Equity schemes post net outflows of Rs 4,000 cr in Aug, highest in 10 yrs

 Equity schemes posted net outflows of about Rs 4,000 in August, the highest in the last decade, led by withdrawals in large and multi-cap schemes. Investors booked profits or redeemed their investments to meet liquidity needs in a month when benchmark indices rose 2.7 per cent.

Seven of the 10 equity oriented categories saw outflows totalling Rs 4,402 crore. Redemptions grew 11.6 per cent to Rs 18,558 crore over the previous month. Inflows via systematic investment plans (SIP) held steady despite slipping for the fifth straight month. Contributions totalled Rs 7,792 crore in August, half a per cent lower than the Rs 7,831 crore garnered in the previous month.

“It is clear that retail investors are impacted due to the current economic environment brought on by Covid-19. Investors tend to reduce risk on their portfolios by selling equity MFs in such an environment. While the long term opportunity of mutual funds remains promising, the pain in the short term is not likely going to go away soon," said Jean-Christophe Gougeon, director - Investment Solutions, Sharekhan by BNP Paribas.

ALSO READ: Equity schemes see net outflows for second straight month in August

Market players, however, do not see the outflows as alarming and expect things to stabilise in a quarter or two, likening the current situation to that seen in 2009 when markets recovered following the global financial crisis.

“The number of folios as well as funds mobilised during the month was marginally higher than July. But at the same time the redemptions too, shot up sharply. This indicates that more investors chose to booking profit given the surge in the equity markets across segments in the recent times,” said Himanshu Srivastava, associate director - manager research, Morningstar India.

The industry saw a net addition of 465,000 new folios, including 343,000 SIP folios, indicating sustained retail interest in mutual funds, said experts. NS Venkatesh, chief executive, Association of Mutual Funds in India (Amfi), said, “Retail investors continue to exhibit mature investment behavior despite a volatile and challenging economic environment, as seen from record high retail AUMs, rise in SIP AUMs, SIP folios, and significantly higher quantum of flows towards multi asset allocation schemes during the month.”

According to G Pradeepkumar, CEO, Union AMC, some investors may have taken a tactical asset allocation call by moving from equity to low duration or ultra-short term funds with the objective of re-entering equity funds at lower levels in the event of a correction in the equity market.

Ultra-short term, low duration and money market funds together saw inflows of over Rs 18,000 crore, even as the debt category as a whole saw outflows of Rs 3,907 crore, led by redemptions in liquid and overnight funds of over Rs 26,000 crore.

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“Given the current interest rate scenario, investors are largely focusing on fixed income categories having relatively shorter duration profile. In addition, funds with pristine credit quality, especially from categories such as money market, corporate bond and banking and PSU, continue to gain traction from investors highlighting their preference for safety in this segment,” said Srivastava.

He added that investors continued to shy away from riskier bets in the credit space, which is why the credit risk funds saw outflows of Rs 554 crore.

Total AUM for the MF industry stood at Rs 27.8 trillion at the end of August, up slightly from Rs 27.3 trillion at the end of the previous month.

Equity schemes post net outflows of Rs 4,000 cr in Aug, highest in 10 yrs

Equity schemes with sizeable cash holdings likely to see limited gains

Equity schemes with sizeable cash holdings could miss out on the gains seen in the recent market rally, as high cash calls in such funds could keep them from fully participating in the rebound.
According to data sourced from primemfdatabase.com, as many as 11 small-cap schemes held 7 per cent of their asset base in cash at the end of June. Half-a-dozen large-cap schemes and five small-cap schemes also held over 7 per cent in cash.
“Typically, one would not want higher cash levels in equity schemes, but largely invested portfolios. An investor can take his cash calls if he wants and there are products that allow re-balancing, such as dynamic asset allocation funds,” said Kaustubh Belapurkar, director-MF research, Morningstar India.
The market benchmark Sensex has bounced back from the March 23 lows, with gains of over 41 per cent. Till that point, the 30-share index was down 37 per cent in year-to-date terms.
Experts say the downside from higher cash calls might not be seen immediately as markets have remained range-bound. “In the current environment, the market rally has been driven by select stocks,” said Amit Bivalkar, founder and director of Sapient Wealth.
Industry experts say a few schemes had higher cash levels even in the months preceding Covid-19, which in some cases would have helped to mitigate the impact of market meltdown that followed. Equity funds typically carry 5 per cent of their holdings in cash and cash equivalents to meet redemption pressures. Higher cash calls can be attributed to fund managers’ view that markets are over-valued and another round of correction could be on the cards.

Equity schemes with sizeable cash holdings likely to see limited gains
Broking houses also advise caution over higher valuations. “Valuations… are no longer cheap. The Nifty is now trading at forward P/E (price-earnings ratio) of 20.4-times, 15 per cent premium to LPA (long-period average),” analysts at Motilal Oswal Financial services said in a recent note. “Valuations are reflecting recovery from H2FY21, leaving limited margin for safety for any negative surprises,” the analysts added.
Experts say fund managers should be wary as taking cash calls could push the fund down the performance scorecard.
“Fund managers can be caught off-guard with such a strategy, as past experience shows it is very difficult to spot market bottoms and deploy cash, and market reversals can also be swift in a volatile environment and cause massive under-performance,” said the chief executive officer of a fund house.
“Within the broader universe, such as small-cap, where the rally has been stock-specific, comparing the individual schemes’ performance against its benchmark would offer a clearer picture of the performance,” said Jimmy Patel, managing director and chief executive officer of Quantum Asset Management Company.

Equity schemes see cuts in H1CY20 as investors book losses, exit portfolios

The correction in the markets has taken a toll on equity portfolios of mutual fund (MF) investors, with such funds losing 11-15 per cent in the first half of the calendar year 2020.
Large-cap funds — the largest equity category — have failed to meet investors’ expectations with negative returns of around 13 per cent over this period.

MF distributors say they have seen investors booking losses and exiting portfolios.
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“Investors, who are worried over their cash flows and were chasing returns, are now looking at pulling out their investments,” said Ritesh Sheth, co-founder of Tejas Consultancy.
So far this year, large-cap funds have seen deeper value erosion than mid- and small-caps. The data from Value Research shows that mid-cap funds have declined 9.6 per cent year-to-date (YTD), while small-cap funds have fallen 11.26 per cent.
Though there has been some recovery in recent months, advisors say investors should be cautious.
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“Within equity, investors should maintain a calibrated approach. Large-cap funds should be kept at 60 per cent of the overall portfolio, with the remaining exposure in mid- and small-cap funds. Here, too, small-cap exposure should be kept lowest,” said Amol Joshi, founder of Plan Rupee Investment Services.
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Experts say market volatility will likely persist as the economic outlook remains uncertain. The India Vix, a volatility gauge, has seen a seven-fold spike in the current calendar year.
Experts say investors should also brace for sharp corrections as corporate earnings are unlikely to improve in the near term.
“June seems to be a washout quarter on a YoY (year-on-year) basis. The September quarter is likely to be weak as well. In December, we could see flat to slightly positive earnings performance. But if lockdown is tightened again, recovery would also get pushed,” said Deepak Jasani, head of retail research at HDFC Securities.
Equity schemes have seen heavy redemptions in the current year — they stood at Rs 62,413 crore from such schemes (data available till May) on a YTD basis.
Rising redemptions can also be gauged from the slowdown in the flows coming through systematic investment plans (SIPs). Since peaking in March, the SIP book has contracted 6 per cent. In May, contributions to MFs through SIPs stood at Rs 8,123 crore.

Q3 earnings, budget expectations to drive markets this week: Analysts

Equitymarket progress this week will broadly hinge on ongoing quarterly corporate results and expectations being built around the upcoming Union Budget, according to analysts.
Investors in domestic market will closely watch quarterly earnings from companies such as Kotak Mahindra Bank, Bank of Maharashtra, Axis Bank, Canara Bank and Bank of Baroda this week.
The BSE gauge Sensex logged a hefty 345.65 points or 0.83 per cent gains in the previous week.
The recent rally has been enthused by a host of factors, mostly global, like cooling of US-Iran tensions and signing of an initial trade deal between Washington and Beijing to defuse their 18-month trade tussle.
The Indian market is now looking beyond global factors to focus on earnings announcements and upcoming budget, as both are expected to underpin the sentiment.
"Going ahead, investors should remain cautious as markets are at all-time high and should expect stock-specific action as Q3 earnings season progresses. Also expectations to the run up to the budget are expected to drive certain sectors related to agri, rural, fertilisers, PSUs, infra and construction.This week key results to watch out for would be ICICI Bank, JSW Steel, Zee, Havells, HDFC AMC," Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said.
Market will also be guided by other key factors like Brent crude movement, rupee-dollar trend and foreign investment flows.
"...Overall expectation is that Q3 is likely to provide a strong push to earnings growth trajectory for FY20 and 21. Further, market is expecting strong measures from the government from budget," Vinod Nair, Head of Research, Geojit Financial Services said.
On Monday, all eyes will be tracking the movement in TCS shares, as the IT major after market hours on Friday reported a muted 0.2 per cent growth in consolidated net profit at Rs 8,118 crore for the third quarter. Shares of Reliance Industries will also be in focus as the company on Friday after market hours posted a 13.5 per cent rise in consolidated net profit to a record Rs 11,640 crore in the October-December period of FY2019-20.
"Global markets witnessed a strong rally as easing trade tensions and promising economic data buoyed the sentiments. Indian markets too ended the week with strong gains especially in midcaps and small caps," Hemang Kapasi, Portfolio Manager - Equity Investment Products, Sanctum Wealth Management, said.

Equity investors shrug off NCLAT's adverse judgment in Tata-Mistry case

Equityinvestors have largely shrugged off the National Company Law Appellate Tribunal’s (NCLAT’s) adverse judgment in the Tata Sons-Cyrus Mistry case. Most of the leading Tata stocks have either gained in the past three days or have fallen marginally. There has been no major meltdown or correction in the stock prices of Tata companies, despite the judgment having the potential to create uncertainty in the top leadership.
The NCLAT had on Wednesday restored Cyrus Mistry as Tata Sons chairman, setting aside the appointment of N Chandrasekaran to that position. The group is likely to appeal against the NCLAT order in the Supreme Court in the coming weeks.

Analysts say that even if the apex court grants a stay on the order, it will curtail Chandrasekaran’s ability to take major decisions, including those related to top-level appointments. This could hamper decision making in key group companies whose boards of directors are chaired by the Tata Sons chairman, they said.
“In the short term, it will certainly bring uncertainty into the group as the NCLAT order has called the appointment of the current Tata Sons chairman as illegal. And if the case drags on in the Supreme Court, then it will make life difficult for the Tata group companies. An early decision by the top court is good for all stake-holders,” said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern.
The bourses are, however, not giving much importance to the issue.
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The group’s top two most valuable companies — Tata Consultancy Services (TCS) and Titan Company — have gained since Wednesday in line with the general buoyancy in the large cap stocks. The benchmark BSE Sensex is up 0.8 per cent since the close trading on Tuesday. The two companies account for nearly 80 per cent of the group companies’ combined market capitalisation.
The NCLAT judgement came during the market hours on Wednesday.
Others say Mistry has a stake in the group companies’ financial performance through his family stake in Tata Sons. They say it precludes a lengthy legal tussle that may adversely affect the group's functioning for long-period.
“Unlike other Tata group management, Mistry has skin in the game as he owns a 18.5 per cent stake in Tata Sons and indirect holding in TCS worth $13 billion. Any share price movement impacts them the most, unlike other top management. We always believe that companies should be run by those who have skin in the game,” said Anil Singhvi, founder director of proxy advisory firm Stakeholders Empowerment Services (SES).
There has been some weakness in the smaller Tata stocks but it tough to link it to the NCLAT judgment. Indian Hotels saw the maximum sell-off and the stock is down 6 per cent in the past three days. Analysts say it could be because of the impact of the anti-Citizenship Amendment Act protests. Many European and North American countries have issued travel advisory against India in view of the protests.

Equity flows see sharpest dip in 3.5 years, slip 78% in November

Equitymutual fund (MF) schemes recorded worst inflows in three and a half years at Rs 1,311 crore for November. It was 78 per cent low compared to the preceding month. Despite the drop in equity inflows, the assets under management (AUM) for the industry soared to a record high of Rs 27 trillion, thanks to over Rs 50,000 crore of net inflows in debt schemes. In November, equity schemes saw Rs 16,268 crore of redemption — 47 per cent higher than the previous month.
“Investors have been nervous and current conditions have not given much comfort. Some investors may have opted to take out money with the recent rally bringing in some relief,” said Swarup Mohanty, chief executive officer at Mirae Asset Management Company (AMC).

In November, equity schemes saw Rs 16,268 crore of redemption, 47 per cent higher than the previous month.
“Investors across the board have taken money off the table as markets have scaled new highs. Even in the current month, the redemptions have stayed on the higher side,” said the chief executive of a fund house, requesting anonymity.
In the past three months, the benchmark Sensex has gained more than 8 per cent, hitting an all-time high of 41,163 points on November 28.
In June 2016, equity flows had slipped to Rs 320 crore, posting a month-on-month decline of 93 per cent. This was also a period when markets had registered a strong recovery, gaining over 20 per cent in the past four months.
Contribution through systematic investment plans (SIPs) — that is, monthly commitment made by investors — grew marginally to Rs 8,272 crore in November. Industry experts said SIPs had stayed intact, which is a healthy sign for the MF industry.
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“If we see markets correcting, we could again see a lump sum coming back. On the other hand, when markets are seeing some euphoria, redemptions are expected to be on the higher side,” said Kaustubh Belapurkar, director (fund research) at Morningstar Investment.
As against SIPs, lump sum money is tactically deployed by investors when they markets are trading at attractive level. On the debt front, inflows into liquid schemes declined to Rs 6,938 crore, which was 92 per cent lower than in the previous month.
Industry experts attribute it to tighter norms laid down by the Securities and Exchange Board of India (Sebi) for liquid schemes.
To curb daily inflow and outflow in liquid schemes from large-ticket institutional investors, Sebi had put in place a graded exit load structure. According to this, investors who take out their investments in liquid schemes in less than seven days will have to bear an exit load. There was a significant rise in flows coming into the overnight schemes. The category saw more than a three-fold jump in flows, rising to Rs 20,649 crore as of November 30.
“Institutional money looking for daily liquidity is now moving into this category, given the new norms placed on liquid schemes,” added Belapurkar.
Concerns around downgrades and defaults kept investor sentiments under check as credit risk funds saw another month of outflows. The category saw Rs 1,898 crore pulled back by investors in November. The MF industry’s AUMs stood at Rs 26.9 trillion in November, which was 3 per cent higher than the previous month. On an overall basis, the MF industry saw net inflow of Rs 54,419 crore last month as compared to Rs 1.33 trillion in October, thanks to encouraging flows into categories such as short-term debt funds, arbitrage funds, banking funds and certain ETFs.

F&O expiry: Sensex up 110 pts, banks gain; Indiabulls Housing Fin zooms 25%

Equitymarket ended in the positive territory on Thursday - the last day of the November series of futures and options (F&O) contracts, led by ICICI Bank, Reliance Industries (RIL), TCS, and IndusInd Bank.
The S&P BSE Sensex added 110 points or 0.27 per cent to close at 41,130 levels - its fresh closing high. IndusInd Bank (up over 2.50 per cent) was the biggest gainer on the index while HeroMotoCorp (down 2 per cent) emerged as the top loser. Reliance Industries (RIL) today became the first Indian company to hit Rs 10 trillion market capitalisation. The stock hit a new high of Rs 1,584 on the BSE.
On the NSE, the Nifty50 index closed at its fresh closing peak of 12,154 levels, up 54 points or 0.44 per cent. The Nifty Bank index ended at 32,124 levels, up 0.8 per cent.
In the broader market, both mid and smallcap stocks outperformed the market. The Nifty Midcap 100 index gained 1 per cent to end at 17,207 and the Nifty SmallCap 100 index settled at 5,759, up 0.6 per cent.
Sectorally, except auto stocks, all the indices on the NSE ended in the green. Nifty PSU Bank index surged 3.44 per cent to 2,716 levels, followed by Nifty Metal index, which gained nearly 2 per cent to 2,654 levels.
BUZZING STOCKS
Reliance Industries (RIL) on Thursday became the first Indian company to hit Rs 10 trillion market capitalisation (m-cap) after the stock price hit a new high of Rs 1,584 on the BSE. The oil-to-telecom conglomerate's m-cap zoomed to Rs 10,02,380 crore during the trade on the BSE. At close, the stock settled at Rs 1580, up over 0.65 per cent.
Shares of Granules India climbed 6 per cent to hit a fresh 52-week high of Rs 135.85 on the BSE on report that private equities (PE) are eyeing controlling stake in the pharmaceutical company. At the close, the stock stood at Rs 129 apiece on the BSE, up 0.4 per cent.
GLOBAL MARKETS
A four-day rally that had lifted world stocks to near-record highs stalled on Thursday as a US bill backing Hong Kong’s protesters became law, provoking China’s ire and threatening to derail an interim trade deal between Washington and Beijing. Besides, Japanese retail figures slumped the most since 2015 as a sales tax hike dragged on the economy, exacerbating a slowdown caused by slowing exports and manufacturing.
These developments took Asian shares excluding Japan down 0.2 per cent. Japan's Nikkei, Hong Kong's Hang Seng and Shanghai blue chips all closed weaker. A pan-European index opened 0.2 per cent lower, led by trade-sensitive sectors such as autos and tech.
In commodities, oil prices fell for a second day on Thursday after official data showed US crude and gasoline stocks rose. Fresh tensions between the US and China, too, weighed on it.
(With inputs from Reuters)

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03:52 PM
Sectoral gainers and losers on the NSE
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CLOSING BELL
The S&P BSE Sensex added 110 points or 0.27 per cent to end at 41,130 while NSE's Nifty50 index settled at 12,154, up 54 points or 0.44 per cent.
03:26 PM
Zee Entertainment extends fall on resignation of independent directors
The company, on Wednesday, said that independent directors Neharika Vohra and Sunil Sharma had stepped down on November 22 and November 24, respectively. Non-independent director Subodh Kumar had also resigned, Zee said, on the same day that Vohra stepped down. Zee said the disclosures were part of its corporate governance policy. READ MORE
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Market check
03:09 PM
Buzzing | Indiabulls group shares in demand
-- Indiabulls Housing Finance surges 22%, Indiabulls Real Estate, Indiabulls Venture locked in 5% upper circuit

03:07 PM
Market check | Sensex gains ahead of F&O expiry
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PE funds bet big on crisis-hit NBFCs even as other investors balk
Private equity funds are picking through the rubble of India’s crisis-stricken shadow banking sector, even as other investors balk.

The funds have invested about $2 billion this year in the country’s non-bank financing sector, which is worth some $40 billion. While that’s not enough to staunch the 16-month long cash crunch following the collapse of IL&FS Group, it is 50 per cent higher than the average over the last four years and comes after a strong 2018, according to data from research firm Venture Intelligence. READ MORE

02:51 PM
NEWS ALERT | Inspection report on Indiabulls Housing Fin, Ventures received: Min of Corporate Affairs
-- Violations pointed out in inspection report being examined
-- Yet to receive inspection report on Indiabulls Real Estate
-- Loans extended to DLF, ADAG, Amricorp have been repaid
-- No violation found w.r.t to allegations made in PIL for 5 loan cases
-- Loans extended to Vatika, Choridia have been classified as 'Standard a/c'

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Dabur trades near day's low, down 0.7%
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Top losers on BSE at this hour

02:21 PM
Edelweiss on metals and mining sector
Domestic HRC prices continue to rise for a fourth successive week buoyed by firming global prices and restocking. In the past one week, domestic HRC price was up across major regions, settling at an average of INR35,703/t, still at a 2.5% discount to the anti-dumping level. Indian HRC export prices too moved up, mirroring the increase in the Black Sea and Chinese prices.
We expect further price tailwinds as exports for January 2020 are being booked at higher levels while US-based producers have hiked the price by USD100/t on average in the past one month. We will keep close tabs on demand as sustainability of domestic prices is contingent on its revival. We continue to prefer JSPL (‘BUY’) in the ferrous space owing to its lower reliance on flats, maintain ‘HOLD’ on Tata Steel (TSL) and JSW Steel (JSTL), and retain ‘REDUCE’ on SAIL.
02:20 PM
ICICI Securities remains bullish on mid, small-caps
Our recommended investment strategy is based on the principle of swings in ‘risk spread’ for mid- and small-caps over large-caps. It moved from zero (peak of risk appetite in Jan’18) to the current environment where it has expanded significantly for micro-caps at 700 bps (probably the peak of risk aversion) and to some extent for small-caps at 220 bps. However, risk spread for mid-caps continue to be low at just 40 bps indicating lower ‘margin of safety’. Our top picks include Bajaj Consumer, J.B. Chemical, Newgen Software, Cyient, Techno electric, Parag Milk and Jubilant Life sciences
02:16 PM
MOSL on Lemon Tree Hotels (LEMONTRE)
The GST rate cut should aid in driving demand for the hotel industry, which in turn would inch up industry occupancy. Additionally, reduction in the effective corporate tax rate (from 34.94% to 25.17%) might increase travel spends of corporate customers, which should further push demand.
LEMONTRE is expected to post revenue/EBITDA CAGR of 41%/69% over FY19-21 backed by room addition and stabilization of recently commenced hotels. We have Buy rating on LEMONTRE with a target price of Rs 72 (one-year forward EV/EBITDA multiple of 18x).
02:14 PM
Antique Stock Broking on Nalco
Nalco's 2QFY20 results were impacted by the sharp increase in power and fuel costs as a result of lower coal supplies from Mahanadi coal fields. Improved coal availability, lower input costs (caustic soda, coal tar pitch and calcined petroleum coke) and recovery in alumina prices would drive a rebound in profits. We retain our positive stance on NALCO considering its integrated business model, high cash levels and attractive dividend yield.
02:11 PM
COMMENT :: Mustafa Nadeem, CEO, Epic Research on RIL's m-cap hitting Rs 10 trillion
We believe the stock can continue to go north. There was a recent consolidation and that was fairly utilized as a minor dip. These dips may be seen in the future and any correction in stock to 3-4% should rather be seen as an opportunity. We believe investors or traders should also put risk-reward into play while buying any stock and stock like reliance should be added but on any minor dips towards lower levels of Rs 1440 - Rs 1460.
02:11 PM
Mukesh Ambani in talks to sell news assets to Times Group: Report
Billionaire Mukesh Ambani is in talks to sell his news media assets to India’s Times Group, as Asia’s richest man plans to unload a business that’s been losing money, people familiar with the matter said.

Bennett Coleman & Co., the publisher of the Times of India, is looking to hire advisers for due diligence on the news properties of Ambani’s Network18 Media & Investments Ltd., the people said, asking not to be named as the discussions are private. READ MORE
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Market check | Sensex slips in the red
01:54 PM
JSW Steel up 4%
01:47 PM
Moody's sees India Inc struggling for credit in 2020 as slowdown weighs
Sluggish economic growth and lacklustre profitability will weaken credit conditions for most non-financial Indian companies in 2020, said rating agency Moody’s.

The credit profiles of rated firms are unlikely to improve significantly over FY21, due to elevated debt levels, weakening profitability and the continued economic slowdown. This puts pressure on both investment and consumption, said Kaustubh Chaubal, a Moody's Vice President and Senior Credit Officer. READ MORE
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PSU banks extend rally, SBI nears record high; Nifty PSU Bank index up 3%
Shares of public sector banks (PSBs) continued their northward movement with the Nifty PSU Bank index surging over 3 per cent on Wednesday, on expectation of improvement in operational performance with receding fears of non-performing loans (NPL). Oriental Bank of Commerce, Union Bank of India, Jammu & Kashmir Bank, Syndicate Bank, Indian Bank and Punjab National Bank (PNB) from the Nifty PSU Bank index rallied over 5 per cent today. READ MORE
State Bank of India
01:29 PM
HDFC dips over 1%
01:14 PM
Global Markets check
Asian share markets fell on Thursday as concerns that tensions over Hong Kong may stymie a US-China trade deal cast a pall over Thanksgiving cheer from positive US economic data.
US President Donald Trump on Wednesday signed into law legislation backing pro-democracy protesters in Hong Kong. China’s Foreign Ministry promptly warned of unspecified “firm counter measures” in response and summoned the US ambassador in Beijing.

That put a lid on steady gains this week for MSCI’s broadest index of Asia-Pacific shares outside Japan. The benchmark fell 0.2 per cent on Thursday. Japan's Nikkei, Hong Kong's Hang Seng and Shanghai blue chips flitted in and out of positive territory but turned negative by the afternoon.

E-Mini futures for the S&P 500 ESc1 fell 0.3 per cent, while EUROSTOXX 50 futures STXEc1 fell 0.2 per cent.
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NEWS ALERT | HDFC MF buys additional stake in PNC Infra: reports CNBC-TV18
- its stake in the co now stands at 7.22 per cent
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Nifty sectoral indices at this hour
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BUZZING STOCK:: Balkrishna Industries up 4%
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No specific scheme/proposal to provide financial assistance to loss-making private airlines: Civil Aviation Min to Lok Sabha
-- Management and finance is internal matter of civil aviation companies: Civil Aviation Min
(Courtsey: CNBC TV18)
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Chart check: US-China trade talks bring metal stocks back in focus
Metal stocks in Indian markets were in the limelight after US President Donald Trump last week said a trade deal with China is "potentially very close" and that he stands with both Hong Kong’s pro-democracy protesters and Chinese leader Xi Jinping. The American and Chinese leaders spoke about their desire to sign an initial trade deal to defuse a 16-month tariff war, boosting financial markets. READ MORE
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Balaji Amines up 4%
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NEWS ALERT | Govt tables supplementary demand for grants in Parliament: CNBC TV18
-- Seek Parliament's nod to spend extra net Rs 18,995 cr and gross Rs 21,240 cr this FY

Markets likely to remain euphoric; focus may shift to earnings: Analysts

Equity markets are likely to remain euphoric in the coming days following the BJP's emphatic victory in the general elections, even as participants may start to shift their focus to policy reforms, earnings growth and global cues, analysts said.
The Sensex and Nifty rallied to record closing highs Friday after the ruling BJP secured a comfortable majority in the lower house, raising expectations of more business-friendly measures by the Narendra Modi-led government.
"Stock market likes certainty. The strength of this mandate for the BJP assures stability in government, stability in governance and continuation of the development agenda for the next five years. In all likelihood, the market will remain euphoric in the coming days. Post that, focus will shift back to corporate earnings, liquidity situation and global events," said Amar Ambani, President and Head of Research, Yes Securities.
The Bharatiya Janata Party (BJP) has won over 300 seats on its own out of 542 seats in the Lok Sabha elections.
"Markets had a very vigorous week and therefore sufficient rest will be needed before it can find new pace. Volatility will eventually come down and rationality will prevail. Benchmark indices might not give any direction this week but could face mild downward pressure and Indian markets will finally align with global mood.
"As of now, a wait and watch approach should be followed by markets at least till the monetary policy and budget announcement by the elected government, which might be a game changer," said Jimeet Modi, Founder and CEO, SAMCO Securities and StockNote.
Last week, the 30-share BSE Sensex gained over 1,503 points to close at 39,434.72 on Friday.
Mustafa Nadeem, CEO, Epic Research said, "An event has finally come to an end with the mandate and now markets are about to shift its focus to other factors. At this point of time for market, we believe one of the factors that's crucial is crude oil. Markets will also try to establish the earnings guidance for next fiscal and quarters."
BHEL, GAIL, InterGlobe Aviation, PNB and SpiceJet are among the major companies set to announce their results this week.
The ongoing trade tussle between the US and China, movement of rupee, crude oil and investment trend by overseas investors would also influence trading, analysts added.
According to Vijay Chandok, MD and CEO, ICICI Securities, "With the decisive mandate, we expect policy continuity and look forward to next generation of reforms, which will take Indian economy to the next phase of accelerated growth. The optimism of a strong mandate could have a positive impact on both FPI flows and domestic flows (which have been lacklustre in the recent past)."

"With the stable government in the saddle for the next five years, we expect reforms process to gather momentum. The economy was in the repair mode for the last 5 years. We expect the government to take affirmative measures to ensure that the economic engine fires on all cylinders.
"The government has to ensure that rural distress is attended, liquidity crisis in financial/debt markets is taken care of and conducive atmosphere for industrial growth is established to capitalise on the demographic dividends of the country," Axis Securities said in a note.

Flows into equity mutual fund schemes fall 33%, liquid plans rebound

Flows into equity mutual fund (MF) schemes fell 33 per cent while that of liquid and money-market plans rebounded 2.5 times in November, data released by the Association of Mutual Funds in India (Amfi) showed.
Industry players attributed the fall in equity flows to a spike in market volatility.

But investor sentiment towards debt schemes was improving as the impact of the IL&FS crisis has been fading with bond prices rallying amid sharp drop in global crude prices.
Equity schemes reported inflows of Rs 84 billion in November against Rs 126 billion in the previous month. Despite the drop, flows into systematic investment plans (SIPs) remained close to Rs 80 billion. About 95 per cent of SIP flows were towards equity schemes.
The assets under management (AUM) for the equity segment stood at Rs 7.71 trillion, up four per cent. The benchmark Sensex gained five per cent in November, after dropping as much as 15 per cent in the previous two months.
Meanwhile, inflows into liquid schemes stood at Rs 1.36 trillion in November compared to Rs 550 billion in the previous month. At the height of the IL&FS crisis in September, over Rs 2 trillion had flown out of liquid and money market schemes.
Graph “Slowly, the confidence is coming back. The worries of the credit event are seen abating and investors are returning to the money markets,” said NS Venkatesh, chief executive officer, Amfi.
The IL&FS default hit the mutual fund industry hard after investors into liquid funds had become risk-averse. Liquid funds of AUMs account for nearly a fourth of the MF industry. Fund houses with exposure to IL&FS debt papers had to mark down their holdings.
Industry players said sentiment in the debt market has improved with bond yields coming off sharply. After climbing to a four-year high of 8.12 per cent in September, the yield on the benchmark 10-year government security is currently at an eight-month low of 7.46. Experts said yields have cooled off as fall in Brent crude prices and recovery in the rupee have eased macro-economic pressure.
Thanks to a surge in liquid inflows, the overall AUM of the MF industry rose by eight per cent to Rs 24 trillion in November from Rs 22.2 trillion at the end of October. On a year-on-year basis, industry AUM is up just five per cent. However, the industry is targeting a 25 per cent jump in asset base over the next one year.
“As India becomes one of the fastest growing economies and with inflation rates slowing down, equities are expected to perform better in the near future. We are hopeful that next year, many more investors will choose MFs as their preferred option to grow their wealth. We see the industry growing 20 per cent and AUM reaching Rs 30 trillion by end of 2019,” said Venkatesh.

Equity flows into mutual funds drops sharply, liquid schemes rebound

Flows into equity mutual fund (MF) schemes declined 33 per cent and those into liquid- and money-market schemes rebounded 2.5 times in November, according to data released by an industry association Association of Mutual Funds in India (Amfi).
Industry players attributed the reduction in equity flows to spike in market volatility. They said investor sentiment towards debt schemes was improving because the impact of the IL&FS crisis was fading and bond prices were rallying amid sharp drop in global crude prices.

Equity schemes reported inflows of Rs 84 billion in November as against Rs 126 billion in the previous month. The drop was despite flows into systematic investment plans (SIPs) remaining close to Rs 80 billion. About 95 per cent of SIP flows are towards equity schemes.
The assets under management (AUM) for the equity segment stood Rs 7.71 trillion, up four per cent. The benchmark Sensex had gained five per cent in November, after dropping as much as 15 per cent in the previous two months.
Inflows into liquid schemes stood at Rs 1.36 trillion in November compared to Rs 550 billion in October. At the height of IL&FS crisis in September, over Rs 2 trillion had flown out of liquid and money market schemes.
“Slowly the confidence is coming back. The worries of the credit event are seen abating and investors are returning to money markets,” NS Venkatesh, chief executive officer, Amfi.
The IL&FS default hit the mutual fund industry after investors into liquid funds had become risk-averse. Liquid fund AUM account for nearly a fourth of the MF industry. Fund houses with exposure to IL&FS debt papers had to mark down their holdings.
Industry players say the sentiment in the debt market has improved with bond yields coming off sharply.
After climbing to a four-year high of 8.12 per cent in September, the yield on the benchmark 10-year government security is currently at an eight-month low of 7.46.
Experts say yields have cooled off as plunge in the Brent crude prices and recovery in the rupee have eased macro-economic pressure.
Thanks to the surge in liquid inflows, the overall AUM of the MF industry rose by eight per cent to Rs 24 trillion in November from Rs 22.2 trillion at the end of October.
On a year-on-year basis, industry AUM is up just five per cent. However, the industry is targeting a 25 per cent jump in asset base over the next one year.
“India becomes the fastest growing economy and with inflation rates slowing down, equities are expected to perform better in the near future. We are hopeful that next year, many more investors will choose MFs as their preferred option to grow their wealth. We see the industry growing by 20 per cent and AUM reaching Rs 30 trillion by end of 2019,” said Venkatesh.

India's $35 billion government pension fund plans equities boost

India’s $2.3 trillion equity market has surged in recent years and is about to get a new endorsement -- from the nation’s pension regulator.
“We are pressing the government to increase the equity proportion for government employees, and expect a favourable response very soon,” from the Finance Ministry, Hemant Contractor, chairman of the Pension Fund Regulatory and Development Authority, said in an interview. The PFRDA has called for a bump to 50 percent, from 15 percent -- to match the maximum for private-sector pensions overseen by its National Pension System arm.

India’s equity culture may also get a boost from a stewardship code to be rolled out for the country’s fund managers to push for corporate-governance best practices. The PFRDA, along with India’s insurance and securities regulators, is pursuing the new code, Contractor said in New Delhi Friday.
Contractor, who’s headed the pension regulator since 2014, said the new code will help improve the professionalism of business management, with challenges ranging from the misuse of corporate funds to boards taking insufficient action when things go wrong.
Government employees contribute about 87 percent of the 2.3 trillion rupees ($35 billion) overseen by the NPS, which started in 2004 and later opened to all citizens for voluntary contributions. Aside from the NPS, the government operates the Employees’ Provident Fund Organization, which offers investors defined returns on savings. Contractor said his agency has pressed for legislation allowing workers to shift from that plan to the NPS.
With interest rates trending lower, “equities, if managed properly, should provide that extra bit” of return, Contractor said. There’s great appetite for putting money in stocks, and one proposal under consideration is to boost the limit for non-government subscribers to 75 percent, he said, adding that the strategy does carry risk.
Pension funds from Japan to Australia have taken on greater risk over time, conferring increased volatility. Norway’s sovereign wealth fund said April 27 it lost $21 billion in the first quarter thanks to the global sell-off in equities. In India, appetite for risk may be less in a country where the 1.3 billion population doesn’t have social security coverage, and where savings have declined as a share of the economy from a peak a decade ago.
But with risk comes the potential for outsized gains. After returning less than bonds in 2016 and a loss in 2015, India’s NSE Nifty 50 Index of equities had a 31 percent total return in rupee terms in 2017, compared with the 3.1 percent on Indian government bonds according to ICE Bank of America Merrill Lynch data.
Contractor saw less need to expand the cap on investment in corporate bonds, which is currently set at 40 percent of the portfolio. He said there’s just not enough issuance in the market to make it more attractive. He also ruled out investing in overseas markets for some time to come, given the likelihood of better returns at home.
The assets overseen by the NPS are managed by the following:
LIC Pension Fund Ltd.
SBI Pension Funds Pvt.
Kotak Mahindra Pension Fund Ltd.
Reliance Capital Pension Fund Ltd.
Birla Sunlife Pension Management Ltd.
HDFC Pension Management Co. Ltd.
ICICI Prudential Pension Funds Management Co. Ltd.
UTI Retirement Solutions Ltd.