Post the elections, Indian equity markets touched an all-time high in the beginning of June. However, after the announcement of the Union Budget for FY19-20, the largecap Nifty index is down 10%, while the midcap and smallcap indices are down 13-16%.

There are growing concerns regarding a slowdown in consumption, especially in the Auto sector. Government seems to have realized the magnitude of Stress and is meeting Industry experts for possible solutions.

There have been sizeable FPI outflows in July due to an increase in the tax surcharge for some of the FPIs which has impacted sentiment.

Indian bond yields have softened in the recent past and earnings yield of equity has gone up with steep correction in stock prices (even after future earnings estimates getting revised downwards).

Outlook

India’s structural growth story remains intact (demographic dividend) and has been reinforced by the progressive reforms initiated by the government.

Select themes that we are participating in are Consumption (i.e. Consumer and Consumer Discretionary) and Financials (i.e. Private Banks, Corporate Banks and select NBFCs), and Industrials (i.e. Capital Goods).

(Source: ABSLAMC Research, Bloomberg)

Portfolio Action

Aditya Birla Sun Life Balanced Advantage Fund (An open ended Dynamic Asset Allocation fund):

During the month, added an Indian cement company and an Indian public sector oil and gas company. Increased weight in a private sector bank. Current overweight Cements, Metals, Consumer Goods and underweight Energy, IT and Auto.

Aditya Birla Sun Life Focused Equity Fund (formerly known as Aditya Birla Sun Life Top 100 Fund) (An Open ended Large cap Equity Scheme investing in maximum 30 stocks):

The fund is overweight on Financials, Pharma and Media while Underweight on Energy, IT and Auto. Increasing weights in Oil & Gas sector by adding a public sector oil and gas company also increased weight in an Indian multinational conglomerate.

Aditya Birla Sun Life Equity Advantage Fund (formerly known as Aditya Birla Sun Life Advantage Fund) (An open ended equity scheme investing in both large cap and mid cap stocks):

The fund is Overweight on Financials, Media and Cement while being underweight on IT, Auto & Energy. Continue to add exposure to an Indian Hypermarket chain & hospital chains. Exited an information technology service and consulting company.

All the Data mentioned above is as on 31st July 2019.

THE SCHEME(S) MAY OR MAY NOT HAVE ANY PRESENT OR FUTURE POSITIONS IN THESE SECTORS

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