Product Updates

RBI to conduct term repo auctions for Rs 75,000 cr on Friday The Reserve Bank of India (RBI) has decided to conduct term repo auctions worth Rs 75,000 crore on Friday. These will be a 7-day term repo auction for Rs 15,000 crore and a 14-day term repo auction for Rs 60,000 crore. Successful bidders will get the allotment at their respective bids, said RBI. According to the Street the term repo auctions will help to ease liquidity into the system and may ensure that the bond auction for Rs 16,000 crore on the same day is fully subscribed. Thanking you Regards, Rajesh Kumar Kathpalia ¤ SMC Global 17,Netaji Subhash Marg,Daryaganj, New Delhi-110002 Mobile No 9891645052 Email Id: rajesh.ipo@smcindiaonline.com -- You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group. To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups...

This Akshaya Tritiya don't buy gold We Indians love gold. It is more than jewellery. It is an investment that helps beat inflation. It is a security that can be pledged in hard times. Getting a loan against gold is much easier than getting a loan against your house or life insurance policies. Our love for the yellow metal pushed up the country's Current Account Deficit so much so that the government had to increase the import duty. The Reserve Bank of India also introduced controls making it difficult to import gold. The price of standard 10 gm gold as on April 28, 2014 was Rs 30,300. Over a one-year period the gain in gold prices has been 10.66%. Over a three-month period the gain is a little over 1%, while over a one-month period it is almost 6% higher. ALSO READ: Gold demand for Akshaya Tritiya likely to be subdued But will the yellow metal continue to give as good returns going ahead? Given that Akshaya Tritiya, when it is considered auspicious to buy gold, is a...

The stock markets are slowly rising in anticipation of the outcome of the ongoing general elections. The Bharatiya Janata Party (BJP)-led National Democratic Alliance is widely expected to form the next government. However, markets have not made big a upmove yet and are probably waiting for the results to be declared. In an interview, Harshad Patwardhan, executive director and head of equities, JP Morgan Asset Management India Pvt. Ltd, shares his thoughts on the present situation in the markets and what he expects in terms of market movement with regards to the possible election verdict. Edited excerpts: Recent data that showed inflation was up and industrial production down, but markets are still moving up. Is there a disconnect between markets and fundamentals? I don't think so. The fact that we are in a situation of high inflation and low growth is well known. It's not a new phenomenon. Clearly, market is looking at what lies ahead. What lies ahead is that cyclical g...

Sebi readying ground for trading new type of bonds Capital market regulator Securities and Exchange Board of India (Sebi) is preparing ground work to launch trading in least four new categories of bonds. These new products include municipal bonds, Sukuk bonds, covered bonds and bonds issued by co-operative societies. According to sources, the regulator is currently in the process of studying the framework for these bonds in the contemporary foreign markets and is examining the structure to be implemented in the domestic market. Sebi has started consultation with various stakeholders and is aiming to launch trading in these bonds in the current financial year. For the first time, the regulator has tasted some success in debt-based exchange traded instruments. Earlier this year, the market watchdog had re-introduced trading in interest rate futures (IRF), for the third time, with an easier framework based on market feedback. IRFs, which is derivative product with govern...

Bonds to find support in current range: Jajoo Fixed income markets maintained the positive momentum of the previous week for most of last week before losing the advantage in the last few hours of Friday to give up all the gains and with benchmark 10 year government bonds yield closing 3 bps higher at 8.88%. Buoyed by strong institutional support and trader interest, bonds continued to rally with 10 year government bond yield hitting an intra week low of 8.81%. However, the release of the minutes of the last technical advisory committee of RBI on monetary policy on Friday afternoon turned around the positive sentiment. As per the minutes, most of the members felt that moderation in vegetable prices drove the recent softening of headline inflation and this was unlikely to be sustained. In their opinion there were clear upside risks  such as suppressed pricing in electricity, fuel items, impact of hailstorms on select food prices, increase in NREGA employment guarantee by 50 d...

RBI clamps down on offshore refinancing SINGAPORE (IFR) - India has taken steps to clamp down on the growing trend among banks to convert rupee exposure into overseas debt in a move likely to trigger a rise in onshore restructurings. In a notice issued on Tuesday evening, the Reserve Bank of India warned that Indian banks should not lend through their overseas branches or issue any kind of credit guarantee to help companies repay their rupee obligations with offshore debt. The notice comes as the RBI is forcing banks to deal with stressed loans by restricting the practice of "evergreening", a common term for refinancing, rather than restructuring non-performing loans. "The amount of non-performing loans in the Indian banking system is grossly understated due to 'greening' of loans," said Sanjay Guglani, CIO of Singapore-based Silverdale Capital. "The RBI notification is a step in right direction to curb the misuse of offshore borrowing by ...

A switch from liquid funds to 'short-term' plans may fetch more: Experts  Many financial advisors are asking their clients to redeem their investments in liquid and ultra-short term bond (USTB) funds, and invest the proceeds in short-term bond funds to pocket better risk-adjusted returns in the next year. "If you have one-year time horizon and if you can take moderate risk, it is time to shift to short-term bond funds," says Lakshmi Iyer, chief investment officer (debt) and head of products, Kotak Asset Management Company. These schemes will benefit from the prevailing high short-term rates, and they may also provide capital gains when the rates starts coming down sometime next year, say experts. Many investors typically use liquid and USTB funds to park their contingency funds. However, they have started investing most of their fixed income portfolio in these funds in the last couple of years due to poor returns and volatility in long-term debt funds. ...

MUMBAI: The Reserve Bank of India could consider selling government bonds for the first time in four years to minimise the impact of heavy inflow of US dollars that have been pouring in on expectations of a stable regime following the ongoing general elections and could come in with greater intensity after the government is formed. The RBI on Monday set a limit of 50,000 crore for sale of government securities in 2014-15 under the Market Stabilisation Scheme (MSS), which was introduced in 2004 to facilitate absorption of excess rupee liquidity in the system. "Right now, it is not needed to issue such (market stabilisation) bonds as the situation does not warrant so," said Anindya Das Gupta, managing director of Barclays Bank. "Expectation on OMOs (open market operations for liquidity infusion) and MSS bonds cannot go in tandem. However, for the rest of 2014-15, if required, the RBI can do it depending on the degree of FII inflows." MSS bonds are special govern...

Limit exposure in high-debt companies ahead of elections, say analysts NEW DELHI: Although benchmark indices are hitting fresh record highs on a daily basis in the run up to election results which are due on May 16th, analysts advise investors to remain cautions of companies which have high debt-to-equity ratio. Investors should focus on companies where the fundamentals are strong and earnings visibility is decent. But that doesn't mean that they should avoid that space completely but the idea should be to limit exposure in high-debt companies. "I advocate a small exposure to these, because with all these companies, the assets are in place, where the utilisation is very low because the economy is doing badly. If the economy starts to pick up and utilisation levels pick up, then the returns could be disproportionate in these," said Jyotivardhan Jaipuria, HOR, BofAML Capital (India). If you look at the enterprise value of these companies, it is very high, but if...

Overnight rates stay firm amid weekly bond auctions Overnight rates stayed firm amid the weekly auctions of government bonds, treasury bills and state development loans, which touched high of 8.9%, according to Clearing Corporation data with the weighted average rate at 8.45%, marginally lower than its previous close. According to market participants, despite the central bank wanting the overnight rates to be aligned with the repo rate, which is at 8%, the rate remained high as liquidity is yet to be infused by Reserve Bank of India (RBI) by open market operations. The street believes if the call rates continue to hover higher, soon RBI will announce liquidity easing steps. In the post-monetary policy conference call with analysts and researchers RBI governor Raghuram Rajan had said that, "As far as the short-term liquidity goes, let me repeat that our intent is as far as possible to try and ensure that the call money rate hugs the repo rate." According to the dea...

Don't delay the insurance claim We all know the importance of doing things on time. Just as it is important to pay your insurance policy premiums on time, it is also important to intimate the insurance company on time in case of death of the policyholder. If the claim is not made within three years of the policyholder's death, the company can refuse to pay the money. Under the The Limitation Act, 1963 the claimant has to intimate the insurance company about the occurrence of death within three years from the death of the family member. The insurance company can refuse to pay the claim if the intimation is beyond this period. However, in case of genuine reasons the company has to pay the claim and cannot reject it on the ground of the technicality that the intimation was late. According to Frederick D'souza, Senior Vice President - Underwriting at HDFC Life most of the life insurance policies which cover the risk of death do not have a specific provision with respec...

India has reduced its exposure to the US government securities this year so far with the holding coming down to USD 67 billion in February. In the first two months of this year, India has trimmed its holding by more than USD 1 billion reversing the trend witnessed during the last few months of 2013. While India's holdings in February stood at USD 67 billion in February, the same was at USD 68.1 billion in the preceding month, according to latest data from the US Treasury Department. India held US Treasury securities worth USD 68.5 billion in December last year. Growth prospects are slowly improving for the US, the world's largest economy, even as many of the developing countries are facing economic headwinds. In the fourth quarter of 2013, the American economy grew 2.6 per cent, as per official figures. Meanwhile not only India, rest of the BRIC (Brazil, Russia, India, China and South Africa) nations too have trimmed their exposures in February compared to Jan...

Bond yields unlikely to fall further: Traders MUMBAI: The rally in the government bond prices seen last may not sustain due to the continuous supply of debt every week and the caution ahead of the election results next month, say bankers. Last Thursday, the 10-year government bond yield eased by over 10 basis points to 8.85 per cent. On the same day, the RBI conducted the largest-ever auction of bonds worth Rs 20,000 crore. "It seems difficult that yields will fall further as every week the Reserve Bank would be selling higher amount of bonds," said a treasurer at a state-owned bank. The government has planned to borrow in the range of Rs 14,000-20,000 crore every week from the market in the first half of the current fiscal which will put pressure on bond prices. "Also, the money which came last week after redemption of security is also being utilised, and for any fresh buying traders do not have money," a senior dealer with another state-owned ba...

Five things to know about unclaimed mutual funds  1. Mutual funds credit payments directly to the investors' bank accounts, but if they have chosen to receive a payment instrument and fail to encash it, it remains unclaimed. 2. The mutual fund invests this unclaimed amount in the money market and can charge up to 0.5% per annum as investment management fee. 3. If the investor claims the money within three years, then the payment is based on the prevailing NAV of the portfolio. 4. If, however, the investor claims the money after three years, then the payment is based on the NAV at the end of three years. 5. The fund house is required to continuously send reminders to the investors to claim their dues. Economics Times Thanking you Regards, Rajesh Kumar Kathpalia ¤ SMC Global 17,Netaji Subhash Marg,Daryaganj, New Delhi-110002 Mobile No 9891645052 Email Id: rajesh.ipo@smcindiaonline.com -- You received this message because you are subscrib...

Use yield spikes to buy into gilt funds Source >> Business Standard This past year has been a tumultuous one for gilt funds. With the 10-year government security yield surging from 7.83 per cent to 8.9 per cent, gilt funds have been hit badly. Last week, the 10-year G-sec yield suddenly spiked to 9.1 per cent due to heavy selling. This has taken a heavy toll on the performance of medium-term and long-term gilt funds. According to data from Value Research, this category has been the worst performer of all fund categories in the year past, with the return merely 1.8 per cent. For debt funds as a whole, this is unusually low. The question is if it will continue to be sluggish. Not likely, say experts. Instead, such a yield in the 10-year G-sec offers investors an excellent opportunity to invest. Says Dhawal Dalal, head, fixed income, DSP BlackRock Mutual Fund: "Investors should not look at the past performance of gilt funds but focus on yield, very attractive at th...

Tactical trades may turn out to be winners: Jajoo Fixed income markets registered further gains amidst another round of volatility in a shortened trading week due to two holidays. Early in the week, higher than expected inflation print triggered a sharp sell-off with benchmark 10 year government bond breaching past the 9% mark for the second time in two weeks of new fiscal 2014-15 but then recovered with double ferocity to close the week 9bps lower at 8.85%. A large auction of Rs 20,000 crore was subscribed aggressively with cut-off slightly better than secondary market levels on the back of strong institutional demand, redemptions of Rs 43,547 crore and a huge term repo of Rs 60,000 crore.   Headline WPI inflation came sharply higher at 5.70%, handsomely beating consensus of 5.25% and more than 100 bps higher than 4.68% previous month. More alarmingly, core WPI spiked to 3.5% from 3.15% last month even as IIP was reported at a dismal -1.9%. Headline CPI for March stood at...

NBFCs approach RBI, govt over new companies Act Non-banking finance companies (NBFCs) have approached the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs to amend regulations under the new companies Act. These companies fear the stiff reserve requirements and norms on investment in government bonds will hit them hard. NBFCs are, however, yet to raise the matter with the ministry in a formal manner. Rules under the new companies Act make it mandatory for NBFCs to create a corpus (debenture redemption reserve account) to meet repayment obligations for debentures maturing within a year. Also, they have to invest 15 per cent of their resources in government bonds. While building buffers for repayment is good for financial discipline, the provisioning would eat into the funds to be deployed into business. And, this will be a huge burden on the already stretched balance sheets of NBFCs, say executives at such companies. Under the old companies Act (of 1956), ...

Reliance Mutual Fund lowest bidder for managing NPS MUMBAI: Reliance Mutual Fund has emerged as the lowest bidder among the fund managers qualified to manage funds in National Pension Scheme (NPS) for private sector on behalf of the sector regulator PFRDA. Its bid of 1 paise for every Rs 100 worth of NPS funds was way below the other nine bidders, which included UTIMF, DSP Blackrock MF and HDFC Pension Fund Management, a wholly-owned subsidiary of HDFC Standard Life. Bids by all the other nine entities were between 15 paise and 25 paise per Rs 100 worth of funds, sources said. In the next stage, according to PFRDA's request for proposal for bids that was published earlier, all the bidders who bid higher than Reliance MF, will be asked to match the lowest bid, that is Reliance MF's. The fund managers who finally qualify under this round of bidding will manage NPS funds of between Rs 500 crore and Rs 1,000 crore, sources said. Industry players, however, said that Relianc...

Automobile scrips rise in fund houses' preference Automobile stocks are now a key component on fund managers' dashboard. It has become the third-most preferred sector pick for equity mutual funds, even as the industry has had a fall in sales of both passenger and commercial vehicles in the past two years. Automobile stocks comprise close to Rs 17,000 crore of MFs' equity assets, show the latest statistics from the Securities and Exchange Board of India. Those in the so-called defensives' sectors -- pharmaceuticals and fast moving consumer goods (FMCG) -- have gone down in terms of fund managers' exposure. About 8.3% of overall equity assets under management has been pumped into automobile stocks (including ancillaries). This is the highest exposure the sector has had in many years. It appears fund managers have positioned themselves well in advance to reap benefits if the scenario turns positive. "It's mainly the big four-wheeler makers being pr...

Trading volumes in govt bonds jumps 200% Trading volumes in the government securities market has jumped by 200 per cent since the beginning of the new financial year as investors see value in the paper which also helped the yields softening from a high of 9.1 per cent. Earlier this month the yield on the 10-year benchmark government bond breached 9 per cent, which attracted buyers. According to data from Clearing Corporation of India Limited (CCIL) the trading volume of government bonds grew by nearly 200 per cent to Rs 40,240.46 crore on April 11 from Rs 13,459.03 crore on April 2. While the trading volume in the 10-year benchmark government bond rose to Rs 24,170.13 crore on April 11 from Rs 6,771 crore on April 2 recording a growth of almost 260 per cent. ALSO READ: Bonds record biggest weekly gain since Jan The yield on the 10-year benchmark bond which ended at 8.96 per cent on April 2 had risen to 9.10 percent on April 7, the highest level for benchmark 10-year notes s...

New Companies Act may hurt non-banking finance companies bond sales KOLKATA: The nascent public bonds market faces a threat from the new Companies Act, which could throw out the most important segment of fund-raisers -- non-banking finance companies -- as the law imposes some impractical conditions. Companies Act mandating that all bond issuers create a charge on 'specific' moveable asset could lead to finance companies such as SREI Finance, Muthoot, and Shriram Transport reducing their bond floats, say experts. Instead, these companies, which have been using market funds to lower costs, will be forced to go to banks, where the rates are higher. "The new rules will make it cumbersome for NBFCs to create security interest on loan receivables as the loans either get amortised or prepaid," says company law expert Vinod Kothari. Typically, NBFCs do not invest in immovable assets. A materially large portion of assets are in the form of receivables from custom...

NSEL to commence e-series remat today Financial Technologies promoted National Spot Exchange Ltd (NSEL) hasdecided to begin rematerialisation (remat) and financial closure of over 33,000 e-series investors from Saturday Financial Technologies promoted National Spot Exchange Ltd (NSEL) hasdecided to begin rematerialisation (remat) and financial closure of over 33,000 e-series investors from Saturday. The last date for receipt of requestapplication is April 23.In the process, NSEL will provide online the updated location, depository and denomination - wise free stock position and the updated stock report on a daily basis. Remat will be feasible only for those unitholders whohold units either matching or exceeding quantity but corresponding to standardbars available in the exchange vaults. Unitholders are required to fill in the required application form tothe exchange for which delivery of the metal from the city and location of thevault / warehouse where the allocation ha...

       

CPSE ETF only for high risk takers Goldman Sachs Mutual Fund - Central Public Sector Enterprises (CPSE) exchange-traded fund (ETF) listed last week. On the first day of trade, the fund rose 10.88% against its issue price (Rs 17.45). According to data from the National Stock Exchange's (NSE) website, CPSE ETF units' closing price on April 4 was Rs 19.35. On April 7, it opened higher at Rs 19.45 and closed at Rs 19.36. And on April 9 it opened at Rs 19.40 and closed at Rs 19.69. Thus, returning close to 13% (against the issue price) in less than a week.Goldman Sachs Mutual Fund - Central Public Sector Enterprises (CPSE) exchange-traded fund (ETF) listed last week. On the first day of trade, the fund rose 10.88% against its issue price (Rs 17.45). According to data from the National Stock Exchange's (NSE) website, CPSE ETF units' closing price on April 4 was Rs 19.35. The CPSE ETF basket consists of shares of ten big public sector units (PSUs) --- Oil & Nat...

The new companies law has come into effect from 1 April. Section 71(4) of the law requires every company that issues debentures to create a debenture redemption reserve (DRR) account out of its profits. Such an account can only be be utilized to redeem debentures. The corpus of DRR should be at least 50% of the amount raised through debentures before redemption starts. For instance, if a company is now raising non-convertible debentures (NCDs) worth Rs.1,000 crore for, say, 18 months, it will have to set aside Rs.500 crore out of its profits to create DRR on 31 March 2015. In other words, its distributable profit will get reduced by Rs.500 crore. Also, under the new norms, every company shall, on or before 30 April of each year, invest or deposit, a sum not less than 15% of the amount of its debentures maturing during the fiscal ending next March. This can be done in the form of deposits in banks or government or corporate bonds. This amount cannot be used for any purpose other t...

    Shriram City Union Finance Ltd ::  Secured Redeemable Non-Convertible Debentures   Issue Opens Issue Size Rating Tenor Coupon Rate (%) p.a. - Retail Category upto Rs 5 Lakhs & HNI Category Coupon Rate (%) p.a. - Insti. & Non Instit. Investors Frequency  of Coupon Rate Listing Issue Close 16-Apr-14 200 Cr Credit Rating : 'CARE AA' by CARE 24 Months 11.00% 10.50% Annual BSE May 16 2014 36 Months 11.50% 10.75% 60 Months 11.75% 10.85%       Form ...