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  • The Asset

    Factsheet March 2017

  • Index

    Fund Manager Commentary

    HSBC Equity Fund

    HSBC India Opportunities Fund

    HSBC Midcap Equity Fund

    HSBC Infrastructure Equity Fund

    HSBC Tax Saver Equity Fund

    HSBC Dividend Yield Equity Fund

    HSBC Emerging Markets Fund

    HSBC Brazil Fund

    HSBC Managed Solutions India - Growth

    HSBC Managed Solutions India - Moderate

    HSBC Managed Solutions India - Conservative

    Fund Managers - Equity

    Fund Manager Wise Comparative Performance of Equity Schemes

    HSBC Monthly Income Plan

    HSBC Dynamic Fund

    HSBCAsia Pacific (Ex Japan) Dividend Yield Fund

    HSBC Income Fund - Investment Plan

    HSBC Income Fund - Short Term Plan

    HSBC Cash Fund

    HSBC Ultra Short Term Bond Fund

    HSBC Flexi Debt Fund

    Fund Managers - MIP & Debt

    Comparative Performance of Debt Schemes

    Section II - How to read Factsheet

    HSBC Global Consumer Opportunities Fund

    SIP Performance of Equity Schemes

    Fund Manager Wise

    01

    05

    06

    07

    08

    09

    10

    11

    12

    13

    14

    15

    16

    17

    19

    21

    26

    31

    32

    33

    34

    35

    36

    37

    38

    40

    18

  • -

    Equity markets surged higher

    Equity Market Outlook

    Equity market indices surged higher on the back of a resounding victory for the ruling party in the key state elections, combined with strong FII

    inflows. BSE Sensex and NSE CNX Nifty traded strong during the month and were up 3.1% & 3.3% respectively, while the mid and small cap

    indices outperformed the large cap indices for the third month running. BSE Midcap and Smallcap indices were up 4% and 5.4% respectively

    during the month.

    Bhartiya Janata Party (BJP) won a landslide victory in the assembly elections for the key state of Uttar Pradesh, an outcome that was keenly

    followed by the market participants. BJP and its allies formed governments in 4 out of 5 states that went to polls during this assembly election

    cycle.

    Goods and Services Tax (GST) is now closer to reality with the Lok Sabha approving four supplementary legislations, though clarity on thefinal products classification under the four different tax slabs is still awaited. As part of finalising the operational aspects, the GST Counciltentatively approved four sets of rules on aspects like invoice and payment apart from the five sets of rules approved earlier. The governmentis working with an implementation date of 01 July 2017.

    It was a strong month on the Foreign Institutional Investors (FII) flows front with about USD 5.14 bn of net inflows, recording a 77- month highon the monthly net inflows figure. The YTD net inflows from the FII segment now stands at an impressive figure of about USD 6.69 bn. Therewas a reversal in the net inflows trend from the Domestic Institutional Investors (DII) segment though, as they turned net sellers after 6consecutive months of net inflows.

    The INR saw further appreciation versus the USD (up 2.8% MoM) and closed at 64.85 to the USD, a level last seen during Oct / Nov 2015period. From the recent peak levels seen during Nov 2016, the INR has seen an appreciation of about 6%.

    FII segment saw substantial net inflows, registering a multi-year high on the monthly inflows during March 2017. FIIs net bought equities

    worth about USD 5.14 bn during the month and this has taken their YTD tally to about USD 6.69 bn of net inflows. The Domestic Institutional

    Investors (DIIs) on the other hand continued to see a similar trend of net inflows from MFs and outflows from the Insurers. However, the net

    inflows trend seen from the DIIs reversed after 6 months and the segment saw net outflows to the tune of about USD 654 mn, as the domestic

    insurers saw net outflows of about USD 1.3 bn. The MFs on the other hand saw net inflows of about USD 651 mn for the month. On YTD basis,

    MF segment has seen net inflows of about USD 1.72 bn, while the insurance segment has seen net outflows to the tune of about USD 1.54

    bn.

    On expected lines, the US federal reserve in its March meeting decided on a 25 bps rate hike, that took the federal funds rate range between

    0.75% - 1%. This was the third rate hike since December 2015 and signals from the meeting suggested that there could be two more rate

    hikes in 2017. March saw global equities edge higher for a fifth straight month with the MSCI AC World Index rising by 0.8% (this index is up

    5.9% on YTD basis), supported by a continuation of upbeat economic data releases, and a slightly more dovish tone from the March Federal

    Reserve meeting than expected. Within Developed Markets, US equities traded flat during the month, on the back of the uncertainty over the

    policy outlook under the new administration, as well as lower oil prices due to renewed supply glut concerns. Lack of clarity in the US policy

    also pushed the US dollar lower against most major currencies.

    External

    Global Economic Scenario

    Institutional Fund Flows

    After a strong performance during the first quarter of the calendar year, equity markets are currently trading slightly above the historicalaverages. The BSE Sensex has gained an impressive 11.2% on a CYTD basis, while the Nifty has moved up by 12.1% for the same period.Both BSE Midcap & Smallcap indices have outperformed the market indices and are up 17.2% & 19.8% respectively for the Jan-Mar 2017quarter. Looking ahead, the key factors to consider would be the GST implementation timeline, the progress of the monsoon (there has beena prediction of a below normal monsoon this year by a private agency) and how the 4QFY17 earnings season will pan out given that themarkets are currently trading slightly above the historical averages.

    Moving into FY 2018, we expect a continuation of the economic recovery process domestically, led by better margins due to lower input andinterest costs and followed by a volume recovery. Government led investment spending and urban consumption are likely to lead with privatesector investments and rural consumption contributing later. On the policy front, Government has done its fair bit to improve the investmentenvironment and the GST, a mega tax reform is now closer to reality. The ruling party at the centre has done well in the recent state assemblyelections, especially in the key state of Uttar Pradesh and this is likely to provide it with the political capital to pursue and implement economicreforms more aggressively. Risks are in the form of market valuations trending above historical averages and the chances of a deficientrainfall during this monsoon season. External news flow would also influence market performance in the near term, as the recent rally in themarkets was supported by strong FII inflows.

    Fund Manager Commentary

    01

    Source: Bloomberg; Bombay Stock Exchange (BSE)

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    Sensex Nifty BSE200 BSE500 BSE

    MidCap

    BSE

    SmallCap

    Indices Performance - Mar 2017

  • -5.0%

    0.0%

    5.0%

    10.0%

    15.0%

    Ja

    n/1

    3

    Mar/

    13

    May/1

    3

    Ju

    l/13

    Sep

    /13

    No

    v/1

    3

    Ja

    n/1

    4

    Mar/

    14

    May/1

    4

    Ju

    l/14

    Sep

    /14

    No

    v/1

    4

    Ja

    n/1

    5

    Mar/

    15

    May/1

    5

    Ju

    l/15

    Sep

    /15

    No

    v/1

    5

    Ja

    n/1

    6

    Mar/

    16

    May/1

    6

    Ju

    l/16

    Sep

    /16

    No

    v/1

    6

    Ja

    n/1

    7

    Index of Industrial Production (IIP)

    IIP YoY Growth (New Series; base 2004- 05)

    Economic Events and Data

    Index Of Industrial Production (IIP)

    RBI Policy Status Quo; policy corridor narrowed

    While RBI retained the policy rate (Repo rate) at 6.25% with a neutral stance, the main action was narrowing the policy corridor to +/- 25bp

    from +/- 50 bps on the consideration that this would bring the overnight rates closer to policy rate. Recent surplus liquidity situation has

    resulted in overnight rates being materially below the call rates. Liquidity is expected to be managed with a mix of various instruments such as

    reverse repos, term repos, Open Market Operations (OMOs) and Cash Management Bills (CMBs). Policy action has been driven by

    persistently higher core Consumer Price Index (CPI) with upside risks driven by El Nino, impact of 7th Pay commission, loan waivers and

    commodity prices and gradual closing of output gap with economic growth.

    IIP - India - IIP grew by 2.7% in January versus the previous reading of -0.4% reconfirming the transitory impact of demonetisation. This is

    primarily lead by capital goods and consumer durables production. Capital goods saw a growth of 11.2% in January and consumer durables

    also bounced back to a growth of 8.1% MoM.

    Marginal increase in CPI inflation, demonetisation impact on veg prices continues

    CPI - India

    WPI India

    Trade deficit Narrows driven by exports

    - CPI accelerated to 3.65% as compared to 3.2% seen in January. The increase is contributed by sugar and fruits. Vegetables

    inflation seems to have bottomed. Commodity prices have also contributed to higher inflation. Core inflation is marginally lower to 4.75% as

    compared to 4.9% in the previous months.

    - WPI accelerated to 6.55% as compared to 5.2% in January. The pickup is broad based across all components. Food inflation

    was led by fruits and vegetables indica

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