Bullion metals end further lower

Strong dollar continues to take shine off precious metals

Bullion metal prices ended lower for second straight day on Monday, 30 March, 2009. The strong dollar was the main reason for precious metals ending lower.

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, Comex Gold for April delivery fell $7.7 (0.8%) to close at $915.5 an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 3.5%. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 12.8%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (7.9%) since then.

On Monday, Comex silver futures for May delivery fell 23 cents (1.7%) to end at $13.033 an ounce. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 20% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar moved higher against most major rivals as investors panicked amid fears in the US auto industry.

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

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for April delivery closed higher by Rs 21 (0.14%) at Rs 15,121 per 10 grams. Prices rose to a high of Rs 15,321 per 10 grams and fell to a low of Rs 15,030 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 153 (0.7%) lower at Rs 22,025/Kg. Prices opened at Rs 22,215/kg and fell to a low of Rs 21,837/Kg during the day's trading.

Crude plunges

Oil prices drop below $50

Demand concerns and strong dollar took crude prices substantially lower on Monday, 30 March, 2009. Many traders had anticipated that crude's recent rally was overdone and hence ended lower for the day. Prices closed below $50 after almost two weeks of rally.

On Monday, crude-oil futures for light sweet crude for May delivery closed at $48.41/barrel (lower by $3.97 or 7.6%) on the New York Mercantile Exchange. Last week, crude ended higher by 0.6%. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 63% since then. Year to date, in 2009, crude prices are higher by 10%. On a yearly basis, crude prices are lower by 51%.

In the currency market on Monday, the dollar moved higher against most major rivals as investors panicked amid fears in the US auto industry. The dollar index gained 0.8% today.

The U.S government's auto task force determined that neither General Motors nor privately held Chrysler had submitted viable restructuring plans and also indicated bankruptcy may be required for the flagging auto companies. This issue kept selling pressure intense in the Wall Street today and stocks lingered in the red for the entire day.

Also at the Nymex on Monday, April reformulated gasoline fell 10.8 cents, or 7.3%, to $1.3799 a gallon and April heating oil dropped 9.02 cents, or 6.3%, to $1.3426 a gallon.

Natural gas for April delivery gave up 3.82 cents, or 8.8%, to $3.947 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 March delivery closed at Rs 2,498/barrel, lower by Rs 158 (5.9%) against previous day's close. Natural gas for April delivery closed at Rs 194.3/mmbtu, higher by Rs 0.5/mmbtu (0.25%).

source: Capital Market

FIIs step up selling

Outflow of Rs 464.60 crore on 30 March 2009

Foreign institutional investors (FIIs) sold shares worth a net Rs 464.60 crore on Monday, 30 March 2009, much higher than Rs 270.70 crore on Friday, 27 March 2009.

FII outflow of Rs 464.60 crore on 30 March 2009 was a result of gross purchases Rs 1466.80 crore and gross sales Rs 1931.40 crore. The BSE Sensex lost 480.35 points, or 4.78%, to 9,568.14 on that day.

FII inflow in March 2009 totaled Rs 530.30 crore (till 30 March 2009). FII outflow in calendar year 2009 totaled Rs 6140.20 crore (till 30 March 2009).

There are a total of 1635 foreign funds registered with the Securities & Exchange Board of India (Sebi).

News Flash

Cairn India Rajasthan Field May Cut Nation's Oil Import Bill by Up to 7% Cairn India Ltd., a unit of U.K.- based explorer Cairn Energy Plc, may produce enough crude from its field in Rajasthan state to slash the South Asian country’s oil import bill by as much as 7 percent.

Gold Imports by India Fall to Zero in March on Weak Rupee, Record Prices Gold imports by India, the world’s biggest buyer, have been near zero for a second month in March as a weak currency and record prices deterred jewelry buyers, a traders’ group said.

India Stocks Rise, Posting Best Month in 11; Infosys Advances on U.S. Data Indian stocks rose, driving the benchmark index to its best month since April 2008, on speculation overseas investors stepped up purchases because they expect stimulus measures to help revive the economy.

Volkswagen Adds India Plant as Emerging Markets Dodge Global Recession Volkswagen AG, Europe’s largest carmaker, opened a factory in India as it boosts investments in emerging markets to offset tumbling demand at home.

India Capital Account Shows Deficit for First Time Since 1998 Amid Crisis India’s capital account slipped into a deficit for the first time since 1998 as the global financial crisis and an ensuing recession prompted risk-averse investors to flee emerging markets.

Wockhardt Delays Earnings Release; Seeks to Restructure Loans With ICICI Wockhardt Ltd. will delay its annual earnings release as it seeks to restructure its loans with ICICI Bank Ltd., according to a statement from the company.

India's Coffee Exports Decline 8 Percent as Heavy Rain Reduces Crop Size India’s coffee exports, which make up 70 percent of the nation’s production, declined in the year ending March 31 after excessive rainfall damaged the crop in the nation’s main growing region.

Bonds Advance on Speculation Yields at November High May Attract Investors India’s 10-year bonds gained, snapping a seven-day loss, on speculation yields near the highest in four months attracted investors.

Home Prices in 20 U.S. Cities Decline by Record 19%, Case-Shiller Reports Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest drop on record, as demand plummeted and foreclosures rose.

Mack Warns Morgan Stanley Brokers of Difficult Year With Recovery Deferred Just when the monthlong rally in bank shares is signaling a thaw in the credit freeze that gripped the world’s financial capitals since August 2007, some of the securities industry’s most experienced executives are predicting no end to Wall Street’s troubles.

Barclays Said to Discuss Sale of IShares Unit to CVC for About $4 Billion Barclays Plc, the U.K.’s third largest bank, is in exclusive talks to sell its iShares unit to CVC Capital Partners Ltd. for about 3 billion pounds ($4.3 billion), people familiar with the discussions said.

Federal Reserve Takes Lead Role in Executing `Stress Tests' of U.S. Banks The Federal Reserve has taken the primary role in determining how much new capital the nation’s biggest banks need to weather the economic slump, people familiar with the matter said.

Riviera Misses Payment, May Seek Bankruptcy as Gambling Revenue Dwindles Riviera Holdings Corp., the operator of Nevada and Colorado casinos, missed a $4 million interest payment and said it may have to seek bankruptcy protection as Las Vegas endures the worst gambling slump on record.

JPMorgan Trounces Competition in Busiest Year for European Rights Offers JPMorgan Chase & Co. has arranged $12.8 billion of rights offers, twice as much as nearest competitor Goldman Sachs Group Inc., in Europe’s busiest year for the share sales.

source: Bloomberg

UTI Master Equity Plan Unit Scheme declares dividend

Record date for dividend is 6 April 2009

UTI Mutual Fund has announced dividend of 15% or Rs 1.50 per unit on a face value of Rs 10 under dividend options of UTI Master Equity Plan Unit Scheme, an equity oriented scheme. The record date for declaration of dividend is set on 6 April 2009.

The NAV per unit as on 27 March 2009 was Rs 29.85 per unit under the scheme.

The scheme primarily aims at securing for the members capital appreciation by investing the funds of the scheme in equity scheme in equity shares and convertible and non-convertible bonds/debentures of companies with good growth prospects and money market instruments.

Sundaram BNP Paribas MF files offer document with Sebi

Plans to launch Sundaram BNP Paribas Gold Plus

Sundaram BNP Paribas Mutual Fund has filed offer document with Securities and Exchange Board of India (SEBI) to launch Sundaram BNP Paribas Gold Plus. It is an open-end scheme of three fund types with varying asset allocation patterns-Scheme A, B and C. The face value of the new issue will be Rs 10 per unit.

Features of scheme:

Investment Objective:

Scheme A: It is an equity fund. The scheme seeks capital appreciation by investing in equity and equity-related instruments listed in India to the extent of at least 65% and in gold-related assets up to 35%. Investment in overseas markets, if any, shall not exceed the permissible limit net of existing usage of the mutual fund's entitlement. Exposure to overseas securities shall also not exceed 35% of assets.

Scheme B: It is a debt fund with an objective of seeking capital appreciation by investing in equity and equity-related instruments listed in India to the extent of at least 50% and in gold-related assets up to 50%. Investment in overseas markets, if any, shall not exceed the permissible limit net of existing usage of the mutual fund's entitlement. Exposure to overseas securities shall not exceed 50% of assets.

Scheme C: This is a fund-of-funds scheme. The investment objective is to seek capital appreciation by investing in gold-related assets. Investment in overseas markets, if any, shall not exceed the permissible limit net of existing usage of the mutual fund's entitlement. Exposure to overseas securities may be up to 100% of assets.

Gold-related assets may include gold ETFs, gold mining stocks' ETFs, mutual fund investing in gold-related assets and gold mining stocks, to name a few. Investments in gold-related assets may be made through ETF listed in India and overseas.

Investment Plans: The scheme offers are two plans viz. regular and institutional in each scheme with growth and dividend option. Dividend option will have dividend payout and dividend reinvestment facility.

Minimum application amount: The minimum application amount under regular plan is Rs 5000 and for the institutional plan, the minimum application amount is Rs 5 crore and in multiples of Re 1 thereafter.

Minimum Target amount: The scheme seeks to collect a minimum corpus of Rs 1 crore under each scheme.

Asset allocation:

Scheme A: The scheme will invest 65-100% in equity & equity-related instruments listed in India with high risk profile. It will have investment up to 35% in gold-related assets with high risk profile. Exposure to fixed income & money market Instruments shall be up to 15% with low to medium risk profile.

Scheme B: The scheme will invest 50-100% in equity & equity-related instruments listed in India with high risk profile. It will have investment up to 50% in gold-related assets with high risk profile. Exposure to fixed income & money market Instruments shall be up to 15% with low to medium risk profile.

Scheme C: The scheme will invest 90-100% in gold-related assets with high risk profile. Exposure to fixed income & money market Instruments shall be up to 10% with low to medium risk profile.

Exposure to securitised debt shall not exceed 50% of the limit indicated for fixed income and money market instruments.

Load structure:

Entry load: Regular Plan under all three schemes will levy an entry load of 2.25% for investment amount of less than Rs 2 crore while no entry load foe investment amount of amount greater than or equal to Rs 2 crore.

Institutional plan shall not charge entry load.

Exit load: Regular Plan will charge an exit load of 1% for redemption done before 6 months for any investment amount. For investment amount less than Rs 2 crore, the exit load will be 1% if redemption is done after 6 months and before 12 months. While for investment amount greater than Rs 2 crore, no exit load will be charged if redemption after 6 months and before 12 months. The regular plan will not charge exit load for redemption after 12 months.

Institutional plan may not charge an exit load.

Benchmark Index: The portfolio of gold-related assets shall be benchmarked to the price of gold.

Scheme A: S & P CNX Nifty + gold (neutral allocation: 65:35)

Scheme B: S & P CNX Nifty + gold (neutral allocation: 50:50)

Scheme C: Gold

Fund Managers: Srividhya Rajesh and S. Bharath will manage the investments under the scheme.

Mutual funds in selling mode

Sales worth Rs 220.50 crore on 30 March 2009

Mutual funds (MFs) sold shares worth a net Rs 220.50 crore on Monday, 30 March 2009, as against an inflow of Rs 253.80 crore on Friday, 27 March 2009.

MFs' net outflow of Rs 220.50 crore on 30 March 2009 was a result of gross purchases Rs 506.20 crore and gross sales Rs 726.70 crore. The BSE Sensex lost 480.35 points, or 4.78%, to 9,568.14 on that day.

MFs were net buyer of shares worth Rs 849.90 crore in this month, till 30 March 2009.

Shariah Benchmark Exchange Traded Scheme to be listed on NSE

With effect from 1 April 2009

Benchmark Mutual Fund has announced that the units of Shariah Benchmark Exchange Traded Scheme (Shariah BeES) shall be listed on the National Stock Exchange (NSE) with effect from 1 April 2009. The Net Asset Value (NAV) of Shariah BeES will track approximately 1/10th of the S&P CNX Nifty Shariah index. The symbol of the fund on NSE will be SHARIABEES.

Shariah Benchmark Exchange Traded Scheme is an open-ended listed index scheme. The new offer period (NFO) was opened from 4 February till 5 March 2009. The face value of new issue is Rs 10 per unit.

Details of the Shariah BeES

The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the S&P CNX Nifty Shariah Index by investing in securities which are constituents of S&P CNX Nifty Shariah Index in the same proportion as in the Index.

The S&P CNX Shariah index comprises stocks that are Shariah compliant. As a result, the fund will not invest in business activities related to pork, alcohol, gambling, financials, advertising and media (newspapers are allowed and sub-industries are analyzed individually), pornography, tobacco and trading of gold and silver.

The scheme will invest 90%-100% in securities covered by the S&P CNX Nifty Shariah Index with medium to high risk profile. The scheme will reserve 10% as cash.

The scheme offers only growth option. The minimum application amount will be Rs 10,000 and in multiples of Re. 1 thereafter.

The scheme will not charge any entry load for continuous offer and it will not charge any exit load.

The benchmark index for the scheme would be S&P CNX Nifty Shariah Index.

Vishal Jain will be the fund manager for the scheme.

IDFC MF files offer document with Sebi

Plans to launch Capital Protection Oriented Fund

IDFC Mutual Fund has filed offer document with Securities and Exchange Board of India (SEBI) to launch IDFC Capital Protection Oriented Fund (Series I-III). It is a 3 year close-ended scheme. The New Fund offer price will be Rs 10 per unit.

Details of the Scheme:

Plans: There are 3 Series in the Scheme namely IDFC Capital Protection Oriented Fund - Series I (IDFC–CPOF–I), IDFC Capital Protection Oriented Fund - Series II (IDFC-CPOF-II) and IDFC Capital Protection Oriented Fund - Series III (IDFCCPOF-III).

Investment Objective: The scheme endeavors to protect the capital by investing in high quality fixed income securities as the primary objective and generate capital appreciation by investing in equity and equity related instruments as a secondary objective.

Investment Options: There are two plans i.e. Plan A (Retail) and Plan B (Institutional Plan) with growth and dividend option.

Asset Allocation: The plans will invest 84-100% of net asset in debt securities and money market instruments with low to medium risk profile. It may invest up to 16% of net assets of the plan in equities & equity related securities with high risk profile.

Load Structure: These schemes will charge an entry load of 2.25% irrespective of any amount. The scheme will not charge an exit load.

No redemption/repurchase of units shall be allowed prior to the maturity of the scheme. Investors wishing to exit may do so through stock exchange mode.

Minimum Investment Amount: The minimum application amount under Plan A is Rs 5000 and multiples of Re 1 thereafter. Under Plan B, the minimum investment amount will be Rs 50 lakh and in multiples of Re 1 thereafter.

Minimum Target amount: The fund seeks to collect a minimum subscription amount of Rs 1 crore under each series during NFO.

Benchmark Index: CRISIL MIP Blended Index.

Fund Manager: Ashwin Patni will manage the fund.

Crude oil drops

Oil prices end marginally higher for the week

Demand concerns and strong dollar took crude prices lower on Friday, 27 March, 2009. With Friday's drop, crude just ended marginally higher for the week.

On Friday, crude-oil futures for light sweet crude for May delivery closed at $52.38/barrel (lower by $1.96 or 3.6%) on the New York Mercantile Exchange. For the week, crude ended higher by 0.6%. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 62% since then. Year to date, in 2009, crude prices are higher by 17.6%. On a yearly basis, crude prices are lower by 48%.

In the currency market on Friday, the dollar moved higher against most major rivals as a budget warning from Germany's finance minister pressured the euro.

The EIA had reported earlier during the week that crude inventories rose 3.3 million barrels last week (for the week ended 20 March, 2009), more than the 1.4 million barrels expected. At 356.6 million barrels, stocks are at the highest level since July 1993. U.S. refineries operated at 82% of their operable capacity last week, down slightly from a week ago. This also pressured crude prices on Friday.

Also at the Nymex on Friday, April reformulated gasoline fell 2.8% to $1.4879 a gallon and April heating oil rose 1.1% to $1.4813 a gallon.

Natural gas for April delivery gave up 0.2% to $3.947 per million British thermal units.

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

source: Capital Market

Bullion metals shed some glaze

Strong dollar takes some shine off precious metals

Bullion metal prices ended lower on Friday, 27 March, 2009. The strong dollar was the main reason for precious metals ending lower on that day.

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 Friday, Comex Gold for April delivery fell $16.7 (1.8%) to close at $923.2 an ounce on the New York Mercantile Exchange. For the week, gold ended lower by 3.5%. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 12%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (7.9%) since then.

On Friday, Comex silver futures for May delivery fell 35.7 cents (2.6%) to end at $13.263 an ounce. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 21.7% this year. For 2008, silver had lost 24%.

In the currency market on Friday, the dollar moved higher against most major rivals as a budget warning from Germany's finance minister pressured the euro.

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

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

FIIs resume selling

Outflow of Rs 270.70 crore on 27 March 2009

Foreign institutional investors (FIIs) sold shares worth a net Rs 270.70 crore on Friday, 27 March 2009, as against a huge inflow of Rs 1317.30 crore on Thursday, 26 March 2009.

FII outflow of Rs 270.70 crore on 27 March 2009 was a result of gross purchases Rs 1740.70 crore and gross sales Rs 2011.40 crore. The BSE Sensex rose 45.39 points, or 0.45%, to 10,048.49 on that day.

FII inflow in March 2009 totaled Rs 994.90 crore (till 27 March 2009). FII outflow in calendar year 2009 totaled Rs 5,675.60 crore (till 27 March 2009).

There are a total of 1632 foreign funds registered with the Securities & Exchange Board of India (Sebi).

News Flash

India's Sugar Output May Fall 45% This Year as Jaggery Attracts More Cane India’s sugar output may fall 45 percent this year as farmers in the world’s second-largest producing nation divert sugar cane to more profitable jaggery, an industry group said.

Government Bonds Decline on Concern India's Debt Sales Will Reduce Demand India’s 10-year bonds fell for a seventh day, the longest losing streak in almost two months, on speculation increasing government debt sales will reduce demand for existing securities.

India May Require Overseas Banks to Sell 26 Percent Stakes in Local Units Overseas banks in India may have to sell at least a 26 percent stake in their local subsidiaries and meet government targets for lending, under proposals made by a joint central bank and finance ministry panel.

Reliance Shuts Oil Output at Krishna-Godavari Field to Attach More Wells Reliance Industries Ltd., India’s most valuable company, shut its oil-producing field off the nation’s east coast to attach two more wells to increase output, a company official said.

India's Rupee Declines Most in Month on Weak Asian Economic Data, Stocks India’s rupee declined the most in almost a month on concern Asia’s weakening economic data will cause overseas investors to take money out of the region.

Asian Stocks Drop, Breaking 5-Day Streak, on Recession Concern: BHP Falls Asian stocks and U.S. index futures slumped as the Obama administration warned that some banks will need more government aid and bankruptcy may be the best option for General Motors Corp. and Chrysler LLC.

Larsen & Toubro $68 Million order from Nuclear Power for Steam Generators Larsen & Toubro Ltd., India’s biggest engineering company, said it won a 3.45 billion rupee ($68 million) order from the Nuclear Power Corp. of India for four steam generators.

Indian Banks' Loan Growth This Year Threatens to Miss Central Bank Target Indian banks’ total loans to companies and consumers are likely to miss the central bank’s target for the fiscal year as lenders tighten credit to avoid rising delinquencies after economic growth faltered.

Obama Says GM, Chrysler Get One Last Chance, Can't Become `Wards of State' President Barack Obama gave General Motors Corp. and Chrysler LLC deadlines to “fundamentally restructure” or lose government aid that has kept them alive.

Chrysler, Fiat Reach Global Automaker Alliance Supported by U.S. Treasury Chrysler LLC said it, Fiat SpA and Cerberus Capital Management LLC have reached an agreement on a global alliance.

Stocks Drop, Treasuries Gain on U.S. Aid Warning; Citigroup, Daimler Slump Stocks slumped, while Treasuries and the dollar gained, as the Obama administration warned that some banks will need more government aid and that General Motors Corp. and Chrysler LLC have one last chance to restructure.

Ireland Loses Top S&P Debt Rating Amid Deteriorating Financial Conditions Ireland had its AAA credit rating removed by Standard & Poor’s in the fourth downgrade of a euro- region government this year as the global financial turmoil fueled borrowing costs and swelled the budget deficit.

Crude Oil Falls a Second Day on Speculation Global Demand Will Remain Weak Crude oil fell below $50 a barrel as tumbling equity markets signaled that the recession in major energy-consuming countries may deepen, curbing fuel demand.

Morgan Stanley Says Sell U.S. Stocks After Best S&P 500 Rally Since 1930s Investors should sell U.S. stocks following the steepest rally since the 1930s because earnings are likely to keep weakening, according to Morgan Stanley.

Goldman Sachs's Bryon Trott, Adviser to Buffett, Said to Be Leaving Firm Byron Trott, the Chicago-based investment banker who advises billionaire investor Warren Buffett, is leaving Goldman Sachs Group Inc., said two people familiar with the matter.

source: Bloomberg

Kotak 30 declares dividend

Kotak 30 declares 10% dividend at the face value of Rs. 10 i.e Rs. 1 per unit for the record date 30 March 2009.

A large cap diversified scheme, which invests in companies with a medium to long-term view. The scheme follows a bottom-up approach to stock selection. The fund has predominantly invested into blue chip large market capitalization companies. Also small portion of the funds is invested in medium capitalization companies, which have the potential to become blue chip companies of tomorrow. Thus the investment strategy is to take balanced exposure across sectors while maintaining less than 30% exposure to mid-cap stocks.

Birla Sun Life MF declares dividend

Record date for dividend is 2 April 2009

Birla Sun Life Mutual Fund has approved 2 April 2009 as the record date for declaration of dividend in the retail plan dividend option of two schemes as Birla Sun Life Fixed Term Plan-Series AN and Birla Sun Life Fixed Term Plan-Series AR respectively.

The fund house has decided to distribute 100% distributable surplus as dividend under the schemes respectively on the record date on the face value of Rs 10 per unit.

Birla Sun Life Fixed Term Plan-Series AN recorded NAV of Rs 10.9826 per unit and Birla Sun Life Fixed Term Plan-Series AR recorded NAV of Rs 10.9133 per unit as on 26 March 2009.

Birla Sun Life Fixed Term Plan-Series AN and AR are close ended income schemes with an investment objective to generate current income by investing in a portfolio of fixed income securities maturing normally in line with the duration of the scheme.

HDFC MF revises load structure

With effect from 1 April 2009

HDFC Mutual Fund has decided to revise load structure (non SIP/STP) in HDFC Floating Rate Income Fund-Long Term Plan. The details are:

Existing Provision:

Entry Load:

Direct applications and applications routed through and any agent/ distributor/broker: nil

Exit load:

In respect of each purchase/switch-in of units upto and including Rs 10 lakh in value, an exit load of 0.50% is payable if units are redeemed/switched-out within 6 months from the date of allotment.

In respect of each purchase/switch-in of units greater than Rs 10 lakh in value, an exit load of 1% is payable if units are redeemed/switched-out within 6 months from the date of allotment.

Revised Provision:

Entry Load:

Applications not routed through and any agent/ distributor/broker (direct application): nil

Applications routed through and any agent/ distributor/broker; in respect of each purchase/switch-in of units, and entry load of 1% is payable.

Exit load:

In respect of each purchase/switch-in of units upto and including Rs 10 lakh in value, an exit load of 0.50% is payable if units are redeemed/switched-out within 6 months from the date of allotment.

In respect of each purchase/switch-in of units greater than Rs 10 lakh in value, an exit load of 3% is payable if units are redeemed/switched-out within 18 months from the date of allotment.

The aforesaid change will be applicable on a prospective basis from 1 April 2009 in respect of investments made in HDFC Floating Rate Income Fund-Long Term Plan.

HDFC Floating Rate Income Fund-Long Term Plan is an open ended income scheme with an investment objective to generate regular income through investment in portfolio comprising substantially of floating rate debt/money market instruments, fixed rate debt/money market instruments swapped for floating rate returns and fixed rate debt securities and money market instruments.

Mutual funds step up buying

Purchases worth Rs 253.70 crore on 27 March 2009

Mutual funds (MFs) bought shares worth a net Rs 253.70 crore on Friday, 27 March 2009, much higher than Rs 20.60 crore on Thursday, 26 March 2009.

MFs' net inflow of Rs 253.70 crore on 25 March 2009 was a result of gross purchases Rs 704.80 crore and gross sales Rs 451.10 crore. The BSE Sensex rose 45.39 points, or 0.45%, to 10,048.49 on that day.

MFs were net buyer of shares worth Rs 1070.40 crore in this month, till 27 March 2009.

SBI Gold Exchange Traded Scheme floats on

NFO period from 30 March – 28 April 2009

SBI Mutual Fund house has launched initial offering period of SBI Gold Exchange Traded Scheme (SBI GETS), an open ended gold exchange traded fund on 30 March 2009. The new offer period (NFO) will close for subscription on 28 April 2009. The NFO price is Rs 100 per unit.

The investment objective of the fund is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical gold. However the performance of the scheme may differ from that of the underlying asset due to tracking error.

The scheme will offer only growth option.

During NFO, for both authorized participants and investors, the minimum application amount will be Rs. 5,000 and in multiples of Rs. 1 thereafter.

The fund seeks to raise Rs 1 crore as minimum target amount during NFO.

The scheme will invest 90%-100% in gold and gold bullion with medium to high risk profile. It will invest 0-10% in debt and money market instruments, with low risk profile.

During NFO period, for application size up to Rs 25 lakh, 2.50% will be an entry load. For application size of Rs 25 lakh to Rs 50 lakh, 1.50% will be entry load. The SBI GETS will charge 1.00% entry load for application amount of Rs 50 lakh to Rs 1 crore while for application amount above Rs 1 crore, no entry load will be charged. During NFO period, the scheme will not levy exit load.

During continuous offer no entry load and exit load is applicable on ongoing basis.

For SBI GETS, benchmark is the price of the gold.

Ritesh Sheth will handle the scheme.

Come Apr, inter-bank ATM usage becomes charge free

Come April 1, the RBI ruling to throw open the usage of ATMs owned by a particular bank to the customers of another bank free, will come into force.

Just a few hours before the entire ATM network—numbering over 40,000 —of the domestic banking industry being available to customers from any bank for transactions for no fee at all, irrespective of the banks in which they have their accounts, commercial banks are waiting for an intimation from the Reserve Bank of India (RBI) about charges that banks will collect from each other for having other customers use their networks. Bankers also mention that the new regulation would not come in the way of their ATM network expansion plans

However, going by the RBI directions, the bank whose ATMs are being used may not charge anything to the users who is a customer of another bank, but will be able to charge a fee to the banks which maintains the account of that customer.

But the banking regulator, RBI is yet to inform anything to the banks in this regard, said bankers which are now deploying smarter strategies to make the most of out new system. “This is an industry issue and we cannot charge anything of our own. We are waiting for the RBI intimation,” said sources at ICICI Bank which owns second largest ATM network in the country. Till March 31, the banks can charge not more than Rs 20 which has to be paid by the other banks’ customers for the use of the ATM owned by another bank.

The large public sector and private sector banks including State Bank of India,Punjab National Bank, ICICI Bank, HDFC Bank and Axis Bank which have larger ATM networks in place, especially where ATM usage are high, are now expecting to earn hefty fee income from the usage of their ATMs by the other bank’s customers.

In fact, bankers rubbish the initial concerns that the new guidelines would create a bottleneck in the expansion of existing ATM networks of individual banks. RP Sinha, deputy managing director, SBI, says, “No way we will go slow on opening ATMs. We enjoy 1/3rd of total ATM population in the country and we have been witnessing 300 hits per ATM per day on an average.”

A Union Bank of India official says, “The more ATMs we have,, the more people will turn towards our branches to open their accounts which will help my bank to increase its customer base in future. We are even targeting grabbing a good chunk of the customers from our peers in private and foreign banks that are having quite less ATMs in the country, compared to ours.” Currently UBI is witnessing 125 hits on an average per ATM we have.

Hemant Kaul, executive director, retail banking, Axis Bank, says that he other banks are expected to charge his bank around Rs 20 per transaction when our customers use the non-Axis Bank ATMs and vice-versa.” We are not expected to lose much in such a scenario as Axis Bank ATMs are strategically located nearby airports or railway stations, or in the areas where the bank’s customers work or reside,” he said.

Axis bank’s ATM:branch ratio is 4.25:1 at present the bank has a wide network of about 3,600 ATMs across the country.

“We thus expect a huge traffic of non-Axis Bank account holders’ transactions at our ATMs. We expect an average transactions surge of around 30% across our ATM network after April 1, 2009. And thus, we will equip the ATM machines with extra cash accordingly.

source: The Financial Express

Bullion metals continue to go up

Weak economic reports help precious metals shine

Bullion metal prices ended higher on Thursday, 26 March, 2009. Gloomy economic data was responsible for precious metals ending higher today.

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 Thursday, Comex Gold for April delivery rose $4.2 (0.4 %) to close at $940 an ounce on the New York Mercantile Exchange. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 13.8%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (7.9%) since then.

On Thursday, Comex silver futures for May delivery rose 18.3 cents (1.4%) to end at $13.62 an ounce. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 24.3% this year. For 2008, silver had lost 24%.

The Labor Department reported on Thursday, 26 March, 2009 that the number of people collecting state unemployment benefits reached yet another new record last week, jumping 122,000 to a seasonally adjusted 5.56 million.

In a separate report, the Commerce Department reported on Thursday 26 March, 2009 that in its third estimate of quarterly growth, the U.S. economy experienced its most violent contraction during the fourth quarter, with real gross domestic product plunging at a 6.3% annualized seasonally adjusted rate.

Earlier this week, the Treasury Department had unveiled their plan about buying back most of the bank's toxic assets thereby cleaning up their balance sheet to the extent possible. Treasure Secretary Tim Geithner detailed that the Treasury plans to create a series of public-private investments funds to buy $500 billion to $1000 billion in legacy loans and securities. To encourage participation from the private sector, the government is taking on much of the risk and offering subsidies.

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

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for April delivery closed higher by Rs 12 (0.07%) at Rs 15,238 per 10 grams. Prices rose to a high of Rs 15,351 per 10 grams and fell to a low of Rs 15,167 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 139 (0.6%) higher at Rs 22,490/Kg. Prices opened at Rs 22,291/kg and rose to a high of Rs 22,665/Kg during the day's trading.

Crude oil adds more glaze

Oil prices pare all of yesterday's losses but natural gas fizzles out

Crude prices ended higher on Thursday, 26 March, 2009. Prices gave up yesterday's losses after EIA's weekly inventory report by the energy department showed that crude inventories rose more than expected last week. It was due to the drop in demand for petroleum products.

On Thursday, crude-oil futures for light sweet crude for May delivery closed at $54.35/barrel (higher by $1.58 or 3%) on the New York Mercantile Exchange. Last week, crude ended higher by 10.4%. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 61.6% since then. Year to date, in 2009, crude prices are higher by 21.3%. On a yearly basis, crude prices are lower by 48%.

The Labor Department reported on Thursday, 26 March, 2009 that the number of people collecting state unemployment benefits reached yet another new record last week, jumping 122,000 to a seasonally adjusted 5.56 million.

In a separate report, the Commerce Department reported on Thursday 26 March, 2009 that in its third estimate of quarterly growth, the U.S. economy experienced its most violent contraction during the fourth quarter, with real gross domestic product plunging at a 6.3% annualized seasonally adjusted rate.

The EIA had reported yesterday that crude inventories rose 3.3 million barrels last week (for the week ended 20 March, 2009), more than the 1.4 million barrels expected. At 356.6 million barrels, stocks are at the highest level since July 1993. U.S. refineries operated at 82% of their operable capacity last week, down slightly from a week ago.

EIA also reported that total petroleum products supplied over the past four weeks averaged 19.1 million barrels a day, down 3.2% from a year ago. Gasoline inventories fell by 1.1 million barrels in the week while distillate stockpiles, which include diesel and heating oil, declined by 1.6 million barrels.

Also at the Nymex on Thursday, April-dated reformulated gasoline rose 2.4% to $1.5311 a gallon and April heating oil added 1.1% to $1.4813 a gallon.

Natural gas for April delivery fell 38.2 cents, or 8.8%, to $3.947 per million British thermal units. EIA reported today that inventories rose 3 billion cubic feet in the week ended 20 March, 2009 against an expected figure of decline of more than 5 billion cubic feet.

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

At the MCX, crude oil for March delivery closed at Rs 2,715/barrel, higher by Rs 30 (1.1%) against previous day's close. Natural gas for April delivery closed at Rs 203.8/mmbtu, lower by Rs 19.7/mmbtu (8.8%).

source: Capital Market

News Flash

India Will Need More Stimulus Measures to Maintain Growth, Ahluwalia Says India will need to introduce further measures to stimulate growth, said Montek Singh Ahluwalia, deputy chairman of the nation’s Planning Commission, ahead of a Group of 20 meeting on the global economic crisis.

Sensitive Index May Extend Bull Run With a 35% Gain in 12 Months, UBS Says India’s benchmark stock index may rise 35 percent in the next 12 months, extending a bull market in anticipation of a recovery in earnings the following year, UBS AG predicted.

Benchmark Indian Sensex Has Best Weekly Gain in Five Months; ICICI Climbs India’s benchmark stock index rose, completing the best week in almost five months, as ICICI Bank Ltd. led lenders higher as the government pledged to revive growth and the U.S. announced plans to revive credit markets.

Reliance Industries Agrees to Start Selling Gas to 12 Fertilizer Companies Reliance Industries Ltd., India’s biggest company by market value, signed accords to start selling gas to 12 fertilizer companies, paving the way for higher production of crop nutrients.

Dollar, Yen Rise as Traders Flee Euro, Pound on Deepening European Slump The dollar and yen rose as traders fled the euro and pound on evidence the recession is deepening in Europe.

Asian Stocks Rise on Optimism Global Growth is Recovering; Rio Tinto Gains Asian stocks fluctuated, with the region’s benchmark index paring gains that drove valuations to the highest levels since December 2007.

U.S., European Stocks Drop, Led by Commodity Producers; Exxon Mobil Slides U.S. and European stocks retreated, trimming a third-straight weekly advance for both markets, after lower oil and metal prices dragged down commodity producers and the U.K. economy contracted more than previously estimated.

Obama Seeks Support From JPMorgan, Goldman Sachs, Citigroup on Bank Plan President Barack Obama will seek support today from executives of the nation’s largest banks for his plan to stabilize the financial system and try to get beyond the furor over bailouts and bonuses.

Consumer Sentiment in U.S. Holds Near Three-Decade Low as Job Losses Mount Confidence among U.S. consumers held in March near the lowest level in three decades as job losses mounted.

Dollar, Yen Climb as Traders Flee Euro, Pound on Deepening European Slump The dollar and yen rose as traders fled the euro and pound on evidence the recession is deepening in Europe.

Cuomo Expands AIG Bonus Probe With Subpoena of Credit-Default Swap Data New York Attorney General Andrew Cuomo, building on his investigation of American International Group Inc.’s bonuses, subpoenaed data on credit derivatives to determine whether Goldman Sachs Group Inc., Deutsche Bank AG and other banks improperly received taxpayer funds.

Barclays Says It Passes Regulator Stress Test, Doesn't Require New Capital Barclays Plc may not need to raise additional capital after Britain’s third-largest bank passed tests conducted by the U.K.’s financial regulator.

Irish Bonds Are `Great Bargain' After Price Slump, Debt Chief Somers Says The man who helped cut Ireland’s debt costs stemming from the days of chronic deficits in the early 1980s said investors are getting a “great bargain” from the government’s bonds following this year’s slump in prices.

source: Bloomberg

Deutsche Bank AG replaces HSBC as Quantum MF's Custodian

Deutsche Bank AG will be the new Custodian for Quantum Mutual Fund with effect from April 01, 2009. The Hongkong Shanghai Banking Corporation Ltd. (HSBC) is the existing custodian for the fund house. A notice from the fund house published today stated the change.

HDFC Arbitrage Fund Discontinues Monthly dividend option

With effect from 6 April 2009

HDFC Mutual Fund has decided to discontinue the Monthly Dividend Option offered under wholesale and retail plan in HDFC Arbitrage Fund with effect from 6 April 2009.

The dividend option under the scheme currently offers monthly and quarterly options with payout and reinvestment facility. Accordingly, effective 6 April 2009 dividend option under the scheme shall only provide quarterly dividend option with payout and reinvestment facility.

Existing unit holders under monthly dividend option will automatically be covered under quarterly dividend option from the effective date.

HDFC Arbitrage Fund is an open ended equity fund, the objective of the scheme is to generate income through arbitrage opportunities between cash and derivative market and arbitrage opportunities within the derivative segment and by deployment of surplus cash in debt securities and money market instruments.

Government borrowing for 1st Half of Fiscal 2009-10

The RBI has released the government borrowing calendar for the first half of fiscal 2009-10. The government is scheduled to borrow Rs 241,000 crores of dated government securities in the April- September 2009 period. The government will auction Rs 48,000 crores of bonds in each of the months of April, May and June 2009. July, August and September 2009 will see issuances of Rs 34,000 crores, Rs 31,000 crores and Rs 32,000 crores respectively.

The inflows into the system in the April-September 2009 period through redemption of government bonds and coupon payments is Rs 100,000 crores of which redemption of government bonds is Rs 33,000 crores. The MSS (Market Stabilization Scheme) bonds unwinding for the same period is Rs 42,000 crores.

The RBI has announced that they will purchase Rs 80,000 crores of bonds from the open market in the first half of fiscal 2009.

To summarise

Government bond auctions (a) Rs 241,000 crores

Government Bond Redemption (b) Rs 33,000 crores

MSS unwinding (c) Rs 33,000 crores

RBI purchase (d) Rs 80,000 crores

The market will have to absorb Rs 95,000 crores ((a-(b+c+d)) of additional government bonds in the period April-September 2009.

The number of Rs 95,000 crores of government bond supply for the market to absorb is not daunting given that RBI will keep policy rates at all time lows, liquidity will be high in the system and inflation will be at all time lows.

We reiterate our positive interest rate outlook and as the market gets adjusted to the supply, bond yields will start trending down.

Bullion metals go up

Gold and silver shine as the dollar dips

Bullion metal prices ended higher on Wednesday, 25 March, 2009. The weak dollar was responsible for precious metals ending higher today.

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, Comex Gold for April delivery rose $12 (1.3%) to close at $935.8 an ounce on the New York Mercantile Exchange. It fell to an intra day low of $916. Last week, the yellow metal ended higher by 2.8%. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 13.4%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (7.9%) since then.

On Wednesday, Comex silver futures for May delivery rose 8 cents (0.3%) to end at $13.437 an ounce. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 22.9% this year. For 2008, silver had lost 24%.

In the currency market today, the dollar weakened against its rivals. The dollar index, which measures the strength of the dollar against a basket of six currencies fell 0.6%. But then, the dollar pared almost all its losses after Treasury Secretary Timothy Geithner clarified his earlier comments, emphasizing that the dollar remains the world's reserve currency.

Earlier this week, the Treasury Department had unveiled their plan about buying back most of the bank's toxic assets thereby cleaning up their balance sheet to the extent possible. Treasure Secretary Tim Geithner detailed that the Treasury plans to create a series of public-private investments funds to buy $500 billion to $1000 billion in legacy loans and securities. To encourage participation from the private sector, the government is taking on much of the risk and offering subsidies.

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

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for April delivery closed higher by Rs 153 (1.01%) at Rs 15,226 per 10 grams. Prices rose to a high of Rs 15,382 per 10 grams and fell to a low of Rs 14,961 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 86 (0.4%) higher at Rs 22,351/Kg. Prices opened at Rs 22,305/kg and rose to a high of Rs 22,545/Kg during the day's trading.

Crude slides down

Oil prices drop as crude inventories rise more than expected

Crude prices ended lower on Wednesday, 25 March, 2009 as the weekly inventory report by the energy department showed that crude inventories rose more than expected last week. It was due to the drop in demand for petroleum products. Crude prices fell today despite the weak dollar.

On Wednesday, crude-oil futures for light sweet crude for May delivery closed at $52.77/barrel (lower by $1.21 or 2.2%) on the New York Mercantile Exchange. Last week, crude ended higher by 10.4%. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 64.6% since then. Year to date, in 2009, crude prices are higher by 18.3%. On a yearly basis, crude prices are lower by 50%.

The EIA reported today that crude inventories rose 3.3 million barrels last week (for the week ended 20 March, 2009), more than the 1.4 million barrels expected. At 356.6 million barrels, stocks are at the highest level since July 1993. U.S. refineries operated at 82% of their operable capacity last week, down slightly from a week ago.

EIA also reported that total petroleum products supplied over the past four weeks averaged 19.1 million barrels a day, down 3.2% from a year ago. Gasoline inventories fell by 1.1 million barrels in the week while distillate stockpiles, which include diesel and heating oil, declined by 1.6 million barrels.

In the currency market today, the dollar weakened against its rivals. The dollar index, which measures the strength of the dollar against a basket of six currencies fell 0.6%. But then, the dollar pared almost all its losses after Treasury Secretary Timothy Geithner clarified his earlier comments, emphasizing that the dollar remains the world's reserve currency.

Also at the Nymex on Wednesday, April-reformulated gasoline fell 0.5% to $1.495 a gallon and April heating oil dropped 2.3% to $1.4647 a gallon.

April natural-gas futures fell 0.4% to $4.329 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 March delivery closed at Rs 2,685/barrel, lower by Rs 6 (0.22%) against previous day's close. Natural gas for April delivery closed at Rs 223.5/mmbtu, lower by Rs 1/mmbtu (0.44%).

FII buying slows down

Inflow of Rs 297.60 crore on 25 March 2009

Foreign institutional investors (FIIs) bought shares worth a net Rs 297.60 crore on Wednesday, 25 March 2009, much lower than Rs 699.20 crore on Tuesday, 24 March 2009.

FII inflow of Rs 297.60 crore on 25 March 2009 was a result of gross purchases Rs 1831.90 crore and gross sales Rs 1534.30 crore. The BSE Sensex rose 196.85 points, or 2.08%, to 9,667.90 on that day.

FII outflow in March 2009 totaled Rs 51.70 crore (till 25 March 2009). FII outflow in calendar year 2009 totaled Rs 6,722.50 crore (till 25 March 2009).

There are a total of 1631 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Inflation at a record low

At 0.27% in the 12 months to 14 March 2009

India's wholesale price index (WPI) rose 0.27% in the 12 months to 14 March 2009, below the previous week's annual rise of 0.44%, government data showed on Thursday, 26 March 2009.

Inflation has fallen sharply in 2009 as commodity prices plunged after the global economic and financial crisis deepened. The annual inflation rate was 8.02% during the corresponding week of the previous year.

The market has been agog with expectations of rate cut by the Reserve Bank of India (RBI). The sharp fall in inflation has provided room for the RBI to cut interest rates

further to support faltering economic growth.

While gains in the wholesale-price index (WPI) have slowed, other gauges of inflation that the central bank takes into account when deciding policy are at a decade high. The inflation rate as measured by consumer price index for industrial workers, which seeks to represent the impact of retail prices on the country's workforce, had risen to 10.45% in January 2009, compared to 9.7% in the previous month.

Similarly, consumer price index for urban non-manual employees suggests that the annual rate of inflation in 59 Indian cities had been 9.8% in December 2008, the latest month for which data is available.

RBI eases NPA norms for banks

Banks can make more provisioning for bad loans

The Reserve Bank of India (RBI) has allowed banks to make higher-than-mandated provisioning for non-performing assets (NPAs) loans that have turned bad.

The provisions set aside for non-performing assets (NPAs) above the regulatory norms would be treated as capital for banks. This would facilitate more provisioning for NPAs. Banks have been wary of making extra provisions for NPAs. At present they are not treated as capital and cannot be credited to the profit and loss account.

In a circular issued to banks on Wednesday, 26 March 2009, the RBI said that banks may voluntarily make specific provisions for NPAs at rates which are higher than the rates prescribed under existing regulations. Higher rates of provisioning should be approved by bank boards and the policy be adopted consistently every year.

The circular also clarified that the additional provisions for NPAs, as happens in the case of regulatory provisions, may be netted off from gross NPAs to arrive at the net NPAs.

If the bank has sold a standard asset and the sale consideration is higher than the book value of the asset, then the excess provisions that end up arising in the process may be credited to profit and loss account.

Furthermore, excess provisions, which arise on sale of NPAs, can be admitted as tier-II capital. But these provisions will be subject to the overall ceiling of 1.25% of total risk weighted assets. Though floating provisions cannot be netted from gross NPAs to arrive at net NPAs, it is clarified that they could be reckoned as part of tier-II capital subject to the overall ceiling of 1.25% of total risk weighted assets.

Provisions for diminution of fair value of restructured advances, both in respect of standard assets as well as NPAs, made on account of reduction in rate of interest and/or reschedulement of principal amount are permitted to be netted from the relative asset.

source: Capital Market

News Flash

Subbarao Says Reserve Bank of India Will Act Appropriately to Aid Growth The Reserve Bank of India will adopt appropriate measures on boosting economic growth, Governor Duvvuri Subbarao said on the day the nation’s inflation rate fell to the lowest on record, giving room for more rate cuts.

India Inflation Slows to 0.27%, Giving More Room for Lower Interest Rates India’s inflation slowed to 0.27 percent, giving the central bank more room to cut interest rates and prop up an economy growing at the weakest pace in six years.

Reliance to Sign Preliminary Agreeements on Gas With Fertilizer Companies Reliance Industries Ltd., India’s biggest company, will sign preliminary agreements today with fertilizer companies to supply natural gas from its largest gas find, an official from one of the buyer companies said.

ICICI Bank Kamath Says Interest Rates May Decline, Wants Clarity on Bonds ICICI Bank Ltd.’s Chief Executive Officer K.V. Kamath expects interest rates to decline in India, following the central bank’s easing of monetary policy in response to the slowdown in economic growth.

Edible Oil Reserves to Triple on Duty-Free Imports, Hurting Oilseed Prices Supplies of vegetable oil in India, the world’s biggest buyer after China, may increase as importers take benefit of duty free purchases of palm and soybean oils, likely hurting domestic oilseed prices.

Government Bonds Drop a Sixth Day as India Unveils Record FY10 Borrowing Indian bonds fell for a sixth day after the government said it will borrow a record amount in the fiscal year beginning April 1 to finance stimulus spending.

Rupee Strengthens as Overseas Investors Increase Purchase of Indian Shares India’s rupee strengthened as investors based abroad added to their local equity holdings for a seventh day, the longest stretch in more than a year.

Geithner Says U.S. Needs `New Rules of Game' to Avert Another Bank Crisis U.S. Treasury Secretary Timothy Geithner said regulation of the U.S. financial system needs a broad overhaul to heal a crippling lack of confidence caused by the credit crisis.

Stocks in U.S. Climb, Extending S&P 500's Biggest Monthly Rally Since '87 U.S. stocks rose, extending the market’s best monthly gain since 1987, on better-than-estimated earnings at Best Buy Co. and ConAgra Foods Inc. and prospects for lower labor costs at General Motors Corp.

U.S. Economy Shrank 6.3% in Fourth Quarter as Profits Fell Most Since 1953 The U.S. economy shrank at a 6.3 percent annual pace in the fourth quarter, the worst performance since 1982, in what may be the depths of the recession.

Fixed 30-Year U.S. Mortgage Rate Falls to 4.85%, Lowest in Freddie Records The U.S. 30-year fixed mortgage rate fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage-backed bonds and buy as much as $300 billion of Treasuries.

SEC's Schapiro Will Impose New Rules on Money Managers After Madoff Fraud U.S. Securities and Exchange Commission Chairman Mary Schapiro said she will impose new rules on money managers to safeguard client holdings after Bernard Madoff’s $65 billion fraud shattered investor confidence.

Principle Capital Shareholders Pass Vote to Oust Myerson, Wind Down Fund Shareholders of Principle Capital Investment Trust Plc, the U.K. private-equity-style fund that dropped 81 percent in 2008, passed a vote to oust Chief Executive Officer Brian Myerson and to wind down the fund today.

GM Says 7,500 Union Workers Take Buyouts as It Seeks to Maintain U.S. Aid General Motors Corp. said 7,500 United Auto Workers members signed up for buyouts the company needs as part of cuts to keep $13.4 billion in U.S. aid, more than doubling a Barclays Capital estimate.

source: Bloomberg

JM MIP Fund offers dividend

Record date for dividend is 30 March 2009

JM Financial Mutual Fund has proposed to declared dividend under dividend option of JM Monthly Income Plan (MIP) Fund. The record date for the dividend is 30 March 2009.

The fund house has decided to offer dividend under Quarterly dividend and Annual dividend option. The quantum of dividend will be up to 3.839% i.e. Re 0.3839 per unit.

The NAV under Quarterly dividend option was Rs 10.4475 per unit and under Annual dividend option was Rs 11.1133 per unit as on 24 March 2009.

JM MIP Fund, an open-ended income scheme was launched in September 2003 with an investment objective of generating regular income, primarily through investments in fixed income securities so as to make monthly, quarterly and annual dividend distribution, declare bonus in the growth option.

Birla Sun Life Dynamic Bond Fund introduces Discipline Advantage Plan

With effect from 30 March 2009

Birla Sun Life Mutual Fund has introduces the Discipline Advantage Plan under Birla Sun Life Dynamic Bond Fund with effect from 30 March 2009.

Detail of the plan:

Plan: Discipline Advantage Plan

Option: Growth

Features: Under the Discipline Advantage Plan, an investor may systematically transfer his investments from the schemes to any of the eligible equity schemes. The eligible schemes are Birla Sun Life Frontline Equity Fund, Birla Sun Life Midcap Fund, Birla Sun Life Top 100 Fund, Birla Sun Life Equity Fund, Birla Sun Life Infrastructure Fund and Birla Sun Life Tax Relief'96.

Minimum Application Amount: The sum of transfer amounts as per the frequency opted or Rs 10000 whichever is greater.

Frequency Transfer: Weekly Transfer, Monthly Transfer or Quarterly Transfer.

Minimum Transfer Amount: Weekly Transfer – 5 transfers for Rs 1000 each, Monthly Transfer – 6 transfer for Rs 1000 each and Quarterly Transfer- 4 transfers for Rs 2000 each.

Transfer Dates: For Weekly Transfer – transfers shall be on 1st, 7th, 14th, 21st and 28th of each month. For Monthly and Quarterly Transfer – transfer can be on 1st or 7th or 10th or 14th or 20th or 21st or 28th of every month/ quarters as applicable.

Load Structure: For Discipline Advantage Plan, no entry load will be charge and exit load 2.50% will be charged for units redeemed/switched out to any scheme other than eligible equity schemes within 2 years from the date of allotment.

Exit load at time of transfer out will be nil and entry load at the time of Transfer IN, the entry load will be payable as applicable to respective eligible equity scheme(s).

Exit load at time of redemption from equity scheme will be as applicable to respective eligible equity scheme(s).

The new plan introduced under the schemes will have the same investment objective, portfolio, liquidity and expense ratio as that of existing plans of the respective schemes.

Birla Sun Life Dynamic Bond Fund declares dividend

Record date for dividend is 30 March 2009

Birla Sun Life Mutual Fund has decided to offer dividend under Quarterly dividend option of Birla Sun Life Dynamic Bond Fund – Retail Option. The record date for the dividend is 30 March 2009.

The quantum of dividend will be 1.90% i.e. Rs 0.19 per unit on the face value of Rs 10 per unit. The NAV of the scheme was at Rs 11.1053 per as on 24 March 2009.

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