In Focus with Tushar Pradhan


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Market Outlook
In Focus with Tushar Pradhan

February 2022

Focus on earnings growth, eye on volatility

Equity Market update

• 2022 started in a volatile manner, with equity markets rising in the first half

but this brief phase being halted by a sharp correction in the broader market from 17 January onwards followed by a marginal recovery towards the end of the month. Though the market benchmark indices were only down marginally (-0.4% & -0.1% for BSE Sensex & CNX Nifty respectively), the sector wise dispersion was stark. Amongst BSE sectoral indices, Information Technology and Health Care were the most impacted shedding 8.2% / 8% respectively during the month while Consumer Durables sector

The Union budget was largely a neutral event for equity markets on an immediate basis. The budget continued on the capex theme, was low on populism, conservative on revenue estimates, brought focus on new age

also fared badly (-6.4%). The key outperformers were Utilities (+13.7%),

areas and stuck to a stable tax regime.

Banks (+7.8%), Infrastructure (+7.2%), Oil & Gas (+6.6%) and Auto (+6.4%). BSE broader market indices viz Midcap and Smallcap indices were down 1.4% & 0.8% respectively.

These factors are positive for equities in the medium to long term. Overall, the budget was long term oriented with an

• Indian equity markets followed the global trend of growth stocks seeing

emphasis on raising the growth profile of

correction on rising bond yields and concerns on valuations. Stocks where profitability expectations are farther away, were battered the most in the

the economy.

correction phase.

• The 3QFY22 results season has so far panned out on expected lines with Equity and other indicators

earnings momentum remaining intact, while the impact of third COVID wave is expected to be milder given the signs of the wave peaking-out in in many parts of the country.

Indices S&P BSE Sensex TR Nifty 50 TR

Last 1 Month CYTD 2021

Close (Change) (Change)

86,595

-0.4%

23.2%

24,895

-0.1%

25.6%

• In line with the weak global sentiments, FII started the year on a sluggish note, witnessing net ouflows worth USD 4.8 bn. This compares to ~USD 3.8 bn of net inflows seen for the entire 2021. The DIIs was firmly on the net inflow territory (+USD 2.6 bn) offsetting some of the selling pressure.

S&P BSE 200 TR S&P BSE 500 TR S&P BSE Midcap TR S&P BSE Smallcap TR NSE Large & Midcap 250 TR

9,227 29,069 30,104 35,345 12,195

-0.3% -0.4% -1.4% -0.8% -0.8%

29.1% 31.6% 40.7% 64.1% 37.0%

MFs were net buyers to the tune of ~USD 2.2 bn, while insurers also were in the positive zone at USD 410 mn of net inflows.

S&P BSE India Infra MSCI India USD MSCI India INR

384 833 2,016

7.2% -1.4% -1.0%

51.7% 25.1% 27.3%

INR - USD

75

0.4%

1.7%

Crude Oil

91

17.3%

50.2%

Global Market Update
• Global equities traded weak as rise on hawkish comments from the US Federal Reserve and rise in bond yields. Additionally, the geopolitical stand-off in Ukraine and tensions in the Middle East acted as headwinds. MSCI World Index was down 5.3% during January, with most of developed markets in the red. Value outperformed Growth and this was visible in country wise performance too, with Brazil; a battered down market, rising ~13% during the month. Post the Fed policy comments, there are now expectation of interest rate hikes starting March itself with five hikes possible this year. The quantitative tightening (Fed taper) is expected from mid-year. Rising geopolitical temperature led to sharp spike global crude oil prices (+17.3% MoM) and is now trading above USD 90 / barrel.

Data as at

unless otherwise given. Source: HSBC Asset Management, India (HSBC AMC), Bloomberg, Returns mentioned in the report are the Total

PUBLIC 1 Return or TR variants of the respective domestic indices. USD return for global indices.

Outlook:
January showed initial signs of companies trading at lofty valuations witnessing some de-rating. This was in line with the global trends observed during the month. The US Federal Reserve policy comments about an imminent rate hike cycle followed by the balance sheet reduction process are negative for global liquidity and the positioning appeared more hawkish than what investors were expecting. This would mean that the near term could be challenging for the equity markets especially in the context of elevated market valuations. The impact is on account of both liquidity drying up and the fact that the cost of capital would be gradually moving up. So while the global growth will still be decent, it will be offset by withdrawal of liquidity and higher yields, which can adversely impact equity valuations. This may mean that equities are likely to trade with a downward bias in the near term.

International market indicators

Indices
MSCI World Dow Jones S&P 500 MSCI EM MSCI Europe MSCI UK MSCI Japan MSCI China MSCI Brazil

Last Close
3,059 35,132
4,516 1,208 1,997 1,184 3,656
81 1,620

1 Month (Change)
-5.3% -3.3% -5.3% -1.9% -4.6% 0.8% -5.1% -3.0% 12.9%

CYTD 2021 (Change) 20.1% 18.7% 26.9% -4.6% 13.8% 13.9% -0.1% -22.8% -23.5%

That said, we remain positive on the medium to long term outlook for equities and the cyclical recovery theme has got a further reaffirmation in the budget. This has the potential to sustain a multi-year earnings growth environment.

Valuations:
• On P/E basis, Nifty is currently trading at 23.4x / 19.6x FY22/23 earnings estimates. Over the next 1-2 years, equity returns will largely come from earnings growth rather than valuation multiple expansion as the latter is on the higher side compared to its own history.
Macro View:
be the case in FY23 as well) and in the improving tax to GDP ratio. The GST collection rose 15% YoY to Rs. 1.38 tn in January. Third wave has not derailed the economic activity so far and this a welcome relief. This should augur for a full year of recovery expected in FY23.

Portfolio Strategy and Update:
• We prefer dominant businesses having scalable businesses and available at reasonable valuations.
• Our portfolio construction is driven by a bottom up approach to stock selection with a focus on names that can deliver positive earnings surprises. We continue to focus on this theme to identify likely outperformers.
• From a portfolio perspective, we are maintaining a pro-cyclical bias. This is driven by strong medium term earnings outlook on the back of the investment revival. The capex push reiterated in the budget is a key positive for the cyclical recovery and improves the multi-year earnings visibility.
• From a portfolio perspective, we are positive on the themes of domestic cyclical recovery and global growth (remaining at higher than historical trend line). Predominantly regulated businesses come last in our pecking order. This preference is dictated by our assessment of sectors / segments leading contribution to the market earnings growth over the next 2-3 years.
• As a result, on the domestic cyclical theme we are positive on rate sensitives (Financials & Real Estate), Industrials (Construction & CVs), Materials (Cement & Building materials). On the global growth theme, we are positive on Technology services, Health Care & Speciality Chemicals. Consumer Discretionary is a neutral sector.

Key drivers for future:
• US Fed taper decision and rate hike timeline: The accelerated taper timeline and advancement of rate hikes in the US are negative for global liquidity and flows.
• Impact of third wave: Third wave has peaked in many parts of the country though not over. Hospitalisation rates are low and vaccination coverage has improved immunity. The baseline assumption is that it may not impact economic recovery. Any change in this premise is negative for equity markets
• RBI Monetary Policy: The key aspect to follow would be the timeline for domestic rate hikes in the context of the current inflation trends and global monetary tightening.
• Ongoing quarterly results season: The results season so far has panned out on expected lines with earnings momentum remaining intact. However, valuations are elevated level and that means earnings will have to meet and/or beat the expectations in future.
• Other Risks: State assembly election outcome (especially Uttar Pradesh), global commodity prices (especially crude oil prices) which has risks to the upside due to geo-political stand-off in Ukraine.
.
PUBLIC 2 Returns mentioned in the report are the Total Return or TR variants of the respective domestic indices. USD return for global indices.

HSBC Mutual Fund - sector view
Financials Positive
We continue to remain positive on financials (i.e. large banks / lenders), driven by the thesis of (1) cyclical recovery in the economy and (2) expectation of large lenders to emerge stronger post pandemic with their ROAs/profitability to be near or above previous peaks. The reaffirmation of the capex cycle in the budget augurs well in this context. In addition, large lenders appear attractive on valuations and we expect them to re-rate with normalisation of credit cost followed by pick up in credit growth, which we are already starting to witness. They should continue to gain market share on account of the strength in capital adequacy, granular deposit franchise and investments in digital infrastructure. We also have exposure to Insurers and AMCs, which would benefit from financialization of savings.
Real Estate - Positive
Real Estate continues to be an overweight sector for us, as the underlying demand is strong. The sector is on a revival path driven by improvement in the residential affordability and listed players being the beneficiaries of industry consolidation. Residential affordability is best since 2003 driven by low interest rates, stagnant real estate prices and rising income levels driven by regional pockets of prosperity (IT hubs). Current disruption has accelerated the consolidation among the residential developers in favour of the major players especially, the listed companies. Our portfolio exposure are to developers who have a mix of residential portfolio and commercial assets, along with relatively strong balance sheets.
Materials - Positive
The overweight position in Materials is on account of the exposure to domestic cyclicals (Cement) and Chemicals while we remain negative on global cyclicals / Metals. The specialty chemicals space is a play on global growth and supply chain diversification benefitting Indian players. As a result, there is a robust demand (order book build up) and consequent strong earnings growth outlook for the sector. With bulk of the capex done, the sector leaders are expected to benefit from the demand environment and improving return ratios. Cement is a play on domestic growth recovery and improvement in capacity utilization, which shall keep prices firm and improve profitability. The budget document reaffirms this view. We continue to remain on the sidelines in global commodities space as sector is already seen peak profitability and the small position is in order to mitigate risk in the portfolio.
Information Technology - Positive
We have increased our exposure on the back of the recent correction. We remain poitive on the demand environment and hence the medium term outlook is robust. The current upcycle has durable legs and is likely to last for longer, even 3-4 years. So higher than historical valuations for the sector is justified given the strong growth visibility. The pandemic has accelerated the shift towards a more digitized world, resulting in continued technology investments from enterprises across industries globally. Indian IT shall continue to gain market share owing to proven capabilities across horizontals, domain knowledge of verticals, scale and access to talent. In addition, large Indian IT companies have strong management, robust profitability ratios and prudent capital allocation. We prefer solution providers with strong digital capabilities, scale of operations and growth visibility.
Industrials Positive
Positive view is maintained as we see potential revival in the investment cycle over the medium term, driven by govt's increased focus and outlay towards the Infrastructure sector, which was reiterated in the budget document. Public capex is expected to act as catalyst for private investment to pick-up. So the Industrial capex is likely to follow the Infra capex push by the government. Our preference is for companies with strong balance sheet, execution capabilities and scale advantages. We continue to remain positive on CV, cables and on select Infra & capital goods companies.
Healthcare Positive
We added to the health care services names in the recent correction and that is the reason for the marginal increase in weight. The view on the Pharma names remain broadly unchanged (Neutral). Overall, the sector continues to offer decent earnings growth visibility at reasonable valuations. Valuations can improve as the sector offers sustainable mid-teen earnings growth visibility and improving return ratios in Pharma names. Within Pharma, we continue to take a portfolio approach through a mix of players having leadership in domestic branded market and also having presence in the export driven generics segment. We also like health care services space (hospitals & diagnostics) as we expect them to benefit from structural improvement in healthcare services penetration and the market shifting towards organized players. The recent correction provided a good entry point, as valuations came-off, even as the underlying fundamentals remain intact.
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unless otherwise given
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HSBC Mutual Fund - sector view
Consumer Discretionary - Neutral
The neutral view on the sector is on account of elevated valuations and possibility of near term demand weakness on a high base. Valuations (especially in consumer goods) imply that a steady recovery is already priced in. We have increased exposure to Auto and have exposure to cyclical recovery plays and prefer them over consumer goods. Auto OEMS had faced demand weakness, supply issues due to chip shortages as well as margin pressure on account of high commodity prices. We believe, there is positive progression in all the three points. Within Auto we have a preference for slight preference for PVs but we are also constructive on CVs and 2Ws. Within other sub-sectors we have exposure to beneficiaries of PLI scheme.

Source: HSBC Asset Management India, Data

unless otherwise given

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HSBC Mutual Fund - sector view
Consumer Staples - Negative
Underweight stance is account of lack of positive earning surprises, moderation in volume growth and high valuations. Margin pressures are likely to continue in the near term and hence the earnings momentum is likely to remain weak for the sector. Additionally, sluggish rural demand would mean that the volume growth recovery could be delayed further. Within staples our preference is for category leaders with scale and product diversification along with superior execution capabilities.
Communication Services - Negative
The negative stance is on account of high capex intensity in the business. While we have seen industry tariff hikes, this is already in estimates and unlikely to lead to meaningful upgrades from hereon. The budget has laid the roadmap for 5G roll-out in the coming year, which can deteriorate return ratios for the sector. Within the Communication Services segment we have exposure to the multiplex segment, which is a play on industry consolidation and demand recovery.
Energy - Negative
We are negative due to structural factors viz weak profitability ratios, high capital intensity and volatile prices. We have exposure to a private sector conglomerate, that has been able to deliver on balance sheet deleveraging and unlock value of investments made over the last decade.
Utilities - Negative
Our negative view is on account of regulated nature of the business and low return ratios. Power utilty companies' focus is moving towards renewable fuel sources, however these are competitively bid projects with lower return potential. Hence, we are staying away.

Source: HSBC Asset Management India, Data

unless otherwise given

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Fixed Income update
Market Summary for the month
• Markets traded weak through month of January, with rise in global bond yields and hawkish central banks weighing on Indian bond markets. We also saw partial devolvement in 3 out of the 4 primary G-Sec auctions during the month, indicating skewness in demand supply for bonds in the absence of RBI support in form of OMOs. CPI inflation also inched upwards, though coming in below expectations. However, core inflation remained high and with crude prices inching upwards and commodity prices remaining elevated, CPI is expected to remain high in coming months.
• As for liquidity management, RBI continued to absorb liquidity through 3-day, 7-day, 14-day and 28-day variable reverse repo rate auctions (VRRRs). The free liquidity available in 1-day fixed rate reverse repo windows continues to be lower as most of liquidity is now absorbed through VRRRs.
• Overall, 10y closed December 23 bps higher at 6.68 v/s 6.45 at the end of November. 5 yr was higher by 17 bps closing at 6.03 at end of January v/s 5.86 at end of December ,14 yr was higher by 22 bps at 7.11 v/s 6.90 in December. Other securities in the 5-14 yr part of the curve were also up by between 10-20 bps. As for corporate bonds, the shorter end of the curve moved higher on tighter liquidity conditions, with 1-4 yr part of the curve higher between 15-20 bps across various securities. 10 yr corporate bonds outperformed G-Sec mildly and spreads contracted further to ~30-35 bps.
• In early February, Budget 2022 was presented by Government of India. Government of India continued with the fiscal accommodation path while simultaneously achieving a marginal consolidation in terms of fiscal deficit of 6.4% of GDP for FY 23 v/s 6.9% (revised estimate) in FY 22 ( 6.8% originally budgeted). The budget math remains conservative in terms of assumptions on the revenue side, both in terms of non-tax revenues such as divestment as well as tax revenues, which are budgeted to grow only 10% in FY 23 on a conservatively estimated base for FY 22. Even FY 22 revised estimates are on the conservative side when compared to current trend in tax collections and revenues. On the expenditure side, focus remains on capex which has seen a strong growth of 24%, while revenue expenditure has seen only marginal growth of 1%, largely due to absence of one-off subsidy requirement in FY 23. However gross borrowings announced at INR 14.95 trn and net borrowing at INR 11.2 trn was much higher than market expectations.
• We have seen a further sharp inch up in yields as gross borrowings announced in budget was much higher than expected. Further there was expectations of rationalization in tax structure for FPIs, that may have been an enabler for global bond index inclusion. However, these expectations were belied, which also weighed on yields.
Outlook
• Demand supply equation for bonds remains adverse as gross borrowings in FY 23 remains high while on the other hand, RBI support in the form of Open market operations remains largely absent unlike in FY 22. With no announcement in budget in terms of steps for global bond index inclusion, potential increase in demands from foreign investors also remains a question mark. Further crude prices have inched up past USD 90, and US treasury yields above 1.90. Global central banks have turned relatively hawkish and have begun steps towards monetary policy normalization and tightening. CPI inflation also remains elevated. While RBI is expected to stay accommodative, it continues to absorb more liquidity through VRRRs and could normalize repo-reverse repo corridor in February policy
• Given these headwinds, we expect markets to trade with a negative bias. 10 yr is expected to trade in a range of 6.80-7.05 in the near term. We continue to prefer the short to medium duration segment in G-Sec and alongside on the corporate curve, as the steepness in the curve up to short and medium duration part of the curve is attractive and has already priced in a fair bit of policy normalization. Bond supply is also likely to be higher in the belly of the curve and relatively lower in short to medium duration segment.
RBI Policy - key highlights
Status quo on rates: Repo rate at 4.0%; Reverse Repo at 3.35% and Marginal Standing Facility at 4.25%.
with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward
estimates remain at 5.3% for FY 22 (5.7% in Q4 FY 22), FY 23 inflation at 4.5% with inflation expected to be at 4.0%-4.2% in 2H FY 23.
23 GDP growth rate estimated at 7.8%, with growth expected to moderate in second half of the year
members of the MPC have voted unanimously to keep repo rate unchanged and while one member expressed reservation on the accommodative stance.

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Source: HSBC Asset Management, India (HSBC AMC), Bloomberg, RBI Policy update as at

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Fixed Income update

2Q FY 2022 GDP: Reflects the trend of recovery post second wave
India 2QFY22 GDP growth came in at 8.4%, marginally higher than consensus (8.3%) and GVA growth came in at 8.5%. Agriculture continued to remain a bright spot with Agri GVA growth at 4.5%, despite a strong base. Manufacturing GVA growth was at 5.5% while services GVA growth was also reasonable at 9.9% driven by growth in public services GVA at 17.4%, aided by spending by state and central governments. On the demand side, gross fixed capital formation grew by 11% y-o-y in 2021 (July-Sep 2021) and surpassed the levels seen in the corresponding period in 2019 (July- Sep 2019). Private consumption expenditure growth was at 8.6% y-o-y in 2021 (July-Sep 2021), which was however lower when compared over a 2 year period (v/s July-Sep 2019).
GST numbers: January collection further improves to INR 1.40 trn
GST collection in the month of January 2022 (for sales in the month of December 2021) was reported at INR 1.40 trillion v/s INR 1.29 trillion in the month of December 21, broadly reflecting continued recovery in economic activity
Fiscal numbers: April to December fiscal deficit only ~50% of the budgeted estimate
December fiscal deficit rose to 50.4% of the originally budgeted fiscal deficit target v/s 46.2% in November, however this still remains way lower than historical trend as a proportion of full year budgeted. Capex in December increased by 74% to 1.18 lakh crore, this was however largely due to equity infusion to clear Air India debt. Overall expenditure was higher by 10.6% y-o-y to reach 72% of budgeted estimate, capex reached 75% of estimate. Revenue receipts rose 31% to reach 89.2% of full year budgeted receipts, indicative of robust tax collections. The current revenue run-rate provides sufficient buffers to meet the revised revenue target as per revised estimates in Budget 2022, thereby providing scope for better than expected full year fiscal deficit numbers as compared to the revised estimates.
PMI - Minor pullback due to third Covid wave but continue to stay in expansion territory
India manufacturing PMI moved to 54.5 in January from 55 in December and Services PMI to 51.5 from 55.5, and hence composite PMI reduced to 53.0 from 56.4. The decrease in PMI is largely due to the third wave and accompanying restrictions on economic activity.
IIP: Moderates to 1.47% as base effects normalize
November IIP grew at 1.47% (October: 4%) came in lower than expectation as festive season impact faded. As per the use-based classification, infrastructure/construction goods grew by 3.8% followed by primary goods by 3.5%, and intermediate goods by 2.5%, and consumer non-durables by 0.8%. On the other hand, capital goods production contracted by 3.7% and consumer durables contracted by 5.6%. Compared to November 2019 (pre-Covid), IIP was lower by 0.2%.
Inflation: Expected to inch up further
CPI inflation came in at 5.6% lower than consensus of 5.8%, with food inflation coming in lower than expected across various categories such as pulses, cereals etc and a lower than expected decline month on month in vegetable prices. Core inflation was largely steady at an elevated 6.1%, though telecom price hike impact is yet to be fully reflected. Going forward, inflation might inch
ns in next two quarters, though with some risks to the upside.
External Factors Oil prices see a sharp move upwards, US treasury yields inch higher
Oil: Crude prices rallied sharply during the month and closed January at 91.21 v/s 77.78 at the end of December.
US Treasury yields: Yields inched higher through the month, given concerns on global inflation and hawkish global central banks, and closed at 1.78 v/s 1.51 at beginning of the month.
Currency: Rupee traded mixed during the month, trading largely in a range of 73.90 to 75.20, and closing at 74.53 v/s 74.50 in the previous month.

Indicators Repo rate 1Y OIS 5Y OIS

Current 4.00 4.44 5.56

Previous month 4.00 4.32 5.35

3M T-Bill 1Y G-Sec 3Y G-Sec 5Y G-Sec 10Y G-sec

3.70

3.59

4.49

4.37

5.60

5.56

6.03

5.86

6.68

6.45

AAA 5Yr Corp Bond AAA 10yr Corp Bond

6.30-6.45 7.05-7.25

6.10-6.25 6.95-7.10

USDINR Brent Oil (USD Per Barrel)

74.53 91.21

74.50 77.78

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Source: HSBC Asset Management, India (HSBC AMC), Bloomberg,

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Fixed Income portfolio strategy and update
Overnight to Money Market rates (up to 1 year)
HSBC Overnight Fund, HSBC Cash Fund, HSBC Ultra Short Duration Fund and HSBC Low Duration Fund are focused on different segments of money market curve. The entire Money-market curve is centric to the overnight funding cost which is in between the repo and reverse repo rate for now. While there will be bouts of volatility as RBI continues the process of liquidity normalization and the 14-day VRRRs and VRRs become the main instrument of RBI henceforth in liquidity operations, the carry and steepness in the curve upto 1-2 yr still remains attractive and will benefit from roll-down and accommodative RBI policy.
With a focus on accrual we intend to keep a neutral duration in the cash fund. The strategy in the Ultra Short duration is also to maintain neutral duration eying accrual while a similar neutral duration stance is maintained in Low Duration fund, given steepness in the yield curve up to 2 years.
Short duration to medium term duration
From medium term perspective, HSBC Short Duration Fund & HSBC Corporate Bond Fund & HSBC Equity Hybrid Fund (debt portion) is expected to benefit from attractive carry at short and medium part of the curve. It offers value for investors at current short-term yields over funding cost in terms of spread. Corporate supply has remained muted and while going forward, we may see an increase in supply in Q4, we expect the same to be well absorbed given demand from market participants.
The short and medium part of the corporate curve still remains attractive from carry play point of view, even after the recent rally, post RBI policy. We also like the short-medium part of Government securities curve as current three years point over one year and five-seven years point over one/three year offers attractive risk-return tradeoffs. The extent of supply on account of increased borrowings in FY 23 is likely to be largely towards the duration segment. Absence of OMOs will also impact the longer end of the curve rather than the short to medium part of the curve, which will benefit from attractive carry and roll-down going forward.
Overall, the pick-up versus overnight rate is quite attractive in the short-medium segment on the G-sec curve and alongside on the corporate curve and on the whole we particularly like this part of the curve as the most attractively placed on the risk/return spectrum. Within this segment, we like the 2 to 2.5-year part of the curve on the corporate bond side where the steepness is attractive and which may not see a significant inch up even with a rise in yields in the ultra-short segment. Hence we continue to be positioned with a slight underweight to neutral duration in these funds (HSBC Short Duration Fund & HSBC Corporate Bond Fund & HSBC Equity Hybrid Fund (debt portion))
Long bonds (HSBC Flexi Debt Fund, HSBC Debt Fund, HSBC Regular Savings Fund)
We had seen a sharp inch up in yields post budget given higher than expected gross borrowing numbers. Globally as well, crude prices remain elevated and US treasury yields have moved further higher. While there has been a pullback rally in yields post the RBI policy, absorption of heavy bond supply will remain a challenge going into FY 23, especially in the absence of open market operation (OMO) purchases from RBI, unlike in the first half of FY 22 when OMO purchases supported yields. On the whole we expect the longer end to trade with a negative bias given these circumstances. While budget revenue assumptions are conservative, any positive surprise on fiscal front in FY 23 versus budgeted estimates could be back-ended in nature. However, at the same time, RBI is likely to prevent a disorderly move upward in yields and could support markets in the event of any stresses.
As such, we intend to position with an underweight stance in the long bond portfolios versus the index and intend to take advantage tactically of any opportunities that may arise on the longer end of the curve depending on market conditions.

Source: HSBC Asset Management, India (HSBC AMC), Bloomberg,

Please refer to the page number 9 of the scheme Offer Document on which the concept of Macaulay's Duration

has been explained

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Potential Risk Class

matrix indicates the maximum interest rate risk (measured by Macaulay Duration of the scheme) and maximum credit risk (measured by Credit

Risk Value of the scheme) the fund manager can take in the scheme. PRC matrix classification is done in accordance with and subject to the methodology/guidelines

prescribed by SEBI to help investors take informed decision based on the maximum interest rate risk and maximum credit risk the fund manager can take in the scheme, as

depicted in the PRC matrix. Please refer to the page number 9 of the scheme Offer Document on which the concept of Macaulay's Duration has been explained

^The Macaulay duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the present value of the cash flow by the price. Please refer to the page number 9 of the scheme Offer Document on which the concept of Macaulay's Duration has been explained
9

PUBLIC

Potential Risk Class

matrix indicates the maximum interest rate risk (measured by Macaulay Duration of the scheme) and maximum credit risk (measured

by Credit Risk Value of the scheme) the fund manager can take in the scheme. PRC matrix classification is done in accordance with and subject to the

methodology/guidelines prescribed by SEBI to help investors take informed decision based on the maximum interest rate risk and maximum credit risk the fund

manager can take in the scheme, as depicted in the PRC matrix. Please refer to the page number 9 of the scheme Offer Document on which the concept of

Macaulay's Duration has been explained

^The Macaulay duration is the weighted average term to maturity of the cash flows from a bond. The weight of each cash flow is determined by dividing the
present value of the cash flow by the price. Please refer to the page number 9 of the scheme Offer Document on which the concept of Macaulay's Duration has 10
been explained
PUBLIC

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In Focus with Tushar Pradhan