Net Asset Value(s)

07 May 2019

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

Net Asset Value statement at 30 April 2019

Net Asset Value

The Company announces its Net Asset Value per share as at 30 April 2019 was 102.01 pence.

In April the Net Asset Value (NAV) was down 2.7% in Sterling terms, whilst the BSE Mid Cap TR Index was down 3.6%, delivering an out performance against the notional benchmark of 1.0%. In local currency terms, the NAV was down 2.8% for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Tech Mahindra (up 7.8%), Jammu & Kashmir Bank (up 13.1%) and Essel Propack (up 17.0%). Negative contribution came from Yes Bank (down 38.9%), IDFC First Bank (down 10.0%) and Indusind Bank (down 9.7%).

Market and economic update

Indian equity market performance remained mixed in April. The BSE Sensex Index grew by 0.9% whilst the BSE Midcap TR Index corrected 3.8% (both total return in Indian Rupees). The Indian Rupee depreciated 0.6% against the US Dollar but appreciated 0.2% against Pound Sterling. Foreign institutional investors were net buyers (US$1.5bn) for the month while domestic institutions were net sellers (US$600m).

The Reserve Bank of India's (RBI) April monetary policy meeting resulted in a further 25bps cut in interest rates as it re-iterated its neutral stance, expecting inflation to remain below 4.0% in FY20. The RBI however lowered its FY20 GDP growth forecast to 7.2% from 7.4% over signs of domestic investment activity weakening as reflected in a slowdown in production and imports of capital goods. This was compounded by concerns over a potential moderation of growth in the global economy impacting India's exports. The consensus view is of another 25bps rate cut at the June policy meeting. On the politics front, the main focus is the General Election, the results of which will be announced on 23 May.

Indian companies began reporting 4Q FY19 (ended March 2019) quarterly results. The Automotive and Consumer Staples spaces disappointed due to lower than expected sales. Weaker consumption in rural India was the major driver as lower food prices have hurt farmers' incomes, alongside a seasonality effect due to a late summer. Cement outperformed benefiting from price hikes and lower input costs whilst IT companies' results reported in line with expectations. Within Financials, private sector banks have seen higher growth and pricing power as they gain share from NBFCs which have had to reduce lending in a bid to address liquidity concerns.