INVESTMENT STRATEGY3 MUTUAL FUND PORTFOLIOS TO BUILD IN THIS MARKET

April 2020

INDEX

EQUITY MARKET UPDATE AND OUTLOOKDeep Corrections Once AgainWhere We Are Now?Handsome Returns Follow Sharp CorrectionsTake Bigger Sips In Volatile Times

DEBT/ FIXED INCOME UPDATE & OUTLOOKMonetary Policy: RBI Gets Into Action

1.

2. Monetary Policy: RBI Gets Into ActionDebt Market WrapDebt Market Outlook

MUTUAL FUND PORTFOLIOSAggressive ModerateConservative

2.

3.

EQUITY MARKET UPDATE & OUTLOOKDEEP CORRECTION ONCE AGAIN

Deep corrections have happened earlier too. In the years 2000 and 2008 also, the equity market corrected sharply across theglobe.

Indian stock markets retracted by 60-70% in previous severe global corrections. The carnage in the broader markets was all themore severe!

EQUITY MARKET UPDATE & OUTLOOKWHERE ARE WE NOW?

Though there could be further 10-12% downside based on trough trailing price-earnings (PE) basis, the valuations seem to benear bottom level on Price-to-Book Value (PBV) and Market Cap-to-GDP ratio basis.

NIFTY trailing P/BV (Mar 2019 – Mar 2020)

3.0

3.2

149.7

Market Cap to GDP Ratio (%)

3.0 2.9

2.7

3.0

2.3

2.0

2.2

2.4

2.6

2.8

3.0

Mar

/19

Apr/

19

May

/19

Jun/

19

Jul/

19

Aug/

19

Sep/

19

Oct

/19

Nov

/19

Dec/

19

Jan/

20

Feb/

20

Mar

/20

Nifty P/BV (TTM)

50.0 66.4 70.7

90.2

64.9 72.3

84.0

65.0

83.5 78.4 85.4 80.6

45.6

77.6

60.5 49.0

40.5

Mar

-20

Dec-

19

Dec-

18

Dec-

17

Dec-

16

Dec-

15

Dec-

14

Dec-

13

Dec-

12

Dec-

11

Dec-

10

Dec-

09

Dec-

08

Dec-

07

Dec-

06

Dec-

05

Dec-

04

Dec-

03

EQUITY MARKET UPDATE & OUTLOOKHANDSOME RETURNS FOLLOW SHARP CORRECTIONS

405%387%

200%

300%

400%

500%

-37% -30%-60%

6% 20% 9%14% 13% 7%23% 11%

34%

79%

-4%

92%103%

-100%

0%

100%

200%

Asian Financial Crisis Dot Com Bubble Global Financial Crisis

Trough 1M post Trough 3M post Trough 6M post Trough 12M post Trough Peak

EQUITY MARKET UPDATE & OUTLOOKTAKE BIGGER SIPS IN VOLATILE TIMES

• Like many crisis this too will come to an end and it is extremely important to maintain asset allocation discipline.

• The correction in stock prices owing to Corona virus have increased the margin of safety and investor should allocate investment in favor of equities after considering his risk appetite.

• Considering the current market correction, investor should rebalance their equity exposure. i.e. if an investor had asset allocation of 70:30 in equity-debt and in current scenario if it has come down to 50:50 due to under performance of equity then investor should rebalance it back to actual allocation by investing in equities based on risk profile in staggered then investor should rebalance it back to actual allocation by investing in equities based on risk profile in staggered manger.

• Current times remind us of famous quote by Warren Buffett “Be fearful when others are greedy, and be greedy when others are fearful”

• Investor should continue SIP in all market conditions.

DEBT/ FIXED INCOME UPDATE & OUTLOOKMONETARY POLICY: RBI GETS INTO ACTION

RBI announces slew of measures to support economy through rate cuts, infusion of additional liquidity and relief toborrowers.

• Policy rate cut sharply: Repo rate cut by 75 bps from 5.15% to 4.40% and reverse repo rate by 90bps from 4.90% to 4.00% with immediate effect.

• Liquidity infusion: Liquidity infusion of Rs 3.74 lakh crore (Rs 3.74 trillion) through cut in CRR by 100 bps (releases Rs 1.37 lakh crore for banks), marginal standing facility (MSF) rate (another Rs 1.37 lakh crore) and another Rs 1 lakh crore will be lakh crore for banks), marginal standing facility (MSF) rate (another Rs 1.37 lakh crore) and another Rs 1 lakh crore will be pumped through TLTRO mechanism.

• Relief to borrowers: Three months moratorium in respect on all term loans of commercial banks, all India financial institutions and NBFCs outstanding as on 1 March 2020.

Abnormal times require unconventional policy response and RBI has taken some measures along with the central government’s fiscal policy response.

• Liquidity – In surplus zoneDuring the week March 16-20, 2020 the weighted average call rate averaged to 4.92% and continued to remain below the RBI’s repo rate of 5.15% with comfortable level of liquidity in banking system

• Bond Prices & other UpdatesThe benchmark 10-year GSec yields till 23rd March 2020 averaged 6.25%, a 19 bps fall from previous month average andranged between 6% to 6.4% during the month till 23rd March 2020.

DEBT/ FIXED INCOME UPDATE & OUTLOOKDEBT MARKET WRAP

ranged between 6% to 6.4% during the month till 23rd March 2020.

For the month of Feb-2020, the retail inflation moderated to a 3-month low of 6.6% which is 1% lower than a month ago inflation of 7.6% but still more than RBI’s upper band inflation target. The WPI inflation also moderated.

Inflation to be in downward trajectory and attractive yields in quality debt instrumentsDownward inflation trajectory of CPI has been aided by the easing inflation witnessed in the food as well as non-food segments.We expect inflation to remain on a downward trajectory over the coming months because of expected slower growth, normalmonsoons and lower oil prices.

We had seen spike in bond yields from 2nd to 23rd Mar-2020 in short term/corporate bond space. It happened because of thelarge redemption from corporate and preference for liquidity in the current scenario. As on 27th Mar-2020, RBI cut repo rate by75bps, CRR by 100 bps and reverse repo by 90bps.

DEBT/ FIXED INCOME UPDATE & OUTLOOKDEBT MARKET OUTLOOK

75bps, CRR by 100 bps and reverse repo by 90bps.

In next few months, RBI may additionally cut repo rate and keep the liquidity in surplus which will help to bring down the currentyields. Currently the yields are attractive in high quality debt instruments.

Strategy: Prefer high credit quality Short duration and corporate bond fundsCurrently the yields are attractive in quality debt instruments and investor should invest in high quality short duration andcorporate bond category schemes. Considering the current market scenario, investor with short term tenure should prefer liquid category schemes than arbitrage schemes.

MUTUAL FUND PORTFOLIO | AGGRESSIVEAMC SCHEME NAMELARGE CAPAxis Axis Bluechip FundBNP Paribas BNP Paribas Large Cap FundCanara Robeco Canara Robeco Bluechip Equity FundHDFC HDFC Top 100 FundHSBC HSBC Large Cap Equity FundICICI Prudential ICICI Prudential Bluechip FundKotak Kotak Bluechip FundMirae Mirae Asset Large Cap FundNippon India Nippon India Large Cap FundUTI UTI Mastershare Unit SchemeMID CAPAxis Axis Midcap Fund

Multi Cap 20%

Mid Cap 15%

Large Cap 65%

Portfolio Composition

Minimum Time Horizon: 5 yearsReview Frequency: 6 monthsAxis Axis Midcap Fund

BNP Paribas BNP Paribas Mid Cap FundDSP DSP Midcap FundEdelweiss Edelweiss Mid Cap FundFranklin Templeton Franklin India Prima FundICICI Prudential ICICI Prudential MidCap FundKotak Kotak Emerging Equity SchemeNippon India Nippon India Growth FundPrincipal Principal Midcap FundMULTI CAPAditya Birla Sun Life Aditya Birla Sun Life Equity FundBNP Paribas BNP Paribas Multi Cap FundCanara Robeco Canara Robeco Equity Diversified FundHDFC HDFC Equity FundICICI Prudential ICICI Prudential Multicap FundKotak Kotak Standard Multicap FundNippon India Nippon India Multi Cap FundPrincipal Principal Multi Cap Growth FundSBI SBI Magnum Multi Cap Fund

Review Frequency: 6 months

Aggressive InvestorYou are ready to take high risks, and very easily adapt when things don't go as you had planned, financially. Your objective is to get the highest return possible in the long term, and you accept the ups and downs along the way

MUTUAL FUND PORTFOLIO | MODERATE

Large Cap30%

Dynamic Asset Allocation20%

Debt Corporate Bond / Short Duration 50%

Portfolio Composition

Minimum Time Horizon: 3 yearsReview Frequency: 12 months

AMC SCHEME NAMEDEBT CORPORATE BOND / SHORT DURATIONICICI Prudential ICICI Prudential Corporate Bond FundAditya Birla Sun Life Aditya Birla Sun Life Corporate Bond FundIDFC IDFC Corporate Bond FundKotak Kotak Corporate Bond Fund ICICI Prudential ICICI Prudential Short Term Fund IDFC IDFC Bond Fund - Short Term PlanL&T L&T Short Term Bond FundSBI SBI Short Term Debt Fund

DYNAMIC ASSET ALLOCATIONIDFC IDFC Dynamic Equity FundAxis Axis Dynamic Equity FundDSP DSP Dynamic Asset Allocation Fund

Review Frequency: 12 monthsDSP DSP Dynamic Asset Allocation FundICICI Prudential ICICI Prudential Balanced Advantage FundICICI Prudential ICICI Prudential Asset Allocator Fund Nippon India Nippon India Balanced Advantage FundTata Tata Balanced Advantage Fund

LARGE CAPAxis Axis Bluechip FundBNP Paribas BNP Paribas Large Cap FundCanara Robeco Canara Robeco Bluechip Equity FundHDFC HDFC Top 100 FundHSBC HSBC Large Cap Equity FundICICI Prudential ICICI Prudential Bluechip FundKotak Kotak Bluechip FundMirae Mirae Asset Large Cap FundNippon India Nippon India Large Cap FundUTI UTI Mastershare Unit Scheme

Moderate InvestorYou are an average risk taker, and try to adapt when things don't go as you had planned, financially. Your long term objective is to get a better return than a Fixed Deposit, net of tax, even if the short term performance could sometime be below expectations

MUTUAL FUND PORTFOLIO | CONSERVATIVE

Low Duration20%

Short Duration30%

Corporate Bond50%

Portfolio Composition

Minimum Time Horizon: 3 yearsReview Frequency: 12 months

AMC SCHEME NAME

CORPORATE BOND

Aditya Birla Sun Life Aditya Birla Sun Life Corporate Bond Fund

ICICI Prudential ICICI Prudential Corporate Bond Fund

IDFC IDFC Corporate Bond Fund

Kotak Kotak Corporate Bond Fund

SHORT DURATION

ICICI Prudentiial ICICI Prudential Short Term Fund

IDFC IDFC Bond Fund - Short Term Plan

L&T L&T Short Term Bond Fund

SBI SBI Short Term Debt Fund Review Frequency: 12 monthsSBI SBI Short Term Debt Fund

LOW DURATION

ICICI Prudential ICICI Prudential Savings Fund

IDFC IDFC Low Duration Fund Conservative InvestorYou are unwilling to take risks, and get very uneasy when things don't go as you had planned, financially. Your long term objective is to try to get a slightly better return than a fixed deposit, net of tax.

THANK YOUTHANK YOU