We believe that the divergence between Value & Growth stocks continues to prevail. Currently, fundamentally sound value stocks are available at inexpensive valuations & have better earnings visibility. Read our Equity Update for August 2020

1. August 2020
Global Markets July-20
(%)
Current
PE
10 Yr
Average
US 2.4 21.7 15.7
UK (4.4) 31.0 17.8
Japan (2.6) 28.8 19.8
Hong Kong 0.7 10.8 10.8
Singapore (2.3) 14.2 12.2
China 2.9 8.4 8.4
Domestic Markets July - 20
(%)
Current
PE
10 Yr
Average
S&P BSE Sensex 7.7 26.20 20.1
NSE Nifty 7.5 30.20 20.4
S&P BSE Auto 8.0 203.5 19.7
S&P BSE Bankex 1.3 18.9 17.7
S&P BSE Capital Goods (1.0) 26.1 28.4
S&P BSE Consumer
Durables 5.6 40.0 31.8
S&P BSE FMCG 1.7 33.0 39.1
S&P BSE Healthcare 12.4 46.0 28.7
S&P BSE IT 22.6 22.1 19.5
S&P BSE Metals 8.5 14.9 12.0
S&P BSE Mid Cap 5.4 27.6 24.3
S&P BSE Oil & Gas 4.0 15.6 12.1
S&P BSE PSU 0.7 9.9 13.0
S&P BSE Realty (0.4) 61.0 24.2
US Economy: US real gross domestic product (GDP) plummeted a record annual rate of
32.9% in the second quarter of 2020, post a 5% decline in the first quarter. US Federal
Reserve (Fed) decided to keep interest rates unchanged at 0-0.25%. The Fed also
expressed its commitment to maintain its bond purchases, and the array of lending and
liquidity programmes.
Eurozone: The European Central Bank (ECB) kept the main refinancing rate unchanged at
0%. The European Commission will borrow the money from the financial markets, and
distribute just over half of it - €390 billion euros ($446 billion) - as grants to the hardest
hit EU states, with the rest provided as loans.
UK: According to the IMF, the pandemic will hit UK‟s economy much harder than much
of the rest of the world, with the country‟s GDP projected to spiral 10.2% this year. The
UK‟s public debt ratio will likely rise 24% of GDP or more relative to 2019 levels, taking
the debt to 109% of GDP this year.
Japan: The Bank of Japan (BoJ) voted 8-1 to retain the interest rate at -0.1% on current
accounts that financial institutions maintain at the central bank. it expects the Japanese
economy to shrink 4.7% and the consumer price index to fall 0.5% in fiscal 2020 through
March 2021 because of the pandemic.
China: In contrast, the Chinese economy grew 3.2% in the second quarter of 2020 – in
fact, the first major economy to show a recovery from the damage caused by the
pandemic. The bounce-back followed a steep 6.8% slump in the first quarter, which was
the biggest contraction since quarterly GDP records began. The People‟s Bank of China
retained the one-year loan prime rate at 3.85% and the five-year loan prime rate at 4.65%.
Index Performance: Bullish trend persisted in Indian equities for the second
consecutive month in July 2020. The benchmarks S&P BSE Sensex and Nifty
50 rallied 7.71% and 7.49%, respectively, in July 2020 owing upbeat domestic
and global cues.
Inflation: CPI inflation in June 2020 was 6.09% on-year, almost touching the
upper end of the Reserve Bank of India‟s (RBI) target band of 2-6%. CPI food
inflation guided this trend; but had softened to 7.87% in June 2020, from 9.2%
in May 2020 and 11.7% in April 2020.
Domestic Developments:
Headwinds:
A spike in Covid-19 cases back home and globally raised fears of renewed
lockdown restrictions derailed hopes of an economic recovery. The RBI in its
financial stability report said that bad loans could soar due to a rise in
pandemic-led debt burden, estimating the gross non-performing assets (NPA)
ratio to increase to 12.5% by March 2021 from 8.5% in March 2020, thereby
resulting in a pullback in equities. Selling by domestic institutional investors
also weighed on local indices.
Tailwinds: The market started on a positive note, propelled by encouraging
domestic manufacturing activity and Goods and Services Tax (GST) collection
numbers, and reports of de-escalation in border tensions between India and
China. The government‟s approval for a scheme to improve the liquidity
position of non-banking financial companies (NBFCs)/ housing finance
companies (HFCs) through a special purpose vehicle also cheered investors.
Expectations of additional stimulus from the government and better-than-
expected June quarter earnings of some of the corporates boosted sentiments
as well.
EQUITY UPDATE
Data Source: Crisil Research; * Data till July 31, 2020;
Data Source: Crisil Research; * Data till July 31, 2020, PE- Price to Earnings; IMF –
International Monetary Fund
Indian Market Update
Global Market Update

2. Indian Market Update
Earnings Growth (%) FY19 FY20E FY21E
Sensex 13.8 (2.2) 33.7
Macro Indicators Latest
Update
Previous
Update
GDP (YoY%) 3.1%
(4QFY20)
4.7%
(3QFY20)
IIP (YoY%) -34.7% (June) -55.5% (May)
Crude ($ bbl) 43.25 (July 31) 41.15 (June 31)
Core Sector Growth
(YoY%)
-15%
(June 2020)
-23.4%
(May 2020)
Trade Deficit ($ mn) 790
(May 2020)
-3,150
(Apr 2020)
Current Account Deficit
($ bn)
0.6
(4QFY20)
-2.6
(3QFY20)
FII Holding in Indian
Equities (%)#
21.5
(4QFY20)
22.2
(3QFY20)
Flows July - 20 June - 20 May - 20
FIIs (Net Purchases /
Sales) (Rs cr)
7,563 21,832 14,569
MFs (Net Purchases /
Sales) (Rs cr)
(9,195) (3,690) 5,109
Note: # FII hldg includes ADR/GDR (BSE500 Index); Data Source: Crisil Research; * Data till July 31, 2020; CAD: Current Account Deficit; GDP: Gross Domestic Product, IIP: India Industrial
Production FII: Foreign Institutional Investors; MF-Mutual Fund; E- Estimate
Outlook & Triggers
Global market performance was a mixed bag with few economies delivering positive and few delivering negative returns. Indian Equity
Market (Nifty 50 Index) ended on a positive note with 7.5% returns. With many economies facing a continued steep rise in the number
of new COVID-19 cases and vaccine trials still underway, global and domestic markets will continue to remain in a cautious zone.
Among global markets, China outperformed as the economy witnessed some signs of recovery with latest PMI data at 52.8. There was
a steep increase in production across manufacturing firms amidst companies citing greater client demand. US markets delivered
moderate returns with less encouraging macro data – US Q2 GDP witnessed a steep contraction, rise in jobless claims, worries of
expiration of enhanced employment benefits, etc. Eurozone Q2 GDP too shrank by 12.1% from Q1. (Data Source: CRISIL)
Despite a steep rise in new COVID-19 cases, Indian equities delivered positive returns. The gains were led by better than anticipated
Q1FY21 results, significant progress in COVID-19 vaccine trials and normal monsoon. With various geo-political tensions, declining
global and domestic growth, absence of demand, unlock 3.0 on the anvil, a stubborn increase in new COVID-19 cases, markets would
seek further guidance from upcoming RBI MPC meet scheduled in early August and as such any future market gains/loss are expected
to be purely data dependent
India‟s Current Account Balance turned surplus to 0.1% of GDP in Q4FY20. IIP contracted -34.7% YoY in May Vs. -57.6% in April. Fiscal
Deficit touched 83.2% of the annual target in April-June quarter. (Data Source: CRISIL)
Sectors like IT and Healthcare did well whereas Power and Telecom underperformed. (Source: NSE)
*The sector(s)/stock(s) mentioned in this communication do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s). PMI – Purchasing Manager‟s Index
Global Developments:
Tailwinds: Strong global cues, including reports of promising results from
Covid-19 vaccine trials and a stimulus package from the EU, buoyed the market
further. Positive global developments, including the US Fed decision to keep
interest rates at record low levels to support the US economy, and the world‟s
second-largest economy - China - bouncing back to 3.2% growth in the second
quarter 2020, after a 6.8% slump in the first quarter, also augured well for local
indices.
Headwinds: Weak global cues, including the disappointing US economic
growth data, US Fed‟s warning that the pandemic might threaten the modest
economic recovery and resurfacing of US-China tensions dented the market
as well.
Sectoral Impact:
Nevertheless, majority of the S&P BSE sectoral indices ended in the green in
July 2020. S&P BSE IT index was the top sector gainer, surging ~23%,
buoyed by encouraging quarterly results of some sector behemoths. A rally in
the shares of healthcare, metal and auto companies buoyed the market
further. S&P BSE Metal, S&P BSE Healthcare and S&P BSE Auto indices
climbed 12.43%, 8.54% and 7.95%, respectively. Sell-off was seen in the
power, capital goods and realty counters. S&P BSE Power index was the top
sectoral laggard - down 2.28% - followed by S&P BSE Capital goods and S&P
Realty index, which fell 0.96% and 0.36%, respectively.

3. Equity valuation index is calculated by assigning equal weights to Price to Earnings (PE), Price to book (PB), G-Sec*PE and Market Cap to Gross
Domestic Product (GDP)
Our Recommendation
Our Recommendations – Equity Schemes
Pure Equity
Schemes
ICICI Prudential Bluechip Fund
ICICI Prudential Multicap Fund
These Schemes aim to generate capital appreciation through
participation in equities.
Long-Term SIP
Schemes
ICICI Prudential Value Discovery Fund
ICICI Prudential Smallcap Fund
ICICI Prudential Midcap Fund
ICICI Prudential Large & Mid Cap Fund
ICICI Prudential India Opportunities Fund
These schemes aim to generate long term wealth creation across
various market cycles
Asset
Allocation
Schemes
ICICI Prudential Balanced Advantage Fund
ICICI Prudential Equity & Debt Fund
ICICI Prudential Multi-Asset Fund
ICICI Prudential Equity Savings Fund
ICICI Prudential Regular Savings Fund
ICICI Prudential Asset Allocator Fund (FOF)
These schemes aim to benefit from volatility and can be suitable for
investors aiming to participate in equities with low volatility.
None of the aforesaid recommendations are based on any assumptions. These are purely for reference and the investors are requested to consult their financial advisors.
Our „VCTS‟ framework is currently indicating that, Valuations - are driven by select Growth stocks, Cycle – Business Cycle is near
bottom, Trigger would be the trajectory of COVID-19 growth curve and vaccine development and Sentiments – around equity as an
asset class is negative since FPI flows have moderated and past returns have been muted. We recommend that it is time to add
equities in a staggered manner with a long term horizon. We believe maintaining asset allocation in volatile markets would be of
paramount importance in near term.
We believe that the divergence between Value and Growth stocks continues to prevail. Currently, fundamentally sound value stocks are
available at inexpensive valuations, providing good dividend yield and have better earnings visibility. Hence, we recommend investors
to take exposure to schemes with Value bias – ICICI Prudential Value Discovery Fund and Special Situation theme – ICICI Prudential
India Opportunities Fund. Small, midcaps and value oriented stocks over the next few years is recommended for lumpsum investment
for patient long term investors.
We also believe that volatility is expected to prevail for some time as the world comes to terms with the evolving COVID-19 situation
and its economic fallout. As an investor, one must embrace volatility and be cognizant of his/her own asset allocation while investing.
We continue to recommend Dynamic Asset Allocation scheme which aim to benefit from volatility by reducing the overall cyclicality of
the portfolio.
Equity Valuation Index

4. ICICI Prudential Bluechip Fund is suitable for investors who are seeking*(An open ended equity scheme predominantly
investing in large cap stocks):
 Long term wealth creation
 An open ended equity scheme predominantly investing in large cap stocks.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Large & Mid Cap Fund is suitable for investors who are seeking**(An open ended equity scheme investing
in both large cap and mid cap stocks):
 Long term wealth creation
 An open ended equity scheme investing in both large cap and mid cap stocks
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Value Discovery Fund is suitable for investors who are seeking*( An open ended equity scheme following a
value investment strategy):
 Long term wealth creation
 An open ended equity scheme following a value investment strategy.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Equity & Debt Fund is suitable for investors who are seeking*(An open ended hybrid scheme investing
predominantly in equity and equity related instruments):
 Long term wealth creation solution
 A balanced fund aiming for long term capital appreciation and current income by investing in equity as well as
fixed income securities.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Balanced Advantage Fund is suitable for investors who are seeking*(An open ended dynamic asset
allocation fund):
 Long term wealth creation solution
 An equity fund that aims for growth by investing in equity and derivatives.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Multicap Fund is suitable for investors who are seeking*(An open ended equity scheme investing across
large cap, mid cap, small cap stocks):
 Long term wealth creation
 An open ended equity scheme investing across largecap, mid cap and small cap stocks.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Equity Savings Fund is suitable for investors who are seeking*(An open ended scheme investing in equity,
arbitrage and debt):
 Long term wealth creation
 An Open ended scheme that seeks to generate regular income through investments in fixed income securities,
arbitrage and other derivative strategies and aim for long term capital appreciation by investing in equity and
equity related instruments.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Multi-Asset Fund is suitable for investors who are seeking*(An open ended scheme investing in Equity,
Debt and Exchange Traded Commodity Derivatives/ Units of Gold ETFs/units of REITs & InvITs/Preference Shares):
• Long term wealth creation
• An open ended scheme investing across asset classes.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Regular Savings Fund is suitable for investors who are seeking*(An open ended hybrid scheme investing
predominantly in debt instruments):
 Medium to Long term regular income solution
 A hybrid fund that aims to generate regular income through investments primarily in debt and money market
instruments and long term capital appreciation by investing a portion in equity.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Riskometers

5. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
In preparation of the material contained in this document, ICICI Prudential Asset Management Company Limited (the AMC) has used information that is publicly
available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the
AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document
is believed to be from reliable sources. The AMC, however, does not warrant the accuracy, reasonableness and / or completeness of any information. We have
included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar
expressions or variations of such expressions that are “forward looking statements”. Actual results may differ materially from those suggested by the forward
looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic
and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of
India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. The AMC (including its
affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not be liable for any loss, damage of any nature, including
but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any
manner. The recipient alone shall be fully responsible/are liable for any decision taken on this material. All figures and other data given in this document are
dated and the same may or may not be relevant in future. The information contained herein should not be construed as a forecast or promise nor should it be
considered as an investment advice. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other
financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. The sector(s)/stock(s) mentioned in this communication do not
constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s)/stock(s). Past
performance may or may not be sustained in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information
document of the scheme. Please refer to the SID for more details.
The information contained herein is only for the purpose of information and not for distribution and do not constitute an offer to buy or sell or solicitation of any
offer to buy or sell any securities or financial instruments in the United States of America ("US") and/or Canada or for the benefit of US persons (being persons
falling within the definition of the term "US Person" under the US Securities Act, 1933, as amended) or persons residing in Canada.
ICICI Prudential Midcap Fund is suitable for investors who are seeking*(An open ended equity scheme predominantly
investing in mid cap stocks):
 Long term wealth creation
 An open-ended equity scheme that aims for capital appreciation by investing in diversified mid cap companies.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Smallcap Fund is suitable for investors who are seeking*(An open ended equity scheme predominantly
investing in small cap stocks):
 Long term wealth creation
 An open ended equity scheme that seeks to generate capital appreciation by predominantly investing in equity
and equity related securities of small cap companies.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential Asset Allocator Fund (FOF) is suitable for investors who are seeking*(An open ended fund of funds scheme
investing in equity oriented schemes, debt oriented schemes and gold ETFs/schemes) *Investors may please note that they will be
bearing the recurring expenses of this Scheme in addition to the expenses of the underlying Schemes in which this Scheme makes investment.:
 Long Term Wealth Creation
 An open ended fund of funds scheme investing in equity oriented schemes, debt oriented schemes and gold
ETFs/ schemes.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
ICICI Prudential India Opportunities Fund is suitable for investors who are seeking*(An open ended equity scheme following
special situations theme):
 Long Term Wealth Creation
 An equity scheme that invests in stocks based on special situations theme.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Disclaimer