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Monthly Market Outlook | November 2023

Amidst global tensions, the global economies might be taking the strain but Indian economy continues the Goldilocks streak. Take a holistic view at what that might mean for you as an investor with the Monthly Market Outlook. #ICICIPrudentialMutualFund #MonthlyMarketOutlook

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O U T L O O K
ONTHLY
MARKET
NOVEMBER 2023
Global Indices Performance
2
• Markets declined for second
consecutive month globally
amidst intensifying Middle East
tensions
• Russian stocks retreated after
the central bank remained
steadfast to hike interest rates
ending sharp slide of Russian
currency
Germany - DAX Index; China - SSE Composite Index; France - CAC 40 Index; Japan - Nikkei; Eurozone - Euronext 100; Hong Kong - HangSeng; US - Dow Jones; Singapore - Strait
Times; Russia - RTS Index; Indonesia - Jakarta Composite Index; U.K. - FTSE; South Korea - Kospi; Brazil - Ibovespa Sao Paulo Index; Indonesia – Jakarta Composite Index; Switzerland
– Swiss Market Index; Taiwan – Taiwan Stock Exchange Corporation; India – S&P BSE Sensex; Data Source: MFI. Returns are absolute returns for the index calculated between Sep 30,
2023 to Oct 31,2023. Past performance may or may not sustain in future. MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit
http://www.icraonline.com/legal/standard-disclaimer.html.
-8%
-5%
-5%
-4% -4% -4% -3% -3% -3% -3% -3% -3% -3%
-2%
-1%
7%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
South
Korea
Switzerland
Singapore
Hong
Kong
UK
Germany
France
Japan
India
China
Brazil
Eurozone
Indonesia
Taiwan
US
Russia
Absolute Returns -October 2023
India – Sectoral Indices Performance
3
FPI: Foreign Portfolio Investors. RBI: Reserve Bank of India. All indices are of S&P BSE and carry the prefix of S&P BSE; Abbreviated CD - S&P BSE Consumer Durables; CG - S&P BSE Capital Goods;
FMCG - S&P BSE Fast Moving Consumer Goods; HC - S&P BSE Health Care; Infra. - S&P BSE India Infrastructure; IT - S&P BSE Information Technology, Govt: Government, RBI: Reserve Bank of
India. Data Source: MFI, BSE ; Returns are absolute returns for the TRI variant of the index (except Infrastructure Index) calculated between September 30.2023 to October 31,2023. Past
performance may or may not sustain in future. The sector(s)/stock(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future
position in this sector(s)/stock(s). MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html.
• Sectoral indices ended in red
mirroring decline in global
stocks
• Concerns over high interest
rates & geo-political conflicts
prompted widespread selling
by FPIs across sectors
• Rate sensitive sector like
Realty rallied after RBI
remained status quo on policy
rates
-6%
-5%
-4% -4% -4% -4%
-3% -3% -3%
-3% -2% -2%
-1% -1%
4%
-9%
-6%
-3%
0%
3%
6%
9%
Telecom
Power
HC
Metal
Oil
&
Gas
CG
Bankex
Infra
Financials
IT
CD
Energy
Auto
FMCG
Realty
Absolute Returns - October 23
India: The ‘Goldilocks’ story continues
(For the long term)
Tracking weak global cues and softening domestic macro indicators have put questions on ‘Goldilocks’
story of Indian Economy. Goldilocks is a state of Economy wherein the country experiences period of ‘High
Growth’ & ‘Low Inflation’
In the long run, while India’s Goldilocks story may remain intact. But in near-term that may not be the case
as inflation though on its downtrend but continues to remain on higher side and Growth may soften in the
near-term. We believe that in near-term volatility may persist as rural growth continues to lag urban
growth, deficient rainfall may impact inflation & demand, global slowdown may affect exports etc. may
contribute to external sector risks. Hence, near-term ‘Goldilocks’ picture looks hazy
However, with strong capex momentum, sustained government revenues, decent corporate profitability,
indigenization, favorable demographics & strong bank balance-sheets, the long term picture looks bright
and clear
Goldilocks: Still in the game!
Near Term Picture –
Rural Growth playing a catch down
6
Data as Sep 30, 2023. Source – Avendus Spark Capital. Mn: Million, Covid refers to Coronavirus Disease 2019.
Rural indicators are trending below Pre-Covid average indicating a lag in Rural Recovery
12.2
0
2
4
6
8
10
12
14
Apr-17
Nov-17
Jun-18
Jan-19
Aug-19
Mar-20
Oct-20
May-21
Dec-21
Jul-22
Feb-23
Sep-23
Air Passenger Traffic: Domestic (Mn)
Pre-Covid Average: 11.3
569.7
-50
50
150
250
350
450
550
650
750
Apr-17
Nov-17
Jun-18
Jan-19
Aug-19
Mar-20
Oct-20
May-21
Dec-21
Jul-22
Feb-23
Sep-23
Railway Passenger Traffic (Mn)
Pre-Covid Average: 696.5
Urban Growth Indicator Rural Growth Indicator

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Monthly Market Outlook | November 2023

  • 1. O U T L O O K ONTHLY MARKET NOVEMBER 2023
  • 2. Global Indices Performance 2 • Markets declined for second consecutive month globally amidst intensifying Middle East tensions • Russian stocks retreated after the central bank remained steadfast to hike interest rates ending sharp slide of Russian currency Germany - DAX Index; China - SSE Composite Index; France - CAC 40 Index; Japan - Nikkei; Eurozone - Euronext 100; Hong Kong - HangSeng; US - Dow Jones; Singapore - Strait Times; Russia - RTS Index; Indonesia - Jakarta Composite Index; U.K. - FTSE; South Korea - Kospi; Brazil - Ibovespa Sao Paulo Index; Indonesia – Jakarta Composite Index; Switzerland – Swiss Market Index; Taiwan – Taiwan Stock Exchange Corporation; India – S&P BSE Sensex; Data Source: MFI. Returns are absolute returns for the index calculated between Sep 30, 2023 to Oct 31,2023. Past performance may or may not sustain in future. MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html. -8% -5% -5% -4% -4% -4% -3% -3% -3% -3% -3% -3% -3% -2% -1% 7% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% South Korea Switzerland Singapore Hong Kong UK Germany France Japan India China Brazil Eurozone Indonesia Taiwan US Russia Absolute Returns -October 2023
  • 3. India – Sectoral Indices Performance 3 FPI: Foreign Portfolio Investors. RBI: Reserve Bank of India. All indices are of S&P BSE and carry the prefix of S&P BSE; Abbreviated CD - S&P BSE Consumer Durables; CG - S&P BSE Capital Goods; FMCG - S&P BSE Fast Moving Consumer Goods; HC - S&P BSE Health Care; Infra. - S&P BSE India Infrastructure; IT - S&P BSE Information Technology, Govt: Government, RBI: Reserve Bank of India. Data Source: MFI, BSE ; Returns are absolute returns for the TRI variant of the index (except Infrastructure Index) calculated between September 30.2023 to October 31,2023. Past performance may or may not sustain in future. The sector(s)/stock(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this sector(s)/stock(s). MFI Explorer is a tool provided by ICRA Online Ltd. For their standard disclaimer please visit http://www.icraonline.com/legal/standard-disclaimer.html. • Sectoral indices ended in red mirroring decline in global stocks • Concerns over high interest rates & geo-political conflicts prompted widespread selling by FPIs across sectors • Rate sensitive sector like Realty rallied after RBI remained status quo on policy rates -6% -5% -4% -4% -4% -4% -3% -3% -3% -3% -2% -2% -1% -1% 4% -9% -6% -3% 0% 3% 6% 9% Telecom Power HC Metal Oil & Gas CG Bankex Infra Financials IT CD Energy Auto FMCG Realty Absolute Returns - October 23
  • 4. India: The ‘Goldilocks’ story continues (For the long term)
  • 5. Tracking weak global cues and softening domestic macro indicators have put questions on ‘Goldilocks’ story of Indian Economy. Goldilocks is a state of Economy wherein the country experiences period of ‘High Growth’ & ‘Low Inflation’ In the long run, while India’s Goldilocks story may remain intact. But in near-term that may not be the case as inflation though on its downtrend but continues to remain on higher side and Growth may soften in the near-term. We believe that in near-term volatility may persist as rural growth continues to lag urban growth, deficient rainfall may impact inflation & demand, global slowdown may affect exports etc. may contribute to external sector risks. Hence, near-term ‘Goldilocks’ picture looks hazy However, with strong capex momentum, sustained government revenues, decent corporate profitability, indigenization, favorable demographics & strong bank balance-sheets, the long term picture looks bright and clear Goldilocks: Still in the game!
  • 6. Near Term Picture – Rural Growth playing a catch down 6 Data as Sep 30, 2023. Source – Avendus Spark Capital. Mn: Million, Covid refers to Coronavirus Disease 2019. Rural indicators are trending below Pre-Covid average indicating a lag in Rural Recovery 12.2 0 2 4 6 8 10 12 14 Apr-17 Nov-17 Jun-18 Jan-19 Aug-19 Mar-20 Oct-20 May-21 Dec-21 Jul-22 Feb-23 Sep-23 Air Passenger Traffic: Domestic (Mn) Pre-Covid Average: 11.3 569.7 -50 50 150 250 350 450 550 650 750 Apr-17 Nov-17 Jun-18 Jan-19 Aug-19 Mar-20 Oct-20 May-21 Dec-21 Jul-22 Feb-23 Sep-23 Railway Passenger Traffic (Mn) Pre-Covid Average: 696.5 Urban Growth Indicator Rural Growth Indicator
  • 7. Near Term Picture – Deficient Monsoon 7 Data as on Sep 30,2023. Data Source: Equirus Research. IMD: Indian Metrological Department. India reports higher rainfall deficit (approx. 6%) in 2023 against IMD estimates of 4% 75 80 85 90 95 100 105 110 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 MONSOON RAINS TRENDING BELOW LONG PERIOD AVERAGE Deficient Rains may further weaken rural demand, spur high inflation & compel government to curb export of commodities
  • 8. 14,300 16,300 18,300 20,300 22,300 24,300 26,300 Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21 Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 Central Bank Balance Sheets (FED, ECB, BoJ)($BN) Central Bank Balance Sheets (FED, ECB,BoJ)($BN) Near Term Picture – Higher for Longer Interest rates 8 Data as Sep 30, 2023. Data Source: ICICI Securities, JP Morgan, Equirus Research &FRED (https://fred.stlouisfed.org/series/WALCL) . Fed: Federal Reserve System of US, ECB: European Central Bank, BoJ: Bank of Japan, USA: United States of America, UK: United Kingdom. Estimates refer to JP Morgan Estimates. Past performance may or may not sustain in future. Expectations of high Interest Rates + shrinking Central Bank Balance sheets likely to decelerate global growth engine 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Global Central Bank Policy Rates Eurozone USA UK Estimates Reducing Balance sheet size since beginning of rate hikes Jun-24
  • 9. -19% -9% 1% 11% 21% 31% 41% Jun-14 Feb-15 Oct-15 Jun-16 Feb-17 Oct-17 Jun-18 Feb-19 Oct-19 Jun-20 Feb-21 Oct-21 Jun-22 Feb-23 3MMA Services Exports (YoY %) Near Term Picture – Moderating Service Exports 9 Data as on Sep 30,2023 is considered. Source – Equirus Research, MMA: Month Moving Average. Past performance may or may not sustain in future. Downtrend of services export may continue in the near-term as Global slowdown is likely to have a bearing on India’s Services exports Services Exports continue to paint downtrend picture Sep-23
  • 10. Zooming out a little…
  • 11. Long term picture – Indian Govt. sustains its firepower 11 For Govt. Debt to GDP: Data as on March 31,2022 is considered. For Central Govt. Tax Revenues: Data as on Sep 30,2023 is considered. Source: Morgan Stanley & Avendus Spark Capital. GDP: Gross Domestic Product, FY: Financial Year, M: Months, Bn: Billion, Govt.: Government. Past performance may or may not sustain in future. India stands relatively less scathed to high global interest rates Buoyant Tax collection likely to help the Govt. keep its fiscal deficit in check Japan 261.3 Govt. Debt to GDP(%) US 121.4 France 111.7 UK 101.4 India 83.1 China 77.1 Taiwan 27.5 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 6M FY13 6M FY14 6M FY15 6M FY16 6M FY17 6M FY18 6M FY19 6M FY20 6M FY21 6M FY22 6M FY23 6M FY24 Central Govt. Revenues (INR Bn) Direct Tax (Rs. bn) Indirect Tax (Rs. bn) GST Collections Total Revenue for 6M FY24 jumped by 14%, marked by buoyant corporate tax collection
  • 12. Long Term Picture – Banking Health 12 FY: Financial Year. Source: Morgan Stanley Research & Avendus Spark Capital. Green color represents best value and red color represents worst value Indian banks remain relatively stable amidst Global banking Crisis due to i) Improved management of Non Performing Loans and ii) Constantly rising Net Interest Margins FY-18 11.5% FY-19 9.3% FY-20 8.5% FY-21 7.5% FY-22 5.9% FY-23 3.9% Years Bank's Net Interest Margins (%) FY-22 3.3 FY-21 3.3 FY-20 3.2 FY-19 3.1 FY-18 2.8 Gross Non Performing Loans (%) Net interest Margins (%)
  • 13. Long term picture – Corporate Profitability 13 Data Source: Morgan Stanley and Avendus Spark. F: Financial Year. FY: Financial Year. E: Estimates. Past performance may or may not sustain in future. India’s Economic growth has bolstered Corporate Profits and reduced corporate’s reliance on large finances 62% 52% 55% 45% 50% 55% 60% 65% F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 F2022 F2023E F2024E F2025E Corporate Debt (% of GDP) 3.7% 1.4% 5.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Corporate Profit to GDP (%) Corporate Debt reduced over the years reflect lower reliance on external finances Steady GDP momentum creates conducive environment for businesses
  • 14. Long term picture – Household Demand 14 Data Source: Morgan Stanley and Macquarie Research. GDP: Gross Domestic Product, F: Forecasts, Mn: Million, For High Income Group, Annual income per household is >30L, for Upper Mid: Annual income above 6 L but below 30L, For Lower Mid, Annual income below 6L and above 3L and for Lower Income, Annual Income lower than 3L is considered. L: Lakhs. Past performance may or may not sustain in future. Lower Household Debt and changing Income Distribution Dynamics create conducive environment for blooming consumer demand China Hong Kong India Indonesia Korea Phillipines Singapore Taiwan Thailand 0% 20% 40% 60% 80% 100% 120% 0 20000 40000 60000 80000 100000 Household Debt, % of GDP GDP per capita (2021) Household Debt to GDP Household Income Distribution (No. of Households in each level group) 2005 2018 2030F High Income Group 1 Mn (1%) Upper-Mid Income Group 16 Mn (7%) Lower-Mid Income Group 51 Mn (23%) Low Income Group 151 Mn (69%) 8 Mn (3%) 61 Mn (21%) 97 Mn (33%) 127 Mn (43%) 29 Mn (7%) 168 Mn (44%) 132 Mn (33%) 57 Mn (15%)
  • 15. Long Term Picture – India’s PMI remains brightest 15 Source – Axis Capital and Equirus Research. PMI – Purchasing Managers Index, US – United States, UK – United Kingdom. PMI >50 indicates expansion and <50 indicates contraction. Readings above 50 are shown in green color and below 50 are shown in red color. India is consistently outperforming major economies in terms of manufacturing activity India US Eurozone UK China Japan Sep-22 55.1 52.0 48.4 48.2 48.1 50.8 Oct-22 55.3 50.4 46.4 46.2 49.2 50.7 Nov-22 55.7 47.7 47.1 46.5 49.4 49.0 Dec-22 57.8 46.2 47.8 45.3 49.0 48.9 Jan-23 55.4 46.9 48.8 47.0 49.2 48.5 Feb-23 55.3 47.3 48.5 49.3 51.6 47.7 Mar-23 56.4 49.2 47.3 47.9 50.0 49.2 Apr-23 57.2 50.2 45.8 47.8 49.5 49.5 May-23 58.7 48.4 44.8 47.1 50.9 50.6 Jun-23 57.8 46.3 43.4 46.5 50.5 49.8 Jul-23 57.7 49 42.7 45.3 49.2 49.6 Aug-23 58.6 47.9 43.5 43 51.0 49.6 Sep-23 57.5 49.8 43.4 43.3 50.6 48.5
  • 16. Long term picture – Favorable Demographics 16 Data is shown on calendar year basis. Data Source: Macquarie Equity Research and Morgan Stanley. Past performance may or may not sustain in future. Confluence of having more younger population mix and lower wage rates braces for higher manufacturing growth in India 40.4 39.6 38.4 33.5 31.5 29.7 29.2 28.4 27.6 30.9 0 5 10 15 20 25 Singapore South Korea Taiwan China Thailand Vietnam Indonesia India Manufacturing Wage(US$/hr) 2020 2021 2022 Lower Manufacturing Wages as compared to other countries
  • 17. Long term picture – Going from strength to strength Data Source: Macquarie Research. GDP: Gross Domestic Product. Average data of 2019 to 2021 is considered. India’s overall gross savings rate remains competitive with major emerging economies Effective mobilization of savings in an economy roots for higher growth China: 44.3 Indonesia: 31.0 Thailand: 29.1 India: 28.8 Russia: 27.7 Philippines: 25.6 Malaysia: 24.8 Mexico: 24.3 Brazil: 15.0 South Africa: 14.6 Gross Domestic Savings (% of GDP)
  • 19. Market goes through Phases… 19 Boom Phase • Lehman Crisis 2008 • Dot com burst – 2001 Burst Phase • Equity Markets in 2013-16 • Equity Markets in 2009-11 • Debt Accrual Schemes in 2019 • Equity Markets in 2020 Good Time to Invest • Equity Markets in 2011 & 2017 • Equity Markets currently • Real Estate in 2013 • e-Commerce in 2014 • Bitcoin in 2017 • Equity in 2007 & 2000 Bubble Phase • Equity Markets in 2012 Boring Phase We are here!
  • 20. Why are we in a Boom Phase? 20 Indicators Current Status Fit for Boom Phase Market Returns High Market Valuations Rising Sentiments Positive Earnings Growth High Production Growth High
  • 21. Boom Phase: Markets yielding higher returns 21 Markets have rebounded at a faster pace in last 6 months Source : MFIE. Data as on October 31, 2023. Past performance may or may not sustain in future. (0.6) (0.3) 2.0 (6.9) 5.9 13.4 22.7 28.3 -10 -5 0 5 10 15 20 25 30 35 Nifty 50 NIFTY Large Midcap 250 Nifty Midcap 150 Nifty Smallcap 250 Absolute Returns (%) 1Yr Returns as on Mar-23 1Yr Returns as on Oct-23 Gains have been the highest in Midcap & Smallcap space
  • 22. 105 - 20 40 60 80 100 120 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Indian Market Cap to GDP (%) 0 5 10 15 20 25 30 35 40 45 Nov-01 Nov-03 Nov-05 Nov-07 Nov-09 Nov-11 Nov-13 Nov-15 Nov-17 Nov-19 Nov-21 Nov-23 Nifty 50 P/E (x) Nifty 50 P/E Average Boom Phase: Valuations on the higher end 22 Following the recent correction, valuations though have moderated but continue to trade close to its long term averages Source : NSE and Nuvama Research. Data as on November 06, 2023 for PE valuations. Data as on Oct 31,2023 for Indian Market Cap to GDP. Past performance may or may not sustain in future. P/E – Price to Earning, GDP: Gross Domestic Product. Average: 93 Average: 21 Oct-23
  • 23. Boom Phase: Valuations on the higher end 23 India’s valuations cooled off between Sep-22 & Mar-23 Source : MFIE. Past performance may or may not sustain in future. For indices considered for each country, please refer to slide 2 disclaimers. 29% 27% 22% 18% 18% 16% 15% 11% 8% 8% 8% 4% 3% -3% -6% -7% -10% 0% 10% 20% 30% Germany France Eurozone Hong Kong Taiwan US South Korea UK China Switzerland Japan Singapore India Indonesia Russia Brazil Absolute Returns (Sep 30, 2022-Mar 31, 2023) However, valuations are again on the rise… 11%10% 8% 8% 1% -1%-1% -4%-5%-5%-6%-6%-6%-8%-8% -16% -25% -15% -5% 5% 15% 25% Brazil Japan Russia India Taiwan US Indonesia UK Germany Eurozone Singapore France Switzerland China South Korea Hong Kong Absolute Returns (Mar 31, 2023 - Oct 31, 2023)
  • 24. Boom Phase: Valuations on the higher end 24 Share of Market Cap – (as a % of Total Market Cap) Source: NSE. Data as on Oct 31,2023. Past performance may or may not sustain in future. Red indicates high valuations, Amber indicates neutral valuations and Green indicates attractive valuations. Period Large Cap Mid Cap Small Cap Sum of Mid & Smallcap 2004 87.1 9.3 3.6 12.9 2005 83 11.3 5.6 16.9 2006 81.9 11.5 6.7 18.2 2007 77.7 13.2 9.1 22.3 2008 82.7 10.9 6.4 17.3 2009 79.8 12.3 7.9 20.2 2010 78 12.5 9.4 21.9 2011 79.8 12.1 8.1 20.2 2012 77.9 13.4 8.7 22.1 2013 80.3 12.4 7.2 19.6 2014 76.8 14.1 9.1 23.2 2015 73.8 15.2 11 26.2 2016 72.9 15.3 11.8 27.1 2017 68.1 17.3 14.6 31.9 2018 72 16.3 11.7 28 Dec-19 74.9 15.6 9.5 25.1 Dec-20 74.2 15.5 10.2 25.7 Dec-21 68.7 16.8 14.5 31.3 Dec-22 69.2 16.1 14.7 30.8 Jun-23 67.5 16.9 15.6 32.5 Aug-23 64.7 17.7 17.6 35.3 Sep-23 65 17.7 17.3 35 Oct-23 64.5 17.7 17.7 35.4
  • 25. Equity Valuation Index 25 Our Equity Valuations Index following recent market correction have although moderated but continue to remain in the neutral zone 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 GDP ratio and any other factor which the AMC may add/delete from time to time.. G-Sec – Government Securities. GDP – Gross Domestic Product, Data as on October 31, 2023 has been considered. Equity Valuation Index (EVI) is a proprietary model of ICICI Prudential AMC Ltd. (the AMC) used for assessing overall equity market valuations. The AMC may also use this model for other facilities/features offered by the AMC. 104.3 50 70 90 110 130 150 170 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Oct-22 Oct-23 Aggressively Invest in Equities Neutral Incremental Money to Debt Book Partial Profits Invest in Equities
  • 26. (600.00) (400.00) (200.00) - 200.00 400.00 600.00 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 FPI Equity Flows (INR Bn) Boom Phase: Investor Sentiments – Positive to Neutral 26 Consistent SIP flows are driving the buying spree for Mutual Fund Houses However, FPI Flows continued to remain negative marked by heavy selling across sectors Data as on Sep 30, 2023 for Mutual Fund Flows. Data as on October 31,2023 for FPI Equity Flows. Data Source: Morgan Stanley Research and NSDL. SIP: Systematic Investment Plan. FPI; Foreign Portfolio Investors. 0 60 120 180 -250 -150 -50 50 150 250 Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21 Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 SIP Flows (INR Bn) Mutual Fund Houses Flows (Ex-SIP) INR Bn Consistent SIP Flows Mutual Fund Houses Flows (Ex-SIP) Monthly SIP flows
  • 27. 5.9 6.8 -10.5 -1.6 6.9 15.8 33.3 33.9 29.7 15.7 15.7 15.7 -15 -10 -5 0 5 10 15 20 25 30 35 40 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jul-23 Aug-23 Sep-23 Oct-23 2 Yrs Earnings Growth (Y-o-Y %) -1.1 14.8 -19.0 -15.7 41.0 59.0 41.9 12.7 8.3 13.9 9.8 13.9 -30 -20 -10 0 10 20 30 40 50 60 70 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jul-23 Aug-23 Sep-23 Oct-23 1 Yr Earnings Growth (Y-o-Y %) Boom Phase: Earnings Trajectory Climbing Up 27 Data as on October 31, 2023. Data Source: Crisil Research and NSE, Earnings for Nifty 50 Companies have been considered. Returns for 1 year are calculated on absolute basis and more than 1 year are calculated on CAGR basis. Covid- Coronavirus Disease 2019. Corporate Earnings continue to gain traction at levels ahead of Pre-covid results GDP gaining momentum bodes well for corporate earnings growth
  • 28. 7.3 7.2 5.3 5.2 4.8 4.8 3.7 3.5 3.4 3 2.9 2.8 2.1 2 1.7 1.7 1.6 1.3 -0.1 -3.2 -4 -2 0 2 4 6 8 Saudi Arabia India Indonesia Argentina Spain EU Australia Mexico Canada Brazil China Italy South Africa South Korea UK France United States Japan Germany Russia FY23 GDP Growth (%) Boom Phase: India’s GDP shining bright 28 Data Source: ICICI Securities. GDP: Gross Domestic Product, UK: United Kingdom, YoY: Year on Year and EU: European Union. Percentages shown above have been calculated on Year on Year basis. The G20 or Group of 20 is an intergovernmental forum comprising 19 countries and the European Union. Indian Economy is emerging as one of the fastest growing economy amongst the G20 Nations
  • 29. Summary & Outlook 29 • With changing global macro dynamics, near term vision of ‘Goldilocks’ for Indian Economy is hazy but a clear vision can be seen in the long term • With sound fundamentals and multiple structural reforms underway, the economy is at the cusp of further up- cycle in the long run • Favorable demographics and demand too bodes well for the economy • Long term structural story remains intact albeit with near term volatility owing to global growth-inflation dynamics and evolving geo-political factors and uncertainties • Post March-23, Indian equity market valuations have become richer with upbeat sentiments on growth and profitability • We believe that markets are in a boom phase and prefer large caps given the recent outperformance of mid and small cap stocks • We recommend investing in diversified equity schemes having flexibility to move across market caps/ sectors /themes coupled with Hybrid schemes that allocate across different asset classes with an aim to navigate volatility The sector(s)/stock(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this sector(s)/stock(s).
  • 31. The Month Gone By 31 • The month was marked by a sharp rise in yields on long-dated government bonds. Yields tracked the fast rise in US Treasury bond yields, which had touched the critical 5% mark on Oct 23, 2023, before rebounding lower. • Rise in US bond yields was attributed to US growth still surprising to the upside; a hawkish Federal Reserve signaling higher rates for longer and loose fiscal policy in preparation for the US presidential election in 2024. • The RBI’s monetary policy committee met on Oct 6 to 8, 2023, and as anticipated, announced no change to key policy rates. However, bond yields reacted to the RBI’s decision to conduct bond sales to adjust liquidity. • Growing tensions in the Middle East in the backdrop of Israel-Hamas war increased worries of potential supply disruptions of energy commodities in a supply-tight market. In a contradictory move, international oil prices corrected in Oct 2023, pushed lower after weak economic data coming out of Europe. Source: RBI; US Federal Reserve; Refinitiv
  • 32. The Month Gone By – Yield Movement 32 The benchmark 10-year bond yield rose sharply during the month on the back of bond sale comments by the RBI and rise in US Treasury yields. The 10-year G-Sec yield settled at 7.36% on Oct 31, 2023, up 15 bps from Sep 30, 2023. Data as on Oct 31, 2023. Source – RBI. RBI suggests bond sales for managing liquidity Yields fell tracking fall in US Treasury yields 10-year US Treasury yields close at 4.99% Yields fell tracking fall in US Treasury yields India’s inflation cools to 5.02% in Sep 2023 7.15% 7.20% 7.25% 7.30% 7.35% 7.40% 30-Sep 1-Oct 2-Oct 3-Oct 4-Oct 5-Oct 6-Oct 7-Oct 8-Oct 9-Oct 10-Oct 11-Oct 12-Oct 13-Oct 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct 19-Oct 20-Oct 21-Oct 22-Oct 23-Oct 24-Oct 25-Oct 26-Oct 27-Oct 28-Oct 29-Oct 30-Oct 31-Oct India Benchmark 10-year G-Sec Yield
  • 33. Yield Curve and Credit Spreads 33 Data as on Oct 31, 2023. Source – RBI; CCIL, Internal Sources. Credit spreads compressed in the shorter-end of the curve due to greater rise in G-Sec yields of comparable tenure. Rise in bond yields was visible across the yield curve. The short- end was affected by tighter liquidity conditions. 7.00 7.10 7.20 7.30 7.40 7.50 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 G-sec Bond Yield (%) Bond Maturity in Years G-Sec Yield Curve 31-Oct-23 30-Sep-23 20 30 40 50 60 70 01/Oct 04/Oct 07/Oct 10/Oct 13/Oct 16/Oct 19/Oct 22/Oct 25/Oct 28/Oct 31/Oct in bps Credit Spreads Over G-Sec of Comparable Tenure 1Yr-AAA 3Yr-AAA 5Yr-AAA
  • 34. Overnight Interest Rates Touch the Ceiling 34 System Liquidity remained in deficit for major part of Oct 2023. Cash-deficit banks tapped the RBI’s marginal standing facility (MSF) window to borrow cash overnight at the penal rate of 6.75%, which, in turn, pushed up overnight yields to the same level. Data as on Oct 31, 2023. Source – RBI. -150,000 -100,000 -50,000 - 50,000 100,000 150,000 6.00% 6.25% 6.50% 6.75% 7.00% 01/Oct /23 06/Oct /23 11/Oct /23 16/Oct /23 21/Oct /23 26/Oct /23 31/Oct /23 System Liquidity (Rs. Cr) Call Rate System Liquidity and Impact on Call Rate Liquidity Call Rate
  • 35. Key Highlights 35 Data as on Oct 31, 2023. Source – Investing.com; RBI’s Lending and Deposit Rates of Scheduled Commercial Banks - October 2023 . Data lags by 1 month The 10-year US Treasury bond yield hit a 16-year high of 5.0% during the month before settling slightly lower. The gap between deposit rate and loan rate has narrowed owing to greater rise in deposit rates amid tighter liquidity conditions 4.5% 4.6% 4.7% 4.8% 4.9% 5.0% 5.1% 29/Sep 01/Oct 03/Oct 05/Oct 07/Oct 09/Oct 11/Oct 13/Oct 15/Oct 17/Oct 19/Oct 21/Oct 23/Oct 25/Oct 27/Oct 29/Oct 31/Oct 10-year US Treasury Bond 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Interest Rate on Outstanding Deposits and Loans Deposit Rate Lending Rate
  • 36. The Big Picture 36 • On the currency front, the Indian Rupee saw some weakness on the back of a stronger dollar index. The RBI’s forex reserves were down $3.4 billion between Sep 29, 2023 and Oct 31, 2023. • Fiscal data, which comes with a 1 month lag, showed fiscal deficit reaching 39.3% of Budget Estimates up till Sep 30, 2023. Deficit was at 37.3% in the corresponding period of the previous year. • Bank credit growth reported a jump of 15.2% on-year as on Oct 20, 2023, excluding the balance sheet impact from the HDFC twin merger. • Globally, the UK economy continued to skirt with recession after a third month of lower output, blamed widely on the increased cost of living, higher interest rates and falling exports. Capital outflow pressures have risen amid decade- high yields on US Treasury bonds. Hopes of a soft landing for the US economy were encouraged by an improved situation seen in October, with headline flash PMI rising to a three-month high. Source – spglobal.com , rbi.org.in , cga.nic.in . PMI – purchasing managers’ index; It is a measure of the prevailing direction of economic trends in manufacturing
  • 37. Fiscal – Favorable Tax Collection 37 Fiscal data lags by 1 month. Data shown is as on Sep 30, 2023. Source: cga.nic.in. FY – financial year. Corporate tax receipts also saw marked improvement, especially in Sep 2023, on the back of strong earnings Income Tax receipts showed robust growth on-year due to increased compliance and a widening tax base. - 50,000 100,000 150,000 200,000 250,000 April May June July Aug Sep Oct Nov Dec Jan Feb March Monthly Corporate Tax Receipts (Rs. Cr) FY22-23 FY23-24 - 30,000 60,000 90,000 120,000 150,000 180,000 April May June July Aug Sep Oct Nov Dec Jan Feb Mar Monthly Income Tax Receipts (Rs. Cr) FY22-23 FY23-24
  • 38. Monetary - RBI’s MPC Decision 38 MPC Meet Decision Stance April 6, 2023 Status Quo Withdrawal of Accommodation June 8, 2023 Status Quo August 10, 2023 Status Quo October 6, 2023 Status Quo December 8, 2023 -- February 8, 2023 -- Data as on Oct 31, 2023. Source – rbi.org.in. Credit figures are ex of HDFC twin merger. The Oct 2023 meeting of the MPC members concluded with no changes to key policy rates and stance Cash-deficit banks are tapping the RBI’s MSF window to borrow funds even when there is surplus cash parked in SDF - 40,000 80,000 120,000 160,000 200,000 01/Oct/23 03/Oct/23 05/Oct/23 07/Oct/23 09/Oct/23 11/Oct/23 13/Oct/23 15/Oct/23 17/Oct/23 19/Oct/23 21/Oct/23 23/Oct/23 25/Oct/23 27/Oct/23 29/Oct/23 31/Oct/23 Bank’s Cash Movement in RBI’s Liquidity Facilities (in Rs. Cr) Marginal Standing Facility (MSF) Standing Deposit Facility (SDF)
  • 39. Economic – Expansion Mode On 39 Data as on Oct 31, 2023. Source – CEIC. S&P Global. Residential Overhang data is available as on Sep 30, 2023 India’s purchasing manager index continued to trail above 50, indicating sustained expansion and increase in factory activity. Time taken for clearing residential real estate listings has reduced, close to where it used to be in 2009-11. 50 52 54 56 58 60 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 India's Manufacturing PMI 10 15 20 25 30 35 40 Q1-2008 Q4-2008 Q3-2009 Q2-2010 Q1-2011 Q4-2011 Q3-2012 Q2-2013 Q1-2014 Q4-2014 Q3-2015 Q2-2016 Q1-2017 Q4-2017 Q3-2018 Q2-2019 Q1-2020 Q4-2020 Q3-2021 Q2-2022 Q1-2023 Residential Overhang (in Months) Q3-2023
  • 40. Global – India Stands Out 40 Data as on Oct 31, 2023. Source – OECD ; RBI; Competitively domestic yields are seen as a positive for attracting foreign flows into Indian bond markets OECD projects India to grow at 6.3% on-year in 2023; among the highest globally. -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% India China Indonesia Brazil World United States Japan Canada Euro area United Kingdom Germany OECD's 2023 Growth Forecasts (Sep ’23; YoY) 7.36% 0% 2% 4% 6% 8% 10% 12% Brazil India United States United Kingdom Canada Germany China Switzerland Japan 10-year Government Bond Yield
  • 41. Our Assessment 41 ECONOMIC MONETARY FISCAL GLOBAL The ‘FMEG’ Framework shows a consolidated view of the factors affecting debt markets STRONG STRONG NEUTRAL NEUTRAL
  • 42. Outlook on Fixed Income 42 • We believe that monetary policy will continue to remain neutral, with a relatively low chance of major shift in policy stance. • Economic indicators have shown steady growth, and hence, monetary policy can maintain a hands-off approach for the time being. • Over the past one year, the yield curve has flattened from its steep levels. This is in sync with the change in phase of the economic growth cycle, moving from recovery and into expansion phase. • We believe the expansion cycle could go on for long, unless growth-inflation dynamics shift considerably. Like-wise, interest rates could also remain elevated and range-bound during the expansion phase. • We suggest keeping moderate duration; taking tactical calls on long-duration and focusing on accrual assets. Yields data source : CCIL
  • 43. Why We Think We Are in Expansion Phase 43 INDICATOR VALUE SIGNALS GDP Forecast for FY24 6.5% Among the fastest globally Inflation Forecast for FY24 5.4% Within tolerable range Capacity Utilization (Sep 2023) 74% At Long Term Average Credit Growth (Oct 2023) >15% YoY Above Recovery Levels G-Sec Yield Curve Change (Mar 31, 2022 to Oct 31, 2023) +263 bps (1Y); +52 bps (10Y) Moving from Steep to Flattish This shows that we are indeed in the Middle of the Expansion Phase and As Growth remains strong there is a Low Probability of Rate Cuts
  • 44. 3.20 0 1 2 3 4 5 6 7 8 9 10 Apr 2014 Nov 2015 Jun 2017 Jan 2019 Aug 2020 Mar 2022 Oct 2023 Fixed-Income Approach: Duration or Accruals? 44 Data as on Oct 31, 2023. Debt Valuation Index considers WPI, CPI, Sensex returns, Gold returns and Real estate returns over G-Sec yield, Current Account Balance, Fiscal Balance, Credit Growth and Crude Oil Movement for calculation. RBI – Reserve Bank of India. Debt Valuation Index is a proprietary model of ICICI Prudential AMC Ltd. (the AMC) used for assessing overall debt valuations. The AMC may also use this model for other facilities/features offered by the AMC. Due to rise in bond yields, our model suggests adding some duration. Overall, however, our stance remains CAUTIOUS towards duration. This means ACCRUALS + Limited Duration seems suitable in the current scenario. Aggressive Highly Aggressive Very Cautious Cautious Moderate
  • 45. Our Choice for Accruals + Limited Duration 45 IPRU – ICICI Prudential. The Yield to Maturity (YTM) mentioned is based on scheme portfolio dated Oct 31, 2023. YTM is the rate of return of a bond if held until maturity. This should not be considered as an indication of the returns that maybe generated by the scheme. The securities bought by the scheme may or may not be held till their respective maturities. Past performance may or may not be sustained in future. Investment Avenues for Savings Core Portfolio Allocation 4.76% 5.44% 5.75% 6.75% 6.88% 7.19% 7.76% 7.79% 8.20% 8.10% 8.35% 8.68% 3% 4% 5% 6% 7% 8% 9% ICICI Prudential Ultra Short Term Fund ICICI Prudential Savings Fund ICICI Prudential Floating Interest Fund ICICI Prudential All Seasons Bond Fund ICICI Prudential Medium Term Bond Fund ICICI Prudential Credit Risk Fund Change in YTM of Accrual Focused Debt Schemes of ICICI Prudential Mutual Fund 30-Apr-22 31-Oct-23 YTMs of most of the debt mutual fund categories have improved, making the risk-reward attractive
  • 46. 46 Data as on Oct 31, 2023. 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. Modified Duration is the price sensitivity and the percentage change in price for a unit change in yield. Our Current Portfolio Positioning – Limited Duration Scheme Average Maturity Macaulay Duration Modified Duration ICICI Prudential Liquid Fund 0.12 Years 0.12 Years 0.11 Years ICICI Prudential Money Market Fund 0.39 Years 0.38 Years 0.36 Years ICICI Prudential Ultra Short Term Fund 0.47 Years 0.44 Years 0.4 Years ICICI Prudential Savings Fund 2.41 Years 0.82 Years 0.76 Years ICICI Prudential Floating Interest Fund 7.26 Years 1.07 Years 1.01 Years ICICI Prudential Corporate Bond Fund 3.76 Years 1.89 Years 1.78 Years ICICI Prudential Credit Risk Fund 3.62 Years 2.02 Years 1.91 Years ICICI Prudential Banking & PSU Debt Fund 4.47 Years 2.26 Years 2.13 Years ICICI Prudential Short Term Fund 4.78 Years 2.33 Years 2.22 Years ICICI Prudential Medium Term Bond Fund 5.18 Years 3.33 Years 3.18 Years ICICI Prudential All Seasons Bond Fund 5.65 Years 3.46 Years 3.31 Years
  • 47. Our Current Portfolio Positioning – Focus on Accruals 47 Data as on Oct 31, 2023. The Yield to Maturity (YTM) mentioned is based on scheme portfolios dated Oct 31, 2023. YTM is the rate of return anticipated on a bond if held until maturity. This should not be considered as an indication of the returns that maybe generated by the scheme. The securities bought by the scheme may or may not be held till their respective maturities. Past performance may or may not be sustained in future, *Includes TREPS & Net Current Assets, ^ Includes Treasury Bills. Shiftin g Sands Shiftin g Sands Scheme AAA & Equivalent Exposure AA & Equivalent and Below Exposure YTM ICICI Prudential Credit Risk Fund 11.5% 62.7% 8.68% ICICI Prudential Medium Term Bond Fund 14.7% 42.2% 8.35% ICICI Prudential Floating Interest Fund 23.5% 9.1% 8.20% ICICI Prudential All Seasons Bond Fund 11.8% 25.4% 8.10% ICICI Prudential Short Term Fund 38.4% 12.7% 7.97% ICICI Prudential Savings Fund 66.9% 3.6% 7.79% ICICI Prudential Ultra Short Term Fund 73.7% 13.2% 7.76%
  • 48. To Summarize… Term spreads remain modest and hence one portfolio duration should be limited Fixed income space continues to remain attractive Short to moderate duration schemes are preferred as we are in an interest-rate-pause cycle Dynamic duration scheme remains our top recommendation Focus on accruals in the current scenario of high interest rates Global central banks action may keep the market volatile 48
  • 49. Investment Approach and Scheme Recommendations
  • 50. Investment Playbook for 2023 – An era of Multiple Asset Classes 50 Category Outlook Our View Scheme Recommendations Equity Valuations moderated but remains in NEUTRAL zone. Long term ‘POSITIVE’ IPRU Business Cycle Fund, IPRU Flexicap Fund, IPRU Focused Equity Fund, IPRU Value Discovery Fund Asset Allocation/ Hybrid Volatility expected to persist IPRU Balanced Advantage Fund, IPRU Multi-Asset Fund, IPRU Equity & Debt Fund Fixed Income High yields making the space attractive IPRU Ultra Short Term Fund, IPRU Short Term Fund, IPRU Credit Risk Fund, IPRU All Seasons Bond Fund Positive Neutral IPRU – ICICI Prudential. Asset allocation and investment strategy will be as per Scheme Information Document.
  • 51. 51 Riskometers ICICI Prudential Business Cycle Fund (An open ended equity scheme following business cycles based investing theme) is suitable for investors whoare seeking*:  Long term wealth creation  An equity scheme that invests in Indian markets with focus on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Flexicap Fund (An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks) is suitable for investors who are seeking*:  Long term wealth creation  An open ended dynamic equity scheme investing across large cap, 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 Focused Equity Fund (An open ended equity scheme investing in maximum 30 stocks across market-capitalization i.e. focus on multicap) suitable for investors who are seeking*:  Long term wealth creation  An open ended equity scheme investing in maximum 30 stocks across market-capitalisation *Investors should consult their financial advisers if in doubt about whether the product is suitable for them Please note that the Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. The above riskometers are as on October 31, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. ICICI Prudential Multi-Asset Fund (An open ended scheme investing in Equity, Debt and Exchange Traded Commodity Derivatives/units of Gold ETFs/units of REITs & InvITs/Preference shares) is suitable for investors who are seeking*:  Long Term Wealth Creation  An open ended scheme investing across asset classes
  • 52. 52 Riskometers ICICI Prudential Value Discovery Fund (An open ended equity scheme following a value investment strategy.)is suitable for investors who are seeking*:  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 Please note that the Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. The above riskometers are as on October 31, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. ICICI Prudential Balanced Advantage Fund (An open ended dynamic asset allocation fund) is suitable for investors who are seeking*:  Long term capital appreciation/income  Investing in equity and equity related securities and debt instruments *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Equity & Debt Fund (An open ended hybrid scheme investing predominantly in equity and equity related instruments) is suitable for investors whoare seeking*:  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
  • 53. Please note that the Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. The aboveriskometers are as on October 31, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. ICICI Prudential Overnight Fund (An open ended debt scheme investing in overnight securities. A relatively low interest rate risk and relatively low credit risk.) ICICI Prudential Liquid Fund (An open ended liquid scheme. A relatively low interest rate risk and moderate credit risk.) This product is suitable for investors who are seeking*: • Short term savings • An overnight fund that aims to provide reasonable returns commensurate with low risk and providing a high level of liquidity This product is suitable for investors who are seeking*: • Short term savings solution • A liquid fund that aims to provide reasonable returns commensurate with low risk and providing a high level of liquidity ICICI Prudential Money Market Fund (An open ended debt scheme investing in money market instruments. A relatively low interest rate risk and relatively low credit risk.) ICICI Prudential Savings Fund (An open ended low duration debt scheme investing in instruments such that the Macaulay Duration of the portfolio is between 6 months and 12 months. A relatively high interest rate risk and moderate credit risk.) This product is suitable for investors who are seeking*: • Short term savings • A money market scheme that seeks to provide reasonable returns, commensurate with low risk and providing a high level of liquidity This product is suitable for investors who are seeking*: • Short term savings • An open ended low duration scheme that aims to maximize income by investing in debt and money market instruments while maintaining optimum balance of yield, safety and liquidity. Riskometers 53
  • 54. 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. A relatively high interest rate risk and moderate credit risk.) ICICI Prudential Bond Fund (An open ended medium to long term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 4 Years and 7 years. The Macaulay duration of the portfolio is 1 Year to 7 years under anticipated adverse situation. A relatively high interest rate risk and moderate credit risk.) This product 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. This product is suitable for investors who are seeking*: • Medium to long 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. 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). A relatively high interest rate risk and moderate credit risk.) ICICI Prudential Constant Maturity Gilt Fund (An open ended debt scheme investing in government securities having a constant maturity of 10 Years. A relatively high interest rate risk and relatively low credit risk.) This product is suitable for investors who are seeking*: • Short term savings • An open ended debt scheme predominantly investing in floating rate instruments. This product is suitable for investors who are seeking*: • Long term wealth creation • A gilt fund that aims to provide reasonable returns by investing in portfolio of Government Securities while maintaining constant maturity of the portfolio at 10 years. Please note that the Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. The aboveriskometers are as on October 31, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. Riskometers 54
  • 55. ICICI Prudential Long Term Bond Fund (An open-ended debt scheme investing in instruments such that the Macaulay duration of the portfolio is greater than 7 Years. A relatively high interest rate risk and relatively low credit risk.) ICICI Prudential All Seasons Bond Fund (An open ended dynamic debt scheme investing across duration. A relatively high interest rate risk and moderate credit risk.) This product is suitable for investors who are seeking*: • Long term wealth creation • 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. This product 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. ICICI Prudential Gilt Fund (An open ended debt scheme investing in government securities across maturity. A relatively high interest rate risk and relatively low credit risk.) ICICI Prudential Credit Risk Fund (An open ended debt scheme predominantly investing in AA and below rated corporate bonds. A relatively high interest rate risk and relatively high credit risk.) This product is suitable for investors who are seeking*: • Long term wealth creation • A gilt scheme that aims to generate income through investment in Gilts of various maturities. This product is suitable for investors who are seeking*: • Medium term savings • A debt scheme that aims to generate income through investing in AA and below rated corporate bonds while maintaining the optimum balance of yield, safety and liquidity. Please note that the Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. The above riskometers are as on October 31, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. Riskometers 55
  • 56. ICICI Prudential Corporate Bond Fund (An open ended debt scheme predominantly investing in AA+ or above rated corporate bonds. A relatively high interest rate risk and moderate credit risk.) ICICI Prudential Short Term Fund (An open ended ultrashort term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 months and 6 months. A moderate interest rate risk and moderate credit risk.) This product is suitable for investors who are seeking*: • Short term savings • An open ended debt scheme predominantly investing in highest rate corporate bonds. This product 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. 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. A moderate interest rate risk and moderate credit risk.) 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. A relatively high interest rate risk and moderate credit risk) This product is suitable for investors who are seeking*: • Short term regular income • An open ended ultra-short debt scheme investing in a range of debt and money market instruments. This product 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. Please note that the Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. The aboveriskometers are as on October 31, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. Riskometers 56
  • 57. YTM Disclaimer Scheme Name ICICI Prudential Money Market Fund ICICI Prudential Savings Fund ICICI Prudential Floating Interest Fund ICICI Prudential Banking & PSU Debt Fund ICICI Prudential Corporate Bond Fund ICICI Prudential All Seasons Bond Fund Description An open ended debt scheme investing in money market instruments. A relatively low interest rate risk and moderate credit risk An open ended low duration debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 6 months and 12 months. A relatively high interest rate risk and moderate credit risk. An open ended debt scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives). A relatively high interest rate risk and moderate credit risk. An open ended debt scheme predominantly investing in Debt instruments of banks, Public Sector Undertakings, Public Financial Institutions and Municipal bonds. A relatively high interest rate risk and moderate credit risk. An open ended debt scheme predominantly investing in AA+ and above rated corporate bonds. A relatively high interest rate risk and moderate credit risk. An open ended dynamic debt scheme investing across duration. A relatively high interest rate risk and moderate credit risk. Annualised Portfolio YTM*: 7.51% 7.79% 8.20% 7.86% 7.95% 8.10% Macaulay Duration 139.33 Days 0.82 Years 1.07 Years 2.26 Years 1.89 Years 3.46 Years Residual Maturity 140.68 Days 2.41 Years 7.26 Years 4.47 Years 3.76 Years 5.65 Years As per AMFI Best Practices Guidelines Circular No. AMFI/ 35P/ MEM-COR/ 72 / 2022-23 dated December 31, 2022 on Standard format for disclosure Portfolio YTM for Debt Schemes, Yield of the instrument is disclosed on annualized basis as provided by Valuation agencies. *in case of semi annual YTM, it will be annualized. The Yield to Maturity (YTM) mentioned is based on scheme portfolio dated Oct 31, 2023. YTM is the rate of return of a bond if held until maturity. This should not be considered as an indication of the returns that maybe generated by the scheme. The securities bought by the scheme may or may not be held till their respective maturities. 57
  • 58. YTM Disclaimer Scheme Name ICICI Prudential Short Term Fund ICICI Prudential Overnight Fund ICICI Prudential Liquid Fund ICICI Prudential Credit Risk Fund ICICI Prudential Medium Term Bond Fund ICICI Prudential Ultra Short Term Fund Description 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. A relatively high interest rate risk and moderate credit risk. An open ended debt scheme investing in overnight securities. A relatively low interest rate risk and relatively low credit risk. An open ended liquid scheme. A relatively low interest rate risk and moderate credit risk. An open ended debt scheme predominantly investing in AA and below rated corporate bonds. A relatively high interest rate risk and relatively high credit risk. 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. A relatively high interest rate risk and moderate credit risk 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. A moderate interest rate risk and moderate credit risk. Annualised Portfolio YTM*: 7.97% 6.78% 7.22% 8.68% 8.35% 7.76% Macaulay Duration 2.33 Years 0.60 Days 0.12 Years 2.02 Years 3.33 Years 0.44 Years Residual Maturity 4.78 Years 1.59 Days 0.12 Years 3.62 Years 5.18 Years 0.47 Years As per AMFI Best Practices Guidelines Circular No. AMFI/ 35P/ MEM-COR/ 72 / 2022-23 dated December 31, 2022 on Standard format for disclosure Portfolio YTM for Debt Schemes, Yield of the instrument is disclosed on annualized basis as provided by Valuation agencies. *in case of semi annual YTM, it will be annualized. The Yield to Maturity (YTM) mentioned is based on scheme portfolio dated Oct 31, 2023. YTM is the rate of return of a bond if held until maturity. This should not be considered as an indication of the returns that maybe generated by the scheme. The securities bought by the scheme may or may not be held till their respective maturities. 58
  • 59. ICICI Prudential Overnight Fund ICICI Prudential Credit Risk Fund ICICI Prudential Ultra Short Term Fund ICICI Prudential Liquid Fund ICICI Prudential Money Market Fund ICICI Prudential Long Term Bond Fund ICICI Prudential Gilt Fund ICICI Prudential Constant Maturity Gilt Fund ICICI Prudential Savings Fund, ICICI Prudential Floating Interest Fund, ICICI Prudential Medium Term Bond Fund, ICICI Prudential All Seasons Bond Fund, ICICI Prudential Corporate Bond Fund, ICICI Prudential Banking & PSU Debt Fund, ICICI Prudential Short Term Fund, ICICI Prudential Bond Fund The Potential risk class (PRC) matrix based on interest rate risk and credit risk. Potential Risk Class Matrix 59
  • 60. 60 Riskometers All figures and other data given in this document are dated as of October 31, 2023 unless stated otherwise. The same may or may not be relevant at a future date. 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 (the AMC). 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 Disclaimer: In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in- house. Some of the material(s) 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 Mutual Fund investments are subject to market risks, read all scheme related documents carefully.