The RBI cut the Repo rate by 75bps to 4.4%, the Reverse Repo by 90bps to 4% and the Cash Reserve Ratio (CRR) by 100bps to 3%, targeting an increase in liquidity with banks to invest in investment-grade corporate bonds, commercial papers etc. and announced macro-prudential measures such as relaxing repayments for all term loans and improving access for working capital for the next 3 months.

1. Impact Analysis :
Leaving no stone unturned
Seventh Bi-monthly Monetary Policy Statement, 2019-20
What is RBI’s Stance?
RBI policy highlights:
• RBI reduced the Repo rate to 4.40%
• Reverse Repo rate stands reduced to 4.00%
• Marginal Standing Facility (MSF) rate and the Bank rate remains
adjusted to 4.65%
• Cash Reserve Ratio (CRR) is reduced to 3%
• Statutory Liquidity Ratio (SLR) remains unchanged to 18.25%
Inflation highlights:
• CPI (Consumer Price Index) inflation, ex food and fuel, moderated
from 4.2% in January 2020 to 4.1% in February 2020.
• Owing to increase in food inflation and fuel deflation, retail inflation
peaked in January 2020 and fell in February 2020 to 6.6%
• Housing inflation expectation is softened by 20 basis points over a
one year ahead horizon, according to RBI’s Mar 2020 round of
inflation expectations survey
Domestic Economy
• Global economic activity in Advanced Economies
(AE's) as well as in major Emerging Market
Economies (EMEs) has come to a near standstill
since the last MPC meeting as COVID-19 related
lockdowns and social distancing are imposed across
a widening swathe of affected countries
• Equity markets in the AE’s as well as in EMEs have
become highly volatile from January onwards due to
the outbreak of COVID-19
• Flight to safety has pulled down Government bond
yields to record lows with some hardening in recent
days in both AE’s as well as EMEs
• Most AE’s as well as EMEs currencies are
experiencing severe depreciation pressure due to
extreme risk aversion. Only the US dollar, remains
safe haven
Global Economy
Accommodative
RBI’s
Inflation
Target
Data Source: RBI Seventh Bi-Monthly Monetary Policy Statement 2019-20 dated March 27, 2020, RBI Statement on Developmental and
Regulatory Policies dated March 27, 2020; Data Source for CRR & SLR: RBI
• The domestic financial condition has tightened
considerably; equity markets faced massive sell-offs by
foreign portfolio investors (FPIs), whereas, the drop in
trading activity, redemption pressure and risk aversion
have pushed up yields to elevated levels across fixed
income segments
• Indian rupee (INR) is experiencing severe depreciation
pressure due to extreme risk aversion
• Trade deficit year-on-year (y-o-y) widened marginally.
However, it was lower than its level a month ago
• The Reserve Bank of India has endeavored to keep
financial markets liquid by adopting few unconventional
tools like Operation Twist, Long Term Repo Auctions of 1
& 3 years, Swap auctions and Open Market Operations
• India’s foreign exchange reserves reached a level of US$
487.2 billion on March 6, 2020 – an increase of US$ 74.4
billion over their end-March 2019 level
0
2
4
6
8
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
CPI Inflation (Month-on-Month %)
2.5
3.5
4.5
5.5
6.5
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
RBI Policy Rates Trend- Last 1 year
Repo Rate CRR Reverse Repo

2. RBI announced a slew of measures in the MPC meeting which got pre-poned by a week. The steps were mainly to ensure that the
system is high on liquidity and to improve the risk capital in the system. We believe RBI has provided meaningful support and we
expect this should help in reducing volatility in the fixed income markets.
Summary:
The RBI cut the Repo rate by 75bps to 4.4%, the Reverse Repo by 90bps to 4% and the Cash Reserve Ratio (CRR) by 100bps to 3%,
targeting an increase in liquidity with banks to invest in investment grade corporate bonds, commercial papers etc. and announced
macro prudential measures such as relaxing repayments for all term loans and improving access for working capital for the next 3
months.
Our View
• We have highlighted in our earlier notes that we needed co-ordinated response from Fiscal and Monetary side to reduce the
impact on Risk sentiment post the COVID-19 spread outside China.
• We believe today’s measure announced by RBI has covered all aspects by providing enough liquidity and reduction in cost of
capital, improving the risk capital in the financial system and providing support to financial sector for mitigating impacts due to
COVID-19 measures.
• Going into this crisis, we believe India’s macros like Current Account Deficit, Inflation etc. remain positive as compared to what
we have seen in 2013 USA Taper Tantrums. This could position India more favorably as compared to its emerging market peers.
• We expect growth and inflation to further moderate; this may provide further headroom to RBI to continue its accommodative
policy stance.
• On the fiscal side, we are comfortable with Government taking measures to combat COVID-19 impact due to absence of private
credit demand i.e. no crowding-out effect
• Going forward, we believe that future policy response will depend on the depth and duration of the disruptions due to COVID-19.
• We continue to remain positive on the overall fixed income space and believe up to 5 Year segment provides relatively better
risk reward benefit.
• We also remain positive on the accrual schemes, as it provides opportunity to invest when the yields and spreads are at
elevated levels.
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 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 :
Leaving no stone unturned
Data Source: RBI Seventh Bi-Monthly Monetary Policy Statement 2019-20 dated March 27, 2020, RBI Statement on Developmental and
Regulatory Policies dated March 27, 2020; Data Source for CRR & SLR: RBI

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 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
*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.
Impact Analysis :
Leaving no stone unturned