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

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Market Outlook

April 2018

Equity Markets

2

Key Events – March 2018

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• India's GDP for the third quarter of 2017-18 grew at 7.2%.
• The government unveiled a Rs 2.88 lakh crore market borrowing roadmap for the first half of FY19, which

would be 22.6 % lesser than Rs 3.72 lakh crore raised during the same period last financial year.

• India’s Industrial Production data for the month of Jan stayed strong at 7.5% which was higher than

consensus estimates of 6.4%. This was led by capital goods which was up 14.6% and Consumer Non- Durables which was up 10.5% similar to what we have seen in the Oct-Dec period

• CPI inflation eased for the second consecutive month to 4.4% in Feb (from 5.1% in Jan). This was partly

led by a decline in vegetable prices along with normalization in the underlying CPI ex of the outliers (ie vegetables, pulses, transportation and housing) from 4.3% to 4%

• During the month, one of BJPs’ key allies TDP pulled out of the NDA alliance over the issue of granting

special status to the state of Andhra Pradesh.

• Election results for 3 bye-polls – 2 in the state of UP and 1 in the state of Bihar came out during the month

and the BJP lost out in all 3 of them.

• Capital market activity saw a pickup in Mar with 27 deals totaling $6.4bn during the month. Among the key
• nes were the IPOs and large $1.4bn block deal in TCS where Tata Sons sold part of their stake.
• Indian equities (-3.6%) saw deepening of the YTD correction in March as concerns over a global trade war

escalated during the month and the BJP suffered political setbacks in by-polls as well as with its erstwhile ally TDP in Andhra on the domestic front.

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Performance of Sensex and Nifty Indices

Source: Bloomberg, Kotak Institutional Equities

Trade Wars

Unlikely To Impact India Directly… 5

India’s Net Exports (goods + services) to US

India’s net exports are a small proportion of its overall GDP

India’s Net (of Imports) Exports (ex oil, ex gold and jewellery) + Net Services

Source: CLSA, BEA

What Does India Export

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What does India export – overall? Who does India export to – overall (goods only)?

The engineering and electronics goods basket, likely targeted more by US govt, is about 20% of India’s total exports Only 15% of India’s goods exports head to the USA

Source: CLSA, CME, Ministry of Commerce

India’s FY 17 export Composition : US $ 439bn India’s FY 17 export Composition (Goods

• nly) by Country/ Region

Domestic Flows Hold Up – A Relief

LTCG Tax Impact Concerns Alleviated 7

Total household savings at 19% of GDP SIP flows at US$1.0bn/mth

Net Flows* Into Domestic MF Equity Schemes Vs Annual Monthly Nifty Returns Quarterly Net Flows* Into Domestic MFs Monthly Flows Into MFs Via SIP Total Gross Household Savings

Domestic Inflows To Absorb Equity Supply; FPIs Hold The Key

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Source: Bloomberg, AMFI, CLSA

Flows Estimate For FY19

9

…Critical Elections Are Ahead

Karnataka Elections In May-18 A Crucial Test

State Election Calendar for remainder of 2018 Karnataka : 2013 Assembly Election results and current projections

Source: CLSA, Election Commission of India, Media reports

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GST collections have stagnated

assumptions for FY19 are optimistic… FY19 Target Is a Long Climb Trends In GST Collections

GST Collection Trend CGST/SGST (Post Settlement) Run Rate For FY 18 Vs Budgeted For FY 19

Source: CLSA, Ministry of Finance

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Source: CLSA, Ministry of Finance

…Fiscal deficit risks due to weak GST Collections ?

Central Government Fiscal Deficit To GDP Ratio

The gov’t has ample potential to keep disinvesting through its existing listed companies. More companies may also be added to this list

… Can it likely to be met through higher disinvestment?

Source: CLSA, Capitaline, Bloomberg

List Of PSUs (Ex-financial) With Gov’t Stake Sale Headroom(ie Value Of Stake > 51% Of US$0.5bn

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PSU Dividend May Continue

NMDC Example At first , the board skipped the interim Dividend Subsequently, the decision was reversed with 3.5% dividend yield – Netting Govt a $200 MN

High frequency data indicate some moderation in growth in Feb’18 as the favourable base effect begins to wane

Macro Indicators : Growth Heatmap

Source: GOI, Spark Capital Research

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Headwinds To Growth: PSU Banks Again Lack Capital

Policy Challenge: Inertia In Banks’ Behavior Bond Holdings Have Eroded Capital

Source: RBI, Company Data, Credit Suisse

0% 5% 10% 15% 20% 25% 30% 35% FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 SLR (%) SLR Required (%) Excess SLR (%)

SLR Holdings for Banks

(300) (250) (200) (150) (100) (50)

• 50

100 150 200 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 Banks' Treasury profit / (loss) (Rs bn)

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Headwinds To Growth: New Loan Sanctions Likely To Slow

Early Loss Recognition To Hurt Capital Availability Fear Of Fraud Investigation To Slow Sanctions

Source: RBI, Credit Suisse

3.5 5.3 2.9 1.5 13.3 NPAs under IBC Other NPAs RBI Dispensations Watchlist/SMA-II Total Stress

Total Stressed Loans

4.2% 6.3% 15.8% 3.5% 1.8% Rs 1-1.5tn will flow to IBC in the next 6 months Loans under RBI dispensation and Watch list / SMA will now flow to IBC at a faster pace 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 Power Telecom Textiles Metals Construction Others

Rs tn Sector Wise Sanctions

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But….Bottom-up Infrastructural Improvement Continues (1) Evidence Of Improvements In Electricity Availability

Source: NASA, ESRI, Credit Suisse

Jan-2012 Dec-2016 Change 2012-2016

Areas showing increase in “brightness” from 2012-16 are in Blue

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Bottom-up Infrastructural Improvement Continues (2)

Price Of Data And Volumes Consumed Electronic Financial Transactions

Source: Company Data, RBI, Credit Suisse

20 40 60 80 100 120 140 160 180 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 Feb-18

UPI no. of txn (mn) Launch of Google Tez

0.0 0.1 0.1 0.2 0.2 0.3 0.3

• 1

2 3 4 5 6 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Data Usage/subs/month (GBs) Avg Revenue per MB (Rs)

Average of Bharti and Idea

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Bottom-up Infrastructural Improvement Continues (3)

Two-thirds Of HHs Used Primitive Fuels 35mn New LPG Connections; 80mn New Target

Source: Census 2011, Ujjwala, Credit Suisse

Firewood 49% Crop residue 9% Cowdung cake 8% Coal, Lignite, Charcoal 1% Kerosene 3% LPG 29% Electricity 0% Biogas 0% Any other 1% No cooking 0%

Split of 247 mn Households (2011)

Uttar Pradesh 19% West Bengal 14% Bihar 14% Madhya Pradesh 9% Rajasthan 7% Odisha 6% Chhattisgarh 5% Maharashtra 5% Gujarat 4% Jharkhand 3% Assam 3% Tamil Nadu 3% Karnataka 3% Others 5%

35 mn LPG cyclinders issued

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Low Inflation And Rising Financial Savings are Positive

CPI Moderation Likely To Persist

Financial Savings as a % Of GDP To Keep Rising

Source: CMIE, Credit Suisse Estimates

4% 6% 8% 10% 12% 14% 16% 18% 197619791982198519881991199419972000200320062009201220152018 Gross Financial Savings Net Financial Savings

% of GDP

• 10%

0% 10% 20% 30% 40% Jan-61 Jun-67 Nov-73 Apr-80 Sep-86 Feb-93 Jul-99 Dec-05 May-12 CPI (% YoY) Sub-4%inflation for 12 steady months has only happened once in history

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Breaking Through The Fiscal Vicious Cycle

Vicious Cycle: Small Government/High Informality Sharp Increase In The Number Of Taxpayers

Source: World Bank, CBDT, Credit Suisse

10% 20% 30% 40% 50% 60% Denmark France Germany OECD UK Japan India (Formal) Turkey Australia Switzerland USA Korea Mexico India

Total Tax to GDP (2014)

40 45 50 55 60 65 70 75 80 85 90 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 1.8mn additional individual income tax filers over and above usual trend post demonetisation

mn No of Direct Tax Filers

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Market Performance

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How Sector Allocation Have Moved In Nifty

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Trend in sector weights (%)

Sector

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 Current w.e.f 2nd Apr Avg Weight CY07-17 Chg New vs Avg Weight (pp)

Automobiles

3.4 2.5 5.2 7.5 8.1 8.8 8.9 9.3 9.9 11.8 10.6 9.9 9.4 7.8 1.5

Banks-Private

5.6 5.0 11.9 14.5 13.7 16.9 16.2 19.9 20.7 21.5 23.5 23.8 23.4 15.4 8.0

Banks-PSU

4.1 5.4 4.7 4.9 3.7 4.7 3.2 4.8 3.3 3.1 2.8 2.4 2.3 4.1

• 1.7

NBFC

2.3 2.3 6.1 6.6 6.9 7.9 6.7 7.1 7.0 6.6 8.7 9.4 10.0 6.2 3.8

Capital Goods

10.5 7.7 10.7 8.7 5.5 5.9 4.9 5.2 4.2 4.0 3.8 4.1 4.0 6.5

• 2.5

Cement

2.1 1.7 3.4 1.9 3.1 4.2 3.2 2.8 2.8 3.0 1.6 1.5 2.1 2.7

• 0.6

Consumer

3.6 6.5 6.1 6.8 10.7 12.3 11.6 10.5 10.1 10.1 9.2 9.3 9.2 8.9 0.3

Healthcare

2.2 2.6 2.4 3.7 4.4 5.0 6.0 6.1 7.3 6.3 4.0 3.7 3.2 4.5

• 1.3

Media

0.4 0.3 0.7 0.8 0.8 0.8 0.8 0.8 0.7 0.1

Metals

9.0 4.8 8.8 8.4 5.6 3.8 4.4 3.1 1.3 1.5 3.7 3.4 3.3 4.9

• 1.6

Oil & Gas

25.4 24.5 17.9 14.7 13.3 12.3 11.7 9.3 9.1 9.4 12.7 12.3 12.1 14.6

• 2.5

Real Estate

2.3 3.0 1.6 0.6 0.5 0.5 0.4 0.2 1.1

• 1.1

Technology

9.5 9.0 12.6 14.3 15.8 11.4 16.9 15.7 16.3 14.4 11.4 12.8 12.6 13.4

• 0.8

Telecom

11.4 11.6 4.1 2.9 3.3 2.0 1.9 1.7 2.2 2.3 2.4 2.0 2.0 4.2

• 2.2

Utilities

8.2 13.3 4.7 4.5 5.4 4.5 4.0 3.6 4.1 4.4 3.3 3.3 3.2 5.4

• 2.2

Miscellaneous

0.8 0.8 1.4 1.4 2.3 1.0 1.3

Nifty-50

100 100 100 100 100 100 100 100 100 100 100 100 100 100

Private

72.8 68.6 85.7 86.3 86.6 87.4 88.6 87.4 89.6 89.1 89.0 89.9 90.1 84.7 5.4

PSU

27.2 31.4 14.3 13.7 13.3 12.7 11.4 12.6 10.4 10.9 11.0 10.1 9.9 15.4

• 5.4

Note: Miscellaneous include Jet Airways in CY06, Adani Ports from CY15 onwards till-date, UPL from CY17 till-date and Titan addition w.e.f from 2nd April

Source: Bloomberg

Sensex Returns (%) 6 month before & 6 month Latter during Union elections (1 of 2)

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6m before Elec Date 6m latter 6m before Elec Date 6m latter 6m before Elec Date 6m latter 6m before Elec Date 6m latter 6m before Elec Date 6m latter Dates July-79 Jan-80 July-80 June-84 Dec-84 June-85 May- 89 Nov-89 May-90 Nov- 90 May-91 Nov-91 Oct-95 Apr-96 Oct-96 Sensex 125 118 123 246 272 459 706 712 778 1265 1284 1911 3409 3765 3251 Sensex Retn(%)

• 5.25

3.81 10.31 68.96 0.84 9.31 1.51 48.77 10.46

• 13.66

Govt Formed Janta Party Congress National Front Cong + left United Front UF formed govt, No big party formed

• govt. 3 PM in 2 yrs BJP failed

to form govt Devi Gowda and then Gujral became PM Total Return in 1 yr

• 1.44

79.26 10.15 50.28

• 3.21

6m before Elec Date 6m latter 6m befor e Elec Date 6m latter 6m before Elec Date 6m latter 6m before Elec Date 6m latter 6m before Elec Date 6m latter Dates Aug-97 Feb-98 Aug-98 Mar- 99 Sept-99 Mar-2000 Oct-03 Apr-04 Oct-04 Oct-08 Apr-09 Oct-09 Nov-13 May-14 Nov-14 Sensex 4321 3450 2969 3649 4710 5521 4852 5805 5673 10581 10947 17323 20399 23905 28177 Sensex Retn(%)

• 20.16
• 13.94

29.07 17.21 19.65

• 2.27

3.46 58.24 17.19 17.87 Govt Formed NDA NDA UPA UPA NDA BJP form govt ,AIDMK withdrew support latter Total Return in 1 yr

• 34.11

46.29 17.38 61.69 35.06

Source: Phillip Capital

The Findings Are Noteworthy (2 of 2)

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 Over return in 1 yr : 70% of time markets have given an +ve return (ranging from 10%~79%). Twice Mkts gave negative return was when 96 & 98 when United Front (UF) Govt came and BJP formed govt post AIDMK support and they withdrew few months latter  Return Pre election : 80% of time markets has given +ve return (ranging from 1% to 29%)  Return Post election : 70% of time markets has given +ve return (ranging from 4% to 69%)

Source: Phillip Capital

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

BSE Sectoral Indices Strong Performance By Majority Sectors In FY18

Pharma & PSU lagging in returns 26

(9.7) (3.2) (12.2) (3.4) (3.1) (3.9) (2.1) (3.1) (5.7) (4.4) (5.7) (6.8) 39.4 16.7 12.9 12.9 12.3 11.4 11.0 9.3 7.7 (6.5) (8.6) (14.1) (20) (10) 10 20 30 40 50 Realty IT Services Metals Tech Capital Goods Bankex FMCG Auto Oil & Gas Power PSU Healthcare (%) 1m return % 1 yr return %

*As on 31 March 2018, Source: Bloomberg

Performance Across Market Cap -

Strong Performance Down the Capitalisation Curve 27

(3.6) (4.6) (6.3) 10.2 9.1 17.7 6.0 13.0 14.7 12.2 20.4 21.6 7.9 11.6 9.0 (10) (5) 5 10 15 20 25 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 March 2018, Source: Bloomberg. Performance data in local currency (4.0) (3.6) (1.8) 0.9 0.9 7.1 8.0 10.2 11.2 11.3 13.2 13.5 14.5 16.6 16.8 24.8 31.4 (2.3) (2.4) (2.7) (2.9) (1.9) 0.4 (2.6) (3.6) (6.2) 1.0 0.8 (2.8) (0.5) (3.7) (3.1) (2.4) 0.0 (20) 20 40 EURO (Euro Stoxx 50) UK (FTSE 100) Germany (DAX) France (CACS 40) Swiss (SMI) Malaysia (KLCI - FTSE) Singapore (Straits) India (Nifty) Indonesia (JCI) Taiwan (TSWE) Korea (Kospi) Japan (Nikkei 225) Russia (MICEX) US (Dow Jones) China (HSCEI) HK (HSI) Brazil (IBOV) 1M 1Yr

Valuations

29

Power & IT 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 March 2018

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20 40 60 80 100 120 Auto BFSI Engg FMCG IT Metals Oil Pharma Power Telecom Sensex

Top Quartile Current L

• wer Quartile

Min Max

P/E Multiple CY18/FY19 of Indices

Source: Internal Estimates , Bloomberg * For India & Japan Fiscal year is FY19 while others it is CY18

Indian Higher Than Most Peers On Valuation

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7.1 8.9 10.5 11.2 12.7 12.7 14.6 15.2 14.9 15.4 18.6 19.9 6 10 14 18 22 China (HSCEI) Korea (Kospi) HK (HSI) Brazil (IBOV) UK (FTSE 100) Singapore (Straits) Thailand (SET) Japan (Nikkei 225) US (Dow Jones) Malaysia (KLCI - FTSE) US (Nasdaq) India (Sensex) (x)

32

With 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 decade

33

Trend In Equity And Derivatives Flows

Notes: A) DII- Domestic Institutional Investors (Includes Bank, DFIs, Insurance, New Pension Scheme and MF) B) FII data is till Mar 26, MF data is till Mar 26 and DII data is till Mar 27. , 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 34

• 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

25

81 129 181 250 266 291 278 280 216 236 272 361 446 540 720 833 820 834 1,024 1,109 1,179 1,334 1,347 1,330 1,326 1,430 1,659 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E

FY93-96: 45% CAGR

FY96-03: 1% CAGR

FY03-08: 25% CAGR FY08-17: 5.3% CAGR FY17-19E: 11.8% CAGR

FY93-FY17: 12% CAGR 19.89 18.09 12.09 17.41 6 12 18 24 30 Oct-93 Oct-94 Oct-95 Oct-96 Oct-97 Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Sensex P/E (x)

Sensex CAGR 14% Sensex CAGR -1% Sensex CAGR 39% Sensex CAGR -1%

Average of 15.3x

Mar-17 Mar-18 Mar-19

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

Election heavy year can dampen near term outlook for meaningful reform

36

83 103 55 95 88 71 64 66 81 69 80 84 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E

Average of 78% for the period

37 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 Feb-91 Feb-92 Feb-93 Feb-94 Feb-95 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Sensex P/B (x) - LHS 12000 15000 18000 21000 24000 27000 30000 33000 36000 39000 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 Feb-18 Mar-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

38

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 39

Source: Bloomberg, Data as of 31st March 2018 50 100 150 200 250 300 350 400 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18

Prices Normalised to 100

Nifty Prices Crude Prices

Risk 2 – Rise in equity issuance impacting market liquidity

40

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 3 – Delay in NPL resolution

41

NPL RATIOS YET TO COME DOWN AND RESOLUTION MAY GET DELAYED

Bank recap details & roadmap would give further clarity

Source: RBI, 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. 42

Strategy For Investments In The Current Scenario

43

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

44

How March 2018 Unfolded

• Inflation :

– The CPI inflation eased sharply to a four-month low of 4.4% in February 2018(+3.7% in February 2017) from 5.1% in January 2018 (+3.2% in January 2017). This was due to easing prices of vegetables and fruits – Annual wholesale price inflation last month eased for the third straight month in February to 2.48%, from a provisional 2.84% rise in January, helped by a softer rise in food and fuel prices.

• Trade Data :

– India's exports increased by 4.5% to $25.8 billion in February 2018 as compared to $24.7 billion in February 2017, – Imports rose by 10.4% to $37.8 billion in February. – This led to narrowing of the trade deficit to $12 billion, its lowest in five months.

• The Nikkei India Manufacturing Purchasing Managers Index (PMI), fell from 52.1 in February to a five-month

low of 51.0 in March, indicating the slowest improvement in operating conditions recorded by the survey since last October

45

• Fiscal Deficit: India's fiscal deficit for the April-February period ballooned to Rs 7.16 lakh crore, which is 120% of

the revised target for FY 18.

• The government unveiled a Rs 2.88 lakh crore market borrowing roadmap for the first half of FY19, which would

be 22.6 % lesser than Rs 3.72 lakh crore raised during the same period last financial year.

• GST collections slid for the second straight month to Rs 85,174 crore in February as only 69% of the assesses

filed returns.

• The US economy expanded an annualized 2.9% on quarter in the last three months of 2017, higher than 2.5%

in the second estimate.

• Parliament passed a key bill that will empower the government to enhance the ceiling of tax free gratuity

to Rs 20 lakh from the existing Rs 10 lakh for employees falling under the Payment of Gratuity Act

• The United States Department of Commerce (USDoC) has raised anti-dumping duty on shrimp exports

from India to 2.34% from 0.84%, a move which will lead to “some margin compression” across the supply chain

• The World Bank projected India’s GDP growth at 7.3% for the next financial year and accelerate further

to 7.5% in 2019-20.

46

How March 2018 Unfolded

Fiscal Deficit : Getting Better

47

• 10
• 9
• 8
• 7
• 6
• 5
• 4
• 3
• 2
• 1

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

State Deficit Union Deficit Consolidated Union & State Fiscal Deficit

As percent of GDP

Source : RBI, Bloomberg

FII Limits Are Almost Approaching Exhaustion

48

15-Mar-18 Category Upper Cap Current Free Limit Free Limit % Utilized incl USD Bn Investments [Unauctioned] [Auctioned] Auctioned Government Bond Long Term FPIs 10.02 8.24 1.78 Not applicable 82.27% SDL Long Term FPIs 2.09 2.09 Not applicable 0.00% Corporate Bond (Infra) Long Term FPIs 2.92 0.03 2.89 1.07% Government Bond All Categories 29.43 27.36 0.47 2 98.40% SDL All Categories 4.85 0.85 4 Not applicable 17.46% Corporate Bond All Categories 34.67 32.63 0.74 1 97.87% Government Bond (Coupon) All Categories 0.716 Not applicable Not applicable SDL (Coupon) All Categories 1 Not applicable Not applicable Total Debt 69.80 Source: Market Intelligence

India’s Potential to Absorb Foreign Ownership in Gilt is High

Source: Nomura, RBI, CSL, Bloomberg, and CEIC.

RBI OMO Purchase Is Contingent To Increase In Currency in Circulation (CIC)

50

Source: Nomura, RBI.

One Of The Most Stable Currency Against The Dollar

51

58 60 62 64 66 68 70 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 Feb-18

USD-INR Exchange Rate (Source: RBI)

USD

Source: RBI

However, The Rupee May Be Overvalued Vis-à-vis Its Peers

52

Source: Nomura

80 90 100 110 120 130 140 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 REER (36 country, trade weighted) REER (6 country, trade weighted)

10 year Gilt Yield For the Month of March

53 The reduction in the gross borrowing programme combined with relatively lower H1 borrowing lead to fall in yields in the month end

Source: Bloomberg, Data as of 28th Match 2018 7.399

7.3 7.35 7.4 7.45 7.5 7.55 7.6 7.65 7.7 7.75 7.8 1-Mar 2-Mar 3-Mar 4-Mar 5-Mar 6-Mar 7-Mar 8-Mar 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar 14-Mar 15-Mar 16-Mar 17-Mar 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 23-Mar 24-Mar 25-Mar 26-Mar 27-Mar 28-Mar

India 10 year Yield

Low Govt Borrowing Plan is Positive for Yields

54 H2 FY 2018 No of weeks Weekly Auction Amt in Cr Total Amt in Cr

October 3 15,000 45,000 November 4 15,000 60,000 December 4 15,000 60,000 January 4 18,000-15,000 63,000 February 2 15,000 30,000 Total 258,000 Actual Done 216,000

Amt Lac cr FY 2018 FY 2019

H1 3.72 2.88 H2 2.16 2.68

FY 2019 Gross Lac cr

AS per budget 6.06 Extra from National Small Savings Fund (NSSF) (0.25) Less Buy Back (0.25) New Gross as of announced today 5.56

Source: Press Release from Ministry of Finance

How Government Plans to cut Borrowing?

55

Reduce share of bonds with 10-14 years maturity as these may have lower demand in uncertain times Sell more floating rate and inflation linked bonds to minimize risk of fluctuating interest rate Government to borrow only 47%

• f budgeted

amount in first half of FY19, least in 10 years

Source: Press Release from Ministry of Finance

Positive Real Interest Rates to Stimulate Financial Savings

56

• 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. March 2018 CPI is assumed to be same as Feb-18 and Real Interest rate is calculated . Source: Bloomberg

3.18

• 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 Mar-18

Source: Bloomberg

CPI Inflation:

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

Source: MOSPI

• The CPI inflation eased sharply to a four-month low 4.4% in February 2018 (+3.7% in February 2017)

from 5.1% in January 2018 (+3.2% in January 2017; lower than the MPC's forecast of 5.1% for Q4 FY2018.

• The core-CPI inflation rose to a 40-month high 5.2% in February 2018 from 5.1% in January 2018. On an

MoM basis, the core-CPI sub-index increased by 0.4% in February 2018, in line with the uptick in February 2017.

• Notably, the wedge between headline and core-CPI inflation widened to four-month high 73 bps in

February 2018

57

4.44 5.2%

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 Feb-18

CPI Core CPI

Crude Prices Range Bound

Data as on 31st March 2018, Source : Bloomberg Crude Oil prices rises to $69.71 from $65.78 in the previous month. This was due to increase in U.S. crude stockpiles that was larger than expected.

58

40 45 50 55 60 65 70 75 Apr-17 Apr-17 May-17 May-17 May-17 Jun-17 Jun-17 Jul-17 Jul-17 Aug-17 Aug-17 Sep-17 Sep-17 Oct-17 Oct-17 Oct-17 Nov-17 Nov-17 Dec-17 Dec-17 Jan-18 Jan-18 Feb-18 Feb-18 Mar-18 Mar-18

Brent Crude (USD)

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

59

*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 normal monsoon and crude prices to remain range bound

45

Credit growth has picked up by 10-12% as compared to last year.

Credit Growth Slowly Picking Up

Source: Bloomberg, Data as on 31st March 2018

60

64 66 68 70 72 74 76 78 80 6600000 6800000 7000000 7200000 7400000 7600000 7800000 8000000 8200000 8400000 8600000

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 Feb-18 Mar-18

Credit Growth (Weekly Data)

Current Credit/ Deposit Ratio is ~75.06% (RHS) Commercial Credit by Banks = Rs 83.77 lakh Crore (LHS)

421.33 Billion USD

360000 370000 380000 390000 400000 410000 420000 430000 Apr-17 Apr-17 May-17 May-17 Jun-17 Jun-17 Jun-17 Jul-17 Jul-17 Aug-17 Aug-17 Sep-17 Sep-17 Oct-17 Oct-17 Nov-17 Nov-17 Dec-17 Dec-17 Dec-17 Jan-18 Jan-18 Feb-18 Feb-18 Mar-18

India Forex Reserves (USD)

India Foreign Exchange Reserves – Stability Is Key

Indian foreign exchange reserves have remained steady at USD 421 bn March month

Source: Bloomberg

61

Data as on 31st March 2018

5.5 6 6.5 7 7.5 8 8.5 9 9.5

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

28th March 2018

• 2719.27

1493.53

• 86.83
• 25.38
• 1337.95

1700.00

Amount in Rs. billion.

Active Liquidity Management

As of 31st March 2018

62

63

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) Update chart

• Due to the change in the borrowing calendar yields fell maximum between 8-16yr maturity
• Due to the shift in maturity bucket from 10-14 to 1-9 yr the curve is expected to flatten between these two

segments

• Long end will depend on LIC and other investors if they buy curve will remain flat else it will rise gradually

with supply

Source: Bloomberg

64

6 6.5 7 7.5 8 8.5 3M 6M 1Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 17Y 27Y 30Y 40Y

INR India Sovereign Curve Last Mid YTM INR India Sovereign Curve 01/03/2018 Mid YTM

• 45
• 25
• 5

3M 6M 1Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 17Y 27Y 30Y 40Y

YTM (M-o-M Change)

India-us 10 Year Gilt- Spreads Provide Adequate Safety

65

The spreads have widened over last 1 month. However we expect the spreads would compress in medium term due to narrowing inflation differentials

Widening Of Spread Between LIBOR And UST

66

This can hurt companies borrowing in USD market more than what is priced by the market

Inflation Adjusted Yields In India Is Attractive

Narrowing CPI spreads and widening bond spreads make Indian fixed income attractive

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

Feb 2018 . Source: Bloomberg

• 2

2 4 6 8 10 12 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18

India-US CPI Spread India-US Gilt Spread

• 0.5

0.5 1 1.5 2 2.5 3 3.5

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

10 Year Gilt of Selected Countries

Global Bond Yields Remain Volatile

68

Data as of 31st March 2018. Source: Bloomberg

Global bond market expected to remain edgy on account of uncertainties on growth and inflation front 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

69

Debt Outlook

• The government took strong measures to arrest rise in bond yields. The gross borrowing was cut by Rs

50000 cr and the H1 borrowing program was also reduced to ~47% of the annual target.

• This is very bold call given that next year will be a election year and global environment is also uncertain.

This shows that government is positive on GST collection and overall macro situation

• This led to short covering and the 10 year gilt closed the March-18 at 7.39%
• The change in pattern of the issuance calendar also will impact the yield curve as it will impact the supply

equation as the bond supply has been shifted from 10-14 to 1-9 yr buckets

• The immediate footprint of inflation is likely to be positive. However headline is likely to rise till June and

then fall for the remaining part of the year

• Monsoon and MSP and crude will play a key role in the headline inflation trajectory in H2.
• The Government has also advised the banks under PCA to call all the perpetual bonds issued under Basel
• 3. So far BoM, BOI, Dena, IDBI, Corporation, UCO and UBI have recalled it amounting to the tune of Rs

20,400 cr. This is likely to create demand for high yield assets, particularly the remaining perpetual bonds in the market; making them superior performers in the current uncertain interest rate environment

• The RBI policy is likely to remain neutral. However any surprise either way cant be ruled out.
• We believe actively managed duration funds are attractive investments from a 3 yr investment horizon

70

Debt Outlook

• Short term rates upto 1 yr dropped by 15-50 bps in March itself and 3-6m are likely to stabilize in the month
• f April. This is a standard March month phenomena of short term rates
• We believe the short term trade is largely over from cap gain point of view. However the 1-5 yr segment still
• ffers decent risk reward for the non credit and duration investors.
• As the 3-6m yields will fall, the short term curve upto 2 yr will become steep again; pricing approx. 50 bps

rate hike by RBI over the course of next 1 year

• Since the curve is already pricing in rate hikes ahead; we believe there is strong case for conservative

investors to take advantage of the steep yield curve by investing in ultra short term fund and short duration funds

71

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

72

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

73

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.

74

Need to Watch Out for Opportunities in Hybrid Space

75

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.

76

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 77

78

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 28th February 2018

Kotak Equity Saving Fund Performance

7.97 8.79

6.42 7.33 1 2 3 4 5 6 7 8 9 10 3 Years Since Inception

Kotak Equity Savings Fund Performance(%)

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

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

79

Record Date Rupees Per Unit Dividend Yield 26-Mar-18 0.138 0.84% 26-Feb-18 0.14 0.83% 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%

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82 Performance (%) as on 28th February, 2018

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.

83 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 28th February, 2018 Source: ICRA

Why Kotak Mutual Fund Is Different From Others

84

• 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: 85

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

86

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

87

88

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