JANUARY 2017

2017 - A YEAR OF
CONTRASTING PERFORMANCE

2016 was a year dominated by global events and we continue to see a similar trend going into 2017. We
believe 2017 is going to be a year of contrasting performance with the first half being more challenging,
driven by domestic and global events and the second half seeing a sharp recovery.

On the global front, we see

More rate hikes by the US Federal reserve after the Trump win in the US Presidential elections and
expected fiscal boost by his administration.
A strengthening US dollar along with higher commodity prices may impact the near term growth and
corporate earnings in emerging markets.
A greater risk of currency devaluation in China which could further impact other emerging market
currencies, including the Indian rupee.
With Europes largest economies electing new governments over the next 18 months, political
uncertainty could periodically impact the markets

On domestic front, the growth/demand slowdown caused by the Governments recent de-monetization
drive may get further accentuated once GST is implemented. While GST may cause a near term
slowdown on account of the complexity and the scale of implementation, we believe the unified system
of taxation will be very positive over the long term as it aims to simplify the existing indirect tax structure,
prevent cascading of taxes, remove inter-state barriers and formalize a greater part of the economy.
This will eventually lead to higher GDP growth, lower inflation and higher Government tax revenues on
account of increased compliance.

De-monetization, GST and other Government measures to curb the black money generation will
eventually lead to a higher Tax/GDP ratio. This would help in boosting Government revenues
and support higher capital expenditure and lower the fiscal deficit.

Macro Update
Currency Movement
The rupee continues to remain one of the most stable currencies since the EM currency sell-off in
August 2013 and we believe the RBI will continue efforts to maintain currency stability.
At Rs. 68.07/USD, the currency is overvalued on a real effective exchange rate (REER) basis and
we believe it will gradually move towards its fair value. This should be positive for export growth. A
stable INR should bode well for foreign flows.

Favorable terms of trade, strong reform focused Government and good macro environment will
offset some of the potential currency weakness triggered by the US dollar strength.

Inflation: Benign inflation should allow the RBI to further cut interest rates in the coming year.
FII activity
Foreign institutional (FII) flows have been muted in 2016, with net inflows into Indian equities of
USD 3.2 billion as the dollar strength has resulted in money flowing back to developed markets from
emerging markets.
This is much below the previous 5 year average of USD 13.5 billion (per year) and the peak inflow of
USD 29 billion in CY2010.
We believe 2017 could see higher flows from foreign institutions as money comes back to growth
markets like India.
Flows from domestic institutions, on the other hand, have outpaced foreign flows for the second
consecutive year and we believe this trend could continue in 2017.

Lack of investment options (gold/real estate) will lead to a faster shift in savings from physical assets to
financial assets.

Corporate Earnings: We expect corporate earnings growth to improve from the second half of FY2018
as the headwinds of the last few years (lower commodity prices, higher banking system NPLs and lower
Government/private capital expenditure) could turn into tailwinds.

We believe that the steps taken by the government are in the right direction and the benefits of
the same will be visible over the next few years. After a near term slowdown on account of de-
monetization, GDP growth will likely bounce back in the second half of FY2018.

On equity markets, we believe 2017 will be a strong year after almost two years of negative returns.
Attractive equity valuations relative to bonds, stable currency, policy reforms and stabilizing global
growth bodes well for equity returns this year.
A pick up in corporate earnings growth, full transmission of lower interest rates and expanding return
on equity (ROE) for corporate India will be the medium to long term drivers for equity markets.
Within portfolios, we expect value stocks to outperform growth stocks in 2017.

In summary, we believe that the Indian equity market is a good structural opportunity and our
outlook is positive for 2017.
 Equity Fund Positioning
Market-Cap Strategy / Investment Approach/Fund
EQUITY Schemes Benefits from
Positioning philosophy
DSP BlackRock Top Pure Large Cap 1. High Conviction stocks High Conviction
100 Fund 2. Blend of Top Down and Bluechip Stock Pick
Bottom Up
DSP BlackRock Diversified Multicap 1. High Conviction Stocks High Conviction
Equity Fund 2. Bottom-Up Approach growth stocks
DSP BlackRock Diversified Multicap 1. Blend of Top Down and Sector Rotation
Opportunities Fund Bottom Up
2. Non-Benchmark Hugging
3. Sector Agnostic
DSP BlackRock Micro Cap 1. Long Term Growth Bottom up approach
Micro Cap Fund 2. Bottom Up
DSP BlackRock Sector Fund 1. High conviction stocks within Growth Potential
India T.I.G.E.R Fund the infrastructure sector
2. Bottom-Up Approach
DSP BlackRock Small and Mid Cap 1. Long Term Growth Bottom up approach
Small and Mid Cap 2. Bottom Up
Fund
DSP BlackRock Tax Diversified Multicap 1. High Conviction stocks High Conviction Stock
Saver Fund 2. Blend of Top Down and Bottom Pick
Up
3. Blend of large and midcap
stocks
DSP BlackRock Sector Fund 1. High conviction stocks within Growth Potential
NRNE Fund the energy sector
2. Bottom-Up Approach
DSP BlackRock Sector Fund 1. High conviction stocks within Growth Potential
Technology.com the Technology sector
Fund 2. Bottom-Up Approach
DSP BlackRock Concentrated Large Cap 1. High conviction 25 High Conviction
Focus 25 Fund 2. Super large caps stocks Bluechip Stock Pick

Fund of Fund Schemes

Market-Cap Strategy / Investment Approach/Fund

Fund of Fund Benefits from
Positioning philosophy
DSP BlackRock Investment in Equity Allocates assets between equity Automatic change in
Dynamic Asset through the following and debt based on the relative asset allocation based
Allocation Fund schemes: attractiveness of the asset class on change in yields of
1. DSP Blackrock Top ascertained by the yield gap debt and equity.
100 Equity Fund model.
2. DSP BlackRock Equity
Fund
Investment in fixed
income through the
following schemes:
1. DSP BlackRock
Strategic Bond Fund
2. DSP BlackRock Short
Term Fund

Key
Large-Cap are the securities ranked by market capitalisation between 1 to 100
Mid-Cap are the securities ranked by market capitalisation between 101 to 200
Small-Cap are the securities ranked by market capitalisation between 201 to 30
Micro-Cap are the securities ranked by market capitalisation above 300
 This Scheme is suitable for investors who are seeking*
DSP BlackRock
Equity Fund Long-term capital growth
Investment in equity and equity-related securities to form a diversified portfolio

This Scheme is suitable for investors who are seeking*

DSP BlackRock Top
Long-term capital growth
100 Equity Fund
Investment in equity and equity-related securities of large cap companies (top 100 companies by
market capitalization)

This Scheme is suitable for investors who are seeking*

DSP BlackRock
Long-term capital growth with exposure limited to a maximum of 25 stocks from an investment
Focus 25 Fund
universe of top 200 companies by market capitalization
Investment in equity and equity-related securities to form a concentrated portfolio

This Scheme is suitable for investors who are seeking*

DSP BlackRock Small
Long-term capital growth
and Mid Cap Fund
Investment in equity and equity-related securities in companies beyond top 100 companies by
market capitalization

This Scheme is suitable for investors who are seeking*

DSP BlackRock
Opportunities Fund Long-term capital growth
Investment in equity and equity-related securities to form a diversified portfolio

This Scheme is suitable for investors who are seeking*

DSP BlackRock
Long-term capital growth
Micro Cap Fund
Investment in equity and equity-related securities in micro cap companies (beyond top 300
companies by market capitalization)

This Scheme is suitable for investors who are seeking*

DSP BlackRock Tax
Saver Fund Long-term capital growth with a three-year lock-in
Investment in equity and equity-related securities to form a diversified portfolio

This Scheme is suitable for investors who are seeking*

DSP BlackRock
Dynamic Asset Long-term capital growth
Allocation Fund Investments in units of one or more equity mutual funds and debt mutual funds of DSP BlackRock
Mutual Fund
 This Scheme is suitable for investors who are seeking*
DSP BlackRock India
T.I.G.E.R. Fund
Long-term capital growth
(The Infrastructure
Investment in equity and equity-related securities of corporates, which could benefit from
Growth and
structural changes brought about by continuing liberalization in economic policies by the
Economic Reforms
Government and/or from continuing investments in infrastructure, both by the public and
Fund)
private sector

This Scheme is suitable for investors who are seeking*

DSP BlackRock
Natural Resources Long-term capital growth
and New Energy Investment in equity and equity-related securities of natural resources companies in sectors like
Fund mining, energy, etc. and companies involved in alternative energy and energy technology and
also, investment in units of overseas funds which invest in such companies overseas

This Scheme is suitable for investors who are seeking*

DSP BlackRock
Technology.com Long-term capital growth
Fund Investment in equity and equity-related securities of companies in media, telecom and
information technology sectors

*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.

In this material DSP BlackRock Investment Managers Pvt. Ltd. (the AMC) has used information that is publicly available, including information
developed in-house. Information gathered and used in this material is believed to be from reliable sources. The AMC however does not warrant the
accuracy, reasonableness and / or completeness of any information. The data/statistics are given to explain general market trends in the securities
market, it should not be construed as any research report/research recommendation. This is a generic update on Fixed Income and Equity Market ; it
shall not constitute any offer to sell or solicitation of an offer to buy units of any of the Schemes of the DSP BlackRock Mutual Fund. We have included
statements / opinions / recommendations in this document, which contain words, or phrases such as "will", "expect", "should", "believe" and similar
expressions or variations of such expressions that are "forward looking statements". Actual results may differ materially from those suggested by the
forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks,
general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary
and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices
etc. All figures and other data given in this document are dated and the same may or may not be relevant in future. For complete details on risk factors,
event of suspension of subscriptions and more details, investors are requested to read the Scheme Information Document (SID) of the Scheme. For
risk factors and product labeling details of the Underlying Schemes, investors are requested to read the respective SIDs of the Underlying Schemes.
The document indicates the strategy/investment approach currently followed by the Schemes and the same may change in future depending on market
conditions and other factors.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.