Group Gratuity Fund Performance Update

(Linked Funds)
February 2024
MARKET UPDATE
2
Market Commentary – Economy
Economic Indicator Latest Prior Year Ago
5.10% 5.69% 6.52%
CPI
(Jan-24) (Dec-23) (Jan-23)
0.27% 0.73% 4.73%
WPI
(Jan-24) (Dec-23) (Jan-23)
3.8% 2.4% 5.1%
IIP
(Dec-23) (Nov-23) (Dec-22)
8.4% 7.6% 4.5%
GDP
(Dec-23) (Sep-23) (Dec-22)
India Manufacturing 56.9 56.5 55.3
PMI (Feb-24) (Jan-24) (Feb-23)
60.6 61.8 59.4
India Services PMI
(Feb-24) (Jan-24) (Feb-23)
Note : The latest values in table are compared with the values a year ago

 January CPI inflation moderated to 5.1%, slightly better than the street expectation. . Sequentially, headline inflation contracted by 0.1% (December: (-
)0.3%) led mainly by vegetables while prices of cereals, pulses, meat and fish continues to rise.
 Core Inflation remained subdued at 3.5%.
 Despite an unfavourable base effect in December, IIP growth increased by 3.8% led by manufacturing activity.
 India’s Jan 2024 Mfg PMI grew to five month high of 56.9 on the back of strong domestic and external demand.
 The 3QFY24 real GDP growth surprised on the upside at 8.4%, while GVA growth was in line with expectations at 6.5%. The surprise GDP number was a
result of high growth in net indirect taxes. NSO’s FY2024 GDP growth projection was revised up to 7.6% and GVA growth at 6.9%.

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 Market Commentary – Debt
 The bond markets saw a further drop in yields during the month with the 10Y benchmark yield closing at 7.08% as against 7.14% for the previous month.
 The yield curve has seen bull flattening as the yields of the long Gsec saw convergence towards the 10Y level.
 The spread between 10Y and 40Y Gsec has compressed to less than 10 bps. This is primarily due to the demand supply dynamics playing out post the
completion of Govt's borrowing programme for the current fiscal by the second week of February.
 RBI Policy meet:
 The RBI, as expected, kept the repo rate and stance unchanged.
 The MPC’s focus remained on achieving the inflation target of 4% while growth continues to provide comfort
 The RBI MPC voted with a 5-1 majority to hold the repo rate at 6.5%
 They also voted to remain focused on the withdrawal of accommodation, with a 5-1 majority. Dr. Jayant Verma voted for a 25 bps rate cut as well as a change in stance
 The MPC expects real GDP growth at 7% in FY2025 (7.3% in FY2024), with upward revisions to their earlier quarterly estimates
 The MPC projects FY2025 headline inflation at 4.5%, down from the FY2024 projection of 5.4%

 System liquidity continues to remain in deficit, albeit at a lower level leading to higher short term rates.
 The inflation as well as the GDP data in US has remained quite strong, thus, putting the rate cut expectations to rest at least until May.
 The US 10Y benchmark has seen a rise of over 30 bps to 4.25%, thus narrowing the spread to IGBs.

4
 Yield Curve Movement Outlook:
INDIA SOVEREIGN CURVE RBI's minutes were more hawkish than expected leading to higher OIS
8.0%
rates. The MPC hinted at a longer pause in rates as any cuts at a time

7.5%
when GDP growth is robust could lead to higher inflation
With inflation and labour markets holding strong, the case for US rate
7.0%
cut also could get pushed further down the road. Hence, the base case of

6.5% 3 cuts (dot-plot) could also get revised to 2 with hints from Fed members
29 February 2024 29 November 2023 28 February 2023
already ongoing.
6.0%
3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 15Y 20Y 30Y We, thus, expect the yield curve to remain "flatter for longer"
considering the current demand and supply situation.
3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y 15Y 20Y 30Y
5 In addition to the Insurance and Pension funds, we have seen MFs as
0 well buy into long gsec leading to a spread compression which could play
-5 out at least for the next couple of months.
-10 We remain very constructive on the yields with the 10Y benchmark
Change in bps

-15 expected trade in the range of 6.90% to 7.10% in the near term.
-20

-25

-30

-35

-40 3M Change 1Y Change

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Equity Market Update
40%
NIFTY 50 FII net flows in INR 1000 'Crs

31%
NIFTY 100 (benchmark)

27%
30%

25%
NIFTY MIDCAP 50

24%
22%
16%
20% Q4 FY24

15%
15%
15%
14%
13%
12%
12%
9%
10%
Q3 FY24
2%
1%

1%

0%
1M 3M 6M 1Y 3Y 5Y
Q2 FY24
40%
38%

32%

29%
27%
23%
30%

21%
20%
19%

18%
17%

16%
14%

13%

20%

12%
Q1 FY24
10%

9%
8%

7%
10%
5%

3%
3%

2%
2%
2%

2%

1%
1%

0%
0%
0%

-2%

-3%
-10% Q4 FY23

-9%
-20%
-100.0 -50.0 0.0 50.0 100.0

1M 3M 1Y
Equity Market Update
 The Indian benchmark index Nifty rose 1.2% in February 2024, post a flattish start to the new year in January.

 The February performance was mainly driven by the strong Q3FY24 result season, positive fiscal glide path presented in the interim
budget, above expectations macro data, inline CPI and positive cues from global stock markets.

 Midcap 100 index declined by 0.5% whereas Smallcap 100 index declined by 0.3% during the month.

 CPI inflation declined from 5.69% last month to 5.10% vs market expectations of 5.0%. RBI expects inflation at 5.4% for FY24E.

 FII's sold equities worth ₹15,963 Cr in February vs. ₹35,988 Cr selling in the previous month. DII's bought equities worth ₹25,379 Cr vs.
₹26,743 Cr buying in the previous month.

 Brent crude prices increased on a MoM basis from $81.7 to $83.6 per barrel.

 Rupee as against dollar settled at ₹82.9, appreciation of 13 bps MoM.

7
Equity Market Update
Nifty Indices update:

 Among major sectors Auto, Pharma and IT outperformed Nifty index with returns of 6.1%, 5.9% and 2.9% respectively, while Bank and
FMCG underperformed the index with returns of 0.3% and (1.9)% respectively.

Sector updates:

 The IT sector continues to provide similar commentary of weak demand environment particularly on the discretionary side.

 The auto sector wholesale numbers saw a mixed performance as PV and 2W had a strong month, while tractor and CV sales remained weak.

 Banking sector credit growth remained stable at ~16% in January 2024.

 Major FMCG players are experiencing weakness in demand due to an inter-play of cost dynamics as well as increasing competitive landscape.

 Cement sector saw prices decline as demand remained soft in February 2024.

 Metal prices in the international markets saw a decline during the month of February.

8
Equity Market Outlook
 The factors which could impact the markets in the upcoming months include the commentary by Central banks, geopolitical issues, CPI
inflation and upcoming Lok Sabha elections.
 Key events to watch out for in the coming month would be the FED FOMC meet, RBI MPC meet and other macro data.
 Dollar vs. Rupee and oil price would be key monitorables.
 Overall from context of Indian economy, GDP, PMI and IIP reported strong prints which were well above market expectations. GST
collections grew 12.5% YoY in February 2024.
 IT sector – Companies are focusing on the client budgets for CY 2024 before giving any future guidance and remain positive led by
expected pent up demand.
 Auto sector is expected to return back to its historical trend of close to GDP growth due to a high base of last year.
 FMCG sector is likely to continue facing volatility in the near term, though the long-term opportunities remain in-tact. Easing inflation
is likely to drive demand in the coming quarters.
 BFSI sector is expected to see some moderation in NIMs, while credit growth is expected to remain stable in the next few quarters.
Along with asset quality on the unsecured side, the credit deposit ratio would need to be tracked closely.
 Cement sector is expected to see uptick in volumes as it enters the busy construction season.
 Equity market is currently trading at a TTM valuation of 23.1x PE vs. 5-year and 10-year averages of 24.7x and 23.1x respectively.

9
FUND COMPOSITION & PERFORMANCE
10
ULIP Gratuity Funds: Asset Composition & Performance
BONDS GILTS Total
MMI &
FUND NAME AA+ & EQUITY AUM
AAA CG SDL NCA
below (Crs)
GROUP PROTECTOR FUND 0.20 1.66 4.03 0.71 0.54 7.14
GROUP ELEVATOR FUND 0.10 1.32 4.15 0.26 6.09 0.23 12.14

Product Design
Fund Name Equity Debt MMI & NCA
GROUP ELEVATOR FUND 0%-60% 40%-100%
GROUP PROTECTOR FUND 0%-30% 70%-100%

AUM
Fund Launch Date 1M 3M 6M 1Y 3Y 5Y
(in INR 'Crs)
GROUP ELEVATOR FUND 30-06-2014 12.14 1.69% 7.06% 11.80% 21.66% 10.83% 10.69%
Benchmark Return 1.36% 5.48% 7.93% 15.55% 8.62% 9.93%
GROUP PROTECTOR FUND 27-11-2013 7.14 0.67% 2.31% 3.62% 7.88% 5.40% 7.60%
Benchmark Return 1.02% 2.90% 3.91% 8.56% 5.73% 7.54%
• The AUMs shown above are as on 29.02.2024
• Group Elevator Fund and Group Protector Fund are hybrid funds i.e. they have a mix of equity and debt instruments, however
presently there is no exposure to equity in the Group protector Fund.
• The past portfolio returns do not guarantee same returns going forward.
11
ULIP Gratuity Funds: Peer Performance
S.No Insurer Name Fund Name Launch Date Fund Focus 1 MONTH 3 MONTHS 1 YEAR 2 YEARS 3 YEARS 5 YEARS
1 Bajaj Allianz Life Group Debt Fund-II 13/09/2013 Fixed Income 1.44% 3.66% 8.97% 5.45% 5.80% 6.41%
2 Bajaj Allianz Life Group Debt Fund 09/01/2010 Fixed Income 1.52% 3.82% 8.90% 5.36% 5.80% 6.30%
3 Bajaj Allianz Life Group Asset Allocation Fund 30/05/2011 Mixed Allocation 1.36% 8.03% 20.89% 12.05% 12.38% 11.42%
4 Birla Sun Life Birla Sun Life--Group Income Advantage Fund16/01/2010 Fixed Income 0.84% 2.75% 7.96% 5.17% 5.37% 6.96%
5 HDFC Defensive ManagedGroup Fund 02/01/2004 Fixed Income 1.23% 4.91% 12.55% 7.60% 7.74% 9.36%
6 HDFC Secure Managed Group Fund II 20/02/2008 Fixed Income 1.12% 3.33% 7.85% 5.09% 4.99% 6.65%
7 HDFC Secure ManagedGroup Fund 02/01/2004 Fixed Income 1.16% 3.44% 8.37% 5.65% 5.51% 7.14%
8 ICICI Group Balanced Fund II 05/11/2013 Fixed Income 1.04% 3.69% 10.58% 6.20% 6.11% 7.60%
9 ICICI Group Balanced Fund 03/04/2003 Mixed Allocation 1.06% 3.77% 10.75% 6.36% 6.25% 7.90%
10 Kotak Mahindra Kotak Group Bond 16/04/2004 Fixed Income 1.21% 3.35% 8.33% 5.52% 5.15% 7.55%
11 Kotak Mahindra Kotak Group Balanced 01/07/2003 Mixed Allocation 1.89% 8.12% 24.75% 13.23% 13.11% 14.04%
12 SBI Life SBI Life Group Debt Plus Fund II 31/03/2014 Fixed Income 1.05% 3.78% 10.68% 6.53% 6.52% 8.23%
13 SBI Life SBI Life Group Balance Plus Fund 16/07/2009 Mixed Allocation 0.91% 4.82% 14.60% 8.59% 8.33% 9.92%
14 Shriram Life GROUP ELEVATOR 30/06/2014 Mixed Allocation 1.69% 7.06% 21.66% 11.82% 10.83% 10.69%
15 Shriram Life GROUP PROTECTOR 27/11/2013 Fixed Income 0.67% 2.31% 7.88% 5.22% 5.40% 7.60%
16 TATA AIA Income - Group Pension 02/03/2004 Fixed Income 1.17% 3.38% 8.22% 5.37% 5.37% 7.28%
17 TATA AIA Bond - Group Pension 17/08/2007 Fixed Income 1.18% 3.39% 8.23% 5.39% 5.39% 7.25%
18 TATA AIA Balanced - Group Pension 17/08/2007 Fixed Income 0.67% 3.71% 11.50% 6.64% 6.59% 8.01%
Shriram Life GROUP PROTECTOR Rank 17 18 17 16 13 10 12