weaker state general insurers will reduce competitive intensity and benefit existing players
• Cases referred to NCLT under the Bankruptcy Code
• Clarification on non applicability of MAT for companies where resolution is completed under the bankruptcy :

Positive for the resolution of corporate NPLs

• Benefit of carry forward and set off of losses now allowed to the new buyer of a stressed company but only after

proper hearing by Principal Commissioner

• SME lending:
• Corporate tax rate of 25% as compared to 30% as of now for SME/MSME with Turnover below INR2500mn:

Reduce tax burden and profitability of SME/MSMEs

• Mudra Target for financial companies increased to INR3Trn (INR2.4Trn)
• Government to separately announce measures for effectively addressing SME/MSME NPAs
• To further develop/promote corporate bond markets in India : SEBI to mull asking large corporates to borrowing 25% of

total from the corporate bond market.

• To allow Regional Rural Banks (RRBs) to raise capital from the market (could reduce capital requirement from sponsor

PSU Banks over time)

Performance of Sensex and Nifty indices – January 2018

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Source: Bloomberg, Kotak Institutional Equities

Economic Survey Snapshot

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Source: Economic Survey 2017-18

GST Collections Reverse Trend

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Source : Economic Times

Mid & Smallcap Give Up Recent Gains

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Data as of 31st Jan 2018, Source: Capital Line

Number of Companies

At the time when Nifty is at all Time High

Election Calendar – Can We Have Early General Elections ?

Tight political calendar for 2018… 15

Source: CLSA, Rajya Sabha, Election Commission. *The number of members the BJP gets to nominate (sans election) is included in the above data.

High PE, But On Low Profitability Base

Source: Bloomberg, CMIE, ACE Equity, MOSPI, CLSA

Corporate Earnings Scorecard encouraging performance so far…

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Source: Companies, Kotak Institutional Equities Estimates

Market Performance

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*As on 31 January 2018, Source: Axis Capital, Bloomberg

BSE Sectoral Indices Strong Performance By Majority Sectors Over The Last 1 Year

Pharma lagging in returns 19

0.0 7.4 6.4 3.3 11.3 6.6 0.5 0.2 (3.0) (0.6) (2.6) (1.6) 90.5 38.9 37.7 32.2 31.0 28.0 27.5 25.0 19.0 9.3 7.0 (1.6) (20) 20 40 60 80 100 Realty Bankex Capital Goods Metals IT Services Tech Oil & Gas FMCG Auto PSU Power Healthcare (%) 1m return % 1 yr return %

*As on 31 January 2018, Source: Bloomberg

Performance Across Market Cap -

Strong Performance Down the Capitalisation Curve 20

4.7 (1.6) (2.7) 28.8 34.8 44.7 7.8 16.6 17.7 12.8 20.0 20.5 7.9 11.0 7.9 (10) 10 20 30 40 50 Nifty Nifty Midcap S&P BSE Smallcap 1m returns 1y returns 3 yr CAGR 5 yr CAGR 10 yr CAGR

In percent

Past Performance may or may not sustain in the future

Most Global Markets Had Strong Showing In The Last Year

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* As on 31 January 2018, Source: Bloomberg. Performance data in local currency 2.8 6.9 11.6 11.8 13.8 14.4 15.3 16.0 17.5 21.3 24.1 24.8 28.8 30.6 31.3 38.3 40.8 8.1 (1.3) 2.9 4.0 0.5 2.2 3.0 3.9 4.3 1.5 4.0 3.9 4.7 10.6 5.5 15.8 9.9 (10) 10 20 30 40 50 Russia (MICEX) UK (FTSE 100) EURO (Euro Stoxx 50) Malaysia (KLCI - FTSE) Swiss (SMI) Germany (DAX) France (CACS 40) Singapore (Straits) Taiwan (TSWE) Japan (Nikkei 225) Korea (Kospi) Indonesia (JCI) India (Nifty) Brazil (IBOV) US (Dow Jones) China (HSCEI) HK (HSI) 1M 1Yr

Nifty performance across cycles

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Source: Phillip Capital

Valuations

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Power at lower end of valuations, other sectors moving towards upper end of valuation zone

Source: Axis Capital, Bloomberg Note: * Since April-2005

Sensex sectoral long-term valuation snapshot: Forward PE*

Stock Picking Will Be Critical

*As on 31 January 2018

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10 20 30 40 50 60 70 80 Auto BFSI Engg FMCG IT Metals Oil Pharma Power Telecom Sensex

Top Quartile Current L

• wer Quartile

Min Max

P/E Multiple CY17/FY18 of Indices

Source: Internal Estimates , Bloomberg * For India & Japan Fiscal year is FY18 while others it is CY17

Indian higher than most peers on Valuation

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7.9 8.9 11.6 11.8 13.4 13.8 15.1 15.6 16.4 16.8 19.9 24.6 6 10 14 18 22 26 China (HSCEI) Korea (Kospi) Brazil (IBOV) HK (HSI) Singapore (Straits) UK (FTSE 100) Thailand (SET) Malaysia (KLCI - FTSE) US (Dow Jones) Japan (Nikkei 225) US (Nasdaq) India (Sensex) (x)

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Greater Power Comes Greater Responsibility

Source: CEIC, AMFI, IIFL Research. Note: Based on sum of ‘ELSS’, ‘Other ETF’, ‘Growth’ and 65% Of ‘Balanced’ category collections. * CY17 flows based on period of Jan to Nov-17

MF Equity collections in CY17 were ~80% of collections in last trade

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Trend In Equity And Derivatives Flows

Notes: A) DII- Domestic Institutional Investors (Includes Bank, DFIs, Insurance, New Pension Scheme and MF) B) FII data till Jan 29, MF data is till Jan 25 and DII data is for full month till Jan 30, Source: Kotak Institutional Equities Research

Net Investments by FPIs, DIIs and MFs in the cash market (US$ mn)

Net foreign flows in the derivatives market (US$ mn)

Flows to equities Domestic Flows May Sustain Into Equity Funds In CY 18

• Low FD Return
• Uncertain real

estate environment 28

• Mature investor

base understanding the benefits of compounding

• f equities as

asset class

• SIP as a tool to

counter volatility

FY93-97 FY98-03 FY05-09 FY10-17 FY18-19e Sensex ‘EPS’ Sensex P/E

Past performance is not a reliable indicator of expected future performance

Markets Consolidating As It Awaits Economy To Take Off

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Key Variables & Their Impact On Equities

Key Variables Short - term Medium - term Remarks

Economy

GST to impact near-term activity especially informal segment

Corporate Earnings

Improving operating leverage, falling interest costs and improvement in working capital can accelerate earnings, but a bit back-ended. Key is improvement in capacity utilisation

FII Flow

India stands out among global asset classes with prospects of strong long term growth.

DII Flow

Focus on improving financial savings of households

Supply of paper

Higher disinvestment target and repair of leveraged balance sheet to create supply in markets.

Policy/Reform Initiative

GST – landmark reform implemented, can result in higher tax compliance

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31 12-month forward Sensex P/B (x) India’s Market Cap to GDP (%) 12-month forward Sensex P/E (x)

Markets Above Fair Range

1.0 2.0 3.0 4.0 5.0 6.0 7.0 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Sensex P/B (x) - LHS 12000 15000 18000 21000 24000 27000 30000 33000 36000 39000 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

Cheap 8x - 10x Attractive 10x - 13x Fair 13x - 17x Fair Value Plus 17x - 20x Stretched 20x - 24x

While Valuations Not Cheap, Patience To Be Key As We Await Earnings To Pick Up

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Corporate earnings, especially of domestic

• riented companies

showing improving trend While equities may still be

• ut-performing other

alternate asset classes, moderate return expectations Use intermittent volatility to increase equity exposure

Risk 1 – Higher Oil Prices

Nifty & Crude Show an Inverse Relationship 33

50 100 150 200 250 300 350 400 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18

Prices Normalised to 100

Nifty Prices Crude Prices

Source: Bloomberg, Data as of 31st Jan 2018

Risk 2 : Interest Rates too are on Upswing

While Nifty is Testing New Peaks 34

2000 4000 6000 8000 10000 12000 2 4 6 8 10 12 14 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Gilt 10 Yr (LHS) Nifty 50 (RHS)

Source: Bloomberg, Data as of 31st Jan 2018

Risk 3 – Rise in equity issuance impacting market liquidity

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A POTENTIAL RISE IN EQUITY ISSUANCE MIGHT IMPACT MARKET LIQUIDITY

But low returns in traditional avenues and increasing awareness continues to drive money to capital markets

Source: Bloomberg, CLSA

Risk 4 – Delay in NPL resolution

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NPL RATIOS YET TO COME DOWN AND RESOLUTION MAY GET DELAYED

Bank recap details & roadmap would give further clarity

Source: RBI, CLSA

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Risk 5 – US Fed Rate Hike & Other Geo Political Risks

India has been relatively resilient to US rate hikes & geo political risks in the past

Source: Bloomberg, BNP Paribas

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Risk 6: IndAS Introduction May be a Risk

Source: Banks, CLSA

Key Recommendations

Key theme Remarks Large Cap – play on buying sectoral leaders that benefit from improving investment climate Kotak 50 Balance of IQ and EQ Kotak Classic Equity Diversified/Multicap – focus on sectors that are likely to benefit the most across market cap Kotak Select Focus / Kotak Opportunities Fund Infrastructure revival – “True-to-label” fund – recent thrust of government to revive the infrastructure theme Kotak Infrastructure & Economic Reforms Fund Through SIP in Midcap oriented scheme Kotak Emerging Equities Fund ELSS – Equity allocation with ability to reduce tax

• utgo

Kotak Tax Saver Fund Balanced – benefit from debt and equity allocation Kotak Balanced Fund

We recommend investors to invest through SIP with a 5 years horizon. 39

Strategy For Investments In The Current Scenario

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1- Kumbhkaran

(Invest & forget)

Or 2- Asset Allocation

Lumpsum Lumpsum Leverage STP/ Lumpsum SIP Partial Profit Booking STP Partial Profit Booking Take Profit Home Overweight Neutral Underweight Below Fair Value Fair Value Above Fair Value Market Valuation Investor Stance

DEBT MARKETS

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How January 2018 Unfolded

• Inflation :

– Retail inflation stood at 5.21% in the month of December 2017 - higher from 4.88% in November 2017 and 3.41% in the similar month of previous year.

• Trade Data :

– India's exports grew to $27.03 billion (up 12.36%) last month from $26.19 billion in November 2017. – Imports during the month, posted a sharper rise of 21.12 per cent to $41.91 billion led by gold, silver, precious stones, petroleum and electronic goods. – This widened the trade deficit to $14.88 billion in December 2017 compared to $10.54 billion in December 2016.

• Growth of the eight core sectors slowed to a five-month low of 4 per cent in December 2017 due to negative

performance of segments like coal and crude oil.

• U.S. economic growth unexpectedly slowed (slowed to 2.6% from 3.2% in third quarter) in the fourth quarter

as the strongest pace of consumer spending in three years resulted in a surge in imports. This brings the growth in 2017 to 2.3%.

• Federal Reserve officials, meeting for the last time under Chair Janet Yellen, left borrowing costs unchanged

while adding emphasis to their plan for more hikes, setting the stage for an increase in March under her successor Jerome Powell.

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10 year Gilt Yield For the Month of January

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7.37 7.61 7.2 7.25 7.3 7.35 7.4 7.45 7.5 7.55 7.6 7.65

1-Jan 2-Jan 3-Jan 4-Jan 5-Jan 6-Jan 7-Jan 8-Jan 9-Jan 10-Jan 11-Jan 12-Jan 13-Jan 14-Jan 15-Jan 16-Jan 17-Jan 18-Jan 19-Jan 20-Jan 21-Jan 22-Jan 23-Jan 24-Jan 25-Jan 26-Jan 27-Jan 28-Jan 29-Jan 30-Jan 31-Jan 1-Feb

10 year Gilt Yield

Dated Borrowing reduced by 30k Issuance of New 10 year Viral Acharya Commentary Economic Survey And Budget Impact

44

(3.0) (2.0) (1.0) 0.0 1.0 2.0 3.0 4.0 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

FII Net Investment- Debt (USD bn) FII Debt Flows

During the calendar year 2017 we saw 88,401 crore inflow in G Sec and 49,117 crore inflow in corporate bonds from FII

Positive Real Interest Rates to Stimulate Financial Savings

45

• Earlier, negative real rates fueled inflation in physical assets as people chased assets such

as real estate and gold till 2014.

• With real rates in the positive territory now, money may move from physical to financial

assets.

Note: Monthly 10 year Gilt Yield taken as average of their respective month. Jan 2018 CPI is assumed to be same as Dec 2017 and Real Interest rate is calculated . Source: Bloomberg

2.1

• 3
• 2
• 1

1 2 3 4 5 6 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18

Real Interest Rate (%)

CPI Inflation: 2nd Half 2018 Average Inflation – Slightly Higher Than RBI Band

Source: MOSPI

• The CPI inflation hardened to a 17-month high 5.2% in December 2017 (+3.4% in December 2016) from 4.9% in

November 2017, led by the sharp jump in inflation for housing, as well as a base-effect led uptick in food inflation, with limited visibility of the impact of the cut in GST rates that was effective mid-November 2017.

• The core-CPI inflation increased to a 38-month high 5.1% in December 2017 from 4.9% in November 2017, led by

housing and miscellaneous items.

• Notably, the core-CPI inflation was lower than the headline CPI inflation for the first time in 16 months, in Dec 2017
• Jan – March 2018 inflation number is expected to be in 4.75-5% band

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5.2 5.1%

0% 2% 4% 6% 8% 10% 12% Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17

CPI Core CPI

Crude Prices Firming up

Data as on 31st Jan 2018, Source : Bloomberg

• Crude Oil prices rises to $69.05 from $66.87 in the previous month. The falling dollar has been a

key driver , which has lost 3.2% against a basket of major currencies so far this year.

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69.05

40 45 50 55 60 65 70 75

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

Brent Crude (USD)

Inflation to Drop Back Below RBI’s 4% Medium-Term Target

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*CPI projections include impact of higher housing rent allowance for central government employees Source : Ministry of Statistics and Programme Implementation, Bloomberg Economics

Inflation could drop to 4% to March 2019 on base effect wearing out , stable food prices and assuming crude prices to remain range bound

Credit growth has picked up by 8-10% as compared to last year.

Credit Growth Slowly Picking Up

Source: Bloomberg, Data as on 31st Jan 2018

49

64 66 68 70 72 74 76 78 80

6400000 6600000 6800000 7000000 7200000 7400000 7600000 7800000 8000000 8200000 8400000

Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

Credit Growth (Weekly Data)

in crores In Percent

Current Credit/ Deposit Ratio is ~74.61% (RHS) Commercial Credit by Banks = Rs 82.05 lakh Crore (LHS)

India Foreign Exchange Reserves – Stability Is Key

• India continues to attract capital flow resulting in healthy foreign exchange reserves.
• Indian foreign exchange reserves have grown by $ 5 billion in January month, indicating rising

foreign investor interest, and stronger rupee.

Source: Bloomberg

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Data as on 31st Jan 2018

$ 414.78 Billion 340000 350000 360000 370000 380000 390000 400000 410000 420000 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

India Forex Reserves(USD)

51

Rupee Has Strengthened

Source: CEIC, Citi Research

REER appreciation leads to high intervention in H2CY17

5 5.5 6 6.5 7 7.5

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

Repo Rate in the last 1 year

Repo Rate Overnight Rate (MIBOR %)

RBI has managed to keep overnight rate close to the repo rate.

Source:Bloomberg Date Repo Reverse Repo MSF SLF Total Systemic Liquidity Government Balances

31st Jan 2018

• 780.18

807.15 13.41 13.56 754.12

Amount in Rs. billion.

Active Liquidity Management

As of 31st Jan 2018

52

53

Spreads Between 10 Year & Repo Widening

Source: Bloomberg, Citi Research

10 year bond yield spread over repo similar to the 2013 rate hike cycle

Yield Curve (M-o-M Analysis)

• During last month there was a parallel shift across the 5- 15 years curve
• The yield spike in the greater than 15 year bond was less then 5-15 year curve.
• Over last few months the spread between 10 year and 30 year G Sec has compressed from 40 bps to 10 bps

Source: Bloomberg

54

6 6.2 6.4 6.6 6.8 7 7.2 7.4 7.6 7.8 8

3M 6M 1Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 12Y 13Y 14Y 16Y 17Y 27Y 28Y 35Y 40Y

INR India Sovereign Curve Last Mid YTM INR India Sovereign Curve 01/01/17 Mid YTM

Belly and Long Front End

20 40 60 80 100

3M 6M 1Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 12Y 13Y 14Y 16Y 17Y 27Y 28Y 35Y 40Y

YTM (M-o-M Change)

India-US 10 Year Gilt- Narrowing Spreads Have More Legs To Run

55 The spreads have widened over last 1 year however we expect the spreads would compress in medium term due to narrowing inflation differentials

India-US 10 Year & CPI Spreads

Narrowing CPI spread makes Indian bonds attractive. Therefore Indian bonds are increasingly attractive and will attract FII flows

56 Note: 10 year Gilt Yield taken as average of their respective month . Data as of Jan 2018 (Jan 18 CPI is assumed to be same as

Dec 2017 . Source: Bloomberg

• 2

2 4 6 8 10 12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18

India-US CPI Spread India-US Gilt Spread

• 0.5

0.5 1 1.5 2 2.5 3 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

10 Years Gilt of Select Countries

Global Bond Yields Remain Volatile

57

Data as of 31st Jan 2018. Source: Bloomberg

Rising Oil Prices (resulting in higher headline inflation) and better growth projections for 2019 (rate hike/ withdrawal of stimulus) led to rise in global bonds yields during last months UK 10 Year Germany 10 Year Japan 10 Year US 10 Year

Key Variables & their Impact On Interest Rates in 2018

Key Variables Short - term (3-6 month) Medium – term (6month – 2 years)

Inflation Rupee Credit Demand Government Borrowing RBI Policy Global Event Risk Corporate bond Spread Debt FII flow Liquidity denotes fall in interest rates

58

Debt Outlook

Longer End

• Yield curve in India has moved up 7.39% on 29th Dec 2017 to 7.80% on the old benchmark
• The new benchmark which came in Jan at 7.17%, closed at 7.60%
• Yield curve has moved up on account of:
• Higher borrowing by Government which subsequently got reduced but failed to cheer the markets
• Absence of demand from the investors/ PSU banks
• Crude Prices/ UST yields moving up, resulting in higher inflation/ FII outflow
• There would be volatility in gilt given the uncertainty on future inflation reading, crude prices, fiscal deficit

target for next year, MSP policy adopted by government in 2018 and its resultant impact on food inflation

• However, inspite of uncertainty most of the negative have been priced at 7.60% on the benchmark
• We believe 10 year gilt may be in the band of 7.40%-7.75% over the course of next 3 months and may

peak out with inflation in the coming months

• The old benchmark touched almost 8% on annualized basis which is very close Bank MCLR and is almost

200 bp over the repo rate.

• We believe actively managed duration funds are attractive investments from a 3 yr investment horizon

59

Debt Outlook

Shorter End

• we have seen spike in short term rates up to 3 years due to reduction in liquidity, increase in CD issuance

from banks, and rate cut getting ruled out.

• There has been a spike of 30-60 bps in yields in instruments crossing March-2018
• We believe that from here till March, short term curve would move up by 10-25 bps on account Jan- March

2018 quarter; and expect the same to reverse post March 2018

• We believe the yield curve up to 2 years is too steep and pricing in minimum 50 bps rate hike by RBI over

the course of next 1 year

• We believe there is strong case for short term investors to take advantage of the steep yield curve by

investing in ultra short term fund and short duration funds

60

Key Recommendations

Segment Scheme Rationale

Accrual Play Kotak Income Opportunities Fund / Kotak Medium Term Fund Investment for higher accrual Asset Allocation Kotak Monthly Income Plan Investment for asset allocation Short Term Parking of Funds Kotak Treasury Advantage Fund / Kotak Low Duration Fund / Kotak Corporate Debt Fund Kotak Equity Arbitrage Fund Higher post tax return Duration Play Kotak Mahindra Bond Scheme Investment for longer maturities Kotak Bond Short Term/ Kotak Flexi Debt Scheme Investment for shorter maturities

61

Why Accrual Funds ?

• India is one of the fastest growing economy in the world and this will translate into revenue and

profitability for India Inc. Commodity & oil price decline has reduced input cost and increased margin support

• Kotak AMC has strong fundamental processes in place to manage and mitigate credit risk
• Kotak AMC does not invest below A category rating. Our robust monitoring ensures that we do not

take exposure even in AA & A ratings from sensitive sectors

• AAA rate firms have never ever defaulted. The risk of default of AA is only 0.03% and of A is only

0.63%. Not Just that, the AAA continue to hold their rating 97% of times, AA around 92% of times, and A around 88% of times

• With efficiently managed credit risk, yields on accrual funds are attractive even on risk-

adjusted basis.

Ratings CRISIL AAA CRISIL AA CRISIL A CRISIL BBB CRISIL BB CRISIL B CRISIL C CRISIL D CRISIL AAA 97.28% 2.72% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% CRISIL AA 1.41% 92.26% 4.78% 0.58% 0.19% 0.03% 0.02% 0.03% CRISIL A 0.00% 3.31% 87.79% 5.95% 1.88% 0.15% 0.30% 0.63% One year average transition rates : between 1988 and 2014

62

Story in Accruals

• The Fund Manager focuses on generating income from credit allocation rather than duration calls.
• Accruals funds generate performance by purchasing high yielding assets with relatively short

duration.

• This provides investor with a relatively high yield with low NAV volatility
• Investors with 18-36 months horizon can look at investing in Accrual Funds
• Accrual funds like Kotak Income Opportunities / Kotak Medium term provide retail investors the

potential to obtain high yields in the present condition.

63

Need to Watch Out for Opportunities in Hybrid Space

64

Particulars Nifty Level Net Assets in Rs Debt Equity Start in Kotak MIP with ~ 20% equity exposure 10000 10 8.5 1.5 Equity markets drop by 15% (represented by Nifty 50) 8500 9.78 8.50 1.28 Shift to Kotak Equity Savings Fund which has ~ 25% unhedged equity 8500 9.78 8.31 1.47 Equity markets drop by 15% (represented by Nifty 50) 7225 9.56 8.31 1.25 Shift to Kotak Balance with ~65% equity 7225 9.56 3.34 6.21 Equity markets drop by 15% (represented by Nifty 50) 6141 8.62 3.34 5.28 Shift to Equity fund with ~100% equity such as Kotak Select Focus 6141 8.62 8.62 Equity markets go up by 20% (represented by Nifty 50) 7370 10.35 Shift Back to Kotak MIP with ~20% equity exposure 7370 10 7.93 2.07

Why Kotak Monthly Income Plan

• Growing Through Asset Allocation

The above illustration is only to explain how various types of funds can be considered for asset allocation in various equity market scenarios. This should not be construed as an advice and indication of performance of the mentioned funds. The level of equity allocations mentioned are as per current scenario and only an

• approximation. The exact allocation to equity in various funds would be different and as per the asset allocation provided in the SID of each fund.

65

Tactical Asset Allocation Through MIP

 Kotak Monthly Income Plan can be used as a de-risking strategy

• The scheme invests upto 20% in equity & equity related instruments & rest in

debt instruments

• Thus, an investor could consider Kotak MIP as a starting point for a moderate

exposure to equity and use it as de-risking strategy by shifting into funds with higher equity allocations as valuations become attractive

• The same has been explained below with an illustration

Whom is the Fund Ideal for?  Investors seeking regular income over short term  Investors seeking income through fixed income securities and marginal gains from equities  Investors with 1-3 year investment horizon  Those who are unwilling to assume the full equity risk  Those who have low appetite for credit risk 66

67

Past performance may or may not sustain in the future * Less than 1 year Simple Annualized returns, Greater than or Equal to 1 year Compound Annualized returns. Scheme in inception since 13th Oct 2014 Performance as of 31st Dec 2017

14.02 8.93 9.27 9.97 6.89 7.3 2 4 6 8 10 12 14 16

1 Year 3 Years Since Inception

Kotak Equity Savings Fund Performance(%)

Kotak Equity Savings Fund - Reg - Growth 75% of Nifty 50 Arbitrage Index & 25% in Nifty 50

Kotak Equity Saving Fund Performance

Kotak Balance – Performance Growth and Stability Together

68

Source: ICRA. Past performance may or may not sustain in the future. Scheme in inception since 29th Nov 1999. Performance as of 31st Dec 2017

* Less than 1 year Absolute returns, Greater than or Equal to 1 year Compound Annualized returns

23.19 11.69 13.72 19.82 8.7 11.29

5 10 15 20 25 1 Year 3 Years 5 Years

Kotak Balance Fund Performance (%)

Kotak Balance - Dividend CRISIL Balanced Fund - Aggressive Index

Have You Noticed The Regular Dividends In Kotak Balance ?

* After payment of the dividend, the per Unit NAV falls to the extent of the payout and statutory levy (if applicable) ^Past performance may

• r may not be sustained

in the future. Dividends are subject to distributable surplus Inception Date: November 25, 1999 All dividends are on face value of Rs.10 per unit

69

Record Date Rupees Per Unit Dividend Yield 26-Jan-18 0.145 0.83% 26-Dec-17 0.14 0.82% 27-Nov-17 0.14 0.82% 25-Oct-17 0.11 0.66% 28-Sept-17 0.11 0.65% 28-Aug-17 0.11 0.67% 25-July-17 0.12 0.70% 27-June-17 0.11 0.65% 25-May-17 0.11 0.65% 25-Apr- 17 0.11 0.66% 27-Mar- 17 0.11 0.67% 27-Feb-17 0.11 0.69% 25-Jan-17 0.11 0.69% 26-Dec-16 0.11 0.69% 01-Dec-16 0.11 0.69% 26-Oct-16 0.08 0.49% 27-Sep-16 0.08 0.49% 25- Aug-16 0.08 0.50% 25-Jul-16 0.08 0.50% 27-Jun-16 0.08 0.53%

70

IIFL - Chartbook - Economic Survey - 20180131.pdf

http://www.nayidisha.com/12-reasons-lok-sabha-elections-happen-next-100-days/ 12 Reasons why Lok Sabha Elections Can Happen in the next 100 days

These links are from different sources and for reference only. Kotak Mutual Fund does not necessarily subscribe to a similar view

Interesting Insights For The Curious Minds

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73 Performance (%) as on 31st December, 2017

Scheme Inception date is 25/11/1999. Mr. Abhishek Bisen has been managing the fund since 15/04/2008. Mr. Pankaj Tibrewal has been managing the fund since 25/08/2015. Different plans have different expense structure. The performance details provided herein are of regular plan. ^Past performance may or may not be sustained in future.*All payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. Returns > = 1 year: CAGR (Compounded Annualised Growth Rate). N.A stands for data not available. Note: Point to Point (PTP) Returns in INR shows the value of 10,000/- investment made at inception. Source: ICRA MFI Explorer. # Name of Scheme Benchmark. ## Name of Additional Benchmark.Please refer slide 76 for top 3 and bottom 3 schemes managed by & Mr. Abhishek Bisen. `

Scheme Inception date is 13/10/2014. Mr. Deepak Gupta has been managing the fund since 17/09/2014. Mr. Abhishek Bisen has been managing the fund since 17/09/2014.

Date Scheme Returns(%)^ CRISIL Balanced Fund – Aggressive Index#(%) Nifty 50##(%)

Current Value of Standard Investment of Rs 10000 in the

Scheme(Rs) Benchmark# (Rs) Additional Benchmark##(Rs) Kotak Balance Since Inception

15.18%

NA

11.75% 1,29,274

NA

74,757

Last 1 Year

23.19% 19.82% 28.65%

Last 3 Years

11.69% 8.70% 8.34%

Last 5 Years

13.72% 11.29% 12.27%

Date Scheme Returns(%)^ CRISIL Balanced Fund – Aggressive Index#(%) Nifty 50##(%) Current Value of Standard Investment of Rs 10000 in the Scheme(Rs) Benchmark#( Rs) Additional Benchmark##(Rs) Kotak Equity Savings Fund Since Inception

9.27% 7.30% 9.42% 13,298 12,540 13,357

Last 1 Year

14.02% 9.97% 28.65%

Last 3 Years

8.93% 6.89% 8.34%

Last 5 Years

NA NA NA

74 Other Funds Managed by Mr. Pankaj Tiberwal and Mr. Deepak Gupta

• Mr. Pankaj Tibrewal manages 3 funds of Kotak Mutual fund.

Kotak Emerging Equity - Growth, *Name of the Benchmark - S&P BSE MidSmallCap, Scheme Inception date is 30/03/2007. Mr. Pankaj Tibrewal has been managing the fund since 27/05/2010. Kotak Midcap - Growth, *Name of the Benchmark - Nifty Free Float Midcap 100, Scheme Inception date is 24/02/2005. Mr. Pankaj Tibrewal has been managing the fund since 21/01/2010. Different plans have different expense structure. The performance details provided herein are of regular plan ^Past performance may or may not be sustained in future.*All payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. Returns > = 1 year: CAGR (Compounded Annualised Growth Rate). N.A stands for data not available. Source: ICRA MFI Explorer.

Top 3 Funds Managed by Mr. Deepak Gupta Bottom 3 Funds Managed by Mr. Deepak Gupta

Performance (%) as on 31st December, 2017 Source: ICRA

Scheme Names 1 YEAR 3 YEARS 5 YEARS Since Inception Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Top 3 Kotak Banking ETF 41.17 40.50 11.63 10.89 NA NA 11.92 11.21 Kotak Classic Equity Fund - Growth 35.39 31.05 11.90 9.84 15.97 13.45 13.60 13.39 Kotak NV20 ETF 31.57 29.57 NA NA NA NA 19.07 14.34

Scheme Names 1 YEAR 3 YEARS 5 YEARS Since Inception Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Bottom 3 Kotak US Equity Fund - Growth 12.77 14.44 8.45 11.79 NA NA 10.07 13.21 Kotak Equity Arbitrage Fund - Growth 5.84 4.29 6.67 6.16 7.63 7.08 7.57 NA Kotak World Gold Fund - Growth

• 0.67

3.54 2.71 12.49

• 8.92
• 7.62
• 1.29
• 1.71

Scheme Names 1 YEAR 3 YEARS 5 YEARS Since Inception Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Scheme Returns(%)^ Benchmark Returns (%)^* Kotak Midcap - Growth 44.02 47.26 18.98 18.88 22.75 19.98 18.02 16.50 Kotak Emerging Equity - Growth 43.00 54.62 19.63 20.50 24.94 20.83 14.29 13.57

Why Kotak Mutual Fund Is Different From Others

75

• We are Managing Your Trust First and Money second
• We are your Partner
• Disciplined Process
• Risk adjusted Return
• Believer in Warren Buffets Philosophy
• Funds are like Kids. Don’t have more than what we

can manage

• Readily accessible for Knowledge and Service

The information contained in this (document) is extracted from different public sources. All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of

• publication. This is for the information of the person to whom it is provided without any liability whatsoever
• n the part of Kotak Mahindra Asset Management Co Ltd or any associated companies or any employee

thereof.We are not soliciting any action based on this material and is for general information only. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Disclaimers & Risk Factors

About the scheme: 76

Name of the Scheme This product is suitable for investors who are seeking* Riskometer

Kotak Mahindra 50 Unit Scheme

• long term capital growth
• Investment in portfolio of predominantly equity & equity related

securities Kotak Select Focus Fund

• long term capital growth
• Investment in portfolio of predominantly equity & equity related

securities generally focused on a few selected sectors Kotak Emerging Equity Scheme

• long term capital growth
• Investment in equity & equity related securities predominantly in

mid & small cap companies. Kotak Balance Fund

• Long term capital growth
• Investment in equity & equity related securities balanced with

income generation by investing in debt & money market instruments Kotak Opportunities

• long term capital growth
• Investment in portfolio of predominantly equity & equity related

securities Kotak Gilt Investment

• income over a long investment horizon
• Investments in sovereign securities issued by the Central and/or

State Government(s) and / or reverse repos in such securities. Kotak Bond

• income over a long investment horizon

investment in debt & money market securities Kotak Medium Term Fund

• Income over a medium term investment horizon
• Investment in debt, government securities & money market

instruments with a portfolio weighted average maturity between 3-7 years Kotak Low Duration Fund (Formerly known as PineBridge India Short Term Fund)

• Regular Income over short term
• Income by focusing on low duration securities

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

Product Labeling

77

Name of the Scheme This product is suitable for investors who are seeking* Riskometer

Kotak Equity Arbitrage Scheme

• income from arbitrage opportunities in the equity market
• investment in arbitrage opportunities in the cash & derivatives

segment of the equity market. Kotak Income Opportunities Fund

• Income over a medium term investment horizon
• Investment in debt & money market securities

Kotak Treasury Advantage Scheme

• Income over a short term investment horizon
• investment in debt & money market securities

Kotak Infrastructure & Economic Reform Fund (formerly known as “PineBridge Infrastructure & Economic Reform Fund”)

• long term capital growth
• long term capital appreciation by investing in equity and equity

related instruments of companies contributing to infrastructure and economic development of India Kotak Tax saver Fund

• Long term capital growth with a 3 year lock in
• Investment in portfolio of predominantly equity & equity related

securities

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

Product Labeling

78

79

Name of the Scheme This product is suitable for investors who are seeking* Riskometer

Kotak Equity Savings Fund

• Income from arbitrage opportunities in the equity market & long

term capital growth

• Investment predominantly in arbitrage opportunities in the cash

& derivatives segment of the equity market and equity & equity related securities Kotak Banking and PSU Debt Fund

• income over a short to medium term investment horizon
• Investment in debt & money market securities of PSUs, Banks &

government securities

Product Labeling