March 2021

Table of Contents

Contents Pg. No.

Global Outlook 1

Indian Economy 5

Budget 2022 12

Debt Outlook 16

Equity Outlook 23

Gold Outlook 30

Why Asset Allocation is Important 32

MF Category-wise average return 34

Why Invest with Baroda Radiance 37

About us 41
Foreword

Baroda Radiance, a journey which started in 2017 has now

expanded its foot-print to cover ~20 cities with over ~19,000+
Clients. Your faith & support has been the key factor in our growth
and I would like to take this opportunity for thanking you for being
a Baroda Radiance customer.

Baroda Radiance is an offering targeted at the fast-growing affluent

segment in the country. It aims to provide a extensive, un-biased
and superior Wealth Management experience to our HNI & UHNI
Clients covering their needs of Banking, Investments, Life & Asset
protection among others.

Our Wealth team has consistently put sincere efforts to bring newer and best-in-class investment
options available to our clients. Since the start of our journey we now provide investment options
ranging from products as simple as Mutual fund to as unique as Portfolio management service,
Alternative Investment fund & Structured product among others. As Mutual fund still remain one of
the top investment avenue, we have empanelled ~21 Asset Management Companies with ~300+
Mutual Fund schemes. The Wealth business has a Central Team that analyses and brings to Clients the
latest relevant market and product information. The team also analyses and conducts periodic review
of investment options available in the market across various qualitative & quantitative parameters so
as to bring the best performing fund managers and schemes on table. Wealth Team also has highly
experienced Relationship Managers – your single point of contact for all your banking needs as well as
Investment counsellors for customized financial planning strategies.

In the fast changing world of finance and with the sheer amount of information available on various
platforms, it is difficult for the investor to be updated with the relevant information & maximize wealth
generation. With the idea of keeping our clients abreast of the latest & key development in the
financial markets so that they are in a position to have the best asset allocation as per the changing
market trends to maximize wealth generation, I’m proud to release the first edition of our monthly
newsletter that provides market insights on global and local key events, investment flows, investment
trends, and movements in various categories of investment so that our clients remain up the curve.
The current edition of the monthly newsletter – March 2021, covers the key events of Feb 2021 like
Budget, monetary policy, key events across the globe and their impact on both local and global
markets. We also present our Outlook, the likely trends and the investment options available.

It will be our continuous efforts to improve our offerings so that we meet your expectations.

Best Wishes,
Vikramaditya Singh Khichi
Executive Director
Executive Summary

As 2021 continues to erase memories of a horrid 2020, the Union

Budget 2021 was one of the major highlights in the month of
February. In what is known as a masterstroke, the Finance Minister
has completely eased all the fears of investors and tax payer alike
by not introducing any new taxes or “COVID cess”, unlike few
countries worldwide.

Indian equities continue to carry yesteryear's enthusiasm by

crossing milestones across bellwether indices. Indian markets are
set to see increased participation from domestic counterparts,
courtesy of increasing financial acumen.

On the debt front, RBI continues to hold an accommodative stance on the back of controlled
inflation. Wearing a growth mindset, it is set to timely intervene to make long-term borrowings
more handsome. Foreign exchange reserves reached to historic high of ~$590 Bn. With external
debt at $554 Bn, India has become net creditor, with reserves recording ~$120 Bn gain over last
year’s figures.

The FY22 budget is designed to propel India as the next global growth engine by loosening credit
discipline and implementing mass-appealing policies & Re-birthing the capex cycle. The govt. has
made room for successful implementation by dampening covid woes via quick vaccination drives.

Q3 earnings have been above consensus estimates and the momentum is expected to sustain, as we
are already seeing the industry upgrading future trajectory. Markets have rallied 80% since March
’20 lows, with gains being heavily polarized to large cap stocks. Heavy buying pushed Nifty 50 index’s
trailing P/E ratio to new highs. With valuations stretched, and ample flows, investors are looking
elsewhere to invest. The backdrop makes mid & small cap sector an exciting opportunity to look at
for investors over the next 5 years. The mid & small cap segments have given comforted returns over
the last 1 year. Govt MSME plans, supportive valuations (PE contraction from 2017 peaks), and Multi
cap MF regulation change, are set to bring in flows into these segments.

While the Finance Minister has hit the ball out of the park, more emphasis will be given how
government plans to execute these policies. Any spike in crude oil prices, inflation and interest rates
domestically and across the globe should be watched out for in the near term.

Happy Investing!
Virendra Somwanshi
Head – Wealth Management
Global Economy

1
Global Consumption

Retail Sales improve in China & US; Dips in Eurozone

Source: BOB Economic Research. Kindly note retail sales in China till Nov’20

Auto Sales Slips down for US & Eurozone

Source: BOB Economic Research

2
Global Manufacturing

Global manufacturing & Services steady in Feb 21

Source: BOB Economic Research

Manufacturing Activity (PMI) in US & Germany improved in Feb 21

Source: BOB Economic Research

3
 Currency & Crude

Global Currencies closed mix in Feb 21

Source: BOB Economic Research

Bitcoin Index rose the most followed by crude prices in Feb 21, amongst major asset class

Source: BOB Economic Research

4
Indian Economy

5
 Growth Expected to pick up

Real GDP Growth

(%YoY) 2019 2020CE 2021CE 2022CE

India 4.9 -6.9 7.3 7.1

US 2.2 -3.6 3.8 3

China 6.1 -2 8.2 5.5

Japan 0.7 -5.3 2.6 1.8

Euro 1.3 -7.4 4.6 3.6

Germany 0.6 -5.6 4 3.2

France 1.5 -9.3 6.1 3.7

Italy 0.3 -9 5.4 3.1

Spain 2 -11.6 6 4.7

UK 1.3 -11.2 5.4 4.5

Russia 1.4 -3.9 3 2.4

Brazil 1.1 -4.7 3.5 2.5

World 3 -3.9 5.2 4

Source: Bloomberg, Axis Securities

6
Consumer spending improving

Non-Oil-Non-Gold Imports Stable

Source: BOB Economic Research

Electronic Import accelerate

Source: BOB Economic Research

7
PMI indicates sustained recovery

Manufacturing PMI Consistently above long term average of 53.6

70.0
56.8 58.9 57.7 57.5
60.0 54.5 56.3 56.4
51.8 52.0
50.0 47.2 46.0

40.0
30.8
30.0 27.4

20.0

10.0

0.0

Source: Bloomberg

Services PMI shows momentum continues into Q4

70

60 57.5
54.10 53.70 52.30 52.80 55.30
49.30 49.80
50
41.80
40 33.70 34.20
30

20
12.60
10 5.40

Source: BOB Economic Research

8
 GST collection

GST Numbers indicating Sharp Recovery (In Rs Cr)

1,40,000

1,20,000 1,13,143

1,00,000

80,000

60,000

40,000

20,000

Source: Bloomberg

The Goods and Services Tax (GST) collection in February 2021 came at around ₹1.13 lakh crore,
which exceeded the ₹1 lakh crore benchmark for the fifth consecutive month, indicating sustained
business recovery.

9
Macro-Economic Dashboard

Feb- Mar- Apr- May- Aug- Sep- Oct- Nov- Dec- Feb-
Jun-20 Jul-20 Jan-21
20 20 20 20 20 20 20 20 20 21
Banking
Currency in circulation (% YoY) 11.5 14.5 15.7 18.4 20.6 22.2 23.2 22.7 20.3 22.2 22.2 21.4 20.3
Bank Non-food credit growth
6.9 6.1 6.7 5.5 5.4 6.1 5.5 5.1 5.6 5.6 6.2 5.9 6.6
(%YoY)
Personal Credit (%YoY) 17.0 15.0 12.1 10.6 10.5 11.2 10.6 9.2 9.3 10.0 9.5 9.1
Credit to industry(%YoY) 0.7 0.7 1.7 1.7 2.2 0.8 0.5 0.0 -1.7 -0.7 -1.2 -1.3
Credit to sevices (%YoY) 6.9 7.4 11.2 11.2 10.7 10.1 8.6 9.1 9.5 8.8 8.8 8.4
Deposit Growth (%YoY) 10.2 7.9 9.9 9.7 11.1 12.1 10.9 10.5 10.1 9.7 10.8 11.1 11.8
Credit to deposit ratio % 75.8 76.4 74.9 73.3 73.6 72.6 72.1 72.0 72.0 72.2 71.1 72.3 72.4
10 year G-sec yields (%) 6.4 6.1 6.1 5.8 5.9 5.8 6.1 6.0 5.9 5.9 5.9 5.9
Weighatged avergae lending
10.1 10.0 9.9 9.9 9.7 9.7 9.9 9.6 9.5 9.5 9.4 9.3
rate of banks (%)
Weighated average deposit rate
6.5 6.4 6.1 6.1 6.0 6.0 5.9 5.7 5.7 5.6 5.6 5.5
of banks (%)
Median MCLR (%) 8.2 8.2 8.0 7.9 7.6 7.6 7.5 7.4 7.4 7.3 7.3 7.3 7.3
Commercial Paper issuance
-23.2 -28.7 -23.1 -22.9 -22.3 -26.4 -25.1 -21.2 -17.8 -18.6 -12.0 -2.7
(%YoY)
Industry
Cement Production (%YoY) 7.8 25.1 -85.2 -21.4 -6.8 -13.4 -14.6 -3.5 3.1 -7.3 -7.2 -5.9
Steel Production (%YoY) 2.9 -24.1 -82.8 -40.4 -25.4 -8.2 -1.7 2.8 4.0 -0.5 2.6 2.6
IIP (%YoY) 4.5 -16.7 -57.3 -33.4 -15.8 -10.8 -7.4 0.5 4.2 -2.1 1.0
Mining (%YoY) 10.0 0.0 -26.9 -20.4 -19.6 -12.8 -9.0 1.4 -1.3 -8.7 -4.8
Manufacturing (%YoY) 3.2 -20.6 -66.6 -37.8 -16.0 -11.6 -7.9 -0.2 4.1 -2.0 1.6
Electricity (%YoY) 8.1 -6.8 -22.9 -14.9 -10.0 -2.5 -1.8 4.9 11.2 3.5 5.1
Capital Goods Production
-9.7 -38.3 -92.7 -65.9 -37.4 -22.8 -14.8 -1.3 3.5 -7.4 0.6
(%YoY)
Consumer durable Production
-6.4 -36.5 -95.7 -70.3 -34.3 -23.0 -9.6 3.4 18.0 -3.4 4.9
(%YoY)
Consumer non-durable
0.0 -20.2 -48.1 -9.7 14.3 1.8 -2.3 2.4 7.1 -1.3 2.0
Production (%YoY)
PMI Manufacturing Index 54.5 51.8 27.4 30.8 47.2 46.0 52.0 56.8 58.9 56.3 56.4 57.7 57.5
PMI Services Index 57.5 49.3 5.4 12.6 33.7 34.2 41.8 49.8 54.1 53.7 52.3 52.8 57.3
PMI Composite Index 57.6 50.6 7.2 14.8 37.8 37.2 46.0 54.5 58.0 56.3 54.9 55.8
Source: BNP Paribas AMC

• Bank Credit growth was up at 6.6% YoY vs 5.9% previously. Banks are still not seeing broad-based credit demand
for recovery

• Steel Production grew by 2.6% after contracting over Nov-dec 2020. Higher automotive sales, robust demand from
rural segment on the back of good monsoon and government spending on infrastructure has led to faster ramp up
in production levels.

• Cement output registered a de-growth of 5.9% in January 2021. Slow pick up in Government projects is the key
reason for the fall

10
Macro-Economic Dashboard

Feb- Mar- Apr- May- Aug- Sep- Oct- Nov- Dec- Feb-
Jun-20 Jul-20 Jan-21
20 20 20 20 20 20 20 20 20 21
Consumer
Rural Wage (%YoY) 4.5 4.0 5.7 5.7 7.5 6.6 5.4 5.1 6.0
Urban Unemployment % 8.7 9.4 25.0 25.8 12.0 9.4 9.8 8.5 7.2 7.1 8.8 8.1 7.0
Rural Unemployment % 7.3 8.4 22.9 22.5 10.5 6.5 7.7 5.9 6.9 5.0 9.2 5.8 6.9
Motorvehicle sales (%YoY) -19.1 -45.0 -98.0 -84.8 -43.0 -18.6 -1.3 7.2 10.5 7.2 0.7 0.4
Passenger Vehicles (%YoY) -7.6 -51.0 -100.0 -85.2 -49.6 -3.9 14.2 26.5 14.2 12.7 13.6 11.1
Commercial Vehicles
-32.9 -88.1 -97.8 -90.0 -80.0 -50.0 -18.0 -3.0 -3.6 1.0 0.8 -10.7
(%YoY)
Two wheeler (%YoY) -19.8 -19.8 -96.2 -83.8 -18.6 -15.2 3.0 11.6 16.9 13.4 7.4 6.6
Tractor Sales 21.3 -49.9 -79.4 4.0 22.4 38.5 74.7 28.3 7.7 51.3 43.1 46.7
Petrol Consumption (%YoY) 11.3 -18.4 -60.4 -35.3 -13.5 -10.4 -7.5 3.3 4.5 5.2 9.4 6.3
Air Traffic (%YoY) 9.0 -32.8 -100.0 -97.7 -83.3 -82.2 -75.9 -65.7 -57.1 -50.8 -43.6 -39.3
Freight
Major Port Traffic (%YoY) 4.5 -5.1 -21.1 -23.3 -14.5 -13.2 -10.4 -1.9 -1.2 2.0 4.4 4.0
Rail freight traffic (%YoY) 6.5 -13.9 -35.3 -21.3 -7.7 -4.6 3.9 15.5 15.4 9.0 8.7 8.7
E-way bills generated (%YoY) 14.3 -28.0 -83.6 -53.0 -12.7 -7.3 -3.5 9.6 21.4 8.1 15.9 10.5
Foreign Trade
Export Growth (%YoY) 2.9 -34.8 -60.3 -36.2 -12.4 -10.2 -12.7 6.0 -5.1 -8.6 0.1 6.2
Import Growth (%YoY) 2.5 -28.7 -58.6 -52.4 -47.6 -28.3 -26.0 -19.8 -11.5 -13.3 7.6 2.0
Non-oil, Non-gold import
-1.0 -30.5 -53.7 -34.5 -42.0 -30.4 -29.7 -12.6 -4.9 -1.7 6.0 7.5
(%YoY)
Capital goods imports (% YoY) 8.3 -36.3 -55.4 -33.9 -42.6 -30.1 -41.3 -34.3 -14.9 -16.3 2.1 -7.4
Fiscal
Central Government
5.2 75.0 20.6 -20.7 45.7 5.6 -15.2 -26.0 9.5 48.3 29.1 49.5
Expenditure (% YoY)
Indirect Tax (% YoY) 13.1 3.8 -74.9 -42.8 -3.2 14.1 -1.6 32.0 49.1 23.9 51.8 34.8
Inflation
CPI (% YoY) 6.6 5.9 7.2 6.3 6.2 6.7 6.7 7.3 7.6 6.9 4.6 4.1
Core CPI (% YoY) 4.1 4.1 4.8 5.0 5.3 5.7 5.8 5.7 5.8 5.8 5.7 5.7
WPI (% YoY) 2.3 0.4 -1.6 -3.4 -1.8 -0.6 0.2 1.3 1.5 1.6 1.2 2.0
Source: BNP Paribas AMC

• The rural unemployment rate inched up to 7%, up from 5.8% in the previous month whereas urban
unemployment rate saw some improvement

• Tractor sales growth are indicative of sustained rural demand. Passenger vehicles and two wheeler saw some
demand moderation

• After remaining flat YoY till October, Central Govt Expenditure has shown sharp jump in the last couple of months

11
Budget 2022

12
 Budget Highlights

Direct Tax collections to bounce back Indirect Tax Collection to see a revival in FY22
25.0% 22.4% 35.0%
17.9% 30.0%
20.0% 14.7% 30.0%
13.4% 12.7%
15.0%
6.7% 7.7% 25.0% 21.4%
10.0%
5.0% 20.0%
0.0% 15.0% 11.1% 11.4%
-5.0%
10.0% 5.8%
-10.0% 3.6%
5.0% 2.7% 1.9%
-15.0%
-20.0% -13.8% 0.0%

Revenue Receipts ( Rs Cr) Revenue Expenditure ( Rs Cr)

25,00,000 35,00,000
30,11,142 29,29,000
20,20,926 30,00,000
20,00,000 26,30,145
17,88,424
16,84,059 25,00,000 23,50,604
15,55,153
15,00,000 20,00,000

10,00,000 15,00,000

10,00,000
5,00,000
5,00,000

- -
FY20 FY21BE FY21RE FY22BE FY20 FY21BE FY21RE FY22BE

Capital Receipts ( Rs Cr) Capital Expenditure ( Rs Cr)

20,00,000 18,95,152 6,00,000 5,54,236

18,00,000 16,94,812
5,00,000 4,39,163
16,00,000
4,12,085
14,00,000 4,00,000
12,00,000 3,35,726
10,02,271 10,21,304
10,00,000 3,00,000
8,00,000
2,00,000
6,00,000
4,00,000 1,00,000
2,00,000
- 0
FY20 FY21BE FY21RE FY22BE FY20 FY21BE FY21RE FY22BE

Source: BOB Economics Research

13
Budget Highlights

Capex Spending to get a big push

35.0%
28.6%
30.0% 26.2%
25.0% 22.7%
20.0% 16.9% 18.1%

15.0% 12.5%
9.1%
10.0%
5.0%
0.0%
-5.0%
-10.0% -7.5%
FY16 FY17 FY18 FY19 FY20 FY21BE FY21RE FY22BE

Fiscal consolidation to begin in FY22

10.0% 9.5%
9.0%
8.0%
6.8%
7.0%
6.0%
4.6%
5.0% 3.9%
4.0% 3.5% 3.5% 3.4% 3.5%
3.0%
2.0%
1.0%
0.0%
FY16 FY17 FY18 FY19 FY20 FY21BE FY21RE FY22BE

Divestment Proceeds to recover in FY22 (Rs Bn)

2500
2100
2000 1750

1500
1000 947
1000

421 477 503

500 320

0
FY16 FY17 FY18 FY19 FY20 FY21BE FY21RE FY22BE

Source: BOB Economics Research

14
Budget – Key announcement

❖ Allocate ~Rs 5.54 Lakh Cr in FY22 Vs. Rs 4.39 Lakh Cr in FY 21 for Capex

❖ Rs 20,000 Crs to be allocated towards Bank Recapitalization

❖ Set up bad bank under Asset Reconstruction Company, Asset Management Company &
Alternative Investment Funds

❖ Privatization of 2 PSU Banks and 1 general insurer along with IPO of LIC

❖ FY22 Disinvestment target at Rs. 1.75 Lakh Crs

❖ FDI Hiked to 74% from Existing 49%

❖ An Auto scrappage policy will be introduced for Commercial/Passenger Vehicles but to

implemented only for old age vehicles and on voluntary basis

❖ Enhanced Outlay of Rs. 1.18 Lakh Crs for Road Transport & Highways

❖ Set up Development Financial Institution (DFI) with a leading portfolio of ~Rs 5 Tn. over 3 years

❖ Rs 1.10 Lakh Crs for Capex of Railways

❖ Completion of ~11,000 Kms of roads by March 2022

❖ Reduction in Import duty on Gold from 12.5% to 10%

❖ To incentivize affordable housing, tax benefits have been extended for another year

❖ Privatization of 2 Public Sector Banks & 1 Insurance Company

❖ 100 cities to be added to city gas distribution network

15
Debt Outlook

16
Global Central Banks Interest rate

Current Inflation Current Policy CY20(Change in CY21(Change in Direction of Policy

Country
rate (%) Rate (%) bps) bps) rate in CY20

India 4.1 4.0% -115 0 -

Brazil 4.6 2.0 -250 0 -

Russia 5.2 4.3 -200 0 -

Philiphines 4.2 2.0 -200 0 -

US 1.4 0.3% -150 0 -

Indonesia 1.4 3.5 -125 -25 Down

Malaysia -0.2 1.8% -125 0 -

Mexico 3.5 4.0 -300 -25 Down

Korea 0.6 0.5 -75 0 -

Thailand -0.3 0.5 -75 0 -

UK 0.7 0.1 -65 0 -

Australia 0.9 0.1% -65 0 -

Germany 1.3 0 0 0 -

Japan -0.6 -0.1 0 0 -

China -0.3 4.4 0 0 -

Turkey 15.0 17.0 500 0 -

Source: BOB Economics Research

17
Bond Yields have risen across the Globe

YTD change in 10Y G-sec bond yields (bps)

Russia 79

Indonesia 70

Mexico 53

Thailand 52

Malaysia 42

India 37

United States 34

South Africa 28

South Korea 24

Germany 22

China 11

0 10 20 30 40 50 60 70 80 90
Data is as on 02 March 2021. Source: UTI AMC, Edelweiss Research, Bloomberg

18
 Monetary Policy – Key Highlights

RBI kept Key Policy rates unchanged and continued with accommodative stance

GDP Growth expected at 10.5% in FY22. Inflation expected to fall to

5.2% Q4FY21

RBI will also allow retail investors to participate in the

government securities market – both primary and secondary –
directly through the Reserve Bank (‘Retail Direct’) making India
one of the few countries to offer this facility.

CRR to be gradually restored in 2 phases from 3% to 3.5% of

NDTL from 27th March 2021 & to 4% from 22nd May 2021 to
absorb excess liquidity

RBI extended relaxation under MSF by 6-months to Sep’21.

Under this, banks can dip into SLR by up to an additional 1% of
NDTL-cumulatively up to 3% of NDTL. This is expected to unlock
Rs 1.53tn liquidity for banks.

The on tap TLTRO scheme will now be extended to NBFCs in order to

provide incremental lending.

Enhanced HTM limit of 22% of NDTL extended to 31 Mar 2023 to include

securities acquired between 1 Apr 2021 and 31 Mar 2022. HTM limits will be
restored to 19.5% in a phased manner starting from Jun’23.

Source: BOB Economics Research

19
Yield Curve & Inflation

10 Year G-Sec yield Movement (%)

6.6
6.4 6.209
6.2
6
5.8
5.6
5.4 Yields on up move post Govt’s increased borrowing program
5.2
Apr 23, 2020

May 15, 2020

Mar 27, 2020

May 05, 2020

May 27, 2020

Apr 13, 2020
Feb 03, 2020
Feb 12, 2020
Feb 25, 2020
Mar 05, 2020
Mar 17, 2020

Aug 04, 2020

Aug 13, 2020
Aug 24, 2020
Sep 02, 2020
Sep 11, 2020
Sep 22, 2020

Dec 04, 2020

Dec 15, 2020
Dec 24, 2020
Jan 05, 2021
Jan 14, 2021
Jan 25, 2021
Feb 04, 2021
Feb 15, 2021
Feb 25, 2021
Jul 06, 2020
Jul 15, 2020
Jul 24, 2020

Oct 01, 2020

Oct 13, 2020
Oct 22, 2020
Jun 05, 2020
Jun 16, 2020
Jun 25, 2020

Nov 03, 2020

Nov 12, 2020
Nov 24, 2020
Yield Curve Graph
8.0% 6.8% 6.6% 7.1% 6.9%
6.6% 6.5%
6.1% 6.2%
6.0% 5.2% 6.0%
4.7% 6.5%
6.1% 5.9%
3.4% 5.5%
4.0%
4.5%
3.5%
2.0%

0.0%
6m 2Y 5Y 8Y 10Y 40Y

Feb-21 Jan-21 Feb-20

India CPI & WPI Inflation

10
7.59 7.22 7.27 7.61
8 6.58 6.73 6.69 6.93
5.84 6.27 6.23
6 4.59 4.06
3.52
4 2.26
1.55 2.03
1.32 1.31 1.22
2 0.42 0.41
0
-2 -0.25
-1.57 -1.81
-4
-3.37
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21

CPI (%) WPI (%)

Source: BOB Economics Research

20
Debt MF Netflows

Debt MF Flows (In Rs Cr.)

1,50,000 1,10,467
91,392
1,00,000 63,666
43,432 44,984
50,000 13,863
2,862 1,735
-
(50,000) (3,908)
(27,940) (33,409)
(1,00,000) (51,962)

(1,50,000)
(2,00,000)
(1,94,915)
(2,50,000)
Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

Category-wise Net Inflow/Outflow (In Rs Cr)

20000 17302
15000
10000
5000 2844

0
-180 -830
-5000 -2945 -1659
-10000 -6752
-10286
-15000
Liquid Fund Ultra Short Low Duration Short Medium Corporate Credit Risk Banking and
Duration Fund Fund Duration Fund Duration Fund Bond Fund Fund PSU Fund

MF Deployment of Debt Funds

13% 12% 9% 8% 9% 8% 8% 8% 8%
13% 14% 14% 14% 14% 15% 15% 15% 16%

25% 24% 24% 24% 24% 23% 22% 22% 22%

8% 8% 8% 8% 9% 8% 10% 14% 11%
12% 13% 15% 14% 13% 13% 13% 10% 10%
18% 18% 16% 17% 16% 16% 18%
20% 18%
9% 10% 13% 13% 14% 16% 16% 15% 14%
MAY-20 JUN-20 JUL-20 AUG-20 SEP-20 OCT-20 NOV-20 DEC-20 JAN-21

G-Sec Commercial Paper Tbills CBLO Corporate Debt PSU Bonds/Debt Others

Source: BOB Economics Research

21
Debt Outlook

❖ Government bonds in US saw a sharp sell-off in late February. Having risen steadily on
expectations of substantial US fiscal stimulus, government yields lurched higher late in the
month, as a US Treasury bond auction saw muted demand. The US 10-year Treasury yield rose
36 basis points (bps) to 1.43. The UK 10-year yield increased by 49bps to 0.82%, reflecting
optimism around the UK’s fast vaccine roll-out and plans for easing lockdown

❖ The Union Budget was more in support of Growth even at the cost of higher borrowing. Govt.’s
increased focus on infrastructure and no tax rate hikes cheered market sentiments. The Budget
is aimed at getting the country back on the growth track and out of the COVID shadow, rather
than worrying about near-term fiscal position

❖ The deviation in FY 21 fiscal deficit entails additional supply of Rs. 80,000 Cr of market
borrowing. In addition, the FY 22 fiscal deficit estimates point to significant borrowing
expectations. The gross borrowing target of FY 22 is pegged at Rs 12 lakh crore

❖ The 10 year G-Sec curve has already seen a sell-off since the budget as markets factored
budget announcements and the proposed higher borrowing calendar for FY22. The 10-year G-
Sec yield spiked to 6.127% from 5.949% on Feb 1st as the government announced its higher
borrowing program in the budget

❖ CPI inflation eased to a 16-month low of 4.1% in Jan’21 driven by sharp drop in food inflation
to 1.9% in Jan’21 (3.4% in Dec’20). Core inflation remained sticky at 5.7% in Jan’21

❖ WPI accelerated to 2% in Jan’21 from 1.2% in Dec’20 led by manufactured inflation at 5.1%
(4.2% in Dec’20). Metals, textiles and rubber rose the most. With oil prices continuing to inch
up, even fuel and power index declined at a slower pace of -4.8% (-8.7% in Dec’20). However,
food inflation contracted by 0.3% in Jan’21 led by decline seen in vegetable, cereal and protein
items

❖ RBI expects inflation to fall to 5.2% in Q4FY21 from 5.8% earlier, inflation in H1FY22 is
estimated to be higher at 5-5.2% from 4.6-5.2% earlier. The upward revision in H1 is led by
entrenched core inflation, rising commodity prices and normalisation of economic activity. RBI
expects inflation to come down to 4.3% in Q3 led by a favourable base

❖ Considering the current economic scenario, sticking with debt funds with high credit quality &
lower mod. Duration may provide comfort

22
Equity Outlook

23
India among Top gainers globally in February

Nifty 50 6.60%

Nikkei 4.70%

FTSE 3.96%

DAX India 3.45%

Dow Jones 3.17%

S&P 500 2.61%

HangSeng 2.46%

MSCI World Index 2.45%

Strait Times 1.60%

Nasdaq 0.93%

SSE Composite Index 0.75%

MSCI EM Index 0.73%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%

Source: Refinitiv

24
 Strong Q3 results for India

Strong Q3 results Highest Ever Quarterly Profit by India Inc.

Nifty 50 Quarter Reported PAT (In Rs Cr.)

Actual Expected
Companies

Dec-19 1,22,235
Sales -1% -2%
Mar-20 53,406

EBITDA 15% 10%

June-20 32,400

Sept-20 1,76,786
PBT 23% 9%

Dec-20 2,09,795

PAT 22% 7%
TTM 4,72,387

Source: MOFSL Source: MOFSL

Brokerage houses revise NIFTY EPS Growth by 4%-6% on the back of strong Q3 Numbers

800 730
700 675

600
482 482 466 505
500
404 387 378 416
400 355
320 345
284
300 226 244 257
200 164 177

100
0

Source: Axis Securities

25
Sectoral Returns

Market cap-wise returns – Feb 2021 Market cap-wise returns – 1 Year

NIFTY SMLCAP 100 12.2% NIFTY SMLCAP 100 41.8%

NIFTY MIDCAP 100 11.3% NIFTY MIDCAP 100 38.6%

Nifty 50 6.6% Nifty 50 29.7%

0.0% 5.0% 10.0% 15.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Source: NSE Source: NSE

Sectoral Returns – Feb 2021

30.0%
24.2%
25.0%
20.0% 16.3%
14.4% 13.9%
15.0% 11.9%
10.0%
3.6%
5.0%
0.0%
-5.0% -1.4% -2.0% -2.0%
Nifty Metal Nifty Energy Nifty Realty Nifty Bank Nifty Infra Nifty Auto Nifty IT Nifty Pharma Nifty FMCG

Source: NSE, BOBCAPS Research

Sector returns – 1 Year

80.0%
70.2%
70.0%
59.7% 57.4%
60.0%
47.3%
50.0%
37.7% 36.5%
40.0%
30.0% 24.7%
19.4%
20.0%
10.7%
10.0%
0.0%
Nifty Metal Nifty IT Nifty Pharma Nifty Auto Nifty Energy Nifty Infra Nifty Realty Nifty Bank Nifty FMCG

Source: NSE, BOBCAPS Research

26
Equity Flows

FII and DII Activity in Equity Cash Market(In Rs Cr.)

80,000
60,000 42,044
40,000
20,000
0
-20,000
-16,358
-40,000
-60,000
-80,000
Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

FII DII

Source: Bloomberg

Outflow continues in Equity MF’s on the back of profit booking due to Rich valuations

15,000
10,796 11,723
10,000
6,213 5,257
5,000
241
-
(734)
(5,000) (2,480) (2,725)
(4,000) (4,534)
(10,000)
(10,147) (9,253)
(15,000) (12,917)
Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

Source: AMFI

SIP Flows (In Rs Cr.)

9,000
8,641
8,513
8376 8,418
8,500
8,123
8,023
7,917 7,831
8,000 7,792 7,788 7,800
7,528
7,500 7,302

7,000

6,500
Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

Source: AMFI

27
 Valuations

Market Cap-to-GDP Ratio above long term average of 75% (%)

120
103 106
100 95
88
82 83 81 79 83 79
80 71 69
64 66
52 55 56
60

40

20

0
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21E

Source: Kotak AMC, MOFSL

Nifty P/E (x) – 1 Year Forward Nifty P/B – 1 Year - Forward

Source: Kotak AMC, MOFSL

Trailing Valuation
Index Ratio Month end Value 5 Year Avg.
Trailing P/E 39.6 25.5
Nifty 50
Trailing P/B 4.1 3.4
Trailing P/E 39.5 26.3
Nifty 100
Trailing P/B 4.2 3.4
Trailing P/E 89.1 49.7
Nifty Midcap 100
Trailing P/B 3.0 2.7
Trailing P/E 38.1 97.8
Nifty Small Cap 100
Trailing P/B 3.4 1.7
Source: NSE

28
Equity Outlook

❖ Global equities gained in February, with value pockets of the market faring well. US equities
survived a bout of turbulence to post gains in February. Fears that a faster than expected
economic recovery would fasten policy tightening amid rising inflation, rattled Equity & Bond
markets. As the fears gradually faded, markets recovered. Sectors that are most sensitive to the
economic cycle – such as energy, financials, and industrials - performed strongly. Defensive
sectors, such as utilities and consumer staples, lagged

❖ Emerging market (EM) equities recorded small gains. Early progress was driven by vaccine
optimism and expectations for US fiscal stimulus, but were partly offset by concerns over
stronger growth which can lead to higher inflation. A stronger dollar also acted as a headwind
for EM

❖ Markets post budget saw a spectacular rally and touched new highs as budget improved market
sentiment dramatically. Notably, the S&P BSE 30 touched the 50,000 mark for the first time
during the month

❖ The Union Budget was more in support of Growth even at the cost of higher borrowing

❖ Govt.’s increased focus on infrastructure and no tax rate hikes cheered market sentiments. The
Budget is aimed at getting the country back on the growth track and out of the COVID shadow,
rather than worrying about near-term fiscal position

❖ Lower rates by RBI have started to show its impact on interest sensitive sectors like housing
where demand up until now had been beaten down. With chances of vaccination improving in
the near term, beaten down & cyclical sectors like travel, hospitality & consumer durables have
seen a revival in the markets

❖ Q3 earnings have been above consensus estimates. Cyclical sectors and companies who have
commanding market share in their respective sectors have seen a good earnings quarter

❖ PV sales continued their upward trajectory in January with healthy YoY growth. Domestic 2W
sales for HMCL and BJAUT remained under pressure as inventories in the system are now on
the higher side, but 2W exports gained momentum. MHCV volumes are improving from
previous months but still slipped 5% YoY for AL. Tractor sales were healthy for both MM and
ESC (+50% YoY each)

❖ Overall, the Indian markets continued its strong upward momentum touching record highs on
the back of Strong Q3 earnings, pro-growth budget & accommodative monetary policy.
However, recent spike in cases across the country may increase the possibility of second
lockdown which may dampen sentiments

❖ Any spike in crude oil prices, inflation and interest rates domestically and across the globe
should be watched out for

29
Gold Outlook

30
Gold Outlook

60,000

50,000

₹45,954
40,000

30,000

20,000

10,000

0
01-Jan-15 01-Jan-16 01-Jan-17 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21

Source: MCX

Gold has been on a rise for the last few years and the rally saw an exuberance last year owing to
the pandemic, which forced central banks and governments to undertake unprecedented monetary
and fiscal measures to support their economies. Gold surged to a record high level of near ~₹56000
in August 2020 and is currently witnessing a short term correction or profit booking. The recent
sell-off has been mainly due to profit-taking amid hopes of a COVID -19 vaccine but with the huge
monetary and fiscal expansion, concerns about inflation, currency debasement may support gold
prices especially since escalating virus situation is proving to be a challenge for the global economic
recovery. If vaccination progresses smoothly, it may dampen gold’s safe-haven appeal and investors
may rather choose to invest in riskier assets like equities and economically sensitive
commodities. Also, lower interest rates worldwide and US Dollar’s downtrend might prove positive
for the yellow metal. The overall outlook for gold remains bullish however; it may not repeat the
2020 performance unless the virus situation takes a turn for worse.

31
Why Asset Allocation is Important

32
 CY Return as per Asset Class
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Gold Gold Mid-Cap International Small-Cap Credit Risk G-Sec Small Cap Gold International
24% 29% 38.52% 29.60% 62.91% 10% 15% 59.64% 8% 27.31%
Large-Cap Real Estate Small-Cap Large-Cap Mid-Cap Corporate Bond Corporate Bond Mid-cap G-sec Gold
17.43% 17.72% 36.45% 8.98% 54.69% 9% 12% 48.13% 8% 18%
Small-Cap Credit Risk Large-Cap Real Estate Large-Cap Mid-Cap Credit Risk Large-cap Large-cap Large-cap
16.69% 8% 25.70% 7.46% 29.89% 7.43% 12% 27.91% 5.91% 12.65%
Mid-Cap corporate Bond Real Estate Credit Risk G-Sec G-Sec Gold International Corporate Bond G-sec
16.15% 8% 17.07% 7% 17% 7% 11% 19.42% 5% 12%
International T-bill International Corporate Bond Credit Risk Small-Cap Real Estate Credit Risk Credit Risk Corporate Bond
12.78% 4.61% 13.40% 6% 14% 6.10% 9.63% 8% 5% 10%
Corporate Bond G-Sec G-Sec T-bill Corporate Bond T-bill International Corporate Bond Real Estate Credit Risk
7% 4% 13% 5.50% 13% 5.38% 9.54% 7% 4.83% 8%
Credit Risk International Gold G-Sec Real Estate Real Estate Mid-Cap Real Estate T-Bill T-Bill
6% 0.50% 12% 2% 11.91% 4.52% 7.97% 6.40% 4.08% 4.20%
Real Estate Large-Cap Credit Risk Mid-Cap International International T-bill Gold International Real Estate
5.50% -24.64% 11% -5.73% 11.39% -0.73% 4.73% 6% -6.24% 2.60%
G-Sec Mid-Cap Corporate Bond Small-Cap T-bill Large-Cap Large-Cap T-Bill Mid-cap Mid-cap
4% -34.19% 11% -9.67% 5.72% -5.03% 1.95% 4.03% -13.38% -4.01%
T-Bill Small-Cap T-Bill Gold Gold Gold Small-Cap G-sec Small-cap Small-cap
3% -36.41% 5.59% -18% 2% -8% 1.77% 2% -23.53% -8.98%
Source: Livemint

*Performance as on: 20th Dec 2019. Large-caps: S&P BSE Sensex. Mid-cap: S&P BSE Mid-cap. Small-cap: S&P BSE Small-cap. T-bills: CCIL Liquidity
weight data, G-secs: CCIl all sovereign bond index, Corporate Bond: Crisil Corporate Bond composite index, Credit Risk: Crisil Composite Credit risk
data, International: S&P 500, Gold: prices as per world gold council, Real Estate: RBI House price Index Data

The Table ranks 10 Asset class in order of their return performance- from highest to the lowest for
each calendar year. As can be seen in the above table, there is absolutely no pattern in the return
of asset classes from one year to next, which shows the importance of asset allocation to build a
portfolio against trying to consistently predicting and chasing next winner among the asset class.

A diversified portfolio of stocks, bonds, Gold, Real Estate etc is key to steering through each and
every business cycle. Such a portfolio may not deliver the highest return in any particular year but
will perform well especially in a risk-adjusted basis across market cycles.

33
MF Category-wise average return

34
Category-wise Return

Equity

Return (%)

Since
Group/Investment 1 Month 6 Month 1 Year 3 Year 5 Year
Inception

Large-Cap 6.8 27.1 26.1 10.2 15.1 18.5

Large & Mid-Cap 8.9 30.6 28.4 9.2 16.4 18.1

Mid-Cap 10.6 35.2 34.9 9.5 16.9 19.8

Small-Cap 11.1 38.9 42.5 6.3 16.8 20.9

Multi-Cap 7.9 29.3 27.7 9.9 16.0 16.1

Focused Fund 7.8 28.7 28.3 9.9 16.7 21.7

Value 9.0 32.3 33.8 5.9 15.2 16.4

ELSS (Tax Savings) 7.8 29.2 28.4 8.9 16.0 14.4

Hybrid

Return (%)

Since
Group/Investment 1 Month 6 Month 1 Year 3 Year 5 Year
Inception

Multi Asset Allocation 3.9 14.5 18.1 8.4 10.0 11.4

Dynamic Asset Allocation 3.1 13.3 16.8 7.8 11.2 11.0

Aggressive Allocation 5.9 22.7 22.8 8.7 13.5 13.0

Conservative Allocation 1.0 8.0 10.3 6.4 8.2 8.6

Equity Savings 2.9 11.5 13.5 6.7 8.5 8.0

Arbitrage Fund 0.3 1.4 2.8 4.9 5.5 5.5

Data as on 26th Feb 2021. Source: Morningstar

35
 Category-wise Return

Debt

Return (%)

Since
Group/Investment 1 Month 6 Month 1 Year 3 Year 5 Year
Inception

Credit Risk 0.0 3.7 2.4 3.4 5.2 6.5

Banking & PSU -0.6 1.9 6.9 8.3 8.0 6.8

Corporate Bond -0.6 2.2 7.6 8.1 8.0 7.7

Medium Duration -0.7 2.6 3.6 5.3 6.5 7.9

Short Duration -0.4 2.0 6.5 6.4 6.8 7.4

Low Duration 0.2 2.0 5.8 6.0 6.5 7.2

Ultra Short Duration 0.3 1.7 4.7 6.2 6.7 6.6

Liquid 0.3 1.5 3.7 5.7 6.2 6.7

Data as on 26th Feb 2021. Source: Morningstar

36
Why Invest with Baroda Radiance ?

37
Why Invest with Baroda Radiance

CUTTING EDGE CUSTOMISED

DEDICATED TEAM RESEARCH FINANCIAL
OF EXPERTS To help you make PLANNING
Get the support you informed decisions
deserve with in-depth Dedicated to meet
understanding your goals

COMPOSITE
WEALTH DIGITAL
MANAGEMENT CONVENIENCE
SOLUTIONS
Invest on the go with
To address all your our digital platforms
financial
requirements

38
Product Suitability Matrix

Profiling:
Mapping Client’s Potential, Risk profile and Knowledge + Experience

Asset Allocation:
Recommending distribution in various asset classes

Recommendations:
Based on stringent filtration processes

Rebalancing
Based on Performance

Surveillance & Testing

As per best practices

39
Product Offerings

• Empanelled with top 20 AMCs, covering~95% of overall

Industry AUM.
Mutual Funds
• Baroda Select – our recommended list of Mutual funds,
shortlisted based on in-depth research

• PMS offerings from experienced and lead product

Portfolio Management Services
(PMS) providers.

• Strategies across Market-cap

• Principal protected Structure Products comprising both

Equity & Debt offerings.
Market Linked Debentures
• PMS feeder availability to reduce the minimum
investment size.

• Partnered with renowned / experienced product

providers to cater to client’s investment needs.
Alternate Investment Funds (AIF)
• Category II & Category III AIFs with various investment
product options.

• Primary & Secondary Debt instruments

Other Products • Tax Free Bonds

• Gold, ETFs, etc.

40
About us

41
 About Bank of Baroda

Founded in
1908

Employees in
85,000+
23 countries
Branches globally
~9,500

INR
~15 trillion in Business
(of combined entity as of
1st Apr 2019)

❖ India’s leading and formidable Bank, which has been in existence for 100+ years
❖ With effective from 1st April 2019, Vijaya Bank and Dena Bank have amalgamated with Bank of
Baroda
❖ Offers comprehensive banking solutions across agriculture, corporates, government, individuals,
public authorities and SMEs
❖ BOB endeavors to identify and diversify target markets with a proactive focus on enhancing customer
franchise and align products offered to address market needs in order to add and retain more credit
valued customers
❖ Provides a strong foundation for growth by strengthening of recovery and collection mechanism,
enhancing credit quality and improving core profitability
❖ Recruits talent to further strengthen internal systems of training and skills development
❖ Retains the leadership position by strategic focus on people, processes, products and technology

42
Bank of Baroda – Key Strength

One of the most formidable and well

recognized brands in the Indian Banking
Industry

Subsidiaries and JVs cover entire Financial Spectrum –

Insurance, Asset Management, Capital Markets

Deep Financial Inclusion Coverage

Wide Customer base

Strong Domestic Presence

Well distributed branch network in rural, semi-urban and

urban coverage

Catering across the globe

Net lender in the market, maintaining adequate liquidity

in
all business cycle phases

Efficient Capital Adequacy Ratio

Superior Employee strength

Source: BOB Analyst

presentation.
43
Disclaimer
This report and information is of confidential, proprietary or legally privileged nature and is meant only for selected
recipients. It should not be used by anyone who is not the original intended recipient. This information should not be
reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in
whole or in part, for any purpose unless otherwise expressly authorized. This service / information is not directed or
intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality,
state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject Bank of Baroda / BOB Capital Markets Ltd. and affiliates/ group companies to any
registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions
may be restricted by law, and persons in whose possession this document comes, should inform themselves about and
observe, any such restrictions. The material in this document is based on facts, figures and information that are
obtained from publicly available media or other sources believed to be true, correct, reliable or accurate, not
misleading or as to its genuineness, fitness for the purpose intended and it should not be relied up on as such. The
recipient acknowledges that BOB/ BOB Capital Markets Ltd. (and associated companies) or its subsidiaries and any of
its officers, directors, personnel and employees, as the case may be, are unable to exercise control or ensure or
guarantee the integrity of/over the contents of the information contained in this report and further acknowledges that
any views expressed in this message are those of the individual sender and no binding nature of the message shall be
implied or assumed unless the sender does so expressly with due authority of Bank of Baroda/BOB Capital Markets
Limited or its subsidiaries and associated companies, as applicable. This message is not intended as an offer or
publication or solicitation for distribution for subscription of or purchase or sale of any securities or financial
instrument(s) to anyone in whose jurisdiction such subscription etc. requires prior local regulatory clearance or is
contrary to the local laws of the land in any manner or as an official confirmation of any transaction. 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 and seek appropriate professional advice.

Prospective investors and others are cautioned and should be alert that any forward-looking statements are not
predictions and may be subject to change without providing any notice. Actual results may differ from those suggested
by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but
not limited to, exposure to market risks, general economic and political conditions globally and /or in India, inflation,
deflation, unanticipated turbulence in interest rates, change in domestic and foreign laws, regulations and taxes and
change in competition in the industry. By their nature, certain market risk disclosures are estimates and could be
different from what actually occurs in future. As a result, actual future gains or losses could martially differ from those
that have been estimated.

While utmost care has been exercised while preparing this report, Bank of Baroda/ BOB Capital Markets Ltd. ,our
affiliates, officers, directors, and employees do not warrant the completeness and absolute accuracy or completeness
of this information and disclaim all liabilities, losses and damages arising out of the use of this information. The
recipient alone shall be fully responsible / liable for any decision taken on the basis of this material. The recipient
should make their own investigation and seek appropriate professional advice.

Mutual fund investments are subject to market risks. Please read the scheme information and other related
documents before investing. Past performance is not indicative of future returns. Please consider your specific
investment requirements before choosing a fund, or designing a portfolio that suits your needs. Bank of Baroda/ BOB
Capital Markets Ltd. makes no warranties or representations, express or implied, on products offered through the
platform. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the
reliance of its product or related services.

44