China‟s
Growth

Middle
East
Crisis

Europe Debt
Crisis

US – Fiscal
Cliff &
Taper

MANY OF 2013‟s MACRO ECONOMIC AND
GEOPO...
OPPORTUNITIES - EQUITIES

Mutual Fund investments are subject to market risks, read all scheme related documents carefully...
ELECTION RESULTS???
AN
UNCLEAR
POSITION

3
INVESTORS UNDER-OWN EQUITY
A CLEAR
POSITION

4

Source: AMFI, RBI
THEMES TO PLAY IN 2014


Balanced approach to investing – Maintain asset

allocation in equity


Mid & Small caps Funds
...
HOW TO MAINTAIN ASSET ALLOCATION

Large Allocations
ICICI Prudential Balanced
Advantage Fund
ICICI Prudential Dynamic Plan...
TURNING POINTS - 2014 – WORST SEEMS TO
BE BEHIND US


Equity markets are giving investors an opportunity to get
on board
...
TURNING POINTS - 2014 – WORST SEEMS TO
BE BEHIND US


Corporate earnings growth should react favourably to the
improving ...
ELECTION OUTCOME – AN IMPORTANT
TRIGGER


A potential strong mandate in May‟14 elections will likely
lead to a decisive g...
WHAT TO EXPECT FROM A STRONG / STABLE
GOVERNMENT?
Possible Actions
•Quick / bold decision
making
•Lower subsidies
•Farm pr...
POLARIZATION IN MARKET
16.00
14.00
12.00
10.00
8.00
6.00

S&P BSE FMCG

S&P BSE MID CAP

S&P BSE Sensex

11

S&P BSE IT
S&...
MARKET IS CHEAP VS GDP
India Market Cap / GDP

12

Source: CLSA, Bloomberg, trailing four quarters GDP
MARKET VALUATIONS AT AVERAGE LEVELS

13

Source: CLSA
MID CAPS TRADING AT A LARGE DISCOUNT
TO THEIR LONG‐TERM AVERAGE PB

14

Source: NSE, IIFL Research
RISKS TO GROWTH IN 2014


A weak coalition government



Risks of rate increases as RBI is gradually attaching
higher im...
INDIA – ONE OF MOST INTERESTING STORIES


Across Asia-Pacific as well as global emerging markets



Is at an early stage...
OUR FRAMEWORK TO INVESTING - EQUITY
Economics

• CAD narrowing
• Trade deficit narrowing sharply
• Growth – can revive in ...
EQUITY FUNDS – RISK REWARD MATRIX

18
19
20
Fixed Income

2014
OUR FRAMEWORK TO INVESTING – FIXED
INCOME
OPPORTUNITIES


Macro indicators pronounce need for lower interest rates



Amidst low pace of tapering external risks m...
RECOMMENDED THEME FOR 2014
Theme: Duration Strategy
With current economy suggesting need for lower interest rates, it may ...
25
26
DISCLAIMER
Mutual Fund investments are subject to market risks, read all
scheme related documents carefully.
All figures a...
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Investment opportunities for 2014

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Investment opportunities for 2014

  1. 1. China‟s Growth Middle East Crisis Europe Debt Crisis US – Fiscal Cliff & Taper MANY OF 2013‟s MACRO ECONOMIC AND GEOPOLITICAL ISSUES ARE NOW BEHIND US 1
  2. 2. OPPORTUNITIES - EQUITIES Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
  3. 3. ELECTION RESULTS??? AN UNCLEAR POSITION 3
  4. 4. INVESTORS UNDER-OWN EQUITY A CLEAR POSITION 4 Source: AMFI, RBI
  5. 5. THEMES TO PLAY IN 2014  Balanced approach to investing – Maintain asset allocation in equity  Mid & Small caps Funds  Infrastructure  Pick up in activity expected across infrastructure sectors  Staying invested in international funds – Important part of asset allocation  5 Fixed Income - Bullish on „Duration‟ & Accrual Funds
  6. 6. HOW TO MAINTAIN ASSET ALLOCATION Large Allocations ICICI Prudential Balanced Advantage Fund ICICI Prudential Dynamic Plan ICICI Prudential Balanced Fund ICICI Prudential Focused Bluechip Equity Fund Small Allocations ICICI Prudential Midcap Fund ICICI Prudential Infrastructure Fund ICICI Prudential Discovery Fund ICICI Prudential Top 100 Fund
  7. 7. TURNING POINTS - 2014 – WORST SEEMS TO BE BEHIND US  Equity markets are giving investors an opportunity to get on board  Falling trend in Gross Domestic Product (GDP) growth, investment growth and corporate earnings growth can reverse during 2014  Policy environment improvements since last 15 months can start seeing its positive impact on 2014   7 Trade Deficit & Current Account Deficit continues to decline With Reserve Bank of India (RBI) reserves/CAD* ratio improving, INR trends should be more stable and capability to handle taper worries is much better now *Current Account Deficit
  8. 8. TURNING POINTS - 2014 – WORST SEEMS TO BE BEHIND US  Corporate earnings growth should react favourably to the improving macro  Almost four years of high interest rates  Financial assets appear attractive against physical assets  Indian investors‟ equity exposure remains very low 8
  9. 9. ELECTION OUTCOME – AN IMPORTANT TRIGGER  A potential strong mandate in May‟14 elections will likely lead to a decisive government  This could accelerate the process of economic recovery  The outcome of the elections can significantly impact market sentiments either ways  This can alter the pace of the recovery process but recovery in itself should not be doubted 9
  10. 10. WHAT TO EXPECT FROM A STRONG / STABLE GOVERNMENT? Possible Actions •Quick / bold decision making •Lower subsidies •Farm productivity enhancement •Tourism promotion at new locations •Tax Reforms Beneficiary / Comments •Infra and cap goods sector •Oil PSUs, fiscal consolidation •Lower inflation / improved rural income •Boost to smaller city infrastructure •VDIS* scheme, Lower peak tax rates Source: CLSA, *refers to Voluntary Disclosure of Income Scheme
  11. 11. POLARIZATION IN MARKET 16.00 14.00 12.00 10.00 8.00 6.00 S&P BSE FMCG S&P BSE MID CAP S&P BSE Sensex 11 S&P BSE IT S&P BSE SMALL CAP S&P BSE HC Source: NSE Index Values have been rebased to 10
  12. 12. MARKET IS CHEAP VS GDP India Market Cap / GDP 12 Source: CLSA, Bloomberg, trailing four quarters GDP
  13. 13. MARKET VALUATIONS AT AVERAGE LEVELS 13 Source: CLSA
  14. 14. MID CAPS TRADING AT A LARGE DISCOUNT TO THEIR LONG‐TERM AVERAGE PB 14 Source: NSE, IIFL Research
  15. 15. RISKS TO GROWTH IN 2014  A weak coalition government  Risks of rate increases as RBI is gradually attaching higher importance to Consumer Price Index (CPI)  Higher vegetable prices (up 60% Y-o-Y); have started coming off  Government expenditure reduction will be a near-term growth headwind 15
  16. 16. INDIA – ONE OF MOST INTERESTING STORIES  Across Asia-Pacific as well as global emerging markets  Is at an early stage of evolution   Urbanization   Consumption Infrastructure investment Delivering improving Competitiveness across a number of industries in addition to IT   Petrochemicals  Generic pharmaceuticals  16 Fibres Non - traditional autos
  17. 17. OUR FRAMEWORK TO INVESTING - EQUITY Economics • CAD narrowing • Trade deficit narrowing sharply • Growth – can revive in 2014 Sentiments • Domestic investor remain underinvested in equities • FIIs (Foreign Institutional Investors) are positive Valuations Triggers 17 • Plenty of value seen across sectors and stocks • Election results – Strong / stable govt. • Growth - Positive • Crude per barrel > 118 US$ - Negative • Drop in loan to deposit ratio - Positive *CAD – Current Account Deficit
  18. 18. EQUITY FUNDS – RISK REWARD MATRIX 18
  19. 19. 19
  20. 20. 20
  21. 21. Fixed Income 2014
  22. 22. OUR FRAMEWORK TO INVESTING – FIXED INCOME
  23. 23. OPPORTUNITIES  Macro indicators pronounce need for lower interest rates  Amidst low pace of tapering external risks may have receded  Lower inflation itself may be enough to improve sentiments in bond markets The current scenario may mark DURATION and ACCRUAL an attractive play for year 2014
  24. 24. RECOMMENDED THEME FOR 2014 Theme: Duration Strategy With current economy suggesting need for lower interest rates, it may be appropriate time to be invested in duration funds. Investment Period Fund 12 months & above ICICI Prudential Dynamic Bond Fund 24 months & above ICICI Prudential Income Plan 24 months & above ICICI Prudential Long Term Gilt Fund Theme: Accrual Strategy Current elevated level of yields are conducive for investing in funds which predominantly aims to generate returns through accruals Investment Period Fund 15 to 30 days ICICI Prudential Savings Fund 15 months & above ICICI Prudential Regular Savings Fund 30 months & above ICICI Prudential Corporate Bond Fund
  25. 25. 25
  26. 26. 26
  27. 27. 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 as on 3rd January 2014 unless stated otherwise. 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. Data source: Bloomberg, except as mentioned specifically. Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/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 information. 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 Limited (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. The recipient alone shall be fully responsible/are liable for any decision taken on this material. 27
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