Equity Update

February 2019

Global Market Update

Market Overview (as on January 31, 2019)
US Economy: The US Federal Reserve (Fed) did not change the
Flows Jan -19 Dec -18 Nov-18 interest rates in its January policy meeting and reversed its
stance of “future gradual increases”, saying it would be “patient”
FIIs (Net Purchases / before making further moves.
-4,262 3,143 6,223
Sales) (Rs cr)
MFs (Net Purchases / European Union: The European Central Bank (ECB) retained its
6,995 2,736 4,896
Sales) (Rs cr) policy stance while keeping a rate hike later this year on the
Domestic Markets Jan -19 Current 10 Yr table.
(%) PE Average
S&P BSE Sensex 0.5 24.8 19.7 UK: The UK’s economic growth cooled to 0.3% in the three
NSE Nifty (0.3) 23.0 19.9 months to November, down from 0.4% in the three months to
S&P BSE Auto October, according to the Office for National Statistics. This was
(11.2) 22.3 19.0
its weakest pace of expansion in six months.
S&P BSE Bankex 1.2 53 15.8
S&P BSE Capital
Japan: The Bank of Japan (BoJ) maintained its key short-term
Goods (0.8) 23 29.7
interest rate target at -0.1% and pledged to guide 10-year
S&P BSE Consumer
government bond yields around 0%. It also cut inflation forecast
Durables 2.7 39.3 27.2
for the fiscal year starting in April to 0.9% from 1.4%.
S&P BSE FMCG (1.8) 46.3 37.2
S&P BSE Healthcare (0.3) 30.8 29.2 Emerging Markets: China's GDP rose 6.4% on-year in the fourth
S&P BSE IT 8.3 21 19.8 quarter, down slightly from 6.5% growth in the third quarter.
S&P BSE Metals (7.4) 6.8 13.1 GDP grew 6.6% in 2018, meeting Beijing's growth target but
S&P BSE Mid Cap (5.7) 32.3 21.6 marking the lowest growth for the country since 1990. The
People's Bank of China cut the banks’ reserve ratio by 1% for the
S&P BSE Oil & Gas (1.0) 10 12.8 fifth time in a year.
S&P BSE PSU (4.6) 55.3 13.6
S&P BSE Realty (1.3) 9.6 23.5 Source: CRISIL Research
Jan -19 Current 10 Yr.
Global Markets
(%) PE Avg.
US 7.2 16.2 15.5
Indian Market Update
UK 3.6 15.6 18.9 Index Performance: Indian equity indices began 2019 on a mixed
Japan 3.8 14.4 20.2 note. Benchmarks S&P BSE Sensex rose 0.52% while Nifty 50
Hong Kong 8.1 10.6 11.1 fell 0.29% in January 2019.
Singapore 4.0 11.5 12.2
Domestic Developments: Encouraging domestic
China 9.0 8.6 8.7 macroeconomic cues including easing of inflation, which raised
Earnings Growth (%) FY18 FY19E FY20E hopes of an interest rate cut by the Reserve Bank of India (RBI) in
Sensex 5 12 27 its sixth bi-monthly monetary policy meeting on February 7,
Latest Previous 2019, helped markets. Better-than-expected corporate earnings
Macro Indicators from some index heavyweights also augured well for the local
Update Update
7.1 8.2 indices. Stock-specific selling amid release of the December
GDP (YoY%) 2018 quarter earnings numbers and concerns about rising debt
(2QFY19) (1QFY19)
0.5 8.2 and corporate governance issues kept investors jittery. Investors
IIP (YoY%) also remained cautious ahead of the interim budget on February
(Nov) (Oct)
61.89 53.8 1, 2019.
Crude ($ bbl)
(Jan 31) (Dec 31)
Core Sector Growth 2.6 3.5 Global Developments: In the beginning of the month, the market
(YoY%) (Dec 2018) (Nov 2018) largely fell owing to weak global cues including revenue warning
-13,077 -16,671 from tech-giant Apple, and disappointing Chinese and US
Trade Deficit ($ mn) manufacturing activity data which fueled fears of slowing global
(Dec 2018) (Nov 2018)
Current Account Deficit (19.1) (15.9) growth. Concerns about global economic slowdown intensified
($ bn) (2QFY19) (1QFY19) further after the IMF cut its global growth forecast to 3.5% and
FII Holding in Indian 21.7 21.5 3.6% for 2019 and 2020, respectively. Rebound in global equities
Equities (%)# (1QFY19) (4QFY18) after the US Fed kept interest rates unchanged and said it would
Note: # FII hldg includes ADR/GDR (BSE500 Index); be patient in hiking rates further this year boosted the
Data Source: Crisil Research; * Data till Jan 31, 2019; CAD: Current sentiments. Hopes of a resolution of the US-China trade conflict
Account Deficit; GDP: Gross Domestic Product, IIP: FII: Foreign after the start of second round of trade talks between two
Institutional Investors; MF-Mutual Fund nations, reopening of the US government and few positive US
economic data also aided the indices.
 Equity Update
February 2019

Sectoral Impact: S&P BSE Sectoral indices ended mixed in than-expected earnings from the index major. Capital goods and
January 2019. S&P BSE Information Technology (IT) index was power stocks saw heavy selling pressure; S&P BSE Capital
the top gainer – up nearly 8.34% due to weakness in the rupee Goods index and S&P BSE Power index fell nearly 8% and 6%,
against the dollar. Buying interest in defensive counters such as respectively. Metal stocks fell following decline in the global
consumer durables brought in more gains. S&P BSE Consumer base metal prices and fears of slowdown in China; S&P BSE
Durables index rose 2.71%. Among the laggards, S&P BSE Auto Metal index lost 7.44%.
index was the top loser – plunging 11.23% due to sell-off in the
auto stocks on weak December 2018 sales numbers and weaker- Source: NSE, BSE; Crisil Research

Market Outlook and Triggers

Interim Budget 2019, presented on Feb 1, held a few good surprises for the farmer community and the salaried classes but was
largely in line with market expectations. Markets, which had already ended January 2019 on a flat note (up 0.5% for the month),
remained largely unaffected by the Budget announcements.
The month of January was good for the IT, energy, consumer durables and banking sector which ended the month in the green while
the rest of the sectors were in the red with auto being the worst, down 11.2%, followed by the consumer durables sector (8%), and
metals sector (7.4%). While oil prices were on their way up, markets drew comfort from the US Federal Reserve’s decision to hit the
pause button on further rate hikes for now. Domestically, January saw markets largely preparing for the February Interim Budget and
the 2019 general elections, about five months away.
This additional recurring expenditure could put pressure on the government’s fiscal situation going forward.
On the fiscal front, the govt revised its FY19 fiscal deficit expectations to 3.4% from 3.3% earlier while continuing to maintain the
current account deficit (CAD) at 2.5%. The government also indicated at simplification of the direct tax system which could boost tax
collections going forward.
Measures such as full tax rebate on income upto Rs 5 lakh, increase in standard deduction, and TDS limits for the middle-class could
help boost consumption in the economy and benefit companies in the auto and consumption sector.
We maintain our neutral stance on equity markets and watch out for the 2019 general elections (April/May) as the key trigger for the
rest of the year. Policy decisions by the RBI, apart from global factors such as end of the bond-buying programme by central banks
globally, escalation of trade-wars, pace of foreign inflows, among others, would be other significant triggers for the market.
We believe we have entered the accumulation phase of investing as most of our market triggers are in the moderate zone, prompting
us to move to a neutral zone from cautious. Equity accumulation, particularly mid-and smallcaps, should be in a staggered manner
through SIP/STP. For lumpsum, we recommend asset allocation and/or largecap-oriented schemes. Themes such as banking and
infrastructure could be explored in 2019, post the recent oil price correction. With valuations fully priced in, special situation themes
could also play out during 2019.

Equity Valuation Index

Equity valuations show that the market valuations are in the zone where investors are recommended to invest in asset allocation
schemes.

Equity valuation index is calculated by assigning equal weights to Price to equity (PE), Price to book (PB), G-Sec*PE and Market Cap to Gross
Domestic Product (GDP)
 Equity Update
February 2019

Our Recommendations
Investors may continue with their investments in pure equity schemes. As uncertainty regarding global events and run-up to
the elections cannot be ruled out, we believe market could be volatile in the near-term. Hence, for new investors we
recommend investing in asset allocation schemes. Investors looking for long-term exposure could consider investing
systematically in small and midcap schemes. Investors looking for tactical allocation could invest in thematic schemes
encompassing banking and infrastructure sectors.

Our Recommendations – Equity Schemes

ICICI Prudential Bluechip Fund
(An open ended equity scheme predominantly investing in large These Schemes aim to
Pure Equity cap stocks) generate capital appreciation
Schemes ICICI Prudential Multicap Fund through participation in
(An open ended equity scheme investing across large cap, mid equities.
cap and small cap stocks)
ICICI Prudential Value Discovery Fund
(An open ended equity scheme following a value investment
strategy)
ICICI Prudential Smallcap Fund
(An open ended equity scheme predominantly investing in small These schemes aim to
Long-Term SIP cap stocks) generate long term wealth
Schemes ICICI Prudential Midcap Fund creation over a full market
(An open ended equity scheme predominantly investing in mid cycle.
cap stocks)
ICICI Prudential Large & Mid Cap Fund
(An open ended equity scheme investing in both large cap and
mid cap stocks)
ICICI Prudential Balanced Advantage Fund
(An open ended dynamic asset allocation fund) These schemes aim to benefit
ICICI Prudential Equity & Debt Fund from volatility and can be
(An open ended hybrid scheme investing predominantly suitable for investors aiming
in equity and equity related instruments) to participate in equities with
ICICI Prudential Multi-Asset Fund low volatility.
Asset Allocation (An open ended scheme investing in Equity, Debt, Gold/Gold
Schemes ETF/units of REITs & InvITs and such other asset classes as may
be permitted from time to time)
ICICI Prudential Equity Savings Fund
(An open ended scheme investing in equity, arbitrage and debt)
ICICI Prudential Regular Savings Fund
(An open ended hybrid scheme investing predominantly in debt
instruments)
ICICI Prudential Banking & Financial Services Fund
(An open ended equity scheme investing in banking & financial services Investors could invest in this
sector)
Thematic/Sectoral thematic scheme for tactical
ICICI Prudential Infrastructure Fund
schemes (An open ended equity scheme following infrastructure theme)
allocation. It would be a high
ICICI Prudential India Opportunities Fund risk investment option.
(An open ended equity scheme following special situation theme)

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.
 Equity Update
February 2019

Disclaimer & Riskometers

ICICI Prudential Bluechip Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme predominantly investing in large cap stocks.

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Large & Mid Cap Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme investing in both largecap and mid cap stocks

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme following a value investment strategy.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Equity & Debt Fund is suitable for investors who are seeking*:

 Long term wealth creation solution

 A balanced fund aiming for long term capital appreciation and current income
by investing in equity as well as fixed income securities.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*:

 Long term wealth creation solution

 An equity fund that aims for growth by investing in equity and derivatives.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.

ICICI Prudential Multicap Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An open ended equity scheme investing across largecap, mid cap and small
cap stocks.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*:

 Long term wealth creation

 An Open ended scheme that seeks to generate regular income through
investments in fixed income securities, arbitrage and other derivative strategies
and aim for long term capital appreciation by investing in equity and equity
related instruments.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
 Equity Update
February 2019

ICICI Prudential Multi-Asset Fund is suitable for investors who are seeking*:

• Long term wealth creation

• An open ended scheme investing in at least three asset classes with minimum
allocation of 10% to each asset class.

*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*:
 Medium to Long term regular income solution
 A hybrid fund that aims to generate regular income through investments
primarily in debt and money market instruments and long term capital
appreciation by investing a portion in equity.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Midcap Fund is suitable for investors who are seeking*:
 Long term wealth creation
 An open-ended equity scheme that aims for capital appreciation by investing in
diversified mid cap companies.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Smallcap Fund is suitable for investors who are seeking*:
 Long term wealth creation
 An open ended equity scheme that seeks to generate capital appreciation by
predominantly investing in equity and equity related securities of small cap
companies.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Banking & Financial Services Fund is suitable for investors who are
seeking*:
 Long Term Wealth Creation
 An open-ended equity scheme that predominantly invests in equity and equity
related securities of companies engaged in banking and financial services.
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential Infrastructure Fund is suitable for investors who are seeking*:
 Long Term Wealth Creation
 An open-ended equity scheme that aims for growth by primarily investing in
companies belonging to infrastructure and allied sectors
*Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.
ICICI Prudential India Opportunities Fund is suitable for investors who are seeking*:
 Long Term Wealth Creation
 An equity scheme that invests in stocks based on special situations theme.

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

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information
developed in-house. Information gathered and material used in this document is believed to be from reliable sources. The Fund however does
not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no
such party will assume any liability for the same. All recipients of this material should before dealing and or transacting in any of the products
referred to in this material make their own investigation, seek appropriate professional advice and carefully read the scheme information
document. We have included statements 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,
 Equity Update
February 2019

exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our
services and / or investments, the monitory and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign
exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and
foreign laws, regulations and taxes and changes in competition in the industry. All data/information used in the preparation of this material is
dated and may or may not be relevant any time after the issuance of this material. The AMC takes no responsibility of updating any
data/information in this material from time to time. he AMC (including its affiliates), the Fund 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. The recipient alone shall be fully
responsible/are liable for any decision taken on the basis of this material.