Indian equity indices ended lower in May 2020 owing to concerns about rise in domestic Covid-19 cases and extension of the nationwide lockdown. Benchmarks S&P BSE Sensex and Nifty 50 declined 3.84% and 2.84%, respectively in May 2020.

1. June 2020
Global Markets May-20
(%)
Current
PE
10 Yr
Average
US 4.3 18.8 15.7
UK 3.0 21.3 17.6
Japan 8.3 25.6 19.8
Hong Kong (6.8) 9.9 10.8
Singapore (4.3) 10.2 12.2
China (4.8) 8.1 8.5
Domestic Markets May - 20
(%)
Current
PE
10 Yr
Average
S&P BSE Sensex (3.8) 20.33 19.9
NSE Nifty (2.8) 22.38 20.2
S&P BSE Auto 5.6 23.3 19.0
S&P BSE Bankex (10.5) 19.7 17.5
S&P BSE Capital Goods 1.2 18.5 28.6
S&P BSE Consumer
Durables (7.6) 35.5 31.2
S&P BSE FMCG 1.2 32.3 39.3
S&P BSE Healthcare 2.0 37.5 28.5
S&P BSE IT (1.2) 17.8 19.5
S&P BSE Metals 0.9 6.5 12.0
S&P BSE Mid Cap (1.4) 23.1 23.9
S&P BSE Oil & Gas (1.9) 9.1 12.0
S&P BSE PSU (6.0) 7.8 13.1
S&P BSE Realty (2.7) 23.0 23.8
US Economy: The United States (US) gross domestic product (GDP) fell at an
annual rate of 5% in the first quarter of 2020 compared with 2.1% growth in the
previous quarter. Officials expressed concern about a second wave of Covid-19
infections as well as the impact on lower-income households.
Eurozone: The euro zone economy contracted at an annualised rate of 3.2% in
the first quarter of 2020 - the sharpest pace of decline since the third quarter of
2009 after rising 1% in the fourth quarter. The economy contracted by 7.5% this
year, before growing by about 6% in 2021. The European Central Bank is "fully
prepared" to provide more stimulus in June to support the economy.
UK: The Bank of England held interest rates at 0.1%, but said it is committed to
take further action should the economic crisis caused by the pandemic continue
to deteriorate. The bank also expects the United Kingdom‟s GDP to fall by 14%
over 2020 as a whole
Japan: Japan‟s economy contracted at an annualised rate of 3.4% in the
January-March quarter, compared with a revised 7.3% contraction in the
previous quarter. The Cabinet approved a $1.1 trillion stimulus packageIn
addition, the Bank of Japan rolled out a new measure of increasing provisions
by 30 trillion yen ($278 billion) to financial institutions, which will help
businesses affected by the pandemic.
China: China has abandoned setting a target for GDP growth for the first time in
decades, citing „great uncertainty‟ caused by the pandemic. The People's Bank
of China injected 120 billion yuan ($16.80 billion) via seven-day reverse repos at
2.20% on May 27, 2020.
Index Performance: Indian equity indices ended lower in May 2020 owing to
concerns about rise in domestic Covid-19 cases and extension of the
nationwide lockdown. Benchmarks S&P BSE Sensex and Nifty 50 declined
3.84% and 2.84%, respectively in May 2020.
Inflation: Retail inflation, based on Consumer Price Index (CPI) for April 2020,
was not released by the government due to limited transactions of products
amidst lockdown restrictions to prevent the spread of the covid-19 pandemic.
CPI for March 2020 was, however, revised to 5.84% in March 2020,
compared with 2.86% in March 2019.
Domestic Developments:
Headwinds:
Rise in Covid-19 cases back home and extension of the nationwide lockdown
intensified worries regarding the economic downturn. More losses were seen
after the Reserve Bank of India‟s (RBI) move to extend the moratorium on term
loans by three months till August 2020, pressured banking shares. The RBI
Governor Shaktikanta Das‟ projection of possible de-growth in GDP in the
current fiscal soured the mood further. Historic decline in India‟s
manufacturing and services activity numbers also acted as a dampener.
Tailwinds:
Further losses were, however, capped by gains in some of the index
heavyweights and buying by the domestic and foreign institutional investors.
EQUITY UPDATE
Data Source: Crisil Research; * Data till May 31, 2020;
Data Source: Crisil Research; * Data till May 31, 2020, PE- Price to Earnings; IMF –
International Monetary Fund
Indian Market Update
Global Market Update

2. Indian Market Update
Earnings Growth (%) FY19 FY20E FY21E
Sensex 15 2.5 30.1
Macro Indicators Latest
Update
Previous
Update
GDP (YoY%) 3.1%
(4QFY20)
4.7%
(3QFY20)
IIP (YoY%) -16.7% (Mar) 4.5% (Feb)
Crude ($ bbl) 35.33 (May 31) 25.27 (Apr 30)
Core Sector Growth
(YoY%)
-38.1%
(April 2020)
-9%
(Mar 2020)
Trade Deficit ($ mn) -6,760
(Mar 2020)
-9,760
(Mar 2020)
Current Account Deficit
($ bn)
-1.4
(3QFY20)
-6.3
(2QFY20)
FII Holding in Indian
Equities (%)#
21.5
(4QFY20)
22.2
(3QFY20)
Flows May - 20 Apr - 20 Mar - 20
FIIs (Net Purchases /
Sales) (Rs cr)
14,569 -6,884 -61,973
MFs (Net Purchases /
Sales) (Rs cr)
5,109 -6,846 25,743
Note: # FII hldg includes ADR/GDR (BSE500 Index); Data Source: Crisil Research; * Data till May 31, 2020; CAD: Current Account Deficit; GDP: Gross Domestic Product, IIP: India Industrial
Production FII: Foreign Institutional Investors; MF-Mutual Fund; E- Estimate
Outlook & Triggers
Global equities broadly had a positive run in the month of May as countries began easing lockdown restrictions. Indian equities (Nifty 50
Index) on the other hand ended on a negative note with -2.8% returns. A slowdown in infection growth rate and progress around vaccine
development too aided positive sentiments globally.
Globally, tensions escalated between US-China over COVID-19 spread row, US & European regions witnessed weak Q120 earnings.
Global Central Banks continued to provide support to their respective economies with Bank of Japan (BOJ) keeping policy rate
unchanged at -0.1%, launching a lending facility to channel more funds to small businesses. ECB too intends to step up bond purchases
in addition to the EUR750 bn bond buying program earlier if need be.
On the domestic front, a Rs. 21 Tn economic package announced by the Finance Minister to counter the effects of slowdown triggered
by COVIID-19, met with a tepid response from investors. In a bid to promote and support local economy and to spur growth, the Finance
Minister announced several reforms and relief measures for various sectors – MSMEs, Real Estate, etc. The reforms announced by the
Finance Minister were primarily supply-side reforms. During the month, the RBI too announced measures like repo rate cut by 40 bps to
4.0% and extension of moratorium by another 3 months to August 2020 (demand-side reforms) with an aim to revive growth.
Macro data releases reflected the impact of shutdown as indicators like – composite PMI index & IIP readings declined significantly.
Q4FY20 GDP data came in at 3.1% Vs. Q3FY20 at 4.1% (revised downward print). The GDP data for FY20 stood at 4.2% Vs. 6.1% for
FY19.
Sectors like Telecom and Auto outperformed while Finance and Banks underperformed.* (Source: NSE)
*The sector(s)/stock(s) mentioned in this communication do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s).
Global Developments:
Headwinds: Weakness was seen in markets due to disappointing global
developments, including second wave of the pandemic across several
countries, escalating tensions between the US and China, weak US monthly
jobs data and after the US Fed Chief Jerome Powell warned of extended
period of weak economic growth and called for additional fiscal spending to
stem the fallout of the pandemic.
Tailwinds: Positive global cues including China reporting an increase in
industrial output in April 2020, hopes of economic recovery following the
easing of lockdown restrictions in many countries globally and reports of a
huge Covid-19 package to be announced by the European Commission also
helped in offsetting some losses.
Sectoral Impact:
Majority of the S&P BSE sectoral indices ended lower in May 2020. The S&P
BSE Bankex index was the top sectoral laggard – down 10.47% after the RBI
extended loan moratorium by three months. Sell-off was seen in the finance,
consumer durables and PSU counters. The S&P BSE Finance index, S&P BSE
Consumer Durables and S&P BSE PSU indices fell in the range of 6% to 10%.
The S&P BSE Auto index was the top sectoral gainer – up 5.58% amid reports
of sales restarting in various parts of the country. Buying was seen in the
defensive counters; S&P BSE Healthcare index and S&P BSE FMCG index rose
2.05% and 1.18%, respectively.

3. 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 Gross
Domestic Product (GDP)
Our Recommendation
Our Recommendations – Equity Schemes
Pure Equity
Schemes
ICICI Prudential Bluechip Fund
ICICI Prudential Multicap Fund
These Schemes aim to generate capital appreciation through
participation in equities.
Long-Term SIP
Schemes
ICICI Prudential Value Discovery Fund
ICICI Prudential Smallcap Fund
ICICI Prudential Midcap Fund
ICICI Prudential Large & Mid Cap Fund
ICICI Prudential India Opportunities Fund
These schemes aim to generate long term wealth creation over a full
market cycle.
Asset
Allocation
Schemes
ICICI Prudential Balanced Advantage Fund
ICICI Prudential Equity & Debt Fund
ICICI Prudential Multi-Asset Fund
ICICI Prudential Equity Savings Fund
ICICI Prudential Regular Savings Fund
ICICI Prudential Asset Allocator Fund (FOF)
These schemes aim to benefit from volatility and can be suitable for
investors aiming to participate in equities with low volatility.
None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to consult their financial advisors.
50
70
90
110
130
150
170
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
May-19
May-20
Aggressively invest in Equities
Neutral
Incremental Money to Debt
Book Partial Profits
86.2
Invest in Equities
Our „VCTS‟ framework suggests that post the recent corrections, Valuations - are reasonable, Cycle - we are at the bottom of the
business cycle and Sentiments – around equity as an asset class is negative due to muted past returns and FII outflows. We believe
the market is providing a good margin of safety. Hence, we recommend investing in equities at this juncture.
We believe that the divergence between Value and Growth stocks continues to prevail. Currently, fundamentally sound value stocks are
available at inexpensive valuations, providing good dividend yield and have better earnings visibility. Hence, we recommend investors
to take exposure to schemes with Value bias – ICICI Prudential Value Discovery Fund and Special Situation theme – ICICI Prudential
India Opportunities Fund. Small, midcaps and value oriented stocks over the next few years is recommended for lumpsum investment
for long term investors.
We also believe that volatility is expected to prevail for some time as the world comes to terms with the evolving COVID-19 situation
and its economic fallout. As an investor, one must embrace volatility and be cognizant of his/her own asset allocation while investing.
We continue to recommend Dynamic Asset Allocation scheme which aim to benefit from volatility by reducing the overall cyclicality of
the portfolio.
Equity Valuation Index

4. ICICI Prudential Bluechip Fund is suitable for investors who are seeking*(An open ended equity scheme predominantly
investing in large cap stocks):
 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 Large & Mid Cap Fund is suitable for investors who are seeking**(An open ended equity scheme investing
in both large cap and mid cap stocks):
 Long term wealth creation
 An open ended equity scheme investing in both large cap and mid 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*( An open ended equity scheme following a
value investment strategy):
 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 Equity & Debt Fund is suitable for investors who are seeking*(An open ended hybrid scheme investing
predominantly in equity and equity related instruments):
 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*(An open ended dynamic asset
allocation fund):
 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.
ICICI Prudential Multicap Fund is suitable for investors who are seeking*(An open ended equity scheme investing across
large cap, mid cap, small cap stocks):
 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.
ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*(An open ended scheme investing in equity,
arbitrage and debt):
 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 Multi-Asset Fund is suitable for investors who are seeking*(An open ended scheme investing in Equity,
Debt and Exchange Traded Commodity Derivatives/ Units of Gold ETFs/units of REITs & InvITs/Preference Shares):
• 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.
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ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*(An open ended hybrid scheme investing
predominantly in debt instruments):
 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 Midcap Fund is suitable for investors who are seeking*(An open ended equity scheme predominantly
investing in mid cap stocks):
 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.
ICICI Prudential Smallcap Fund is suitable for investors who are seeking*(An open ended equity scheme predominantly
investing in small cap stocks):
 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 Asset Allocator Fund (FOF) is suitable for investors who are seeking*(An open ended fund of funds scheme
investing in equity oriented schemes, debt 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.:
 Long Term Wealth Creation
 An open ended fund of funds scheme investing in equity oriented schemes, debt oriented schemes and gold
ETFs/ schemes.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential India Opportunities Fund is suitable for investors who are seeking*(An open ended equity scheme following
special situations theme):
 Long Term Wealth Creation
 An equity scheme that invests in stocks based on special situations theme.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
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