Showing posts with label "karvy private group". Show all posts
Showing posts with label "karvy private group". Show all posts
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Monday, 26 March 2012
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Wednesday, 14 March 2012
No Big Reforms This Fiscal Budget?
The Union Budget is to be announced on 16th March 2012. There is no significant expectation from the government’s fiscal policy, as there are no big reforms which will be addressed. The only thing we are expecting is slight increase in excise duty and service tax rate. We expect the excise duty to be increased from 10% to 12%. The sectors which primarily will take the hit are from this will be automobiles, cements and cigarettes.
We also expect the government to expand the service tax by having an ‘Exclusion List’ for service tax applicable as against the list of sectors where the service tax was applicable previously. All these measures are expected to boost the government’s revenues. There might also be few populist measures like the “Right to Food” bill which could be tabled this time.
A big positive step for the infrastructure sector could be abolishment of 5% import duty on Coal. This move will be positive for most of the power generating companies
Overall, fiscal deficit for FY13 is expected to be at 4.7%, although looking at the current welfare program and social spending we expect the number to exceed 4.7% levels and the realistic estimate for FY13 fiscal deficit should be around 5%, which is on back of assumption that Brent Crude will remain around 110$/barrel for full year
We also expect the government to expand the service tax by having an ‘Exclusion List’ for service tax applicable as against the list of sectors where the service tax was applicable previously. All these measures are expected to boost the government’s revenues. There might also be few populist measures like the “Right to Food” bill which could be tabled this time.
A big positive step for the infrastructure sector could be abolishment of 5% import duty on Coal. This move will be positive for most of the power generating companies
Overall, fiscal deficit for FY13 is expected to be at 4.7%, although looking at the current welfare program and social spending we expect the number to exceed 4.7% levels and the realistic estimate for FY13 fiscal deficit should be around 5%, which is on back of assumption that Brent Crude will remain around 110$/barrel for full year
Friday, 9 March 2012
HNIs are heroes of gold-ETF saga
The run-up in gold prices did not quell investor appetite for the precious metal. It only turned to exchange traded funds. Demand from gold fund-of-funds and high net worth individuals appears to have driven the rise in gold ETF assets.
According to half-year data for gold funds released by AMFI, the total number of folios under gold-ETFs stood at 4.28 lakh accounts in September 2011. This was 75 per cent higher than the total accounts in the same month of 2010. The assets under management of gold-ETFs schemes grew 187 per cent to Rs 8,184 crore.
In the above period, gold price in the domestic market had rallied 35 per cent to around Rs 2,563/gram. The net inflow into gold ETF schemes during the period was Rs 3,959 crore.
HNIs queue up
Who is buying into gold-ETFs? Though retail investors continue to be the single largest group of investors (4.12 lakh accounts) under gold-ETF schemes, there has been a rising interest among High Networth Individuals (HNI) for these funds.
From 5,433 HNI accounts in September 2010, gold-ETFs reported a total of 10,361 HNI accounts at the end of September 2011.
Ms Lakshmi Iyer, Head of Products, Kotak Mutual Fund, says: “A large number of HNIs who have long- term investment objective are diversifying into gold through gold-ETF schemes. The global uncertainty, the high inflation and the relative convenience of gold investment through ETFs are driving demand for gold funds.”
What of corporates?
Yet another piece of interesting data from AMFI is the number of corporate accounts under gold-ETFs. Corporate folios under gold-ETFs stood at 5,599 in September-2011, up from 3,310 accounts in September 2010.
So, are the 5000-odd corporates investing in gold-ETFs now? Maybe not, says Ms Iyer. “A lot of these are accounts from gold fund-of-fund schemes.” Some of these f-o-f schemes account for about 50 per cent of AUMs of some gold-ETFs, she added.
Gold fund-of-fund schemes are relatively less rewarding for a gold investor compared to gold-ETFs due to higher fund-management costs. But promotions by AMCs appear to have made them successful.
According to half-year data for gold funds released by AMFI, the total number of folios under gold-ETFs stood at 4.28 lakh accounts in September 2011. This was 75 per cent higher than the total accounts in the same month of 2010. The assets under management of gold-ETFs schemes grew 187 per cent to Rs 8,184 crore.
In the above period, gold price in the domestic market had rallied 35 per cent to around Rs 2,563/gram. The net inflow into gold ETF schemes during the period was Rs 3,959 crore.
HNIs queue up
Who is buying into gold-ETFs? Though retail investors continue to be the single largest group of investors (4.12 lakh accounts) under gold-ETF schemes, there has been a rising interest among High Networth Individuals (HNI) for these funds.
From 5,433 HNI accounts in September 2010, gold-ETFs reported a total of 10,361 HNI accounts at the end of September 2011.
Ms Lakshmi Iyer, Head of Products, Kotak Mutual Fund, says: “A large number of HNIs who have long- term investment objective are diversifying into gold through gold-ETF schemes. The global uncertainty, the high inflation and the relative convenience of gold investment through ETFs are driving demand for gold funds.”
What of corporates?
Yet another piece of interesting data from AMFI is the number of corporate accounts under gold-ETFs. Corporate folios under gold-ETFs stood at 5,599 in September-2011, up from 3,310 accounts in September 2010.
So, are the 5000-odd corporates investing in gold-ETFs now? Maybe not, says Ms Iyer. “A lot of these are accounts from gold fund-of-fund schemes.” Some of these f-o-f schemes account for about 50 per cent of AUMs of some gold-ETFs, she added.
Gold fund-of-fund schemes are relatively less rewarding for a gold investor compared to gold-ETFs due to higher fund-management costs. But promotions by AMCs appear to have made them successful.
Wednesday, 8 February 2012
Tuesday, 7 February 2012
Monday, 6 February 2012
India's forex reserves rise by $673.4 mn
India's foreign exchange reserves increased by $673.4 million to $293.93 billion for the week ended Jan 27, Reserve Bank of India data showed.
The forex reserves have risen for the second week after six straight weeks of decline. They had increased by $731.8 million for the week ended Jan 20 after slumping by $14.25 billion in the previous six weeks.
A strong rally in the Indian equities markets and rebound in the value of rupee on the back of huge inflow of funds from overseas investors have helped in increase in the foreign exchange reserves.
Since the beginning of the year, Indian markets have been riding a firm bull rally. The Sensex has shot up 13.91 percent till Feb 3. The Nifty too has shot up 15.17 percent or 701.55 points in little over a month.
Foreign fund flows have also led to a strong recovery in the value of the rupee, helping alleviate worries of investors. The rupee closed Friday at a 3 month high at 48.68 against the dollar. Strong overseas inflows have also played a big role in the current rally. Since the beginning of the year, foreign institutional investors have pumped in over $2 billion.
Foreign currency assets, the biggest component of the forex reserves kitty, rose by $614.1 million to $260.12 billion for the week ended Jan 27, according to the Reserve Bank of India weekly statistical supplement. The RBI did not provide any reasons for the change in foreign currency assets.
It said the assets expressed in US dollar terms included the effect of appreciation or depreciation of non-US currencies such as the pound sterling, euro and yen held in reserve. The value of special drawing rights (SDRs) rose by $36.8 million to $4.46 billion, and India's reserves with the International Monetary Fund (IMF) increased by $22.5 million to $2.72 billion. However, the value of gold reserves remained unchanged at $26.62 billion.
Source: http://news.in.msn.com/business/article.aspx?cp-documentid=5820987
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Saturday, 4 February 2012
India's per capita income rises to Rs 53,000
India's per capita income grew by 15.6 percent to Rs.53,331 in 2010-11 as compared to Rs.46,117 in the previous year on the back of 8.4 percent economic growth and partly also because of high inflation, official data showed Tuesday. The country's per capita income has crossed Rs.50,000-mark for the first time.
"The per capita income at current prices is estimated at Rs.53,331 in 2010-11 as against Rs.46,117 for the previous year depicting a growth of 15.6 percent," according to provisional data released by the ministry of statistics and programme implementation here.
However, in real terms based on 2004-05 prices, the per capita income grew by a slower 6.4 percent to Rs.35,993 in 2010-11 as compared to Rs.33,843 in the previous year. The growth in per capita income is led by 8.4 percent expansion in the economy.
The Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2010-11 is estimated at Rs.48,85,954 crore, which is 8.4 percent more than the previous year's Rs.45,07,637 crore.
Gross domestic saving of India, which has over 1.2 billion population, increased by 32.3 percent to Rs.24,81,931 crore in 2010-11 as compared to Rs.21,82,970 crore in the previous year. The domestic saving had increased by 33.8 percent in 2009-10.
The gross domestic capital formation, an indicator of increase in physical assets, rose to Rs.26,92,031 crore in 2010-11 at current prices as compared to Rs.23,63,670 crore in the previous year.
At constant 2004-05 prices, the gross domestic capital formation increased to Rs.19,74,172 crore in 2010-11 as compared to Rs.18,38,870 crore in the previous year. The rate of gross capital formation at constant (2004-05) prices was 37.7 percent in 2010-11 as against 38.5 percent in 2009-10.
Source : http://news.in.msn.com/business/article.aspx?cp-documentid=5802415
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"The per capita income at current prices is estimated at Rs.53,331 in 2010-11 as against Rs.46,117 for the previous year depicting a growth of 15.6 percent," according to provisional data released by the ministry of statistics and programme implementation here.
However, in real terms based on 2004-05 prices, the per capita income grew by a slower 6.4 percent to Rs.35,993 in 2010-11 as compared to Rs.33,843 in the previous year. The growth in per capita income is led by 8.4 percent expansion in the economy.
The Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2010-11 is estimated at Rs.48,85,954 crore, which is 8.4 percent more than the previous year's Rs.45,07,637 crore.
Gross domestic saving of India, which has over 1.2 billion population, increased by 32.3 percent to Rs.24,81,931 crore in 2010-11 as compared to Rs.21,82,970 crore in the previous year. The domestic saving had increased by 33.8 percent in 2009-10.
The gross domestic capital formation, an indicator of increase in physical assets, rose to Rs.26,92,031 crore in 2010-11 at current prices as compared to Rs.23,63,670 crore in the previous year.
At constant 2004-05 prices, the gross domestic capital formation increased to Rs.19,74,172 crore in 2010-11 as compared to Rs.18,38,870 crore in the previous year. The rate of gross capital formation at constant (2004-05) prices was 37.7 percent in 2010-11 as against 38.5 percent in 2009-10.
Source : http://news.in.msn.com/business/article.aspx?cp-documentid=5802415
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Friday, 3 February 2012
2012 : India Macroeconomic Outlook
India is stepping into a challenging period. The government has at best only one and a half years to act before the election fever rises in anticipation of the 2014 national election. In the short term, economic activity may receive a boost from lower interest rates, a trend likely to begin soon. A cheaper rupee may help stimulate exports. However, the bigger challenge before the nationis to prevent the economy from getting locked in a porlonged period of policy inaction, leading to a vicious spiral of low growth, high inflation, unsustainable fiscal deficit and slack in business confidence.
Amid the global financial and economic crisis in 2008, India prided itself for remaining relatively unhurt. Now, however, the Indian economy is slowing down to 6-7% due to global uncertainty and slowdown and the domestic policy and governance environment. Blame is put on the excessively tight monetary policy, which has caused a decline in investment. It is being argued that a cut in interest rates can prove to be panacea for the problems of the Indian economy and provide a fillip to growth.
Today, the Indian economy is facing a macroeconomic slowdown, with low investments coupled with high inflation. The high, volatile inflation is, in itself, a major problem that is holding back investment. The macroeconomic instability has left the private sector scared, leaving it risk averse and afraid to invest, particularly for long-term projects.
A roller-coaster 2011
The year 2011 proved to be a roller-coaster ride, with a greater degree of negativity. The year began with the anti-corruption campaign, which attracted unprecedented support from the middle class, creating a Hero in Anna Hazare! But the year ended with the compromising ‘Lokpal Bill’, which is far from the expected success in terms of creating a strong institution that can solve the corruption cancer in the country.
The year was marked by economic slowdown across the globe, with the Euro crisis being the highlight. The Indian economy, despite its resilience, was not immune. The falling rupee, widening fiscal deficit, double-digit inflation, 13 interest rate hikes in a year, crucial policies like FDI in retail with strong backward linkages going on the back burner, the dismal feeling of policy paralysis in the country, all these marked critical developments in the course of 2011.
Despite the above-worrisome backdrop, the Indian economy remains fundamentally strong due to its entrepreneurial people, rising young population, some initiatives in agricultural and infrastructural reforms, and investors only delaying their decision to invest but remaining hopeful of better times to come. The single negative factor is that despite over two decades of economic reforms and fruitful results, the economy has been unsuccessful in divorcing economic decision-making from political idiosyncrasies. Somehow, if this can be accomplished, then India’s growth story could certainly shine.
Outlook for 2012
The economic concerns would certainly take some time to go away. Inflation worries are likely to lighten, with food inflation declining steadily. However, the proposed Food Security Bill will widen the fiscal deficit further. There are many important policy reforms in the pipeline in 2012, such as land acquisition reform, new manufacturing policy, deferred FDI in retail, among others. This is also the year when the government has set its targets to achieve its ambitious goal of total electrification of villages. Therefore, the year ought to be definitely an action-packed one from the perspective of economic development.
The most pressing task for the government will be to get the investment cycle buoyant again. Higher public investment appears unlikely given the tight fiscal situation this government finds itself in due to the uncontrolled revenue spending which has led to uncontrollable inflation. However, many public sector companies seem to have excess cash, which should be deployed for new capacity rather than to cover the budgetary gap.
Private investment activity ahs been slack due to numerous uncertainties facing corporates. The large Indian companies are sitting on a pile of cash which they are refraining to use to build fresh capacity. The animal spirits have dampened due to the recent policy paralysis. The obvious way would be to rebuild corporate confidence, and that can be achieved only through the implementation of a well-studied actionable agenda. At least, the government would do well to focus on some reform initiatives that are already on the table, such as Direct Tax Code (DTC), Goods and Services Tax (GST), and licenses to new banks, among others.
The few sectors that have a significant multiplier effect on the rest of the economy could be given special attention. These include construction of new roads, a reinvigorated national highway programme, or construction of affordable housing for the masses, which will generate jobs as well as demand for cement, steel and engineering equipment among others. Energy is another area crying out for attention. It will also be politically less controversial than getting foreign direct investment in retail.
The fiscal deficit is an elephant in the room. It seems highly unlikely that there will be significant progress towards fiscal discipline right now. There are already fears that the government will move towards populist policies, such as farm loans waivers, unsustainable subsidy regime, among others.
Vision for 2012
The vision for 2012 include: (1) India should become power surplus in the country; (2) inflation should get back to single digits; (3) India’s statistics should become more reliable; (4) strong on policy, with a pro-governance perspective; (5) apt implementation of economic policies; (6) major breakthrough in the global economic scenario with Euro-zone consensus.
Incredible India is the oldest civilization, with the largest democracy and the second-fastest growing economy. However, the realization of the country’s true potential is somehow escaping our grasp due to implementation and governance failures. These need to be tackled on an urgent footing.
Disclaimer: The views expressed in this article are the personal views of the author. They do not necessarily reflect the views of the Karvy Group or the organisation that the author represents.
Kiran Nanda
Corporate Economist
When stocks get delisted, what MUST the investors do?
The stock market is witnessing a slew of delisting offers -- Alfa Laval, Carol Info, Patni Computers, UTV Software -- due to various reasons. For investors in these, it is often a tough call on whether or not they should go along.
Sometimes, the price offered by the company is not lucrative enough to exit. However, if they do not exit, they run the risk of getting stuck with the stock if the company does not relist. Delisting means permanent removal of stocks of a listed company from the stock exchange. This can be done by promoters increasing their stake in the company, or when the company is merged or acquired by another one and so on. The process can take six to eight months.
According to a recent report by ICICI Direct, there are many probables for delisting. These include Oracle Financial Services, Novartis, Honeywell Auto, Thomas Cook, Singer, Gillette, AstraZeneca Pharma, Blue Dart and 3M India. These companies have to take a call sooner or later on whether to reduce promoter holding or go for delisting.
In most cases, the company/ies share prices tend to go up as soon as the market smells a stock delist. Rising prices lure investors, who rush to take advantage of short-term gains. Some that have delisted in the past three years include Bhuruka Gases, Aztecsoft and Binani Cement. The share prices of these companies had risen sharply after the announcement.
The stock of UTV Software Communications started rising in June, on speculation of delisting plans. By the time the plan was announced in late July, the share price had shot up 30 per cent since June. Many may have bought the stock from the time it started moving up, for short-term gains. But, experts advise against buying merely on delisting rumours. Pankaj Pandey of ICICI Direct suggests an alternative, "Choose fundamentally strong companies from the list of probable candidates and stay invested until they delist."
What and why?
Tender the shares only if you get a good premium at the time of delisting. "You will have to see if there is enough left on the table for you as an investor. That is, if the delisting price will give you enough returns," says Prashanth Prabhakaran, president-retail broking, IIFL.
Adding, that one should not look at the delisting price in isolation. "You should look at the quality of the shares. It could be a wise decision to tender shares if you are uncertain about the company's future," he adds. Holding on to stocks for more than a year means no capital gains tax.
If you do not tender your shares, you will continue to remain a shareholder and be eligible for benefits such as bonus, dividends and so on from the company.
Since you are holding on to shares of an unlisted company now, you may find it difficult to sell these scrips. "You will have limited options. If you want to unload shares after the delisting, you can do so by tendering these to promoters within off-market transactions," says Prabhakaran.
Off-market transactions are those which do not take place on the stock exchanges, and are conducted through negotiations between the buyer and the seller. In the rare event of these firms relisting, you may get to trade these in the secondary market. Alternatively, you can take legal recourse like the shareholders of chocolate maker Cadbury India. In early 2003, Cadbury delisted, offering Rs 500 a share.
The company managed to buy over 90 per cent of shares, the minimum required for delisting. It has been trying to buy out the remaining shareholders (2.4 per cent). However, the latter did not accept the price offered and have gone to court. The case is still going on.
In the case of an unsuccessful delisting, while investors can quote any price, it is up to the company to accept or reject it. For buying the statutory minimum 90 per cent, a company has to fix the price in such a manner that it is acceptable to investors. Failing which, the delisting will not happen and the stock price can crash. In this case, Pandey says whether you should book losses and exit or not is a call to be taken on fundamentals and business prospects. It is best to tender your shares in a delisting programme, he advises. "Unless you are a big investor and have a substantial say in the company; then, you can hold on to your shares," he adds.
Source : http://www.rediff.com/business/slide-show/slide-show-1-perfin-is-it-a-good-move-to-exit-on-delisting-find-out-here/20120203.htm
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