After a strong start to the year in January 2019, global equity markets continued the positive momentumin February buoyed by a decisively dovish Fed coupled with optimism on resolution of US-China trade talks.

Considering these developments, Emerging Markets saw Foreign Portfolio Investment (FPI) inflows in February with India alone seeing inflow of USD 2.4 Bn in Equities.

With inflation consistently undershooting estimates and well below the RBI’s target of 4%, the RBI cut its policy rate by 25 bps and hinted at additional rate cuts this year which should boost the economy.

Mid and small cap indices were down ~1-3% in Feb and continued to underperform the large cap index. Confidence is coming back in the markets leadingto the rally seen in mid-and-small cap stocks.

Outlook

We remain constructive on India’s overall economic growth going forward and investors may continue to build equity exposure for the long term.

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

Source: ABSLAMC Research, Bloomberg

Portfolio Action

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 55 stocks with Banking/Financials, Software, Consumer Durables/Non-durables, Pharma, Cement being few key sectors. Continue to add exposure to a Housing and Rural finance company, which may have access to lower cost funding & larger lending platform post-merger.

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):

Reallocation done under financial space during the month of February 2019, by trimming position in major private sector bank and adding stake in another private sector bank, mid-size bank. We also increased weight in an electrical equipment manufacturing company in appliance segment (consumer durables),

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

During the month, exited position in an Indian conglomerate and reallocated exposure to an Indian financial and investment service provider with a better growth outlook.Increased stake in an Indian Public Sector Undertaking engaged in the business of generation of electricity, with an expectation of reasonable upside over medium to long term horizon.

All the Data mentioned above is as on 28th February 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