MANY OF 2013‟s MACRO ECONOMIC AND

GEOPOLITICAL ISSUES ARE NOW BEHIND US

1

Europe Debt

Crisis

US – Fiscal

Cliff &

Taper

China‟s

Growth

Middle

East

Crisis

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

OPPORTUNITIES - EQUITIES

3

ELECTION RESULTS???

AN

UNCLEAR

POSITION

INVESTORS UNDER-OWN EQUITY

Source: AMFI, RBI

A CLEAR

POSITION

4

THEMES TO PLAY IN 2014

Balanced approach to investing – Maintain asset

allocation in equity

Mid & Small caps Funds

Infrastructure

Pick up in activity expected across infrastructure

sectors

Staying invested in international funds – Important

part of asset allocation

Fixed Income - Bullish on „Duration‟ & Accrual Funds

5

HOW TO MAINTAIN ASSET ALLOCATION

Large Allocations ICICI Prudential Balanced

Advantage Fund

ICICI Prudential Dynamic Plan

ICICI Prudential Balanced Fund

ICICI Prudential Focused Bluechip

Equity Fund

Small Allocations ICICI Prudential Midcap Fund

ICICI Prudential Infrastructure Fund

ICICI Prudential Discovery Fund

ICICI Prudential Top 100 Fund

TURNING POINTS - 2014 – WORST SEEMS TO

BE BEHIND US

Equity markets are giving investors an opportunity to get

on board

Falling trend in Gross Domestic Product (GDP) growth,

investment growth and corporate earnings growth can

reverse during 2014

Policy environment improvements since last 15 months can

start seeing its positive impact on 2014

Trade Deficit & Current Account Deficit continues to decline

With Reserve Bank of India (RBI) reserves/CAD* ratio

improving, INR trends should be more stable and capability

to handle taper worries is much better now

7 *Current Account Deficit

8

Corporate earnings growth should react favourably to the

improving macro

Almost four years of high interest rates

Financial assets appear attractive against physical assets

Indian investors‟ equity exposure remains very low

TURNING POINTS - 2014 – WORST SEEMS TO

BE BEHIND US

ELECTION OUTCOME – AN IMPORTANT

TRIGGER

A potential strong mandate in May‟14 elections will likely

lead to a decisive government

This could accelerate the process of economic recovery

The outcome of the elections can significantly impact market

sentiments either ways

This can alter the pace of the recovery process but recovery

in itself should not be doubted

9

WHAT TO EXPECT FROM A STRONG / STABLE

GOVERNMENT?

Possible Actions Beneficiary / Comments

•Quick / bold decision

making

•Lower subsidies

•Farm productivity

enhancement

•Tourism promotion at

new locations

•Tax Reforms

• Infra and cap goods

sector

•Oil PSUs, fiscal

consolidation

•Lower inflation /

improved rural income

•Boost to smaller city

infrastructure

•VDIS* scheme, Lower

peak tax rates

Source: CLSA, *refers to Voluntary Disclosure of Income Scheme

POLARIZATION IN MARKET

11 Source: NSE Index Values have been rebased to 10

6.00

8.00

10.00

12.00

14.00

16.00

S&P BSE FMCG S&P BSE IT S&P BSE MID CAP

S&P BSE Sensex S&P BSE SMALL CAP S&P BSE HC

MARKET IS CHEAP VS GDP

12

India Market Cap / GDP

Source: CLSA, Bloomberg, trailing four quarters GDP

MARKET VALUATIONS AT AVERAGE LEVELS

13 Source: CLSA

MID CAPS TRADING AT A LARGE DISCOUNT

TO THEIR LONG‐TERM AVERAGE PB

14 Source: NSE, IIFL Research

RISKS TO GROWTH IN 2014

A weak coalition government

Risks of rate increases as RBI is gradually attaching

higher importance to Consumer Price Index (CPI)

Higher vegetable prices (up 60% Y-o-Y); have

started coming off

Government expenditure reduction will be a near-term

growth headwind

15

INDIA – ONE OF MOST INTERESTING STORIES

Across Asia-Pacific as well as global emerging markets

Is at an early stage of evolution

Consumption

Urbanization

Infrastructure investment

Delivering improving Competitiveness across a number of

industries in addition to IT

Fibres

Petrochemicals

Generic pharmaceuticals

Non - traditional autos

16

• CAD narrowing

• Trade deficit narrowing sharply

• Growth – can revive in 2014

Economics

• Domestic investor remain underinvested in

equities

• FIIs (Foreign Institutional Investors) are

positive

Sentiments

• Plenty of value seen across sectors and

stocks Valuations

• Election results – Strong / stable govt.

• Growth - Positive

• Crude per barrel > 118 US$ - Negative

• Drop in loan to deposit ratio - Positive

Triggers

*CAD – Current Account Deficit

OUR FRAMEWORK TO INVESTING - EQUITY

17

EQUITY FUNDS – RISK REWARD MATRIX

18

19

20

Fixed Income

2014

OUR FRAMEWORK TO INVESTING – FIXED

INCOME

OPPORTUNITIES

Macro indicators pronounce need for lower interest rates

Amidst low pace of tapering external risks may have

receded

Lower inflation itself may be enough to improve sentiments

in bond markets

The current scenario may mark DURATION and ACCRUAL an

attractive play for year 2014

RECOMMENDED THEME FOR 2014

Theme: Duration Strategy

With current economy suggesting need for lower interest rates, it may be

appropriate time to be invested in duration funds.

Theme: Accrual Strategy

Current elevated level of yields are conducive for investing in funds which

predominantly aims to generate returns through accruals

Investment Period Fund

12 months & above ICICI Prudential Dynamic Bond Fund

24 months & above ICICI Prudential Income Plan

24 months & above ICICI Prudential Long Term Gilt Fund

Investment Period Fund

15 to 30 days ICICI Prudential Savings Fund

15 months & above ICICI Prudential Regular Savings Fund

30 months & above ICICI Prudential Corporate Bond Fund

25

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DISCLAIMER

Mutual Fund investments are subject to market risks, read all

scheme related documents carefully.

All figures and other data given in this document are as on 3rd

January 2014 unless stated otherwise. The same may or may not be relevant at a

future date. The AMC takes no responsibility of updating any data/information in this material from time to time. The information shall not be

altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form,

without prior written consent of ICICI Prudential Asset Management Company Limited.

Prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial

implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund.

Data source: Bloomberg, except as mentioned specifically.

Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used

information that is publicly available, including information developed in-house. Some of the material used in the document may have been

obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its

affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the

accuracy, reasonableness and / or completeness of any information. We have included statements / opinions / recommendations in this document,

which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions, that are

“forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or

uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political

conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of

India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc.

ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors,

personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special,

exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner.

Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable

for any decision taken on this material.

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