MUTUAL FUNDS 23 Sep 2016

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Monthly Report Sep 2016

Prologue: The month end Assets Under Management (AUM) of Indian Mutual Fund industry witnessed a M-o-M rise during August by 2.97% or Rs. 45,080 crore to Rs. 15,63,177 crore
against Rs. 15,18,097 crore as seen in the previous month (Source: AMFI Monthly data).
The maximum growth among MF categories during the month was seen in the AUM of Balanced Funds category by 7.77%, while the minimum growth was witnessed in the AUM of FoF
overseas category by -4.76%.
The total mutual fund industry saw net inflows of Rs. 25,332 crore while the equity categories saw net inflows of Rs. 6,103 crore during last month.

Net Flow during the month of August 2016 - Category wise AUM as on Changes in AUM
Sales on Existing Redemptions / Net Inflow / Aug 31, 2016 July 31, 2016 Including flows Including flows Excluding flows Excluding flows
Segment NFO Sales
Schemes Repurchases Outflow (Crs) (Crs) (Crs) (%) (Crs)* (%)*
Income 1,812 75,990 49,345 28,457 7,04,240 6,69,933 34,307 5.12 5,850 0.87
Infrastructure Debt Fund 0 1,795 1,782 13 0.73 13 0.73
Equity 20,501 14,398 6,103 4,16,814 4,01,469 15,345 3.82 9,242 2.30
Balanced 3,878 1,146 2,732 53,881 49,994 3,887 7.77 1,155 2.31
Liquid 13,24,461 13,37,643 -13,182 2,89,707 3,00,995 -11,288 -3.75 1,894 0.63
Gilt 1,126 1,095 31 16,149 15,875 274 1.73 243 1.53
ELSS - Equity 812 410 402 50,604 49,064 1,540 3.14 1,138 2.32
Gold ETFs 18 69 -51 6,349 6,499 -150 -2.31 -99 -1.52
Other ETFs 2,085 1,193 892 21,698 20,449 1,249 6.11 357 1.75
FOF Overseas 34 86 -52 1,940 2,037 -97 -4.76 -45 -2.21
Total 1,812 14,28,905 14,05,385 25,332 15,63,177 15,18,097 45,080 2.97 19,748 1.30
* Mainly represents approximate MTM gain / loss over the month.

Equity Markets: In the month of August 2016, the S&P BSE Sensex and CNX Nifty gained 1.4% and 1.7% respectively. The BSE Sensex jumped to a 13-month high in line with the
global markets as automakers and consumer companies rose amid speculation payment of past dues to government staff soon will stoke sales of cars and appliances. Gains in
emerging-market stocks, following a rally in US equities to near a record, aided sentiment and put the Sensex on course for its sixth monthly increase. Even the RBIs growth projection
lifted domestic investor sentiments. The Sensex has risen about 28% from the low in February as capital flows accelerated amidst a wave of global policy easing and the forecast of a
good monsoon promised a spurt in rural incomes after a two-year drought.

Debt Markets: The yields of the domestic bonds inched down significantly during the month of Aug 2016. The benchmark, 7.59% GS 2026 bond yield closed at 7.11%, down by 5 bps
over the last month. Some of the factors that influenced the market sentiments negatively during the month included Profit booking, caution ahead of RBIs monetary policy meeting,
ahead of the Jul retail inflation data, weekly auctions, caution ahead of the U.S. Federal Reserve chairs speech at the annual central bankers meeting, favourable comment from the
Federal Reserve chief on hiking rates, etc. Major factors that influenced the market sentiments positively during the month included hopes that the GST Bill would be approved in the
Parliament, approval from Rajya Sabha for GST bill, announcement of Open Market Operation by the RBI, RBIs move to ensure surplus cash in the system, strong response for weekly
auctions, strong demand from foreign investors, g announcement of auction for a new 10-year paper, etc.

Liquidity conditions improved significantly in last 3 months and have been positive during the last 2 months. As against ~Rs 12,297 crs of average liquidity net surplus placed with RBI
during the month of July through various sources (Liquidity Adjustment Facility, export refinance, marginal standing facility and term repos/reverse repos), ~Rs. 28,251 crs of liquidity
was net surplus placed with RBI during the month of August. Wholesale inflation came in at 3.55% (provisional) for the month of July, 2016.

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Categories Month-end Corpus Detailed: Liquidity Provided by the RBI (Rs. Mn):
The AUM for equity category rose during Aug month by 3.82% MoM to Rs.4,16,814 crore mainly
on the back of notable inflows. In the month of August 2016, the S&P BSE Sensex and CNX Nifty
gained 1.4% and 1.7% respectively. Gains in emerging-market stocks, following a rally in US
equities to near a record, aided sentiment and put the Sensex on course for its sixth monthly
increase. Even the RBIs growth projection lifted domestic investor sentiments. The Equity
category saw net inflows of Rs. 6,103 crore during the month. The category accounts for 27% of
the overall assets of the Indian MF industry.

The AUM of Other ETFs category rose during the month by 6.11% to Rs. 21,698 crore. The
category witnessed net inflows of Rs. 892 crore. It is worth noting that EPFO has started
investing in the stock market through ETFs to invest 5-15% of its incremental corpus. It is
estimated that EPFO will invest a minimum Rs. 400-500 crore every month in the mentioned
ETF. As on June 30, the EPFO invested Rs 7,468 crore (Rs 74.68 billion) in two index-linked ETFs.
Relationship between Net flows in Equity category Vs. Nifty Index:
The AUM of Balanced category rose the most during last month. The category witnessed net
inflows of Rs. 2,732 crore during last month. The recent volatility seen in the domestic equity
markets induced the investors to shift to moderate risk bearing instruments such as Balanced
funds. The AUM of the category rose by 7.77% to Rs. 53,881 crore.

The AUM of the ELSS category witnessed a rise by 3.14% to Rs. 50,604 crore during the month.
The category saw net inflows of Rs. 402 crore during the month.

The AUM of FOF Overseas category fell the most during the month by 4.76% and stood at Rs.
1,940 crore. The category saw net outflows of Rs. 52 crore.

The AUM of Gilt category rose during last month by 1.73% to Rs. 16,149 crore. The category saw
net outflows of Rs. 31 crore during the last month. Trend in mutual Funds folios (Crs in numbers):

The AUM of liquid funds fell during last month by 3.75%. The category witnessed net outflows of
Rs. 13,182 crore. The AUM of the category stood at Rs. 2,89,707 crore.

The corpus of the Gold ETF category fell during last month by Rs. 150 crore or 2.31% to Rs. 6,349
crore. The category saw net outflows of Rs. 51 crore during the month. Gold Prices fell to its
two-month low as concerns over the possibility of an interest-rate increase drove nervous
investors to close out bets on the precious metal. Gold in INR term fell 0.5% during the last
month.

Funds mobilized by 20 newly launched schemes (All FMPs) in Aug stood at Rs. 1,812 crore.

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Overall MF folios saw an increase for the 27th consecutive month. As of Aug 2016, the total Average Quarter end AUM:
number of equity folios (Equity + ELSS) stood at 3.72 crore while the overall folios of the MF
industry stood at 4.98 crore. During the month, the overall MF folios saw increase in numbers by
5.6 lakh while the equity folios saw an increase of 3.1 lakh folios.

FII & MF Activity:

On the equity side, Mutual funds were net buyers during Aug by buying net equities of Rs. 2,717
crore. They were the net sellers of Rs. 33.5 crore in July 2016. The net outflows during last
month was a result of gross purchases Rs. 29,723 crore and gross sales Rs. 27,006 crore.

On the debt side, mutual funds were net buyers in Aug by buying debt net of Rs. 4,093 crore.
They were the net buyers in July as they bought the debt securities to the tune of Rs 19,653
crore. The net inflow during the month was a result of gross purchases of Rs. 1,27,545 crore and
gross sales of Rs. 1,23,452 crore. MFs net investment in Equity and Debt during Aug 2016 (Rs in Crs):

FIIs were net buyers in equity market as they bought securities to the tune of Rs. 9,786 crore in
Aug 2016 after being net buyers of Rs. 11,339 crore in July 2016.

FIIs turned net sellers in the debt side as they sold to the tune of Rs. 2,949 crore during the
month of Aug 2016. The net inflow during the last month was a result of gross purchases Rs.
25,151 crore and gross sales Rs 28,000 crore. They were net buyers in the month of July 2016
bought debt securities for Rs. 6,965 crore.

Bulk Deals:
Company Name Date Exchge MF Price VOLUME DEAL
Health.Global 8/22/2016 BSE Reliance MF 210.00 1260104 BUY
VOLTAMP TRAN 9/01/2016 BSE Reliance MF 775.00 659200 BUY
VOLTAMP TRAN 9/01/2016 BSE ICICI Pru MF 775.00 659537 SELL
Triveni Turbine 9/02/2016 BSE FT MF 125.00 2096339 BUY
Advance. Enzyme. 8/01/2016 NSE Reliance MF 1229.43 200000 BUY
Astra Microwave 8/01/2016 NSE Reliance MF 120.05 700000 BUY
Atul 8/01/2016 NSE HDFC MF 1925.00 400000 BUY
Health.Global 8/22/2016 NSE Reliance MF 210.00 1296901 BUY
Agro Tech Foods. 8/23/2016 NSE Reliance MF 525.00 309000 SELL
GHCL 9/01/2016 NSE FT MF 257.40 1174893 BUY
Nava Bharat Vent 9/15/2016 NSE Reliance MF 112.00 443420 BUY
PRICOL LTD. 9/09/2016 NSE UTI MF 120.00 1269050 BUY

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Indices & asset class returns (%) across the globe for the month of Aug 2016:

MF Categories returns (%) during the month of Aug 2016:

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Toppers and Laggards for the month based on simple average basis:
Category:
Most of Mutual Fund categories posted positive returns during last month (barring Equity Infotech, Pharma and Gold ETF). On the equity oriented categories side, the Equity
Diversified sub categories such as Large-cap, Mid-cap and Multi-cap categories outperformed the key indices Sensex and Nifty. They posted returns of +2.59%, +2.71% and 3.13%
respectively. In the month of August 2016, the S&P BSE Sensex and CNX Nifty gained 1.4% and 1.7% respectively. Equity Infotech category was the bottom performer during last
month posting -2.50% return. Equity - banking category was the top performer during last month as the category posted 4.19% of returns during last month. Among Debt categories,
Gilt LT Funds outperformed other by posting returns of 1.34%.

Schemes:
Baroda Pioneer PSU Equity Fund (G), Mirae Asset China Advantage (G) and DSP BR Natural Resources & New Energy Fund (G) were the top performing schemes during the month. They
posted 7.3%, 6.8% and 6.3% of absolute returns respectively. Kotak World Gold Fund, DSP BR World Gold Fund and DSP BR World Mining Fund were least performers as they registered
returns of -14.4%, -13.2% and -7.8% respectively.

Top 3 & Bottom 3 performers from MF categories during the month (based on Simple average returns):
The following charts depict the top three (Sky blue) and the bottom three (Orange) performers in each category in Aug 2016.

Large-cap: Multi-cap:

Mid-cap: ELSS:

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Equity Banking:
Equity Infrastructure:

Hybrid - Equity: MIP - LT:

Liquid: Income:

Short term Income:

Gilt:

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Asset Weighted average returns (%) (Trailing) for MF categories over periods:
Category Name 1 Month Absolute 3 Months Absolute 6 Months Absolute 1 Year CAGR 3 Years CAGR 5 Years CAGR
Arbitrage Funds 0.65 1.85 3.50 6.38 6.98 7.38
Balanced - Debt Oriented 0.82 3.22 7.36 4.02 1.67 0.79
Balanced - Equity Oriented 2.16 9.08 24.47 12.53 22.94 14.60
Equity - Auto 4.05 12.82 32.69 11.12 50.68 30.68
Equity - Banking 4.72 18.69 49.78 24.15 27.63 14.66
Equity - Diversified - Dividend Yield 3.25 10.91 28.71 9.46 20.71 11.50
Equity - Diversified - Infrastructure 2.54 13.45 35.79 10.23 30.61 11.33
Equity - Diversified - LARGE 2.73 11.14 30.51 11.52 16.17 9.67
Equity - Diversified - MID 3.35 13.50 32.79 14.43 28.70 16.63
Equity - Diversified - MNC 0.07 7.05 20.51 4.36 34.93 23.19
Equity - Diversified - MULTI 3.04 12.01 30.50 12.54 21.70 13.87
Equity - Diversified - SMALL 3.25 13.62 37.19 19.98 46.54 24.66
Equity - FMCG 1.81 11.54 27.80 16.64 19.54 9.63
Equity - Infotech -2.42 -5.98 5.11 -4.00 13.78 15.26
Equity - Pharma 0.12 7.44 8.82 -4.67 26.49 22.41
Equity - Tax Planning 2.09 10.36 26.14 9.09 24.47 15.40
ETFs - Gold ETFs -1.50 7.86 3.59 17.17 -2.65 2.09
Floating Rate Income Funds 0.73 2.34 4.85 8.69 9.26 9.12
Fund of Funds - FOF - Debt 1.04 4.15 8.63 9.41 10.87 9.24
Fund of Funds - FOF - Equity 1.66 6.73 16.57 11.23 7.74 5.14
Fund of Funds - FOF - Gold -0.28 7.48 5.78 14.74 -2.05 0.48
Gilt Funds - Medium & Long Term 1.23 5.01 8.73 10.41 9.64 7.92
Gilt Funds - Short Term 1.29 5.10 9.05 12.53 11.83 9.93
Global Funds -0.20 7.04 17.57 15.32 8.77 4.86
Income Funds 1.14 4.09 7.56 10.20 9.66 7.87
Liquid Funds 0.44 1.29 2.78 5.53 6.12 6.10
Monthly Income Plans 1.45 6.28 13.22 11.28 14.74 10.98
Short Term Income Funds 0.89 3.05 5.95 9.49 9.40 8.57
Ultra Short Term Funds 0.73 2.34 4.82 8.55 8.62 8.45
Note: NAV value as of Aug 31, 2016.

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Micro Analysis (period between July 2016 and Aug 2016):
New stocks bought in from primary/secondary market by at least three mutual funds during Aug 2016:
Mutual Fund
BNP Paribas Mutual Fund
DHFL Pramerica Mutual Fund
Invesco Mutual Fund
L&T Mutual Fund
HSBC Mutual Fund
Invesco Mutual Fund
LIC Mutual Fund
DSP BlackRock Mutual Fund
JM Financial Mutual Fund
L&T Mutual Fund
Mirae Asset Mutual Fund
IDFC Mutual Fund
Invesco Mutual Fund
JM Financial Mutual Fund
Birla Sun Life Mutual Fund
ICICI Prudential Mutual Fund
IDFC Mutual Fund
Stocks exited totally by at least three Mutual Funds during Aug 2016:
Mutual Fund
BOI AXA Mutual Fund
Edelweiss Mutual Fund
Kotak Mahindra Mutual Fund
Escorts Mutual Fund
JM Financial Mutual Fund
L&T Mutual Fund
BNP Paribas Mutual Fund
Tata Mutual Fund
UTI Mutual Fund
Baroda Pioneer Mutual Fund
Canara Robeco Mutual Fund
DSP BlackRock Mutual Fund
AXIS Mutual Fund
Escorts Mutual Fund
HDFC Mutual Fund
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Stock
Cadila Healthcare Ltd
Exide Industries Ltd
GAIL (India) Ltd
Godrej Consumer Products Ltd
Housing Development & Infrastructure Ltd
Stock
Advanced Enzyme Technologies Ltd
Ajanta Pharma Ltd
Bata India Ltd
Bharat Financial Inclusion Ltd
Castrol India Ltd
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Mutual Fund Stock
HSBC Mutual Fund
Invesco Mutual Fund Muthoot Finance Ltd
Union KBC Mutual Fund
Edelweiss Mutual Fund
IDFC Mutual Fund NHPC Ltd
Invesco Mutual Fund
Edelweiss Mutual Fund
Invesco Mutual Fund
PTC India Ltd
L&T Mutual Fund
LIC Mutual Fund
Canara Robeco Mutual Fund
Edelweiss Mutual Fund Tata Chemicals Ltd
Invesco Mutual Fund
Canara Robeco Mutual Fund
HDFC Mutual Fund
TCI Express Ltd
IDFC Mutual Fund
PRINCIPAL Mutual Fund
Mutual Fund Stock
Baroda Pioneer Mutual Fund Max India Ltd
Motilal Oswal Mutual Fund
Sundaram Mutual Fund
JP Morgan Mutual Fund MBL Infrastructures Ltd
L&T Mutual Fund
Reliance Mutual Fund
Birla Sun Life Mutual Fund MphasiS Ltd
Escorts Mutual Fund
Taurus Mutual Fund
Baroda Pioneer Mutual Fund Muthoot Finance Ltd
Canara Robeco Mutual Fund
SBI Mutual Fund
Baroda Pioneer Mutual Fund Persistent Systems Ltd
DSP BlackRock Mutual Fund
Escorts Mutual Fund
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JM Financial Mutual Fund Birla Sun Life Mutual Fund Power Finance Corporation Ltd
Escorts Mutual Fund Crompton Greaves Consumer Electrical Ltd Edelweiss Mutual Fund
LIC Mutual Fund Escorts Mutual Fund
SBI Mutual Fund DSP BlackRock Mutual Fund Rural Electrification Corporation Ltd
Escorts Mutual Fund Gulf Oil Lubricants India Ltd Invesco Mutual Fund
ICICI Prudential Mutual Fund L&T Mutual Fund
Sundaram Mutual Fund PRINCIPAL Mutual Fund
Baroda Pioneer Mutual Fund HCL Technologies Ltd Tata Mutual Fund
Canara Robeco Mutual Fund UTI Mutual Fund
Escorts Mutual Fund Birla Sun Life Mutual Fund Torrent Power Ltd
Indiabulls Mutual Fund Edelweiss Mutual Fund
Edelweiss Mutual Fund Hexaware Technologies Ltd Escorts Mutual Fund
Escorts Mutual Fund BNP Paribas Mutual Fund Welspun India Ltd
LIC Mutual Fund Edelweiss Mutual Fund
Edelweiss Mutual Fund Mahindra & Mahindra Financial Services Ltd L&T Mutual Fund
IDFC Mutual Fund PRINCIPAL Mutual Fund
JM Financial Mutual Fund

Comments on Fund activities:

Funds have bought some stocks belonging to sectors like Pharma, Power Generation, Finance, Personal care to name a few.

Funds have sold some stocks belonging to Chemicals, Leather, Textiles, Finance, Pharma to name a few.

Among top AMCs having larger AUM, IDFC, Reliance and DSP BR Mutual Funds did the maximum additions and exit of stocks during the month. These funds have made fresh additions
and total exits in 29, 18 & 16 stocks respectively.

Motilal, Mirae and HSBC Mutual Funds did the least churning in terms of making fresh additions and total exits. These funds made fresh additions and total exits from 3, 4 & 4 stocks
respectively during the period.

Most common stock among Top 5 holdings in the portfolio of All 221 Equity Diversified Schemes (in terms of corpus) HDFC Bank, Infosys, ICICI Bank, SBI & ITC Ltd.

Most common stock among Top 10 holdings in the portfolio of All 221 Equity Diversified Schemes (in terms of corpus) In addition to the above, IndusInd Bank, L&T, RIL, Maruti
Suzuki Ind and Yes Bank Ltd.

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NEWS:

Mahendra Kumar Jajoo appointed as Head - Fixed Income of Mirae Asset MF: Mirae Asset Mutual Fund has appointed Mr. Mahendra Kumar Jajoo as Head - Fixed Income & Key
Personnel with effect from August 22, 2016. Mr. Jajoo is ACA, ACS, CFA and has over 25 years of experience in the field of financial services including 11 years of experience in Fixed
Income funds management.

NSE to move to web-based system for MF trade from January 2017: NSE has decided to shift its mutual fund services platform to web-based system from January 2 next year. Currently,
the bourse is operating the mutual fund platform through its fully automated screen trading system - National Exchange for Automated Trading (NEAT).

Merger of Reliance MF and Goldman Sachs MF schemes: Goldman Sachs MF has 12 schemes in operation and are transferred to Reliance MF. Taking forward its deal to acquire
Goldman Sachs mutual fund business in India, Reliance Capital Asset Management has begun the process of merging the schemes of global giant with itself.

Analyst: DhuraivelGunasekaran (dhuraivel.gunasekaran@hdfcsec.com) Source: NAVIndia.com& ACEMF

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HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email:
hdfcsecretailresearch@hdfcsec.com.

Disclaimer: Mutual Funds investments are subject to risk. Past performance is no guarantee for future performance.This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or
copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and i t should not be relied upon as
such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional
Clients.

This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams
(Institutional, PCG) of HDFC Securities Ltd. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475.

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