Financial News Flash

Ohio Wooing Tata Consultancy, Wipro as U.S. States Look to India for Jobs Ohio Governor Ted Strickland is quick to admit that he doesn’t “particularly enjoy heights.” So why would he climb into a cherry picker to be lifted 40 feet in the air?

Asian Stocks Fall as Japan Air Plunges; Newcrest Leads Drop in Gold Shares Asian stocks fell for the first time in three days as Japan Airlines Corp. tumbled on reports the carrier’s biggest lenders oppose a plan to restructure the company through bankruptcy and gold ended a three-day rally.

Indian Stocks Fall, Snapping Four-Day Advance; Larsen & Toubro, ITC Drop India’s stocks fell, snapping a 4.8 percent four-day climb. ITC Ltd. and Larsen & Toubro Ltd. led declines after Finance Minister Pranab Mukherjee raised concerns on the outlook for the nation’s budget deficit.

Mukherjee Says India's 16-Year High Budget Deficit Can't Be Sustained India’s budget deficit, forecast to balloon to a 16-year high this year, can’t be sustained for a long time, according to Finance Minister Pranab Mukherjee.

Euro Declines Against Yen, Dollar on Concerns Ratings Downgrades Possible The euro fell to a one-week low against the dollar on speculation some of the countries sharing the European currency will have their credit ratings downgraded.

India's National Exchange Won't Change Start of Extended Trading Next Week National Stock Exchange, India’s biggest bourse, said there’s “no truth” to speculation it will postpone the start of extended trading hours next year.

Crude Oil Set for Biggest Annual Gain in Decade Amid Iran Political Unrest Crude oil futures pared gains after the U.S. Energy Department released its report on stockpiles.

NTPC Starts to Generate Power at New 490 Megawatt Unit in North India NTPC Ltd., India’s biggest power utility, said its new coal-fired unit at Dadri in northern India started generating electricity on Dec. 25, helping ease power shortages in the nation’s capital New Delhi.

Russia Unbeatable for Emerging Market Funds as Kudrin Says Stocks Too High Russia is the top investment pick for the biggest emerging-market stock funds in 2010, even after the RTS Index’s world-beating 126 percent rally prompted Finance Minister Alexei Kudrin to say shares are too expensive.

U.S. Companies Expand by Most Since 2006 in Sign Recovery Is Gaining Speed Companies in the U.S. expanded in December at the fastest pace in almost four years, signaling the economic recovery is gaining speed heading into 2010.

Dollar Gains as Gold, Stocks Fall on Speculation Fed to Withdraw Stimulus The dollar climbed, sending gold and U.S. equities lower, as signs of an improving economy added to speculation the Federal Reserve will withdraw stimulus measures. Treasuries were little changed before an auction of $32 billion of seven-year debt.

M&A Rebound May Be Years Away as Morgan Stanley Predicts `Gentle Recovery' Takeover advisers who cheered a surprise fourth-quarter surge in mergers and acquisitions may still have years to wait for a return to 2007’s record dealmaking.

Aiful Credit-Default Swaps to Be Paid Out After Lender Delays Repayments Credit-default swaps insuring about $1.3 billion of Aiful Corp.’s debt will be paid out after Japan’s third biggest consumer lender delayed loan repayments, the International Swaps & Derivatives Association said.

Treasuries Set for Worst Year Since 1978 on Record Sales, Recovery Signs Treasuries headed for the worst year since at least 1978 as the U.S. stepped up debt sales to help spur growth in an economy recovering from its deepest recession in six decades.

Worst U.S. Funds of Decade Never Recovered From Technology-Stock Debacle U.S. stock mutual funds with the biggest losses in the past 10 years, a list topped by Fidelity Growth Strategies and Vanguard U.S. Growth, were crushed by the market sell-off at the start of the decade and never recovered.

Airbus Delivered 10 Superjumbo A380s This Year, Trailing Its Own Forecast Airbus SAS, the world’s largest maker of commercial aircraft, delivered 10 A380s in 2009, one short of its target and fewer than last year, as the company struggles to customize the double-decker plane for airlines.

source: Bloomberg

Oil Stays Firm As Yen Supports

Oil futures traded firm as the Yen slipped to 2 month lows against the US dollar. Oil was also supported by the recent unrest in Iran, cold weather in US. This off set the gains in the oil futures even though the US dollar rallied today against most of the currencies. 

Iran continued a crackdown on opposition protests after at least eight people were killed in clashes with security forces. Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.

Cold weather will raise U.S. consumption of heating fuels by 6.7 percent in the next seven days, according to forecasts from Weather Derivatives. The temperature in New York may fall as low as 20 degrees Fahrenheit (minus 7 Celsius) today, 5 degrees below average, according to Weather.com.

Benchmark crude for February delivery was up 12 cents to $78.99 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 10 cents to settle at $78.87 on Tuesday.

In foreign exchange markets, the U.S. dollar extended recent gains against the yen, touching its highest level since October, supported by an up trend in long-term U.S. interest rates. The greenback also advanced against the euro as a ratings downgrade of Abu Dhabi Commercial Bank by Moody's Investors Service weighed on the risk-sensitive common currency.

MCX January crude oil futures are trading near the Rs 3700 mark, up nearly Rs 10 from yesterday's closing. It may trade in the range of 3710-3660 levels today.

Gold Falls Sharply For The Second Consecutive Day

MCX Gold futures dropped sharply in the Asia trading session today as dollar had across the board rally. 

MCX February gold futures fell to as low as Rs 16661 per 10 grams. It has fallen nearly Rs 150 on the closing basis since the start of week. It may shrink to 16630 and 16555 levels today.

Asian shares were mixed Wednesday in holiday-thinned activity, with Korean shares pressured by concerns of a liquidity crunch at two of Kumho Asiana Group's units.

An ounce of gold on the Comex Division of the New York Mercantile Exchange fell below $ 1100 mark and is trading down $2.3 at $ 1094.7. A break of $1092 may take it to 1083 levels.

The US dollar is trading higher against all the major currencies today. Against the Euro it has rallied by nearly 1% from dollar's yesterdays low of 1.4458 per Euro. The Japanese has been on a downtrend since the end of November and it has lost 0.5% against the dollar in the week so far. It has fallen by nearly 9% since end November thereby fueling rally in the equity markets and other risky assets and reducing the appeal for safe haven assets

FIIs continue buying

Inflow of Rs 384.50 crore on 29 December 2009 

Foreign institutional investors (FIIs) bought shares worth a net Rs 384.50 crore on Tuesday, 29 December 2009, much lower than Rs 811.30 crore on Thursday, 24 December 2009.

FII inflow of Rs 384.50 crore on 29 December 2009 was a result of gross purchases Rs 1776.20 crore and gross sales Rs 1391.70 crore. The secondary equity market purchases totaled Rs 233.90 crore, which was a result of gross purchases Rs 1625.50 crore and gross sales Rs 1391.60 crore. The BSE Sensex rose 40.95 points or 0.24% to 17,401.56 on that day.

There was an inflow of Rs 150.60 crore in the category 'primary market & others', which was a result of gross purchases Rs 150.70 crore and gross sales Rs 0.10 crore.

FII inflow in December 2009 totaled Rs 9879.20 crore (till 29 December 2009). FII had bought equities worth Rs 5469 crore in November 2009. FII inflow in the calendar year 2009 totaled Rs 83,070.09 crore (till 29 December 2009).

There are a total of 1,706 foreign funds registered with the Securities & Exchange Board of India (Sebi).

IRDA likely to widen infra definition

Insurance companies keen on tapping growth opportunities in various sectors 

The Insurance Regulatory Development Authority (Irda) may widen the definition of infrastructure to include more sectors to enable insurers to get access to more papers to invest in and diversify their portfolio.

Currently, life insurance companies can invest up to 15% of their investible funds in papers issued by power, roads, ports, dams, housing and construction companies or projects. The life insurers had to invest at least 50% of their investible surplus in government securities, while 35% could be allocated for investment in other instruments, including equities.

The norms for unit-linked plans that account for 90% of the sales, however, permit investors to allocate the entire money in equities.

While the definition covered sectors other than core infrastructure, there was inadequate availability of papers. This has necessitated the need to broaden the scope of investment in sectors such as cement, steel and engineering etc.

During 2009-10, life insurance companies are expected to earn a premium income of Rs 255000 crore compared to Rs 210000 crore during the last financial year, including the renewal premium income as well as income emanating from sale of new policies. With higher funds flow, the availability of infrastructure sector papers also needed to expand at the same pace.

The government has forwarded the proposal to IRDA, which in turn has approached insurers to seek their comments.

The IRDA has mandated that 75% of the infrastructure investment should be made in AAA-rated bonds, which has also impacted the flexibility in choosing the bonds and companies.

Ten investment mistakes one must avoid

It was that year when most investors paid heavily for their costly mistakes. As we step in 2010, there are some lessons to learn and at least avoid the following 10 investment mistakes.

I can time the market

As Peter Lynch pointed out in his Investor Test, an investor who tried to time the market for the past 20 years had the misfortune to be out of stocks and in cash during the “best” 15 months. In fact, the investors had given up 76% in this period.

These highs and lows travel through quick bursts, which even a market expert is unable to time. By chance, if an investor manages to get the timing right even once, he assumes he has mastered the art. Such investors make repeated attempts and burn their fingers.

Keeping up with the Sharmas

Herd mentality is a common fallacy seen among investors. There was a time when everyone believed that investing in a child plan was a rage and almost every parent believed in the instrument.

The question is not whether child plan is a good option, but whether an investor knew his requirement, financial and risk-taking capacity before choosing an investment option. Keep your milestones in mind before entering into any investment.

Property will take care of retirement

If you stick to one asset class, you are exposed to higher risk and low-yield instruments. Look at a diversified asset allocation based on your age, income, future goals and risk appetite. Real estate was considered a stable and excellent asset class till 2008, and even now it is still grappling with slowdown. The same applies for equity, gold, etc.

Safe instruments such as deposits or small savings cannot beat inflation over long-term and help you meet your dream corpus. A right mix of debt and equity is the right recipe, but you have to stay invested in equity for at least five years or more to earn optimal returns.

I deal with multiple banks & brokers

Even as diversification is key, you should have a consolidated view of your portfolio. There have been instances when investors have invested in similar equity funds with five different brokers. It’s difficult to find one touch point for all investments, but you can go for chosen few to keep a tab on your investments.

Brokers must offer freebies

Expecting kickbacks is very common among customers. If you try to squeeze the broker, he will try to squeeze you in return by deploying your money in less-deserving instruments. Go with quality of the advice offered by neutral financial advisors.  

I need to churn to earn 

 If a mutual fund delivers 25% return in 12 months, the investor liquidates and shifts to another fund. The two assumptions are this fund will not generate a similar return and the other fund will offer a higher return. Any mutual fund with a proven track record will generate consistent returns in line with the benchmark index.

Low NAVs are the best buys

This can be explained with an example. You buy a mutual fund at a NAV for Rs 10 during the NFO. Your friend invests in another fund from the same AMC and the NAV is Rs 100.

The two of you invest Rs 10,000, of which you get 1,000 units and your friend gets 100 units. Assuming the same fund manager generates 20% return on both the funds, both of you would earn Rs 12,000 each. So it’s the performance and the track record of the fund and not the NAV that matters. In case of an existing fund, you can see the track record of fund unlike an NFO. 

Why should I pay an advisor?

Investors are ready to pay for a product and not the service. For example, an insurance agent would be getting as high as 20% commission from an ULIP investment. This commission is factored in the product itself and the customer is not conscious of paying a higher premium.

But the same doesn’t apply for a third party advisor. In fact, it’s detrimental to pay for a product, as the commissions would influence a broker’s advice more than the customer’s need or requirement. It’s a classic conflict between value for advice vs value for products.

I have to earn a return on my insurance

People don’t invest in term plans because they don’t earn a return, if they outlive the policy term. A customer is ready to invest in a child plan for child’s future, pension plan for retirement and in ULIPs for equity without realizing there are better and cheaper options available in the market. Insurance is meant for protection, and customers shouldn’t mix investment with protection.

Otherwise, the premium outgo would be as high as Rs 3-4 lakh, which would constrain the cash flow severely. Also these policies have expensive exit options. In the process, they stay under insured, which is the biggest risk.

I am 25 or 55, how does it matter?

The asset allocation gets more tilted towards debt since your risk appetite is much lower when you turn 60. For instance, the debt to equity ratio shifts from 80:20 at 25 to 20:80 at 50. This is the time to enjoy your savings rather than regret on an aggressive equity driven investment plan.  

 

Crude extends winning streak

Prices gain for fourth straight day 

Crude prices shot up once again on Monday, 28 December 2009. This was the fourth consecutive rise for crude and its longest winning streak since October this year. Prices rose as the dollar fell and due to rising geo political tensions in the Middle East. Good retail sales data during pre Christmas shopping also lifted oil prices in anticipation of higher demand in coming months.

On Monday, crude-oil futures for light sweet crude for February delivery closed at $78.77/barrel (higher by $0.72 or 0.9%). Last week, crude ended higher by 4.9%.

Crude ended month of November, higher by 0.4%. It reached a high of $82 earlier in October this year. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 43% since then.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.4%.

A report from MasterCard's Spending Pulse unit showed that retail sales for the holiday season rose 3.6% from the year earlier period through Christmas Eve.

In the latest meet at Angola last week, members of the OPEC oil cartel decided to make no changes to current production quotas. The decision was in line with market expectations. In keeping its quotas unchanged, OPEC cited "shrinking industrial production, low private consumption and high unemployment" in the global economy.

Among other energy products on Monday, January gasoline rose 2.88 cents, or 1.4%, to $2.0184 a gallon and January heating oil gained 3.79 cents, or 1.9%, to $2.0735 a gallon.

Also on Monday, the big winner was January natural gas, which rallied 34.7 cents, or 6.1%, to $5.99 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

Precious metals add some more shine

Prices rise as dollar continues to slip 

Bullion metal prices went up on Monday, 28 December 2009. Prices rose as the dollar fell and due to rising geo political tensions in the Middle East.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Monday, gold for February delivery ended at $1,107.9 an ounce, higher by $3.1 (0.3%) an ounce on the New York Mercantile Exchange. Earlier during the day, gold was trading lower. Last week, it had dropped below the $1,100 level for first time in more than one and half months. Last week, gold shed 0.6%. The metal fell for four straight weeks.

Gold ended November 2009 higher by 13%. Before that, for the third quarter it ended higher by 8.7%. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year. On a year to date basis, gold price is higher by 26.4%.

Gold has come under pressure since early December, with the dollar having risen steadily on expectations that the Federal Reserve will next year pull back on measures to support the economy.

On Monday, December Comex silver futures ended higher by 12 cents (0.7%) at $17.56 an ounce. Last week, silver registered 0.7% gain. The metal has gained 54.3% this year until date.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.4%.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

FIIs continue buying

Inflow of Rs 811.30 crore on 24 December 2009 

Foreign institutional investors (FIIs) bought shares worth a net Rs 811.30 crore on Thursday, 24 December 2009, lower than Rs 1353.50 crore on Wednesday, 23 December 2009.

FII inflow of Rs 811.30 crore on 24 December 2009 was a result of gross purchases Rs 1594.70 crore and gross sales Rs 783.40 crore. The secondary equity market purchases totaled Rs 742.60, which was a result of gross purchases Rs 1525.20 crore and gross sales Rs 782.60 crore. The BSE 30-share Sensex jumped 129.50 points or 0.75% to 17,360.61 that day, its highest closing since 16 May 2008.

There was an inflow of Rs 68.70 crore in the category 'primary market & others', which was a result of gross purchases Rs 69.50 crore and gross sales Rs 0.70 crore.

FII inflow in December 2009 totaled Rs 9494.70 crore (till 24 December 2009). FII had bought equities worth Rs 5469 crore in November 2009. FII inflow in the calendar year 2009 totaled Rs 82685.59 crore (till 24 December 2009).

There are a total of 1,705 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Financial News Flash

Reliance Power Starts 1st Unit; Plans to Add Capacity to 3,000 MW by 2012 Reliance Power Ltd., which raised $3 billion in India’s biggest initial share sale last year, started its first power station as it seeks to build capacity and supply a fifth of the nation’s electricity. Shares gained.

Jindal Power Plans India's Biggest Utility IPO After Reliance in 2008 Jindal Power Ltd., controlled by India’s richest woman, plans to raise 72 billion rupees ($1.5 billion) in the nation’s biggest initial public offering by a power company in two years.

India Stocks Post Longest Winning Streak in Seven Weeks on Growth Outlook India’s stocks rose for a fourth day, the longest winning streak in seven weeks, after Prime Minister Manmohan Singh said economic growth may accelerate.

Oil & Natural Gas Plans $857 Million Interest-Free Loan to Overseas Unit Oil & Natural Gas Corp. will lend 40 billion rupees ($857 million) to its overseas unit investing in a gas project off Myanmar’s coast as India’s biggest explorer seeks to meet rising fuel demand at home.

India Raises Exports Tax on All Grades of Iron Ore; Sesa Goa Stock Slumps India imposed a 5 percent duty on exports of iron-ore fines and doubled the tax on overseas sales of lumps to 10 percent, to increase the supply of the material to domestic steelmakers.

Rupee Declines as Indian Importers Buy Dollars to Meet Month-End Payment India’s rupee dropped on speculation importers bought dollars to meet month-end payments.

Ten-Year Bonds Slide After Central Bank Says Food Costs May Fan Inflation India’s bonds fell the most in more than a week on speculation the central bank will raise interest rates to keep inflation in check as food costs surge.

Nathaniel Rothschild, Paulson Said to Be Investing in Rusal $2 Billion IPO Companies controlled by Malaysian billionaire Robert Kuok, and Nathaniel Rothschild may buy shares in United Co. Rusal’s $2 billion Hong Kong initial public offering, said three people familiar with the plan.

U.S. Consumer Sentiment Gains a Second Month as Job-Market Pessimism Wanes Confidence among U.S. consumers rose in December for a second month as pessimism over the outlook for jobs diminished.

Home Prices in 20 U.S. Cities Rose for Fifth Consecutive Month in October Home prices in 20 U.S. cities rose in October for a fifth consecutive month, putting the housing market and economy farther along the path to recovery.

Mining, Energy Stocks Rise on Economic Outlook; Sugar Reaches 20-Year High Mining and energy companies led an advance in stocks and currencies of commodity producers strengthened as investors anticipated faster economic growth next year. Treasury five-year note yields traded at the highest level since August.

Goldman Sachs Wins Most Fees on U.S. IPOs as Citigroup Drops From Top Five Goldman Sachs Group Inc. won the biggest share of the $923 million in fees from U.S. initial public offerings this year, while Citigroup Inc. fell out of the top five after its revenue plummeted more than 50 percent.

Biggs, Faber Unite in Predicting Dollar Rally as S&P 500 Extends 67% Surge Barton Biggs and Marc Faber, who recommended buying stocks in March when investors were dumping them, are again united as they predict gains for U.S. equities and the dollar.

UBS Said to Search New York Area Office Market for Space as Prices Decline UBS AG, Switzerland’s biggest bank, is searching for as much as 800,000 square feet of New York-area office space, making it the biggest tenant shopping the market as rents fall, two people familiar with the plans said.

GM May Wait Until After Year-End to Decide Future of Saab, Aakerlund Says General Motors Co. is prepared to wait beyond the end of this week before deciding on the future of the Saab brand as it reviews remaining bids, according to Paul Aakerlund, a board member at the Swedish carmaker.

source: Bloomberg

SBI MF declares dividend under Magnum Equity Fund

Record date for dividend is 31 December 2009 

SBI Mutual Fund has announced 31 December 2009 as the record date for declaration of dividend under Magnum Equity Fund.

The fund house has decided to distribute Rs 5.00 per unit as dividend under on the face value of Rs 10.00 per unit for its investors.

The NAV of the Magnum equity fund as on 23 December 2009 stands at Rs 33.88.

Magnum Equity Fund is an open ended equity scheme with an investment objective to provide the investor long term capital appreciation by investing in high growth companies along with the liquidity of an open ended scheme through investments primarily in equities and balanced in debt and money market instruments.

Taurus MF Announces Change in Key Personnel

With effect from 11 December 2009 

Taurus Mutual Fund has announced that Mr. Kumar Nathani shall cease to be the Fund Manager of the fixed income schemes as Mr. Nathani has rendered his resignation from the services of Taurus Asset Management Private Limited.

Mr. Pankaj Jain has been appointed as new Fund Manager of the Fixed Income Schemes and will be responsible for managing the respective Fixed Income Schemes – Taurus Income fund, Gilt fund, liquid fund and ultra short term bond fund.

The changes will be effective from 11 December 2009.

Brila Sun Life MF declares dividend for its Monthly Income Scheme (Quarterly)

Record date for dividend is 31 December 2009 

Brila Sun Life Mutual Fund has announced 31 December 2009 as the record date for declaration of quarterly dividend under Brila Sun Life Monthly Income Scheme.

The fund house has decided to distribute 1.8350% (Re 0.1835 per unit on face value of Rs 10 per unit) as dividend on the above mentioned record date.

Brila Sun Life Monthly Income Scheme is an open ended income scheme with primary objective to generate regular income so as to make monthly and quarterly distribution to unit holders and secondary objective is to generate growth of capital.

Birla Sun Life MF declares dividend for its Dynamic Bond Fund

Record date for dividend is 31 December 2009 

Birla Sun Life Mutual Fund has announced 31 December 2009 as the record date for declaration of quarterly dividend under Birla Sun Life Dynamic Bond Fund (Retail plan).

The fund house has decided to distribute 1.5500% (Re 0.1550 per unit on face value of Rs 10 per unit) as dividend on the above mentioned record date.

Birla Sun Life Dynamic Bond Fund is an open ended income scheme with objective to generate optimum returns with high liquidity through active management of the portfolio by investing in high quality debt and money market instruments.

Reliance Fixed Horizon Fund- XIII – Series 6 mops up Rs 300 crore

Investment will be in money market instruments & Government Securities 

Reliance Mutual Fund has collected nearly Rs 300 crore through Reliance Fixed Horizon Fund – XIII – Series 6, a close ended income scheme, during its initial offer period from 18 December–23 December 2009. The duration of the scheme is 607 days from the date of allotment of units.

 

The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of Central and State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the scheme with the objective of limiting interest rate volatility. 

The scheme will allocate up-to 70% of assets in money market instruments and it would allocate 30% to 100% of assets in Government Securities issued by Central &/or State Govt. & other fixed income/ debt securities including but not limited to Corporate bonds and securitized debt with low to medium risk profile.

The scheme offers three options viz. dividend and growth options. The dividend option will carry payout facility.

The benchmark index for Reliance Fixed Horizon Fund - XIII - Series 6 is CRISIL Short Term Bond Fund Index.

The fund manager for the scheme is Amit Tripathi.

UTI MF announces dividend in two schemes

Record date is 29 December 2009 

UTI Mutual Fund has declared a dividend of 15% i.e. Rs 1.5 per unit on a face value of Rs 10, in UTI Equity Tax Savings Plan and UTI Transportation & Logistics Fund. The record date for dividend is 29 December 2009.

All unit holders registered under the dividend option of the schemes as on 29 December 2009 will be eligible for this dividend. The NAV of the UTI Equity Tax Savings Plan and UTI Transportation & Logistics Fund under dividend option were recorded at Rs 17.06 per unit and Rs 15.28 per unit respectively as on 24 December 2009 .

UTI Equity Tax Savings Plan is an open ended ELSS scheme aims to invest collected corpus in equities, fully convertible debentures/bonds and warrants of companies. Investment may also be made in issues of partly convertible debentures/bonds including those issued on rights basis subject to the condition that, as far as possible, the nonconvertible portion of the debentures/ bonds so acquired or sub-scribed shall be disinvested within a period of twelve months from their acquisition. 

UTI Transportation & Logistics Fund is an open ended equity scheme. The objective of the scheme is capital appreciation through investments in stocks of the companies engaged in the transportation and logistics sector.

Insurance cos allowed to offer health+ life

Insurance regulator Irda on Wednesday allowed insurance companies to offer 'Health plus Life Combi Product, a policy that would provide life cover along with health insurance to subscribers. 

Under the guidelines issued by the Insurance Regulatory and Development Authority (Irda), the life and non-life insurance firms can come together to offer health-plus-life cover. "It is envisaged that the proposed product class (will) enhance the penetration of personal lines of insurance business with a wider product choice to policyholders," it said while issuing the guidelines.

Under the existing structure, non-life insurers do not provide pure life insurance products. The Irda notified the guidelines following representations by the insurance companies for an "umbrella of a single product" to give more choice to a policy subscriber.

The guidelines added that it would be mandatory for life and non-life insurance companies to enter into agreements before offering the new product to subscriber.

source: Indian Express

Crude shoots up

Prices end substantially higher as inventories drop more than expected 

Crude prices shot up considerably higher on Wednesday, 23 December 2009. Prices rose as energy department reported a more than expected drop in crude supplies for last week. The weak dollar also aided in crude prices gliding up.

On Wednesday, crude-oil futures for light sweet crude for February delivery closed at $76.67/barrel (higher by $2.27 or 3.1%).

Last week, crude ended higher by almost 5%. Crude ended month of November, higher by 0.4%. It reached a high of $82 earlier in October this year.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 46% since then.

EIA reported today that crude inventories fell 4.9 million barrels in the week ended 18 December 2009. The EIA also reported that gasoline inventories fell 900,000 barrels, and distillate stockpiles, which include diesel and heating oil, fell by 3.1 million barrels. Market was expecting a drop of 2 million and 1.3 million of crude and gasoline inventories respectively. Inventories dropped as net crude imports fell 0.8% to 7.68 million barrels a day.

The report also showed that total petroleum inventories, including crude, gasoline and other petroleum products, decreased by 14.2 million barrels last week to 1,059.4 million barrels, but were still above the upper limit of the average range for this time of year.

In the latest meet at Angola yesterday, members of the OPEC oil cartel decided to make no changes to current production quotas. The decision was in line with market expectations. In keeping its quotas unchanged, OPEC cited "shrinking industrial production, low private consumption and high unemployment" in the global economy.

OPEC said in its monthly report that the 11 members bound by production quotas produced 26.6 million barrels a day of crude in November, up for an eighth straight month. OPEC had agreed to set their quotas at 24.845 million barrels a day starting from the beginning of this year.

Last week, in the latest report, OPEC, revised higher its forecast for world oil demand next year by 70,000 barrels a day, to 85.13 million barrels, citing demand from developing countries such as China and India. However, the cartel said the pace of recovery in developed countries, especially in the U.S., remained at risk and could dampen demand.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.7%.

Among other energy products on Wednesday, January gasoline rose 4.1% to $1.9666 a gallon as January heating oil added 3.2% to $2.0118 a gallon.

Also on Wednesday, January natural-gas futures added 1.9% to $5.821 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for January delivery closed higher by Rs 23 (0.66%) at Rs 3,492/barrel. Natural gas for December delivery closed higher by Rs 0.7 (0.26%) at Rs 266.1/mmbtu.

Precious metals gather shine

Prices rise as weak economic data weighs on the dollar 

Bullion metal prices went up on Wednesday, 23 December 2009. Prices rose as the dollar fell following a set of disappointing economic data.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Wednesday, gold for February delivery ended at $1,094 an ounce, higher by $7.3 (0.7%) an ounce on the New York Mercantile Exchange. Earlier this week, gold fell below the $1,100 level for first time in more than one and half months. Gold prices have been hammered since December as the dollar had firmed up. Last week, gold shed 1.1%. The metal fell for three straight weeks.

Gold ended November 2009 higher by 13%. Before that, for the third quarter it ended higher by 8.7%. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year. On a year to date basis, gold price is higher by 25.1%.

On Wednesday, December Comex silver futures ended higher by 16 cents (0.9%) at $17.19 an ounce. Last week, silver registered marginal fall. The metal has gained 52.2% this year until date.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.7%.

The Commerce Department in US reported on Wednesday, 23 December, 2009 that sales of new homes fell 11.3% in November to a seasonally adjusted annual rate of 355,000 as the popular tax break for first-time homeowners was set to expire. It was the lowest sales pace since April.

Separately, the University of Michigan survey of consumers in US reported on Wednesday, 23 December, 2009 that U.S. consumer confidence rose in December, as Americans said that the outlook for the economy and employment were somewhat better. The number was weaker than expected, however, and worse than a prior reading.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for February delivery closed lower by Rs 105 (0.62%) at Rs 16,600 per ten grams. Prices rose to a high of Rs 16,714 per 10 grams and fell to a low of Rs 16,447 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 27 (0.1%) higher at Rs 27,004/Kg. Prices opened at Rs 26,926/kg and rose to a high of Rs 27,093/Kg during the day's trading.

FII inflow crosses Rs 8600 crore in December 2009

Inflow of Rs 1353.50 crore on 23 December 2009 

Foreign institutional investors (FIIs) bought shares worth a net Rs 1353.50 crore on Wednesday, 23 December 2009 much higher than Rs 224.90 crore on Tuesday, 22 December 2009.

FII inflow of Rs 1353.50 crore on 23 December 2009 was a result of gross purchases Rs 2467.50 crore and gross sales Rs 1114 crore. The secondary equity market purchases totaled Rs 795.80 crore, which was a result of gross purchases Rs 1908.80 crore and gross sales Rs 1113 crore. The BSE Sensex surged 539.11 points or 3.23% to 17231.11 on that day.

There was an inflow of Rs 557.70 crore in the category 'primary market & others', which was a result of gross purchases Rs 558.70 crore and gross sales Rs 1 crore.

FII inflow in December 2009 totaled Rs 8683.40 crore (till 23 December 2009). FII had bought equities worth Rs 5469 crore in November 2009. FII inflow in the calendar year 2009 totaled Rs 81,874.30 crore (till 23 December 2009).

There are a total of 1,704 foreign funds registered with the Securities & Exchange Board of India (Sebi).

FDI touched US $ 19.38 billion till November 2009

India becoming investment hub 

FDI inflows for the month of April-November 2009 touched US $ 19.38 billion. FDI inflows for November 2009 was at US $ 1.74 billion which an increase of almost 60% over US $ 1.08 billion in November last year. FDI equity inflows, as a percentage of GDP, have grown from 0.75% in 2005-06 to nearly 2.49% in 2008-09.

India's share of world FDI jumped from 0.78% in 2005 to 2.45% in 2008.As per World Investment Report 2009, - the top five most attractive locations for FDI for 2009-11 are China, United States, India, Brazil and the Russian Federation. The 2009 survey of the Japan Bank for International Cooperation, conducted among Japanese investors, continues to rank India as the second most promising country for overseas business operations, after China.

The Prime Minister Dr. Manmohan Singh, in his remarks at the World Economic Forum recently, had announced that, “our policy will be guided by the desire to make India even more attractive for Foreign Direct Investment. We are particularly keen to rationalize and simplify procedures so as to create an investor friendly environment”.

Primary articles surged 14.66%

2.4% growth in non food articles 

The WPI for the week ended 12 December, 2009 in respect of ‘Primary Articles' and Commodities in the broad group surged 14.66% compared to 14.98% for the previous week. The index for this major group declined 0.3 % to 284.7 from 285.5 for the previous week.

The index for food articles group declined 1.2 % to 288.8 from 292.2 for the previous week due to lower prices of wheat (5%), bajra(4%), fruits & vegetables and barley (2 % each) and rice, condiments & spices, tea, masur and maize(1% each). However, the prices of moong (2%) and jowar (1 %) moved up.

The index for non-food articles group rose 2.4% to 250.7 from 244.8 for the previous week due to higher prices of tobacco (33 %), raw cotton (6%), raw rubber (4 %), fodder and copra (3 % each) and raw jute, groundnut seed and logs & timber (1 % each). However, the prices of raw silk (2 %) declined.

The index for fuel, power, light and lubricants remained unchanged at their provisional level of 344.9 and 3.95% respectively. The rate of inflation was declined 0.27 %during the corresponding week of the previous year.

Financial News Flash

Domino's Pizza, Gym Club Share Sales Tap India's Consumer Spending Wave Domino’s Pizza Inc.’s Indian franchise, a gym chain and a developer of games for Sony Corp.’s PlayStation plan to sell shares in India, riding a boom in spending in the world’s second-fastest growing major economy.

Sensitive Index Rises to 19-Month High as Foreign Direct Investment Jumps India’s stocks rose to their highest in 19 months after foreign direct investment into the nation jumped 61 percent and the government relaxed a rule to make some state-run companies globally competitive.

India Allows `Maharatna' State-Run Companies to Spend More on Acquisitions India increased the amount some state-run companies can spend to acquire assets and set up joint ventures, allowing them greater freedom to expand and become globally competitive.

Gold Imports in December Drop as Record Price Cools India Jewelry Demand Gold imports by India in December may decline from the previous month as demand wanes because of record prices.

Bombay Stock Exchange Plans Cuts in Trading Charges to Boost Market Share The Bombay Stock Exchange, Asia’s oldest bourse, said it’s planning to cut trading fees starting Dec. 29 and roll out derivative products to take market share from bigger rival National Stock Exchange of India Ltd.

Real Estate Developer BPTP Files to Raise 15 Billion Rupees in Share Sale Indian real estate developer BPTP Ltd. filed a draft share sale document with the market regulator to raise as much as 15 billion rupees ($321.5 million) in an initial offering, it said in a statement.

Production at Six Key Indian Industries Grew 5.3% in November, Sharma Says India’s production at six key industries, which account for a quarter of the nation’s industrial output, rose 5.3 percent in November from a year earlier, Trade Minister Anand Sharma said in New Delhi today.

Rupee Gains Most in Three Weeks as Overseas Funds Boost Stock Investments India’s rupee gained the most in three weeks after exchange data showed overseas investors raised holdings of local shares to near a record to benefit from the nation’s relatively fast economic growth.

Government Bonds Poised for Weekly Advance as Rate-Increase Concerns Wane India’s bonds due in 2020 headed for a weekly gain after a government official said excess cash in the system isn’t fuelling inflation, tempering speculation the central bank will raise interest rates before a January review.

India's Wholesale Food Inflation Rate Continues to be Near an 11-Year High India’s wholesale food inflation rate held near an 11-year high as potato and vegetable costs climbed, adding pressure on policy makers to take steps to cool price gains.

Durables Orders in U.S. Rise in Sign Companies Investing Ahead of New Year Orders for goods meant to last several years rose in November, pointing to increases in spending and production that will help sustain the expansion into 2010.

U.S. Initial Jobless Claims Decline to Lowest Level Since September 2008 The number of Americans filing claims for unemployment benefits last week declined to the lowest level since September 2008, signaling firings are easing as employers gain confidence in the economic recovery.

Stocks, Copper Advance on Economic Growth Outlook While U.S. Dollar Slips Stocks gained around the world, with China’s benchmark index posting its biggest advance this month, on expectations the global economic recovery will strengthen. Copper rose, heading for the best year in more than two decades.

Mortgage Rates Climb to 5.05% for 30-Year Loans, Highest in Three Months Mortgage rates for fixed 30-year U.S. home loans increased for a third consecutive week to the highest in three months, reducing affordability for buyers and owners who wish to refinance.

Schwarzenegger May Appeal to Obama as $21 Billion Deficit Defies Solution California Governor Arnold Schwarzenegger, anticipating a $21 billion budget deficit, plans to ask President Barack Obama to ease mandates and minimums on social programs to save as much as $8 billion.

Goldcorp Matches Newmont's Canplats Bid as Miners Vie to Boost Gold Output Goldcorp Inc., the world’s second- largest gold producer, matched a competing offer from a venture owned by Newmont Mining Corp. to buy Canplats Resources Corp. for about C$254 million ($240 million)

source: Bloomberg

DBS Chola MF Declares Dividend for Chola Monthly Income Plan

Record date for dividend is 29 December 2009 

DBS Chola Mutual Fund has announced dividend under quarterly dividend option of DBS Chola Monthly Income Plan - Regular. The record date for the declaration of dividend is 29 December 2009.

The quantum of dividend will be Rs 0.225 per unit on the face value of Rs 10 per unit on the record date. The scheme recorded NAV of Rs 11.9121 as on 22 December 2009.

DBS Chola Monthly Income Plan, an open-ended income scheme with no assured returns. The primary investment objective of the scheme is to generate monthly income through investments in range of debt, equity and money market instrument. Income will be distributed only if the same is earned by the scheme and there can be no assurance that the objective of the scheme will be realized.

Escorts MF Announces Change in Key Personnel

With effect from 7 November 2009 

Escorts Mutual Fund has announced that Mr. Sanjay Arora has joined the services of Escorts Asset Management Ltd. as Chief Investment Officer of all the schemes of the fund house with effect from the start of business hours on 7 November 2009 and hence he is a Key Personnel.

ING MF Announces Change in Fund Managers

ING Mutual Fund has announced that Mr. Manish Bhandari, Vice President & Portfolio Manager – Equities has ceased to be associated with the services of the AMC with effect from 11 December 2009. Subsequently, the following persons have been appointed as Fund Managers for the Single Manager Schemes (equity) of the AMC with effect from 14 December 2009:

Scheme Name	Fund Manager
ING Balanced Fund & ING MIP Fund	Ms. Jasmina Parekh (equity portion)
ING Core Equity Fund	Ms. Jasmina Parekh
ING Domestic Opportunities Fund
ING Midcap Fund
ING Tax Savings Fund
ING C.U.B (Competitive Upcoming Businesses) Fund
ING Contra Fund	Mr. Ankur Arora
ING Dividend Yield
ING Global Real Estate Fund	Mr. Deepak Arackal
ING Latin America Equity Fund
ING Nifty Plus Fund