Monthly

Market
Outlook
April 2020
 Global Indices Performance
Returns Performance - March 2020
0
-5
-5 -5
-10 -8
-10 Global Markets ended
Returns (%)

-15 -12
-14
-14
-14 -16
on a sombre note in
-16 -17
-20 -17 -18 March as the world
-25 -22
-23
grappled with the
-30 widening spread of
-30 COVID-19
-35

France
US

UK

Indonesia

Singapore
Hong Kong

Taiwan

Germany
China

Switzerland

South Korea
Japan

Europe

Russia

Brazil
India
Germany - DAX Index; China - SSE Composite Index; France - CAC 40 Index; Japan - Nikkei; Eurozone - Euronext 100; Hong Kong - HangSeng; US - Dow Jones; Singapore - Strait Times; Russia - RTS Index; Indonesia - Jakarta Composite
Index; U.K. - FTSE; South Korea - Kospi; Brazil - Ibovespa Sao Paulo Index; Indonesia – Jakarta Composite Index; Switzerland – Swiss Market Index; Taiwan – Taiwan Stock Exchange Corporation; India – S&P BSE Sensex; Returns in % terms.
GDP – Gross Domestic Product. Data Source: MFI & ACEMF; Returns are absolute returns for the index calculated between February 28, 2020 – March 31, 2020. Past performance may or may not be sustained in future. For more tax related 2
information, consult your tax advisors. MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html. COVID-19 is Coronavirus disease 2019.
 India – Sectoral Indices Performance

Returns Performance - March 2020

0 • Financials, Auto and
Industrials were key
laggards as the sectors
Returns (%)

-8 -6
-10 were hit by negative
-16 -14 sentiments on
-17 -18
-19 -19 expectations of muted
-24
-24 -26
growth due to COVID-19
-32 -28 -28 -29
-30 • FMCG & healthcare too
-33 -34
-40 -36 ended in negative but the
fall was limited relative to
FMCG

Power

Metal

Finance
HC

Energy

Infra

Auto
CD
CG

Realty
IT

Telecom
Oil & Gas

Bankex
Basic Mat. other sectors

All indices are of S&P BSE and carry the prefix of S&P BSE; Abbreviated CD - S&P BSE Consumer Durables; CG - S&P BSE Capital Goods; FMCG - S&P BSE Fast Moving Consumer Goods; HC - S&P BSE Health Care; Infra. - S&P BSE India
Infrastructure; IT - S&P BSE Information Technology, NBFC – Non-banking Finance Companies. Data Source: MFI, ACEMF ; Returns are absolute returns for the TRI variant of the index calculated between February 28, 2020 – March 31, 2020;
Past performance may or may not be sustained in future. The sectors)/stock(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this sector(s)/stock(s).
MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html. COVID-19 is Coronavirus Disease 2019
3
 OUR EQUITY OUTLOOK
Make the most of BEARS today to
be able to ride the BULLS tomorrow –
Time to Add Equities

4
 VCTS Framework –
Our Market Checklist

5
 „VCTS‟ Framework signalling a „Strong Buy‟

Market V aluations Business C ycle T riggers S entiments

• Low P/E – 19.4 • Low Capacity • Containment of • FII record outflow
Utilisation COVID-19 spread
• Low P/B – 2.5 • Domestic Flows
• Global & Domestic steady
• Low Credit Growth
growth recovering

VALUATIONS CYCLE – TRIGGERS – SENTIMENTS –

ATTRACTIVE BOTTOM GROWTH RECOVERY NEGATIVE

With recent market sell-off, Valuations have become very attractive, Business Cycle has bottomed out and FII
outflows are at record high. Our framework suggests that it is a good time to buy equities
6
P/E – Price-to-Earnings; P/B – Price to Book Value Ratio; COVID-19 is Coronavirus disease 2019, FII – Foreign Institutional Investor. P/E and P/B data mentioned is of Nifty 50 Index. Data as of March 31, 2020
 Valuations
170

150 Book Partial Profits

The Equity Valuation
130 Index indicates that
Incremental Money to Debt it is a good time for
110
Neutral investors to be
aggressive on
90
Invest in Equities equities
78.9
70
Aggressively invest in Equities
50

Mar-15
Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
Equity Valuation index is calculated by assigning equal weights to Price-to-Earnings (PE), Price-to-Book (PB), G-Sec*PE and Market Cap to GDP ratio. G-Sec – Government Securities. GDP – Gross Domestic Product, Data as of March 31, 2020 7
 Valuations
Nifty P/E and P/B are well below Long Term Average

Nifty 50 P/E Ratio Nifty 50 P/B ratio

30
4.0
28
26
3.5
24

Nifty 50 P/B Ratio

Nifty 50 P/E Ratio

22
3.0
20
18 19.4
2.5
16 2.45
14
2.0
12

Sep-16
Nov-11

Mar-13

Mar-20
May-17
Oct-09
Jun-10

Jul-12

Aug-14
Apr-15

Oct-18
Jun-19
Feb-18
Jan-09

Jan-16
Feb-11

Dec-13
Sep-16
Mar-13
Nov-11

Mar-20
May-17
Oct-09

Oct-18
Jan-09

Jun-10

Aug-14

Jan-16

Jun-19
Feb-11

Jul-12

Dec-13

Feb-18
Apr-15

Nifty 50 P/B ratio Average -1 SD `+ 1 SD

Nifty 50 PE Average -1 SD `+1 SD
8
Source: NSE India; Data as of March 31, 2020; P/E – Price to Earnings; P/B – Price to Book Value ; SD – Standard Deviation
 Valuations
Marketcap to GDP ratio
100%

90%
The Marketcap to
Average: 77% GDP ratio is at 56%
80%
well below its
historic average of
70%
77% indicating an
undervalued market
60%
56%
50%
Mar-09

Mar-20
Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19
Source: Edelweiss Research; Data as of March 31 2020; GDP - Gross Domestic Product
9
 Cycle
Capacity Utilization (%)

76

Average: 72.8 Capacity Utilization

74
which is an indicator of
the Business Cycle the
72 economy is in, is below
historic average. This
70 indicates that we are in
68.6 the bottom of the
68
Business Cycle
Mar-16
Dec-14
Mar-15

Dec-15

Dec-16
Mar-17

Dec-17
Mar-18

Dec-18
Mar-19

Dec-19
Jun-15

Jun-16

Jun-17

Jun-18

Jun-19
Sep-19
Sep-15

Sep-16

Sep-17

Sep-18
Source: RBI, Data as of December 2019 10
 Cycle
Credit and Deposit Growth (YoY)
16%

14% Credit growth is a key

15%
measure to assess demand
12% and subsequently business
cycle phase. The credit
10% growth has moderated from
9%
10%
15% to 6% lagging deposit
8%
growth over last one year.
6%
6% This again highlights that
we are at the bottom of the
Mar-19

Mar-20
Apr-19
May-19
Jun-19

Aug-19

Oct-19

Dec-19
Jul-19

Nov-19
Jan-19
Feb-19

Sep-19

Jan-20
Feb-20
Business Cycle

Credit Growth (YoY) Deposit Growth (YoY)

Source: RBI, Data as of Mar 13, 2020 11
 Triggers
Triggers to watch out for will be the COVID-19 spread curve flattening
and domestic economic growth trajectory

COVID-19 TRACKER • India‟s COVID cases have crossed 4000

• The number doubled from 2000 to 4000

India World at a much faster pace than previous
doubling
Total Cases 9,240 18,66,654
• India‟s testing per million is lower than
many countries
Total Deaths 331 1,15,269
• The moderation in number of new
Total Cured 1,096 4,34,054 cases needs to be monitored for further
growth guidance
Source: Ministry of Health & Family Welfare, WHO, JP Morgan. Data as of April 13, 2020. COVID-19 is Coronavirus Disease 2019. 12
 Sentiments
Record FII outflows indicate negative sentiments around equity as an asset class

FII Net Flows (in Rs. Crs)

70,000
50,000 44,937
31,709
30,000
10,000
-10,000
-30,000 -22,463
-50,000 -48,030
Jan-Mar 2017

Jan-Mar 2018

July-Sep 2018

Jan-Mar 2019

Jan-Mar 2020
July-Sep 2017

Oct-Dec 2017

Oct-Dec 2018

July-Sep 2019

Oct-Dec 2019
Apr-Jun 2017

Apr-Jun 2018

Apr-Jun 2019
Source: NSDL, Kotak Securities. Data as of March 31, 2020 13
 Sentiments
Due to recent corrections, markets are in an oversold zone and hence returns across categories
have moderated. This may provide a good margin of safety to investors

Performance of Largecap, Midcap & Smallcap Funds

15%
9% 8% 9%
7% 6%
5% 1% 1% 1% 2%
0%

-5% -1%
-3% -4%
-6%
-9%
-15%

-25%
-24% -26% -25%
-26%
-35% -32%
Largecap Funds Midcap Funds Multicap Funds Smallcap Funds Nifty 50 TRI
1Y 3Y 5Y 10Y
14
Source: Value Research, Data as of Mar 31, 2020. Scheme and peer group categorization is as per Value Research classification. Returns are in CAGR terms. Past performance may or may not sustain in future
Equity Theme –
Divergence

15
 Value Vs. Growth Divergence

Marketcap Change (Since Feb'18 till Mar'20)

40%

20% 11.9%
Divergence between
0% „VALUE‟ & „GROWTH‟
-6.6% stocks continues to
-20%
-19.0% prevail with select
-40% -33.4% -29.8%
Megacaps still in the
-60% -52.8% bubble zone
-80% -73.7%

>=501
Top 10

251-500
Top 11-20

Top 21-50

Top 51-100

101-250

Total Universe considered is 1670 listed stocks. Stocks are arranged in descending order as per Marketcap. Marketcap change is considered for period between 28-Feb-18 and 31-Mar-20. Returns are in absolute
terms. Source: Capitaline. Period considered is Feb‟18 to March „20. Markets corrected sharply in Feb ‟18 due to expensive market valuations throughout 2017. Hence the mentioned period is considered. Past 16
performance may or may not sustain in future
 Value Vs. Growth Divergence
Nifty 50 Index performance is led by select „GROWTH‟ stocks

Nifty 50 Index – Nifty 50 Index –

Nifty Top 10 P/B Vs. Nifty Bottom 40 P/B Nifty Top 10 P/E Vs. Nifty Bottom 40 P/E
5.2 45
4.8
40
4.4

P/E (x)
4.0 35
P/B (x)

3.6 3.8
30
3.2
2.8 25 27.3
2.4 2.1
20 20.7
2.0

Jun-19
Sep-18

Sep-19
Dec-18

Dec-19
Mar-19

Mar-20
Dec-18

Dec-19
Jun-19

Sep-19
Mar-19

Mar-20

Nifty 10 Ex Bottom 40 Nifty 40 Ex Top 10 Nifty 10 Ex Bottom 40 Nifty 40 Ex Top 10

17
P/E – Price to Earnings, P/B: Price to Book. Ex – Excluding. Source : NSE, Capitaline, Data as of March 31, 2020. Past performance may or may not sustain in future.
 Marketcap Divergence

Earnings yield spread of Smallcaps over Largecaps

2.0%
1.8% Smallcaps are
1.0%
currently offering
better Margin of
Safety in terms of
0.0% risk spread over
Largecaps

-1.0%
Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20
18
Data as of January 31, 2020. Source: ICICI Securities. Largecaps: top 100 Mcap companies, Midcaps – Next 150, Smallcaps – Next 250. Only profit making companies are considered.
 Marketcap Divergence

The recent correction in Smallcap space has led to Marketcap divergence in terms of valuations

Share in the Overall Market Cap (%)

Index 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Dec-19 Jan-20 Feb-20 Mar-20

Top-
79 75 74 71 79 77 78 79 78 81 75 74 72 65 70 73.7 72.7 73.2 76.0
100

101-
11 12 12 13 11 12 13 13 14 13 14 15 15 16 16 15.8 16.4 16.2 15.2
250

Above
11 13 14 16 10 11 9 8 8 6 10 11 14 18 14 10.5 10.9 10.5 8.7
250

Top 100 indicates top 100 companies by market capitalization,101-250 indicates next 150 companies by market cap and above 250 indicates companies post the 150 companies by market cap. Source : Edelweiss Research, Data as of
March 31, 2020 19
 Marketcap Divergence

Over the last 2 years, there has been a significant divergence in returns posted by Large and Smallcaps

Nifty 50 Vs Nifty Smallcap 250 Index

130
-8.3% Returns
120
Index Levels Re-based to 100

110
100
90
80
-30.6% Returns
70
60
50
Jul-18

Jul-19
Mar-18

Mar-19

Mar-20
Jan-18

Sep-18

Jan-19

Sep-19

Jan-20
Nov-18

Nov-19
May-18

May-19
Nifty 50 Nifty Smallcap 250
Source: NSE India. Data as of March 31, 2020. Data in % terms. Returns mentioned are absolute returns. Past performance may or may not sustain in future. 20
 Strategies aimed at
benefitting from Divergence

• ICICI Prudential Value Discovery Fund – A scheme that aims to invest in companies
available at reasonable valuations than their intrinsic value (Value Theme)

• ICICI Prudential India Opportunities Fund – A scheme that aims to invest in

fundamentally sound opportunities that may benefit from temporary crisis (in company,
sector, economy), any govt/regulatory changes or any global events
(Special Situations Theme)

• ICICI Prudential Smallcap Fund – Aim to benefit from Marketcap divergence through
this scheme as current smallcap valuations look reasonable
(Marketcap Divergence theme)
21
Managing Volatility while
investing in Equities…

22
 Volatility provides investment
opportunities
S&P BSE Sensex NBFC
Crisis Returns post Events
40,000
Post China Yuan Year 1Y Returns
35,000 European devaluation
Crisis
30,000 2008 to 2009 101%
Lehman
25,000 Crisis
2011 to 2012 28%
20,000 Corona
15,000 virus 2013 to 2014 43%
Taper
10,000
Tantrum Feb-16 to Nov-16* 16%
5,000
2018 to 2019 13%
2012
2007

2008

2009

2010

2011

2013

2014

2015

2016

2017

2018

2019

2020
Source: MFI. Data as of March 31 2020. Past performance may or may not sustain in future. * All returns mentioned are 1Y returns except for Feb-16 to Nov-16. For 2008 to 2009, Period considered is 20-Nov-08 to 20-Nov-09, For 2011 to 2012, Period considered is
20-Dec-11 to 20-Dec-12, For 2013 to 2014, Period considered is 31-Aug-13 to 31-Aug-14. For 2018 to 2019, Period considered is 30-Nov-18 to 31-Dec-19. Returns are in absolute terms except for the period 2018 to 2019 which are CAGR returns. MFI Explorer is a
23
tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html
 Schemes that aim to benefit from Volatility –
Our Asset Allocation Bouquet

65 - 80%
ICICI Prudential Equity
10 - 80% & Debt Fund
ICICI Prudential
Multi-Asset Fund 30 - 80%
ICICI Prudential Balanced
15 - 50% Advantage Fund
ICICI Prudential Equity
10 - 25% Savings Fund

ICICI Prudential Regular

Savings Fund* 0-100%
ICICI Prudential Asset Allocator Fund (FOF)*^
The asset allocation and investment strategy will be as per the Scheme Information Document, *These schemes will attract debt taxation. ^Investors may please note that they will be bearing the recurring expenses of this Scheme in addition
to the expenses of the underlying Schemes in which this Scheme makes investment. 24
 Journey of ICICI Prudential Balanced
Advantage Fund Equity Allocation
S&P BSE Sensex Levels vis-a-vis ICICI Prudential BAF Net Equity Exposure (%)
73.70 80
78

ICICI Prudential Balanced Advantage Fund

40000 38645
70
S&P BSE Sensex Levels

35000

Net Equity Exposure (%)

29468 60
30000

25000 50
24871
20000 40

15000 30 30
Jul-11

Jul-13

Jul-15

Jul-17

Jul-19
Nov-10

Nov-14
Mar-10

Mar-12

Nov-12

Mar-14

Mar-16

Nov-16

Mar-18

Nov-18

Mar-20
S&P BSE Sensex Net Equity Exposure %
Source: BSE India & MFI, Data as of March 31, 2020. The in-house valuation model starts from March 2010 onwards. ICICI Prudential BAF stands for ICICI Prudential Balanced Advantage Fund. The asset allocation and investment 25
strategy will be as per Scheme Information Document. MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html
 Equity Outlook

• With the recent sell-off, equity valuations have turned attractive, Business Cycle has bottomed out and there have
been record FII outflows

• Markets have stepped in an oversold zone and provides a good margin of safety for equity investments. Hence, we
recommend investing aggressively in equities

• Quality stocks still being expensive Vs. Value stocks, we recommend investing through Value Scheme and Special
Situation Scheme like ICICI Prudential Value Discovery Fund & ICICI Prudential India Opportunities Fund respectively

• Given further uncertainty regarding the spread of COVID-19, volatility is expected to prevail. We recommend
investing in asset allocation scheme – ICICI Prudential Balanced Advantage Fund to manage volatility

• We remain positive on the Smallcap space as valuations are reasonable and recommend investing in ICICI
Prudential Smallcap Fund
26
FII – Foreign Institutional Investors
OUR DEBT OUTLOOK
Positive on overall
Fixed Income Space

27
 Fixed Income Statistics

CPI Inflation – 6.6% GDP (%) – 4.7% for Q3 FY20

Fiscal Deficit (% of GDP) – Currency (USD/INR) – 75.46

3.8% FY20E

FIXED INCOME
STATISTICS
Crude Oil (USD/Barrel) – 23.67 10Y G-sec – 6.12%

Source: CRISIL Research; FY refers to fiscal year end. GDP – Gross Domestic Product data as of December 2019. CPI – Consumer Price Index. Brent Crude price is considered for crude oil. All data as of March 31, 2020 unless mentioned
otherwise. 28
 Fixed Income Overview

Growth slowdown and AA/A yields continue to

RBI cut repo rate by 75 bps to remain at elevated levels
4.4% & also reduced CRR to moderating food inflation may
provide some headroom to the since market participants
3% from 4% for a year resort to AAA corporate
RBI to keep interest rates low
bonds in this period of crisis

The measures taken was on RBI‟s introduction of Positive on the overall fixed
lines of Global Central Banks TLTROs is a positive for income space and believe
to increase liquidity to the corporate bond market up to 2-5 Y segment
mitigate the economic provides relatively better
impact of COVID-19 risk reward benefit

Source: RBI. RBI – Reserve Bank of India, TLTRO – Targetted Long Term Repo Operation
29
 Global Market Scenario

Risk sentiments impacted due to Dollar liquidity has tightened

COVID-19 spread outside China

Risk positions being reduced Risk aversion and flight towards

globally. Leverage positions are liquidity further accentuates the
unwinding due to margin calls & situation
forced hedging
30
 Global Central Bank Actions –
“Whatever it takes”
• Central banks globally have been pro-active in their response to counter economic
impact of COVID-19 spread
• “Whatever it takes” stance adopted by the Central Banks
• Few examples of slew of measures taken by the US Fed are :
 Policy rate cut by 150 bps taking the floor rate to zero
 $ 1 Trillion overnight repo and $1 trillion term repo
 $ 700 Billion asset purchase program including $200 Billion of MBS
 Forex Swap lines to all the major central banks to help funding dollar liquidity demand
 Commercial paper funding facility to buy Commercial paper
MBS – Mortgage Backed Security. Source: Morgan Stanley 31
 Where does India Stand?

• India‟s macroeconomic scenario remains positive

• There is a huge spread between policy rates of India and Global Central Banks

• There is low FPI ownership of debt compared to other countries

• Inflation expected to moderate significantly in the current environment

• Fiscal Deficit not a concern in the absence of private credit demand (No
crowding-out effect)
FPI – Foreign Portfolio Investors 32
 India‟s Macros Strong

Fiscal Year Ends FY13 FY14 FY15 FY16 FY17 FY18 FY19 Latest*

Inflation (CPI%) 10.2 9.5 5.9 4.9 3.8 3.6 3.4 6.6

Current Account (% of GDP) -4.8 -1.7 -1.3 -1.1 -0.6 -1.9 -2.4 -0.2

Fiscal Deficit (% of GDP) 4.9 4.5 4.1 3.9 3.5 3.5 3.4 3.3

Crude Oil (USD/barrel) 109 107 53 39 60 58 65 28

GDP Growth (%) 5.6 6.6 7.2 7.9 7.9 7.3 6.8 4.7

Forex Reserves (USD bn) 292 304 342 356 370 424 413 487

Currency (USD/INR) 54 60 63 66 65 65 70 75

Source: CRISIL Research, RBI, CCIL India, Data as on 19-Mar-2020; FY refers to fiscal year ends Apr - Mar; *Inflation (CPI) is for the month of Feb-20, Currency, Crude Oil prices as on 19 Mar 2020 , Forex Reserves
as on Mar-2020, CAD, GDP Growth and FD Estimates from Budget Documents for FY20
33
 Margin of Safety High for
Indian Fixed Income Instruments
India and US 10 Year Government Bond (%)
9 600
8
India & US Sovereign 10 Year (%)

7 550

Spread in Bps
500
5
4
450
3
2 400
1
0 350
Dec-16

Dec-17

Dec-18

Dec-19
Jun-17

Sep-17

Jun-18

Jun-19
Mar-18

Sep-18

Sep-19
Mar-17

Mar-19

Mar-20
Spread in Bps (%) India Sovereign 10 Year (%) US Sovereign Bond 10 Year (%)
Data as on 19-March-2020, Source : Morgan Stanley Research 34
 Credit growth continues to struggle

Fiscal deficit not a concern in the absence of private credit demand (No crowding-out effect)

120 Scheduled Commercial Banks (SCB) Credit Growth (%) 35%

30%
Non – Food Credit Growth (Rs. Tn)

100
25%

Credit Growth YoY

80
20%
60
15%
40
10%
20 5%
0 0%
Jul-11

Jul-13

Jul-15

Jul-17

Jul-19
Mar-10

Nov-10

Nov-12

Nov-14

Nov-16

Nov-18
Mar-12

Mar-14

Mar-16

Mar-18

Mar-20
Overall SCBs Non Food credit growth (Rs trn) yoy (%), rhs
Data as on 19-March-2020, Source : IDFC Research
35
 Liquidity high but risk capital low
Liquidity is high but risk capacity is low, demand for overnight schemes has increased, resulting in low overnight rates

Liquidity Overnight Rates

3
Liquidity in the system (INR Tn) TREPS Rate (%)
2 6
1 Surplus
5
0
4
-1
Deficit 3
-2
-3 2
-4 1
-5
0
-6

02-Mar-20
04-Mar-20
06-Mar-20
08-Mar-20
10-Mar-20
12-Mar-20
14-Mar-20
16-Mar-20
18-Mar-20
20-Mar-20
22-Mar-20
24-Mar-20
Jul-11

Jul-13

Jul-15

Jul-17

Jul-19
Nov-10

Nov-14

Nov-18
Mar-10

Mar-12
Nov-12

Mar-14

Mar-16
Nov-16

Mar-18

Mar-20
Data as on March 2020, Source : IDFC Research, TREPS – Tri- Party Repo 36
 Key RBI Measures

Improving Banking Supporting Financial Reducing debt

Liquidity Markets servicing burden

• Reduced policy rates by • TLTROs to be deployed in • Moratorium of 3 Months on

75 bps investment grade corporate term loan repayments
bonds, CPs and NCDs
• CRR reduction of 100 bps • Deferment of interest
• CRR reduction of 100 bps payments on working
• Increasing MSF limit by capital by 3 Months
100 bps • Reverse repo lower than
40bps than the policy rate

TLTRO – Targeted long-term repo operation, CP- Commercial Paper, NCD- Non Convertible Debentures, CRR – Cash Reserve Ratio, MSF – Marginal Standing facility RBI – Reserve Bank of India 37
 RBI Measures & Yield Curve Impact
RBI unleashed it‟s bazooka on 27-Mar-2020 and helped the corporate bond yield curve to break out of inversion

Corporate Bond Yield Curve Government Bond Yield Curve

Corporate Bond Yields G-Sec Yields
8.5% 6.5%
8.0% 6.0%
7.5% 5.5%
7.0%
5.0%
6.5%
4.5%
6.0%
5.5% 4.0%

6M

5 YearGSec
1 Year Gsec

3 Year Gsec

10 Year Gsec
6M

1 Year AAA

3 Year AAA

5 Year AAA

10 Year AAA

24-Mar-20 27-Mar-20 31-Mar-20 24-Mar-20 27-Mar-20 31-Mar-20

Data Source: CRISIL Research. Data as of March 31, 2020 38

 Corporate Bond Spread Still Attractive

Avg
9% 300 bps
Avg
243 bps
8%
Avg Despite the cooling off
Yields (%)

186 bps
7% of yields, the spread in
Avg 84 the corporate bond
bps spread over repo rate
6%
remain attractive and
5% hence may deliver
better risk-adjusted
returns
4%
1 Yr 3 Yr 5 Yr 10 Yr

Repo Gsec AAA AA A

Data Source: CRISIL, Data as on 31/03/2020
39
 Rate Transmission –
MCLR Rates
MCLR Rates fell post the rate cut. This is expected to help in better transmission

9.3 SBI Bank 1 Year - MCLR Rate (%)

9.1
8.9
8.7
8.5
8.3
8.1
7.9
7.7
7.5
Dec-16

Dec-17

Dec-18

Dec-19
Jun-16

Sep-16

Jun-17

Sep-17

Jun-18

Sep-18

Jun-19

Sep-19
Mar-17

Mar-18

Mar-19

Mar-20
Data Source: RBI, MCLR – Marginal Cost of funds based Lending Rate. Data as of March 31, 2020. The sector(s)/stock(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may 40
not have any future position in this sector(s)/stock(s).
 Rate Transmission –
Small Savings Scheme Rate Cut
Small Savings Schemes rate cut should help in the overall transmission of rate cuts

Name of Instrument Old Rate (%) New Rate (%)

1, 2 & 3 Year Time Deposit 6.9 5.5
5 Year Term Deposit 7.7 6.7
5 Year Recurring Deposit 7.2 5.8
Senior Citizen Savings Scheme 8.6 7.4
Monthly Income Account 7.6 6.6
National Savings Certificate 7.9 6.8
Public Provident Fund 7.9 7.1
Kisan Vikas Patrika 7.6 6.9
Sukanya Samriddhi Yojana 8.4 7.6
Data Source: www.indiapost.gov.in. Data as of March 31, 2020
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 Fixed Income Outlook

Keeping the Positive Macros and RBI‟s increased headroom for action
• We believe the fixed income market has become attractive despite continuing volatility
• Delving in the crisis, we believe India‟s macros like Current Account Deficit, Inflation etc. remain positive
• We expect RBI to continue its supportive stance making a case for investing in Fixed Income
• Inflation and Growth expected to come down providing further room for rate cuts
• On the fiscal side, we are comfortable with Government taking measures to combat COVID-19 impact due to absence of
private credit demand i.e. no crowding-out effect
• We continue to remain positive on the overall fixed income space and believe up to 5 Year segment provides relatively
better risk reward benefit
• We continue to remain positive on accrual schemes, as it provides opportunity to invest when the yields and spreads are
at elevated levels
42
FIXED INCOME SCHEME
RECOMMENDATIONS
 Fixed Income Recommendations

ICICI Prudential Floating Interest Fund

Cash Management Schemes
(which aim to benefit from better risk adjusted returns)
ICICI Prudential Ultra Short Term Fund

ICICI Prudential Medium Term Bond Fund

Accrual Schemes
(which aim to benefit from capturing yields at elevated levels)
ICICI Prudential Credit Risk Fund

Dynamic Duration Schemes

ICICI Prudential All Seasons Bond Fund
(which aim to benefit from volatility by actively managing duration)

ICICI Prudential Short Term Fund

Short/Medium Duration Schemes
ICICI Prudential Banking and PSU Debt Fund (which aim to benefit from mitigating interest rate volatility)

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 IPRUTOUCH

ICICI Prudential AMC‟s

very own mobile app
IPRUTOUCH is a suitable
way for investors to
know more about our
schemes and transact

45
 IPRUTOUCH for Investors

Features for Investors

As an Investor, you can get access to:

Your Portfolio Easily Initiate Statements

Transaction

Easy Access To Calculators Touch To Call

Our Presentations,
Videos etc 46
 Our Equity Schemes

Scheme Name Type of Scheme

ICICI Prudential Bluechip Fund An open ended equity scheme predominantly investing in large cap stocks

ICICI Prudential Large & Mid Cap Fund An open ended equity scheme investing in both large cap and mid cap stocks.

ICICI Prudential Midcap Fund An open ended equity scheme predominantly investing in mid cap stocks.

ICICI Prudential Smallcap Fund An open ended equity scheme predominantly investing in small cap stocks.

ICICI Prudential Value Discovery Fund An open ended equity scheme following a value investment strategy.

An open ended equity scheme investing across large cap, mid cap, small cap
ICICI Prudential Multicap Fund
stocks.

ICICI Prudential India Opportunities Fund An Open Ended Equity Scheme following Special Situations theme

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 Our Hybrid Schemes / Fund of Funds Scheme

Scheme Name Type of Scheme

ICICI Prudential Balanced Advantage Fund An open ended dynamic asset allocation fund

ICICI Prudential Regular Savings Fund An open ended hybrid scheme investing predominantly in debt instruments

ICICI Prudential Equity Savings Fund An open ended scheme investing in equity, arbitrage and debt.

An open ended hybrid scheme investing predominantly in equity and equity related
ICICI Prudential Equity & Debt Fund
instruments
An open ended scheme investing in Equity, Debt and Exchange Traded Commodity
ICICI Prudential Multi-Asset Fund Derivatives/units of Gold ETFs/units of REITs & InvITs/Preference shares

Scheme Name Type of Scheme

An open ended fund of funds scheme investing in equity oriented schemes, debt
ICICI Prudential Asset Allocator Fund (FoF)* oriented schemes and gold ETFs/schemes.

*Investors may please note that they will be bearing the recurring expenses of this Scheme in addition to the expenses of the underlying Schemes in which this Scheme makes investment.
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 Our Fixed Income Schemes

Scheme Name Type of Scheme

ICICI Prudential Ultra Short Term Fund
ICICI Prudential Short Term Fund
ICICI Prudential Medium Term Bond Fund
An open ended ultra-short term debt scheme investing in instruments such that the Macaulay
duration of the portfolio is between 3 months and 6 months.
An open ended short term debt scheme investing in instruments such that the Macaulay
duration of the portfolio is between 1 Year and 3 Years.
An open ended medium term debt scheme investing in instruments such that the Macaulay
duration of the portfolio is between 3 Years and 4 Years. The Macaulay duration of the portfolio
is 1 Year to 4 years under anticipated adverse situation.

ICICI Prudential Credit Risk Fund An open ended debt scheme predominantly investing in AA and below rated corporate bonds.
An open ended debt scheme predominantly investing in floating rate instruments (including
ICICI Prudential Floating Interest Fund fixed rate instruments converted to floating rate exposures using swaps/derivatives).

ICICI Prudential All Seasons Bond Fund
ICICI Prudential Savings Fund
ICICI Prudential Banking & PSU Debt Fund
An open ended dynamic debt scheme investing across duration.
An open ended low duration debt scheme investing in instruments such that the Macaulay
duration of the portfolio is between 6 months and 12 months
An open ended debt scheme predominantly investing in Debt instruments of banks, Public
Sector Undertakings, Public Financial Institutions and Municipal Bonds

ICICI Prudential Corporate Bond Fund An open ended debt scheme predominantly investing in AA+ and above rated corporate bonds.

ICICI Prudential Money Market Fund An open ended debt scheme investing in money market instruments

Macaulay duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price
49
 Riskometers

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

 Long term wealth creation

 An open ended scheme investing across asset classes.

*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

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 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 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 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

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 Riskometers

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 Credit Risk Fund is suitable for investors who are seeking*:
 Medium term savings
 A debt scheme that aims to generate income through investing predominantly in AA and below rated corporate bonds while
maintaining the optimum balance of yield, safety and liquidity

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

ICICI Prudential Medium Term Bond Fund is suitable for investors who are seeking*:

 Medium term savings

 A debt scheme that invests in debt and money market instruments with a view to maximize income while maintaining optimum balance
of yield, safety and liquidity

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

52
 Riskometers

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 Short Term Fund is suitable for investors who are seeking*:

 Short term income generation and capital appreciation solution

 A debt fund that aims to generate income by investing in a range of debt and money market instruments of various maturities.

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

ICICI Prudential All Seasons Bond Fund is suitable for investors who are seeking*:

 All duration savings

 A debt scheme that invests in debt and money market instruments with a view to maximize income while maintaining optimum balance
of yield, safety and liquidity

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
53
 Riskometers

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

 Short term savings

 An open ended debt scheme predominantly investing in floating rate instruments

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

ICICI Prudential Ultra Short Term Fund is suitable for investors who are seeking*:

 Short term regular income

 An open ended ultra-short term debt scheme investing in a range of debt and money market instruments

*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

54
 Riskometers

ICICI Prudential India Opportunities Fund (The scheme 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 advisors 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

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
55
 Riskometers

ICICI Prudential Savings Fund is suitable for investors who are seeking*:
 Short term savings
 An open ended low duration debt scheme that aims to maximize income by investing in debt and money market instruments while
maintaining optimum balance of yield, safety and liquidity

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

ICICI Prudential Banking & PSU Debt Fund is suitable for investors who are seeking*:

 Short term savings

 An open ended debt scheme predominantly investing in Debt instruments of banks, Public Sector Undertakings, Public Financial Institutions
and Municipal Bonds
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

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

 Short term savings

 An open ended debt scheme predominantly investing in highest rated corporate bonds

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

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 Riskometers

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

 Short term savings

 A money market scheme that seeks to provide reasonable returns, commensurate with low risk while providing a high level of liquidity

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

ICICI Prudential Asset Allocator Fund (FoF) (An open ended fund of funds scheme investing in equity oriented schemes,
debt oriented schemes and gold ETFs/ schemes) is suitable for investors who are seeking*:

• Long Term wealth creation

• An open ended fund of funds scheme investing in equity oriented schemes, debt oriented schemes and gold ETF/schemes.

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

*Investors may please note that they will be bearing the recurring expenses of this Scheme in addition to the expenses of the underlying Schemes in which this Scheme makes investment.

Macaulay duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price
57
 Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
All figures and other data given in this document are dated. 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. Past Performance may or may not be sustained in future.
Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is pub-
licly available, including Budget speech and information developed in-house. The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and
ICICI Prudential Mutual Fund may or may not have any future position in this stock(s). Some of the material used in the document may have been obtained from mem-
bers/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 informa-
tion. 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 other 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 Lim-
ited (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 or investment advice. The recipient alone shall be fully responsible/are
liable for any decision taken on this material.
58