1. China‟s
Growth
Middle
East
Crisis
Europe Debt
Crisis
US – Fiscal
Cliff &
Taper
MANY OF 2013‟s MACRO ECONOMIC AND
GEOPOLITICAL ISSUES ARE NOW BEHIND US
1

2. OPPORTUNITIES - EQUITIES
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

3. ELECTION RESULTS???
AN
UNCLEAR
POSITION
3

4. INVESTORS UNDER-OWN EQUITY
A CLEAR
POSITION
4
Source: AMFI, RBI

5. THEMES TO PLAY IN 2014

Balanced approach to investing – Maintain asset
allocation in equity

Mid & Small caps Funds

Infrastructure

Pick up in activity expected across infrastructure
sectors

Staying invested in international funds – Important
part of asset allocation

5
Fixed Income - Bullish on „Duration‟ & Accrual Funds

6. HOW TO MAINTAIN ASSET ALLOCATION
Large Allocations
ICICI Prudential Balanced
Advantage Fund
ICICI Prudential Dynamic Plan
ICICI Prudential Balanced Fund
ICICI Prudential Focused Bluechip
Equity Fund
Small Allocations
ICICI Prudential Midcap Fund
ICICI Prudential Infrastructure Fund
ICICI Prudential Discovery Fund
ICICI Prudential Top 100 Fund

7. TURNING POINTS - 2014 – WORST SEEMS TO
BE BEHIND US

Equity markets are giving investors an opportunity to get
on board

Falling trend in Gross Domestic Product (GDP) growth,
investment growth and corporate earnings growth can
reverse during 2014

Policy environment improvements since last 15 months can
start seeing its positive impact on 2014


7
Trade Deficit & Current Account Deficit continues to decline
With Reserve Bank of India (RBI) reserves/CAD* ratio
improving, INR trends should be more stable and capability
to handle taper worries is much better now
*Current Account Deficit

8. TURNING POINTS - 2014 – WORST SEEMS TO
BE BEHIND US

Corporate earnings growth should react favourably to the
improving macro

Almost four years of high interest rates

Financial assets appear attractive against physical assets

Indian investors‟ equity exposure remains very low
8

9. ELECTION OUTCOME – AN IMPORTANT
TRIGGER

A potential strong mandate in May‟14 elections will likely
lead to a decisive government

This could accelerate the process of economic recovery

The outcome of the elections can significantly impact market
sentiments either ways

This can alter the pace of the recovery process but recovery
in itself should not be doubted
9

10. WHAT TO EXPECT FROM A STRONG / STABLE
GOVERNMENT?
Possible Actions
•Quick / bold decision
making
•Lower subsidies
•Farm productivity
enhancement
•Tourism promotion at
new locations
•Tax Reforms
Beneficiary / Comments
•Infra and cap goods
sector
•Oil PSUs, fiscal
consolidation
•Lower inflation /
improved rural income
•Boost to smaller city
infrastructure
•VDIS* scheme, Lower
peak tax rates
Source: CLSA, *refers to Voluntary Disclosure of Income Scheme

11. POLARIZATION IN MARKET
16.00
14.00
12.00
10.00
8.00
6.00
S&P BSE FMCG
S&P BSE MID CAP
S&P BSE Sensex
11
S&P BSE IT
S&P BSE SMALL CAP
S&P BSE HC
Source: NSE
Index Values have been rebased to 10

12. MARKET IS CHEAP VS GDP
India Market Cap / GDP
12
Source: CLSA, Bloomberg, trailing four quarters GDP

13. MARKET VALUATIONS AT AVERAGE LEVELS
13
Source: CLSA

14. MID CAPS TRADING AT A LARGE DISCOUNT
TO THEIR LONG‐TERM AVERAGE PB
14
Source: NSE, IIFL Research

15. RISKS TO GROWTH IN 2014

A weak coalition government

Risks of rate increases as RBI is gradually attaching
higher importance to Consumer Price Index (CPI)

Higher vegetable prices (up 60% Y-o-Y); have
started coming off

Government expenditure reduction will be a near-term
growth headwind
15

16. INDIA – ONE OF MOST INTERESTING STORIES

Across Asia-Pacific as well as global emerging markets

Is at an early stage of evolution


Urbanization


Consumption
Infrastructure investment
Delivering improving Competitiveness across a number of
industries in addition to IT


Petrochemicals

Generic pharmaceuticals

16
Fibres
Non - traditional autos

17. OUR FRAMEWORK TO INVESTING - EQUITY
Economics
• CAD narrowing
• Trade deficit narrowing sharply
• Growth – can revive in 2014
Sentiments
• Domestic investor remain underinvested in
equities
• FIIs (Foreign Institutional Investors) are
positive
Valuations
Triggers
17
• Plenty of value seen across sectors and
stocks
• Election results – Strong / stable govt.
• Growth - Positive
• Crude per barrel > 118 US$ - Negative
• Drop in loan to deposit ratio - Positive
*CAD – Current Account Deficit

18. EQUITY FUNDS – RISK REWARD MATRIX
18

19. 19

20. 20

21. Fixed Income
2014

22. OUR FRAMEWORK TO INVESTING – FIXED
INCOME

23. OPPORTUNITIES

Macro indicators pronounce need for lower interest rates

Amidst low pace of tapering external risks may have
receded

Lower inflation itself may be enough to improve sentiments
in bond markets
The current scenario may mark DURATION and ACCRUAL an
attractive play for year 2014

24. RECOMMENDED THEME FOR 2014
Theme: Duration Strategy
With current economy suggesting need for lower interest rates, it may be
appropriate time to be invested in duration funds.
Investment Period
Fund
12 months & above
ICICI Prudential Dynamic Bond Fund
24 months & above
ICICI Prudential Income Plan
24 months & above
ICICI Prudential Long Term Gilt Fund
Theme: Accrual Strategy
Current elevated level of yields are conducive for investing in funds which
predominantly aims to generate returns through accruals
Investment Period
Fund
15 to 30 days
ICICI Prudential Savings Fund
15 months & above
ICICI Prudential Regular Savings Fund
30 months & above
ICICI Prudential Corporate Bond Fund

25. 25

26. 26

27. DISCLAIMER
Mutual Fund investments are subject to market risks, read all
scheme related documents carefully.
All figures and other data given in this document are as on 3rd January 2014 unless stated otherwise. The same may or may not be relevant at a
future date. The AMC takes no responsibility of updating any data/information in this material from time to time. 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.
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.
Data source: Bloomberg, except as mentioned specifically.
Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used
information that is publicly available, including information developed in-house. Some of the material 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.
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