RBI kept the Repo rate unchanged to 5.15% • Reverse Repo rate remains adjusted to 4.90% • Marginal Standing Facility (MSF) rate and the Bank rate remains adjusted to 5.40% • Cash Reserve Ratio (CRR) remains unchanged at 4% • Statutory Liquidity Ratio (SLR) stands adjusted to 18.50% Read the full document to know more.

1. Impact Analysis
Fifth Bi-monthly Monetary Policy Statement, 2019-20
What is RBI’s Stance?
RBI policy highlights:
• RBI kept the Repo rate unchanged to 5.15%
• Reverse Repo rate remains adjusted to 4.90%
• Marginal Standing Facility (MSF) rate and the Bank rate remains
adjusted to 5.40%
• Cash Reserve Ratio (CRR) remains unchanged at 4%
• Statutory Liquidity Ratio (SLR) stands adjusted to 18.50%
Inflation highlights:
• CPI (Consumer Price Index) inflation, ex food and fuel, moderated
from 4.20% in September 2019 to 3.4% in October 2019.
• Owing to increase in food inflation and fuel deflation, retail inflation
increased sharply to 4.6% in October 2019
• Housing inflation is increased by 120 basis points over a 3 month
ahead horizon and 180 basis points over a one year ahead horizon,
according to RBI’s Nov 2019 round of inflation expectations survey
Domestic Economy
• Global economic activity has remained subdued since
the last MPC meeting in Advanced Economies (AE's)
as well as in major Emerging Market Economies
(EMEs)
• Equity markets in the AE’s witnessed recovery,
triggered by renewed optimism on the trade truce
between US-China and possibility of a Brexit deal. In
EME, equity markets too witnessed gains on renewed
fears of US-China trade talks stalling on the Hong Kong
stand-off
• Yields in AE’s and in most EMEs fixed income markets
showed mixed movements
• US dollar weakened against other major currencies,
while EME currencies have been trading with an
appreciating bias
• Gold prices have slightly fallen in Nov 2019 as a revival
of risk appetite eased safe haven demand
Global Economy
Accommodative
RBI’s
Inflation
Target
Data Source: RBI Fifth Bi-Monthly Monetary Policy Statement 2019-20 dated December 5, 2019, RBI Statement on Developmental and
Regulatory Policies dated December 5, 2019 ; Data Source for CRR & SLR: RBI
• The Gross Domestic Product (GDP) growth moderated to
4.5 per cent year-on-year (y-o-y) and Gross Value Added
(GVA) growth decelerated to 4.3 per cent in Q2 FY20,
pulled down by contraction in manufacturing.
• The purchasing managers index (PMI) for Nov 2019
increased over Oct 2019 on the back of pick-up in new
businesses, new orders and output
• The transmission of policy repo rate cuts to the weighted
average lending rates (WALRs) of banks had a
reasonable shift across various money market segments
and private corporate bond market. Banks reduced their
WALR on fresh rupee loans by 44 bps during Feb to Oct
2019 against the cumulative policy repo rate reduction of
135 bps
• Liquidity remained surplus in Oct 2019 & Nov 2019
despite expansion of currency in circulation due to
festival demand
3.5
4.5
5.5
6.5
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
RBI Policy Rates Trend- Last 1 year
Repo Rate CRR Reverse Repo
0
2
4
6
8
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
CPI Inflation (Month-on-Month %)

2. The Reserve Bank of India (RBI) kept the policy rates unchanged to 5.15%. The RBI’s Monetary Policy Committee (MPC) decision to
maintain existing rates was brought on in line with the evolving growth-inflation dynamics.
Despite recognising monetary policy space for further action, the MPC felt appropriate to take a pause at this juncture and continued
to maintain its “accommodative” policy stance, implying the next policy action is either a hold or a cut.
RBI has revised its inflation projections upwards to 4.7-5.1 per cent for H2 FY20 and 3.8-4.0 per cent for H1 FY21.
Growth projection for FY20 was reduced to 5% from earlier 6.1%.
Our View
• The environment remains conducive for RBI to maintain its accommodative stance on the back of domestic factors like growth
slowing down and inflation within RBI’s comfort zone and global central banks likely to remain dovish.
• We believe that the next rate cut would be data dependent as the RBI may want to see certain risks play out such as growth
and consumption data, inflation and fiscal.
• Going forward, we believe that the 4 C's i.e. Credit growth, Current Account balance, Central Bank Action and Crude may guide
the trajectory of long term rates.
• System liquidity remained in surplus on the back of government spending and RBI forex purchases.
• The pain of transmission of rates is expected to continue, due to broken transmission channels. As against the previous
cumulative policy repo rate reduction of 135 bps in CY19, the weighted average lending rate (WALR) on loans of commercial
banks declined by only 44bps.
• Going forward, we expect liquidity to remain in the surplus zone; this bodes well for shorter end of the yield curve. Hence, we
remain sanguine towards the short end of the yield curve i.e. the 2-5 Year segment of the yield curve where the risk-reward
benefit is favourable.
• Also, post the rally in G-Sec and AAA equivalent space, we recommend investors to add accrual to their portfolios as the
spreads seems attractive at this juncture and they may benefit from better carry and capital appreciation opportunities.
Our Analysis & Outlook
Scheme Recommendations
Cash Management
Schemes
ICICI Prudential Savings Fund
ICICI Prudential Floating Interest Fund
ICICI Prudential Ultra Short Term Fund
ICICI Prudential Money Market Fund
These schemes may
benefit from better risk
adjusted returns
Short Duration
Schemes
ICICI Prudential Short Term Fund
ICICI Prudential Banking & PSU Debt Fund
ICICI Prudential Corporate Bond Fund
These schemes may
benefit from mitigating
interest rate volatility
Accrual Schemes ICICI Prudential Credit Risk Fund
ICICI Prudential Medium Term Bond Fund
These schemes may
benefit from capturing
yields at elevated levels
Dynamic Duration
Scheme
ICICI Prudential All Seasons Bond Fund This scheme may benefit
from volatility by actively
managing duration
Impact Analysis
Data Source: RBI Fifth Bi-Monthly Monetary Policy Statement 2019-20 dated December 5, 2019, RBI Statement on Developmental and
Regulatory Policies dated December 5, 2019

3. Disclaimer
Scheme Risk-o-meters
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to consult their financial
advisors before investing. All data/information used in the preparation of this material is specific to a time and may or may not be relevant in future post issuance of
this material. ICICI Prudential Asset Management Company Limited (the AMC) takes no responsibility of updating any data/information in this material from time to
time. The AMC (including its affiliates), ICICI Prudential Mutual Fund (the Fund), ICICI Prudential Trust Limited (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. Nothing contained in this document shall be construed to be an investment advice
or an assurance of the benefits of investing in the any of the Schemes of the Fund. Sectors/stocks mentioned in the article do not constitute any recommendation
and the Fund through its schemes may or may not have any future position in these sectors/stocks. Recipient alone shall be fully responsible for any decision taken
on the basis of this document. The information contained herein is only for the purpose of information and not for distribution and do not constitute an offer to buy
or sell or solicitation of any offer to buy or sell any securities or financial instruments in the United States of America ("US") and/or Canada or for the benefit of US
persons (being persons falling within the definition of the term "US Person" under the US Securities Act, 1933, as amended) or persons residing in Canada.
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) is suitable for investors who are seeking*:
• Short term income generation and capital appreciation solution
• A debt fund that aims to generate income by investing in a range of debt and money market instruments of
various maturities
ICICI Prudential Credit Risk Fund (An open ended debt scheme predominantly investing in AA and below rated
corporate bonds) 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
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) 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
ICICI Prudential All Seasons Bond Fund (An open ended dynamic debt scheme investing across duration) is
suitable for investors who are seeking*:
 All duration savings
 A debt scheme that invests in debt and money market instruments with a view to maximize income
while maintaining optimum balance of yield, safety and liquidity
ICICI Prudential Ultra Short Term Fund(An open ended ultra-short term debt scheme investing in instruments
such that the Macaulay duration of the portfolio is between 3 months and 6 months) 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
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)
is suitable for investors who are seeking*
 Short term savings
 An open ended debt scheme predominantly investing in floating rate instruments
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) 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
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.) 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
ICICI Prudential Corporate Bond Fund (An open ended debt scheme predominantly investing in AA+ and above
rated corporate bonds.) is suitable for investors who are seeking*
 Short term savings
 An open ended debt scheme predominantly investing in highest rated corporate bonds.
ICICI Prudential Money Market Fund (An open ended debt scheme investing in money market instruments) is
suitable for investors who are seeking*
 Short term savings
 A money market scheme that seeks to provide reasonable returns, commensurate with low risk while
providing a high level of liquidity
Impact Analysis
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
Note: The Macaulay duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by
dividing the present value of the cash flow by the price.