Interbank call money rates remained below the RBI’s repo rate of 6.25% during the month as the RBI conducted periodic repo auctions to infuse liquidity in the system. Meanwhile, the central bank accepted the $5 billion it targeted from banks at its currency swap auction to ease liquidity as against the bids received worth $16.31 billion. Read the full document to know more.

1. April 2019
Market Update
Month Overview as on 29 March, 2019
Interbank call money rates remained below the RBI’s repo
rate of 6.25% during the month as the RBI conducted
periodic repo auctions to infuse liquidity in the system.
Meanwhile, the central bank accepted the $5 billion it
targeted from banks at its currency swap auction to ease
liquidity as against the bids received worth $16.31 billion.
Currency in circulation rose 17.5% on-year in the week
ended March 22, 2019, compared with 39.2% growth a year
ago. The RBI, via its liquidity window, injected Rs 716.96
billion on a net daily average basis in February 2019,
compared with net liquidity injection of Rs 380.97 billion in
January 2019.
Bank credit growth rose 14.5% on-year in the fortnight
ended March 15, 2019, compared with 14.4% on-year
growth reported in the fortnight ended February 15, 2019.
Source: CRISIL
Data Source – RBI, Mospi.Nic.in, CRISIL Fixed Income Database, LAF – Liquidity Adjustment Facility, MSF – Marginal Standing Facility, SLF – Standing Liquidity Facility, CP - Commercial Paper, CD – Certificate
of Deposit, CB – Corporate Bond, IIP – India Industrial Production, CPI – Consumer Price Index, WPI – Wholesale Price Index, CAD – Current Account Deficit, GDP – Gross Domestic Product
Macro Update
Month Overview as on 29 March, 2019
Macro Economy Data Release
Indicator Latest Update Previous Update
IIP 1.7% (Jan) 2.6% (Dec)
GDP 6.6% (3QFY19) 7.0% (2QFY19)
USD/INR 69.11 (Mar) 70.74 (Feb)
WPI 2.93% (Feb) 2.76% (Jan)
CPI 2.57% (Feb) 1.97% (Jan)
Credit Spread Data in basis points
Tenure AAA AA A
1Y 1.03% 1.51% 2.07%
3Y 0.81% 1.36% 2.25%
5Y 0.70% 1.33% 2.35%
10Y 0.76% 1.51% 2.56%
Average Liquidity Support by RBI
Rs 599.90 billion (Includes: LAF, MSF, SLF & Term Repo)
Bank Credit Growth Bank Deposit Growth
14.5% 10.0%
Money Market Change in basis points (bps)
Tenure CD Change CP Change
1M 6.65 0 7.05 -10
3M 6.65 -67 7.05 -75
6M 7.10 -40 7.85 -55
12M 7.20 -55 7.95 -75
Bond Market Change in basis points (bps)
Tenure G-Sec Change AAA
CB
Change
1Y 6.43 -14 7.35 -55
3Y 6.66 -12 7.60 -45
5Y 6.93 -16 7.75 -54
10Y 7.35 -6 8.22 -43
Crude: London Brent crude oil prices gained 3.6% in March to close
at $68.39 per barrel on March 29, 2019 vis-à-vis $66.03 per barrel on
February 28, 2019 mainly on the back of a) an unexpected decline in
US crude inventories and a bigger-than-expected drop in gasoline
inventories, and b) a supply declines brought on by US sanctions on
Iran and Venezuela.
Inflation: Consumer Price Index (CPI)-based inflation climbed for the
first time in eight months, came in at 2.57% in February 2019
compared with 1.97% in January 2019. The uptick was largely on
account of the base effect and some firming up of core.
Currency: The rupee ended higher against the US dollar, with the
exchange rate settling at Rs 69.11 per dollar on March 29 as against
Rs 70.74 per dollar on February 28. Dollar demand from state-owned
banks following the central bank’s decision to conduct foreign-
exchange swaps to infuse rupee liquidity put the rupee under
pressure. Concern over a slowdown in global economic growth and
a slump in the Turkish lira and European Central Bank’s (ECB)
reduction in its growth forecast hit investors’ risk appetite, thereby
putting the rupee under pressure.
Gilts: Gilts advanced in the month with yield on the 10-year
benchmark 7.26% 2029 paper ending at 7.35% on March 29, 2019,
compared with 7.41% on February 28, 2019. Prices rose behind
expectations of an interest rate reduction, decline in US benchmark
Treasury yields, sporadic pullback in crude oil prices and the central
bank conducted open market bond purchase auctions during the
month.
Source: CRISIL
Data Source – RBI, Mospi.Nic.in, CRISIL Fixed Income Database, LAF – Liquidity
Adjustment Facility, MSF – Marginal Standing Facility, SLF – Standing Liquidity Facility, CP
- Commercial Paper, CD – Certificate of Deposit, CB – Corporate Bond, IIP – India Industrial
Production, CPI – Consumer Price Index, WPI – Wholesale Price Index, CAD – Current
Account Deficit, GDP – Gross Domestic Product
FIXED INCOME UPDATE

2. Our Outlook
On the fixed income space, we remain nimble-footed and sanguine towards the short end of the yield curve. We continue
to believe that the risk-reward benefit is still favourable in the 1-3 Year segment of the yield curve. However, we aim to
capitalize on any opportunities which are presented to us and therefore, we have lapped onto longer assets in the State
Development Loans (SDL) and corporate bonds which were available at good spread. This has resulted in increased
duration in our select portfolios.
The above strategy is a play on spread compression in the SDL & Corporate bond space. We may be tactical enough to exit
this position once the compression happens. Also, other factors like market sentiments turning positive post the recent
opinion polls, RBI adopting a more growth friendly approach and dovish stance of the US Federal Reserve leading to
higher FPI flows guided us into taking this tactical call.
However, what is making us cautious on the longer end of the yield curve is the possibility of fiscal stress due to a shortfall
in GST collection, best of food deflation being behind us, heavy borrowing calendar for the first half of the year and RBI’s
new liquidity tool facility pointing towards reduced OMO operations.
Additionally, we expect a rate cut in the upcoming policy. A series of rate cuts looks challenging and the central
government’s FY20 projection for GST seems a tad ambitious.
As per our investment framework, accrual schemes have moved into ‘buy’ territory with attractive valuations (spread
between repo rate), reduced flows, and negative sentiments (NBFC liquidity crunch). The risk-reward benefit has turned
favourable and it’s a good time to earn the carry with high credit spreads available in the corporate bond space. Having
said that, we remain cognizant of managing the liquidity, concentration, credit and duration in our accrual portfolios to
provide better risk-adjusted returns.
We would recommend short duration schemes which could mitigate interest rate volatility, accrual schemes which provide
better carry and dynamic duration schemes which are flexible enough to benefit out of interest rate volatility.
We remain watchful of any fiscal slippages, reversal in prices of any perishable food items, uncertainty regarding global
events and escalating trade tensions between US and China.
Debt Valuation
Debt Valuation Index considers WPI, CPI, Sensex YEAR-ON-YEAR returns, Gold YEAR-ON-YEAR returns and Real estate YEAR-ON-YEAR returns over G-Sec yield, Current
Account Balance and Crude Oil Movement for calculation.
1
2
3
4
5
6
7
8
9
10
Aggressively in
High Duration
High Duration
Moderate Duration
Low Duration
Ultra Low Duration
2.50

3. Our Recommendation
For new allocations we recommend short to medium duration, accrual based schemes or dynamically managed schemes.
Our Recommendations
Cash
Manage
ment
Solutions
ICICI Prudential Floating Interest Fund (An open ended debt scheme predominantly
investing in floating rate instruments (including fixed rate instruments converted to
floating rate exposures using swaps/derivatives)
ICICI Prudential Ultra Short Term Fund (An open ended ultra-short term debt scheme
investing in instruments such that the Macaulay duration of the portfolio is between
3 months and 6 months)
ICICI Prudential Savings Fund (An open ended low duration debt scheme investing
in instruments such that the Macau- lay duration of the portfolio is between 6
months and 12 months.)
These schemes
aim to benefit
from better risk
adjusted returns
Short
Duration
Scheme
ICICI Prudential Short Term Fund (An open ended short term debt scheme investing
in instruments such that the Macaulay duration of the portfolio is between 1 Year
and 3 Years)
ICICI Prudential Banking & PSU Debt Fund (An open ended debt scheme
predominantly investing in Debt instruments of banks, Public Sector Undertakings,
Public Financial Institutions and Municipal Bonds)
ICICI Prudential Corporate Bond Fund (An open ended debt scheme predominantly
investing in AA+ and above rated corporate bonds.)
These schemes
aim to benefit
from mitigating
interest rate
volatility
Accrual
Schemes
ICICI Prudential Medium Term Bond Fund (An open ended medium term debt
scheme investing in instruments such that the Macaulay duration of the portfolio is
between 3 Years and 4 Years. The Macaulay duration of the portfolio is 1 Year to
4 years under anticipated adverse situation)
ICICI Prudential Credit Risk Fund (An open ended debt scheme predominantly
investing in AA and below rated corporate bonds)
These schemes
aim to benefit
from capturing
yields at elevated
levels.
Dynamic
Duration
Scheme
ICICI Prudential All Seasons Bond Fund (An open ended dynamic debt scheme
investing across duration)
This scheme
aims to benefit
from volatility by
actively
managing
duration.
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
before investing.
Note: The Macaulay duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present
value of the cash flow by the price.
Riskometer
ICICI Prudential Ultra Short Term Fund is suitable for investors who are seeking*:
 Short term regular income
 An open ended ultra-short term debt scheme investing in a range of debt
and money market instruments
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.

4. ICICI Prudential Savings Fund is suitable for investors who are seeking*:
 Short term savings
 An open ended low duration debt scheme that aims to maximize income
by investing in debt and money market instruments while maintaining
optimum balance of yield, safety and liquidity
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
ICICI Prudential Short Term Fund is suitable for investors who are seeking*:
 Short term income generation and capital appreciation solution
 A debt fund that aims to generate income by investing in a range of debt
and money market instruments of various maturities
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
ICICI Prudential Medium Term Bond Fund is suitable for investors who are
seeking*:
 Medium term savings
 A debt scheme that invests in debt and money market instruments with a
view to maximize income while maintaining optimum balance of yield,
safety and liquidity
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
ICICI Prudential All Seasons Bond Fund is suitable for investors who are seeking*:
 All duration savings
 A debt scheme that invests in debt and money market instruments with a
view to maximize income while maintaining optimum balance of yield,
safety and liquidity
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
ICICI Prudential Corporate Bond Fund is suitable for investors who are seeking*:
 Short term savings
 An open ended debt scheme predominantly investing in highest rated
corporate bonds
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.

5. ICICI Prudential Credit Risk Fund is suitable for investors who are seeking*:
 Medium term savings
 A debt scheme that aims to generate income through investing
predominantly in AA and below rated corporate bonds while maintaining
the optimum balance of yield, safety and liquidity
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
ICICI Prudential Floating Interest Fund is suitable for investors who are seeking*:
 Short term savings
 An open ended debt scheme predominantly investing in floating rate
instruments
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
ICICI Prudential Banking & PSU Debt Fund is suitable for investors who are
seeking*:
 Short term savings
 An open ended debt scheme predominantly investing in Debt instruments
of banks, Public Sector Undertakings, Public Financial Institutions and
Municipal Bonds
*Investors should consult their financial advisers if in doubt about whether the
product is suitable for them.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information
developed in-house. Information gathered and material used in this document is believed to be from reliable sources.
The Fund however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference toany third
party in this material no such party will assume any liability for the same. 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, seek appropriate professional advice and carefully
read the scheme information document. We have included statements 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 monitory and interest policies of India, inflation, deflation, unanticipated turbulence in
interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally,
changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry. All data/information used in the
preparation of this material is dated and may or may not be relevant any time after the issuance of this material. The AMC takes no
responsibility of updating any data/information in this material from time to time. The AMC (including its affiliates), the Fund 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. The recipient
alone shall be fully responsible/are liable for any decision taken on the basis of this material.
Disclaimer