Currency Futures-NSE and MCX-SX to launch futures trading in 3 new currency pairs-EUR, GBP and JPY-VRK100-30012010

Currency Futures-NSE and MCX-SX to launch futures trading in 3 new currency pairs-EUR, GBP and JPY-VRK100-30012010


Rama Krishna Vadlamudi                                       January 30, 2010

www.scribd.com/vrk100                                 vrk_100@yahoo.co.in

National Stock Exchange of India and MCX Stock Exchange will be launching futures trading in three additional currency pairs, namely, Euro-Indian Rupee, Pound Sterling-INR and Japanese Yen-INR, with effect from February 1, 2010. RBI and SEBI had on January 19, 2010, permitted the recognised stock exchanges to launch futures trading in these three additional currency pairs, in addition to US dollar-INR which was introduced in August 2008.

Some important details for all these additional currency pairs, as given by NSE circular dated January 29, 2010, are:

1. Contract trading cycle 

EURINR, GBPINR and JPYINR futures contracts will have a 12 month trading cycle. A new contract will be introduced after 12 noon on the last trading day of the near month contract.

2. Expiry day & time

EURINR, GBPINR and JPYINR futures contracts shall expire at 12 noon, two working days prior to the last business day of the expiry month.

3. Contracts available for trading

Futures contracts having the following expiries shall be available for trading on EURINR, GBPINR and JPYINR. On the expiry of a near month contract, a new contract shall be made available so that at any point in time there shall be at least 12 monthly contracts available for trading.

4. Order quotation:

Currency pair    Method of quotation

EURINR           Quotation for 1 EUR in Indian rupees
GBPINR           Quotation for 1 GBP in Indian rupees
JPYINR            Quotation for 100 JPY in Indian rupees

5. Permitted lot size

Currency pair   Permitted lot size per contract

EURINR          1,000 Euros
GBPINR          1,000 British Pounds
JPYINR           1,00,000 Japanese Yen

(since quotation is for 100 Japanese Yen; lot size on trading system shall be 1,000 Japanese Yen

6. Order placement

Members shall place orders in terms of number of lots.
 

If you want to know the full details of contract specifications and the margin requirements, JUST CLICK:

www.scribd.com/doc/21686968

or,

http://ramakrishnavadlamudi.blogspot.com/2010/01/currency-futures-market-in-india.html

RBI's Third Quarter Review of Monetary Policy 2009-10 : Shift in policy stance from 'MANAGING THE CRISIS' to 'MANAGING THE RECOVERY' - VRK100-29012010

RBI’s Third Quarter Review of Monetary Policy 2009-10


Rama Krishna Vadlamudi               January 29, 2010

www.scribd.com/vrk100


vrk_100@yahoo.co.in


If you want to read this article in a READER-FRIENDLY PDF format, just click:

www.scribd.com/doc/26035796


What are the implications for stock market and the Indian economy?




Shift in policy stance from ‘managing the crisis’ to ‘managing the recovery’

EXECUTIVE SUMMARY OF THE THIRD QUARTER REVIEW:



Monetary policy documents usually tend to be full of jargon and round-about expressions. Mr. D. Subbarao after taking over as RBI Governor just before the Lehman Brothers collapse has brought some sort of freshness, clarity and transparency in language, form and intent to the policy documents in the last 18 months of his able leadership. One refreshing feature about the third quarter review of monetary policy 2009-10 is its crispness. What ever the RBI Governor wants to convey has been conveyed in a succinct manner in the third quarter review of the policy.






Around 11.00 this morning, RBI announced its third quarter review of monetary policy 2009-10. Now, let us see what the RBI Governor has set out in the policy for the economy. As expected, there was a hike in cash reserve ratio (CRR) and there is no hike in the LAF-Repo Rate and LAF-Reverse Repo Rate. But, what surprised the market was the 75-basis point (0.75 per cent) hike in CRR from the present 5.00% to 5.75%. The days of cheap money policy are over and we have entered an era of dear money policy.






RBI is telling that the Indian economy is recovering fast and it has raised its GDP growth forecast to 7.5 per cent for 2009-10. It is very optimistic about GDP growth rate. It has raised the WPI inflation forecast to 8.5 per cent by the end of March 2010. It has reduced its projections for money supply, deposit and loan growth for 2009-10. It has expressed concern about the slow recovery in the world economy which, it feels, will have some adverse impact on our growth prospects. It expects the Government go give a clear roadmap for withdrawing fiscal stimulus. It wants the Government to return to the path of fiscal consolidation (meaning that Government should bring down fiscal deficit.). RBI does not want to upset the apple cart of India’s growing economy. It does not want to hamper the growth in consumer spending and private sector investment. As such, it has postponed the increase in interest rates for the time being. At present, it is taking out only excess liquidity by raising CRR. As RBI rightly put it, it wants to move from ‘Managing the Crisis’ to ‘Managing the Recovery.’ The details of the policy are given below:

THE HIGHLIGHTS OF THE THIRD QUARTER REVIEW OF THE MONETARY POLICY:

1) Cash Reserve Ratio has been increased from 5.00 per cent to 5.75 per cent. This is being done in two stages. In the first stage, the increase will be 50 basis points to 5.50 per cent effective February 13, 2010. In the second stage, the increase will be 25 bp from 5.50 per cent to 5.75 per cent of their net demand and time liabilities (NDTL) with effect from February 27, 2010.

2) The LAF-Repo Rate has been kept unchanged at 4.75 per cent

3) The LAF-Reverse Repo Rate has been kept unchanged at 3.25 per cent

4) The Bank Rate has been retained at 6.00 per cent

5) The Savings Bank Rate has been retained at 3.50 per cent

RBI’s GROWTH FORECAST:

The following are the growth forecasts for various indicators as per the third quarter review of monetary policy:

 GDP growth for 2009-10 has been revised to 7.5 per cent (from 7 per cent earlier). Interestingly, this is in sharp contrast to 6.9-per cent growth projection proposed by professional forecasters’ survey conducted by RBI and announced yesterday.

 WPI inflation is expected to touch 8.5 per cent (from 6.5 per cent projected earlier) by end-March 2010

 Indicative projection for deposit growth rate is reduced to 17 per cent (from 18 per cent earlier)

 Indicative projection for loan growth is reduced to 16 per cent (from 17 per cent earlier)

 Indicative projection for M3 growth is cut to 16.5 per cent – RBI maintains these are only indicative projections, but should not be construed as RBI’s targets

IMPACT OF THE POLICY MEASURES:

I. IMPACT ON LIQUIDITY:

We have seen a long period of excess liquidity, ranging from Rs 70,000 crore to Rs 1,40,000 crore, in the banking system in the last nine months. (This does not include Government’s surplus kept with the RBI.) RBI is behind the curve and it wants to make up for the lost time. As such, it raised the CRR by 75 basis points suddenly. A 75-bp hike in a single instance has never been attempted by RBI in the last 10 years. The two-stage hike in CRR will suck out liquidity to the tune of Rs 36,000 crore from the banking system by the end of February 2010. Coupled with the Advance Tax outgo in the middle of March 2010, a substantial portion of the excess liquidity would have been taken out by the end of March 2010.

II. IMPACT ON MONEY MARKETS:

With tightening of liquidity, short-term money will become costlier as short-term rates for certificate of deposit, commercial paper, treasury bill, etc, will go up. As such, one can expect better returns from liquid/money market mutual funds. At this point of time, they have been giving returns in the range of 4.50 and 5.00 per cent. The returns from the liquid/MMMFs will go up gradually to between 5.25 and 5.50 per cent in the next few months. However, as money supply will be tight, the net assets of mutual funds will be under pressure in the next few months.

(Liquid funds offer much better returns compared to Savings Bank accounts. If you want to invest your short-term money in liquid mutual funds, you can read my article at:)

Good Liquid or Money Market Mutual Funds

www.scribd.com/doc/23073415

III. IMPACT ON BOND MARKET:

Bond market was expecting a 50-basis point raise in CRR. But, when RBI raised CRR by 75 bp, the market reacted negatively in the initial stage and yields were hardened by five basis points from 7.68 per cent to 7.73 per cent. Later, they absorbed the policy action and at the time of writing this article, the 10-year benchmark (6.90% GS 2019) yield retraced back to 7.69 per cent. In future, bond markets will remain stable as international crude oil price is down to USD 73.5/barrel from levels of USD 85/barrel two weeks ago. With huge pipeline of PSU disinvestment programme by the Central Government, the pressure on fiscal deficit will be lesser going forward. And then there is this auction of 3G spectrum to telecom companies, through which Government wants to raise about Rs 35,000 crore. However, much will depend on tax collections and the borrowing programme of the Central Government which will be announced when the Union Budget is presented on February 26, 2010.

IV. IMPACT ON STOCK MARKET:

Benchmark index, Sensex, has lost 10 per cent in the last seven to ten days due to expectations of rate hike by RBI, poor quarterly results from some bellwether companies (like, Larsen & Toubro, HUL, M&M, HCL Technologies) and weak global indications which were worsened by comments from the US President, Barack Obama, who wants to put curbs on proprietary trading done by big banks in the US and hedge fund activities. After the RBI announcement of the policy, Sensex went down up to minus 300 points (over previous day’s close) and recovered later. At the time of writing this article, the Sensex was flat at 16,300. After a loss of about 10 per cent in the last one week or so, one may not see much weakness in the stock indices going forward due to RBI’s CRR hike.


Some companies – like, Maruti Suzuki, Asian Paints, Reliance Industries, Hero Honda, Axis Bank, BHEL, Tata Steel, Infosys, TCS, Wipro – have posted good to excellent quarterly results. But, as is its wont, stock market has ignored these positive results and focused more on negative numbers.

Interestingly, in the last round monetary tightening from October 2004 to August 2008, when YV Reddy was at the helm as RBI Governor, Sensex had gone up from 5,600-level to 14,500-level, a spectacular rise of 160 per cent in a little less than four years. In this context, is it correct to say that monetary tightening will stunt growth in the economy and corporate profits? I have my own doubts. Of course, excessive raise in interest rates will dampen GDP growth as had happened when YV Reddy raised interest rates in the latter part of 2007 and early part of 2008. This monetary tightening had resulted in the sudden slump in GDP growth rate to 7.80 per cent in the first half of 2008-09 and further to 5.80 per cent in the second half of 2008-09 which was much less than 9.0 per cent growth levels achieved in 2007-08. To be fair to Mr YV Reddy, I would like to add that there are other reasons for the sudden slump in GDP growth to 6.70% in 2008-09.

Of course, those times, the prospects, circumstances and the context were different. As we have seen here, the argument that monetary tightening is detrimental to economic growth is rather specious and fallacious on the face of it. The notion that dear money policy (that is, rising interest rate scenario) from RBI will hamper growth needs further investigation. Having said that, I would like to add that rising interest rates will have adverse impact on interest rate-sensitive sectors, like, automobiles, housing finance, housing, real estate, etc. Banks may weather the rising rate scenario in a better manner as they will concentrate more on protecting their net interest margins (NIMs) by raising the deposit and loan rates. Of course, banks may not raise loan rates immediately.

If RBI raises repo rate, then banks will seriously consider raising interest rates. However, the sluggish credit growth may prove to be more tricky for banks to raise their interest rates on loans. If the credit off-take picks up, banks are likely to start raising loan rates. The mandatory 70-per cent provisioning coverage and rising NPAs in the books of banks will put the stock markets on edge for some more time. One more important thing is that the rise in CRR will bring down the returns banks earn on their assets as they have to keep this extra CRR money with RBI at zero per cent interest.

V. IMPACT ON INDIAN ECONOMY:

The period of accommodative monetary policy has come to an end and the excess liquidity is going to be taken out by the end of March 2010. As mentioned above, it will have negative impact on rate-sensitive sectors. RBI has to make some tough decisions to achieve its twin objectives of making credit (at reasonable rates) available for supporting growth while anchoring inflationary expectations in the economy. The economy can easily absorb the 75-bp hike in CRR for now, as there is more surplus money with banks. Private sector in India is more dependent on FCCBs, FDI, IPOs, private equity and QIPs rather than bank credit.


RBI is concerned that the slower economic recovery at the global level may impact India’s economic prospects adversely. It is also concerned about the food inflation which is at 17.5 per cent at this point of time. RBI is closely watching the progress of south west monsoon also. It has also expressed its concern on large capital inflows into the Indian economy beyond the level of absorption by Indian economy. It says that these capital inflows may complicate monetary management and exchange rate policy.

RBI in its policy has strongly advocated a policy of reining in India’s huge fiscal deficit, which is around 13 per cent of the GDP, much above the FRBM’s targets. (Please don’t believe the Government’s official figure of 6.8 per cent fiscal deficit!) RBI has indicated, in no uncertain terms, that the Central Government should indicate its roadmap for withdrawal of fiscal incentives; tax policies are to be spelt out clearly; and unnecessary expenditure should be curbed. It remains to be seen how the Government will respond to RBI’s strong overtures in this regard. Even the 13th Finance Commission, which submitted its report to the Government recently, has suggested that India should return to a path of fiscal consolidation immediately in the next two years.

WHY DID CHOOSE TO RAISE CRR, BUT NOT REPO RATE?:

Interestingly, RBI chose to raise only CRR now. It has refrained from raising interest rates by keeping both the Repo and Reverse Repo at historically low levels. So, why did RBI opt to raise only CRR, but not Repo/Reverse Repo rates now? To know the answer, we need to go back a little in time. If you analyse the rates in the last decade we can see that whenever the CRR was between 5.50 and 6.00 per cent, the Repo and Reverse Repo rates were kept at much higher levels. RBI’s actions in the last decade indicate that whenever there is increase/decrease in reserve ratios (CRR & SLR), there is an associate increase/decrease in policy ratios (bank rate, repo rate and revere repo rate) or vice versa. Of course, there could have been a little time lag between RBI’s actions.

CRR was last revised wef January 17, 2009 when it was reduced from 5.50 per cent to 5.00 per cent. Repo and Reverse Repo rates were last revised wef April 21, 2009 when they were reduced from 5.00 per cent to 4.75 per cent and from 3.50 per cent to 3.25 per cent respectively. Bank rate has not been revised since April 2003.

For example, CRR was at 5.50 per cent in November 2008 and at that time repo and reverse repo rates were at 7.50 and 6.00 per cent respectively. In February 2007, CRR was at 5.75 per cent; whereas, repo and reverse rates were at 7.50 and 6.00 per cent respectively. This clearly shows RBI has been behind the curve (Meaning monetary policy action is a bit slow in response to rising inflation and higher GDP growth forecast – Of course, the years 2008 and 2009 were very challenging for central banks around the world due to the global financial meltdown and as such RBI was justified in keeping the policy rates very low as it wants to play safe and not stifle the economic recovery in the nascent stage.). Now, with a steep and sudden 75-bp increase in CRR today, RBI wants to move fast as it no longer wants the excess liquidity feeding inflationary pressures.

Now, if you see while the CRR is at 5.75%, the Repo and Reverse Repo rates are at 4.75% and 3.25% respectively. RBI has delayed the hike in interest rates as it wants to regulate the exit of expansionary policies in a smooth manner. It does not want to give any sudden shocks to the economy. This reassurance is good for the economy. However, we need to watch how the monetary exit will be coordinated with the withdrawal of excise duty concessions and service tax reduction by the Government. We may look for some indications about that in the next Union Budget on February 26, 2010.

RBI’s policy of holding interest rates for now is in tune with the expectations of the Government. As we have seen in the last six months or so, policymakers at the Central Government have been cautioning, directly and indirectly, the RBI not to raise interest rates immediately as the economy recovery is in early stages. The Prime Minister and Finance Minister have spoken in this regard and expressed that monetary and fiscal incentives are likely to be continued for some more time. Even Montek Singh Ahluwalia, deputy chairman, Planning Commission, and Kaushik Basu, the new Chief Economic Advisor in the Finance Ministry have cautioned against any immediate withdrawal of fiscal as well as monetary stimulus. Only the chairman of the PM’s Economic Advisory Council, C Rangarajan, has been consistently advocating rate action from RBI. Even SS Tarapore, former RBI Governor, has been a staunch advocate of dear money policy for some time.

More over, the Union Government wants to divest its stake in PSUs, especially, NTPC and others. At this point of time, the Government does not want to upset the stock markets. It wants to raise money for itself at much better prices for its stake sale.

What is the outlook for interest rates?

As explained before, RBI has got a lot of catching up to do with country’s growth estimates and rising inflationary concerns and accordingly it has raised its forecast for GDP growth and inflation rate significantly. Sooner than later, it will have to increase repo and reverse repo rates by at least 150 basis points. This will be done in a gradual manner in the next six to nine months. However, we can anticipate that RBI will have to raise repo and reverse repo rates by at least 25 basis points by the end of February 2010, by which time Union Budget and third quarter GDP figures would have been out. Of course, RBI will be watching closely wholesale price index as well as food inflation, in addition to GDP, IIP growth figures (3rd quarter GDP figures will be announced on February 26, 2010.) And it will be monitoring the progress of actions from other central banks, like, US Fed, BoE and ECB.

The policy is, more or less, in tune with the expectations of the financial markets. Though it is slightly behind the curve, it wants to balance its twin objectives of price stability and making credit available for supporting growth in a way that is in line with the objectives of fiscal policy and the Government’s policies. RBI has said that it will support the growth recovery process without compromising on inflation. One comforting factor for the RBI is the deep correction (of about 13 per cent in international crude oil prices) in crude oil price to USD 73.50/barrel at this point of time. Any sudden spike in the oil prices to USD 100/barrel or beyond will pose serious challenges to RBI and the Indian economy.

ABBREVIATIONS USED:

BoE : Bank of England

CRR : Cash Reserve Ratio (the money banks have to keep statutorily with RBI – RBI does not pay any interest on CRR money kept by banks)

ECB : European Central Bank

FCCB : Foreign Currency Convertible Bond

FDI : Foreign Direct Investment

FRBM : Fiscal Responsibility and Budget Management Act

IPO : Initial Public Offer

LAF : Liquidity Adjustment Facility (RBI uses this facility to withdraw excess liquidity from banks or inject liquidity into banks when they need it)

LAF-Repo Rate : The rate charged by RBI to banks for lending its overnight money to banks

LAF-Reverse Repo Rate : The rate paid by RBI to banks for keeping banks’ surplus funds overnight with RBI

NPAs : Non-Performing Assets or bad loans in banks’ books

QIP : Qualified Institutional Placement

RBI : Reserve Bank of India

SLR : Statutory Liquidity Ratio

US Fed : US Federal Reserve

WPI inflation : Inflation based on wholesale price index

MAHARASHTRA SEAMLESS-AN ANALYSIS FOR INVESTMENT

MAHARASHTRA SEAMLESS LIMITED-AN ANALYSIS FOR INVESTMENT

Rama Krishna Vadlamudi, BOMBAY                 Janauary 24, 2010

I had analysed Maharashtra Seamless for investment purpose on November 11, 2009. My case for investment was as follows:

To read the full article, JUST CLICK:

Maharashtra Seamless - An Analysis for Investment

www.scribd.com/doc/22356027

Or,

http://groups.google.co.in/group/random-thoughts-on-investments/files?hl=en&&sort=date

 Any rise in international crude oil prices will have a salutary impact on E & P activity of the world’s Oil majors and their requirement for seamless and ERW pipes will go up; which in turn will give a boost to MSL’s revenues

 Steel prices have fallen since last year and this is a big profit margin-booster for the company. As a result of the decline in steel prices, the company’s OPM has risen by 11.5 percentage points to 27.20 per cent in September 2009 quarters (over Sep.08 qtr).

 It’s practically a debt-free company and known for its high transparency

 It’s a cash-rich company with a cash and cash equivalents of Rs 622 crore as on 30.9.09, working out to Rs 88 cash per share

 At CMP of Rs 312 (close prices of 9.11.09), the PE ratio is 8.3 and the price-book value is 1.70. These ratios are lower compared to its competitors Jindal SAW and Welspun Gujarat which command a PE ratio of 9.1 and 13.8; and price-book value of 1.74 and 3.25 respectively

 MSL’s operating profit margin (OPM) for the quarter ended September 2009 is 27.20 per cent (a jump of 11.5 percentage points compared to 14.7 per cent in September 2008 quarter) due to decline in metal prices

 Compared to MSL’s OPM of around 27 per cent, the OPMs of Jindal SAW and Welspun Gujarat are much lower at 19 and 16 per cent respectively

 MSL’s ROCE and RONW are at 30.6% and 21.5% respectively for 2008-09 and these are one of the highest in the pipes industry in India

 Jindal SAW and Welspun Gujarat have much lower capital efficiency with their ROCE at 18.6 and 17.2 per cent; and RONW of 16.2 and 14.8 per cent respectively for 2008-09

 MSL’s cash and bank balance is at Rs 622 crore amounting to Rs 88 per share (September 30, 2009)

The current market price of the company’s equity share is Rs 356 (close price of January 22, 2010) and its PE ratio is 9.5 and price-book value is 1.92. Its 52-week high was Rs 392 on January 18, 2010. Following the weakness in markets in the wake of disappointing December 2009 quarterly results from L&T, the stock had fallen from Rs 392 to the CMP of Rs 356. The weakness can be utilized by investors to accumulate the stock.

Now, Business Line has recommended a buy on the stock in its issue dated January 24, 2010. Its recommendation is more or less on same investment rationale as I’ve mentioned above. To read the abridged version of their analysis, just see below.

Is it still worth investing even at this point of time at the current market price of Rs 356 per share? I genuinely think it’s attractive from a two-three year perspective.

Any way, do your own diligence test through business prospects, competition, oil prices, balance sheet strength, etc; and invest according to your risk appetite, risk profile, asset allocation and following other investment tenets. And read my ‘disclaimer’ given in the above mentioned article before investing.

Happy investing, Rama Krishna V,   BOMBAY

++++++++++++++++++++++++++++++++++++++++++++++++++++

Maharashtra Seamless: Buy

BUSINESS LINE, Janury 24, 2010

Investors can consider buying the shares of steel pipe maker Maharashtra Seamless.

 At the current price of Rs 356, the stock trades at 9.5 times its one-year trailing earnings, with robust growth in sales and net profit in last two years

 In addition to boasting operating margins that have been consistently better than bigger peers such as Jindal SAW and Welspun-Gujarat Stahl Rohren, the company has also consistently provided better returns on capital employed.

 It has also weathered the pressure on realisations over the last 16-18 months much better than peers. Jindal SAW and Welspun-Gujarat Stahl trade at 9.7 times and 10.9 times their per share earnings, respectively.

 Though currently dependent on external sources for steel billets, the company is also mulling a move towards an integrated model by producing billets.

 Its order book, which stands at around Rs 430 crore, includes a multi-year deal from ONGC for OCTG products.

 Prospects for future order flows appear strong with potential demand from GAIL, Reliance Gas Transportation and other oil and gas distribution companies.

 Globally, too, rising oil and gas prices have also rendered new projects more viable, improving medium-term demand prospects for pipes, casings, etc.

 Recently imposed duties on Chinese pipe imports by the US augur well for pipe makers across the globe including Maharashtra Seamless which has already witnessed a spike in export orders.

 It is practically a zero-debt company

 The risks include the import threat from China and the still-tentative prospects for global demand including the US.

 Raw material costs have favoured secondary steel makers through 2009, this is unlikely to remain the case through 2010.

To read the full article, JUST CLICK:

http://www.thehindubusinessline.com/iw/2010/01/24/stories/2010012451720100.htm

Currency Futures Market in India-Trading in 3 new currency pairs permitted by RBI-VRK100-22012010

Currency Futures Market in India-Trading in 3 new currency pairs permitted by RBI

Rama Krishna Vadlamudi    January 22, 2010

www.scribd.com/vrk100


vrk_100@yahoo.co.in


To read this full article in a reader-friendly PDF form, just click:




www.scribd.com/doc/21686968

It is almost one and a half years since the introduction of currency futures under the currency derivatives segment of Indian stock exchanges. The volumes have increased tremendously on NSE and its arch rival MCX-SX, the two dominant exchanges of trading in currency futures; while on BSE practically there have been no volumes in the last six months or so. Trading in currency futures had started by NSE on August 29, 2008. This article examines the volumes traded on these and explains the basics of the currency futures from a layman’s point of view.

RBI’s decision to introduce more currency pairs for currency futures trading is welcomed by the industry:



In its second quarter review of Annual Policy (Monetary Policy) released on October 27th, 2009; Reserve Bank of India had proposed to permit the three recognized stock exchanges to trade currency futures in three more currency pairs namely, Euro-Indian Rupee, Pound Sterling-INR and Japanese Yen-INR; in addition to US Dollar-INR which has already been permitted since the introduction of currency futures in August 2008. On January 19, 2010, RBI and SEBI came out with guidelines for introducing these three new currency pairs. The size of the contract would be Euro 1,000; GBP 1,000 and JPY 1,00,000 for Euro, GBP and JPY respectively.



The introduction of these new currency pairs has been anticipated for some time by the industry. Now, that the RBI at last is permitting more currency pairs in currency futures, this is good news for the industry.



MARGIN REQUIREMENTS for USD-INR Contract (Full Details for all the four currency pairs are given in the Annexure 1): Basically there are three types of margins - Initial Margin (Also called the SPAN Margin), the Extreme Loss Margin and Calendar Spread Margin. The Initial Margin is 1.75 per cent MINIMUM on the first day of the contract (that means the first day of introduction of a contract – the margin is higher on first day because there is no historical price trend available for the contract) and one per cent MINIMUM thereafter. The word 'Minimum' is very important here. Practically it is never at the minimum levels. We find that it is around 1.75% - 2% now (whether first day or other days). During peak volatility in USD/INR, this has gone up to 3% also. This margin can be changed up to six times a day depending on the volatility of the market. The initial margin shall be deducted from the liquid networth of the clearing member on an online, real time basis.




Extreme Loss margin is always 1% flat. So, the total margin now is approximately 2.75% to 3% in all. The above calculation is only for one sided position. If any client takes a calendar spread position (long in one contract and short in another), the calendar spread margin shall be at a value of Rs. 400 for a spread of 1 month; Rs 500 for a spread of 2 months, Rs 800 for a spread of 3 months and Rs 1,000 for a spread or 4 months or more. The benefit for a calendar spread would continue till expiry of the near month contract. The client can avail the benefit of calendar spread till the maturity of the nearer leg contract. (These are only for USD-INR pair and for other pairs, see Annexure 1.)


To read this full article in a reader-friendly PDF form, just click:



www.scribd.com/doc/21686968














 

BEST TAX-SAVING MUTUAL FUNDS-ELSS-VRK100-18012010

BEST TAX SAVING MUTUAL FUNDS-ELSS


Rama Krishna Vadlamudi            January 18, 2010

www.scribd.com/vrk100

TO READ THIS ARTICLE IN A READER-FRIENDLY PDF FORMAT, JUST CLICK:

www.scribd.com/doc/25382935


The last quarter of a financial year is very crucial as far as tax-saving equity schemes are concerned. During these three months from January to March, individual investors allocate most of the savings into ELSS (equity linked savings schemes) that provide tax deduction from taxable income under Section 80C of the Income Tax Act. So, it would be better if we know what are the best tax-savings schemes to invest in at this point of time.

Before we begin our analysis of the best tax-saving schemes, technically known as ELSS funds, it would be instructive to find out what are the funds that are at the bottom of the ELSS category:


Table 1. BOTTOM FIVE FUNDS ON 3-YEAR RETURNS BASIS

Sl.No. NAME OF THE FUND AAUM for Dec.09              CAGR*

                                                  Rs crore                   1-year %   3-year %   5-year %

1 Fortis Tax Advantage Plan          74                            81.36      (2.65)           -

2 ING Tax Savings                        48                          115.71      (1.50)       17.92

3 LICMF Tax Plan                        43                            75.26        1.10       11.49

4 Principal Tax Savings                282                            82.38        1.14       18.92

5 Escorts Tax Plan                          5                             79.03        2.33       17.13

CATEGORY AVERAGE              NA                           96.49        8.21       21.90

*As on January 15, 2010


As can be seen from the above table 1, while the category (ELSS) average return for three years is 8.21, the fund at the bottom delivered a negative return of 2.65 per cent – with a gap of more than 10 per cent CAGR in returns, which will be huge in absolute terms. Even if we compare the five-year performance, the category average is 21.90%, the worst performing scheme could deliver only 11.5 per cent CAGR – again with a huge gap of more than 10 per cent CAGR.

However, when you compare the returns of the best ELSS fund with the worst fund, the difference will be huge. On a three-year basis as on January 15, 2010, the topmost fund has delivered a return of 21.30 per cent and the worst fund (as given in table 1 above) gave a negative return of 2.65 per cent – with the gap between the worst and best being around 24 per cent. While selecting our funds, it’s better to know the funds at the bottom so that we could choose the best funds for our mutual fund portfolio, while avoiding the funds at the bottom.

LIST OF BEST ELSS SCHEMES

Table 2. THE FABULOUS FOUR!

Sl.No. NAME OF THE FUND LARGE/MID CAP Bias RISK GRADE NAV$

($ as on 15.01.2010)

                                                                                                                        Rs

1 Fidelity Tax Advantage          Large 64%, Mid 35%            Low                18.58

2 Franklin India Taxshield         Large 67%, Mid 33%            Low              182.96

3 HDFC Taxsaver                     Large 53%, Mid 47%  Below Average        203.44

4 Sundaram BNPP Taxsaver    Large 57%, Mid 43%  Below Average         43.87

Notes: All are growth plans and NAV is for growth plans; and all are open-ended schemes


Table 3. More on the Fabulous Four!

Sl.No. NAME OF THE FUND      AAUM for Dec.09        CAGR

                                                      Rs crore              1-year %    3-year %    5-year %

1 Fidelity Tax Advantage                   1,134                 98.60       13.26             -

2 Franklin India Taxshield                    746                 93.75       12.25         24.08

3 HDFC Taxsaver                               2,084               115.49       10.72         27.82

4 Sundaram BNPP Taxsaver               1,270                 89.65       14.60         28.11

CATEGORY AVERAGE                     NA                   96.49          8.21        21.90

Notes: AAUM-Average assets under management; CAGR-compounded average growth rate; and returns as on 15.1.10

Other good funds include, Canara Robeco Equity Taxsaver, SBI Magnum Taxgain 1993 and Reliance Taxsaver. Though past performance may not be a guide to the future performance, it is expected that the funds are going to do well in future also. In the following pages, we shall discuss more on the performance and portfolio of these schemes:

1. FIDELITY TAX ADVANTAGE:

This fund was launched in January 2006 and it is managed by a veteran fund manager, Sandeep Kothari. The fund is tilted towards large cap stocks with a share of two-thirds in them. It is a conservative fund and the fund manager is known for his consistency and long-term view. He usually does not believe in keeping the assets in cash or cash equivalents. The top holdings in the fund as on November 30, 2009 are: Reliance Industries, HDFC Bank, ITC, SBI and Larsen & Toubro. It is betting on sectors: Financial Services, Energy and Pharma. Because of its higher exposure to large cap stocks, the risk is low.

2. FRANKLIN INDIA TAXSHIELD:

This fund was launched in the second quarter of 1999 and it is managed by an experienced fund manager, Anand Radhakrishnan. The fund is tilted towards large cap stocks with a share of two-thirds share in them. It is a conservative fund and the fund manager is known for his consistency and long-term view. The cash holding in the scheme is practically zero. The top holdings in the fund as on December 31, 2009 are: Infosys, Reliance Industries, Axis Bank, HDFC Bank, and Bharti Airtel. It is betting on sectors: Financial Services, Energy and Engineering. Because of its higher exposure to large cap stocks, the risk is low.

3. HDFC TAXSAVER:

This fund was launched in March 1996 and it is managed by a skilled fund manager, Vinay Kulkarni. Compared to the other two funds mentioned above, this fund’s exposure to mid cap stocks is much higher at slightly less than 50 per cent. The cash holding in the scheme is around four percent only and usually the fund does not keep much of its assets in cash. The top holdings in the fund as on December 31, 2009 are: ICICI Bank, SBI, Crompton Greaves, Dr Reddy’s Labs and TCS. The fund manager is overweight on sectors: Financial Services, Pharma and Technology. Because of its higher exposure to mid cap stocks, the risk is below average. However, the fund is well-known for protecting investor’s money during bear markets or severe downturns as was proved during 2008.

4. SUNDARAM BNP PARIBAS TAXSAVER:

This fund was launched at the end of 1999 and it is managed by a veteran fund manager, Satish Ramanathan. Like HDFC Taxsaver, this fund’s exposure to mid cap stocks is much higher at around 43 per cent. The cash holding in the scheme is zero. The top holdings in the fund as on December 31, 2009 are: Tata Motors, TCS, ICICI Bank, Mahindra & Mahindra and Cairn India. The fund manager is overweight on sectors: Energy, Financial Services and Technology. Because of its higher exposure to mid cap stocks, the risk is below average. In the last six months or so, the fund has increased its exposure to mid cap stocks as mid cap stocks have done much better than large caps during that period.

The following filters have been applied while arriving at the above set of funds:

1) The reputation of the particular fund house is considered before picking up individual schemes of that fund house

2) Experience and long-term track record of the fund manager

3) Consistency of returns during bear phases as well as bull markets

4) Long-term track record of the fund, say, more than three/five years

5) Only growth plans of open-ended, diversified equity mutual fund schemes are considered


There is not any entry load on any of the above schemes. With effect from August 1, 2009, entry loads are banned by the capital market regulator, SEBI. As of now, these schemes do not charge any exit load (3-year lock-in period).

Some Caveats before investing in ELSS schemes

1. ELSS schemes are subject to a lock-in of three years from the date of investment. It’s better to invest in growth options, rather than dividend options, if you are looking for long-term returns. Many a time, funds offer the bait of big dividends towards the end of the financial year to attract more retail investors into these schemes. Dividends are paid out of the NAV and as such investors do not derive any benefit out of them. After dividends, the NAV comes down to the extent of dividend paid.

2. ELSS schemes are eligible for tax deduction of up to a maximum of Rs one lakh under Section 80C of Income Tax Act.

3. If you’re in higher tax brackets of 20% or 30%, investment in these schemes is more beneficial. However, if you’re in 10% tax slab, it’s better to avoid them as they carry the risk of three-year lock-in. Instead, you can go for good and diversified equity mutual funds.

- - -

For calculating your tax liability and to know your income tax slabs, JUST CLICK:

Income Tax Slabs 2009-10--Resident Individuals, HUF, etc

www.scribd.com/doc/19394676

For knowing about good and well-diversified equity mutual funds, JUST CLICK:

Good and well-diversified equity MFs in India

www.scribd.com/doc/22665551

HOW TO CHOOSE EQUITY MUTUAL FUNDS

Before investing in an equity mutual fund, it would be better if investors take a hard look at the following five parameters:


1) Sustainable Performance: Consider the performance of the fund during several time periods – in a bear market as well as a bull market. Don’t consider only the recent performance. Take into account the returns over three/five year time periods.

2) Suitability: The investment objective of the fund must match with the objective of the individual investor. Mid-cap funds may not be suitable for some risk-averse investors. Likewise, investors with higher risk appetite may like to invest in mid-cap oriented funds.

3) Fund Manager’s Track Record: Watch the track record of the fund manager across various funds and different fund houses (if any)

4) Diversification: Check for the number of stocks and concentration of the portfolio. Too large a number of stocks or too less may not provide optimal returns for the investors in the long run.

5) Risk parameters: Look for Sharpe Ratio – which is statistical tool measuring risk-reward ratio. This ratio measures the amount of excess return for each unit of risk taken by the fund.

For a detailed article on picking up good equity mutual funds, just click:

http://www.scribd.com/doc/20712330

Some Caveats before investing in equity mutual funds

1) Read the Scheme Information Document (SID) and Statement of Additional Information (SAI) thoroughly before investing

2) MF performance is subject to market risk. During 2008, some good funds had lost only 40 to 45 per cent against the loss of around 50 to 52 per cent by the market. However, there are some funds which managed to lose more than 85 per cent of their NAV in just one year!

3) Time you keep your money in the market is more important than TIMING the market

4) The longer the time horizon of your investments, the lesser the risk

5) Regular investments through a Systematic Investment Plan (SIP) in the market during the bull as well as the bear phases will give better returns for long-term investors. It’s better to avoid lump sum investments to the extent possible.

6) Investors should invest a part of their savings or surplus as per their asset allocation. Asset allocation is a process whereby every investor shall allocate (depending on their own risk appetitie, risk profile, age, time horizon, investment objective, etc) funds to different asset classes, like, fixed deposits, PPF/NSC, equities, mutual funds, real estate, gold and others; in addition to life insurance and medical insurance

7) Before jumping into equities or equity mutual funds, consult your certified financial advisor and get his/her advice based on your investment objectives and needs

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Data source: ValueResearch

AUTHOR’S DISCLAIMER: This should not be construed as a recommendation by the author. The author holds a small stake in a few mutual fund schemes and as such it’s safe to assume that the author has a vested interest in general market going up. The views of the author are personal. Readers or investors must consult their certified financial advisor before taking any decision on their equity investments and the investment should be in line with their risk profile & risk appetite and their general market perception. Any equity investment should be within their overall ASSET ALLOCATION, which is extremely vital.

THE BEST OF MY STUFF ON                                           Reads

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2. Income Tax Slabs 2009-10 for Salaried Class                3 447

3. Direct Taxes Code Bill 2009-analysis                               1 572

4. Public Provident Fund PPF ac-Little Known Facts       1 522

5. Govt Securities Market in India and Bond Duration Management 946

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Chinese Central Bank Steps In Strongly To Control Its Overheating Economy-VRK100-13012010

CHINESE CENTRAL BANK STEPS IN STRONGLY TO CONTROL ITS OVERHEATING ECONOMY.


What will Reserve Bank of India do now? When is the CRR hike likely in India?

Rama Krishna Vadlamudi

January 13, 2010

www.scribd.com/vrk100


(To View this article reader-friendly PDF form, JUST CLICK:

www.scribd.com/doc/25121900)



CHINA RAISES ITS RESERVE RATIO BY 50 BASIS POINTS:

Chinese Central Bank on January 12th raised the reserve requirement ratio, the proportion of deposits banks must set aside as reserves, by 50 basis points with effect from January 18th. The present hike my drain out liquidity in China to an extent of 200-300 billion yuan. It was the first time revision in the ratio since it lowered the ratio in December 2008.

Apparently, People’s Bank of China is raising the ratio in order to cool its overheating economy and to control inflationary pressures. The raise is likely to arrest any asset bubbles in the Chinese economy. The move came earlier than anticipated by the markets.

Interestingly, the hike in reserve ratio has come after reports suggested over-lending by banks in China in the last six months or so. In the first week of this year alone, loans have gone up by 600 billion yuan. A few days back, China has surpassed Germany as world’s largest exporter. China’s exports rose around 18 per cent in December 2009. Total exports of China in 2009 were USD 1.2 trillion, down 16 per cent over 2008. Total imports in 2009 were at USD 1.01 trillion, down 11 per cent over 2008. Even though German data for 2009 is yet to be out, it is expected that China has overtaken Germany in exports. Moreover, China is expected to overtake Japan as the world’s largest economy this year. All this point out to a dominant China going forward.


EXIT STRATEGY OF CENTRAL BANKS AND WHAT WILL RBI DO NOW?
 

China has become the second country, after Australia, to chalk out its exit strategy from loose monetary and fiscal policies, which were pursued to stimulate its economy which was reeling under severe downturn following the global financial meltdown in 2008. The surprising move by Chinese Central Bank is likely to influence the decisions of Reserve Bank of India when it meets on January 29th for the third quarter review of its Annual Policy. In all likelihood, RBI may raise CRR by 50 basis points in order to curb the spiraling food inflation even though some policymakers want to continue the loose monetary policy for some more time.


WHY ARE INDIAN EXPORTERS LOSING OUT COMPARED TO CHINESE EXPORTERS?

India’s currency has appreciated against the US dollar of late. It has gone up from around 52-level to the present 45.70-level. During the first week of March 2009, Rupee touched a high of 52 against the US dollar. At that time, Chinese Renminbi was hovering around 6.845 versus the dollar. And now it is quoting at around 6.827, signifying its stagnated level. While Indian Rupee appreciated by about 12.12 per cent against the USD in the last 10 months, the Chinese currency’s appreciation was negligible at 0.26 per cent. The lack of appreciation of Chinese currency is beneficial to Chinese exporters, whereas rupee’s 12-per cent appreciation has acted as a dampener for Indian exporters. Comparatively, other Asian currencies, except China, too have shown appreciation against the US dollar.

The question that has been exercising the minds of several developed countries is China’s continued reluctance to allow any appreciation of Yuan. At present, Chinese currency Yuan or Renminbi is grossly undervalued. A recent Reuters’ poll has suggested that Yuan is undervalued by about 20 per cent. China has amassed huge foreign reserves (USD 2.2 trillion). These huge reserves have been built up with large export surpluses over many years by keeping its currency undervalued. Many trading partners, governments and economists in the Western world have been highly critical of China’s stonewalling tactics. But the criticism is not new to the Chinese government. The US has been putting pressure on China since 2002 to allow Yuan appreciation. In July 2005, China removed pegging its currency to the dollar and moved to a managed floating rate regime based on market supply and demand. At that time, the Yuan was quoting at 8.30 to a dollar. This means the Yuan has appreciated against the USD by 17.7 per cent in four and a half years.

In fact, China had continued with its gradual appreciation till the collapse of Lehman Brothers in the middle of September 2008. Afterwards, China has not allowed any appreciation of its domestic currency to protect its exports. (On September 15th, 2008, Yuan was quoting at 6.85 to a US dollar). China is a global manufacturing factory and is heavily dependent on its exports. Any adverse impact on its exports will undermine its labour markets. China has to protect its domestic economy from the ill-effects of the global financial meltdown. China’s first priority is to protect the jobs of its domestic workers, while creating more jobs for them. So, it has been playing very hard with its currency by not allowing any appreciation against the US dollar. However, this has earned the wrath of many of its trading partners. China’s export juggernaut continues to roll for the time being. And China is not in a hurry to give in to any outside pressures and will pursue its own exchange rate policy. China has become a superpower of sorts in its own right and it has been flexing its muscles unabashedly. China usually does not tolerate any interference from outside world.

How long will China continue with its policy of undervalued domestic currency? There are no easy answers. That is the million-dollar, sorry, billion-yuan question in the minds of market players around the world.

Why Are Equity Mutual Fund Investors Selling Out? - VRK100 - 11Jan2010

Why Are Equity Mutual Fund Investors Selling Out? 

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(If you want to read this article in PDF form, JUST CLICK:

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This is a curious case of equity mutual fund investors’ encashing their investments even as Indian stock market has gone up in the last five months. Mutual funds seem to be finding it difficult to manage the changed business environment after the capital market regulator, Securities and Exchange Board of India, banned entry loads on mutual funds with effect from August 1, 2009.

The following table will give you a better idea about the redemption pressure in equity mutual funds in India between August and December 2009:

REDEMPTIONS/REPURCHASES (Rs crore): Equity mutual funds:

Net Outflow                                             Net Inflow

From August to December 2009              From January to July 2009

(7,315)                                                    7,432                                      

Data source: AMFI

As can be seen from the above table, between August 2009 (when SEBI banned entry loads) and December 2009, the net outflow from equity mutual funds is Rs 7,315 crore; whereas, net inflow into equity mutual funds is Rs 7,432 crore between January and July 2009. The ban on entry loads seems to have caught the mutual fund industry off-guard. 

The criticism leveled against the mutual fund industry is that their business model till July 2009 was distributor-driven at the cost of individual investors. All these 15 years, they were doing their fund business in a particular way. The entry-load ban by SEBI has changed their business complexion completely.

But, the industry is yet to come to grips with the situation. As insurance products (Unit-Linked Insurance Plans, or, ULIPs) are more attractive for distributors, they seem to be pushing ULIPs instead of equity mutual funds. Even though IRDA has changed the structure of ULIPs recently, distributors still find ULIPs more attractive for getting their share of commissions.

It is interesting to see how mutual fund industry would realign itself in view of the changed circumstances. The time has come for them to focus on customer acquisition, which is very expensive in the absence of entry loads. Due to the ban on entry loads, mutual funds are finding it difficult to raise new fund offers (NFOs), through which they used to rake in substantial amounts of funds. 

The net assets of equity mutual funds were growing phenomenally mainly due to the NFOs. Now, the NFO route is not possible due to the entry load ban.

More curious is the behaviour of equity mutual fund investors. Let us consider the movement of stock market indices between August and December 2009:

INDEX        31-Dec-09            Growth over 31.7.09
                        Points                              %

SENSEX       17 464.81                       11.50

MIDCAP         6 717.82                      20.60

BSE-200          2 180.25                      14.20


From the above table, one can observe that the Sensex has given a positive return of 11.50 per cent against 20.60 per cent by BSE-Midcap index, between July 31st, 2009 and 31st, December 2009. The BSE-200 broader index has recorded a return of 14.20 per cent during the same period. 

This clearly indicates that even though the stock markets have gone up steadily in the last five months, investors have preferred to encash their equity MF investments, with net outflow of Rs 7,300 crore (as shown above).

Before August 1, 2009, if you invest Rs 10,000 in an equity mutual fund, the Asset Management Company or AMC used to charge 2.25 per cent or Rs 225 from your money toward entry load and the remaining Rs 9775 (10,000 – 225), they used to invest in equities and allot units to you. 

Now after the entry load is banned, if you invest Rs 10,000 in an equity MF, the entire Rs 10,000 will be invested in equities and units will be allotted, based on the prevailing Net Asset Value, to you for the entire Rs 10,000. 

Which means, now MF investors will be saving Rs 225 or 2.25 per cent of their money. This is a substantial benefit to MF investors. But, investors are selling out their investments instead of putting more money in mutual funds; even though they are saving up to 2.25 per cent of entry load.

The reasons for the strange behaviour of investors are attributed mainly to:

1. The entry load ban by SEBI wef August 1, 2009

2. Regulatory arbitrage in favour of ULIPs driving distributors towards insurance products

3. Equity investors see the raise in indices as an opportunity to sell out and make small profits in the process. They still seem to be afraid of the panic situation that prevailed in 2008, when equity investors have lost very heavily.

 

SUMMING UP:

The entry-load ban by SEBI seems to have broken the back of mutual fund industry; as far as raising money through equity new fund offers is concerned. The distributors find it unattractive to push equity mutual funds and instead they are turning towards ULIPs. 

Equity mutual funds have become cheaper by 2.25 per cent compared to previously. As such, investors would be better off putting in more money into equity mutual funds according to their risk appetite, asset allocation and convenience taking their long-term interests into consideration.

It’s time for them to invest based on the following considerations:

1. Long-term track record of three or five years of the particular fund;

2. It is a myth to assume that NFO with Rs 10 net asset value is better than an existing fund with an NAV of Rs 100 or more. The NAV of Rs 150 (of a fund with growth option) indicates that the fund started with an NAV of Rs 10 and since inception its value has grown by 15 time. 

For example, the present NAV of Reliance Growth fund (growth option) is Rs 437. It indicates that the NAV of this fund has gone up by 43.7 times since its inception in October 1995. Its annualized return (CAGR) since inception is 30.32 per cent!; and,

3. See the track record of the fund manager also whether she is able to protect your money during any downturns. The fund manager should be able to generate sustainable performance – not only during bull markets but protect our money during bear markets as we have seen in 2008.

If you select your equity funds based on the above time-tested principles, you are likely to generate decent returns provided the India Growth Story is intact for the next five to ten years.

- - -

Disclosure:  I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. 

He blogs at:

https://ramakrishnavadlamudi.blogspot.com/

https://www.scribd.com/vrk100

 

P.S.:

The following weblinks are included here after 15Aug2021 for reference purpose > 

 

Mutual Funds Comparison weblinks:

Rupee Vest - Mutual Fund Portfolio Tracker (past 4 months holdings)

Rupee Vest Factsheets - Parag 1, Parag 2, Parag 3, Franklin 1, Franklin 2, Quantum 1, Quantum 2, Quantum 3

Trendlyne (previous holdings for the past 2 / 3 years) - Parag1, Parag 2, Parag 3, Franklin 1, Franklin 2, Quantum 1, Quantum 2, Quantum 3, Nifty 50

 

Parag Parikh Flexi cap fund 2023 - Morningstar India (ISIN number is available) - Parag 1, Parag 2, Parag 3, Franklin 1, Franklin 2, Quantum 1, Quantum 2, Quantum 3, Nifty 50

Parag Parikh Flexi cap fund 2024 - Value Research

Rupee Vest Portfolios 2024 - Parag 1, Parag 2, Parag 3, Franklin 1, Franklin 2, Quantum 1, Quantum 2, Quantum 3, Nifty 50

Compare debt funds 2024 (gilt, conservative hybrid, dynamic bond, etc) VR 

 

Compare funds 2024 Daylynn Pinto, Bandhan AMC - VR

 

2024 AUM movement: Axis Direct:

 

Quantum LT Equity value

Quantum ELSS tax saver

 

Quantum dynamic bond 

Quantum liquid

ICICI gilt

 

Franklin India Bluechip 

Franklin ELSS taxsaver

2024 Funds Compare weblinks  

International funds MS - including Japan, US, etc.

International funds VR - including Japan, US, etc.

Compare gold, gilt, liquid, midcap and largecap funds MS

Compare gold, gilt, liquid, midcap and largecap funds VR

 

MS category performance (e.g., for large-cap, ELSS or liquid fund categories) 

MS category risk measures, like, Sharpe ratio (e.g., for flexi cap, govt bond or index funds)

 

2023 Funds Compare weblinks (ICICI Pru Nifty 100 Low Vol 30 ETF)

Comparision of all passive funds (equity ETFs and equity index funds) VR

 

 

Fund compare of passive funds linked to Nifty 200 Quality 30 and Nifty 100 Quality 30 indices MS

 

Comparison of Low Volatility, Alpha Low Vol, Quality 30, Value 20 and Nifty 50 ETFs Morningstar 

 

Comparison of Nifty 50 Equal Weight index, equal weight ETF, Low Vol, Nifty 50 index and Nifty Next 50 index funds  Morningstar

Compare funds Nifty 50 equal weight index, Nifty 50 index, Nifty 50 BeES, Nifty Junior BeES, Nifty Next 50 index MS 

Compare funds Hang Seng BeES, Nasdaq 100 ETF, Nifty Midcap 100 ETF, Nifty 100 Equal weight index and CPSE ETF MS

 

 

Comparison of Low Vol, Momentum 30, Quality 30, Nifty Next 50 and Nifty 50 index funds Value Research  

 

Comparison of Nifty 50 Equal Weight, Nifty 50, Nifty Next 50, Nifty 500 and Value 20 index funds Value Research 

Comparison of Nifty 50 equal weight, Nifty 50, Nifty Next 500, Nifty 500 and Nifty 100 equal weight index funds Value Research

 

Comparison of Momentum 30, Nifty 50 Equal weight, Nifty Next 50, Nifty 500 and Value 20 index funds Value Research

Comparison of Nifty 50, Nifty 50 Equal Weight, Nifty Next 50 and Nifty 500 index funds Value Research

 

 

Compare MNC funds of ABSL, UTI, ICICI Pru, HDFC and Kotak - value research - compare 2023 - Morningstar India 

VR including SBI Magnum Global

 

So-called Innovation funds compare 2023 (there are four funds with such a name, all started in 2023)

Rupee Vest (portfolio changes) - ICICI Pru Innovation, Nippon Innovation, Union Innovation and UTI Innovation

 

RBI Notes from HBIE (pages 401 to 404) - HBIE explanatory notes on tables - mutual fund name changes - MF mergers and takeovers (details of various fund house changes given here)

VR mutual fund AMCs and size of AUM - size of assets - fund size - fund asset size - 43 AMCs as of 07Feb2024

Axis Direct - AUM movement for past five years - historical AUM - historical assets - asset size

Morningstar India - AUM movement for the past quarter - average AUM - all AMCs in single page - asset size growth - historical also (drop down menu)

Morningstar India - AUM movement for the past quarter - average AUM - AMC wise - historical also (dropdown menu) - scheme wise growth data

Trendlyne - Parag cons hyb, (doesn't show REIT holdings) Quantum Dyn Bnd, ICICI Gilt, HDFC Gilt, Parag liquid, quantum liquid  

PPFAS MF introduces instant access facility (IAF) wef 28Dec2023 in its Parag Parikh Liquid fund -- instant credit up to Rs 50,000 per day via IMPS to bank account

Parag Parikh Conservative Hybrid fund compare 2023 with other debt funds - Morningstar India (ISIN number is available)

Parag Parikh Conservative Hybrid fund compare 2023 with other debt funds - Value Research  

Parag Parikh Conservative Hybrid fund - Rupee Vest (shows REIT holdings also)

ABSL Ajay Garg - Morningstar India (Ajay Garg on 28Dec2021 was replaced by ABSL MF)

ABSL Ajay Garg - Value Research

HDFC Chirag Setalvad - M

HDFC Chirag Setalvad - V 

HDFC Amit Ganatra - M (Amit Ganatra moved back, in Jan2022, to Invesco India MF)

HDFC Amit Ganatra - V

Canara Robeco Shridatta Bhandwaldar - M

Canara Robeco Shridatta Bhandwaldar -V

IDFC Sachin Relekar - M 

IDFC Sachin Relekar - V

IDFC Anoop Bhaskar - M

IDFC Anoop Bhaskar -V

BNP Paribas Karthikraj Lakshmanan & Abhijeet Dey - M

BNP Paribas Karthikraj Lakshmanan & Abhijeet Dey - V 

JM Sanjay Chhabaria - M

JM Sanjay Chhabaria - V

SBI R.Srinivasan - M 

SBI R.Srinivasan - V - fund compare 2023 (his other funds include, SBI Flexicap, SBI Multicap and SBI Magnum Children's Benefit fund)

Union Vinay Paharia 1 - M

Union Vinay Paharia 2 - M

Union Vinay Paharia - V

UTI Ajay Tyagi - M

UTI Ajay Tyagi - V

Kotak Harish Krishnan - M 

Kotak Harish Krishnan -V

Mirae Asset Neelesh Surana & Gaurav Misra - M 

Mirae Asset Neelesh Surana & Gaurav Misra - V 

ITI George Heber Joseph - M  

ITI George Heber Joseph -V

Axis Anupam Tewari - M

Axis Anupam Tewari -V

Tata Meeta Shetty - V

Tata Meeta Shetty - M 

L&T Venugopal Manghat - M 

L&T Venugopal Manghat - V

 

HDFC Equity funds all (other than sector funds) comparison 01Feb2023  -VR

select HDFC equity funds comparison - MS

 

Pharma ETFs / Healthcare ETFs - V 

Pharma funds / Healthcare funds - V - both index funds and ETFs

Aggressive Hybrid plans (analysed 14Aug2021) or Equity-oriented Balanced funds - M

Aggressive Hybrid plans (analysed 14Aug2021) or Equity-oriented Balanced funds -V

MNC funds -M

MNC funds - V

BSE 500 and NSE 500 passive funds compare 2024 - M

BSE 500 and NSE 500 passive funds compare 2024 (only index funds) - V 

ETF compare Blog - Nifty BeES vs Junior BeES 

Value Research ETF compare - Nifty 50 vs Nifty Next 50 funds (Nifty BeES vs Junior BeES) --> to check ETFs based on Nifty indices, click on the weblink of List of ETFs - India ETFs (Twitter handle India ETFs) - volume data of NSE ETFs (India ETFs) - volume data of NSE ETFs (NSE) -

Compare funds 2022 mid cap funds - M

Compare funds 2022 mid cap funds -V

Tweet 15Jun2020 - Compare funds 2020 - equity mutual funds - multi-cap funds, large-cap and large & mid-cap funds  

MoneyControl weblinks: stocks & recent changes

Parag Parikh flexi cap, Parag Parikh tax saver, Conservative Hybrid fund (shows REIT holdings also) - Rajeev Thakkar

ABSL Ajay Garg funds

ABSL frontline equity,  focussed equity, pure value  - Mahesh Patil

UTI Swati Kulkarni, UTI flexi cap

Mirae large cap Neelesh Surana

Mirae tax saver, Mirae emerging bluechip, Mirae hybrid equity, Mirae great consumer

Franklin India Prima, taxshield, smaller companies, opportunities, flexi cap, equity advantage - R Janakiraman

Franklin Anand Radhakrishnan 

Axis Jinesh Gopani 

Axis flexi cap, mid cap, Bluechip - Shreyash Devalkar

HDFC Chirag Setalvad 

Quantum long term equity value, tax saver - Nilesh Shetty, Sorbh Gupta

Union multi cap, value discovery, small cap, equity savings - Vinay Paharia

Canara Robeco emerging equities, bluechip equity, flexi cap, equity hybrid - Shridatta Bhandwaldar

Tata flexi cap, equity PE, young citizens, India consumer - Sonam Udasi

Tata large cap, India tax savings, mid cap growth, ethical, infrastructure

BNP Paribas Karthikraj Lakshmanan 

Invesco India large cap, growth opportunities,  contra fund, tax plan

DSP tax saver, India TIGER, equity opportunities, small cap, mid cap - Vinit Sambre, Rohit Singhania

Kotak emerging equity, small cap,  equity hybrid - Pankaj Tibrewal

Principal multi cap - Ravi Gopalakrishnan (to be taken over by Sundaram MF)

L&T flexi cap, emerging businesses, midcap, large and midcap, tax advantage, hybrid equity - Venugopal Manghat, Vihang Naik (to be taken over by HSBC MF)

SBI Bluechip, SBI Magnum Midcap - Sohini Andani

SBI equity hybrid, focussed equity, small cap - R Srinivasan

HDFC MF Prashant Jain - Top 100, Flexi cap, Balanced Advantage, Hybrid Debt

Nippon India Sailesh Raj Bhan - Multicap, largecap, pharma

Nippon India Flexicap, Growth, Balanced Advantage, Smallcap - Manish Gunwani, Samir Rachh 

IDFC MF Flexi cap, Infrastructure, Equity Savings - Sachin Relekar

LIC MF Yogesh Patil - large cap, flexi cap, large and mid cap, tax plan, equity hybrid

HDFC Amit Ganatra - taxsaver, capital builder, multi asset

UTI MF Ajay Tyagi - Flexi cap, Regular Savings 

 

Debt Mutual Funds taxation wef 01Apr2023

On 24Mar2023, PM Modi government brought some last-minute amendments to Finance Bill, 2023 in the Indian Parliament. One of the negative surprise from the amendments is the removal of tax benefit that debt mutual funds (debt MFs) currently enjoy with regard to long term capital gains (LTCG) tax.

Comprehensive article dated 25Mar2023 on the above subject

Bharat Bond ETFs (2023, 2025, 2030, 2031 & 2032) Comparison:

Compare BB ETFs - VR 

Compare BB ETFs - RV

Nifty Indices - Target Maturity Index -  Nifty Bharat Bond Indices and others - methodology document -

   - e.g., Nifty Bharat Bond Index - April 2032 -- its factsheet -- its portfolio

 

Freefincal 06Jul2020 article - Bharat Bond ETF risks  - Price - NAV disparity is quite high (liquidity risk) -

 

 

Target Maturity Funds (TMFs) Comparison:

Crisil Limited - Benchmark indices for TMFs - methodology document for Index Linked Products PDF dated 04Aug2022 - web archive - the PDF contains details of index construction, historical securities and their weights in the index and maturity dates of the index 

Target Maturity Funds compare 2022 - Value Research

Debt: Medium to Long Duration funds

Debt: Gilt funds

Debt: Medium Duration funds

Value Research 17Jan2021 - part 1 - part 2  

Morningstar article 13Oct2021

FAQs by freefincal 28Feb2022

Pros and Cons by WSJ 03Feb2019 - "Target-maturity funds-(not to be confused with target-date funds, which gradually shift assets from stocks to bonds to increase safety as the target date approaches)—tackle these problems by purchasing bonds maturing at about the same time."

Prime Investor undated

FMPs vs Target Maturity Funds > 

 

Debt Mutual Funds Comparison:

 

SEBI circulars on Categorization and Rationalization of Mutual Fund Schemes

SEBI circular on valuation of money market and debt instruments

SEBI circular on multi cap funds asset allocation 

 

Compare debt funds 2024 (gilt, conservative hybrid, dynamic bond, etc) VR 

Gilt funds compare 2023 - VR - weblink for all gilt funds

Gilt funds compare 2023 - MS - weblink for all gilt funds

Gilt funds fund screener 2023 RV (RV provides average maturity, yield to maturity and modified duration for better comparison)

Gilt funds compare 2023 - MC

 

Mix of debt funds 2023 - VR -  conservative hybrid,  gilt, dynamic bond, etc.

Conservative hybrid funds 2023 screener Rupee Vest

Conservative hybrid funds 2023 compare - VR - weblink for all conservative hybrid funds  

Conservative hybrid funds 2023 compare - MS - weblink for all conservative hybrid funds

 

Dynamic Bond Funds compare 2023 (this provides fixed income maturity breakdown for 1 to 3y; 3 to 5y etc) Morningstar India - weblink for dynamic bond funds (modified duration is provided in the factsheet)

Dynamic Bond Funds screneer 2023 Rupee Vest (RV provides average maturity, yield to maturity and modified duration for better comparison)

Dynamic Bond Funds compare 2023 Value Research - weblink for all dynamic bond funds (VR doesn't give modified duration data in comparison tables)

-- images as on 03Aug2022

Debt Mutual Funds issues in India:

Franklin Templeton India - Debt Fund closure - six debt funds winding up - Franklin Fiasco - Tweets from 10Aug2020 to 21Jan2021 - Value Research timeline - 

Prof Jayant Varma argues for some sort of a sovereign backstop for debt mutual funds in India - Tweet 29Apr2020

Occasionally, liquid funds deliver negative returns for very brief periods, e.g., between 2009 and 2021 - Tweet 01Apr2021 -

Why Corporate bond funds generate lower returns compared to Gilt funds? - Tweet 19Mar2021

Impact of write down of Vodafone India debt papers on debt mutual funds - AGR dues - Supreme Court - Tweet 18Jan2020 - Tweet 15Nov2019 -

Impact of downgrade of Simplex Infrastructure on HDFC credit risk fund - Tweet 31Dec2019

Franklin India Debt funds holdings debt of Essel Infraprojects - Tweet 12Dec2019

Shenanigans of debt mutual funds - Tweet 27Nov2019

SEBI mandate of 20% minimum G-Secs / Treasury Bills investment for liquid and overnight funds - Tweet 20Sep2019

Debt funds impacted by Dewan Housing Finance Ltd (DHFL) credit rating downgrade - side pocketing - segregated portfolios - FMPs - Tweet 05Jun2019 - Tweet 05Jun2019 - Tweet 05Jun2019 - debt funds concentration risk  Tweet 13Feb2019 -

Lending to promoters (via share pledging) by debt funds via opaque structures - Tweet 19Feb2019 - Tweet 19Feb2019 - exposure to DHFL, Essel group / Zee group Tweet 30Jan2019 - 

SEBI circular on creation of segregated portfolios - side pocketing - Tweet 28Dec2018

RBI FSR - Money Market Mutual Funds & their Inter-connectedness with Banks - Tweet 16Oct2018 - network effect of interaction among banks, NBFCs, AMCs (mutual funds) and insurance cos Tweet 24Oct2018

Debt / liquid / short term mutual fund schemes for Franklin Templeton India MF suffered heavily in February 2016 due to credit rating downgrade of securities of Jindal Steel and Power (JSPL) Tweet 02Jul2018

16Feb2016 Franklin Templeton - credit rating downgrade by CRISIL of Jindal Steel and Power (JSPL) debt securities: Tweet 11Mar2018

28Aug2015: JP Morgan AMC's redemption crisis in liquid / short term funds - credit rating downgrade of Amtek Auto by Crisil, Care Tweet 11Mar2018 

Ballarpur Industries default and debt funds exposure - Tweet 17May2017 - Taurus MF debt funds lost heavily Tweet 11Mar2018

Lessons for mutual funds from Amtek Auto default - Tweet 07Oct2015 

JP Morgan AMC's redemption crisis in debt funds (credit rating downgrade of Amtek Auto by Crisil and Care - Amtek Auto default) - Tweet 28Aug2015 - Tweet 04Sep2015 - JP Morgan's 1% cap on redemption Tweet 02Sep2015 - 

 

Direct MF Plans / Direct MF platforms

15Dec2022 Livemint -  "A decade on, how have direct MF plans fared?" 

 

As per the article of 15Dec2022, Zerodha Coin and Kuvera are the biggest direct MF platforms, that provide access to online investors for investing in direct MF plans >

Direct MF platforms: 

19Dec2022: Coin was launched as a direct MF platform by Zerodha in April 2017. Initially they were charging Rs 50 per month for use of Coin above Rs 25,000 of investments. Since, 24Aug2018, Zerodha's Coin waived this small fee also. Now, Coin is free of cost, claims the online platform.

 

19Dec2022: Kuvera direct MF platform

 

Also, see the weblink for 'direct MF platforms' details as of Oct2019 (others include, Groww, Paytm Money, ET Money, MF Utilities etc.) 

 

 

Tweet thread 22Jan2018 dated on Direct vs Regular plans

Blog 07Dec2021 -  Indian Mutual Funds and The Art of Ripping Off Investors

 

 

Silver ETF

28Jan2022 BSE - ICICI Pru Silver ETF, India's first Silver exchange-trade fund, starts trading on 31Jan2022 on BSE and NSE - 1) market lot is one; 2) face value is Rs 10; 3) issue price is Rs 67.07* and 4) total number of units allotted on 24Jan2022 are 168.10 lakh units as per BSE notice - the AMC collected Rs 112.74 crore in the NFO or new fund offer -

(* my guess is this allotment price of Rs 67.07 is close to the one gram price of silver as declared by IBJA on its website -- as per IBJA, silver 999 (AM price) per one kilogram is Rs 61,683 as on 28Jan2022 -- as such, each unit price of Silver ETF roughly equals price of one gram of silver)

29Jan2022 ICICI MF -  iNAV - indicative NAV - intra-day NAV - real time NAV - unit creation size for ETFs - ETF - Tweet 12May2021 on iNAV -

 

ICICI Pru Silver ETF - India's first silver ETF - NFO from 5th to 19th Jan2022 - NFO presentation - NFO Brochure - collects Rs 113 crore in NFO; will be listed for trading on 31Jan2022 - SAI of ICICI MF - Tweet 05Jan2022 - 

- scheme information document or SID dt 24Dec2021 of ICICI Silver ETF >

 

my notes from the above SID:

1. benchmark is domestic silver price derived from LBMA AM fixing prices
2. iNAV or indicative NAV will be disclosed on BSE / NSE on a continuous basis during trading hours
   
3.  no entry load; and no exit load
   

Tweet 12Dec2020 on Silver ETF - many were waiting for the silver ETF  for a long time

05Jan2022 ICICI Direct - ICICI Pru MF is launching a Silver ETF NFO,  India's first silver ETF   (https://ramakrishnavadlamudi.blogspot.com)

"Though I'm optimistic about silver price in dollar terms (current price around USD 23 per troy ounce) for the next three to five years horizon, I'm not so sure about silver price in rupee terms because Reserve Bank of India has been manipulating USD-INR exchange rate. The manipulation right now is much higher compared to historically. RBI under governor Shaktikanta Das has been dancing to the tune of muscular Modi government in the sense that RBI has been preventing the rupee from depreciating further againt the USD (left on its own to market mechanism minus RBI intervention in forex market, Indian rupee would have depreciated much more against USD to much lower like, 77 or 78 handle). As of now, rupee is quoting at 74.60 versus US dollar. Rupee silver price is a function of dollar silver price and USD-INR exchange rate - if rupee depreciates more against the USD, rupee silver price would go up keeping the dollar silver price constant. Against the backdrop of such heavy RBI interevention, one needs to be more circumspect about investing greedily in Indian silver ETFs."

06Dec2021 SEBI - ICICI Pru Silver ETF - draft SID - 

06Dec2021 SEBI - ICICI Pru Silver ETF fund of funds - FOF - draft SID - ABSL MF, Nippon India MF and Mirae Asset MF too filed their draft SID with SEBI for proposed launch of Silver ETFs

24Nov2021 SEBI circular -  Norms for silver ETFs and gold ETFs

 - - -

Disclosure:  I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets. 

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