Monthly Market Presentation Monthly Market Presentation Happy - - PowerPoint PPT Presentation

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Monthly Market Presentation Monthly Market Presentation

Please refer slide no. 24 for risk factors.

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

Happy Investing in Festivities!!!

Wishing you a very Happy Diwali!!!

Retrospective October 2012: Ordinary October Retrospective October 2012: Ordinary October

The mid- and small-caps

• utperformed the

large-cap indices. The year-to-date

• utperformance

gap of mid-caps and small-caps vs. the large caps widened to 8.1ppt and 6.2ppt, respectively.

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Source: FactSet, MSCI, Bloomberg, Morgan Stanley Research

FII Equity Flows: Strong & STEADY FII Equity Flows: Strong & STEADY

Sources: SEBI, BSE, Morgan Stanley Research, Please note the FII Cash, FII futures, FII Debt & FII Primary Market Data for 31st October is not included.

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Value of FII Portfolio in India Value of FII Portfolio in India

Value of FII investments is up 18% in USD over the quarter…but is still 20% lower than its Dec’10 peak

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Source: CMIE, Citi Research

Who Owns India Inc? Who Owns India Inc?

Including FII, FDI and listed MNC’s….foreign

• wnership of India Inc at 26.8% is an all time high;

Foreigners have more conviction in Indian Equities??? Foreigners have more conviction in Indian Equities???

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Source: CMIE, Citi Research

FII Ownership concentrated in Top 30 FII Ownership concentrated in Top 30

Ownership moderates as we broaden the corporate base

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Source: CMIE, Citi Research

Domestic MF: Why Selling Continues? Domestic MF: Why Selling Continues?

Source: SEBI, SEBI, BSE BSE, AMF AMFI, Mo , Morgan an Stan anley R y Rese search ch, Ple , Please n se note th te the e DMF an DMF and Insu d Insurance flo nce flows data s data for for 30th and 31st Octobe 30th and 31st October is not inc r is not included ed

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Profit Booking by Retail Investors Profit Booking by Retail Investors

Are we invested to capitalize on any upward moves from here???

Source: SEBI, SEBI, BSE BSE, AMF AMFI, Mo , Morgan an Stan anley R y Rese search ch, Ple , Please n se note th te the e DMF an DMF and Insu d Insurance flo nce flows data s data for for 30th and 31st Octobe 30th and 31st October is not inc r is not included ed

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Key facets of Equity Investments Key facets of Equity Investments

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Economics Economics

Reduction in oil subsidy and cylinder cap per

household may help contain fiscal deficit by 0.2% of GDP over next 12 months

FDI to revive overall business confidence and help

arrest decline in private investment

Divestment in four state-owned enterprises may help

collect Rs100 bn (30% of the budget estimate)

Urging state-owned enterprises to use cash surplus

will likely accelerate investment spending

Evidence of stabilization in Corporate Results

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Sentiments Sentiments

Significantly boosted by progressive government

action

FIIs bullish on Indian Equities… Mutual Fund net selling on account of redemption

pressures

Recent measures are undoubtedly positive and being

viewed as a good beginning

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Valuations - Valuations - Fair value air value

Valuation levels of the Sensex based on earnings estimate of Rs. 1321 (4 Quarter Forward)

Dichotomy of Valuations Set of quality stocks are trading at very high valuations in

FMCG, Cements, Pharmaceutical sector

Excluding these stocks, the broader market is attractive

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Triggers Triggers

Follow up on policy reforms -

Steps outside divestment like increased taxation and further hike in fuel prices that will likely aid in further fiscal consolidation

Crude prices not having rallied post the liquidity gush,

is a positive. Crude below or at US $ 100 per barrel

RBI cutting interest rates

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Equity Outlook & Recommendation Equity Outlook & Recommendation

Equity Outlook

Markets likely to continue being volatile with upside potential

based on triggers being achieved

More headroom available to RBI for lowering interest rates Infrastructure as a sector is expected to see positive action

Recommendations

For lump-sum allocations, invest in any of ICICI Prudential’s

Volatility Advantage Products which aim to benefit out of market volatility

Continue SIPs in all core products of ICICI Prudential Mutual

Fund with an aim to benefit from long term wealth creation

For overseas diversification, invest in ICICI Prudential US

Bluechip Equity Fund

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No None of th

• f the afor

e afores esaid re aid recomm commenda endati tions a

• ns are ba

e based on any d on any assumptio

• assumptions. Th
• s. Thes

ese e are p e purely f for r refe ference an nce and th d the e In Investors ar vestors are r e requ quested to ested to cons consult their fin ult their financi ncial advisors befor l advisors before investi investing. g.

Fixed Income Outlook Fixed Income Outlook

Rate cut delayed but inevitable…..

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RBI Policy Rates RBI Policy Rates

RBI Cut CRR in anticipation of liquidity tightness

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Source: Morgan Stanley Research, RBI: CRR- Cash Reserve Ratio, MSF – Marginal Standing Facility

Inflation (WPI) Inflation (WPI)

RBI sticks to path to contain inflationary

expectations.

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Source: Morgan Stanley Research, Office of Economic Adviser: WPI – Wholesale Price Index

Low interest rates a pre-condition for growth Low interest rates a pre-condition for growth revival revival

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Source: Bloomberg: GDP – Gross Domestic Product, GOI – Goverment of India

RBI Policy RBI Policy

RBI expects Inflation to come down to 7.50% range by

January’ 2013

If Inflation behaves in line with RBI’s expectation with no

major fiscal slippage, then high probability of decline in interest rates to the extent of 50-75 bps over next six months.

By that time, better clarity will emerge as far as incremental

steps on fiscal consolidation

Final Fiscal deficit figure at which government is likely to end

the year

Extent of additional borrowing by government

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Bps – Basis Points

Liquidity Liquidity

By end of Nov’2012 expect liquidity deficit to be in the

range of INR 1.25 – 1.35 trillion

CRR cut of 25 bps may not be adequate

Therefore, OMOs will need to be conducted to bring liquidity

within RBI’s comfort zone.

In next 3-4 months, expect OMOs to the extent of equivalent

• f 1% of NDTL i.e. about INR 700 bilion.

Such step will not only bring liquidity within RBI’s comfort

zone but also may result in drifting down 10yr yield to 7.9%

Expect 10yr to trade in a range of 7.90-8.25% in next 3

months

This potentially brings forward an opportunity for investors to

add / increase duration to their portfolios.

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OMOs – Open Market Operations, NDTL – Net Demand & Time Liabilities

Outlook & Strategy Outlook & Strategy

Toward the later part of November, expect liquidity to

worsen.

Hence, short term rates may become more prone to moving

up providing opportunity to invest in Corporate Bonds.

Do not expect Corporate Bond spreads at 55-60 bps to

sustain.

Expect spreads to widen to 80-85 bps in next 4-6 months

time.

Hence, we have made adjustments in our strategy Not increasing any exposure to Corporate Bonds in our

duration funds.

Having increased exposure to G-Secs including SDLs.

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SDLs – State Development Loans

Outlook & Strategy Outlook & Strategy

As we see spreads widening to a more comfortable level of

80-90 bps, then we may again start increasing exposure to Corporate Bonds.

As of now we are overweight G-Secs and SDLs.

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Fixed Income product recommendation Fixed Income product recommendation

We recommend investments in funds as follows: ICICI Prudential Short Term Plan for 9-12 month horizon ICICI Prudential Regular Savings Fund for 1 Year and above

horizon

Investors with a 2 year view may consider ICICI Prudential

Corporate Bond Fund

For duration play – Invest in the longer term Gilt and Income

with a 24-36 months investment horizon

None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the Investors are requested to consult their financial advisors before investing.

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DISCLAIMER DISCLAIMER

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

All figures and other data given in this document is as on 30 October 2012 unless stated otherwise. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material from time to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Prudential Asset Management Company Limited. Prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. Data source: Bloomberg, except as mentioned specifically. Disclaimer: laimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable

• sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. We have

included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and

• ther countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India,

inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable for any decision taken on this material. 24

Thank you Thank you

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