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Monthly Market Outlook | Oct 2023

How can we prepare for the mood of the market? Use micro indicators for a comprehensive look at the market in this month's Market Outlook! #ICICIPrudentialMutualFund #MonthlyMarketOutlook #October #Investment #MutualFunds

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O U T L O O K
ONTHLY
MARKET
OCTOBER 2023
Global Indices Performance
2
• Markets declined as Global
central banks signaled their
‘Higher for Longer’ narrative for
interest rates
• Subdued business surveys across
major economies and China’s
growth engine showing alarming
data further stoked bearish
sentiments
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 August 31, 2023 to
Sep 30,2023. 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.
-5%
-4% -4% -3%
-3%
-2% -2% -2%
-2% -1%
-0.5%
-0.3%
-0.2%
1%
2%
2%
-7%
-5%
-3%
-1%
1%
3%
5%
Russia
South
Korea
Germany
US
Hong
Kong
France
Eurozone
Japan
Taiwan
Switzerland
Singapore
China
Indonesia
Brazil
India
UK
Absolute Returns -September 2023
India – Sectoral Indices Performance
3
DoT: Department of Telecommunication. 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 August 31, 2023 to September 30.2023. 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.
• All the sectoral indices gained with
Telecom sector leading the race
• DoT’s recommendations for
strengthening telecom
infrastructure in the country
enticed investors for telecom
stocks
• While power sector witnessed
gains due to high coal production
levels, Oil & gas stocks rallied on
the back of rising crude oil prices
1%
2% 2% 2% 2%
2%
3% 3% 3%
4%
6%
6%
7%
8%
9%
0%
3%
6%
9%
FMCG
Bankex
IT
CD
Financials
HC
Auto
Realty
Oil
&
Gas
Energy
CG
Metal
Power
Infra
Telecom
Absolute Returns - September 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 and rising
crude prices 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 April 30, 2023. Source – Equirus Research. YoY: Year on Year.
Weak rural wage growth may trickle down to rural consumption which is already lagging behind
0%
4%
8%
12%
16%
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Jul-20
Oct-20
Jan-21
May-21
Aug-21
Nov-21
Feb-22
Jun-22
Sep-22
Dec-22
Mar-23
Rural Wage Growth (YoY %)
High rural inflation is
likely to keep wage
growth contained in
the near-term thereby
slowing rural
consumption
Near Term Picture –
Deficient Monsoon
7
Data as on Sep 30,2023. Data Source: Equirus Research. IMD: Indian Metrological Department. LPA: Long Period Average
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
weaken rural demand,
spur high inflation &
compel government to
curb export of
commodities
LPA: 100
94.8
96.2
65
75
85
95
105
115
125
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Brent Crude Prices ($/bbl)
Near Term Picture –
Oil on the boil
8
Data as of September 30, 2023. Source: ICICI Securities. Bbl: Barrel of oil
India being net importer of oil, high crude prices may result in rupee depreciation & higher trade deficits in the near-term
Spike due to
Russia-
Ukraine
Geo-political
conflicts
79.5
83.0
73
75
77
79
81
83
85
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
May-23
Jul-23
Sep-23
Rupee Movement (USD/INR)
Rupee Depreciation tends
to result in widening
Trade Deficit
Near Term Picture –
Higher for Longer Interest rates
9
Data as Aug 21, 2023 for Central Bank Balance Sheets. Data as on Sep 30,2023 is considered for Central Bank Policy Rates. Data Source: ICICI Securities & JP Morgan.
Fed: Federal Reserve System of US, ECB: European Central Bank, BoJ: Bank of Japan, PBoC: People’s Bank of China, USA: United States of America, UK: United Kingdom.
Estimates refer to JP Morgan Estimates. Past performance may or may not sustain in future.
19,000
21,000
23,000
25,000
27,000
29,000
31,000
33,000
Jan-20
May-20
Sep-20
Jan-21
May-21
Sep-21
Jan-22
May-22
Sep-22
Jan-23
May-23
Central Bank Balance Sheets (FED,
ECB,PBoC,BoJ)($BN)
Central Bank Balance Sheets (FED, ECB,PBoC,BoJ)($BN)
Aug-23
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
Near Term Picture –
Moderating Service Exports
10
Data as on Aug 31,2023 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
-19%
-9%
1%
11%
21%
31%
41%
Jun-14
Nov-14
Apr-15
Sep-15
Feb-16
Jul-16
Dec-16
May-17
Oct-17
Mar-18
Aug-18
Jan-19
Jun-19
Nov-19
Apr-20
Sep-20
Feb-21
Jul-21
Dec-21
May-22
Oct-22
Mar-23
Aug-23
3
MMA
Services
Exports
(YoY
%)
Slowing Services Exports of India
Services Exports continue to
paint downtrend picture
Zooming out a little…
Long term picture –
Indian Govt. sustains its firepower
12
For Govt. Debt to GDP: Data as on March 31,2022 is considered. For Central Govt. Tax Revenues: Data as on Aug 31,2023 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
5M
FY
12
5M
FY
13
5M
FY
14
5M
FY
15
5M
FY
16
5M
FY
17
5M
FY
18
5M
FY
19
5M
FY
20
5M
FY
21
5M
FY
22
5M
FY
23
5M
FY
24
Central Govt. Tax Revenues (INR Bn)
Direct Tax Indirect Tax GST
Long Term Picture –
Banking Health
13
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 (%)
Long term picture –
Corporate Profitability
14
Data Source: Morgan Stanley and Avendus Spark. F: Financial Year. FY: Financial Year. E: Estimates. GDP: Gross Domestic Product. 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
Long term picture –
Household Demand
15
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%)
Long Term Picture –
India’s PMI remains brightest
16
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
Long term picture –
Favorable Demographics
17
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 younger population mix and lower wage rates
braces for high 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
Valuations Update
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!
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
Boom Phase: Markets yielding higher returns
21
Markets have rebounded at a faster pace in last 6 months
Source : MFIE. Data as on September 30, 2023. Past performance may or may not sustain in future.
14.7 14.9
21.1
30.0
33.0
0.7
-0.6 -0.3
2
-6.9
-10
-5
0
5
10
15
20
25
30
35
S&P BSE Sensex Nifty 50 NIFTY Large Midcap
250
Nifty Midcap 150 Nifty Smallcap 250
Market Indices Absolute Returns (%)
1 Yr Returns as on Sep 23 1 Yr Returns as on Mar 23
Boom Phase: Valuations on the higher end
22
Equity Market Valuations continue to trade above long term average
Source : NSE and Nuvama Research. . Data as on September 30, 2023. Past performance may or may not sustain in future. P/E – Price to Earning, GDP: Gross Domestic Product.
22
0
5
10
15
20
25
30
35
40
45
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Jan-14
Jan-16
Jan-18
Jan-20
Jan-22
Nifty 50 P/E (x)
Nifty 50 P/E Average Sep-23
108
-
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 (%)
Average: 93
Average: 21
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…
14%14%
12%
3% 2% 1% 1%
0% 0% -1%-1%-2%-3%-3%
-5%
-13%
-18%
-13%
-8%
-3%
2%
7%
12%
17%
22%
Brazil
Japan
India
Taiwan
Indonesia
Russia
US
UK
South
Korea
Singapore
Switzerland
Germany
France
Eurozone
China
Hong
Kong
Absolute Returns (Mar 31, 2023 - Sep 30, 2023)
Boom Phase: Valuations on the higher end
24
Share of Market Cap – (as a % of Total Market Cap)
Source: NSE. Data as on Sep 30,2023. 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
2004 87.1 9.3 3.6
2005 83.0 11.3 5.6
2006 81.9 11.5 6.7
2007 77.7 13.2 9.1
2008 82.7 10.9 6.4
2009 79.8 12.3 7.9
2010 78.0 12.5 9.4
2011 79.8 12.1 8.1
2012 77.9 13.4 8.7
2013 80.3 12.4 7.2
2014 76.8 14.1 9.1
2015 73.8 15.2 11.0
2016 72.9 15.3 11.8
2017 68.1 17.3 14.6
2018 72.0 16.3 11.7
Dec-19 74.9 15.6 9.5
Dec-20 74.2 15.5 10.2
Dec-21 68.7 16.8 14.5
Dec-22 69.2 16.1 14.7
Mar-23 68.9 16.4 14.6
Jun-23 67.5 16.9 15.6
Aug-23 64.7 17.7 17.6
Sep-23 65.0 17.7 17.3
107.9
50
70
90
110
130
150
170
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Aggressively Invest in Equities
Neutral
Incremental Money to Debt
Book Partial Profits
Invest in Equities
Equity Valuation Index
25
Our Equity Valuations Index continues 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 September 30, 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.
Boom Phase: Investor Sentiments –
Positive to Neutral
26
Consistent SIP flows are driving the buying spree for Mutual Fund Houses
However, FPI Flows turned negative, snapping six month buying trends
Data as on August 31, 2023 for Mutual Fund Flows. Data as on Sep 30,2023 for FPI Equity Flows. Data Source: Morgan Stanley Research. SIP: Systematic Investment Plan. FPI; Foreign Portfolio
Investors.
-600.0
-400.0
-200.0
0.0
200.0
400.0
600.0
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
FPI Equity Flows (INR Mn)
Sep-23
0
60
120
180
-250
-150
-50
50
150
250
Jan-20
Jun-20
Nov-20
Apr-21
Sep-21
Feb-22
Jul-22
Dec-22
May-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
Aug-23
5.9 6.8
-10.5
-1.6
6.9
15.8
33.3 33.9
29.7
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
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 9.8 9.8
-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
1 Yr Earnings Growth (Y-o-Y %)
Boom Phase: Earnings Trajectory Climbing Up
27
Data as on September 30, 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
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. FY: Financial Year. 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
Summary & Outlook
29
• With changing global macro dynamics, near term vision of ‘Goldilocks’ for Indian Economy is hazy but long term
view remains bright & clear
• 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).
Understanding Fixed Income Landscape
India’s Fixed Income Markets : Then & Now
Post 2014, India’s business cycle never entered expansion cycle mainly due to: 1. Impairment of
financial sector balance sheets due to outflow of large corporate loans and 2. Real estate loans in the
NBFC balance sheet. Both kept the banking balance sheet distressed and effective loan rates high for
the borrowers despite RBI bringing down interest rates in the pre-demonetization period.
Also, before 2018 monetary conditions remained tight due to RBI’s inflation targeting framework. As a
result, capacity utilization started trailing and credit growth started falling. Residential real estate
market too saw an inventory built up.
However, things changed post-pandemic as 1. RBI changed the pace of monetary easing and 2. the
fiscal balance sheet of the government started to expand to support growth. Due to Fiscal and
Monetary support, economy moved from slow phase of growth to the expansion cycle.
NBFC: Non Banking Financial Companies.
32
In 2018-2020 phase RBI used to focus on inflation for monetary action. And when economy moved into
slower growth resulting into lower inflation, RBI had the room to cut interest rates.
GROWTH
High Inflation
Low Inflation
High Growth
Low Growth
INFLATION
Slow Growth Phase
of Economic Cycle:
2018 to 2020
Phases of Economic Cycle
33
GROWTH
High Growth –
Low Inflation
Low Growth –
Low Inflation
High Growth –
High Inflation
Low Growth –
High Inflation
INFLATION
The above is based on various calculations and assumptions. Actual scenarios may vary.
No Policy
Action
Rate Cut
Rate Hike
No Policy
Action
Now, RBI has shifted its focus from inflation only to interplay between growth and inflation. Hence, going forward for
policy action, trajectory of inflation & growth would become important. Currently, growth being strong and inflation
in RBI’s tolerable zone, possibility of rate action is low
Phases of Economic Cycle and Policy Action
34
Recovery Late Cycle
Expansion Slowdown
Steep Inverted
Flattish Low
We are Here
Economic Cycle
Shape of the
Yield Curve
Phases of Economic Cycle and Yield Curves
35
The capacity utilization levels have gone up for first time in the last 9 years. This is evident in various
sectors like power, cement, steel where the overall capacity utilizations are at a much higher point.
65
67
69
71
73
75
77
79
81
83
85
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
Sep-20
Mar-21
Sep-21
Mar-22
Sep-22
Mar-23
All India Capacity Utilization Levels
Data as on March 31,2023. Source: RBI; https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=20650.
Economic Cycle :
All India Capacity Utilization Levels
36
4%
8%
12%
16%
20%
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
Sep-20
Mar-21
Sep-21
Mar-22
Sep-22
Mar-23
Sep-23
Non Food Credit Growth (Y-o-Y %)
Credit growth has moved up from an average of 8-10% to an average of 14-16%, which corroborates
well with the mid cycle numbers.
Data as on September 30,2023. Source: RBI; https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=20650; YOY- Year on Year.
Economic Cycle :
Rise in Credit Growth (Y-O-Y%)
37
10
15
20
25
30
35
40
Q1-2008
Q3-2008
Q1-2009
Q3-2009
Q1-2010
Q3-2010
Q1-2011
Q3-2011
Q1-2012
Q3-2012
Q1-2013
Q3-2013
Q1-2014
Q3-2014
Q1-2015
Q3-2015
Q1-2016
Q3-2016
Q1-2017
Q3-2017
Q1-2018
Q3-2018
Q1-2019
Q3-2019
Q1-2020
Q3-2020
Q1-2021
Q3-2021
Q1-2022
Q3-2022
Q1-2023
Q3-2023*
Residential Overhang (in Months)
The inventory overhang in the residential real estate has gone down substantially. The number of
months of inventory is close to where it used to be in the last strong real estate cycle i.e. 2009-2011
Data as on Dec 31,2022. Data Source: CRISIL Research. Q: Quarter . Inventory Overhang is an estimate of the amount of time it would take to sell all of the current
listings in an area, provided that there are no new listings.
Economic Cycle :
Residential Inventory Overhang
38
During 2016-2020, most banks did not have their balance sheets capitalized which reflected in overall
high weighted average lending rates for the borrowers. Currently, the effective loan rates have come
down despite rake hikes due to healthy banking balance sheets
Data Source: CRISIL Research. Weighted Average Lending Rate is the interest rate charged on all the outstanding loans of banks.
Economic Cycle :
Weighted Average Lending Rate (WALR)
-4
-2
0
2
4
6
8
10
12
14
Aug-2013
Feb-2014
Aug-2014
Feb-2015
Aug-2015
Feb-2016
Aug-2016
Feb-2017
Aug-2017
Feb-2018
Aug-2018
Feb-2019
Aug-2019
Feb-2020
Aug-2020
Feb-2021
Aug-2021
Feb-2022
Aug-2022
Feb-2023
Aug-2023
Real WALR Nominal weighted avg. lending rate (WALR)
Nominal v/s Real
39
4.1 3.9 3.5 3.5 3.4
4.6
9.2
6.7 6.4 5.9
- - 0.5
1.8 1.8
1.5
1.0
0.4
- 0.5
2.6 3.1 3.5
2.4 2.4
2.6
4.1
2.7
2.8 3.2
-
0.7
0.7
6.7
7.7 8.2 7.7 7.7
8.7
14.2
9.8
9.2 9.6
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24BE
COMBINED FISCAL DEFICIT
State off-budget (UDAY bonds)
State govt. fiscal deficit
Centre off-budget (FCI IEBR, GOI Services bonds, NSSF loans, Air India, Recap Bonds)
The combined fiscal deficit of centre, state and center off budget has gone up as compared to FY2015-20. In FY2021-
22, it was required to run a high fiscal deficit to support the private sector. The fiscal deficit looks high even now and
on a total basis there is hardly been any consolidation between the 3 years.
Data Source: CRISIL Research. FY: Financial Year. FCI: Food Corporation of India, IEBR: Internal & Extra Budgetary Resources, GOI: Government of India, NSSF: National Small Savings Fund, UDAY: Ujjwal
DISCOM Assurance Yojana. BE: Budgeted Estimate.
Economic Cycle :
Fiscal Deficit Elevated v/s Pre-Pandemic Levels
40
RBI’s Monetary Policy Highlights
3.5
4.5
5.5
6.5
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
Jun-23
Aug-23
Oct-23
Repo Rate
 Monetary Policy Committee (MPC) of the RBI kept
the policy repo rate unchanged at 6.50%.
 This is the fourth consecutive pause by the MPC,
after increasing the repo rate from 4.00% to 6.50%
in six consecutive meetings in the last financial year.
 Real GDP growth projection and inflation projections
for FY2023-24 was maintained at 6.5% and 5.4%
respectively.
 Going forward, the RBI may consider OMO-sales
(Open Market Operation sales) to manage system
liquidity.
Our View
We believe RBI would keep policy rates unchanged till March 2024 to avoid rocking the boat when Growth-
Inflation dynamic is moving as expected.
Rate Pause
41
Income
Dispersion
Retail
Credit
Geo-
Political
Risks
Key Risks for India
42
2.9
4
5 5.9
7.9
10.2 29%
0.7
1.1
1.4
1.6
1.8
2.1 25%
0
2
4
6
8
10
12
14
FY18 FY19 FY20 FY21 FY22 FY23 5 yr
CAGR
Unsecured credit system (INR trn)
Personal loans Credit cards
1.31
1.87
2.34
2.59
2.85
3.15 19%
0
0.5
1
1.5
2
2.5
3
3.5
FY18 FY19 FY20 FY21 FY22 FY23 5 yr
CAGR
MFI system level(INR trn)
Over the last 5 years, the unsecured rate in the system has grown by ~29% and the MFI credit has grown
at the pace of ~19%. Unless income growth in the lower middle and the lower strata of the population
picks up, there is a risk that the credit parameters for this pace will worsen and can turn into NPAs.
Source – Morgan Stanley Research. NPA: Non-Performing Assets; Trn: Trillion; CAGR: Compounded Annual Growth Rate; MFI: Micro Finance Institutions.
Unsecured Lending
43
COVID has impacted the lower strata of the society more, which is visible in the consumption trends of
two wheeler and four wheeler sales
Data as on August 31,2023. Source – Morgan Stanley Research. PV: Private Vehicles. Covid: Coronavirus Disease 2019.
Divergent Consumption Trends
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Feb-20
May-20
Aug-20
Nov-20
Feb-21
May-21
Aug-21
Nov-21
Feb-22
May-22
Aug-22
Nov-22
Feb-23
May-23
Aug-23
Motorcycle sales indexed to Dec-19
Motorcycles Premium segment (200cc+)
Motorcycles Economy segment (below 125cc)
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Feb-20
May-20
Aug-20
Nov-20
Feb-21
May-21
Aug-21
Nov-21
Feb-22
May-22
Aug-22
Nov-22
Feb-23
May-23
Aug-23
PV sales indexed to Dec-19
Premium cars
Micro and compact cars
44
 There are a lot of catalysts which are at play like government spending's, fiscal and monetary support,
improved balance sheets for corporates and banks etc. which has helped India to move into the mid stage of
business cycle.
 In this phase, economic growth may continue to remain strong without inflation sustainably breaching the
RBI’s tolerance band.
 Effectively, this phase is a neutral zone for the RBI as the economy can thrive without policy action.
 We will, however, keep a watch on the forward looking data as any shift in the growth trajectory could
change the RBI’s status quo.
 We continue to remain positive on accrual assets due to stable macros and elevated interest rates.
 Floating rate bonds too, may continue to see improved demand for their attractive spreads.
 We recommend shorter-duration schemes and also dynamic duration schemes as they can actively manage
instruments with credit ratings^ and actively manage duration to handle interest-rate fluctuations.
India Outlook
^As required under regulations
45
Our model remains
cautious on long-duration
and recommends tactical
exposure, as the term
premium remains modest
coupled with an
expectation of interest rate
pause for an extended
period
KEY TAKEAWAYS
Data as on September 30, 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, Crude Oil Movement for calculation any other factor which the AMC may add/delete from time to time. Debt Valuation Index is a proprietary model of ICICI Prudential AMC Ltd. (the AMC)
used for assessing over all debt valuations. The AMC may also use this model for other facilities/features offered by the AMC.
Case for low to moderate duration –
In-House Debt Duration Valuation Index
2.69
0
1
2
3
4
5
6
7
8
9
10
Sep
2014
Sep
2015
Sep
2016
Sep
2017
Sep
2018
Sep
2019
Sep
2020
Sep
2021
Sep
2022
Sep
2023
Very Cautious
Aggressive
Highly Aggressive
Cautious
Moderate
46
Scheme
Modified Duration (Years)
Dec 2021 Sept 2023 Difference
ICICI Prudential Liquid Fund 0.1 0.2 0.1
ICICI Prudential Money Market Fund 0.2 0.4 0.2
ICICI Prudential Ultra Short Term Fund 0.2 0.5 0.3
ICICI Prudential Savings Fund 0.8 0.8 0.0
ICICI Prudential Floating Interest Fund 1.6 0.9 -0.7
ICICI Prudential Credit Risk Fund 1.6 1.7 0.1
ICICI Prudential Short Term Fund 1.6 2.0 0.4
ICICI Prudential Corporate Bond Fund 2.7 1.7 -1.0
ICICI Prudential Banking & PSU Debt Fund 3.9 2.0 -1.9
ICICI Prudential Medium Term Bond Fund 2.5 3.0 0.5
ICICI Prudential Bond Fund 4.2 4.0 -0.2
ICICI Prudential All Seasons Bond Fund 2.3 2.7 0.4
ICICI Prudential Long Term Bond Fund 8.3 7.3 -1.0
ICICI Prudential Gilt Fund 7.0 1.7 -5.3
Data as on September 30, 2023.
Our Current Portfolio Positioning –
Exposure to Low to Moderate Duration
47
Scheme Name
Cash* +
Gsec^
AAA/A1+ AA Below AA-
YTM
Modified
Duration
(%
Holding)
(% Holding) (% Holding)
ICICI Prudential Overnight Fund 100.00% 0.00% 0.00% 0.00% 6.85% 3 Days
ICICI Prudential Liquid Fund 11.82% 88.18% 0.00% 0.00% 7.09% 62 Days
ICICI Prudential Money Market Fund 15.30% 84.70% 0.00% 0.00% 7.38% 152 Days
ICICI Prudential Ultra Short Term Fund 12.36% 72.23% 15.41% 0.00% 7.69% 167 Days
ICICI Prudential Savings Fund 27.00% 69.20% 3.80% 0.00% 7.74% 279 Days
ICICI Prudential Floating Interest Fund 61.96% 29.91% 8.13% 0.00% 8.05% 339 Days
ICICI Prudential Corporate Bond Fund 29.91% 70.09% 0.00% 0.00% 7.85% 1.7 Yrs
ICICI Prudential Short Term Fund 42.03% 45.69% 12.28% 0.00% 7.88% 2.0 Yrs
ICICI Prudential Banking & PSU Debt Fund 26.90% 73.10% 0.00% 0.00% 7.74% 2.0 Yrs
ICICI Prudential Medium Term Bond Fund 40.45% 15.76% 43.78% 0.00% 8.24% 3.0 Yrs
ICICI Prudential Credit Risk Fund# 25.01% 14.13% 44.23% 11.60% 8.52% 1.7 Yrs
ICICI Prudential All Seasons Bond Fund 55.39% 18.53% 26.08% 0.00% 8.00% 2.7 Yrs
Data as on September 30, 2023. The Yield to Maturity (YTM) mentioned is based on scheme portfolios dated September 30, 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, # - Excludes REITs
and InvITs which stands at 5.04%.
Spread Assets
Our Current Portfolio Positioning –
Exposure to spread assets
48
Actively managed portfolios
should be preferred
Mid-Cycle means fixed
income rates are at
attractive levels
Interest rates are expected to
remain in a range and RBI can
afford for an elongated pause
Floating rate bond call in
various portfolios has
played out well
Short Duration schemes
preferable for managing
interest rate volatility
Tactical trading in long duration
Outlook & Summary
49
Long-Term
(More than 3 Years)
• IPRU All Seasons Bond Fund
Parking Option
(3-12 Months)
• IPRU Ultra Short Term
• IPRU Savings Fund
Short Term
(1-3 Years)
• IPRU Short Term Fund
• IPRU Corporate Bond Fund
• IPRU Banking & PSU Debt
Fund
Our Key Recommendations
IPRU: ICICI Prudential. The period mentioned above is the indicative investment horizon
Investment Approach and Scheme
Recommendations
Investment Playbook for 2023 –
An era of Multiple Asset Classes
51
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.
52
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 September 30, 2023 Please refer to
https://www.icicipruamc.com/news-and-updates/all-news for more details.
53
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 September 30, 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 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 ) 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
54
Riskometers
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
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.) 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
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
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) 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 All Seasons Bond Fund (An open ended dynamic debt scheme investing across duration.
A relatively high interest rate risk and moderate credit risk) 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
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 September 30, 2023 Please refer to
https://www.icicipruamc.com/news-and-updates/all-news for more details.
55
Riskometers
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
ICICI Prudential Corporate Bond Fund (An open ended debt scheme predominantly investing in AA+ and
above rated corporate bonds. A relatively high interest rate risk and moderate credit risk) 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
ICICI Prudential Liquid Fund (An open ended liquid scheme. A relatively low interest rate risk and
moderate credit risk) 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
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
ICICI Prudential Ultra Short Term (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) 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
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 September 30, 2023 Please refer to
https://www.icicipruamc.com/news-and-updates/all-news for more details.
 Short term savings
 A money market scheme that seeks to provide reasonable returns, commensurate with low risk while
providing a high level of liquidity
56
Riskometers
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
ICICI Prudential Money Market Fund (An open ended debt scheme investing in money market instruments.
A relatively low interest rate risk and moderate credit risk) is suitable for investors who are seeking*:
*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 September 30, 2023 Please refer to
https://www.icicipruamc.com/news-and-updates/all-news for more details.
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) 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
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. A relatively high interest rate
risk and moderate credit risk) 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
57
Riskometers
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
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) 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
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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-
updates/all-news for more details.
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) 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 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
58
Riskometers
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) is suitable for investors who are seeking*
 Medium to Long term savings
 A debt scheme that invests in debt and money market instruments with an aim to maximize income while
maintaining an optimum balance of yield, safety and liquidity
*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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-
updates/all-news for more details.
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
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) is suitable for investors who are seeking*:
 Long term wealth creation
 A debt scheme that invests in debt and money market instruments with an aim to maximize income while
maintaining an 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 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
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
59
Riskometers
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 September 30, 2023 Please refer to
https://www.icicipruamc.com/news-and-updates/all-news for more details.
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
ICICI Prudential Overnight Fund (An open ended debt scheme investing in overnight securities. A
relatively low interest rate risk and relatively low credit risk) 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.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
60
YTM disclaimers
As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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
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
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Credit Risk Fund
Description (if any)
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.
Annualised Portfolio YTM* : 8.52%
Macaulay Duration 1.82 Years
Residual Maturity 3.28 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Overnight Fund
Description (if any)
An open ended debt scheme investing in overnight securities. A relatively low interest
rate risk and relatively low credit risk
Annualised Portfolio YTM* : 6.76%
Macaulay Duration 0.0077 Years
Residual Maturity 0.0104 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Liquid Fund
Description (if any) An open ended liquid scheme. A relatively low interest rate risk and moderate credit risk
Annualised Portfolio YTM* : 7.15%
Macaulay Duration 0.18 Years
Residual Maturity 0.19 Years
As on (Date) Sep 30, 2023
61
YTM disclaimers
As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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
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
YTM Disclaimer Portfolio Information
Scheme Name : ICICI Prudential Money Market Fund
Description (if any)
An open ended debt scheme investing in money market instruments. A relatively low interest rate risk
and moderate credit risk
Annualised Portfolio YTM* : 7.38%
Macaulay Duration 0.45 Years
Residual Maturity 0.45 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Ultra Short Term Fund
Description (if any)
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* : 7.69%
Macaulay Duration 0.49 Years
Residual Maturity 0.53 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Savings Fund
Description (if any)
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
Annualised Portfolio YTM* : 7.74%
Macaulay Duration 0.82 Years
Residual Maturity 2.59 Years
As on (Date) Sep 30, 2023
62
YTM disclaimers
As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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
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
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Floating Interest Fund
Description (if any)
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
Annualised Portfolio YTM* : 8.05%
Macaulay Duration 0.99 Years
Residual Maturity 6.87 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Corporate Bond Fund
Description (if any)
An open ended debt scheme predominantly investing in AA+ and above rated
corporate bonds. A relatively high interest rate risk and moderate credit risk
Annualised Portfolio YTM* : 7.85%
Macaulay Duration 1.83 Years
Residual Maturity 3.79 Years
As on (Date) Sep 30, 2023
63
YTM disclaimers
As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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
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
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Short Term Fund
Description (if any)
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
Annualised Portfolio YTM* : 7.88%
Macaulay Duration 2.14 Years
Residual Maturity 4.60 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Banking & PSU Debt Fund
Description (if any)
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
Annualised Portfolio YTM* : 7.74%
Macaulay Duration 2.14 Years
Residual Maturity 4.31 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Medium Term Bond Fund
Description (if any)
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
Annualised Portfolio YTM* : 8.24%
Macaulay Duration 3.12 Years
Residual Maturity 4.86 Years
As on (Date) Sep 30, 2023
64
YTM disclaimers
As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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
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
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential All Seasons Bond Fund
Description (if any)
An open ended dynamic debt scheme investing across duration. A relatively high
interest rate risk and moderate credit risk
Annualised Portfolio YTM* : 8.00%
Macaulay Duration 2.81 Years
Residual Maturity 4.86 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Bond Fund
Description (if any)
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
Annualised Portfolio YTM* : 7.58%
Macaulay Duration 4.16 Years
Residual Maturity 6.87 Years
As on (Date) Sep 30, 2023
65
YTM disclaimers
As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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
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
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Long Term Bond Fund
Description (if any)
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
Annualised Portfolio YTM* : 7.52%
Macaulay Duration 7.53 Years
Residual Maturity 11.28 Years
As on (Date) Sep 30, 2023
YTM Disclaimer: Portfolio Information
Scheme Name : ICICI Prudential Gilt Fund
Description (if any)
An open ended debt scheme investing in government securities across maturity. A
relatively high interest rate risk and relatively low credit risk
Annualised Portfolio YTM* : 7.49%
Macaulay Duration 1.79 Years
Residual Maturity 5.52 Years
As on (Date) Sep 30, 2023
66
Potential Risk Class Matrix
Sr No
1
Scheme Name
ICICI Prudential Medium Term Bond Fund
Position in the Matrix
2 ICICI Prudential All Seasons Bond Fund
3 ICICI Prudential Savings Fund
4 ICICI Prudential Floating Interest Fund
5 ICICI Prudential Corporate Bond Fund
6 ICICI Prudential Banking & PSU Debt Fund
7 ICICI Prudential Short Term Fund
8 ICICI Prudential Bond Fund
9 ICICI Prudential Long Term Bond Fund
10 ICICI Prudential Gilt Fund
11 ICICI Prudential Ultra Short Term Fund
Disclaimer: The potential risk class (PRC) matrix based on interest rate risk and credit risk, is as above:
67
Potential Risk Class Matrix
Disclaimer: The potential risk class (PRC) matrix based on interest rate risk and credit risk, is as above:
Sr No
12
Scheme Name
ICICI Prudential Overnight Fund
Position in the Matrix
13 ICICI Prudential Liquid Fund
14 ICICI Prudential Money Market Fund
15 ICICI Prudential Credit Risk Fund
68
Mutual Fund Disclaimer
All figures and other data given in this document are dated as of September 30, 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.

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Monthly Market Outlook | Oct 2023

  • 1. O U T L O O K ONTHLY MARKET OCTOBER 2023
  • 2. Global Indices Performance 2 • Markets declined as Global central banks signaled their ‘Higher for Longer’ narrative for interest rates • Subdued business surveys across major economies and China’s growth engine showing alarming data further stoked bearish sentiments 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 August 31, 2023 to Sep 30,2023. 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. -5% -4% -4% -3% -3% -2% -2% -2% -2% -1% -0.5% -0.3% -0.2% 1% 2% 2% -7% -5% -3% -1% 1% 3% 5% Russia South Korea Germany US Hong Kong France Eurozone Japan Taiwan Switzerland Singapore China Indonesia Brazil India UK Absolute Returns -September 2023
  • 3. India – Sectoral Indices Performance 3 DoT: Department of Telecommunication. 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 August 31, 2023 to September 30.2023. 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. • All the sectoral indices gained with Telecom sector leading the race • DoT’s recommendations for strengthening telecom infrastructure in the country enticed investors for telecom stocks • While power sector witnessed gains due to high coal production levels, Oil & gas stocks rallied on the back of rising crude oil prices 1% 2% 2% 2% 2% 2% 3% 3% 3% 4% 6% 6% 7% 8% 9% 0% 3% 6% 9% FMCG Bankex IT CD Financials HC Auto Realty Oil & Gas Energy CG Metal Power Infra Telecom Absolute Returns - September 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 and rising crude prices 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 April 30, 2023. Source – Equirus Research. YoY: Year on Year. Weak rural wage growth may trickle down to rural consumption which is already lagging behind 0% 4% 8% 12% 16% Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jul-20 Oct-20 Jan-21 May-21 Aug-21 Nov-21 Feb-22 Jun-22 Sep-22 Dec-22 Mar-23 Rural Wage Growth (YoY %) High rural inflation is likely to keep wage growth contained in the near-term thereby slowing rural consumption
  • 7. Near Term Picture – Deficient Monsoon 7 Data as on Sep 30,2023. Data Source: Equirus Research. IMD: Indian Metrological Department. LPA: Long Period Average 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 weaken rural demand, spur high inflation & compel government to curb export of commodities LPA: 100
  • 8. 94.8 96.2 65 75 85 95 105 115 125 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Brent Crude Prices ($/bbl) Near Term Picture – Oil on the boil 8 Data as of September 30, 2023. Source: ICICI Securities. Bbl: Barrel of oil India being net importer of oil, high crude prices may result in rupee depreciation & higher trade deficits in the near-term Spike due to Russia- Ukraine Geo-political conflicts 79.5 83.0 73 75 77 79 81 83 85 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Rupee Movement (USD/INR) Rupee Depreciation tends to result in widening Trade Deficit
  • 9. Near Term Picture – Higher for Longer Interest rates 9 Data as Aug 21, 2023 for Central Bank Balance Sheets. Data as on Sep 30,2023 is considered for Central Bank Policy Rates. Data Source: ICICI Securities & JP Morgan. Fed: Federal Reserve System of US, ECB: European Central Bank, BoJ: Bank of Japan, PBoC: People’s Bank of China, USA: United States of America, UK: United Kingdom. Estimates refer to JP Morgan Estimates. Past performance may or may not sustain in future. 19,000 21,000 23,000 25,000 27,000 29,000 31,000 33,000 Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21 Jan-22 May-22 Sep-22 Jan-23 May-23 Central Bank Balance Sheets (FED, ECB,PBoC,BoJ)($BN) Central Bank Balance Sheets (FED, ECB,PBoC,BoJ)($BN) Aug-23 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
  • 10. Near Term Picture – Moderating Service Exports 10 Data as on Aug 31,2023 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 -19% -9% 1% 11% 21% 31% 41% Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18 Jan-19 Jun-19 Nov-19 Apr-20 Sep-20 Feb-21 Jul-21 Dec-21 May-22 Oct-22 Mar-23 Aug-23 3 MMA Services Exports (YoY %) Slowing Services Exports of India Services Exports continue to paint downtrend picture
  • 11. Zooming out a little…
  • 12. Long term picture – Indian Govt. sustains its firepower 12 For Govt. Debt to GDP: Data as on March 31,2022 is considered. For Central Govt. Tax Revenues: Data as on Aug 31,2023 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 5M FY 12 5M FY 13 5M FY 14 5M FY 15 5M FY 16 5M FY 17 5M FY 18 5M FY 19 5M FY 20 5M FY 21 5M FY 22 5M FY 23 5M FY 24 Central Govt. Tax Revenues (INR Bn) Direct Tax Indirect Tax GST
  • 13. Long Term Picture – Banking Health 13 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 (%)
  • 14. Long term picture – Corporate Profitability 14 Data Source: Morgan Stanley and Avendus Spark. F: Financial Year. FY: Financial Year. E: Estimates. GDP: Gross Domestic Product. 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
  • 15. Long term picture – Household Demand 15 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%)
  • 16. Long Term Picture – India’s PMI remains brightest 16 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
  • 17. Long term picture – Favorable Demographics 17 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 younger population mix and lower wage rates braces for high 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
  • 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 September 30, 2023. Past performance may or may not sustain in future. 14.7 14.9 21.1 30.0 33.0 0.7 -0.6 -0.3 2 -6.9 -10 -5 0 5 10 15 20 25 30 35 S&P BSE Sensex Nifty 50 NIFTY Large Midcap 250 Nifty Midcap 150 Nifty Smallcap 250 Market Indices Absolute Returns (%) 1 Yr Returns as on Sep 23 1 Yr Returns as on Mar 23
  • 22. Boom Phase: Valuations on the higher end 22 Equity Market Valuations continue to trade above long term average Source : NSE and Nuvama Research. . Data as on September 30, 2023. Past performance may or may not sustain in future. P/E – Price to Earning, GDP: Gross Domestic Product. 22 0 5 10 15 20 25 30 35 40 45 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Nifty 50 P/E (x) Nifty 50 P/E Average Sep-23 108 - 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 (%) Average: 93 Average: 21
  • 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… 14%14% 12% 3% 2% 1% 1% 0% 0% -1%-1%-2%-3%-3% -5% -13% -18% -13% -8% -3% 2% 7% 12% 17% 22% Brazil Japan India Taiwan Indonesia Russia US UK South Korea Singapore Switzerland Germany France Eurozone China Hong Kong Absolute Returns (Mar 31, 2023 - Sep 30, 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 Sep 30,2023. 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 2004 87.1 9.3 3.6 2005 83.0 11.3 5.6 2006 81.9 11.5 6.7 2007 77.7 13.2 9.1 2008 82.7 10.9 6.4 2009 79.8 12.3 7.9 2010 78.0 12.5 9.4 2011 79.8 12.1 8.1 2012 77.9 13.4 8.7 2013 80.3 12.4 7.2 2014 76.8 14.1 9.1 2015 73.8 15.2 11.0 2016 72.9 15.3 11.8 2017 68.1 17.3 14.6 2018 72.0 16.3 11.7 Dec-19 74.9 15.6 9.5 Dec-20 74.2 15.5 10.2 Dec-21 68.7 16.8 14.5 Dec-22 69.2 16.1 14.7 Mar-23 68.9 16.4 14.6 Jun-23 67.5 16.9 15.6 Aug-23 64.7 17.7 17.6 Sep-23 65.0 17.7 17.3
  • 25. 107.9 50 70 90 110 130 150 170 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Aggressively Invest in Equities Neutral Incremental Money to Debt Book Partial Profits Invest in Equities Equity Valuation Index 25 Our Equity Valuations Index continues 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 September 30, 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.
  • 26. Boom Phase: Investor Sentiments – Positive to Neutral 26 Consistent SIP flows are driving the buying spree for Mutual Fund Houses However, FPI Flows turned negative, snapping six month buying trends Data as on August 31, 2023 for Mutual Fund Flows. Data as on Sep 30,2023 for FPI Equity Flows. Data Source: Morgan Stanley Research. SIP: Systematic Investment Plan. FPI; Foreign Portfolio Investors. -600.0 -400.0 -200.0 0.0 200.0 400.0 600.0 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 FPI Equity Flows (INR Mn) Sep-23 0 60 120 180 -250 -150 -50 50 150 250 Jan-20 Jun-20 Nov-20 Apr-21 Sep-21 Feb-22 Jul-22 Dec-22 May-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 Aug-23
  • 27. 5.9 6.8 -10.5 -1.6 6.9 15.8 33.3 33.9 29.7 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 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 9.8 9.8 -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 1 Yr Earnings Growth (Y-o-Y %) Boom Phase: Earnings Trajectory Climbing Up 27 Data as on September 30, 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. FY: Financial Year. 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 long term view remains bright & clear • 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. India’s Fixed Income Markets : Then & Now Post 2014, India’s business cycle never entered expansion cycle mainly due to: 1. Impairment of financial sector balance sheets due to outflow of large corporate loans and 2. Real estate loans in the NBFC balance sheet. Both kept the banking balance sheet distressed and effective loan rates high for the borrowers despite RBI bringing down interest rates in the pre-demonetization period. Also, before 2018 monetary conditions remained tight due to RBI’s inflation targeting framework. As a result, capacity utilization started trailing and credit growth started falling. Residential real estate market too saw an inventory built up. However, things changed post-pandemic as 1. RBI changed the pace of monetary easing and 2. the fiscal balance sheet of the government started to expand to support growth. Due to Fiscal and Monetary support, economy moved from slow phase of growth to the expansion cycle. NBFC: Non Banking Financial Companies.
  • 32. 32 In 2018-2020 phase RBI used to focus on inflation for monetary action. And when economy moved into slower growth resulting into lower inflation, RBI had the room to cut interest rates. GROWTH High Inflation Low Inflation High Growth Low Growth INFLATION Slow Growth Phase of Economic Cycle: 2018 to 2020 Phases of Economic Cycle
  • 33. 33 GROWTH High Growth – Low Inflation Low Growth – Low Inflation High Growth – High Inflation Low Growth – High Inflation INFLATION The above is based on various calculations and assumptions. Actual scenarios may vary. No Policy Action Rate Cut Rate Hike No Policy Action Now, RBI has shifted its focus from inflation only to interplay between growth and inflation. Hence, going forward for policy action, trajectory of inflation & growth would become important. Currently, growth being strong and inflation in RBI’s tolerable zone, possibility of rate action is low Phases of Economic Cycle and Policy Action
  • 34. 34 Recovery Late Cycle Expansion Slowdown Steep Inverted Flattish Low We are Here Economic Cycle Shape of the Yield Curve Phases of Economic Cycle and Yield Curves
  • 35. 35 The capacity utilization levels have gone up for first time in the last 9 years. This is evident in various sectors like power, cement, steel where the overall capacity utilizations are at a much higher point. 65 67 69 71 73 75 77 79 81 83 85 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 All India Capacity Utilization Levels Data as on March 31,2023. Source: RBI; https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=20650. Economic Cycle : All India Capacity Utilization Levels
  • 36. 36 4% 8% 12% 16% 20% Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 Non Food Credit Growth (Y-o-Y %) Credit growth has moved up from an average of 8-10% to an average of 14-16%, which corroborates well with the mid cycle numbers. Data as on September 30,2023. Source: RBI; https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=20650; YOY- Year on Year. Economic Cycle : Rise in Credit Growth (Y-O-Y%)
  • 37. 37 10 15 20 25 30 35 40 Q1-2008 Q3-2008 Q1-2009 Q3-2009 Q1-2010 Q3-2010 Q1-2011 Q3-2011 Q1-2012 Q3-2012 Q1-2013 Q3-2013 Q1-2014 Q3-2014 Q1-2015 Q3-2015 Q1-2016 Q3-2016 Q1-2017 Q3-2017 Q1-2018 Q3-2018 Q1-2019 Q3-2019 Q1-2020 Q3-2020 Q1-2021 Q3-2021 Q1-2022 Q3-2022 Q1-2023 Q3-2023* Residential Overhang (in Months) The inventory overhang in the residential real estate has gone down substantially. The number of months of inventory is close to where it used to be in the last strong real estate cycle i.e. 2009-2011 Data as on Dec 31,2022. Data Source: CRISIL Research. Q: Quarter . Inventory Overhang is an estimate of the amount of time it would take to sell all of the current listings in an area, provided that there are no new listings. Economic Cycle : Residential Inventory Overhang
  • 38. 38 During 2016-2020, most banks did not have their balance sheets capitalized which reflected in overall high weighted average lending rates for the borrowers. Currently, the effective loan rates have come down despite rake hikes due to healthy banking balance sheets Data Source: CRISIL Research. Weighted Average Lending Rate is the interest rate charged on all the outstanding loans of banks. Economic Cycle : Weighted Average Lending Rate (WALR) -4 -2 0 2 4 6 8 10 12 14 Aug-2013 Feb-2014 Aug-2014 Feb-2015 Aug-2015 Feb-2016 Aug-2016 Feb-2017 Aug-2017 Feb-2018 Aug-2018 Feb-2019 Aug-2019 Feb-2020 Aug-2020 Feb-2021 Aug-2021 Feb-2022 Aug-2022 Feb-2023 Aug-2023 Real WALR Nominal weighted avg. lending rate (WALR) Nominal v/s Real
  • 39. 39 4.1 3.9 3.5 3.5 3.4 4.6 9.2 6.7 6.4 5.9 - - 0.5 1.8 1.8 1.5 1.0 0.4 - 0.5 2.6 3.1 3.5 2.4 2.4 2.6 4.1 2.7 2.8 3.2 - 0.7 0.7 6.7 7.7 8.2 7.7 7.7 8.7 14.2 9.8 9.2 9.6 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24BE COMBINED FISCAL DEFICIT State off-budget (UDAY bonds) State govt. fiscal deficit Centre off-budget (FCI IEBR, GOI Services bonds, NSSF loans, Air India, Recap Bonds) The combined fiscal deficit of centre, state and center off budget has gone up as compared to FY2015-20. In FY2021- 22, it was required to run a high fiscal deficit to support the private sector. The fiscal deficit looks high even now and on a total basis there is hardly been any consolidation between the 3 years. Data Source: CRISIL Research. FY: Financial Year. FCI: Food Corporation of India, IEBR: Internal & Extra Budgetary Resources, GOI: Government of India, NSSF: National Small Savings Fund, UDAY: Ujjwal DISCOM Assurance Yojana. BE: Budgeted Estimate. Economic Cycle : Fiscal Deficit Elevated v/s Pre-Pandemic Levels
  • 40. 40 RBI’s Monetary Policy Highlights 3.5 4.5 5.5 6.5 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Repo Rate  Monetary Policy Committee (MPC) of the RBI kept the policy repo rate unchanged at 6.50%.  This is the fourth consecutive pause by the MPC, after increasing the repo rate from 4.00% to 6.50% in six consecutive meetings in the last financial year.  Real GDP growth projection and inflation projections for FY2023-24 was maintained at 6.5% and 5.4% respectively.  Going forward, the RBI may consider OMO-sales (Open Market Operation sales) to manage system liquidity. Our View We believe RBI would keep policy rates unchanged till March 2024 to avoid rocking the boat when Growth- Inflation dynamic is moving as expected. Rate Pause
  • 42. 42 2.9 4 5 5.9 7.9 10.2 29% 0.7 1.1 1.4 1.6 1.8 2.1 25% 0 2 4 6 8 10 12 14 FY18 FY19 FY20 FY21 FY22 FY23 5 yr CAGR Unsecured credit system (INR trn) Personal loans Credit cards 1.31 1.87 2.34 2.59 2.85 3.15 19% 0 0.5 1 1.5 2 2.5 3 3.5 FY18 FY19 FY20 FY21 FY22 FY23 5 yr CAGR MFI system level(INR trn) Over the last 5 years, the unsecured rate in the system has grown by ~29% and the MFI credit has grown at the pace of ~19%. Unless income growth in the lower middle and the lower strata of the population picks up, there is a risk that the credit parameters for this pace will worsen and can turn into NPAs. Source – Morgan Stanley Research. NPA: Non-Performing Assets; Trn: Trillion; CAGR: Compounded Annual Growth Rate; MFI: Micro Finance Institutions. Unsecured Lending
  • 43. 43 COVID has impacted the lower strata of the society more, which is visible in the consumption trends of two wheeler and four wheeler sales Data as on August 31,2023. Source – Morgan Stanley Research. PV: Private Vehicles. Covid: Coronavirus Disease 2019. Divergent Consumption Trends - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22 Feb-23 May-23 Aug-23 Motorcycle sales indexed to Dec-19 Motorcycles Premium segment (200cc+) Motorcycles Economy segment (below 125cc) - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22 Feb-23 May-23 Aug-23 PV sales indexed to Dec-19 Premium cars Micro and compact cars
  • 44. 44  There are a lot of catalysts which are at play like government spending's, fiscal and monetary support, improved balance sheets for corporates and banks etc. which has helped India to move into the mid stage of business cycle.  In this phase, economic growth may continue to remain strong without inflation sustainably breaching the RBI’s tolerance band.  Effectively, this phase is a neutral zone for the RBI as the economy can thrive without policy action.  We will, however, keep a watch on the forward looking data as any shift in the growth trajectory could change the RBI’s status quo.  We continue to remain positive on accrual assets due to stable macros and elevated interest rates.  Floating rate bonds too, may continue to see improved demand for their attractive spreads.  We recommend shorter-duration schemes and also dynamic duration schemes as they can actively manage instruments with credit ratings^ and actively manage duration to handle interest-rate fluctuations. India Outlook ^As required under regulations
  • 45. 45 Our model remains cautious on long-duration and recommends tactical exposure, as the term premium remains modest coupled with an expectation of interest rate pause for an extended period KEY TAKEAWAYS Data as on September 30, 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, Crude Oil Movement for calculation any other factor which the AMC may add/delete from time to time. Debt Valuation Index is a proprietary model of ICICI Prudential AMC Ltd. (the AMC) used for assessing over all debt valuations. The AMC may also use this model for other facilities/features offered by the AMC. Case for low to moderate duration – In-House Debt Duration Valuation Index 2.69 0 1 2 3 4 5 6 7 8 9 10 Sep 2014 Sep 2015 Sep 2016 Sep 2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Sep 2023 Very Cautious Aggressive Highly Aggressive Cautious Moderate
  • 46. 46 Scheme Modified Duration (Years) Dec 2021 Sept 2023 Difference ICICI Prudential Liquid Fund 0.1 0.2 0.1 ICICI Prudential Money Market Fund 0.2 0.4 0.2 ICICI Prudential Ultra Short Term Fund 0.2 0.5 0.3 ICICI Prudential Savings Fund 0.8 0.8 0.0 ICICI Prudential Floating Interest Fund 1.6 0.9 -0.7 ICICI Prudential Credit Risk Fund 1.6 1.7 0.1 ICICI Prudential Short Term Fund 1.6 2.0 0.4 ICICI Prudential Corporate Bond Fund 2.7 1.7 -1.0 ICICI Prudential Banking & PSU Debt Fund 3.9 2.0 -1.9 ICICI Prudential Medium Term Bond Fund 2.5 3.0 0.5 ICICI Prudential Bond Fund 4.2 4.0 -0.2 ICICI Prudential All Seasons Bond Fund 2.3 2.7 0.4 ICICI Prudential Long Term Bond Fund 8.3 7.3 -1.0 ICICI Prudential Gilt Fund 7.0 1.7 -5.3 Data as on September 30, 2023. Our Current Portfolio Positioning – Exposure to Low to Moderate Duration
  • 47. 47 Scheme Name Cash* + Gsec^ AAA/A1+ AA Below AA- YTM Modified Duration (% Holding) (% Holding) (% Holding) ICICI Prudential Overnight Fund 100.00% 0.00% 0.00% 0.00% 6.85% 3 Days ICICI Prudential Liquid Fund 11.82% 88.18% 0.00% 0.00% 7.09% 62 Days ICICI Prudential Money Market Fund 15.30% 84.70% 0.00% 0.00% 7.38% 152 Days ICICI Prudential Ultra Short Term Fund 12.36% 72.23% 15.41% 0.00% 7.69% 167 Days ICICI Prudential Savings Fund 27.00% 69.20% 3.80% 0.00% 7.74% 279 Days ICICI Prudential Floating Interest Fund 61.96% 29.91% 8.13% 0.00% 8.05% 339 Days ICICI Prudential Corporate Bond Fund 29.91% 70.09% 0.00% 0.00% 7.85% 1.7 Yrs ICICI Prudential Short Term Fund 42.03% 45.69% 12.28% 0.00% 7.88% 2.0 Yrs ICICI Prudential Banking & PSU Debt Fund 26.90% 73.10% 0.00% 0.00% 7.74% 2.0 Yrs ICICI Prudential Medium Term Bond Fund 40.45% 15.76% 43.78% 0.00% 8.24% 3.0 Yrs ICICI Prudential Credit Risk Fund# 25.01% 14.13% 44.23% 11.60% 8.52% 1.7 Yrs ICICI Prudential All Seasons Bond Fund 55.39% 18.53% 26.08% 0.00% 8.00% 2.7 Yrs Data as on September 30, 2023. The Yield to Maturity (YTM) mentioned is based on scheme portfolios dated September 30, 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, # - Excludes REITs and InvITs which stands at 5.04%. Spread Assets Our Current Portfolio Positioning – Exposure to spread assets
  • 48. 48 Actively managed portfolios should be preferred Mid-Cycle means fixed income rates are at attractive levels Interest rates are expected to remain in a range and RBI can afford for an elongated pause Floating rate bond call in various portfolios has played out well Short Duration schemes preferable for managing interest rate volatility Tactical trading in long duration Outlook & Summary
  • 49. 49 Long-Term (More than 3 Years) • IPRU All Seasons Bond Fund Parking Option (3-12 Months) • IPRU Ultra Short Term • IPRU Savings Fund Short Term (1-3 Years) • IPRU Short Term Fund • IPRU Corporate Bond Fund • IPRU Banking & PSU Debt Fund Our Key Recommendations IPRU: ICICI Prudential. The period mentioned above is the indicative investment horizon
  • 50. Investment Approach and Scheme Recommendations
  • 51. Investment Playbook for 2023 – An era of Multiple Asset Classes 51 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.
  • 52. 52 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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details.
  • 53. 53 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 September 30, 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 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 ) 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
  • 54. 54 Riskometers 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 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.) 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 *Investors should consult their financial advisers if in doubt about whether the product is suitable for them 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) 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 All Seasons Bond Fund (An open ended dynamic debt scheme investing across duration. A relatively high interest rate risk and moderate credit risk) 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 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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details.
  • 55. 55 Riskometers 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 ICICI Prudential Corporate Bond Fund (An open ended debt scheme predominantly investing in AA+ and above rated corporate bonds. A relatively high interest rate risk and moderate credit risk) 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 ICICI Prudential Liquid Fund (An open ended liquid scheme. A relatively low interest rate risk and moderate credit risk) 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 *Investors should consult their financial advisers if in doubt about whether the product is suitable for them ICICI Prudential Ultra Short Term (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) 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 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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details.
  • 56.  Short term savings  A money market scheme that seeks to provide reasonable returns, commensurate with low risk while providing a high level of liquidity 56 Riskometers 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 ICICI Prudential Money Market Fund (An open ended debt scheme investing in money market instruments. A relatively low interest rate risk and moderate credit risk) is suitable for investors who are seeking*: *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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. 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) 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 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. A relatively high interest rate risk and moderate credit risk) 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
  • 57. 57 Riskometers 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 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) 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 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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and- updates/all-news for more details. 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) 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 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
  • 58. 58 Riskometers 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) is suitable for investors who are seeking*  Medium to Long term savings  A debt scheme that invests in debt and money market instruments with an aim to maximize income while maintaining an optimum balance of yield, safety and liquidity *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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and- updates/all-news for more details. 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 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) is suitable for investors who are seeking*:  Long term wealth creation  A debt scheme that invests in debt and money market instruments with an aim to maximize income while maintaining an 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 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 *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 59. 59 Riskometers 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 September 30, 2023 Please refer to https://www.icicipruamc.com/news-and-updates/all-news for more details. 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 ICICI Prudential Overnight Fund (An open ended debt scheme investing in overnight securities. A relatively low interest rate risk and relatively low credit risk) 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. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
  • 60. 60 YTM disclaimers As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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 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 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Credit Risk Fund Description (if any) 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. Annualised Portfolio YTM* : 8.52% Macaulay Duration 1.82 Years Residual Maturity 3.28 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Overnight Fund Description (if any) An open ended debt scheme investing in overnight securities. A relatively low interest rate risk and relatively low credit risk Annualised Portfolio YTM* : 6.76% Macaulay Duration 0.0077 Years Residual Maturity 0.0104 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Liquid Fund Description (if any) An open ended liquid scheme. A relatively low interest rate risk and moderate credit risk Annualised Portfolio YTM* : 7.15% Macaulay Duration 0.18 Years Residual Maturity 0.19 Years As on (Date) Sep 30, 2023
  • 61. 61 YTM disclaimers As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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 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 YTM Disclaimer Portfolio Information Scheme Name : ICICI Prudential Money Market Fund Description (if any) An open ended debt scheme investing in money market instruments. A relatively low interest rate risk and moderate credit risk Annualised Portfolio YTM* : 7.38% Macaulay Duration 0.45 Years Residual Maturity 0.45 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Ultra Short Term Fund Description (if any) 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* : 7.69% Macaulay Duration 0.49 Years Residual Maturity 0.53 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Savings Fund Description (if any) 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 Annualised Portfolio YTM* : 7.74% Macaulay Duration 0.82 Years Residual Maturity 2.59 Years As on (Date) Sep 30, 2023
  • 62. 62 YTM disclaimers As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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 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 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Floating Interest Fund Description (if any) 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 Annualised Portfolio YTM* : 8.05% Macaulay Duration 0.99 Years Residual Maturity 6.87 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Corporate Bond Fund Description (if any) An open ended debt scheme predominantly investing in AA+ and above rated corporate bonds. A relatively high interest rate risk and moderate credit risk Annualised Portfolio YTM* : 7.85% Macaulay Duration 1.83 Years Residual Maturity 3.79 Years As on (Date) Sep 30, 2023
  • 63. 63 YTM disclaimers As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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 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 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Short Term Fund Description (if any) 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 Annualised Portfolio YTM* : 7.88% Macaulay Duration 2.14 Years Residual Maturity 4.60 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Banking & PSU Debt Fund Description (if any) 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 Annualised Portfolio YTM* : 7.74% Macaulay Duration 2.14 Years Residual Maturity 4.31 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Medium Term Bond Fund Description (if any) 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 Annualised Portfolio YTM* : 8.24% Macaulay Duration 3.12 Years Residual Maturity 4.86 Years As on (Date) Sep 30, 2023
  • 64. 64 YTM disclaimers As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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 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 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential All Seasons Bond Fund Description (if any) An open ended dynamic debt scheme investing across duration. A relatively high interest rate risk and moderate credit risk Annualised Portfolio YTM* : 8.00% Macaulay Duration 2.81 Years Residual Maturity 4.86 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Bond Fund Description (if any) 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 Annualised Portfolio YTM* : 7.58% Macaulay Duration 4.16 Years Residual Maturity 6.87 Years As on (Date) Sep 30, 2023
  • 65. 65 YTM disclaimers As per AMFI Best Practices Guidelines Circular No. AMFI/35P/MEM-COR/72/2022-23 dated December 31, 2022 on Standard format for disclosure of 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 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 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Long Term Bond Fund Description (if any) 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 Annualised Portfolio YTM* : 7.52% Macaulay Duration 7.53 Years Residual Maturity 11.28 Years As on (Date) Sep 30, 2023 YTM Disclaimer: Portfolio Information Scheme Name : ICICI Prudential Gilt Fund Description (if any) An open ended debt scheme investing in government securities across maturity. A relatively high interest rate risk and relatively low credit risk Annualised Portfolio YTM* : 7.49% Macaulay Duration 1.79 Years Residual Maturity 5.52 Years As on (Date) Sep 30, 2023
  • 66. 66 Potential Risk Class Matrix Sr No 1 Scheme Name ICICI Prudential Medium Term Bond Fund Position in the Matrix 2 ICICI Prudential All Seasons Bond Fund 3 ICICI Prudential Savings Fund 4 ICICI Prudential Floating Interest Fund 5 ICICI Prudential Corporate Bond Fund 6 ICICI Prudential Banking & PSU Debt Fund 7 ICICI Prudential Short Term Fund 8 ICICI Prudential Bond Fund 9 ICICI Prudential Long Term Bond Fund 10 ICICI Prudential Gilt Fund 11 ICICI Prudential Ultra Short Term Fund Disclaimer: The potential risk class (PRC) matrix based on interest rate risk and credit risk, is as above:
  • 67. 67 Potential Risk Class Matrix Disclaimer: The potential risk class (PRC) matrix based on interest rate risk and credit risk, is as above: Sr No 12 Scheme Name ICICI Prudential Overnight Fund Position in the Matrix 13 ICICI Prudential Liquid Fund 14 ICICI Prudential Money Market Fund 15 ICICI Prudential Credit Risk Fund
  • 68. 68 Mutual Fund Disclaimer All figures and other data given in this document are dated as of September 30, 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.