Net Asset Value(s)

6 December 2018

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

Net Asset Value statement at 30 November 2018

Net Asset Value

The Company announces its Net Asset Value (NAV) per share as at 30 November 2018 was 97.73 pence.

In November the NAV was up 5.6% whilst the BSE Mid Cap TR Index was up 8.8%, delivering an under performance against the notional benchmark of 3.2%. In local currency terms, the NAV was flat for the month.

Portfolio update

Positive contribution to the portfolio's performance came from Indusind Bank (up 14.5%), Berger Paints (up 14.3%) and Kajaria Ceramics (up 11.5%). Negative contribution came from NIIT Tech (down 11.2%), Balkrishna Industries (down 12.3%) and Jammu & Kashmir Bank (down 12.8%).

Market and economic update

Indian equity markets improved in November with the BSE Sensex up 5.1% and the BSE Mid Cap TR Index up 3.0% on the back of falling crude oil prices which corrected 21% in the month. As a consequence, the Indian Rupee (INR) appreciated 5.9% against the US Dollar and 5.3% against the GB Pound and Foreign Institutions turned net buyers (US$868m). Additionally Domestic Institutions continued to be net buyers for the month (US$127m).

GDP growth in Q2FY19 moderated to 7.1% from 8.2% in Q1, missing expectations due to a slowdown in Agriculture (3.8% from 5.3% in Q1) and in Industry (6.8% from 10.3% in Q1) led by a decline in Manufacturing and Mining, although Services contributed positively (7.5% from 7.3% in Q1). On the demand side, private consumption slowed although there was a pickup in Government expenditure and in gross fixed capital formation. The lower-than-expected growth in Q2 has slightly tempered the full year view of GDP but with crude oil prices falling, INR rising and liquidity constraints improving, the outlook has improved for the last four months of the fiscal year. Consequently the Reserve Bank of India (RBI) has retained its GDP estimate for the current year at 7.4%.

The RBI also kept interest rates unchanged at 6.5% retaining its 'calibrated tightening' policy stance. However inflation continues to undershoot expectations. Consumer price inflation (CPI) fell further to 3.3% in October forcing the RBI to further lower its inflation projection for the second month in a row to 2.7%-3.2% for H2FY2019. To help improve liquidity the RBI announced it is cutting its SLR rate (statutory liquidity reserve) by 25 bps every calendar quarter commencing January 2019, from 19.5% currently until the ratio reaches 18.0%.