Our tax saving provisions are defined not just to save taxes but make long term investments that can help meet our life goals. However it is easy to overlook the financial planning aspect in tax planning while investing in tax saving instruments.

It is crucial that we invest according to our life stage and are aware of the options available which best suit that life stage. For example taxable income is relatively lower at the start of one career and tends to increase as our career progresses. This stage is also the beginning of Shilpa Kumar establishing an asset base, there is MD & CEO little income from capital gains or ICICI Securities Ltd. interest and fewer deductions. Investors here have the advantage of having time on their side. Equity oriented investments make perfect sense at this stage, more importantly products like equity linked savings scheme (ELSS). The three year lock in also ensures discipline and investing for the long term. Additional it also has benefit of tax exemption under section 80C.

As you grow, your income and responsibilities also tend to increase. At this stage usually these is a family and some serious goal planning begins. Tax, at this stage, can be managed while achieving financial goals like buying a house, investing in insurance to safeguard the future of your dependents and also starting to invest to build a kitty for retirement. Tax breaks on home loan repayment combined with tax concessions on life insurance premiums and contribution to pension schemes like Provident Fund (PF) and National Pension System (NPS) and help increase income and achieve life goals.

Additionally, buying health insurance not only helps in times of a medical emergency but also helps save tax under Section 80D. Taxes on tuition fees of children and education loan are also subject to deduction up to certain limit.

This stage, also usually signals the peak in expenses and liabilities. Therefore, making optimum use of tax-saving instruments under all permissible sections is a must for assessing tax saving investments. It is equally important to factor in your risk appetite and time horizon to achieve the goal before investing in tax efficient plans.

Tax-saving portfolio of those moving towards retirement should be focused on the goal of capital protection. Also, in this phase, with debt obligations reduced and the tax bracket being at the highest slab, it is prudent to focus more on tax saving options. While Senior citizen saving schemes (SCSS) is a great tax-saving investment for senior citizens, other opportunities can be discovered depending upon risk profile and life expectancy of the assesse. Individuals can also consider tax saving through noninvestment related instruments like charity and donations.

Tax commitments, financial circumstances, life-stage goals, risk appetite and liquidity requirement of every individual are distinct, no standard tax-planning strategy can be applied to all. Taking professional help to manage taxes is thus highly recommended. The bottom line is to consider taxation before making or revising financial plan at every life stage.

I also take this opportunity to wish you and your family a Happy New Year 2019. 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 help investors know more on investing, make them aware of the options they have and to partner with them in setting and achieving their financial goals. We welcome you to write to us or visit our branches to assist you.

ICICIdirect Money Manager 1 December 2018 Tax planning is an integral part of our overall financial planning. All our investments, including tax-saving ones, need to reflect our long-term investment plans. This means to have a financial goal first and then decide an asset allocation strategy. Once you know how much to invest in an asset class, start with investing into the most tax-efficient product. By developing and implementing appropriate investment strategies, we can improve our prospects of saving taxes as well as meeting our financial goals. Our cover story of this edition handholds you through the aspects of efficient tax planning. Tax planning should fit into your overall financial goals. For instance, including equity linked tax-saving products like ELSS (equity-linked savings scheme) and NPS (national pension system) in your portfolio can accomplish two goals: tax deduction up to Rs. 2 lakh and accumulate retirement corpus. Similarly, investment in tax-saving FDs can be utilized to achieve short-term goals. Insurance, the most popular tax-saving player amongst Indians, should be primarily purchased for the risk coverage. Tax benefit should be an incidental benefit. The nature of your tax-efficient portfolio primarily depends on your risk profile, income, tax-bracket and age. But the most suitable tax-saving plan is the one that is aligned with your life-stage goals and helps you achieve it on time. This, edition also comprises of an interview held with the team of H&R Block that will be an add-on guide while you plan your tax saving instruments. Further, if you wish to get clarity on different aspects of personal finance or any other money matter through Ask our Planner, you may write to us at [email protected]. So read on, stay updated and involved. Do write in with your feedback and share your thoughts. Team ICICIdirect Money Manager wishes you a happy and prosperous New Year.

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

Editor & Publisher : Abhishake Mathur, CFA Editorial Board : Sameer Chavan, CWM®, Pankaj Pandey Editorial Team : Nithyakumar VP CFPCM, Sachin Jain, Research Team

ICICIdirect Money Manager 2 December 2018 MD Desk ...... 1 Editorial ...... 2 Contents ...... 3 News ...... 4 Stock ideas: Petronet LNG and The Phoenix Mills Flavour of the Month: Be prepared for this Tax Season Very often we take tax planning for granted, though the tax filing happens once a year we do tax planning last min. Most of us have tax planning but an effective tax plan could help in reducing your taxes much more. This edition will ensure you are known to every tax saving instruments that can help youdesign your income tax. Learn more……...... 14 Tête-à-tête An interview held with the team of H&R Block India (Pvt) Ltd, giving their insights on tax planning which will help you have an effective plan this tax season...... 23 Ask Our Planner Our financial expert answers your personal finance queries …...... 27 Mutual Fund Analysis Which are the top performing mutual funds in current market scenario? Check these top pharma funds recommended by our research team...... 34 This month on iCommunity Take a look at the latest activities on our unique information platform- iCommunity (for December 2018) ...... 4 7 Equity Model Portfolio ...... 48 Quiz Time ...... 52 Prime Numbers ...... 53

ICICIdirect Money Manager 3 December 2018 Half of India's ATMs may shut down by March; here's why Nearly 50 per cent of the Automated Teller Machines (ATMs) in India may be shut down by March 2019 due to unviability of operations, hitting hard both urban and rural population, the Confederation of ATM Industry (CATMi) warned on 21st November. "This would severely impact millions of beneficiaries under the Pradhan Mantri Jan Dhan Yojana who withdraw subsidies in the form of cash through ATMs, besides urban centres, resulting in snaky queues and chaos akin to post-demonetisation," said the spokesperson. He said the CATMi step is forced on account of recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash. Courtesy: Financial Express Shaktikanta Das appointed as the new RBI Governor Former economic affairs secretary Shaktikanta Das was named the 25th governor of the Reserve Bank of India (RBI) to succeed Urjit Patel, who quit abruptly on 10th December amid a bitter dispute over the regulator's autonomy. The appointment will be for three years. It has been seeking a special liquidity window for nonbanking finance companies (NBFCs) that lend to small and medium enterprises (SMEs) and create jobs in smaller towns. Finance Minister Arun Jaitley told ET in an interview 10th December that while overall liquidity may have improved, some sectors still face issues. Courtesy: Economic Times Provident Fund alert! EPF withdrawal before retirement capped at 75% A jobless Employees' Provident Fund (EPF) subscriber who hasn't crossed the retirement age (60 years) will now be able to withdraw only up to 75% of the accumulated EPF deposits, as against 100% earlier. A month without a job will make a subscriber eligible to withdraw the deposits. Earlier, pre-retirement withdrawal of EPF funds required the subscriber to be without job for a continuous period of two months. EPF scheme does not have provision for advance to members during such kind of non- employment and the scheme allows only full and final settlement. This compels members to withdraw entire amount at the cost of their social security. Courtesy: Financial Express Cocktail of fears set to make 2019 worse Rising interest rates around the globe combined with tensions over geopolitics and trade mean that the start of 2019 in markets might look just as volatile and turbulent as this year. "Mixed signals from the global economy and the gradual, yet persistent, tightening of financial conditions triggered the market repricing. Protracted trade tensions and heightened political uncertainty added to the flight to safety," said Claudio Borio, the Head of the Monetary and Economic Department at BIS. That misery, sadly, looks set to continue, with rising inflation, the continued swell of the leveraged loan market in the US, and a weak European banking sector all set to push markets sharply lower as 2019 arrives. Courtesy: Economic Times

ICICIdirect Money Manager 4 December 2018 STOCK IDEAS

Petronet LNG – Key beneficiary of increasing gas demand…

Company Background p r o d u c t i o n , I n d i a ' s L N G demand has continued to Petronet LNG Ltd, India's increase over the last 4-5 years premier company in the and Petronet LNG has captured hydrocarbon sector, was set the opportunity with increase up by the Government of India in volumes from ~500 trillion to meet the increasing demand british thermal unit (tbtu) in for natural gas and enhance FY14 to ~850 tbtu in FY18. the energy security of the With increasing gas demand country. Petronet LNG was from City Gas Distribution, incorporated on April 2, 1998 Fertilisers & Industrial sectors, to import LNG and set up LNG etc over the next few years, we terminals in the country. expect Petronet LNG volumes Petronet LNG is a joint venture will continue to grow at steady between GAIL, ONGC, IOC and pace. We estimate total LNG BPCL, with each of them volumes of 874.6 tbtu and having a 12.5% stake in the 948.8 tbtu for FY19E and c o m p a n y. Pe t r o n e t L N G FY20E, respectively. commissioned India's first LNG receiving and regasification Ramp up in Kochi utilisation & terminal at Dahej with a Increase in Dahej capacity the key capacity of 5 mmtpa in April 2004. Currently, Petronet LNG Petronet's Kochi terminal, has regasification capacity of which is currently under- 20 mmtpa; 15 mmtpa in Dahej utilised (~10% capacity and 5 mmtpa in Kochi. utilisation) on account of lack of pipeline connectivity, is Investment Rationale expected to witness upside in Volume outlook remains positive i t s u t i l i s a t i o n p o s t t h e Petronet LNG is the beneficiary c o m p l e t i o n o f K o c h i - of increasing gas demand in Mangalore pipeline. The India. With subdued domestic execution of the pipeline is

ICICIdirect Money Manager 5 December 2018 STOCK IDEAS currently under way and the remain healthy at ` 48/mmbtu, entire stretch is expected to be ` 50.7/mmbtu in FY19E and completed by March 2019. FY20E, respectively from Going forward, the company `46.1/mmbtu in Fy18. could receive additional 1–1.5 mmtpa of gas when the Primary LNG play in India pipeline work gets completed. Pe t r o n e t L N G p r o v i d e s With regards to Dahej terminal, comfort on the business it is booked for 7.5 MMTPA m o d e l a n d r e m a i n s a under RasGas long term structural story of India's volumes while an additional increasing gas demand. With 8.25 MMTPA is booked as I n d i a c o n t i n u i n g t o b e regasification capacity, taking significantly short of natural the count to more than the gas supply, Petronet LNG will current nameplate capacity of benefit as the primary play on 15 MMT. On the capacity increasing usage of LNG. In the expansion front, the company long term, we expect volumes expects 2.5 mmtpa Dahej to show stable growth and terminal's expansion to get c o n t r i b u t e t o h i g h e r completed by June 2019, profitability. We value Petronet which will add to incremental LNG at 16x FY20E EPS of 17.2 volumes. On the profitability ` to arrive at a price target of front, we estimate blended `275 with a BUY rating. margins will continue to

Key Financials

` crore FY17 FY18 FY19E FY20E Net Sales 24,616.0 30,598.6 41,796.8 46,841.7 EBITDA 2,592.3 3,312.4 3,533.0 4,119.8 PAT 1,705.7 2,077.9 2,200.5 2,580.9 EPS (`) 11.4 13.9 14.7 17.2

ICICIdirect Money Manager 6 December 2018 STOCK IDEAS

Valuations Summary

FY17 FY18 FY19E FY20E P/E 18.5 15.2 14.3 12.2 Target P/E 24.2 19.9 18.7 16.0 EV / EBITDA 12.9 9.7 9.0 7.3 P/BV 3.9 3.2 3.1 2.7 RoNW (%) 21.1 21.4 21.7 22.1 RoCE (%) 21.4 25.9 28.7 31.5 Stock Data

Particular Amount Market Capitalization (` Crore) 31,500.0 Total Debt (FY18) (` Crore) 1,496.6 Cash and Investments (FY18) (` Crore) 862.5 EV (` Crore) 32,134.1 52 week H/L 260/202 Equity capital (` Crore) 750.0 Face value (`) 10.0 Key risks include: volumes and profitability of Competitiveness of the company. alternative fuels Regulatory risk LNG competes with alternative fuels like naphtha, fuel oil and Currently, Petronet LNG's coal for the supply of fuel to regasification charges are end-user industries like beyond the purview of the fertilisers, power, refineries, regulator. Any regulatory etc. A reduction in the price of change on regasification alternative fuels could lead to charges or returns front would better competitiveness of adversely impact Petronet these fuels. This may have an L N G ' s p r o f i t a b i l i t y a n d adverse impact on the future valuations.

ICICIdirect Money Manager 7 December 2018 STOCK IDEAS

ANALYST CERTIFICATION We /I, Mayur Matani, MBA 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 Limited Sebi Registration is INZ000183631 for stock broker. 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.

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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. It is confirmed that Mayur Matani, MBA 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.

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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.

ICICIdirect Money Manager 8 December 2018 STOCK IDEAS

The Phoenix Mills Ltd. – Quasi play on retail growth story!!!

Company Background Investment Rationale

Headquartered in Mumbai, Retail assets to double over Phoenix Mills (PML) is a market the next 4-5 years; rental leader and an active owner, income to grow 14.4% CAGR developer and manager of in FY18-23E prime retail assets in key Indian cities. Established in 1905, PML enjoys a quality retail PML began operations as a a s s e t p o r t f o l i o o f e i g h t t e x t i l e m a n u f a c t u r i n g operational assets across top company in Mumbai and got cities aggregating 5.9 msf. listed on the BSE in 1959. Later What makes it a unique player on, PML exited its textile in this space is that it not only business and forayed into the leases space to retailers in its real estate sector with its iconic malls but also participates High Street Phoenix (HSP) mall with retailers over the entire in Mumbai in 1996. Since then, life-cycle of malls. PML enters the company has grown its into lease agreements as per a s s e t p o r t f o l i o a c r o s s which, retailers need to pay a segments like retail (malls), minimum guarantee (MG) rent residential, commercial & or revenue share (percentage hospitality, thus diversifying its of consumption), whichever is product portfolio. PML has a higher to PML. The company unique city-centric retail-led generated rental income of ` mixed-use development 867.8 crore in FY18. It plans to m o d e l f o r s u s t a i n a b l e double its retail portfolio to profitability and growth of its 10.6 msf over next four to five business. Such a model has years leading to next leg of enabled PML to cross-sell its growth. Hence, we expect s e r v i c e s . C u r r e n t l y, t h e rental income to grow at 14.4% company has a gross asset CAGR to ` 1702.4 crore in portfolio of 17.5 million square FY18-23E. feet (msf)

ICICIdirect Money Manager 9 December 2018 STOCK IDEAS

Commercial portfolio to grow expect the balance sheet to to ~3 msf remain lean. While its retail & commercial portfolio are set to PML has four operational double, it would take four to commercial assets (GLA: 1.16 five years for this expansion to msf). Also, it has two under be completed. Hence, we construction assets at Pune, expect revenues to grow Chennai with GLA of 1.12 msf. moderately at 10.4% CAGR to a n d p l a n s t o d e v e l o p ` 1973.1 crore in FY18-20E. commercial asset at PMC This growth would improve Hebbal with GLA of 0.65 msf. significantly, once all assets These expansions would become operational. EBITDA augment PML's commercial margins are expected to portfolio to ~3 msf in next four improve from 48.0% in FY18 to to five years. Once operational, 50.4% in FY20E on the back of we expect the commercial a margin revival in the retail portfolio rentals to grow at division. Consequently, we 23.5% CAGR to ` 223.4 crore in expect the bottomline to grow FY18-24E. robustly at 15.5% CAGR to ` 323.2 crore in FY18-20E. In our Current valuations do not view, PML's current valuation factor-in value for expansion reflects only operational retail portfolio; recommend BUY… & commercial asset valuation At the CMP, PML is trading at and does not assign any value 13.6x FY20E EV/EBITDA . to its expansion portfolio Going ahead, expansion of its (~24% of our valuation). retail and commercial assets H e n c e , w e h a v e a B U Y would lead its next leg of recommendation on the stock growth. Given the asset-light with SOTP-based TP of ` nature of expansion, we also 775/share

ICICIdirect Money Manager 10 December 2018 STOCK IDEAS

Key Financials ` Crore FY18 FY19E FY20E FY21E Revenue 1,620 1,713 1,973 2,228 EBITDA 777 853 994 1,134 Net Profit 242 252 323 413 EPS (`) 15.8 16.5 21.1 27.0

Valuations Summary (x) FY18 FY19E FY20E FY21E P/E 37.6 36.1 28.2 22.0 Target P/E 49.0 47.1 36.8 28.7 EV / EBITDA 15.9 15.5 13.6 12.1 P/BV 3.2 2.5 2.3 2.1 RoNW (%) 8.5 7.0 8.2 9.4 RoCE (%) 8.6 7.8 8.5 9.1 Stock Data Particular

Market Capitalization (` Crore) 9,096.6 Total Debt (` Crore) 4,012.1 Cash and Investments (` Crore) 44.9 EV (` Crore) 13,063.8 52 week H/L (`) 725 / 492 Equity capital 30.6 Face value (`) ` 2

Key risks include: get impacted. Also, with higher Failure to generate sufficient competition and aggressive footfalls at malls e x p a n s i o n b y p e e r s , occupancy could also take a hit PML is expanding its retail or rentals may fall with portfolio aggressively where it oversupply in a particular area. is increasing from 6 msf to 10.6 If PML is unable to generate msf. However, with multiple enough footfalls or attract malls in same cities and reasonable rentals, it would increasing competition from impact its entire investment in other malls operating in the the expansion of its retail neighbourhood, footfalls may business.

ICICIdirect Money Manager 11 December 2018 STOCK IDEAS

Delay in execution of new PML is at ~9%. However, with projects to hinder growth every 1% increase in interest rates, profitability would be P M L i s g o i n g t h r o u g h i m p a c t e d b y 8 - 1 0 % . significant expansion in its Furthermore, it would not only r e t a i l a n d c o m m e r c i a l impact profitability as interest portfolio, which would drive its rates would also have a n e x t p h a s e o f g r o w t h . bearing on WACC and cap rate, H o w e v e r, a n y d e l a y i n execution of these projects which would ultimately impact would not only lead to cost the valuations of assets. We escalations but also hamper have also run the sensitivity of PML's next leg of growth. WACC and cap rate on PML. For every 1% change in cap Rise in interest rates rate & WACC, it would impact our fair value by 11-15% Currently, the cost of debt for

ANALYST CERTIFICATION We /I, Deepak Purswani, CFA MBA (Finance), Harsh Pathak, MBANovember (Finance); 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 Limited Sebi Registration is INZ000183631 for stock broker. 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

ICICIdirect Money Manager 12 December 2018 STOCK IDEAS

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 Deepak Purswani, CFA MBA (Finance), Harsh Pathak, MBA (Finance); Research Analysts 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. It is confirmed that Deepak Purswani, CFA MBA (Finance), Harsh Pathak, MBA (Finance); Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report.November

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.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

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.

ICICIdirect Money Manager 13 December 2018 FLAVOUR OF THE MONTH

Be prepared for Tax Season: Everything you need to know to plan your taxes. In a recent poll that we conducted it was heartening to learn that over 70 per cent of our customers plan for their taxes at the beginning of the year or through the year. Tax planning is an important part of overall financial planning and should not be started towards the last few months before filing returns. And more so because our tax system is not only designed to help us reduce taxes but in turn also help achieve our life goals. Just name a goal you have in life and there is an appropriate investment for it which will also help you save taxes.

Need for tax planning: NPS, etc. Likewise there are The main advantage of having insurance products like health a tax plan helps to inculcate insurance and life insurance, ways to investments, where etc. and retirement products different schemes enable your for senior namely senior citizen money to grow as well as be saving schemes and Bank FDs, protected till your retirement. etc. At every life stage there are tax Tax slabs: saving instruments available The income tax slabs is like every age as its advantage applicable to the assessment i n v e s t m e n t s f o r e q u i t y- year is 2019-20. The tax oriented tax saving schemes charged are as per the ages, its and debt-oriented tax savings income and accordingly the schemes like ELSS, ULIP, PPF, tax slabs is designed. Individual and HUF(less than 60 years) Income tax slabs Income Tax rate and Cess upto 2,50,000 Nil 2,50,001-5,00,000 5%(Total income-2,50,000) 12,500+20%(Total income- 5,00,001-10,00,000 5,00,000) 1,12,500+30%(Total income- 10,00,001 and above 10,00,000)

ICICIdirect Money Manager 14 December 2018 FLAVOUR OF THE MONTH

Senior Citizen(between 60-80 years) Income tax slabs Income Tax rate and Cess upto 3,00,000 Nil 3,00,001-5,00,000 5%(Total income-3,00,000) 10,000+20%(Total income- 5,00,001-10,00,000 5,00,000) 1,10,000+30%(Total income- 10,00,001 and above 10,00,000)

Super Senior Citizen (above 80 years) Income tax slabs Income Tax rate and Cess upto 5,00,000 Nil 5,00,001 -10,00,000 20%(Total income-5,00,000) 1,00,000+30%(Total income- 10,00,001 and above 10,00,000) Note: As per the above tax slabs you · The education cess applied will need to pay taxes for your here is 4%. incomes. In order to avoid · Surcharge of 10% on income paying off such taxes the best ranging Rs. 50 lakhs and way is to save those taxes with below 1 crore and 15% on a few tools that comes under the income above Rs. 1 section 80 of the Income Tax Crore. Act. · NRIs tax slab is same as the Individuals tax slab.

Tax Terminology: Previous year: refers to the period where the tax has to be paid. Financial year: refers to the period you are earning your incomes. Assessment year: refers to the following year in which the income is assessed and taxed. (Here, currently 1st April 2017-31st March 2018 is my previous year, 1st April 2018-31st March 2019 is my financial year and 1st

ICICIdirect Money Manager 15 December 2018 FLAVOUR OF THE MONTH

April 2019-31st March 2020 is my assessment year) Deductions: the amount subtracted from the tax to be paid. (Tax deducted) Exemptions: excluding certain incomes that is exempt from tax. (Tax free)

Tax Saving Investments: There are various schemes Below are the types of section that can be availed to avoid or 80 that gives you tax benefit. reduce the tax. Specifically, The most often used section is section 80 will be or is the best 80C that is commonly used by tool to be used to save on tax. the tax payers.

Section 80 deduction the tax amour: Eligible deduction available under section 80C:

Investments Interest or Investment Lock-in Feature return amount period (Rs.) Fixed Deposits Rate fixed Min: 1,000 5 years Interest earned is taxable as per (FDs) by the the tax slabs. Income below the Max: No bank slab need to submit 15G or 15H Limit form to avail tax benefit.

Public Provident 8%(as per Min: 500 15 years Principal and interest are tax - Fund(PPF) quarter free Max: Oct-Dec 1,50,000 ’18) National 8%(as per Min: 100 5 years Interest is taxable but tax free Savings quarter within the lock-in period. Max: No Schemes(NSC) Oct-Dec Limit ’18)

Equity-linked No fixed Min: 500 3 years Gains received more than 1 lakh savings returns would be taxed at 10% without Max: No schemes(ELSS) any indexation benefits. Limit National No fixed Min: 500 – Till Tax free and regular monthly Pension System returns Tier I; 1,000 Retireme income streams after (NPS) – Tier II nt retirement. The withdrawal is made 100% tax free. Max: No Limit

ICICIdirect Money Manager 16 December 2018 FLAVOUR OF THE MONTH

Senior Citizen 8.7% Min: 1,000 5 years Availed only to senior citizen Savings (55-60 plus). Maturity amount is Max: Scheme(SCSS) tax free and account can be 15,00,000 extended for 3 years . Interest is charged if the amount is above Rs. 10,000 p.a. Unit -linked No fixed Depends on 5 years The surrender value will be tax Insurance returns the plan free post lock in period but if it is Plans(ULIPs) surrendered before the lock in period then it gets added to your income, tax to be paid according to your tax slab. Life Insurance No fixed Depends on Till the Tax-free on maturity sum returns the plan maturity subject to certain conditions. Premium should not exceed 15% of the sum assured.

EPF 8.55%(as Up to 12% 5 years Tax-free on maturity sum. per quarter of basic Oct-Dec salary by ’18) employee and employer + D.A . 8.50%(as Min: 1,000 21 years Availed only to girl child until Sukanya per quarter from the age 10 . Maturity amount is tax Max: 1,50 Samriddhi Oct-Dec account free. Partial withdrawal up to ,000 Yojana ’18) opening 50% can be availed by the girl when she turns 18 years.

nil nil nil Eligible for 2 children. Payment Tuition Fees made to school, college, and institute. No development or donation will be counted here. · The eligibility deduction under section 80C comprises up to Rs. 1,50,000 Section 80CCC: annuity, amount received upon The deduction is the premiums surrender of the annuity, paid on Annuity Plan of LIC and including interest or bonus other insurers. It's a plan stated accrued on the annuity, is under Section 10(23AAB) taxable in the year of receipt. where the person receives Section 80CCD: pension from that fund. Here, This section comprises of the pension received is from contribution made by the

ICICIdirect Money Manager 17 December 2018 FLAVOUR OF THE MONTH individual income tax assesses contribution to NPS account) is towards the National Pension Rs. 1, 50,000/- S c h e m e ( N P S ) a n d A t a l Section 80CCG: Pension Yojana (APY). This section is related to the Tax benefit for Salaried investments made on equity An employee is eligible for tax saving schemes, where the deduction up to 10% of (Basic deduction is based on 50% of Salary +DA) under Section 80 the amount invested in the CCD(1) within the overall equity shares and a maximum ceiling of Rs. 1,50,000 under o f R s . 2 5 , 0 0 0 a n n u a l Sec 80 CCE with additional tax exemption is allowed for the deduction up to Rs. 50,000 investors. However, at least 3 under Section 80CCD(1B) y e a r s l o c k i n p e r i o d o f Tax benefit for Self-employed investment should be made Self-employed is eligible for from the date of scheme tax deduction up to 20 % of acquisition. This deduction is gross income under Sec 80 available for the assesses who CCD (1) within the overall have acquired listed equity ceiling of Rs. 1,50,000 under shares or listed units of an Sec 80 CCE with additional tax equity oriented fund with deduction up to Rs. 50,000 respect to the Rajiv Gandhi under Section 80CCD(1B) Equity Savings Schemes. Assesse has to be a resident Employer's contribution to an individual and should have a individual's account under g r o s s t o t a l i n c o m e n o t National Pension Scheme for exceeding Rs. 12 lakhs. an amount up to 10% of (basic salary + DA) is eligible for Section 80D: deduction. This deduction is This section allows the tax over and above the limit of Rs. payer exemption on the 150,000. premiums paid for Medical Note: The limit for aggregate of Insurance. Accordingly it is deductions available under extended to the dependents sections 80C, 80CCC and and parents. The maximum 8 0 C C D ( i n d i v i d u a l ' s limit of deduction under this

ICICIdirect Money Manager 18 December 2018 FLAVOUR OF THE MONTH section is Rs. 30,000/- for h i g h e r e d u c a t i o n o f senior citizens and upto Rs. self/spouse or child. The loan 2 5 , 0 0 0 / f o r o t h e r s . T h e should be taken from a premium should be paid for financial institution or an h e a l t h i n s u r a n c e o f t h e a p p r o v e d c h a r i t a b l e i n d i v i d u a l o r h i s f a m i l y organization. members. Capital Gains: E x p e n s e s i n c u r r e d o n Capital gains is referred to the preventive health check-up for sale of the non-inventory asset self, spouse, dependent that is the profit earned on the children / parents are also sale. This could be sale of deductible within the overall stocks, bonds, precious metal, limit of Rs. 30,000 for Senior property, etc. normally there is citizen and Rs. 25,000 for other a rate of tax charged on these than senior citizen, However gains but if you reinvest or total deduction for expenditure invest in government NHAI on preventive health check-up bond it could reduce the capital is restricted to Rs. 5,000. gains up to 50 lakh that enables Also any payment made on you to save tax on capital a c c o u n t o f m e d i c a l gains. expenditure in respect of a STCG (Short term capital very senior citizen (80 years or gains): more), if no payment has been The gains that you hold less made to keep in force an than a year to 3 years is termed insurance on the health of such as the short term capital gains. person, as does not exceed About 15% + 4% cess is the thirty thousand rupees shall be tax rate charged on the short allowed as deduction. term capital gains. If you fall Section 80E: under the 10% tax bracket you This section has deduction in need to pay more than the respect of Interest on Loan for individual but if you fall under H i g h e r S t u d i e s . H e r e , the 20-30% tax bracket 15% deduction is allowed only for rate is beneficial. the interest on loan taken for

ICICIdirect Money Manager 19 December 2018 FLAVOUR OF THE MONTH

LTCG (long term capital Instead of 36 months, it is gains): r e d u c e d t o 1 2 m o n t h s It comprises of capital assets considered as a period for ( s t o c k s , b o n d s , l a n d , holding Equity shares which residential property, etc.) sold are listed on the recognized after 3years from the date it's stock exchange, units of equity acquired, the profits earned oriented mutual funds, listed from the sale of those assets is debentures and government termed to be long term capital securities, units of UTI and gains. Zero Coupon Bonds, etc. As per the Union Budget, the On Debt oriented Funds, Gold s a l e o n t h e s e c u r i t i e s ETFs and Gold Funds, Bullion, exceeding Rs. 1 lakh has a tax Jewelry and Real Estate about implication of 10% on it. 20% is the indexation charged.

Alok, aged 35, is working in a sector bank and mother is a private sector firm in Delhi. home maker. His family includes his wife Alok's salary details are (aged 33, and home maker) provided below. Alok has and 2 kids. Alok's parents, been paying a total tax of who are senior citizens, also Rs.1.83 lakh. He wants to stay with him. Alok's father is a know if there's a scope of retired banker from a private reducing the tax outgo.

Particulars Monthly Annual

Basic Salary 50,000 600,000 House Rent Allowance 25,000 300,000 Professional Allowance 40,000 480,000 Leave Travel Allowance 5,000 60,000 Medical Reimbursement 1,250 15,000 Travel Allowance 1,600 19,200 Annual Bonus 400,000

Total Income 1,874,200

ICICIdirect Money Manager 20 December 2018 FLAVOUR OF THE MONTH

Currently, Alok is claiming below deductions:

Total Income 1,874,200

Less: HRA exemption & professional tax 272,500 Less: Standard Deduction (applicable from FY 2018-19) 40,000 Less: S.80C deductions 150,000 1) EPF contribution 72,000 2) Home Loan principal payment 86,000 Less: S.24(b) deduction - Int. on home loan 200,000

Taxable Income 1,211,700 And, his tax outgo currently is:

Income slab Tax Rate Amount

Upto 2.5 lakh 0% 0 2.5 to 5 lakh 5% 12,500 5 to 10 lakh 20% 100,000 Above 10 lakh 30% 63,510 T otal 176,010 Cess 4% 7,040 Total tax to be paid incl. cess 183,050 Suggestion: Alok can look at the below options to save some more tax: 1) If Alok travels on a holiday individually / with family within India, he can claim deduction for the travel cost, subject to the maximum amount of Leave Travel Allowance being paid to him. This can be claimed in two years in every block of four years (the current block is 2018-2021). Let's assume if he has traveled and incurred cost of Rs.48, 000 on air tickets; this can be claimed as deduction. 2) Alok can also consider investing into National Pension Scheme (NPS) towards retirement. He can claim a deduction of upto Rs.50, 000 under Section 80CCD (1B), over and above Section 80C. With the Government now announcing tax exemption on the entire lumpsum amount of 60% to be received at maturity, this investment looks a good option for retirement. 3) If Alok has not availed medical insurance for self & immediate family and relying only on employer cover, it's better to take one

ICICIdirect Money Manager 21 December 2018 FLAVOUR OF THE MONTH

separately now. If medical cover is taken at a later age, it could prove costly or he might not get, if he has any disorder at that age. Let's assume he takes a Rs.5 lakh cover for an annual premium of Rs.20, 000. He can avail deduction under Section 80D for the premium upto Rs.25, 000; which also includes health checkup expenditure of Rs.5, 000. This also can be used by Alok to complete his annual health check-up and claim a further deduction of Rs.5, 000. 4) Alok can also consider taking medical insurance for his parents who are senior citizens, to cover against any medical emergencies. Let's assume he takes a Rs.5 lakh cover for an annual premium of Rs.35, 000. Alok can avail deduction under Section 80D for the premium upto Rs.50, 000 for senior citizens; which also includes health checkup expenditure of Rs.5, 000. This also can be used by Alok to complete his parents' annual health check-up and claim a further deduction of Rs.5, 000. With the above steps, Alok can claim deductions & save tax further upto: Deduction Amount Leave Travel Allowance 48,000 S.80CCD (1B) - NPS 50,000 S.80D - Medical insurance - Self 20,000 S.80D - Health checkup - Self 5,000 S.80D - Medical insurance - Parents 35,000 S.80D - Health checkup - Parents 5,000 Total Deductions-Additional 163,000 Tax to be saved 50,856 Net tax to be paid now 132,194 Hence, with the above steps, Alok could save tax of Rs.50, 856 and pay only Rs.132, 194, instead of Rs.183, 050. Summing Up: in preparing can damage your As the above stated example earnings of investments and has given you a pure idea of o t h e r i n c o m e s o u r c e s . how effectively you can save on Remember to not only take tax if planned wisely. Further measures to build the corpus that it's the most essential tool but also take measures to save of financial planning and delay the build corpus. The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities

ICICIdirect Money Manager 22 December 2018 Tête-à-tête

Reducing the tax liability by contributing to the right investments

The purpose of a tax planning is to ensure tax efficiency where all the elements of financial plan are worked out well. Planning enables to get a detailed record about your earnings and you can plan investments and expenditure accordingly. Further, an interview set with the team of H&R Block India (Pvt) Ltd, will give you a broad view of the things to be considered while planning for tax this season. Especially to make sure no income is missed out while filing tax returns and suggest to look beyond Section 80C and 80D for tax saving purpose. One of the most common used term is the Tax loss/gain harvesting, to know the concept read on….

purchases, and planning for other expenditures. Few factors to be kept in mind are as Q. What are the factors one should follows: keep in mind when planning for taxes? Can you highlight the 1. Submit tax saving proofs to different investment options that your employer on time to avoid can be used for tax planning? paying excess tax as TDS. 2. Claim your LTA is applicable. A. Tax planning is the analysis 3. Check on HRA - If you are of a financial situation or plan l i v i n g i n a r e n t e d from a tax perspective. The accommodation or living with purpose of tax planning is to your parents and paying them ensure tax efficiency. Through rent, then you can claim an tax planning, all elements of exemption from your total t h e f i n a n c i a l p l a n w o r k taxable income, together in the most tax- efficient manner possible. 4. Checking on the limits of Reduction of tax liability and 80C is not exhausted. maximizing the ability to 5. Tax free avenues like, ELSS, contribute to retirement plans SCSS PPF, EPF, ULIP, Sukanya are crucial for success. Tax Samruddhi, NSC, etc. planning includes timing of 6. Check on NPS, health income, size, and timing of Insurance etc.

ICICIdirect Money Manager 23 December 2018 Tête-à-tête

Q. What are some of the mistakes as a tax saving bet over an we make while planning for our investment in SIP in an equity taxes? fund. A. Some common mistakes a. Ignoring the expenses that which we make while planning are exempt. Like HRA, LTA, etc. our taxes are as follows: Q. What are the pros and cons of 1. Health insurance should be clubbing the incomes while filing an essential component of returns of spouse and minor child? your tax plan A. Both the husband as well as 2. Failing to mention all the wife should take due care of income sources like FD the aforesaid provisions interest, saving interest, etc. If relating to clubbing of income you fail to mention all your so that by taking care of the credible income sources while above clubbing provisions the filing returns, it is deemed as income of the husband as well an act of concealment of as the wife is not clubbed. income and could cause troubles later The biggest disadvantage of 3. Not looking beyond Section clubbing of the income of 80C and Section 80D. husband and wife is that the tax 4. Health insurance premium burden increases because the in cash: The report says, "In the income accruing or arising to both of them are taxed as one last-minute rush, people often tax entity. Hence the slab rate make the mistake of paying of tax goes up so also the through cash and so end up exemptions and deductions paying higher tax despite get further narrowed down. buying a health policy," 5. N o n - Ta x S a v i n g Thus, from the point of view of Instruments: Sometimes in tax planning it is strongly rush of allocating your funds recommended that one should you tend to invest in such avoid the clubbing of incomes instruments where there is no of husband as well as the wife tax saving. For e.g. investing in so as to achieve full tax a mutual fund, like ELSS wins benefits to both of them.

ICICIdirect Money Manager 24 December 2018 Tête-à-tête

Q. Can you explain about tax loss 15%. In this case, you can harvesting and tax gain harvesting employ tax loss harvesting to in simple terms? reduce the tax liability on both LTCG and STCG. Usually, A. Tax loss harvesting is used investors use it for STCG to reduce tax liability on because the tax rates on short- investments. term capital gains are higher than that of long-term capital In tax loss harvesting, you sell gains. your stocks/fund units at a loss in order to reduce your tax The basic idea behind tax-loss liability on capital gains. It is a harvesting is that you sell method to offset the capital i n v e s t m e n t s t h a t h a v e gains made on equity against decreased in value and then the capital loss suffered to pay use the losses to decrease your lesser amount of tax. income taxes.

Previously, the long-term Tax gain harvesting, as capital gains (LTCG) made on o p p o s e d t o t a x - l o s s sale of equity shares and harvesting, is the process of equity funds were completely turning unrealized long-term t a x- f r e e i n y o u r h a n d s . capital gains into realized However, the amendment capital gains at a specific time made in the union budget 2018 for tax purposes. Not found has totally changed the tax much in India yet. With tax-gain harvesting, you strategically treatment of LTCG on sale of sell winning investments in listed equity shares and equity years where your tax rates are funds. relatively lower than what you Beginning from 1 April 2018, expect it will be in the future. LTCG made in excess of Rs 1lac will be taxed at the rate of 10% Q. What is the difference between w i t h o u t t h e b e n e f i t o f an exemption and deduction under indexation. Compared to that, tax? short-term capital gains A. Income Tax is a compulsory (STCG) are taxed at the rate of obligation which is levied on

ICICIdirect Money Manager 25 December 2018 Tête-à-tête every citizen, based on their are satisfied. An exemption, on paying capacity and age. To the the other hand, is the income relief of the assessee from which is not charged to tax. payment of taxes, the tax law has certain provisions for While deduction is a part of deduction and exemptions, Gross Total Income (GTI), but which decreases the overall any person can avail its benefit tax liability. In deduction, the b a s e d o n a p p l i c a t i o n . amount is first included in the Conversely, the exemption is not a part of GTI. The article income of the taxpayer and provided below explains the then the deduction is allowed s u b s t a n t i a l d i f f e r e n c e s as per the rules, i.e. in full or b e t w e e n d e d u c t i o n a n d part or when certain conditions exemption.

BASIS FOR DEDUCTION EXEMPTION COMPARISON

Meaning Deduction means subtraction i.e. Exemption means exclusion, i.e. if an amount that is eligible to certain income is exempt from tax reduce taxable income. then it will not contribute to the total income of a person.

What is it? Concession Relax ation

Concept The amount o f deduction is first The exempted income is not included in the gross income and considered as a part of total income, then deducted from it to arrive at the whole amount is an exemption the net income. for the taxpayer. Income is Tax deductible Tax free

Objective To promote savings and To boost that particular section in investments of the general public. which tax is exempted.

Sections Section 80 C to 80 U deals with Section 10 deals with exemptions deduction Allowable to Specific persons All the persons

Conditional Yes No

ICICIdirect Money Manager 26 December 2018 ASK OUR PLANNER

Can we gift a security which is a loan collateral?

Q. I have purchased bond security lender. Partial holdings shall be and used it as collateral for loan. freed in case of part payments. Now that I want to transfer the Alternatively, you can request bond as a gift to a relative. What t h e l e n d e r t o s w a p t h e happens to my loan collateral? collateral wherein you provide - Lenin Miranda another asset to the lender to create a lien on, which allows A. When you apply for a loan you to transfer your existing by using your existing asset(s) bond security. However, this as collateral, a lien is created may mean that the amount of against these asset(s) which loan sanctioned to you will will remain till the time all change depending on the outstanding liabilities & nature of security. charges have been paid off. A lien gives lender the right to Q. I had brought ICICI Life stage liquidate the security if the pension policy term 13. Years in borrower does not discharge 2008. The amount is now approx. h i s o b l i g a t i o n s ( t i m e l y 10 lakhs. I have been told by an payment, adhering to margin agent that if I surrender the policy, call etc.). In this case, a lien is the amount will be taxable but if I created on your bond security. switch to ULIP then after 5 years, if The ownership of the security I surrender the ULIP the amount remains in your name and you will be tax free. Please advice. !! are entitled to receive any - Shashikant Kirkole income accrued from the security i.e. interest payouts. A. As per the Section 80CCC(2) But you cannot transact or of Income Tax Act, if any transfer the asset before amount available in a pension releasing the lien. policy, in respect of which deduction has been allowed, The lien can be removed once together with interest or you pay off the outstanding bonus, is received on account loan balance by informing the of surrender, then such

ICICIdirect Money Manager 27 December 2018 ASK OUR PLANNER amount is added to your maximum of 1/3 r d of the income and taxed as per your maturity value as lumpsum, i n c o m e s l a b . T h u s t h e which will be exempt from tax. taxability of the redeemed The remaining 2/3rd of the amount will be based on m a t u r i t y v a l u e w i l l b e whether you had availed the converted into annuity and 80C tax benefits towards you will start receiving pension deduction for the annual from the same. Such pension premiums paid in the previous received will be added to your years: income and taxed as per your income slab. a) If you had availed 80C benefits for all the premiums Q. What is the tax on premature paid: Entire surrender value surrender of LIC market plus 1? Is will be added to your income full amount taxable or only the gain and taxed as per the tax slab part? - Vineet Sarin b) If you did not avail 80C benefits for the premiums paid A. LIC Market Plus I is an unit- in any year: The accumulated linked pension policy. As it's a gains (Surrender Value less pension policy, surrendering Total Premiums Paid) will be the policy would attract tax. added to your income and T h e t a x a b l e a m o u n t o n taxed as per the tax slab surrender will be based on whether you had availed The end use of surrender Section 80C deduction for the proceeds does not change the annual premiums paid in the taxability. Hence, even if you previous years, as below: switch the surrender proceeds to any other policy, the a) If you had not availed deduction under Section 80C surrender proceeds will still be for premiums paid in any year: taxable as above. Only the gains will be added to On the other hand, if you hold a your income and taxed. pension policy till its maturity, b) If you had availed deduction then you can withdraw a under Section 80C for the

ICICIdirect Money Manager 28 December 2018 ASK OUR PLANNER premiums paid in previous term opportunities that spring y e a r s : E n t i r e s u r r e n d e r up due to lack of information to proceeds will be added to your a set of market participants in income and taxed. one of the markets. The fund manager is responsible for Q. What are arbitrage funds? How e v a l u a t i n g s u c h p r i c e do they work? I have invested lump differences and take positions sum of Rs. 1, 00, 000 in ICICI accordingly. These funds may Prudential Equity Arbitrage Fund – also allocate a minor portion Regular Plan and I intend to invest (15%- 30%) in money market similar amount every year in top and /or short term debt performing arbitrage fund. Is it a securities. good idea or should I start an SIP in this fund? By its investment strategy, - Amol Singh Arbitrage Funds have a risk- return profile comparable to a A. The term 'Arbitrage' refers to Debt oriented mutual fund, the simultaneous buying and with the taxation of an Equity selling of a security in two oriented mutual fund. These different markets, with an aim funds are suitable for 1-3 year t o g a i n f r o m t h e p r i c e horizon holding period. If you difference. For e.g., an equity plan to invest for longer time share may trade at different horizon, it makes sense to opt prices in Spot Market & Futures for pure Large-cap & Multi-cap Market. Since the transactions category of equity oriented are in either direction, the mutual funds and Medium & positions are completely Long duration category of debt hedged. Hence, pure arbitrage oriented mutual funds, based transactions are virtually risk- free. Arbitrage Funds are a on the criticality and tenure of category of mutual funds that your financial goals. The endeavor to take advantage of arbitrage category mutual mispricing of stocks (or a stock funds have delivered between index) in different market 6%-8% annualized returns segments. These are short- over 3-year and higher time

ICICIdirect Money Manager 29 December 2018 ASK OUR PLANNER horizon. It has also to be Q. I have a life-stage pension policy understood that arbitrage taken in 2010 with no sum assured opportunities provide limited for 10 years. I have been paying a returns. Over longer horizon, premium of 3000/- per month. It will returns potential may be mature in 2020. I want to know: A) impacted as increased fund what are the tax implications if I inflows will end up chasing surrender the policy now? B) As per limited opportunities. IRDA guidelines, is it essential to buy annuity plan for 2/3rd of We suggest you to invest your surrender value? savings for longer time horizon by starting a SIP instead of - Kamlesh Malviya lumpsum investments. SIP will A. As per the Section 80CCC(2) help in averaging your cost of Income Tax Act, if any over a period of time, which amount available in a pension works well with volatile assets policy, in respect of which like equity. Chasing top deduction has been allowed, performing funds each year together with interest or w i l l o n l y c l u t t e r y o u r bonus, is received on account investment portfolio with too of surrender, then such many funds. You must select amount is added to your f u n d s w i t h a g o o d a n d income and taxed as per your consistent track record of risk- income slab. adjusted performance, in commensurate with your risk Thus the taxability of the profile and financial goals. surrendered amount will be based on whether you had A c u s t o m i z e d a n d availed the 80C tax benefits comprehensive financial plan towards deduction for the will take into consideration annual premiums paid in the your needs & provide optimal previous years: investment strategies. To know more about this, you may write c) If you had availed 80C to us at benefits for all the premiums paid: Entire surrender value [email protected].

ICICIdirect Money Manager 30 December 2018 ASK OUR PLANNER will be added to your income process is the same as that of a and taxed as per the tax slab n o r m a l d e m a t a c c o u n t o p e n i n g w i t h t h e o n l y d) If you did not avail 80C difference being that the benefits for the premiums paid guardian has to provide his/her in any year: The accumulated i n f o r m a t i o n a n d K Y C gains (Surrender Value less documents as well. Age proof Total Premiums Paid) will be of the minor is mandatory. This added to your income and account will be operated only taxed as per the tax slab by the guardian, till the time minor turns major. If you opt for surrender, there is no need to annuitize any part of Once minor turns major, a fresh the surrender proceeds. You set of KYC documents has to are eligible to receive the be provided and fresh account lumpsum amount as is. If you opening form has to be filled. wish for, you can purchase an You can update the same a n n u i t y p l a n f r o m t h e account by following required surrender proceeds, which will procedure, entering into a new be a separate transaction. As a g r e e m e n t w i t h t h e per current laws, pension depository. Details of the income is taxable as per guardian will be deleted. individual's tax slab. Alternatively, you can open a new account in the name of the Q. Can a demat account be opened major, where the holdings in in the name of the minor? What is the old account shall be the process and are there any transferred to the new account. issues faced when the minor turns major? There are no issues other than - Bharat Kataria providing a fresh set of KYC documents again once minor A. Demat account can be turns major and following the opened in the name of a minor required paperwork. It is to be child only by the natural noted that only demat account guardian (parents) or court- can exist in a minor's name. appointed guardians. The

ICICIdirect Money Manager 31 December 2018 ASK OUR PLANNER

You cannot open a trading of 17 years, and Rs. 46.61 lakh account in the name of a minor. at your child's age of 21 years (assuming a 4 year course for Q. I need to set a good corpus for Graduation). Assuming you my 1 year old child. I am ready to are able to achieve a post-tax contribute Rs. 1,000 per month for return of 10% p.a. from your building the corpus. Assuming my investments, you will need to child's education expenses to be 40 invest Rs. 7,500 p.m. for lakhs till 20 years from now. What Graduation & Rs. 6,500 p.m. for do you suggest should be my PG. This amount is much more investment tools and how much than what you had initially s h o u l d b e t h e p e r m o n t h planned for. contribution in the corpus. Guide me as to the appropriate MF/ Child As you have a long time gift for long term wealth creation. horizon for your investments, - Megha Chauhan you can take more risk and invest majorly into Equity asset A. It is a good thing that you are class. You can opt to invest planning for your child's higher your surplus in a mix of Large- education at an early stage. cap, Multi-cap & Mid-cap Starting early will help you in category of equity oriented ensuring that your corpus mutual funds. It is also grows in a manner that suggested that you invest a outpaces inflation. Firstly you minor portion in Debt asset need to estimate the exact class, by choosing Medium & corpus required for your Long Duration category of debt child's Graduation & Post- oriented mutual funds. The Graduation needs – whether rationale for investing in Debt Rs. 40 lakh is in today's cost or even for a longer time frame is at future cost. Say you require to reduce the volatility of your Rs. 10 lakh each for Graduation overall portfolio (due to volatile & PG in today's cost. Estimating nature of Equity) and also inflation at 8% p.a., you will provide an opportunity to require about Rs. 34.26 lakh for invest more in Equity during graduation at your child's age period of low or negative

ICICIdirect Money Manager 32 December 2018 ASK OUR PLANNER returns, by shifting funds from required investible surplus as Debt to Equity at opportune per your actual costs, and also times. An asset allocation of whether you're near term 75:25 (Equity: Debt) can be financial responsibilities can considered. b e m e t w i t h e x i s t i n g investments & unutilized part It is also important to review of future investible surplus. It is and monitor the performance also important to analyze your of your investments. Any cash flow situation to assess deviation from expected the possible impacts while performance should be acted planning for your immediate, upon e.g. moving some part short term & long term financial from Debt to Equity during targets. A customized and negative returns in Equity; comprehensive financial plan booking profits by shifting will take into consideration some part of Equity into Debt these inputs and provide during above average positive optimal strategies to achieve returns in Equity. This act is your needs. To know more known as re-balancing. Also about this, you may write to us you need to identify whether at you are able to manage the [email protected].

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

ICICIdirect Money Manager 33 December 2018 MUTUAL FUND ANALYSIS

Investing in pharma funds

Indian benchmark equity w i t h c u r r e n t t a i l w i n d . indices have been choppy after A l t h o u g h t h e g r o w t h scaling an all-time high in late trajectory has come down August 2018. A confluence of from 20-25% to 10-15% (on a factors such as tight liquidity in n o r m a l i s e d b a s i s ) , t h e debt markets, volatile crude oil correction in prices of most p r i c e s , s h a r p c u r r e n c y stocks has turned the risk- movements and a global trade reward favourable. Since near war have weighed on equity term news flows remain markets. Midcap and small cap n e g a t i v e , s t a g g e r e d stocks, in particular, have been investment over the next 12 affected even more. months through SIP mode with an investment horizon of Amid the volatility, defensive three years would be an ideal sectors like pharma and IT investment strategy. have prevented the downside and, thus, done well. We T h e t o p l i n e o f p h a r m a b e l i e v e t h i s c o u l d b e companies is likely to be driven s y m p t o m a t i c o f s e c t o r by normalised growth in key rotation that is a regular geographies and favourable market phenomenon. While currency movement. However, the IT sector had started on the margins front, issues like outperforming since early 1 ) C h i n e s e s o u r c i n g, 2 ) 2017, the pharma sector imported raw materials and witnessed increased investor other expenditure like R&D, employee cost spend in US$ or interest in the last few months. can still be some stumbling We have been positive on the € blocks. On the geographical pharma sector for the last few front, US generics, which has months due to suppressed been the Achilles heel for valuations, a smart recovery in almost all players due to acute t h e d o m e s t i c m a r k e t , base business pricing pressure, normalisation of US market is witnessing comparatively related issues like compliance softer price erosion. There are and pricing pressure along instances of volume growth in

ICICIdirect Money Manager 34 December 2018 MUTUAL FUND ANALYSIS the base business as well. symptomatic of the sector as a S i m i l a r l y , p o s i t i v e whole. developments on the regulatory The pharma sector (NSE front and new launches, Pharma) traded between 30x including speciality approvals, and 35x one year forward PE m a y r e k i n d l e i n v e s t o r s band consistently during 2012- sentiments. We expect overall 16. However, in FY16-18, as the visibility in the US generics front U S s i t u a t i o n b e c a m e to improve gradually on the increasingly difficult due to back of a changed product mix c o m p l i a n c e i s s u e s a n d ( t i l t i n g t o w a r d s n o n - U S franchisee), a leaner US persistent pricing pressure, portfolio driven by incremental there was a sharp de-rating of product launches largely in the the sector PE. While the Nifty PE speciality, biosimilar and currently is still trading at 25x injectables space. Another one year forward, many stocks interesting development is the are trading below their 10-year geographical diversification as average PE multiples. companies are increasingly expanding or evaluating other We believe the pharma space geographies such as Europe and emerging market and more offers a favourable risk-reward recently China. We expect proposition. Investors can companies to remain measured consider investments into on the US front and expand in pharma funds from a medium the ex-US exports markets to long term perspective. besides growing at a steady However, being a thematic pace in India. This expansive allocation, it should not exceed strategy is likely to improve free more than 5-10% of the overall cash flows and return ratios. We equity allocation. Our preferred believe the recent case of funds in this sector are Reliance alleged corporate governance Pharma Fund, UTI Healthcare related lapses is a company Fund and SBI Healthcare s p e c i f i c i s s u e a n d n o t Opportunities Fund.

ICICIdirect Money Manager 35 December 2018 MUTUAL FUND ANALYSIS

Reliance Pharma Fund

Fund Objective: Performance: The primary investment objective of the scheme is to The fund has been among the generate consistent returns by best performing pharma funds investing in equity/equity across time frames. It has related or fixed income d e l i v e r e d a c o n s i s t e n t securities of pharma and other outperformance by a large associated companies. margin compared to the index Key Information NAV as on November 30, 2018 (`) 152.8 Inception Date June 5, 2004 as well as its peers (as of Fund Manager Sailesh Raj Bhan Minimum Investment (`) Lumpsum 5000 SIP 500 N o v e m b e r 3 0 ) . I t h a s Expense Ratio (%) 2.30 Exit Load 1% on or before 1Y, Nil after 1Y Benchmark S&P BSE Health Care - TRI generated CAGR of 1.5% and Last declared Quarterly AAUM(` cr) 2752 14.2% in the last three years Product Label: This product is suitable for investors and five years vs. -3.6% and who are seeking: 9.2% returns by benchmark, • Long term capital growth • Investment in equity and equity respectively (as of November related securities of pharma & other associated companies 30). Investors understand that their principal will be at high risk

Performance vs. Benchmark (CAGR Returns %) 30 20.7 1.9 20 14.2 1 10 9.2 3 1.5 0 0 -10 3.6 1 Year 3 Year- 5 Year Since Inception Fund Benchmark

(Note - The benchmark was not in existence at the time of the fund's inception)

ICICIdirect Money Manager 36 December 2018 MUTUAL FUND ANALYSIS

Portfolio: business profile and some US The portfolio comprises 21 exposure as well, with some stocks. Currently, the portfolio companies having higher US is tilted towards large caps g e o g r a p h y e x p o s u r e (~60%) while midcap and compared to others. The fund small cap stocks make up the also holds some MNCs as well r e s t . T h e f u n d d i s p l a y s as companies into CRAMS and conviction in its picks and biosimilar business. It has allocation is concentrated. diversified some part of the Companies held by the fund portfolio into healthcare have a strong domestic companies as well.

Top 10 Holdings Asset Type % Divis Laboratories Ltd. Domestic Equities 10.6 Dr. Reddys Laboratories Ltd. Domestic Equities 10.2 Aurobindo Pharma Ltd. Domestic Equities 9.5 Sun Pharmaceutical Industries Ltd. Domestic Equities 9.3 Cipla Ltd. Domestic Equities 6.9 Syngene International Ltd. Domestic Equities 6.5 Sanofi India Ltd. Domestic Equities 5.9 Abbott India Ltd. Domestic Equities 5.8 Biocon Ltd. Domestic Equities 5.8 Lupin Ltd. Domestic Equities 5.2

Top 10 Sectors Asset Type % Pharmaceuticals & Drugs Domestic Equities 79.1 Hospital & Healthcare Services Domestic Equities 11.3 Miscellaneous Domestic Equities 7.4 Finance - Investment Domestic Equities 1.6

Whats In %

Whats out % Glenmark Pharmaceuticals Ltd. 1.2

ICICIdirect Money Manager 37 December 2018 MUTUAL FUND ANALYSIS

Our View: considerable midcap exposure. The fund management team is The fund's strong performance able and has managed to since inception and a long d e l i v e r a c o n s i s t e n t history are comforting factors performance. We feel that even though the fund holds investors can consider the fund concentrated positions and has from a three-year perspective

You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://www.reliancemutual.com/InvestorServices/Factsheets Documents/Fundamental-October-2018.pdf

Data as on November 30, 2018; Portfolio details as on October-2018 Source: ACE MF, ICICI Direct Research

ICICIdirect Money Manager 38 December 2018 MUTUAL FUND ANALYSIS

UTI Healthcare Fund

Fund Objective: Product Label: This product is suitable for investors who are seeking The primary objective of the • Long term capital appreciation • Investment predominantly in scheme is to generate long equity and equity related securities in the Healthcare term capital appreciation by Services sector investing predominantly in Investors understand that their principal will be at high risk equity and equity related Performance: securities of companies /institutions engaged in the The fund performance has healthcare services sector. been subdued in recent times b u t i t s l o n g e r t e r m However, there can be no performance continues to assurance or guarantee that remain encouraging. It has the investment objective of the delivered -2.6% CAGR and scheme would be achieved. 8 . 6 % C A G R r e t u r n s , respectively, for three and five- Key Information NAV as on November 30, 2018 (`) 85.3 year time frames vs -3.6% Inception Date August 1, 2005 Fund Manager V. Srivatsa C A G R a n d 9 . 2 % C A G R Minimum Investment (`) Lumpsum 5000 SIP 0 performance of the benchmark Expense Ratio (%) 2.82 Exit Load 1% on or before 1Y, Nil after 1Y over these time frames (as of Benchmark S&P BSE Health Care - TRI Last declared Quarterly AAUM(` cr) 441 November 30).

Performance vs. Benchmark (CAGR Returns %)

20 17.4 9.2 10 8.6 3 0 0 1.2 2.6

-10 - 3.6 - 1 Year 3 Year- 5 Year Since Inception Fund Benchmark

(Note - The benchmark was not in existence at the time of the fund's inception)

ICICIdirect Money Manager 39 December 2018 MUTUAL FUND ANALYSIS

Portfolio more unique picks compared to The portfolio features companies some other funds. Currently, there that are relatively more focused are 23 stocks in the portfolio, on domestic formulations, which m a k i n g i t s l i g h t l y l e s s is the fastest growing segment in concentrated than some other current scenario. The US generics funds. Overall, the portfolio is well business forms a comparatively placed with respect to current lower portion of these companies' growth opportunities in the overall business. The portfolio has pharma sector.

Top 10 Holdings Asset Type % Sun Pharmaceutical Industries Ltd. Domestic Equities 9.6 Cipla Ltd. Domestic Equities 8.6 Dr. Reddys Laboratories Ltd. Domestic Equities 7.1 Cadila Healthcare Ltd. Domestic Equities 6.6 Ipca Laboratories Ltd. Domestic Equities 6.5 Torrent Pharmaceuticals Ltd. Domestic Equities 6.4 Divis Laboratories Ltd. Domestic Equities 6.2 Sanofi India Ltd. Domestic Equities 6.2 Pfizer Ltd. Domestic Equities 4.7 Alkem Laboratories Ltd. Domestic Equities 4.5

Top 10 Sectors Asset Type % Pharmaceuticals & Drugs Domestic Equities 85.5 Hospital & Healthcare Services Domestic Equities 5.8 Miscellaneous Domestic Equities 3.1 Finance - Investment Domestic Equities 2.5

Whats In % Biocon Ltd. 2.6

Whats out % Narayana Hrudayalaya Ltd. 1.8

Our View: constructed in terms of The fund is on the aggressive diversification. Investors can side with higher allocation to consider the fund from a three- midcaps than large caps. year perspective. However, the portfolio is well

ICICIdirect Money Manager 40 December 2018 MUTUAL FUND ANALYSIS

You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://docs.utimf.com/v1/AUTH_5b9dd00b-8132-4a21-a800- 711111810cee/UTIContainer/UTI%20Fund%20Watch %20November%20201820181115-213003.pdf

Data as on November 30, 2018; Portfolio details as on October-2018 Source: ACE MF, ICICI Direct Research

ICICIdirect Money Manager 41 December 2018 MUTUAL FUND ANALYSIS

SBI Healthcare Opportunities Fund

Fund Objective: Performance: To provide investors with the The fund has outperformed its opportunity of long-term benchmark over longer time c a p i t a l a p p r e c i a t i o n b y p e r i o d s b u t h a s investing in a diversified portfolio of equity and equity underperformed heavily in the related securities in healthcare last year. The one year, three space. y e a r s a n d f i v e - y e a r Key Information performance (as of November NAV as on November 30, 2018 (`) 122.6 Inception Date July 14, 1999 Fund Manager Tanmaya Desai 30) is -3.7%, -5.7% CAGR and Minimum Investment (`) Lumpsum 5000 SIP 0 11% CAGR, respectively, Expense Ratio (%) 2.23 Exit Load 0.50% on or before 15D, Nil after 15D Benchmark S&P BSE Health Care - TRI compared to benchmark index' Last declared Quarterly AAUM(` cr) 1076 Product Label: 3%, -3.6% CAGR and 9.2% CAGR. Nevertheless, decent This product is suitable for investors who are seeking outperformance over longer • Long term capital appreciation • Equity investments in stocks of holding periods provides companies in the healthcare sector comfort. Investors understand that their principal will be at high risk

Performance vs. Benchmark (CAGR Returns %) 20 1 14.8 15 1 10 9.2 3

5 0 0 -5

-10 3.7 5.7 3.6 - - - 1 Year 3 Year 5 Year Since Inception Fund Benchmark

(Note - The benchmark was not in existence at the time of the fund's inception)

ICICIdirect Money Manager 42 December 2018 MUTUAL FUND ANALYSIS

Portfolio markets. Overall portfolio stocks The portfolio has 20 stocks with a feature a decent mix of domestic near equal split between large cap facing and US facing businesses. stocks and midcap/small cap In terms of portfolio construct, it is stocks. It has some differentiated less concentrated than our other stock picks. Recent additions picks, with lesser weights to its top indicate a play towards US picks as well.

Top 10 Holdings Asset Type % Aurobindo Pharma Ltd. Domestic Equities 11.3 Dr. Reddys Laboratories Ltd. Domestic Equities 9.4 Sun Pharmaceutical Industries Ltd. Domestic Equities 9.2 Strides Pharma Science Ltd. Domestic Equities 9.0 Divis Laboratories Ltd. Domestic Equities 8.6 Lupin Ltd. Domestic Equities 6.6 Tri-Party Repo (TREPS) Cash & Cash Equivalents and Net Assets 6.2 Biocon Ltd. Domestic Equities 4.6 Torrent Pharmaceuticals Ltd. Domestic Equities 4.6 Alkem Laboratories Ltd. Domestic Equities 4.3

Top 10 Sectors Asset Type % Pharmaceuticals & Drugs Domestic Equities 91.3 Hospital & Healthcare Services Domestic Equities 2.9

Whats In %

Whats out % Apollo Hospitals Enterprise Ltd. 2.1 Laurus Labs Ltd. 0.3

Our View: holdings or in general. However, The fund is more suited to the significant midcap bias makes investors who do not prefer heavy the fund slightly more prone to c o n c e n t r a t i o n a m o n g t o p volatility.

ICICIdirect Money Manager 43 December 2018 MUTUAL FUND ANALYSIS

You can view performance of other schemes being managed by the fund manager of this scheme on the following link: https://www.sbimf.com/en-us/lists/schemefactsheets /december%202018.pdf

Data as on November 30, 2018; Portfolio details as on October-2018 Source: ACE MF, ICICI Direct Research

ICICIdirect Money Manager 44 December 2018 MUTUAL FUND ANALYSIS

Performance of other schemes managed by these fund managers: 1. Reliance Pharma Fund

Performance of other schemes managed by the fund manager - Sailesh Raj Bhan

Fund Name 1 Year 3 Years 5 Years Top 3 Performing Schemes Reliance Pharma Fund(G) 11.03 1.65 14.12 S&P BSE Health Care - TRI 2.45 -4.44 8.63 Reliance Large Cap Fund(G) 2.71 12.34 18.12 S&P BSE 200 - TRI 4.71 13.30 15.03 Reliance Multi Cap Fund(G) 0.46 8.60 16.65 S&P BSE 500 - TRI 2.11 12.94 15.23 Bottom 3 Performing Schemes Reliance Close Ended Equity Fund-B(G) -6.45 9.55 -- S&P BSE 200 3.34 11.82 13.49 Reliance Consumption Fund(G) -7.08 3.56 10.75 NIFTY CONSUMPTION - TRI 3.92 13.14 15.56 Reliance India Opp Fund-Sr-A(G) ------S&P BSE 200 3.34 11.82 13.49 Note : The schemes may or may not have been managed by the same Fund Manager since its inception Note : The concerned Fund Manager manages 8 other schemes of the concerned Mutual Fund

Performance of other schemes managed by the fund manager - Kinjal Desai Fund Name 1 Year 3 Years 5 Years Top 3 Performing Schemes Reliance US Equity Opp Fund(G) 18.01 13.29 -- S&P BSE SENSEX - TRI 11.27 13.60 13.33 Reliance Pharma Fund(G) 11.03 1.65 14.12 S&P BSE Health Care - TRI 2.45 -4.44 8.63 Reliance Inv-Qrtly-II(G) 8.55 7.56 8.10 Crisil Liquid Fund Index 7.48 7.24 7.84 Bottom 3 Performing Schemes Reliance Capital Builder Fund-IV-C(G) ------S&P BSE 200 3.34 11.82 13.49 Reliance Capital Builder Fund-IV-D(G) ------S&P BSE 200 3.34 11.82 13.49 Reliance India Opp Fund-Sr-A(G) ------S&P BSE 200 3.34 11.82 13.49 Note : The schemes may or may not have been managed by the same Fund Manager since its inception Note : The concerned Fund Manager manages 49 other schemes of the concerned Mutual Fund

ICICIdirect Money Manager 45 December 2018 MUTUAL FUND ANALYSIS

2. UTI Healthcare Fund

Performance of other schemes managed by the fund manager - V. Srivatsa

Fund Name 1 Year 3 Years 5 Years Top 3 Performing Schemes UTI Dual Adv FTF-III-II(G) 4.25 -- -- CRISIL Hybrid 85+15 - Conservative Index 4.18 8.38 10.03 UTI Dual Adv FTF-III-III(G) 4.15 -- -- CRISIL Hybrid 85+15 - Conservative Index 4.18 8.38 10.03 UTI CPO-VII-V(1281D)(G) 3.89 -- -- CRISIL Hybrid 85+15 - Conservative Index 4.18 8.38 10.03 Bottom 3 Performing Schemes UTI Core Equity Fund-Reg(G) -4.13 8.64 13.54 Nifty LargeMidcap 250 Index - TRI -0.96 13.46 18.17 UTI Equity Savings Fund-Reg(G) ------Crisil Equity Savings Index ------UTI CPO-X-II(1134D)(G) ------CRISIL Hybrid 85+15 - Conservative Index 4.18 8.38 10.03 Note : The schemes may or may not have been managed by the same Fund Manager since its inception Note : The concerned Fund Manager manages 30 other schemes of the concerned Mutual Fund 3. SBI Healthcare Opportunities Fund

Performance of other schemes managed by the fund manager - Tanmaya Desai

Fund Name 1 Year 3 Years 5 Years Top 3 Performing Schemes SBI Healthcare Opp Fund-Reg(D) -5.82 -6.40 10.60 S&P BSE Health Care - TRI 0.32 -4.41 8.64 Note : The schemes may or may not have been managed by the same Fund Manager since its inception Note : The concerned Fund Manager manages 0 other schemes of the concerned Mutual Fund

Data as on November 30, 2018; Portfolio details as on October-2018 Source: ACE MF, ICICI Direct Research

ICICIdirect Money Manager 46 December 2018 This month on iCommunity

1. Buzz in the market discussion - Your voice matters! In the upcoming New Year, what challenges and opportunities, you foresee for the domestic markets? With election results of five states out, the nation is gearing up for the big national event - the central election. Populist policies, last minute strategies and political rhetoric will be the order of the day. On the flip side, better macros like low inflation (retail inflation fell to a 17-month low in November 2018 to 2.33%) and strong IIP (October 2018 IIP at 8.08% vs. 1.83% YoY), where do you see the markets heading? Share your thoughts on ICICIdirect exclusive knowledge sharing platform - iCommunity. Link to join the discussions: http://community.icicidirect.com/service_forum

2. Exclusive Q&A Session with Mutual Fund Product Manager - December 17, 2017 Some questions asked by customers were: a) If I want to invest some surplus funds for some time in Short term Liquid fund, say for two months, and then redeem it, will it attract Capital gain tax? b) Is Aadhaar linking to mutual fund folio mandatory or not? How to link aadhaar to folios? c) How can I modify dividend option?

3. Q & A Forum Seek answers to your queries regarding investments and market updates for free. Questions like: > Recommend me some small cap companies to invest for growth, can hold for 8 to 10 years. > Should I continue my SIP in XXX fund? I can hold for 5 years. > What is the future of XXX? Can it be bought at current levels? Login to ask questions, give your comments on the questions asked before or browse through the various segments.

What is iCommunity? iCommunity is ICICIdirect's interactive platform where one can answer and get answered as well. With extensive range of forums, events & discussions iCommunity serves as an opportunity to learn more about financial world.

ICICIdirect Money Manager 47 December 2018 EQUITY MODEL PORTFOLIO

Our indicative large-cap equity model portfolio is delivering an impressive return (inclusive of dividends) of 142.59% till date (as on November 30, 2018) since its inception (June 21, 2011) vis-à- vis the benchmark index (S&P BSE Sensex) return of 106.16% during the same period, an outperformance of 36.43. This validates our thesis of selecting companies with sound business fundamentals that forms the core theme of our portfolio. We have revised stocks in our midcap portfolio. It continues to outperform, delivering 238.06% (inclusive of dividends) till date (as on November 30, 2018) vis-à-vis the benchmark index (CNX Midcap) return of 127.38%, an outperformance of 110.68. Our consistent outperformance demonstrates our superior stock picking ability as markets aligned to our view of favourable risk reward, good franchisee vs. reward-at-any-risk businesses. We have always suggested the SIP mode of investment and still find a lot of merit in it as the preferred mode of deployment given the market conditions and volatility associated since the inception of the portfolio. We highlight that the SIP return of our portfolio has consistently outperformed the indices. Following the same pace and opportunities in the market, our latest portfolio (large caps) remains overweight on BFSI sector – HDFC Bank (10%), HDFC Limited (9%), Axis Bank (6%) Bajaj Finance (6%) and SBI (6%). Affirming our view on consumption demand, Dabur (5%) and Marico (4%) continue to be part of our large cap portfolio. We remain positive on auto, IT and pharma. We remain overweight to neutral on pure play defensives (IT, FMCG) as secular earnings coupled with sector rotation could lead to consolidation in near term valuations and offer stock specific opportunities. We continue to remain underweight on metals and oil & gas with our only pick being Gail Ltd., which has a better risk reward opportunity. Among individual names, we recommend TCS in the IT space, HDFC and HDFC Bank in the BFSI space and ITC in consumer space.

ICICIdirect Money Manager 48 December 2018 EQUITY MODEL PORTFOLIO

Name of the company Model Portfolio Largecap Midcap Diversified (%) (%) (%) Largecap Stocks Maruti Suzuki 6.0 4.2 EICHER Motors 4.0 2.8 Mahindra & Mahindra (M&M) 4.0 2.8 HDFC Bank 10.0 7.0 Axis Bank 6.0 4.2 HDFC Limited 9.0 6.3 Bajaj Finance 6.0 4.2 SBI 6.0 4.2 Larsen & Toubro 6.0 4.2 UltraTech Cement 4.0 2.8 Dabur 5.0 3.5 Marico 4.0 2.8 ITC 6.0 4.2 Nestle India 4.0 2.8 TCS 6.0 4.2 Hindustan Zinc 6.0 4.2 Divis Laboratories 3.0 2.1 GAIL Ltd. 5.0 3.5 Largecap share in diversified 100.0 70.0

ICICIdirect Money Manager 49 December 2018 EQUITY MODEL PORTFOLIO

Bharat Forge 6.0 1.8 Exide Industries 6.0 1.8 Bajaj Finserve 8.0 2.4 Indian Bank 6.0 1.8 AIA Engineering 6.0 1.8 Kalpataru Power transmission 6.0 1.8 Ramco Cement 6.0 1.8 Kansai Nerolac 6.0 1.8 Pidilite Industries 6.0 1.8 Tata Chemicals 6.0 1.8 Bata India 6.0 1.8 Graphite India 6.0 1.8 Firstsource Solutions 6.0 1.8 Container Corporation of India 6.0 1.8 Syngene International 8.0 2.4 Arvind 6.0 1.8 Total 100.0 30.0 Midcap share in diversified 30

TOTAL 100 0 100.0

ICICI Securities has received an Investment Banking mandate from Mahindra & Mahindra and Indian Bank.

ICICIdirect Money Manager 50 December 2018 EQUITY MODEL PORTFOLIO

Performance so far since inception*

300

238.0632958

200 170.2326596 142.5853615

% 127.377063 106.1610925 110.3555153 100

0 Large Cap Midcap Diversified

Portfolio Benchmark

*Returns (in %) as on November 30, 2018 Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio Benchmark: CNX Midcap; Diversified Portfolio Benchmark: Combination of BSE Sensex and CNX Midcap

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

16000000

14000000

12000000

10000000 9000000 9000000 9000000 20956417.69

| 8000000

6000000 15172026.04 13900839.84 12944330.97 1999915.63

4000000 12387860.73 1

2000000

0 Largecap Midcap Divesified

Investment Value of Investment in Portfolio Value if invested in Benchmark

Start date of SIP: June 30, 2011; *Value as on November 30, 2018

ICICIdirect Money Manager 51 December 2018 QUIZ TIME

A D A S S E S S M E N T D S E K A U K Y N A X T Q T S D B T T J L I T A X U A Q U A R T E R A Q T A A X E C O Z X T J G X E T R S W T L I S B A L S M O S L A I G O V D M A F O E R A L O C K A E J T X C U O B S N Y T X D R I A N V I S X S J E X E M P T I O N S A H Y U O L V A A O L C U T G E G R A H C R U S R P Word Search: 1. Income Tax 2. Surcharge 3. Quarter 4. Capital gains 5. Cess 6. Tax slabs 7. Deductions 8. Exemptions 9. Assessment 10. Previous Correct answers for the November 2018 quiz are: 1. A trust acts as a third party who technically owns the cash, stocks, bonds, life insurance or real estate of the testator. 2. The most important requirement is to register a nominee for your property, investments and bank related matters. 3. You can have an original and duplicate copy of a Will? True. 4. A document that enables you to appoint someone to take decisions on your behalf? Power of Attorney. 5. When a Will isn't drafted it is said to be intestate succession.

ICICIdirect Money Manager 52 December 2018 PRIME NUMBERS

Equity Markets Domestic Equity Indices 30-Nov-18 31-Oct-18 Change (%) CNX Nifty 10877.0 10386.6 4.7% CNX Midcap 17503.6 17189.2 1.8% S&P BSE Sensex 36194.3 34442.1 5.1% S&P BSE 100 11119.2 10681.7 4.1% S&P BSE 200 4626.5 4440.2 4.2% S&P BSE 500 14429.0 13881.7 3.9%

Global Equity Indices 30-Nov-18 31-Oct-18 Change (%) Dow Jones 25,538.5 25,115.8 1.7% S&P 500 2,760.2 2,711.7 1.8% Nasdaq 7,330.5 7,305.9 0.3% FTSE 6,980.2 7,128.1 -2.1% DAX 11,257.2 11,447.5 -1.7% CAC 40 5,003.9 5,093.4 -1.8% Nikkei 22,351.1 21,920.5 2.0% Hang Seng 26,506.8 24,979.7 6.1% Shanghai Composite 2,588.2 2,602.8 -0.6% Taiwan Weighted 9,888.0 9,802.1 0.9% Straits Times 3,117.6 3,018.8 3.3%

Sectoral Indices 30-Nov-18 31-Oct-18 Change (%) S&P BSE Auto 20,900.2 19,881.1 5.1% S&P BSE Bankex 29,949.0 28,359.6 5.6% S&P BSE FMCG 18,639.4 17,488.6 6.6% S&P BSE Healthcare 14,332.7 14,726.6 -2.7% S&P BSE Metals 11831.86 12524.55 -5.5% S&P BSE Oil & Gas 13,246.2 13,246.9 0.0% S&P BSE Power 1,911.3 1,958.1 -2.4% S&P BSE Realty 1,791.7 1,679.8 6.7% S&P BSE Teck 7,170.2 7,234.6 -0.9%

ICICIdirect Money Manager 53 December 2018 PRIME NUMBERS

Volatility Index (VIX) 30-Nov-18 31-Oct-18 VIX 19.16 19.79

Debt Markets Government Securities Yield (in %) Nov-18 Oct-18 Change (bps) 10 year 7.61 7.85 -24 5 year 7.47 7.83 -36 3 year 7.32 7.64 -32 1 year 7.10 7.38 -29

Corporate Bond Yields (in %) Nov-18 Oct-18 Change (bps) AAA 10 year 8.77 8.90 -13 AAA 5 year 8.64 8.90 -26 AAA 3 year 8.60 8.73 -13 AAA 1 year 8.41 8.60 -19 AA 10 year 9.23 9.40 -17 AA 5 year 9.25 9.48 -23 AA 3 year 9.19 9.28 -9 AA 1 year 9.00 9.11 -11

Commercial Paper (in %) Nov-18 Oct-18 Change (bps) 12 Months 8.80 8.80 0 6 Months 8.10 8.10 0 3 Months 7.83 7.75 8 1 Month 0 Note : Data not available on Bloomberg for 1 month CP post 3/28/18

T-Bills Yields (in %) Nov-18 Oct-18 Change (bps) 91D TB 0 182D TB 0 364D TB 0 Note : Data not available on Bloomberg for 3,6 and 12 month Tbill post 3/28/18

ICICIdirect Money Manager 54 December 2018 PRIME NUMBERS

10-year benchmark yields (%) across countries Countries 30-Nov-18 31-Oct-18 Change in bps US 2.988 3.144 (16) UK 1.364 1.437 (7) Japan 0.092 0.127 (4) Spain 1.500 1.545 (4) Germany 0.313 0.385 (7) France 0.683 0.749 (7) Italy 3.213 3.427 (21) Brazil 9.894 10.210 (32) China 3.380 3.536 (16) India 7.607 7.853 (25)

MF Investment Nov-18 Oct-18 Fy18 Equity 5236 24047 141769 Debt 51392 27364 370716

FII Investment Nov-18 Oct-18 Fy18 Equity 6223 -27622 22272 Debt 6467 -10019 120387

Macro-economic Indicators Consumer price index (CPI) Items Weights(%) Sep-18 Oct-18 Nov-18 Food&bev. 45.86 1.08 -0.14 -1.69 Pan,tob& intox. 2.38 5.57 6.13 6.14 Cloth & Foot 6.53 4.64 3.55 3.53 Housing 10.07 7.07 6.55 5.99 Fuel & light 6.84 8.47 8.55 7.39 Misc. 28.31 5.65 6.73 6.15 CPI 100 3.77 3.31 2.33 Wholesale price index (WPI) Month Weights Sep-18 Oct-18 Nov-18 WPI 100.0 5.13 5.28 4.64 Primary Articles 22.6 2.97 1.79 0.88 Fuel & Power 13.2 16.65 18.44 16.28 Manufactured Goods 64.2 4.22 4.49 4.21 *WPI numbers are based on new series with 2011-12 as the base year’ ICICIdirect Money Manager 55 December 2018 PRIME NUMBERS

Index of industrial production (IIP) Sector-wise growth rate (%) Categories Oct-18 Sep-18 Aug-18 Weight(%) Mining 14.1 2.7 -3.6 14.4 Manufacturing 1.6 0.8 2.2 77.6 Electricity 1.9 -2.6 3.1 8.0 Overall 3.0 0.6 1.7 100.0 *IIP numbers are based on new series with 2011-12 as the base year’ Currencies and Commodities Currencies 30-Nov-18 31-Oct-18 Change (%) Status USDINR 69.6 74.0 -5.9% Appreciated EURINR 79.2 83.9 -5.7% Appreciated GBPINR 88.7 94.5 -6.1% Appreciated AUDINR 50.8 52.5 -3.2% Appreciated CHFINR 69.8 73.6 -5.2% Appreciated JPYINR 0.6 0.7 -6.0% Appreciated CNYINR 10.0 10.6 -5.7% Appreciated Commodities 30-Nov-18 31-Oct-18 Change (%) Crude ($/barrel) 58.4 73.9 -20.9% Gold ($/ounce) 1,222.5 1,214.8 0.6% Mutual Funds: Category Average Returns Equity Funds Returns (in %) Multicap Midcap Large Cap Small cap ELSS 6 months -4.26 -8.63 -0.44 -14.66 -5.53 1 year -4.80 -11.39 0.35 -17.57 -6.30 3 year 9.70 8.64 9.77 8.64 10.08 5 year 15.85 20.60 14.59 22.43 16.33 Returns as on November 30, 2018

Debt Funds Returns (in %) Liquid Debt ST Ultra ST Debt LT 6 months 6.49 6.42 5.96 5.46 1 year 6.80 5.08 6.13 2.17 3 year 6.95 6.92 7.07 6.05 Returns as on November 30, 2018

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

ICICIdirect Money Manager 56 December 2018

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