icici may 17 issuecontent.icicidirect.com/moneymanagermagazine/may_2017.pdf · 2017-05-26 · tyres...

Shilpa KumarMD & CEO

ICICI Securities Ltd.

Our retirement will perhaps be quite different from our parents. In the past there were defined pension schemes and other benefits to fall back on. There was also the additional cushion of a joint family to rely on for support. But with the gradual movement away from defined pension schemes the onus on securing our retirement is ours alone. The move towards nuclear families actually makes planning and securing our retirement that much more critical.

Retirement planning is a two stage process - accumulat ion and distribution. The accumulation stage is our earning period when we save and invest our income to be able to fulfill our financial needs after retirement which is the distribution stage. The investment choices we make during this accumulating phase are the most crucial ones as we rely heavily on them in the future. The real challenge is to build a retirement portfolio with right balance of fixed income and market-linked investments.

Traditionally, provident funds have been one of the favorite choices for retirement planning due to their safe and stable returns. However, with the current rate of return on Employee's Provident Fund (EPF) being 8.65 per cent and 7.90 per cent on Public Provident Fund (PPF), these schemes are essential but not sufficient to support one's retired life. Building wealth through National Pension System (NPS) can be one potential way to strategize retirement as its considerable exposure to equity gives higher scope for growth as compared to debt oriented schemes like EPF. Withdrawal restriction up till 60 years keeps you invested in equity for long-term – optimum time to build returns.

One simple advice for a secure retirement is - the longer time you give your retirement fund to grow the more security you add to your life after

1ICICIdirect Money Manager May 2017

retirement. But this plan has to be backed by strong yielding instruments. Like equity. Investing in equity for a longer duration has shown a remarkable growth in returns.

Although volatile in nature, if started at a young age, long-term growth potential of equity overrides risks. For more disciplined stock investments, opt for Systematic Equity Plans (SEP) where you either buy stocks of fixed amount or fixed number of shares (irrespective of stock price) at regular intervals. Equity mutual funds are also an excellent way of taking exposure to equity and can also give tax benefit. However, it is always recommended to ascertain your asset allocation and determine the extent of equity exposure you should have in your retirement corpus.

It is also worthwhile to keep having some level of exposure to equity in your retirement corpus post retirement as well. Equity can possibly be the only instrument that can help counter the increasing cost of living.

Additionally, one can also consider post-retirement schemes like Senior Citizen Savings Scheme (SCSS), balanced mutual funds and tax-free bonds – for those in high tax-bracket. Investing in more than one bank fixed deposits of different maturities, known as the laddering strategy, discourages re-investment risk and can be effective retirement saving instrument.

But before you decide the best instruments to invest in for your retirement it is important to actually ascertain how much money you will require for retirement. Here are some of the factors you should consider. Start with life expectancy, for how many year after you retire will you need to draw from your retirement fund. The next step is to consider your expenses today and which of those expenses would rise in the future and which could potentially cease to exit. For example medical bills could rise while your home loan EMIs will end. Once you have done this you will have a fair understanding of the monthly expense you will have to plan for post-retirement. Alternatively, it is also worthwhile to approach a Financial Planner to help plan your retirement.

Our message remains the same - 'Keep investing and stay invested for your life goals'. Through this magazine and our website www.icicidirect.com we want to make an earnest attempt to partner with you in setting and achieving your financial goals. Do walk into any of your Neighborhood Financial Superstore and talk to us.

2

Good retirement planning is a combination of money and time management. Money management, to build diversified portfolio that can secure your wealth; and time management that can give enough time to grow this wealth. In simple words, one should save as much as possible and start as early you realize because financial restraint becomes the major cause of anxiety during retirement period. Studies tell us 51% of Indians are worried about managing expenses in their retirement.

Here's something on diversified portfolio: Predicting future performance of an asset can be challenging, unnecessarily risky even. And since all asset classes will not perform equivalently during favourable market times, wiser way is to pool money in maximum assets. NPS, fixed-income funds, equity, real estate are tried and tested avenues for retirement income. Depending upon your risk profile, day-to-day income needs, retirement duration, lifestyle changes and other essential expenses you can decide asset allocation of your retirement portfolio.

A research report by HSBC shows that one in ten people do not know what their source of income will be after retirement. Mixed responses included- continue working to fund retirement, reliance on personal pension schemes and income from other savings or investments; which only shows that many Indians understand the need and importance to personally prepare for retirement. I believe, awareness about financial products and professional support can help us construct substantial corpus and turn into a steady stream of post-retirement income.

Despite believing in 'living for the day' culture, my advice, especially to young investors, is to take steps towards retirement savings form Today! Longer life expectancy, lack of family support due to nuclear family system, soaring medical costs, rising inflation, job-hopping attitude, lack of government sponsored pension schemes – makes it all the more necessary to plan your retirement now. Our May edition is extension of this view point.

Calculating cost of living after retirement is the most significant figure in your retirement plan. Our cover story takes you through elements and products to consider while getting down to that ballpark figure. We have illustrated this with the help of a descriptive example and an extensive research report.

The May edition of Money Manager also offers comprehensive review of mutual funds recommended by our research team. I would like to draw your attention to our recently updated Equity Model Portfolio, which we have aligned to capture the new opportunities available in the market. So stay updated, plan a happy retirement and keep reading to stay f inancial ly f i t . Do write us back at [email protected] any queries or feedback.

Your magazine is now also available on www.magzter.com, a digital newsstand.

ICICIdirect Money Manager May 2017

Editor & Publisher : Abhishake Mathur, CFA

Editorial Board : Sameer Chavan, CWM®, Pankaj Pandey

CMEditorial Team : Nithyakumar VP CFP , Sachin Jain, Research Team

Coordinating Editor : Namrata Lonkar


MD Desk......................................................................................... 1

Editorial...........................................................................................2

Contents..........................................................................................3

News..............................................................................................4

Stock ideas: Persistent Systems &J K Tyres..................................5

Flavour of the Month: How much is enough for a happy retirement?

Even if financial prudence says at least 15% of your monthly

income should be directed towards retirement savings, we say

aim for larger portion right from the beginning.After all, your

dream retirement can only be a reality when you are financially

sound and stable….....................................................................14

Ask Our Planner

Our financial expert answers your personal finance queries...25

Mutual Fund Analysis

Which are the top performing mutual funds in current market

scenario? Check these top three funds recommended by our

research team.............................................................................29

Equity Model Portfolio.................................................................... 37

Quiz Time...................................................................................... 40

Prime Numbers.............................................................................. 41

4

3 years of Modi govt: Markets give a thumbs up to NDA

Indian equities have surged to record highs during the three years of the NarendraModigovernment. Since May 26, 2014, the day he was sworn in as Prime Minister, the benchmark Sensexand Niftyindices on the two major exchanges have rallied 23 per cent and 28 per cent, respectively.

The Sensexhas crossed the psychological 30,000-mark; the Niftyis around 9,500. Mid-cap and small-cap stocks have outperformed the blue-chips ones. The BSE MidCapand SmallCap indices have gained 73 per cent and 71 per cent, respectively. As a result, total market capitalisation has gone up 47.5 per cent, from Rs 85.2 lakh crore to Rs 125.7 lakh crore in the period.

Courtesy: Business Standard

Advancing the Union Budget and passing the Finance Bill before the start of the financial year are already showing results in central government expenditure. For April, total spending is pegged at Rs 2.43 lakh crore, Business Standard has learnt. That is a near 50 per cent jump over Rs 1.62 lakh crore spent in April 2016. The April 2017 figure of Rs 2.43 lakh crore works out to 11.3 per cent of the total budgeted spending estimates for 2017-18 at Rs 21.46 lakh crore. Last April, the expenditure was 8.2 per cent of the annual spending estimates for 2016-17.

Courtesy: Business Standard

Early Budget lifts April spend by 50%

LIC earns investment income of Rs1.8 trillion in FY17Insurance behemoth Life Insurance Corporation (LIC) of India earned a total investment income of Rs1,80,117 crore during the financial year 2016-17. For LIC, which is also the largest domestic institutional investor in the country, the income was earned through investment in government bonds and state development loans, interest, corporate bond interest, dividend income and profits on sale of equity. The market value of LIC's total investment grew 17.08% at the end of the financial year 2016-17 at Rs24,69,589 crore (provisional) from Rs21,09,253 crore a year ago.

Courtesy: LiveMint


While some tax experts and economists have questioned the rationale for a multi-slab mechanism for goods as well as service, the Centre has advised states during deliberations not to look at GST as an opportunity to implement all reforms at one go. The maze of central and state tax regimes would make it difficult to do away with all exemptions and opt for one-rate structure at one go.

The GST Council-comprising state finance ministers and headed by Union finance minister ArunJaitley-has agreed to four slabs of 5%, 12%, 18% and 28% and, contrary to expectations, even opted for multiple rates for services, where a two-tier structure was being talked about. In the next stage, a review of the rate structure may take place but there is no time frame that has been suggested.

Courtesy: Economic Times

Under GST, govt to stop exemptions gradually

5

STOCK IDEAS


JK Tyres & Industries– In a sweet spot!!!

Company Background

Investment Rationale Signs of Chinese imports fading away

JK Tyre & Industries Ltd ( J KT I L ) , a p a r t o f J K organization is an Automotive Ty r e , t u b e a n d f l a p s manufacturing company. It is a leading player in the M&HCV truck bus radial (TBR) segment with market share >30%. In the passenger car radial (PCR) segment, it has a share of >12% in India. They started w i t h t h e f i r s t t y r e manufac tu r ing p lan t in Kankroli, Rajasthan with an installed capacity of 0.5mn tyres p.a. They currently have 9 domestic plants, 3 of them are located in Mysore, 3 in Laksar, 1 in Banmore, 1 in Kankroli and 1 in Chennai. The company has also acquired Tornel (2008) a Mexican tyre major along with their 3 Mexican plants. With the acquisition of Laksar unit of Cavendish Industries, the total capacity of JK Tyre stands at 35 mn tyre p.a. The company has a wide distribution network of ~4000 dealers across India.

Import of Chinese radial tyre in Ind ia had subs tan t i a l l y

increased from May 2015. Average monthly TBR import from China was at ~54,000 in CY13, surging to 166,000 tyres in June 2016. However, since then, Chinese TBR imports have gradually come down -52,000 tyres in January 2017, m a i n l y d u e t o 1 ) demonetisation adversely impact ing Ch inese TBR distributors in India as their transactions were largely cash based, 2) media reports suggest US International Trade Commission will not levy any kind of duty on Chinese tyres, making US a preferable destination for Chinese TBR exports. The reduction in Chinese TBR import is positive for a player like JKTIL (derives 74% of its revenue from CV segment). Also, any anti-dumping duty on imports of tyres, will favour JKTIL.

Average Natural Rubber (NR) (key input cost) prices have been more volatile - from lows of 94/kg in February 2016 to 159/kg in February 2017 to 129/kg currently. The sharp surge in NR prices was mainly

Price hikes to support margins!

` ``


STOCK IDEAS

due to 1) production cut of top NR producing countr ies ( T h a i l a n d , I n d o n e s i a & Malaysia account for >60% of world's production), 2) floods in Thailand (impacted its production) coupled with higher demand from China in the same period resulting in NR prices moving northwards. However, we believe the situation will normalise. NR prices are likely to stay benign, going forward. To protect their operating performance, major tyre players (including JKTIL) undertook a price hike of ~10% in the past six months that wil l cushions their margins. Average prices of other raw material costs (that are crude linked) may also stay subdued. Further, a better product mix (higher share of radial tyres) will also support margins.

The acquisition of the Laksar unit (of Cavendish Industries - CIL) has strengthened JKTIL's leadership position in the TBR segment and helped them enter the fast growing 2-W & 3-W segments. According to the

Acquisition of Cavendish Industries to yield better returns!

management, JKTIL has managed to turn around the unit by higher productivity & reduced its plant conversion cost (down 40%) thereby turning PBT positive. We believe CIL would have been operating at very low utilization level at its time of acquisition. The utilization is gradually e x p e c t e d t o r a m p u p (considering JKTIL's stake of 64% in the un i t cou ld contribute maximum revenues of > 4,000 crore) thereby generating higher margins. Thus, CIL is likely to yield better returns, going forward.

The expectation of a revival in the capex cycle makes us o p t i m i s t i c a b o u t t h e revenue/earnings growth possibilities. Its plans to explore the 2-W space & new radial capacity would drive incremental growth. JKTIL is available at attractive valuation - currently trading at PE of 8x FY18E vs. the tyre industry average of >13x. Thus, we value JKTIL at 5x FY19E EV/EBITDA to arrive at a target price of 215. We maintain BUY on JKTIL.

`

`

Attractive valuation; maintain BUY!


STOCK IDEAS

Stock Data

Key Financials

Valuations Summary

Key risks include:

Subdued Automotive demand + stiff competition might impacts its revenue growth

If the automotive demand takes a prolonged recovery (from the negative impact of demonetization) we believe this is likely to impact JKTIL growth prospects. Further stiff competition from the domestic players and from the cheaper Chinese imports (though off-late has moderated) in the middle of weak demand environment might impact its growth prospects. The industry is hopeful of an imposition of

anti dumping duty on Chinese tyres, though a defined timeline of such an imposition remains uncertain.

Natural Rubber account for ~40% of the input cost while remaining of ~60% is largely linked to the crude price movement. Hence we believe any adverse price movement (upwards) of the above mentioned raw material will impact its gross margins thereby impacting its overal l operating performance.

Unfavorable movement in Natural Rubber (NR) & Crude might impact its performance

Net Sales 6,953.0 7,492.0 8,332.0 9,342.0

EBITDA 1,141.5 1,273.0 1,365.0 1,526.7

PAT 476.2 352.1 509.1 667.6

EPS (`/share) 21.0 15.5 22.4 29.4

` crore FY16 FY17E FY18E FY19E

P/E 8.0 10.4 8.0 6.1

EV / EBITDA 5.8 6.0 5.4 4.5

Tar. EV / EBITDA 6.5 6.7 6.0 5.0

P/BV 2.3 2.0 1.7 1.3

RoNW (%) 29.1 19.3 20.7 22.1

RoCE (%) 20.1 14.5 15.8 17.7

Valuation Summary FY16 FY17E FY18E FY19E

Market Capitalization 4,059.7

Total Debt (FY16) 2,669.7

Cash and Cash Equivalent (FY16) 154.4

Enterprise Value 6,575.0

52 week H/L 173 / 79

Equity Capital ` 45.4 crore

Face Value (`) ` 2

DII Holding (%) 10.3

FII Holding (%) 20.1


STOCK IDEAS

ANALYST CERTIFICATIONWe /I, Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India's largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may 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 Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.

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STOCK IDEAS

Persistent Systems– Speeding on digital transformation!!!

Company BackgroundPersistent Systems Ltd (PSL),

founded in 1990 (IPO in 2010)

and headquartered in Pune, is

a global company specialising

i n s o f t w a r e p r o d u c t &

technology solutions and

p r o v i d e s t h e s a m e t o

customers in technology,

te lecommunica t ion , l i f e

science, healthcare, banking

and consumer product sectors

across North America, Europe

and Asia. The company has

deep domain expertise on

n e x t - g e n e r a t i o n c l o u d ,

bus iness in te l l igence &

analytics, collaboration as well

as mobility-based computing

platforms. PSL has ~8800

associates with overseas

offices spread in the US, UK,

C a n a d a , N e t h e r l a n d s ,

Singapore, Malaysia, etc.

Company's core purpose is to

b e a w e l l - r e s p e c t e d

technology company focused

on delivering best in class

innovative solutions to its

customers and partners. In

FY16, PSL signed an alliance

with IBM around the IBM

Watson Internet of Things (IoT)

ecosystem and according to

McKinsey, IoT is supposedly to

be a $70-trillion opportunity.

IBM-Watson IoT deal with

Persistent systems in Jan 2016

is driving the growth in IBM-

Alliance space (~30% of

revenue) resulting in ~62%

YoY growth to US$120 million

in IP based revenues in Fy17

compared to 25.7% annual

growth in FY16. We believe

Watson-IoT deal could be the

next big trigger for Persistent

systems to ride the IoT wave

and could scale up significantly

in coming years. PSL exposure

to newer digital technologies

along with continued alliance

with IBM has led the company

to grow above the industry

average in FY17. Over 5 years,

Persistent's dollar revenues

Investment Rationale

IBM-Watson IOT deal may lead

growth for PSL …


STOCK IDEAS

grew at a CAGR of 15.6% YoY

to US$429 million in FY17 with

average EBITDA margins at

21.5%. Also, PSL step towards

strengthening its leadership

t e a m t o c a p i t a l i z e t h e

opportunity in digital wave

transformation should help

drive revenue momentum in

coming years. Moreover,

Persistent's continued focus on

strategic key accounts for the

last few quarters is clearly

playing out leading to top 10

accounts contributing US$228

million in revenue in Fy17,

growth of 40.5% YoY.

a) Persistent has re-organized

its businesses to create the

necessary focus on digital

transformation. Aligned its

organization into 4 key growth

strategies namely (i) Digital

(focus on HOW of digital) (ii)

IBM Alliance (focus on IBM

alliance ~30% of revenues) (iii)

Services business( focus on

s e r v i c e s f o r I S V s a n d

enterprises (iv) Accelerite

PSL positioning may strengthen

post organisational restructuring

…

( focus on sof tware for

enterprises as well its own IP

l e d b u s i n e s s e s ) b )

Strengthened the leadership

team c) Focus on being global

(currently presence in only 10

countr ies ) d) Focus on

partnerships.

PSL exposure to newer digital

technologies along with

continued alliance with IBM

gives us optimism for its

growth, go ing forward.

M o r e o v e r , t w o n e w

partnerships with Partners

healthcare and USAA in digital

space provide support to the

revenue growth visibility,

going ahead. Hence, we

expect rupee revenues, PAT to

grow at 11.8%, 11.2% CAGR in

FY17-19E with ~70 bps

improvement in EBITDA

margin for FY18E on account

of expected better growth in IP

led and digital revenues. We

have a BUY rating on the stock

and value Persistent at 700

(15x FY19E EPS).

Portfolio stock; IP and digital to

lead growth, BUY!

`


STOCK IDEAS

Stock Data

Key Financials

Valuations Summary

crore FY16 FY17E FY18E FY19E `

Net Sales 2,312.3 2,878.4 3,116.8 3,600.2

EBITDA 413.8 453.9 514.5 612.5

Normalized PAT 297.4 301.3 320.1 372.6

Normalized EPS (`/share) 37.2 37.6 40.1 46.7

P/E 15.6 15.4 14.5 12.4

Target P/E 18.8 18.6 17.5 15.0

EV / EBITDA 9.7 8.5 7.1 5.6

P/BV 2.8 2.5 2.2 2.0

RoNW (%) 18.1 16.2 15.4 15.9

RoCE (%) 23.8 21.3 20.4 21.3

FY16 FY17E FY18E FY19E

Market Capitalization ( Crore) 4,639.2

Total Debt (` Crore) 6.0

Cash and Investments (` Crore) 143.2

EV (` Crore) 4,502.0

52 week H/L 758 / 501

Equity capital 80.0

Face value 10.0

DII Holding (%) 12.4

FII Holding (%) 20.8

`


STOCK IDEAS

Key risks include:

Significant currency volatility may impact operating margins

The average rupee has appreciated ~3% in FY17 vs. FY16 while the same number stands at ~5% at Q4FY17 end. This could impact margins by ~30-50 bps assuming 30 bps impact for every 100 bps change in rupee. That said, tailwinds in form of operational efficiency may be available, going forward, however, significant currency volatility

from current levels could have a material impact on operating margins.

PSL derives ~85% of its revenues from the US. A significant slowdown could i m p a c t t h e p r o d u c t deve lopment spend ing, genera l ly d isc re t ionary, capability of its clients. Also, any change in US visa regulations, if any could impact margins slightly.

Higher dependence on US geography


STOCK IDEAS

ANALYST CERTIFICATION We /I, Chirag Shah PGDBM, Shashank Kanodia, CFA MBA (Capital Markets), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures:ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India's largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may 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 Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.




ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

It is confirmed that Chirag Shah PGDBM, Shashank Kanodia, CFA MBA (Capital Markets), Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.


ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report.

It is confirmed that Chirag Shah PGDBM, Shashank Kanodia, CFA MBA (Capital Markets). Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

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This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.




ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report.

It is confirmed that Chirag Shah PGDBM, Shashank Kanodia, CFA MBA (Capital Markets), Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.


14

FLAVOUR OF THE MONTH

How much is enough for a happy retirement?


The eight digit figures given by

online retirement calculator

seem intimidating at first. For

instance, to a person earning

50,000 a month and monthly

expenses of 30,000 total

amount needed at the time of

retirement will be around 9

crore. The lump sum looks

impossible to few people

andthey simply choose to

ignore retirement planning

instead of worrying about it.

That's the first misstep in

retirement journey. Here's why.

'The sooner the better '

formulaProcrastination is the biggest

hurdle in your retirement

corpus creation. Experts have

always advised to start off at an

early age; reason is – the

earlier you enter market the

longer time you give your

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investments to grow. By the

time you are half way through

your working life, you have

already done some spending

and savings for goals like

marriage, child's education,

property purchase etc. Starting

a retirement fund at this point

of time will only be onerous.

At initial days of earning, you

have lesser financial duties and

can afford to save a large chunk

aside for your retirement.

However small the pay, saving

20-30% of it every month right

from the beginning can build a

strong base for your retirement

corpus. To build the corpus of

5 crore at the age of 60, you will

have to save less if started at 25

and more in the later age.

Another benefit for early birds

is the growing effect of

compound interest rate.

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At 29, Amit is working for an IT firm and earns approximately Rs. 8 lakh per annum. When asked about how much money he will require every month after retirement his response was a hasty 'haven't figured it yet' comment and a shrug. This many not sound serious to many. Because, like Amit, retirement is a distant goal for many of us and we have not calculated the amount we need to stay financially sound after retirement. Well, it's time we do.

15



Source: 'The future of retirement' HSBC report*

1 Tell us your retirement planStarted PPF a/c at 25 yrs and started investing 5k p.m. At 27 yrs, started MF-SIP for Rs.2k p.m. and gradually increased to 7k p.m.; Started NPS a/c at 35 yrs.Post-retirement strategy is to sell all physical assets & have only financial assets; invest around 30% into equity and remaining 70% into debt MFs and start withdrawing t h r o u g h S y s t e m a t i c Withdrawal Plan (SWP) for funding expenses.

- Pravin K, 35 (Banker)

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It's a long journey from the first paycheck to re t i rement payouts. In the meantime, developing some qualities can help you attain the goal of retirement more efficiently.

• Patience – for investments to grow

Starting early is undoubtedly the wisest decision you make for your retirement but how long you stick to it is a matter of g r e a t e r s i g n i f i c a n c e . Investments in fixed income plans (FD, Provident Fund etc.) are of slow-and-steady nature and show progress after considerable time. Similarly, market related investments (stocks, mutual funds etc.) give better performance in longer run. Withdrawing funds because they are increasing at conservative rate or pulling back during bearish market phase decelerates your investment's growth.

For those investing in direct stocks or mutual funds, it's not always about beating market

16



or picking the best stock / mutual fund. Your retirement portfol io should aim to accumulate sufficient assets. The key toride out market volatility is by staying invested. Fortunately, patience is more important than intelligence when it comes to investments. Because even the negligible stock can survive (outperform even) the negative market times. So, be patient and don't' look at the portfolio too often once invested.

• Vision- for long term benefitsAn investment without vision is likely to lose its edge over a period of time. Remember, the long-term hold of retirement fund will definitely pay off if you have a clearer direction for your goal. The vision serves as a 'north star' and encourages you to re-allocate assets a c c o r d i n g t o c h a n g i n g investment term and parallel with retirement objective. Simply put, don't get distracted by other goals or investment schemes; stay focused.

• Discipline – for regular savingsCultivate a habit of regular savings; since a) it is difficult for an average investor to invest a lump sum that will

suffice for his entire retirement b) effect ofcompounding works best on periodical i n v e s t m e n t s . O n l y a disciplined approach can build wealth adequate enough to give monthly payouts after your retirement when you stop earning or earning at the same pace.

Investment in mutual funds via SIP is one way to ensure disciplined savings for your r e t i r e m e n t . R e g u l a r installments average out the risks in high and low times as you buy fewer units during high NAV phase and more units when the NAV is low. Besides the habit may even control your splurge that will help you manage personal finance better in your retired days.

• Balance- for strong wealth corpus

A mixed port fo l io wi th balanced exposure to varied assets can considerably lift up your ret irement corpus. Diversified portfolio, of course, cannot guarantee profits or shield against market falls; but it sure can hold better than single asset investment. Give significant exposure to equity

17



right from the beginning and during the retirement. Don't abandon all stocks that are performing consistently low. Same stock may balance out losses in future when other assets are thinning out your portfolio. Equivalently, don't forget to include debt oriented investments as they are less likely to get affected by market fluctuations. Find the correct mix of equity, bonds, FDs, real estate etc. with the help of an expert to avoid extreme approaches investing in any asset class.

• At ten t ion – fo r hea l thy retirement funds

Regular review of your retirement portfolio doesn't mean checking investment's performance every time the market takes a slight down or high swing. There's no ideal t i m e - f r a m e t o m o n i t o r portfolio performance; but make a habit of checking it once in 18 to 24 months. Study and research carefully before re-allocating assets. Pay attention to market updates. Better yet, take help of financial experts to avoid impulsive and emotional decisions.


Retirement in IndiaPerks of retirement in India might be appealing but the path to reach there isequally

exhausting. With no more government defined plans or employer's pension scheme to take full responsibility of our

18



golden years, saving for retirement while managing expenses of today's life has become burdensome. Then t h e r e ' s i n c r e a s i n g l i f e expectancy that adds to this financial load as the gap between retiring age and average living years widens (retirees have to make financial arrangements for larger span).

Compensating for inflation is another major concern for l o n g - t e r m g o a l s l i k e retirement. The inflation rate in last decade touched the highest of 12.11% (2010) and was leveled down between 4-7% in following years. Despite of speedy recovery, one cannot deny that inflation weakens the purchasing power of rupee, which furthermore undermines our retirement savings.

1 Tell us your retirement planIt will take 2 more years to

stabilize basic necessities

e.g. house, car. Once I reach

30, I will preferably go for

mutual funds oriented

retirement plans. Currently

I'm saving in NPS which is a

major contribution for

retirement. LIC policies will

serve other needs like child

education, or other short

term plans. Also I will go for

traditional investments like

FD, RD for future expenses.

I will get monthly NPS

payouts. Apart from this, on

retirement whichever lump

sum amount I'm getting, I will

k e e p 4 0 % o f i t f o r

emergency funds and rest I

will put it in some SWP.

- Prajakta L. , 28 (Central

Government Employee)

If your monthly expense is

50,000today and you expect

same pension income after

retirement, here's a reality

check. The value of 50,000

after 15 years will 9,212 at the

inflation rate of 7%. And lesser

if you are to retire later than

that. So, even the corpus of 1

crore will be valued as 36.24

lakh after 15 years (considering

constant inflation rate of 7%).

Although inevitable, inflation

can be tackled by adopting

inflation-beating investment

strategy.

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The silver lining is that there iswide range of investment options suitable for every retiree's needs available in the market today. As a rule, 'don't put all your eggs in one basket'. Based on your risk tolerance and investment term allocate funds to different instruments. Here's a list of investment avenues that can provide stable income after retirement.

National Pension SystemAt annualized returns of over 1 0 % , N P S i s a n i d e a l retirement vehicle for both moderate and aggressive risk takers. Up to 50% exposure to equity and restriction on pre-mature exits or withdrawal

favors the long-term benefit. This government initiative allows retirees to enjoy tax break over and above the existing limit of 1, 50,000 under section 80C. However, income from NPS is taxed as per respective tax bracket and o n l y 6 0 % o f t h e t o t a l contribution can be withdrawn at the time of retirement (age of 60). Subscriber must buy annuity with remaining 40% for monthly pension.

Employee's Provident FundAnother government led product that is popular for its safe returns and tax benefits. Current rate of return is fixed at 8.65% p.a. Make this part of

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your retirement portfolio as b o t h p r e m i u m s a n d withdrawals from EPF account are tax-free after 5 years of continuous contribution.

Real estateApart from adding diversity to your portfolio, real estate offers cash support (from rent) after retirement which is helpful, especially when other assets are not easy-to-liquidate type. With ever-rising property prices this is an appreciative asset. However, there's a baggage of maintenance cost with rental income and collecting rent may not always be a pleasurable task.

Reverse mortgage is another way to fund ret irement through real estate. This is an agreement between the house owner, retired senior citizen, and the bank that ensures regular stream of income against mortgage of the house. The bank decides the loan amount of the pledged property on the basis of current value, future demand, condition of the house and current real estate market trends. The borrower cannot take lump sum amount of the calculated sum. Payments are

done on monthly, quarterly or partial payment intervals. The retiree can reside in the same house while receiving timely payments (reverse EMIs). There can be major drawback of the payment

1 Tell us your retirement planMade my retirement plan when I was 32.Have invested in two mutual fund schemes (SIP) since then and intend to keep the accumulated amount untouched for my retirement years. Post-retirement strategy is to practice at my personal clinic for as long as I can. Rental income from my second house can be one source of income.- Anil Kharat, 47 (Doctor)

EquityStock investments or equity oriented mutual funds are the best picks to fight against in f la t ion. Equi t ies have outperform other asset classes in long haul. Periodical payments towards mutual funds in the form of SIP (Systematic Investment Plan) is a tried-and-tested strategy of happy retirees. Long-term capital gains from equity also

21



gain tax exemption in India. In fact, equity qualifies for post retirement strategy as well. Life expectancy rise is the prime reason for th is . People generally live for 15-25 years after retirement. And what safe f i x e d i n c o m e a v e n u e s generate at the average rate of 7-9% will fulfill income needs for maximum of 10 years, unless you have invested enormous amount in these products. So in order to live all your retired life without financial stress you need more solid returns.

Senior Citizen Savings Scheme This expert recommended post- ret i rement product provides stable returns fixed

rate of 8.6%. Eligible only for retirees above the age of 60, SCSS can be held for 5 years and stretched up to 3 years later that. Only lump sum investment, not exceeding Rs. 15 lakh is allowed in one account. The catch is, this easy to access, reliable investment charges penalty on pre-mature terminations of accounts.

Fixed Deposits and Liquid FundsCash inflow becomes one of the greatest necessities in retirement, hence make sure to include investment products with high liquidity in your retirement plan. Both these investments are tax-efficient and traditionally trusted.

Mr. & Mrs. Shah's retirement planMr. Kishore Shah, aged 35 years, currently works at Mumbai. He has been staying in Mumbai for the last 5 years due to his work. He is married to Smitu, aged 34 years. Smitu is a dentist and has a small clinic. They have 2 children – Laya, aged 5 years and Harsh, aged 2 years. Kishore has accumulated 10 lakh in his PF account & has around 15 lakh into equity mutual funds, which he has earmarked for his retirement.

Step 1: Ascertain Retirement age & Life expectancy: Kishore wants to retire at 55 years & Smitu also wants to retire along with him at the same time. They both expect to live till their age of 80 years.

Step 2: Estimate the post-retirement needs: The couple has to visualize their retirement & understand how much they would require every year post-retirement. Let's take a quick step-by step guide for the same:

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1) Where do I settle post-retirement? The cost of living would change based on the location where you plan to settle down. Kishore has not thought much about it till now. His native is Nagpur & is thinking to re-locate there after retirement.

2) Do I have a house to stay at the location? Once the location is decided, then the next consideration should be the house to stay. Kishore has his parental house in the native; however, he has also bought a plot of land some time back on which he wants to build a house, as he does not want to bank on the parental house.

3) Household & other basic expenses: Kishore & Smitu have been spending 50,000 p.m. currently for a family of four (including house rent). After retirement, these expenses could come down, as there will be only two people – Kishore & Smitu; children would have started earning / got settled. Rent expense will be eliminated. Maid expenses could go up. Considering all these, they might require around 25,000 p.m. (in today's cost) post-retirement for these expenses.

4) Daily Travel expenses: Kishore & Smitu are currently spending Rs.5,000 p.m. towards fuel expenses; however, post retirement, daily travel would not be there and this cost could come down to 2,000 p.m. (in today's cost). Beyond some point after retirement, they might either hire a driver or opt for cabs, instead of self-driving. This might increase the cost further.

5) Medical expenses: Currently, Kishore & Smitu are spending around 25,000 p.a. towards medical expenses, including vaccinations for children. This expense could go up post-retirement, as they would be aged. Hence, for post retirement phase, an average of 75,000 p.a. (in today's cost) would be needed for these expenses.

6) Holiday & Entertainment expenses: Currently, Kishore & Smitu are spending around 1 lakh p.a. towards holidays & 5,000 p.m. towards entertainment / eating out. Holiday expenses could go up, as they would want to travel more, as they would have more time now; also, their children might have settled down in any part of the world – visiting them once or twice a

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year would also inflate the expenses. Entertainment / eating out expenses might be similar or come down slightly. Considering all these, they might want around 2.50 lakh p.a. (in today's cost) for these expenses post-retirement.

7) Replacement of white goods / maintenance of assets, etc.: The amount of these expenses might be similar as of today and Kishore & Smitu might need around 1 lakh p.a. (in today's cost) for these expenses.

8) Gifting / Donation, etc.: Currently, Kishore & Smitu spend an average of 1,500 p.m. towards gifts for birthdays / wedding, etc. They foresee this expenditure to go up slightly, as they would need more amount to gift their grandchildren and make some donations, after retirement. Accordingly, they would need around 50,000 p.a. (in today's cost) for these expenses.

9) Miscellaneous expenses: Over and above all these foreseeable expenses, there are always many unforeseeable expenses which we incur over the year. It's a good idea to allocate some amount for the same every year. Accordingly, Kishore & Smitu can allocate around 50,000 p.a. (in today's cost).

All expenses add up to around 8.50 lakh p.a. (in today's cost). This estimate will help Kishore & Smitu to know how much they need to invest towards retirement, rather than investing a random amount. Investing a random amount, in most of the cases, would end up with a shortfall in the required retirement corpus.

Step 3: List down planned sources of income post-retirement: Once the expenses are estimated, the couple has to list down any planned sources of income post-retirement like rental income, pension income, etc. and knock of them from the above expenses. If they are planning to rent out the clinic post-retirement and are expecting 3 lakh p.a. (in today's cost) from the same, then the net expenses required would be 5.50 lakh p.a. (i.e. 8,50,000 – 3,00,000) (in today's cost).

Step 4:Calculate the future value of net expenses post-retirement: The value of 5.50 lakh after 20 years from now, i.e. at Kishore's retirement would be 21.28 lakh, assuming an average inflation

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rate of 7% p.a. This will further inflate every year post- retirement.

Step 5: Calculate the retirement corpus required: Assuming the corpus would fetch a net return of 8% p.a. post-retirement, Kishore & Smitu would require a retirement corpus of 4.94 crore, which can fund the net expenses every year post retirement till the expected lifetime of both. From this value, the couple can discount the future value of any investments / retirement benefits which are already earmarked for retirement. Assuming Kishore's basic salary grows by 8% p.a., he would be accumulating around

1.73 crore through his PF account by the time he retires (assuming an average return of 8.5% p.a.). His existing mutual fund investments of 15 lakh, earmarked for retirement, would grow to 1.45 crore by the time he retires (assuming an average return of 12% p.a.). This leaves a shortfall of 1.76 crore (i.e. 4.94 crore less 1.73 crore less 1.45 crore), which has to be further accumulated through fresh investments.

Step 6: Determine the asset allocation & the amount to be invested: Since the couple has 20 years to accumulate the corpus, they can opt for an allocation which is skewed more towards equity asset class i.e. around 70-75% can be into equity. Assuming an average return of 10% p.a. from the fresh investments, the couple has to invest around 24,300 p.m. for the next 20 years to accumulate the shortfall of 1.76 crore in their retirement corpus.

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G i v e s m a l l b u t e s s e n t i a l

weightage to as many investment

options possible. After all, your

dream retirement can only be a

reality when you are financially

sound and stable. And last but not

the least, start your retirement

bank 1-2 years after the first job. If

gone past that point, gear up

today. It's never too late to achieve

your dream.

The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities

*Reproduced with permission from The Future of Retirement, published in 2011 by HSBC Insurance Holdings Limited, London. This report, based on the views of 1,028 respondents in India, explores how households in India are likely to respond to the rapidly changing shape of retirement over the coming decades.

25

ASK OUR PLANNER


The goal of secured retirement entails advanced planning

Q.

A.

My age is 32. I want to start

investing into NPS; however, I read

that out of my investment amount,

only a maximum of 50% goes into

Equity. Considering the same, is it

worth to invest in NPS or is there

any way I can increase the amount

to be invested into Equity under

NPS?- Charan Raj

It used to be the case earlier;

however, during last year end,

some changes have been

brought to this rule. Now, a

NPS subscriber can choose

between Active Choice or Auto

Choice for allocation of funds

between the different asset

classes – Equity (E), Corporate

Bonds (c ) , Government

Securities (G) and Alternative

investment schemes (A).

If you choose Active Choice,

you can decide the percentage

of allocation into these asset

classes by your own; however,

this choice has a maximum cap

of 50% into Equity.

If you choose Auto Choice, you

can select any of the three

options further – Aggressive,

Moderate & Conservative. In

Auto Choice, the percentage

allocation towards Equity class

reduces gradually, as your age

increases. In Aggressive

option under Auto Choice, the

maximum exposure in Equity

can go upto 75% till your age of

35 years, after which it will

gradually reduce. Hence, when

you open NPS account, you

can opt for Auto Choice &

choose Aggressive option.

Please note that if you only opt

for Auto Choice and do not

choose Aggressive option

spec i f i ca l l y, by de fau l t

Moderate option will be

ass igned, in which the

maximum exposure in Equity

goes upto only 50%.

You can also switch between

Auto Choice and Active Choice

& between different asset

classes under Active Choice

anyt ime dur ing a year;

26

ASK OUR PLANNER


however, you wil l have

restrictions on the number of

times you can do so in a year.

I have taken Life stage pension

policy in November 2009 and as per

terms of policy I have to pay 10

yearly instalments of 15, 000

each. I have paid 8 installments

and I am opting for discontinuance

of the policy by surrendering.

Presently I have 6287.30 unit and

NAV is of .28.918 each with total

NAV of .1, 81,807. As I have paid

premium totaling to 1, 20,000 and

by surrendering the policy I would

get an amount of 61, 807 over and

above the premium paid. What is

tax treatment for the proceeds

received by surrendering the policy,

kindly inform.

- Mareddi Basivi

If a pension policy is

s u r r end er ed be f o r e i t s

maturity, the entire surrender

proceeds (not jus t the

appreciation) would be added

to your income on the year of

receipt and taxed as per your

income slab.

I have an ICICIdirect account&

presently invest 5000 /month in

Q.

A.

Q.

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tax saving mutual funds. Now want

to invest another 10000 through SIP

in Equity Mutual funds or ELSS.

Which option will be better? OR any

better option if you will suggest.

Another query is that if I take ELSS,

and add my wife as joint holder. Will

there be tax exemption benefits for

her also? - Kiran Sanap

If you are looking to invest

for a long term, you can opt

either of them. However, if you

need to save tax too, then only

opt for ELSS; else, equity

funds are a better choice.

If you invest into ELSS in joint

name, only the first holder will

be able to claim tax exemption

benefit.

I have a life-stage pension policy

taken in 2007 with no sum assured

for 10 years. I have been paying a

premium of 3000/- per month. It

will mature in 2017. I want to know:

A) What are the tax implications if I

surrender the policy now? B) As per

IRDA guidelines, is it essential to

buy annuity plan for 2/3rd of

surrender value?- Tukaram Rajeswaran

A.

Q.

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27

ASK OUR PLANNER


borrowers, unless there is a

d i f ferent percentage of

ownership mentioned in the

property deed.

I have monthly income of

approximately 40,000 and

planning to retire at the age of 60.

My current age being 29 what are

the suitable saving/investing

options for me? I already invest

1000 every month in NPS and PF

through my employer. I don't want

to invest in stocks neither want to

settle on slow-growth options like

fixed deposits in bank. Please

suggest some low-risk-high-

income option for retirement.- M. K. Bhagwat

Since you have more than 30

years to retire, you can

consider investing more into

equity mutual funds; you can

also increase your investment

into NPS from 1,000 per

month. Equity funds carry

higher risk in short term;

however, in a longer term

(more than 20 years), the risk is

very minimal, and can provide

you higher returns. Please

k e e p r e v i e w i n g t h e

Q.

A.

`

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A.

Q.

A.

If a pension policy is

s u r r e n d e r e d b e f o r e i t s

maturity, the entire surrender

proceeds would be added to

your income on the year of

receipt and taxed as per your

income slab. On maturity, you

can withdraw upto a maximum rd

of 1/3 of maturity proceeds as

lumpsum and the remaining

has to be converted into

annuity.

I am a 27 years old salaried

person. I have taken a house loan

with my sister as a co-borrower

(50%). Currently, both of us come

under same tax bracket. Are we

eligible for any tax benefit? Also,

what will be the tax implication if

one of us falls in higher tax bracket

in next year? - Sujata Nadar

Both you and your sister can

claim tax benefits equally on

the interest / principal payment

of the home loan, provided

your sister is also a joint owner

in the house proper ty.

Irrespective of your tax

bracket, the tax benefits will be

provided equally to both the

28

ASK OUR PLANNER


To give you an example, let's

assume you had invested Rs.1

lakh into a FD in January, 2014

for 3 years at an interest rate of

7% p.a. The interest income for

3 years works to around

22,500. The tax to be paid on

22,500 will be 4,500 (plus

cess). Assuming debt mutual

fund also generates similar

return for 3 years and your

capital gain is 22,500.

However, the indexed cost

after 3 years would have been

119,808; hence, the capital

gains after indexation would

be only 2,692 (i.e. 122,500

minus 119,808). The taxation

@ 20% on this gain will be only

538 (plus cess), which

translates to an effective tax

rate of 2.4%.

Hence, even at 20% tax slab,

you will still be better off by

investing into debt mutual

funds, instead of f ixed

deposits.

`

`

`

`

`

`

`

Do you also have similar queries to ask our experts? Write to us at: [email protected].

performance of the funds you

have invested into on a regular

basis and take corrective

actions periodically.

I fall under 20% tax slab. I want

to invest some money into FD for a

period of 3 to 4 years to save for my

marriage. I read from a magazine

that debt funds are more tax

efficient, as they have lesser tax.

However, since my tax slab is 20%

& not 30%, both FD & debt mutual

funds will have the same taxation

of 20%. So, is it not better to invest

into a FD itself, as the interest rate

in a FD is fixed, compared to a debt

mutual fund?- Nivedita Reddy

Though on the face of it the

tax rate looks the same in your

case, the interest income on FD

gets added to your income

directly and you have to pay

20% tax on the entire income.

In case of a debt mutual fund,

the taxation of 20% is after

i n d e x a t i o n , w h i c h w i l l

s igni f icant ly reduce the

effective tax rate.

Q.

A.

MUTUAL FUND ANALYSIS

29

Diversified Equity Funds


Equities have enjoyed a sustained run over the past year backed by a number of factors. Falling interest rates, abundant liquidity and hopes for continued reforms from a pro-business government are some of the factors that have combined to prop up the asset class through 2016 and especially in YTD terms.

The upsurge is more pronounced in the boarder indices and in the mid and small cap space, but the bellwether indices have also delivered strong performance. While the BSE Sensex has given 18% returns in the 12 months immediately preceding May 2017, the returns given by broader indices are higher (23% by BSE 100, 25% by BSE 200 and 27% by BSE 500). Similarly, BSE Midcap Index has given 39% returns during this period and the corresponding figure for BSE Smallcap Index is 45%. Although midcaps have run up significantly, growth potential is also higher in these companies. The selection of stocks within the broader market is becoming more important as wrong stock selection may lead to significant downside risk in case of a market fall. We believe that diversified funds with largecap bias along with better stock selection in midcap space are well placed to offer long term wealth creation option. The selection of the fund manager and fund house apart from proven track record of consistent performance in all market cycles is of paramount importance in current market scenario.

Following the above mentioned approach we recommend the following three multi cap schemes.

ICICI Pru Focused Bluechip Fund

Fund Objective:

The investment objective of the Scheme is to generate long-term capital appreciation and income distribution to unitholders from a portfolio that is invested in equity and equity related securities of about 20 companies belonging to the large cap domain and the balance in debt securities and money market instruments.

Investing in Diversified Equity Funds

Key Information:

Product Label:

NAV as on April 28, 2017 ( ) 35.1

Inception Date May 23, 2008

Fund Manager Manish Gunwani

Minimum Investment (`)

Lumpsum 5000

SIP 500

Expense Ratio (%) 1.67

Exit Load 1% on or before1Y, NIL after 1Y

Benchmark NIFTY 50

Last declared Quarterly AAUM (`cr) 12843

`

30



This product is suitable for

investors who are seeking:

•

solution

• A focused large cap equity fund

that aims for growth by

investing in companies in the

large cap category

Long term wealth creation

Performance:Fund has delivered 23.6% return over 1 year period and annualised 17.4% in the last 3 years, comfortably beating the benchmark over shorter and longer durations as well as since its inception. Overall the fund remains among the consistent performers in the large cap funds sub-category.

Fund Benchmark

Performance vs. Benchmark

23.6

17.4

16.8

15.118.6

11.6

12.1

7.3

0.0

5.0

10.0

15.0

20.0

25.0

1 Year 3 Year 5 Year Since Inception

Portfolio:ICICI Pru Focused Bluechip Fund is a true label large cap scheme with ~92% of its portfolio invested in bluechip stocks. Mid cap stocks (~2.5% in March 2016) make up ~0.75% of the portfolio and the scheme holds 5-6% in cash and equivalents. The market cap allocation has not varied much over the past year. ~30% of the portfolio is invested in financial stocks with a bias towards private

banks. The fund is seen taking a contra call compared to most peers, with IT & Pharma sectorseach having ~10% portfolio allocation.

A proven long term track record of performance, the presence of a skilled and experienced fund manager and its true label portfolio make ICICI Pru Focused Bluechip fund a fund worthy of consideration.

Our View:

31



Data as on April 28, 2017; Portfolio details as on Mar-2017Source: ACE MF, ICICIdirect Research, AMC factsheet

You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://www.icicipruamc.com/docs/default-source/default-document-library/fund-factsheet-for-april270000ff41026ea9a3af27f6b7599 dea.pdf?sfvrsn=0

%

7.2

7.0

4.8

4.4

4.0

3.9

3.7

3.5

3.4

3.3

Domestic Equities

Cipla Ltd. Domestic Equities

Axis Bank Ltd. Domestic Equities

ITC Ltd. Domestic Equities

State Bank Of India Domestic Equities

Bajaj Finserv Ltd. Domestic Equities

HDFC Bank Ltd. Domestic Equities

ICICI Bank Ltd. Domestic Equities

CBLO Cash & Cash Equivalents

Infosys Ltd. Domestic Equities

Maruti Suzuki India Ltd.

Top 10 Holdings Asset Type

%29.6

10.1

10.1

9.5

9.3

8.9

4.5

3.0

2.6

2.4

Construction Domestic Equities

Others Domestic Equities

Consumer Goods Domestic Equities

Metals Domestic Equities

Telecom Domestic Equities

Domestic Equities

Pharma Domestic Equities

Energy Domestic Equities

Automobile Domestic Equities

Top 10 Sectors Asset Type

Financial Services Domestic Equities

IT

%

1.9

0.2

0.3Bharti Infratel Ltd.

Whats In

Hindalco Industries Ltd.

Idea Cellular Ltd.

%

0.4

0.30.5

Whats out

Bharat Heavy Electricals Ltd.

Eicher Motors Ltd.Tata Consultancy Services Ltd.

NAV as on April 28, 2017 ( ) 35.9

Inception Date July 26, 2007

Fund Manager Anand Radhakrishnan,Roshi Jain


Lumpsum 5000

SIP 500


Exit Load 1% on or before 2Y

Benchmark NIFTY 500

Last declared Quarterly AAUM (`cr) 6343

`

32


Franklin India High Growth Companies Fund

Fund Objective:The objective of the scheme is to achieve capital appreciation through investments in Indian companies/sectors with high growth rates or potential.


Key Information:Performance:

The fund has delivered 26.9%

return over 1 year and 26.9%

annualised return over 3 years.

It has a record of strong

performance over several time

frames and also since its

inception.

Over a horizon of 3-5 years and

beyond, the fund is among the

top performers in its category.

Product Label:

This product is suitable for

investors who are seeking*:

• Long term capital appreciation

• A fund that invests in stocks of

companies/ sectors with high

growth rates or above average

potential

Portfolio:Franklin India High Growth

Companies Fund has a large cap tilt (~60%) in its portfolio

13.9

8

16.0

7

14.4

8

8.4

9

-

10.00

20.00

30.00


26.9

1

24.7

5

26.9

2

24.3

2

Fund Benchmark


33



You can view performance of other schemes being managed by the fund manager of this scheme on the following link:

http://www.franklintempletonindia.com/downloadsServlet?docid=j2eihfm3


whi le tak ing s igni f icant exposure to mid cap and small cap stocks as well (~25%). Allocation to large cap stocks has increased by ~4% points over the past 6 months. In terms of sectors, the fund is invested heavily in financial stocks, them making up ~39% of the portfolio. The fund does

not shy away from placing relatively concentrated bets on its top picks.

The fund can be looked at by investors looking for a slightly more aggressive offering in the multi cap space.

Our View:

%

9.6

8.6

8.3

6.4

6.1

5.6

5.3

4.6

3.5

3.1



ICICI Bank Ltd. Domestic Equities

HDFC Bank Ltd. Domestic Equities

Domestic Equities

Domestic Equities

Tata Motors - DVR Ordinary Rights

Bharti Airtel Ltd. Domestic Equities

TVS Motor Company Ltd. Domestic Equities

Cash & Cash Equivalents

Whirlpool Of India Ltd. Domestic Equities

Indian Oil Corporation Ltd.

Axis Bank Ltd.

Call Money

%38.8

8.7

8.6

7.9

6.7

6.1

4.6

4.6

2.9

1.5

Telecom Domestic Equities

Consumer Goods




Industrial Manufacturing Domestic Equities


IT Domestic Equities

Domestic Equities


Others Rights


%

1.8

Whats In

Somany Ceramics Ltd.

%

0.3

Whats out

Jubilant FoodWorks Ltd.

34


Kotak Select Focus Fund

Fund Objective:To generate long-term capital appreciation from a portfolio of equity and equity related securities, generally focused on a few selected sectors


Key Information:

Product Label:

This product is suitable for investors who are seeking*:

• long term capital growth

* Investment in portfolio of predominantly equity & equity related securities generally focussed on a few selected sectors

Performance:The fund has delivered 33.4% return over 1 year and 25.7% annualised return over 3 years. The fund has delivered healthy out performance compared to benchmark across t ime frames.

The performance of the fund holds up when compared to peers as well. Kotak Select Focus is one of the most consistent performers with a long history in the multicap fund sub-category

NAV as on April 28, 2017 ( ) 30.1

Inception Date September 11, 2009

Fund Manager Harsha Upadhyaya


Lumpsum 5000

SIP 500


Exit Load 1% on or before1Y, Nil after 1Y

Benchmark NIFTY 200

Last declared Quarterly AAUM (` cr) 9323

`


Fund Benchmark

33.4

25.7

21.9

15.52

3.0

14.7

13.8

9.7

0.0

10.0

20.0

30.0

40.0


Portfolio:Kotak Select Focus Fund is a large cap-oriented fund in the multi cap category. The split in

terms of market cap categories is ~73% large caps and ~16% mid & small caps. Over the past year, mid & small cap exposure

35



%

6.4

4.7

4.4

4.0

4.0

3.7

3.6

3.4

3.3

2.9


CBLO Cash & Cash EquivalentsReliance Industries Ltd. Domestic Equities

ITC Ltd. Domestic Equities

Maruti Suzuki India Ltd. Domestic EquitiesIndusInd Bank Ltd. Domestic Equities


Hero MotoCorp Ltd. Domestic Equities

HDFC Bank Ltd. Domestic EquitiesUltratech Cement Ltd. Domestic Equities

GAIL (India) Ltd. Domestic Equities

%21.8

16.4

12.5

10.0

8.2

4.6

3.4

3.3

3.2

2.9



Cement & Cement Products Domestic Equities

Consumer Goods Domestic Equities

Others Derivatives-Futures




IT Domestic Equities

Industrial Manufacturing Domestic Equities


%

0.3

0.2

Whats In

Bata India Ltd.

Avenue Supermarts Ltd.

h a s b e e n t r i m m e d asvaluations have continued to climb markedly in those pockets. The fund is seen holding sizeable cash and equivalent position in its portfolio.

T h e f u n d m a i n t a i n s concentrated positions in select sectors. Financial services (~22%), Energy (~16%), Automobiles (~13%) and Cement (~10%) make up nearly two-thirds of the portfolio.

Our View:Kotak Select Focus Fund offers an opportunity for investors who require a multi cap fund

that takes a comparatively disciplined approach in terms of market cap allocation and individual security weights.

You can view performance of other schemes being managed by the fund manager of this scheme on the following link: http://assetmanagement.kotak.com/fact-sheet

36



Performance details of other schemes managed by the concerned fund managers:

1. ICICI Pru Focused Bluechip Fund

1 year 3 year 5 year

31.92 20.97Note : Close ended funded that has been redeemed on Feb 21, 2017.ICICI Pru Growth Fund - 7 31.32

Nifty 50 18.58 11.60 12.14ICICI Pru RIGHT Fund 28.83 22.15 22.09Nifty 50 18.58 11.60 12.14

ICICI Pru Growth Fund - 3 24.59

Nifty 50 18.58 11.60 12.14ICICI Pru Exports & Other Services Fund 19.60 22.12 26.52Nifty Service Sector 18.15 13.92 13.87ICICI Pru Technology Fund -6.21 8.80 16.31BSE IT -15.14 3.20 11.02

Performance of all the schemes managed by the fund manager

Fund Name

ICICI Pru Equity Savings Fund - 1

Top 3 Performing Schemes

Bottom 3 Performing Schemes

CAGR Returns %

1 year 3 year 5 year

30.90 31.94 26.81Nifty 500 24.75 16.07 14.48Franklin India Life Stage FOFs - 20 20.60 18.10 15.49

Sensex, Crisil Composite Bond, Nifty 500 -- -- --Franklin India Prima Plus 19.58 22.37 19.57Nifty 500 24.75 16.07 14.48

Franklin India Life Stage FOFs - 50 + FR 10.22 10.30 9.88

Crisil Liquid. Sensex -- -- --Franklin India Multi Asset Solution Fund 8.58Crisil Balanced Fund Aggressive 15.69 11.60 11.39Franklin Infotech Fund -1.63 8.08 13.00BSE IT -15.14 3.20 11.02

CAGR Returns %

Top 3 Performing Schemes

Bottom 3 Performing Schemes

Franklin Build India Fund

Fund Name

Performance of other schemes managed by Anand Radhakrishnan

1 year 3 year 5 year17.34 8.74 8.80

MSCI India -- -- --30.90 31.94 26.81

Nifty 500 24.75 16.07 14.48

Performance of other schemes managed by Roshi Jain

Fund NameCAGR Returns %

Franklin Asian Equity Fund

Franklin Build India Fund

1 year 3 year 5 year33.56 24.29 19.7924.75 16.06 14.4833.24 24.79 17.8524.75 16.06 14.48

CAGR Returns %

NIFTY 500

Kotak Opportunities Fund(G)NIFTY 500Kotak Tax Saver Scheme(G)

Performance of all the schemes managed by the fund manager

Fund Name


2. Franklin India High Growth Companies Fund

3. Kotak Select Focus Fund

37

EQUITY MODEL PORTFOLIO


Name of the company

Largecap Stocks

Model Portfolio

Largecap(%)

Midcap(%)

Diversified(%)

Auto 15.0 10.5

Tata Motor DVR 4.0 2.8

Bosch 3.0 2.1

Maruti 5.0 3.5

EICHER Motors 3.0 2.1

BFSI 32.0 22.4

HDFC Bank 8.0 5.6

Axis Bank 4.0 2.8

HDFC 8.0 5.6

Bajaj Finance 6.0 4.2

SBI 6.0 4.2

Capital Goods 4.0 2.8

L & T 4.0 2.8

Cement 4.0 2.8

UltraTech Cement 4.0 2.8

FMCG/Consumer 18.0 12.6

Dabur 5.0 3.5

Marico 4.0 2.8

Asian Paints 5.0 3.5

Nestle 4.0 2.8

IT 12.0 8.4

Infosys 6.0 4.2

TCS 6.0 4.2

Meida 4.0 2.8

Zee Entertainment 4.0 2.8

Oil & Gas 5.0 3.5

GAIL Ltd. 5.0 3.5

Pharma 6.0 4.2

Lupin 6.0 4.2

Largecap share in diversified 100.0 70.0

38



Aviation 6.0 1.8

Interglobe Aviation 6.0 1.8

Auto 6.0 1.8

Bharat Forge 6.0 1.8

BFSI 12.0 3.6

Bajaj Finserve 6.0 1.8

J&K Bank 6.0 1.8

Capital Goods 6.0 1.8

Bharat Electronics 6.0 1.8

Cement 6.0 1.8

Ramco Cement 6.0 1.8

Consumer 30.0 9.0

Symphony 6.0 1.8

Supreme Ind 6.0 1.8

Kansai Nerolac 6.0 1.8

Pidilite 6.0 1.8

Rallis 6.0 1.8

Infrastructure 8.0 2.4

NBCC 8.0 2.4

Logistics 6.0 1.8

Container Corporation of India 6.0 1.8

Pharma 14.0 4.2

Natco Pharma 6.0 1.8

Biocon 8.0 2.4

Textile 6.0 1.8

Arvind 6.0 1.8

Midcap share in diversified 100 30

TOTAL 100 100 100.0

39

Performance* so far Since inception

*Returns (in %) as on

Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio

Benchmark: CNX Midcap; Diversified Portfolio Benchmark: Combination

of BSE Sensex and CNX Midcap

May 20, 2017

Value of 1,00,000 invested via SIP at the end of every month `

Portfolio Benchmark

Investment Value of Investment in Portfolio Value if invested in Benchmark

Start date of SIP: , 2011; *Value as on June 30 May 20, 2017



98.43553105

200.4562576

123.7671699

74.09138796

130.1959587

89.5466923

0255075

100125150175200225

%

7200000

7200000

7200000

9881222.5

28

15872380.3

3

11136586.3

6

6384771.5

52

6304525.4

94

7687934.2

3500000

4500000

5500000

6500000

7500000

8500000

Largecap Midcap Divesified

|

QUIZ TIME

1. Your retirement portfolio should aim to ______________ sufficient assets.

2. The gap between retiring age and average life expectancy i n India has ____________.

3. As per regulations, NPS can invest _________ amount into equity asset class.

4. Returns on this post-retirement investment product - ______________ are fixed at 8.6%.

5. Advice seekers __________________ are likely to seek advice around one particular need, rather than take holistic

advice.

Note: All the answers are in the stories that have appeared in this edition of ICICIdirect Money Manager. You may send in your answers at: [email protected]. The answers will be published in our next edition. The names of the earliest all correct entries will be published too. So jog your grey cells and be quick to send in your entries.

Correct answers for the April2017 quiz are:1. Loan taken out for purchase of the second house should be treated as bad debt. True or FalseA. False

2. ______________ & _______________ carry highest interest rate among all types of loan. A. Personal loans & Credit Card Loans

3. Special loans are offered for doctors at concessional rates. True or False

A. True

4. Value of household appliances ___________ over time.A. Depreciates

5. A personal loan taken out to clear credit card balance is good loan. True or False

A. False

Congratulations to the following winner for providing correct answers at the earliest

Amit K Singh


41

PRIME NUMBERS

Equity Markets


Domestic Equity Indices

Global Equity Indices

Sectoral Indices

28-Apr-17 31-Mar-17 Change (%)

CNX Nifty 9304.0 9173.8 1.4%

CNX Midcap 18086.0 17197.2 5.2%

S&P BSE Sensex 29918.0 29620.5 1.0%

S&P BSE 100 9670.0 9494.4 1.8%

S&P BSE 200 4083.0 3991.9 2.3%

S&P BSE 500 12979.0 12631.9 2.7%


Dow Jones 20,940.5 20,663.2 1.3%

S&P 500 2,384.2 2,362.7 0.9%

Nasdaq 6,047.6 5,911.7 2.3%

FTSE 7,203.9 7,322.9 -1.6%

DAX 12,438.0 12,312.9 1.0%

CAC 40 5,267.3 5,122.5 2.8%

Nikkei 19,196.7 18,909.3 1.5%

Hang Seng 24,615.1 24,111.6 2.1%

Shanghai Composite 3,154.7 3,222.5 -2.1%

Taiwan Weighted 9,872.0 9,811.5 0.6%

Straits Times 3,175.4 3,175.1 0.0%


S&P BSE Auto 22,782.4 22,012.7 3.5%

S&P BSE Bankex 25,325.3 24,420.8 3.7%

S&P BSE FMCG 9,412.3 9,270.3 1.5%

S&P BSE Healthcare 15,019.4 15,312.4 -1.9%

S&P BSE Metals 11,303.4 11,804.5 -4.2%

S&P BSE Oil & Gas 14,455.0 13,563.6 6.6%

S&P BSE Power 2,329.8 2,274.4 2.4%

S&P BSE Realty 1,923.9 1,600.0 20.2%

S&P BSE Teck 5,450.2 5,771.5 -5.6%

42

PRIME NUMBERS


Debt Markets

Government Securities (G-Sec) Yields (in %) Apr-17 Change (bps)Mar-17

Corporate Bond Yields (in %) Change (bps)Apr-17 Mar-17

Commercial Paper (CP) Rates (in %) Change (bps)Apr-17 Mar-17

Treasury Bill (T-Bills) Yields (in %) Change (bps)Apr-17 Mar-17

Volatility Index (VIX)

28-Apr-17

VIX 10.86 12.42 0%

31-Mar-17 Change (%)

10 year 6.96 6.67 29

5 year 6.90 6.75 15

3 year 6.79 6.56 23

1 year 6.54 6.26 28

AAA 10 year 8.14 8.07 7

AAA 5 year 7.85 7.73 12

AAA 3 year 7.62 7.45 17

AAA 1 year 7.20 7.15 5

AA 10 year 8.41 8.35 6

AA 5 year 8.25 8.08 16

AA 3 year 8.08 7.93 15

AA 1 year 7.57 7.52 5

12 Months 7.25 7.24 1

6 Months 7.03 6.96 6

3 Months 6.75 6.61 14

1 Month 6.53 6.50 3

91D TB 6.18 5.78 40

182D TB 6.27 5.87 40

364D TB 6.41 6.10 31

43

PRIME NUMBERS

10-year benchmark yields (%) across countries


Macro-economic Indicators

Consumer price index (CPI)

Wholesale price index (WPI)Month

Countries 28-Apr-17 31-Mar-17 Change in bps

US 2.28 2.39 (11)

UK 1.09 1.14 (5)

Japan 0.02 0.07 (5)

Spain 1.64 1.65 (2)

Germany 0.32 0.33 (1)

France 0.83 0.97 (13)

Italy 2.28 2.32 (4)

Brazil 10.30 10.06 24

China 3.47 3.29 18

India 6.96 6.68 28

MF Investment Apr-17 Mar-17 YTD

Equity 11244 2368 20683

Debt 55932 40085 165411

FII Investment Apr-17 Mar-17 YTD

Equity -2209 33782 42011

Debt 19401 26094 48864

Items Weights(%) Feb-17 Mar-17 Apr-17

Food&bev. 45.86 2.39 2.46 1.21

Pan,tob& intox. 2.38 6.25 6.23 6.05

Cloth & Foot 6.53 4.38 4.60 4.58

Housing 10.07 4.90 4.96 4.86

Fuel & light 6.84 3.90 5.64 6.13

Misc. 28.31 4.79 4.78 4.25

CPI 100 3.65 3.81 2.99

Weights Feb-17 Mar-17 Apr-17WPI 100.0 5.51 5.29 3.85Primary Articles 22.6 4.01 3.98 1.82Fuel & Power 13.2 25.17 23.66 18.52Manufactured Goods 64.2 3.23 3.03 2.66

44

PRIME NUMBERS

Commodities

Sources for above data: Bloomberg, Reuters, CRISIL, MOSPI, ICICIdirect.com Research


Mutual Funds: Category Average Returns

Equity Funds Returns (in %)Tenure Diversified Funds Mid-cap &

Small-cap Funds

Large-capFunds

ELSS (Tax-

savingfunds)

Returns as on April 28, 2017

Debt Funds Returns (in %)

Returns as on April 28, 2017

Tenure Liquid Funds Short-termincome funds

Ultra short-term funds

Long-termincome funds

Gilt funds

Index of industrial production (IIP) Sector-wise growth rate (%)

Currencies and CommoditiesCurrencies

Categories 31-Mar-17 28-Feb-17 31-Jan-17 Weight(%)Mining 9.7 4.6 8.6 14.2Manufacturing 1.2 1.4 3.0 75.5Electricity 6.2 1.2 5.1 10.3Overall 2.7 1.9 3.8

*IIP numbers are based on new series with 2011-12 as the base year'

28-Apr-17 31-Mar-17 Change (%) StatusUSDINR 64.25 64.85 0.9% AppreciatedEURINR 70.26 69.30 -1.4% DepreciatedGBPINR 83.17 80.92 -2.8% DepreciatedAUDINR 48.01 49.57 3.2% AppreciatedCHFINR 64.85 64.83 0.0% DepreciatedJPYINR 0.577 0.5801 0.5% AppreciatedCNYINR 9.320 9.416 1.0% Appreciated

28-Apr-17 31-Mar-17 Change (%)Crude ($/barrel) 51.73 52.8 -2.1%Gold ($/ounce) 1,268.3 1,249.4 1.5%

6 months 9.04 10.95 8.04 9.131 year 27.30 34.93 22.88 27.003 year 20.77 30.65 16.21 20.155 year 18.25 25.75 15.58 18.04

6 months 6.01 6.35 6.49 4.99 4.97

1 year 6.61 8.55 7.68 9.38 10.65

3 year 7.69 8.83 8.26 9.80 10.94

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