Mutual fund assets slide from their all time highs

Mutual fund assets slide from their all time highs

Equity funds posted the biggest decline in AUMs in 15 months to Rs1.76 trillion, down 7% from January. Photo: Pradeep Gaur/Mint

Also Read

Updated: Wed, Mar 13 2013. 09 19 PM IST

Mumbai: Mutual funds’ assets under management (AUMs) fell by 1.5% to Rs.8.14 trillion in February from a record Rs.8.26 trillion in January, according to data released by the Association of Mutual Funds in India (AMFI) on Wednesday.

The fall in AUMs was attributed to the mark-to-market fall in assets of equity-oriented mutual funds following a 6% decline in the National Stock Exchange’s benchmark CNX Nifty during the month.

“AUM of income funds (mainly short maturity funds) declined owing to tight liquidity conditions prevailing towards the financial year end. The industry saw sharply lower net inflows of Rs.36 billion (Rs.3,600 crore) in the month vis-à-vis Rs.607 billion in the previous month,” credit rating agency Crisil Ltd and AMFI said in a joint press release.

Equity funds posted the biggest decline in AUMs in 15 months to Rs.1.76 trillion, down 7% from January, hurt by mark-to-market losses in their underlying assets. Net outflows from the category slowed to Rs.160 crore in February, the lowest in the past nine months.

India’s key equity indices retreated from their highs in line with global markets on fears that the US central bank may slow or stop its bond buying programme and concerns over political gridlock in Italy and bleak Chinese manufacturing data, coupled with worries over slowing economic growth at home.

Income funds, including long-term and short-term debt funds, fixed-maturity products (FMPs) and ultra short-term debt funds, posted a 1.4% decline in AUMs to Rs.3.93 trillion in February, primarily due to outflows of Rs.5,300 crore.

“Tight liquidity conditions towards the financial year-end saw redemptions from short-maturity debt funds. While FMPs have seen redemptions of Rs.16 billion, these have been balanced by inflows of Rs.21 billion into interval funds,” the press release said.

Liquid and gilt funds attracted net inflows. While liquid funds or money market funds drew inflows of Rs.8,600 crore last month, gilt funds registered net inflows for the sixth consecutive month. Inflows into gilt funds were, however, lower at Rs.400 crore compared with Rs.1,100 crore inflows recorded in January.

“The category has become attractive in the recent months on anticipation of easing of interest rates,” said the press release by AMFI and Crisil.

The Reserve Bank of India cut its key rates by a quarter of a percentage point on 29 January, the first reduction in nine months.

Bond prices and yields move in opposite directions. “A fall in interest rates will result in a rise in bond prices and positively impact gilt fund NAVs (net asset values, or returns),” the release said.

Gold exchange-traded funds saw outflows for the first time since June 2012 and their AUMs declined by 4% to Rs.11,600 crore.

“The mark-to-market losses (as represented by the CRISIL Gold Index) were around 4% amid a weak global trend for gold following increase in risk appetite,” 

 

 

rohit singh pgdm

 

Despite IIP surprise, RBI to cut rates next Tue: Foreign analysts


Analysts at leading foreign brokerages like Credit Suisse and Barclays on Tuesday said the marginal uptick in IIP number and a spike in retail inflation would not deter the RBI from cutting lending rates by 25 basis points at its March 19 policy review.

Credit Suisse director

<script type="text/javascript" src="http://altfarm.mediaplex.com/ad/!js/10599-62036-32048-15?mpt=249768346&mpvc=http://adclick.g.doubleclick.net/aclk%253Fsa%253DL%2526ai%253DBBkyw6kxBUemHHsO4igeU_oCgBqbIwZADAAAAEAEg2vGODDgAWJbq1NdFYOWa6YPgDrIBFnd3dy5oaW5kdXN0YW50aW1lcy5jb226AQoyMDB4MjAwX2FzyAEJ2gGOAWh0dHA6Ly93d3cuaGluZHVzdGFudGltZXMuY29tL2J1c2luZXNzLW5ld3Mvd29ybGRlY29ub215L0Rlc3BpdGUtSUlQLXN1cnByaXNlLVJCSS10by1jdXQtcmF0ZXMtbmV4dC1UdWUtRm9yZWlnbi1hbmFseXN0cy9BcnRpY2xlMS0xMDI1MzYzLmFzcHjgAQOYAoDxBKkCuPCiTjXGUz7AAgLgAgDqAhhodF9zdG9yeV90b3BfbGhzXzIwMHgyMDD4AvLRHpADmgiYA5oIqAMB4AQBoAYW%2526num%253D0%2526sig%253DAOD64_2ZviXCmUIS9Wx7ndOEVeDQ1ua58Q%2526client%253Dca-pub-9783515403541006%2526adurl%253D"> </script> <noscript> <a href="http://altfarm.mediaplex.com/ad/nc/10599-62036-32048-15?mpt=[CACHEBUSTER]"> <img src="http://altfarm.mediaplex.com/ad/nb/10599-62036-32048-15?mpt=[CACHEBUSTER]" alt="Click Here" border="0"> </a> </noscript>

Robert Prior-Wandesforde in a note said he still expects the monetary authority to slash the repo or short-term lending rate next Tuesday. "We doubt that either of today's data releases (IIP and retail inflation) will prevent the RBI from cutting the repo (and cash reserve ratio) by another 25 bps March 19, while we are also looking for a 25 bps reduction on May 3," Prior-Wandesforde said.
Explaining the rationale for this optimism, he said the disappointing Q3 GDP data of just 4.5%, and the fact that finance minister P Chidambaram has stuck to his budgetary commitments are likely to carry more weight in the context of a WPI rate, which is trending lower.
While the January industrial production rose 2.4% mainly due to perk up in manufacturing output and enhanced power generation, against 1% a year ago, the retail inflation rose to 10.91% in February from 10.79% in January, dampening markets, which shed 0.41% or 81 points today.
For the April-January period of this fiscal, the IIP print stands at a poor 1%, down from 3.4% a year ago.
However, the RBI mostly bases it inflation reading on the wholesale price numbers, which have been trending down for the past many months now. The latest reading stood at 6.62% in January. The February readings will be out on Thursday.
Joining him, his counterpart at Barclays India said he too expects a 25 bps cut in the repo rate on Tuesday


ARUSI SINGH
 PGDM 2nd Sem

Mutual fund assets slide from their all time highs

AUMs dip due to mark-to-market fall in assets of equity-oriented mutual funds, following a 6% decline in CNX Nifty 

Equity funds posted the biggest decline in AUMs in 15 months to Rs1.76 trillion, down 7% from January. Photo: Pradeep Gaur/Mint 

              Mumbai: Mutual funds’ assets under management (AUMs) fell by 1.5% to Rs.8.14 trillion in February from a record Rs.8.26 trillion in January, according to data released by the Association of Mutual Funds in India (AMFI) on Wednesday.

The fall in AUMs was attributed to the mark-to-market fall in assets of equity-oriented mutual funds following a 6% decline in the National Stock Exchange’s benchmark CNX Nifty during the month.

“AUM of income funds (mainly short maturity funds) declined owing to tight liquidity conditions prevailing towards the financial year end. The industry saw sharply lower net inflows of Rs.36 billion (Rs.3,600 crore) in the month vis-à-vis Rs.607 billion in the previous month,” credit rating agency Crisil Ltd and AMFI said in a joint press release.

Equity funds posted the biggest decline in AUMs in 15 months to Rs.1.76 trillion, down 7% from January, hurt by mark-to-market losses in their underlying assets. Net outflows from the category slowed to Rs.160 crore in February, the lowest in the past nine months.

India’s key equity indices retreated from their highs in line with global markets on fears that the US central bank may slow or stop its bond buying programme and concerns over political gridlock in Italy and bleak Chinese manufacturing data, coupled with worries over slowing economic growth at home.

Income funds, including long-term and short-term debt funds, fixed-maturity products (FMPs) and ultra short-term debt funds, posted a 1.4% decline in AUMs to Rs.3.93 trillion in February, primarily due to outflows of Rs.5,300 crore.

“Tight liquidity conditions towards the financial year-end saw redemptions from short-maturity debt funds. While FMPs have seen redemptions of Rs.16 billion, these have been balanced by inflows of Rs.21 billion into interval funds,” the press release said.

Liquid and gilt funds attracted net inflows. While liquid funds or money market funds drew inflows of Rs.8,600 crore last month, gilt funds registered net inflows for the sixth consecutive month. Inflows into gilt funds were, however, lower at Rs.400 crore compared with Rs.1,100 crore inflows recorded in January.

“The category has become attractive in the recent months on anticipation of easing of interest rates,” said the press release by AMFI and Crisil.

The Reserve Bank of India cut its key rates by a quarter of a percentage point on 29 January, the first reduction in nine months.

Bond prices and yields move in opposite directions. “A fall in interest rates will result in a rise in bond prices and positively impact gilt fund NAVs (net asset values, or returns),” the release said.

Gold exchange-traded funds saw outflows for the first time since June 2012 and their AUMs declined by 4% to Rs.11,600 crore.

“The mark-to-market losses (as represented by the CRISIL Gold Index) were around 4% amid a weak global trend for gold following increase in risk appetite,” it said

TOUHID HUSSAIN
PGDM 2nd SEM

 

RIL to invest $27 billion in next four years: report

RIL to invest $27 billion in next four years: report

Deutsche Bank report says RIL at cusp of next capex cycle; amount 50% more than Mukesh Ambani stated in June ’12

RIL’s management expects its money-losing retail venture to break even next fiscal, the report said. Photo: HT

Also Read

• RIL to sell stake in block in Yemen
• Analysts turn bullish on RIL

Updated: Wed, Mar 13 2013. 12 22 AM IST

Mumbai: Reliance Industries Ltd (RIL) will invest around $27 billion (Rs.1.47 trillion) in the next four years till the end of fiscal 2017 across its various businesses, according to a Deutsche Bank AG report issued after its analysts met one of the company’s two joint chief financial officers (CFOs). The number is about 50% more than the estimate mentioned by RIL chairman Mukesh Ambani in June last year.

“We believe RIL is at the cusp of its next capex (capital expenditure) cycle as it invests around $27 billion over FY13-FY17 (85% in its core business),” said the 11 March report by analysts Harshad Katkar and Amit Murarka.

In a related development, the report also said that RIL’s management expects its retail venture, which has been a loss-making one thus far, to break-even next fiscal.

RIL has two joint CFOs, Alok Agarwal and V. Srikanth. The Deutsche Bank report didn’t specify which of them it met.

The company reiterated its investment target in an email that it sent in response to queries.

“As highlighted in the past, we have plans to invest around Rs.100,000 crore over the next five years in India across our businesses,” the company said. “We are also planning to invest in a series of projects to develop around 4 trillion cu. ft of discovered natural gas from the KG-D6 block, which would entail a potential investment in excess of $5 billion over the next three to five years. RIL’s share would be around 60% for this potential investment.”

The company added that “any additional capital expenditures in Deutsche Bank’s report is based on their own estimates”.

Reliance said, “All these projects are proposed to be fully funded by RIL through a combination of export credit agency financing, accessing the public markets, syndicated loans and cash that exists on the balance sheet.”

The Deutsche Bank report provided a break-up of RIL’s proposed investment as per its calculations—$11 billion for exploration and production (including US shale gas), $4 billion on refining, $8 billion for petrochemicals, $3 billion on telecom, and $1 billion on retail.

The Deutsche Bank analysts noted that their meeting with RIL’s joint CFO convinced them of their bullish view based on expectations of approval for gas price increases in fiscal 2014; approvals for the company’s R-Series gas field in the Krishna-Godavari (KG) D6 gas reservoir and development plans in the next fiscal for the NEC-25 gas block; improving visibility on monetization of these discoveries; and the start of a new capex cycle.

The prospects of RIL’s hydrocarbons exploration and production business have begun looking up after a period of challenges over the last three years, especially with gas production from the flagship D6 reservoir in the KG basin falling.

The company and its British partner BP Plc have been lobbying for more remunerative gas prices. The demand may have received a boost with a committee led by C. Rangarajan, chairman of the Prime Minister’s economic advisory council, recommending a new formula for gas pricing in India. According to this, natural gas prices work out to around $8 per million British thermal unit (mmBtu), nearly double the current $4.2. To be sure, the pricing proposal is yet to be accepted by the government, although the agreement to supply gas at $4.2 per mmBtu ends next year.

RIL and the oil ministry—especially under former minister S. Jaipal Reddy—have also had several disputes ranging from differences on understanding of the cost recovery entitled to the company from its operations at D6, to approvals for RIL’s work programme across various blocks getting stuck.

The relationship has however improved since M. Veerappa Moily became oil minister in October.

In connection with the new investments RIL is likely to make over the next four years, the Deutsche Bank report said these were likely to yield an incremental Ebitda (earnings before interest, tax, depreciation and amortization) of $3.5 billion annually starting in fiscal 2017.

The report “estimates the petchem (petrochemicals) and refining capex to have low pay-back periods and high incremental returns.” Investments in retail, shale gas and telecom are expected to “start contributing materially” from fiscal 2016.

The proposed investment, according to the report, is higher than that envisaged by chairman Ambani while speaking at the company’s last annual general meeting in June. Ambani had said that RIL would be investing nearly Rs.1 trillion over the next five years in India to “build a stronger and more diversified Reliance”.

RIL has cash and cash equivalents of around Rs.80,000 crore and has been raising money through bond sales in the public debt market, all of which may be utilized to fund the conglomerate’s investment plans.

Since much of the equipment and services needed by RIL for the augmentation of capacity at the refining and petrochemicals complex at Jamnagar in Gujarat have to be imported, RIL will also look at funding from international export credit agencies, a senior RIL executive had said in January. He didn’t want to be identified.

“There was a lull in Reliance for the last two years where things were quiet, but activity appears to be picking up,” said S.P. Tulsian, a Mumbai-based independent stock market analyst who has been covering RIL since its listing in 1977. “There is positive news with the oil minister talking of resolving issues involving RIL and gas pricing. But we will only start to see the impact of these investments gradually after the next four quarters or so.”

The Deutsche Bank report is one in a series of recent analyst reports that are positive on RIL.

An 11 March report by Bank of America-Merrill Lynch (BofA-ML) upgraded RIL to “neutral” from its earlier rating of “underperform” and revised the price target upwards by 9% to Rs.893 per share. The BofA-ML report cited an improved outlook on refining margins and a recovery in earnings growth by 8-13% between fiscal 2014 and fiscal 2015 as the primary reasons for the upgrade.

“RIL’s GRM (gross refining margin) is up in the last two quarters and the strength appears sustainable,” the BoA-ML report said, citing global demand for oil products outstripping net refining capacity addition as the main reason.

GRM is the difference between the cost of processing crude and the value of petroleum products sold.

A 4 March Reuters report said Morgan Stanley had upgraded RIL to “overweight” from “underweight” earlier and raised the price target to Rs.961 per share from Rs.798 earlier. The report said the investment bank stated in its report that the operating environment was improving across RIL’s core businesses and that should “spur a renewed earnings upgrade cycle”.

RIL gained 0.45% to close at Rs.847.5 Tuesday on the BSE, while the benchmark Sensex lost 0.41% to 19,564.92 points. In the past year, RIL has gained 6.34% and the Sensex has risen 11.24%.

 

rohit singh pgdm

Tata Motors Feb global sales fall 22 percent, JLR sales up 10 percent

• Tweet
• Link this
• Share this
• digg
• Email
• Print

Related Topics

• Business »

Stocks

 

Tata Motors Ltd

TAMO.NS

Rs300.00

-4.70-1.54%

12:48:00 IDT

PICTURE GALLERY

Kim Jong-un

A look at the daily life of North Korea's leader.  Slideshow 

• Pope chimney watch
• The Korean War
• Colours of India
• Mars Base Utah
• Brazil's 'Roofless' movement

» Click here for more slideshows

Wed Mar 13, 2013 12:13pm IST

REUTERS - Tata Motors Ltd (TAMO.NS) said global sales in February fell 22.4 percent to 98,837 vehicles, the fourth consecutive monthly slide, as a 10 percent rise in sales at its key Jaguar Land Rover unit was undermined by a slump in its Tata-branded vehicles.
Jaguar Land Rover sales stood at 35,485 vehicles, Tata Motors said in a statement on Wednesday, up from 32,257 in the same month last year.
Sales of Tata passenger vehicles stood at 11,177 during the month, down almost 70 percent. Tata, part of the salt-to-steel Tata Group conglomerate, said it sold 52,175 commercial vehicles in February, down an annual 9.8 percent.
(Reporting by Henry Foy in MUMBAI; Editing by Jijo Jacob)
Arvind Kumar Pathak
PGDM 2

Reuters) - Asian shares fell on Wednesday on investor concerns that the recent rally in global equities was running out of steam, while sterling remained vulnerable after weak UK data fed fears of a triple-dip recession.
Sentiment toward riskier assets was not completely soured, however, with U.S. crude futures and Shanghai copper clinging on to gains and gold little changed.
"Asian markets have given up further ground today as a lack of positive drivers to keep the risk rally going has encouraged investors to lock in recent gains. Price action in equities seems to have plateaued after weeks of a relentless rally," said Stan Shamu, market strategist at IG Markets.
The bearish tone was expected to spill over to European markets, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX to open down as much as 0.5 percent.
U.S. stock futures were down 0.1 percent, also pointing to a soft Wall Street open, after the Dow Jones Industrial Average marked another record close on Tuesday, its eighth straight day of rises and pushing it higher into overbought territory.
The MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent. South Korean shares bucked the regional downtrend, edging up 0.2 percent.
"We are still in the scare framework, people are still scared of risk," said Adrian Foster, head of financial markets research for Asia-Pacific at Rabobank International in Hong Kong.
This was despite the generous global liquidity still in place even when the risks that prompted central banks into accommodative stances have subsided, Foster said, with Europe stabilising and the United States skirting around its budget problems, improving growth prospects and supporting asset prices generally.
Michael Gavin, head of asset allocation at Barclays Capital in New York, suggests the return of the VIX volatility index to levels seen before the global financial crisis may indicate a "new normal" extended period of low volatility, buttressed by activist central banks ready to restore calm when they can.
"Of course, this whole context could change if some risk materialises that cannot be contained by activist central banks. But the main risks that have preoccupied investors in the past several years seem unlikely to return to such menacing proportions," Gavin said in a research.
China shares headed for a fifth-straight loss on Wednesday, hurting Hong Kong stocks, with the mainland financial and property sectors hit by fears of tighter regulations to curb speculative betting on property.
But analysts say China would be careful not to entirely kill the property boom.
"Property regulation is a near-term concern, but the government is trying to avoid a too extreme situation of an overheating or a collapse of the property sector. The government is adjusting to contain it in a certain range," Yiping Huang, chief economist for Asia at Barclays Capital in Hong Kong.
STERLING UNDER PRESSURE
As the yen's weakness paused, Japan's Nikkei stock average fell 0.5 percent, after snapping an 8-day winning streak which took the index up to a 4-1/2-year high on Tuesday.
Japan's approaching fiscal year-end on March 31 was also prompting investors to sell to adjust their positions.
The dollar slipped 0.4 percent to 95.67 yen, off Tuesday's high of 96.71 yen, its peak since August 2009.
The euro fell 0.3 percent to 124.74 yen, after reaching a one-month high of 126.03 on Tuesday. Expectations for much bolder monetary easing from the Bank of Japan when a new leadership takes over next week have pressured the yen.
Sterling traded up 0.2 percent to $1.4938, after falling to its lowest since late June 2010 on Tuesday after data showed a surprise fall in British industrial output in January, pushing the pound down to $1.4832.
Against the Australian dollar, the pound skidded towards A$1.4370 on Tuesday, lows not seen since 1985, but was up at A$1.4489 on Wednesday.
"Sterling's weakness on the foreign exchanges remains intact as an absence of fresh initiatives from the Bank of England, and the lack of room to ease fiscal policy, leave much onus on a weaker pound to help stimulate growth," ANZ said in a note.
The euro was steady around $1.3041, with investors watching bond sales from highly-indebted euro zone countries to gauge the degree of anxiety. Italy will offer three-year and 15-year bonds on Wednesday, while Spain plans to sell bonds due 2029, 2040 and 2041 at a special, off-calendar auction on Thursday.
Crude oil rose 0.2 percent to $92.71 a barrel but Brent fell 0.2 percent to $109.42.
London copper steadied around $7,832.75 a tonne while Shanghai copper rose to a 1-1/2-week high 57,160 yuan a tonne.
Spot gold was nearly unchanged at $1,591.46 an ounce.
(Additional reporting by Clement Tan in Hong Kong; Editing by Eric Meijer & Kim Coghill)
PINTU KUMAR OJHA
PGDM 2nd

Government to get around Rs 3,639 crore from CDMA spectrum auction

NEW DELHI: The government will get around Rs 3,639 crore from the 2G spectrum auction for CDMA services, which ended today with Russian conglomerate Sistema's Indian unit SSTL being the only bidder.

However, the government may not get any upfront payment as Rs 1,626 crore has to be adjusted against SSTL's earlier payment, sources said.

The auction, which lasted just around four hours, drew no bids for Mumbai, Maharashtra and UP East, they added.

The auction for 2G spectrum for GSM players held in November last year was spread across three days fetching the government Rs 9,407 crore.

The CDMA sale did not take place in November as there was no participant due to high cost.

Government has since then reduced the spectrum base price by 50 per cent but still no company, except SSTL, showed any interest.


In 2010, spectrum auction for 3G services ended after 34 days and 183 rounds of bidding. This was followed by 16-day long auction for wireless broadband (BWA) spectrum.

Sistema Shyam Teleservices (SSTL) had deposited Rs 613.75 crore for the auction, which made it eligible to bid for minimum quantum of 2.5 Megahertz spectrum (two blocks of 1.25 Mhz airwaves frequency) in 11 circles.

However, the company bid for only eight circles, which means it may curtail operations in three more circles.

The company has already announced discontinuation of services in 10 out of 22 telecom circles - Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East,
 Orissa and Punjab.

ABDUL WAHEED
PGDM 2nd SEM.
IIMT COLLEGE OF MANAGEMENT