Fund Fact Sheet Unit Linked Insurance Plans – Individual Policyholders October 2019
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Fund Fact Sheet Unit Linked Insurance Plans – Individual policyholders October 2019 Disclaimer: Past performance may or may not be sustained in future and is not a guarantee of future performance. Some of the contents of this document may contain statements / estimates / expectations / predictions, which may be 'forward looking'. The actual outcomes could differ materially from those expressed /implied in this document. These statements, do not intend to provide personal recommendation to any specific individual or any investment needs of an individual. The recommendations / statements / estimates / expectations / predictions are of general in nature and may not take into account the specific investment needs or risk appetite or financial situations of individual clients. Therefore, before acting on any advice or recommendations contained in this document, readers, in their own interest, should consider seeking advice from any authorized and professional investment advisors or financial consultants.’ MarketFirst Monthly Report October 2019 The month witnessed a sharp rise in the equity market indices UK PM Boris Johnson agreed to a new Brexit deal with the EU. whereas the 10 – year government bond yields remained range However, members of the British parliament didn’t approve of rushing bound. Equity markets continued their momentum of the previous through the legislation process for Britain to leave the EU by the 31 month backed by RBI’s continued monetary easing, expectations October deadline, thus extending the departure deadline to 31 January of a relief on the personal income tax front and strong global cues 2020. In the interim, general elections will be held in the UK in whereas fixed income markets were impacted by concerns of December. potential fiscal slippage on account of the recently announced Macro-economic data emanating from the US was mixed with labour corporate tax rate cuts. market (payrolls) data coming below market expectations, Institute for Below are some key pointers which impacted the markets during Supply Management’s (ISM) manufacturing purchasing managers’ the month: index (PMI) indicating a contraction in manufacturing whereas Real GDP growth coming above expectations and the unemployment rate • India’s rank jumped to 63rd position in World Bank's ‘Ease of Doing remaining at multi-decade lows. Business 2020’ report. Domestically, equity market indices built on the momentum gained last • Retail inflation, as measured by the CPI, grew 3.99 percent in month. On the monetary policy front, the RBI continued its monetary September 2019 vs 3.21 percent in August 2019, almost at the RBI's easing as economic data remained subdued with industrial production medium-term target of 4 per cent, after being below the target for data for the previous month as also the core sector data for September thirteen straight months. month showing a de-growth whereas inflation inched up to RBI’ • Factory output, as measured by the IIP, de-grew 1.1 percent in medium term target. Government continued its efforts to spur domestic August vs 4.3 percent growth in July. demand by announcing a 5% hike in dearness allowance for central • Infosys Ltd stock price fell ~16 percent in a single trading session government employees and pensioners. after the company disclosed that it received an anonymous whistle GST collection for September stood at ~ INR 95380 crore (vs ~ INR blower complaint. 91916 crore in August), third straight month of remaining below the • BJP along with its allies retained power in the state of Maharashtra INR 1 lakh crore mark. The revenue figure represents a 5.3 percent and emerged as the single largest party in Haryana in the recently YoY fall. concluded state elections. Movement / Trends in key market variables: Performance of Sectoral indices during October 2019 Present Price Change Particulars Level 3M 6M 1 Year Crude ($ / bbl.) 60.23 -7.58% -17.27% -20.19% Gold ($ / ounce) 1512.99 7.02% 17.88% 24.55% USD / INR 70.9287 3.10% 1.96% -4.09% MSCI Emerging Market Index 1041.98 0.48% -3.45% 9.00% MSCI World Market Index 2233.53 2.10% 2.50% 10.50% Nifty 50 11877.45 6.83% 1.10% 14.35% Equity Market Valuation: Sensex @ 40247 FY19 FY20E FY21E EPS 1390 1975 2320 PE 28.95 20.3 17.34 Source: Select Brokerage Average. Debt Market Data Points: Present Basis Point Change With regards to the institutional flows, FPI were net buyers of equities Particulars Level (%) 3M 6M 1 Year (cash market) worth INR 14656 Cr (USD 2062 mn) and debt worth INR 5055 Cr (USD 713 mn). DIIs too remained buyers of equities worth India 10 year bond yield 6.45 8 (96) (143) INR 4675 Cr (USD 650 mn). AAA – 10 year Spread 1.39 11 26 38 Market Outlook: Spread (India 10 year – US 4.76 40 (14) 5 10 year) Equity Market Outlook: Market Overview: At current levels of approx. 40247, SENSEX is trading at 20.3x Mar 2020 earnings estimate (Select brokerage estimates) of INR 1975. Global equities continued their rise in October supported by rising hopes of a trade deal between the US & China, indications of easing of In light of lower economic growth expectations for major global geopolitical tensions and continued accommodative monetary policy economies alongside negative interest rate scenario, India remains a stance of global central banks. bright spot. Factors such as; strong government with a reformist mindset at the center, fiscal prudence, attractive interest rates vis-à-vis A preliminary trade deal, between the two largest economies, meant to global peers, surplus monsoons for the season, lower crude / be signed in Chile is now expected to be signed at an alternate location commodity prices make India stand out from the rest. Several growth as indicated by US President Trump. The US Fed cut interest rates for oriented economic reform measures would eventually translate into a thirdtimeinarowwiththeFedChairmanstronglyhintingabout‘standing higher economic growth trajectory. pat’ for the time being and at the same time acknowledging the risks facing the global economy. In the near term, global uncertainties and risks such as an escalation of The government has stayed with the borrowing plan for the fiscal, as geopolitical tensions in the Middle East and the ongoing trade war, no- announced in the budget, sending a strong signal that it will try and deal UK Brexit & potential economic slowdown in major global meet the fiscal deficit target despite a sharp cut in corporate tax rate economies would weigh on market sentiments. On the other hand, that is expected to cost Rs 1.45 lakh crore. continued accommodative monetary policy path of global central banks The Federal Reserve in its meeting held this month cut the policy rates accompanied by quantitative easing & fiscal stimulus measures could by 25bps (3rd rate cut in last 4 months) aimed at supporting the remain supportive of markets sentiments. economy due to weakening global growth and trade tensions. Rupee Domestically, recent government announced measures aimed at has been stable during the month trading in the range of around Rs. 71- accelerating domestic demand and expected monetary transmission Rs.71.50. augur well for the domestic aggregate demand in the medium term. Oil prices which have been volatile during the previous month post This along with the recent reduction in corporate taxes could spur attack on the Saudi Arabia Aramco’s oil facilities are now stabilized after private corporate investments. A combination of rising consumer restoration of full oil outputs. Extended monsoon till end of October and demand, private capex and government expenditure may spur cyclone in the western coastal areas have raised concerns about its economic growth in the medium term but maintaining the fiscal balance impact on the food prices and its impact on the inflation going ahead. could remain a challenge for the government. The ongoing Q2FY20 corporate earnings season will also be keenly watched. Gross tax collection continued to be a concern with the impact of corporate tax cut and decline in indirect tax collections as a result of Considering the steep correction witnessed in the broader markets vis- reduction in GST rates and MSME sector refunds. RBI has signaled à-vis large cap peers, an increase in allocation towards quality names accommodative stance going forward aimed at aiding the growth and from the broader markets can be considered. Investments in Dynamic the market can expect further rate cuts in the policy rates By RBI going Asset Allocation Fund would also be a good option. Equity as an asset forward. Impact of Normal monsoon, direct tax & GST collections, final class has proven its ability to deliver superior returns in the long term decision on the issue of overseas sovereign bonds, US & China trade and investors should approach the equity markets with a horizon of at war, oil prices and expected fiscal slippages as a result of cut in the least 5 years. corporate tax might impact bond yields in the near future. We are keeping a modified duration of around 4 years in our Funds Debt Market Outlook: keeping a very close watch on the data points and the investments are The 10-year G-Sec yields closed at the levels of 6.65% against the concentrated in the medium end of the yield curve in the present previous month close of 6.70% and remained rangebound throughout scenario. the month amid fears of extra government borrowings mainly on account of lower tax collections (post corporate tax cut). India’s retail price inflation rate increased to the levels of 3.99% year on year in September 2019 from 3.21% in the previous month. It was the highest inflation rate since July last year as food prices rose to 3 year high. With the inflation below the medium-term target, the Monetary PolicyCommittee(MPC)ofRBIwithanaimofaidingthegrowthhas cumulatively cut the policy rates by 135 bps in the policy rates (5 consecutive rate cuts) maintaining the policy stance to accommodative.