Globally, most asset classes were in the red due to macro concerns, especially volatile crude oil prices, strong USD and rising yields.

Geopolitical events kept investors on tenterhooks and domestic events such as tightened liquidity and State elections added fuel to the fire.

India will continue to see steady economic growth with a marginal improvement in FY20E. The key driver will be secular growth in private consumption, supported by investments, particularly in infrastructure.

Bank balance sheets are getting repaired and credit growth is expected to remain strong as banks step in for Non Banking Financial Companies (NBFCs).Government is continuing its investment in infrastructure development. Utilization has risen to levels where we should start seeing private capex picking up.

After a strong 2017, 2018 was a year of consolidation in the market. The large cap Nify index fell around 8% from its peak while the midcap and smallcap indices fell ~20% and ~35% respectively.

Outlook

Looking forward, in 2019, it is expected to be on a steady wicket and anticipate the macro backdrop to become supportive of markets.

Themes of interest for 2019 are expected to be Financials i.e. Private banks, Corporate banks and select NBFCs, and Consumption i.e. Consumer and Consumer Discretionary

Source: ABSLAMC Research.

Portfolio Action

Aditya Birla Sun Life Equity Fund (An open ended equity scheme investing across large cap, mid cap, small cap stocks):

An Indian multinational pharmaceutical companywas a new entrant in the portfolio available at attractive valuations post the recent correction in the stock price. We continue to increase exposure to corporate banks, and marginally added an Indian car manufacturing company in the portfolio, given its strong leadership in farm equipment segment (FES), revival in rural growth, a slew of new launches couple with reasonable valuations.

Aditya Birla Sun Life Small Cap Fund (formerly known as Aditya Birla Sun Life Small & Midcap Fund) (An open ended equity scheme predominantly investing in small cap stocks):

We continue to increase exposure to one of the leading players in the road sector construction, with strong financials available at attractive valuations. An Indian public sector bank was a new entrant to the portfolio available at reasonable valuations, expected to benefit with higher growth earnings, as stress in large corporates is abating.

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 has exposure to around 60 high quality stocks with Banking/Financials, Software, Consumer Durables/Non-durables, Pharma, and Cement being few key sectors. An Indian private sector bank was a new entrant in the portfolio under banking sector. Increased exposure to an Indian consumer electrical equipment manufacturing company.

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.

All the Data mentioned above is as on 31^st December 2018