Equity Update
January 2016
Market Overview
Flows
FIIs (Net Purchases /
Sales) (Rs. Cr.)
MFs (Net Purchases /
Sales) (Rs. Cr.)
Domestic Markets
S&P BSE Sensex
Nifty 50
S&P BSE Auto
S&P BSE Bankex
S&P BSE Consumer
Durables
S&P BSE FMCG
S&P BSE Healthcare
S&P BSE IT
S&P BSE Mid Cap
S&P BSE Oil & Gas
S&P BSE PSU
S&P BSE Realty
S&P BSE Teck Index
Global Markets
US
UK
Japan
Hong Kong
Singapore
China
Earnings Growth
Sensex
Macro Indicators
Dec-15
Nov-15
Oct-15
(899)
(7,629)
5,065
4,234
6,548
2,935
Dec-15
(%)
(0.1)
0.1
(2.3)
(3.8)
(0.5)
Current
PE
19.8
20.8
23.7
33.9
43.6
10 Yr.
Avg.
18.8
17.8
16.0
18.4
27.8
3.7
1.0
(3.8)
1.4
2.4
(1.0)
0.0
1.9
Dec-15
(%)
(1.7)
(1.8)
(3.6)
(0.4)
0.9
(1.3)
35.6
20.8
33.9
26.5
12.0
11.7
35.1
21.1
Current
PE
15.4
27.9
19.8
9.7
13.3
7.2
24.6
20.5
18.4
16.7
14.3
12.4
20.6
22.5
10 Yr.
Avg.
15.4
16.5
21.4
12.0
12.6
12.0
FY15
FY16 (E)
FY17 (E)
6
5
23
Latest Value
Last Reading
7.4
7.0
9.8
36.14
3.6
35.75
(1.3)
3.2
(9,782)
(9,767)
Current Account Deficit
(8.2)
(6.1)
Market Cap to GDP ^
80.0
-
GDP (YoY%)
IIP (YoY%)
Crude ($ bbl)
Core Sector Growth
(YoY%)
Trade Deficit ($ mn)
($ bn)
Note: # FII holding includes ADR/GDR (BSE500 Index); ^ Mcap = Current Mcap & GDP =
Nominal GDP (Mar-15); AxisCap: Data Source: Bloomberg; CRISIL Research
Global Market Update
The global economy sees no sign of improvement and the
outlook remains bleak. The International Monetary Fund
(IMF) Chief Christine Lagarde warned that global economic
growth will be disappointing next year and the mediumterm outlook has also deteriorated, as prospects of rising
interest rates in the US and an economic slowdown in
China were feeding uncertainty and a higher risk of
economic vulnerability worldwide.
The seven-year period of near-zero interest rates in the US
finally ended after the Federal (Fed) Reserve hiked key
interest rates by a quarter point to 0.25-0.50%. However,
the Fed signaled that announcements of further hikes will
be slow-paced, as the economy gains strength.
The European Central Bank (ECB) said its monthly bondbuying scheme will be extended till at least March 2017.
Meanwhile, the IMF warned that uncertainty on the
outcome of Britain's referendum on leaving the European
Union could hurt its economy.
In China, the National Bureau of Statistics (NBS) said the
economy is showing early signs of recovery and there will
be more positive signs in coming months, as government
supported policies gain traction. China also unveiled a new
blueprint to make its monetary policy more flexible as it
embraces supply-side reforms to arrest economic
slowdown and power its transition to a consumption-based
model.
Indian Market Update
Industrial growth, as measured by the Index of Industrial
Production (IIP), jumped up to 9.8% in October 2015 as
compared with 3.6% in September 2015, the highest
growth since October 2010. This was majorly driven by a
weak base effect from last year. On a month-on-month
basis, IIP growth was stagnant. All sub-indicators, except
for electricity, saw higher growth in October 2015.
India's core sector output contracted by 1.3% in November
from a year ago period due to sharp decline in steel,
cement and crude oil production.
India’s Consumer Price Index (CPI)-based inflation rose to
5.41% in November 2015, from 5% in October 2015. Two
factors drove inflation (i) sharp rise in food inflation, mainly
in pulses, oils and fats and vegetables, and (ii) an increase
in transport and communication inflation.
Equity Update
January 2016
Market Outlook and Triggers
Currently, capacity utilisation in the manufacturing sector is at a multi-year low. We believe that strong operating leverage
and gradual improvement in demand will improve the utilisation rate and drive corporate earnings over the next three to
four quarters. We also expect government to support capital expenditure in the transportation and defense sectors. Higher
capacity utilisation coupled with reduction in non-performing assets in the banking space, would boost the economy.
The expectation of a good monsoon after two years for failure, improvement in asset quality of banks, speedy
implementation of reforms, higher capacity utilisation and eventual earnings growth are likely triggers for the markets in
2016.
Further, we believe that oil prices will bottom out and recover this year, which could bring about some stability in global
markets and halt foreign investors from selling in emerging markets such as India. As the equity market is expected to be
volatile till commodity prices remain weak, we recommend Dynamic Asset Allocation Funds as they are likely to
outperform and invest systematically in pure equity funds in 2016.
Equity Valuation Index
Equity market valuations as displayed by Composite Index shows that the broader market is in fair value zone and
suggests that investors should look at systematic investment towards equities.
Equity valuation index is calculated by assigning equal weights to Price to equity (PE), Price to book (PB), G-Sec*PE and Market Cap to Gross
Domestic Product (GDP)
Equity Update
January 2016
Our Recommendations
Since volatility may continue to stay in the near term, funds that are structured with an intent to benefit from
volatility remains our top recommendation. Large-cap funds and flexicap funds that have higher large-cap allocation
are also recommended for lump-sum investments with long term view.
EQUITY RECOMMENDATION
Invest lump sum in:
ICICI Prudential Dynamic Plan
Markets may remain volatile until crude
and other commodity prices bottom.
ICICI Prudential Balanced Fund
Hence, dynamic asset allocation funds
ICICI Prudential Balanced Advantage Fund
can be a suitable idea for 2016
ICICI Prudential Equity Income Fund
Invest systematically over next 6 months in:
ICICI Prudential Focused Bluechip Equity Fund
ICICI Prudential Value Discovery Fund
Equity markets may bottom in 2016.
ICICI Prudential Long Term Equity Fund (Tax
Investors may invest systematically in
Saving)
these funds for long-term wealth creation.
ICICI Prudential Balanced Advantage Fund
(SMART SIP)
Aggressive investment ideas for next three years:
ICICI Prudential Select Largecap Fund
These funds may be suitable for
aggressive investors with a clear threeICICI Prudential Top 100 Fund
year and above investment horizon.
ICICI Prudential Multicap Fund
ICICI Prudential Focused Bluechip Equity Fund is suitable for investors who are seeking*:


Long term wealth creation solution
A focused large cap equity fund that aims for growth by investing in companies in the
large cap category
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Select Large Cap Fund is suitable for investors who are seeking*:


Long term wealth creation solution
An equity fund that aims to generate capital appreciation by investing in equity and
equity related securities of large market capitalisation companies, with an option to
withdraw investment periodically based on triggers.
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Top 100 Fund is suitable for investors who are seeking*:


Long term wealth creation solution
An equity fund that aims to provide long term capital appreciation by predominantly
investing in equity and equity related securities.
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
Equity Update
January 2016
ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*:


Long term wealth creation solution
A diversified equity fund that aims to generate returns by investing in stocks with
attractive valuations
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Long Term Equity Fund (Tax Saving) is suitable for investors who are seeking*:


Long term wealth creation solution
An Equity Linked Savings Scheme that aims to generate long term capital appreciation
by primarily investing in equity and related securities.
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Balanced Fund is suitable for investors who are 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.
ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*:


Long term wealth creation solution
An equity fund that aims for growth by investing in equity and derivatives.
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Equity Income Fund is suitable for investors who are seeking*:


Long term wealth creation solution
An equity Scheme that seeks to generate regular income through investments in fixed
income securities and using arbitrage and other derivative strategies and also intends
to generate long term capital appreciation by investing in equity and equity related
instruments.
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Dynamic Plan is suitable for investors who are seeking*:


Long term wealth creation solution
A diversified equity fund that aims for growth by investing in equity and debt (for
defensive considerations)
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
ICICI Prudential Multicap Fund is suitable for investors who are seeking*:


Long term wealth creation solution
A growth oriented equity fund that invests in equity and equity related securities of core
sectors and associated feeder industries.
*Investors should consult their financial advisers if in doubt about whether the product is
suitable for them.
Abbreviations: FII - Foreign Institutional Investors; MFs - Mutual Funds; PE - Price-to-earnings ratio; GDP - Gross Domestic Products;
YoY - year-on-year.
Data Source: Bloomberg; CRISIL Economic Research; FIMMDA
Equity Update
January 2016
Disclaimer:
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house.
Information gathered and material used in this document is believed to be from reliable sources. The Fund however does not warrant the accuracy, reasonableness
and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. All recipients of
this material should before dealing and or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional
advice and carefully read the scheme information document. 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 monitory and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other
rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in
competition in the industry. All data/information used in the preparation of this material is dated and may or may not be relevant any time after the issuance of this
material. The AMC takes no responsibility of updating any data/information in this material from time to time. The AMC (including its affiliates), the Fund 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. The recipient alone shall be fully responsible/are
liable for any decision taken on the basis of this material.