Net Asset Value(s)

India Capital Growth Fund Limited (the "Company" or "ICGF")

Net Asset Value statement at 31 January 2019

Net Asset Value

The Company announces its Net Asset Value per share as at 31 January 2019 was 93.04 pence.

In January the Net Asset Value (NAV) was down 8.5% in Pound Sterling terms, whilst the BSE Mid Cap TR Index was down 10.4%, delivering an outperformance against the notional benchmark of 1.9%. In local currency terms, the NAV was down 3.6% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from NIIT Technologies (up 14.0%), Kajaria Ceramics (up 9.1%) and Aurobindo Pharma (up 7.5%). Negative contribution came from Jyothy Laboratoies (down 13.9%), Motherson Sumi Systems (down 15.7%) and Dewan Housing Finance (down 45.5%).

Market and economic update

Looming elections and perceived corporate governance lapses were in focus as investors continued to favour large caps in January; the BSE-Sensex moved up 0.5% compared to a 5.7% fall for the BSE-Midcap Index. The Indian Rupee depreciated 1.9% against the US Dollar and 5.3% against the Pound Sterling, driven by a 13.8% rally in oil and net outflows from foreign institutional investors (US$75m). Domestic institutions were net buyers to the tune of US$304m for the month.

The Government announced its interim budget which focused on alleviating rural distress in an attempt to boost sentiment in the run-up to general elections in May 2019. Cash disbursements to 120 million small and marginal farmers (direct payments of INR6,000 per annum) and a tax break for lower earners (exempting earnings of up to INR500,000 per annum) were announced. The Finance Ministry restated its commitment to the Government's target of limiting the fiscal deficit to 3.4% in FY20.

Indian Companies began reporting results for Q3FY19 ending in December 2018. Sectors which outperformed were; IT (good revenue growth and a healthy deal pipeline), Pharmaceuticals (new launches), Consumer staples (demand growth and margin expansion). Private sector banks reported in line with expectations highlighting steady trends in loan growth with stable asset quality for retail banks. As expected, Non-Banking Finance Companies' funding issues impacted disbursement growth. Sectors which disappointed were Automotive (weak demand and lower margins), and Cement (lower realisation and profitability) despite strong volume growth.