Most of the fund categories surge in the week ended 26 June 2009

Return of IT, mid cap fund rises while income fund fell

Most of the mutual fund categories have registered positive returns as major equity benchmark indices have surged in the week ended 26 June 2009. Returns of IT, mid cap funds, banking funds, ELSS funds and equity diversified funds advanced in the week ended 26 June 2009. However, income funds fell during the week.

Sensex shed 242.75 points or 1.67% to 14764.64 while the S&P CNX Nifty rose 61.90 points or 1.43%, to 4375.5 in the week ended 26 June 2009.

Over the week, MFs were net buyers of equities worth Rs 1653.30 crore whereas net sellers of debt papers of Rs 504.90 crore. FIIs sold equities net worth Rs 2520.80 crore. Foreign Institutional Investors (FIIs) had pulled out money from the markets over the week. Their net buying of debt securities increased to Rs 1888.40 crore in the week ended 26 June 2009.

Equity diversified funds

Equity-diversified funds' category average rose 2.25% outperforming the Sensex that gained 1.67% in the week ended 26 June 2009. Returns of Escorts Growth Plan grew the most that posted returns of 7.55%. JM Contra Fund, JM Basic Fund, and JM Emerging Leaders Fund posted returns of 5.45%, 5.44%, and 5.33%, respectively. Returns of only 3 out of 199 funds fell over a week ended 26 June 2009. Sahara R.E.A.L Fund fell 3.81%. Kotak MNC and Tata Indo-Global Infrastructure Fund fell 0.30% and 0.24%, respectively.

ELSS Funds

NAVs of the ELSS funds category grew 2.32% in the week ended 26 June 2009. The ELSS funds' category average outperformed the Sensex that inched up 1.67%. Escorts Tax Plan increased by 4.67%. Tata Infrastructure Tax Saving Fund and JM Equity Tax Saver Fund - Series I grew 4.20% and 3.61%, respectively. Religare Tax Plan scaled up by 3.21%. Only 1 fund out of 47 funds fell over the week. SBI Tax Advantage Fund - Series I plunged by 0.11%.

Index Funds

All 20 index funds posted positive returns over the week. NAVs of the index funds' category scaled up 1.39% underperforming both the Sensex and the Nifty in the week ended 26 June 2009. Among the Index funds, LICMF Index Fund - Sensex Advantage Plan has topped among others by posting returns of 2.16%. The returns of HDFC Index Fund-Sensex Plus Plan grew 2.06%. Returns of Benchmark S&P CNX 500 Fund and Franklin India Index Fund-BSE Sensex Plan increased by 1.72%and 1.69%, respectively.

Pharma Funds

The average returns of pharma funds increased by 1.87% outperforming the BSE Healthcare index that fell 0.70% for week ended 26 June 2009. Returns of Franklin Pharma Fund grew the most by 3.68%. Returns of Reliance Pharma Fund and Magnum SFU - Pharma Fund scaled up by 2.74% and 1.35%, respectively. One out of 4 pharma funds failed to post positive returns in the week. UTI-Pharma & Healthcare Fund fell 0.27% over the week ended 26 June 2009.

FMCG Funds

FMCG funds grew 1.96% outperforming the BSE FMCG Index that advanced by 1.00% over the week ended 26 June 2009. Magnum SFU - FMCG Fund increased by 2.54%. Returns of Franklin FMCG Fund and ICICI Pru FMCG Fund gained 2.18% and 1.16%, respectively.

Mid Cap funds

The Net asset value of the Mid Cap fund category advanced by 3.24% underperforming BSE MidCap and CNX MidCap that rose 4.28% and 3.82%, respectively in the week ended 26 June 2009. All 27 mid cap funds have gave positive returns over the week ended 26 June 2009. Kotak Midcap increased by 5.74%. Birla Sun Life Midcap Fund rose 4.55%. HSBC Midcap Equity Fund increased by 4.50%. Sahara Midcap Fund and ICICI Pru Discovery Fund increased by 4.00% and 3.92%, respectively.

Banking funds

The net asset value of the banking funds grew 3.13% outperforming BSE Bankex that increased by 2.51%. JM Financial Services Sector Fund topped by giving returns of 4.93%. Sahara Banking & Financial Services Fund gained 3.27%. UTI-Banking Sector Fund grew 3.08%. All 7 funds rose over the week.

IT funds

NAV of six IT funds moved up by 3.28% outperforming the BSE Infotech index which gained 3.01% while underperforming the CNX IT that increased by 3.31% Magnum SFU - Infotech Fund increased by 4.28%. ICICI Pru Technology Fund and Franklin Infotech Fund recorded negative returns of 3.69% and 3.53%, respectively. Returns of DSP BR Technology.com and Kotak Tech went up by 3.26% and 2.48%, respectively over the week ended 26 June 2009.

Gold ETFs

Gold prices have surged in both the international and domestic markets over the week. Thus, the returns of the gold ETFs gained. The price of gold has increased by nearly 0.72% in international (London) and 1.20% in domestic (Mumbai) markets over the week ended 26 June 2009. The category average of GETFs increased by 1.75% in the week ended 26 June 2009. All five Gold ETFs posted positive returns over the week. Returns of Quantum Gold Fund and UTI-Gold Exchange Traded Fund rose 1.76% each. Gold BeES and Kotak GOLD ETF posted returns of 1.75% each.

Arbitrage funds

The arbitrage funds grew 0.04% in the week ended 26 June 2009. UTI-SPrEAD Fund and IDFC Arbitrage - Plan B posted returns of 0.15% and 0.09%, respectively. IDFC Arbitrage - Plan A have recorded returns of 0.08% over the same time period. Net asset value of Religare Arbitrage Fund scaled up marginally 0.07%. 3 funds fell over the week ended 26 June 2009. Returns of ICICI Pru Equity & Deriv -Income Optimis JM Arbitrage Advantage Fund decreased by 0.08% and 0.05% respectively.

Balanced Funds

Net asset value of the balanced funds moved up 0.98% in the week ended 26 June 2009 underperforming the Sensex. Among the balanced funds, Escorts Balanced Fund, ICICI Pru Child Care Plan-Gift Plan, Tata Balanced Fund enhanced by 5.05%, 3.44%, and 3.06%, respectively. JM Balanced Fund grew 2.91%. Only 3 out of 78 balanced funds gave negative returns over week ended 26 June 2009. Birla Sun Life Freedom Fund and ICICI Pru Real Estate Securities Fund fell 0.07% and 0.04%, respectively.

Gilt Funds

NAVs of the gilt fund category gained slightly by 0.10% in the week ended 26 June 2009. Among the gilt funds, IDFC G Sec Fund - Invst Plan – B rose 0.39%, IDFC G Sec Fund - Invst Plan - A scaled up 0.38%. IDFC G Sec Fund - PF and Templeton India G-Sec Fund – LTP grew 0.34% each. Returns of 10 out of 68 gilt funds declined over week ended 26 June 2009. Net asset value of ICICI Pru Gilt Fund - Invest - PF Option and LICMF G-Sec Fund - PF Plan dropped 0.34% and 0.20%, respectively. LICMF G-Sec Fund declined by 0.20%.

Income Funds

The category average of income funds decreased by 0.02% in the week ended 26 June 2009. In the income funds, UTI-CCP Advantage Fund gained 1.99%, Birla Sun Life Income Fund (Discipline Advant Plan) increased by 0.58%. Birla Sun Life Income Fund 54EB rose 0.58%. Returns of 20 out of 93 funds slipped over a week ended 26 June 2009. ICICI Pru S.M.A.R.T. Fund - Sr.G - 36Mths, ICICI Pru S.M.A.R.T. Fund - Sr.F - 36Mths and ICICI Pru S.M.A.R.T. Fund - Sr.H - 36Mths fell 6.38%, 2.34%, and 1.99%, respectively.

Weekly returns of various MF categories
Funds category	Absolute returns (%)*
IT funds	3.28
Mid Cap funds	3.24
Banking funds	3.13
ELSS Funds	2.32
Equity diversified funds	2.25
FMCG Funds	1.96
Pharma Funds	1.87
Gold ETFs	1.75
Index Funds	1.39
Balanced Funds	0.98
Gilt Funds	0.10
Arbitrage funds	0.04
Income Funds	-0.02
*As on week ended 26 June 2009

Bullion metals lose some luster

Prices drop as the dollar fluctuates

Precious metal prices fell at USA on Monday, 29 June, 2009. Prices fell today as the dollar fluctuated throughout the course of the day. The dollar traded higher against its counterparts earlier during the day but then fell.

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 August delivery ended at $940.7, lower by $0.30 (0.03%) an ounce on the New York Mercantile Exchange. Earlier during the day, it hit a high of $943.2. Last week, gold ended higher by 1%. This was the first weekly gain for the yellow metal in four weeks. Year to date, gold prices are higher by 7%.

For the month of June, 2009, gold is still down by 4% on a m-t-d basis. Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.

On Monday, Comex silver futures for July delivery fell 18.1 cents (1.3%) at $13.847 an ounce. Last week, silver ended lower by 0.5%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 28.2% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the euro strengthened against the dollar. Earlier, the dollar was slightly higher after China' central bank governor ruled out any "sudden" changes to its foreign-exchange reserves.

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

At the MCX, gold prices for August delivery closed lower by Rs 34 (0.23%) at Rs 14,609 per 10 grams. Prices rose to a high of Rs 14,649 per 10 grams and fell to a low of Rs 14,553 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 253 (1.11%) lower at Rs 22,351/Kg. Prices opened at Rs 22,530/kg and fell to a low of Rs 22,252/Kg during the day's trading.

Crude shoots up

Crude prices cross $70 again on supply concerns

Set of geo political tensions took crude prices back above the $70 mark at Nymex on Monday, 29 June, 2009. Prices rose on Monday after attack on Nigerian pipeline once again raised supply concerns.

On Monday, crude-oil futures for light sweet crude for July delivery closed at $71.49/barrel (higher by $2.33 or 3.3%). During intra day trading, crude rose to a high of $72.4/barrel. Last week, crude ended lower by 1.2%.

For the month of June, 2009, crude is still 6.3% higher on a m-t-d basis. Crude had ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 51.3% since then. Year to date, in 2009, crude prices are higher by 58%.

As per reports, the Movement for the Emancipation of the Niger Delta said that it had struck at the Shell Forcados offshore platform in Delta state. Royal Dutch Shell said that it was shutting down some production in Nigeria after an attack by a militant group. Nigeria is a key exporter of crude.

Also at the Nymex on Monday, July reformulated gasoline rose 6.20 cents to end at $1.936 a gallon and July heating oil gained 5.40 cents to finish at $1.784 a gallon. The gasoline and heating oil contracts expire tomorrow.

August natural-gas futures fell 17 cents to end at $3.94 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 July delivery closed at Rs 3,449/barrel, higher by Rs 97 (2.9%) against previous day's close. Natural gas for July delivery closed at Rs 192.4/mmbtu, lower by Rs 6.4/mmbtu (3.2%).

FIIs continue buying

Inflow of Rs 397.20 crore on 29 June 2009

Foreign institutional investors (FIIs) bought shares worth a net Rs 397.20 crore on Monday, 29 June 2009, much lower than 672.90 crore on Friday, 26 June 2009.

FII inflow of Rs 397.20 crore on 29 June 2009 was a result of gross purchases Rs 2,388.10 crore and gross sales Rs 1,990.90 crore. The BSE Sensex rose 21.10 points or 0.14% to 14,785.74 on that day.

FII inflow in June 2009 totaled Rs 2,996 crore (till 29 June 2009). FII inflow in calendar year 2009 totaled Rs 24,315.40 crore (till 29 June 2009).

There are a total of 1668 foreign funds registered with the Securities & Exchange Board of India (Sebi).

News Flash

Hindalco Industries Full-Year Profit Falls 80% on Derivatives, Input Costs Hindalco Industries Ltd., India’s biggest aluminum producer, reported an 80 percent decline in full-year profit because of waning demand, higher raw material costs and derivatives losses.

Indian Stocks Retreat on Share Sale Plans, Paring Best Quarter in 17 Years Indian stocks fell, paring the benchmark index’s best quarter in 17 years, on concern share sales will draw liquidity away from existing equities.

Indian Rupee to Drop 4 Percent to 50 Per Dollar on U.S. Recovery, DBS Says India’s rupee will drop more than 4 percent in three months on speculation a faster recovery in the U.S., the world’s largest economy, will attract investors to the dollar, according to DBS Group Holdings Ltd.

Housing Development Leads $815 Million in Share Sales; GMR Scraps Offer Housing Development & Infrastructure Ltd. and four other Indian companies raised $815 million selling shares to institutional investors in two days, taking advantage of the benchmark index’s best quarter in 17 years.

National Spot Exchange to Lure Housewives With Small-Size Gold Contracts National Spot Exchange Ltd., India’s biggest bourse for trading physical gold, launched contracts in small denominations, aimed at households in the world’s largest consumer of the precious metal.

Wockhardt Hospitals's Bali Rules Out Revival of India IPO; Prefers Merger Wockhardt Hospitals Ltd., which scrapped an initial public offer in India last year due to poor investor response, ruled out a revival of the plan and said it would prefer private equity or merger with a strategic investor.

India's Monsoon Rains to Move Further Into Sugar Cane, Oilseeds Regions India’s monsoon, the main source of irrigation water for the nation’s 235 million farmers, will move further into the biggest sugar cane and soybeans-growing areas in the next one-to-two days, the weather office said today.

Government Bonds Decline on Concern India Will Increase Debt Sales Target India’s five-year bonds fell for the first time in six days on speculation the government will raise its debt-sale target for this fiscal year in the budget scheduled to be unveiled July 6.

Stocks in U.S. Fall on Mortgage Delinquencies, Consumer Confidence Slump U.S. stocks fell, paring gains at the end of the best quarter since 1998 for the Standard & Poor’s 500 Index, after consumer confidence unexpectedly slid and delinquencies on the least risky mortgages more than doubled.

Home-Loan Delinquencies Double on Least-Risky Mortgages, U.S. Report Says Delinquency rates on the least risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure.

Consumer Confidence in U.S. Unexpectedly Drops, Reflecting Weak Job Market Confidence among U.S. consumers slipped unexpectedly in June, reflecting a weak labor market and rising energy costs.

BG Buys Assets From Exco for $1.06 Billion to Develop U.S. Shale Reserves BG Group Plc, the U.K.’s third- largest natural-gas company, bought assets from Exco Resources Inc. for $1.06 billion to develop its first U.S. shale gas project.

U.K. Economy Shrinks More Than Estimated in Biggest Contraction Since 1958 The U.K. economy shrank more than previously estimated in the first quarter in the biggest contraction since 1958 as the recession choked industries from construction to services.

Company Bonds in Europe Beat Government Debt With Record First-Half Return Corporate bonds in Europe posted record returns in the first half, outperforming the region’s government debt and stocks, amid investor demand for higher- yielding assets that helped boost issuance to a record.

ANZ Said to Be Seeking to Buy RBS Assets in Hong Kong, Four Asian Nations Australia & New Zealand Banking Group Ltd., Australia’s fourth-largest bank, may buy Royal Bank of Scotland Group Plc’s operations in at least five Asian countries, three people familiar with the plan said.

source: Bloomberg

Mutual funds' buying slows down

Purchases worth Rs 175.20 crore on 29 June 2009

Mutual funds (MFs) bought shares worth a net Rs 175.20 crore on Monday, 29 June 2009, much lower than Rs 369.70 crore on Friday, 26 June 2009.

MFs' net inflow of Rs 175.20 crore on 29 June 2009 was a result of gross purchases Rs 1,013.40 crore and gross sales Rs 838.20 crore. The BSE Sensex rose 21.10 points or 0.14% to 14,785.74 on that day.

MFs were net buyers of shares worth Rs 1,119.40 crore in June 2009 (till 29 June 2009).

Mutual funds are deploying funds received from investors in the market. The recently concluded new fund offer of Reliance Infrastructure Fund received a strong investor response, with estimated collections of Rs 2500-Rs 3000 crore. As the name suggest, the fund is focused on the infrastructure sector.

Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India

Weak dollar pushes up bullion metals

Gold witnesses first weekly gain in a month

Precious metal prices rose at USA on Friday, 26 June, 2009. Prices rose on Friday as the dollar index slipped for the second straight day. Dollar dropped on Friday as traders mulled over all time low interest rates in the US.

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, gold for August delivery ended at $941, higher by $1.5 (0.2%) an ounce on the New York Mercantile Exchange. Earlier during the day, it hit a high of $949. For the week, gold ended higher by 1%. This was the first weekly gain for the yellow metal in four weeks. Year to date, gold prices are higher by 8.2%.

For the month of June, 2009, gold is still down by 4% on a m-t-d basis. Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.

On Friday, Comex silver futures for July delivery rose 12.3 cents (0.9%) at $14.128 an ounce. For the week, silver ended lower by 0.5%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 29.5% this year. For 2008, silver had lost 24%.

In the currency market on Friday, the dollar was under renewed pressure after China's central bank reiterated a call to lessen the currency's role as the world's reserve currency. The dollar also slipped on speculation about global central banks' efforts to stabilize the economy that will boost demand for higher-yielding assets. The dollar index, which measures the strength of the dollar against a basket of six other currencies, fell almost 0.6%.

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

At the MCX, gold prices for August delivery closed lower by Rs 28 (0.2%) at Rs 14,651 per 10 grams. Prices rose to a high of Rs 14,783 per 10 grams and fell to a low of Rs 14,612 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 79 (0.35%) higher at Rs 22,570/Kg. Prices opened at Rs 22,514/kg and rose to a high of Rs 22,793/Kg during the day's trading.

Crude drops below $70 again

Crude prices end lower for second consecutive week

Fresh demand concerns took crude prices at Nymex below $70 once again on Friday, 26 June, 2009. Prices fell on Friday as economic report showed that savings rate in US climbed to fifteen year high in US. Prices had crossed $70 mark a day earlier after militants attacked a key pipeline in Nigeria, the fifth largest oil exporter to the U.S. With Friday's drop, crude ended lower for the second consecutive week.

On Friday, crude-oil futures for light sweet crude for July delivery closed at $69.16/barrel (lower by $1.07 or 1.5%). For the week, crude ended lower by 1.2%.

For the month of June, 2009, crude is still 3% higher on a m-t-d basis. Crude had ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 52.9% since then. Year to date, in 2009, crude prices are higher by 54.7%.

The Commerce Department reported on Friday, 26 June, 2009 that U.S. personal incomes jumped 1.4% in May due to one-time stimulus checks, sending the savings rate to a 15-year high. Incomes were boosted by one-time $250 checks sent to about 50 million Social Security beneficiaries as part of the Obama stimulus program. Excluding the one-time payments, disposable incomes rose 0.2%.

Real disposable incomes (after taxes and inflation-adjusted) rose 1.6%. With the boost to incomes, the savings rate rose to 6.9%, the highest in 15 years. Consumer spending rose 0.3% in nominal terms, and 0.2% after adjusting for inflation, the largest gain since January.

EIA reported earlier during the week that crude inventories fell 3.8 million barrels in the week ended 19 June, 2009. Market was expecting a decline of 1.2 million barrels. Refiners boosted production in anticipation of higher fuel demand in the summer driving season. U.S. refineries ran at 87.1% of their operable capacity last week.

The government also reported that gasoline inventories increased by 3.9 million barrels last week, more than the buildup of 1 million barrels expected. Distillate inventories rose by 2.1 million barrels last week. Gasoline production stood at 9.2 million barrels a day last week, up 1% from the previous week. Total implied demand for petroleum products over the last four-week period has averaged 18.3 million barrels a day, down by 6.6% compared to the similar period last year

Also at the Nymex on Friday, July reformulated gasoline slid 2.42 cents, or 1.3%, to $1.8741 a gallon and July heating oil lost 4.6 cents, or 2.6% to $1.7303 a gallon.

Natural gas for July delivery rose 10.5 cents, or 2.7%, to $3.949 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 July delivery closed at Rs 3,353/barrel, lower by Rs 75 (2.2%) against previous day's close. Natural gas for July delivery closed at Rs 194.9/mmbtu, higher by Rs 0.1/mmbtu (0.05%).

FIIs turn buyer after nine trading sessions

Inflow of Rs 672.90 crore on 26 June 2009

After sustained selling for nine trading sessions in a row, foreign funds turned buyers on Friday, 26 June 2009. Foreign institutional investors (FIIs) bought shares worth a net Rs 672.90 crore on Friday, 26 June 2009, as against an outflow of Rs 1,038.10 crore on Thursday, 25 June 2009.

FII inflow of Rs 672.90 crore on 26 June 2009 was a result of gross purchases Rs 2,547.70 crore and gross sales Rs 1,874.80 crore. The BSE Sensex surged 419.02 points or 2.92% to 14,764.64 on that day.

FII inflow in June 2009 totaled Rs 2,598.80 crore (till 26 June 2009). FII inflow in calendar year 2009 totaled Rs 23,918.20 crore (till 26 June 2009).

There are a total of 1668 foreign funds registered with the Securities & Exchange Board of India (Sebi).

News Flash

Jaguar Land Rover Turns to China, India as Recession Damps Demand in U.S. Jaguar Land Rover, the luxury vehicle division of Tata Motors Ltd., expects emerging economies to account for as much as a third of the unit’s sales as demand in the U.S. and Europe plunges due to recession.

India Sugar Output May Miss Forecast Next Year on Dry Weather, Group Says India, the world’s largest user of sugar, may produce less than forecast next year as below average rainfall reduces harvests, adding to a global supply deficit.

Sensex Little Changed; Tata Motors Declines on First Loss in Seven Years India’s benchmark stock index closed little changed. Metal suppliers rose after copper in Shanghai climbed for a fifth day. Tata Motors Ltd. plunged after it posted its first annual loss in at least seven years.

Bonds Advance for Fifth Day on Bank Demand as Government Trims Debt Sales India’s five-year bonds rose for a fifth day on speculation banks, the biggest buyers of the government debt, will boost holdings as the nation trims sales of fixed-income securities next month.

Suzlon Energy May Sell Stake in Belgium's Hansen Transmissions to Cut Debt Suzlon Energy Ltd., India’s largest wind-turbine maker, said it may sell all or part of its stake in unit Hansen Transmissions International NV to cut some of its debt amounting to $2.5 billion.

Deficient Monsoon Rains May Erode India's Farm Production, Pronab Sen Says India’s farm output, critical for the $1.2 trillion economy, may be diminished as insufficient rainfall reduces the yield of sugar, cotton and other crops.

Indian Rupee Rises on Speculation Stock Gains Will Attract Overseas Funds India’s rupee ended at the highest level in more than a week on speculation gains in local stocks will attract overseas investors.

Asia's Economic Growth to Lure Stock Investors Back, Halbis Capital Says Asia’s economic growth, led by China and India, will lure global investors back to the region’s stocks after the first weekly funds outflow since March, Halbis Capital Management said.

Bernard Madoff Gets 150-Year Prison Term for Leading Biggest Ponzi Scheme Bernard Madoff was sentenced to 150 years in federal prison for masterminding the largest Ponzi scheme in history, a penalty six times longer than those meted out to the chief executives of WorldCom Inc. and Enron Corp.

Stocks in U.S. Rise as S&P 500 Extends Biggest Quarterly Rally Since 1998 U.S. stocks rose, extending the best quarterly rally for the Standard & Poor’s 500 Index since 1998, as higher oil prices lifted energy shares and investors speculated the recession is easing.

Treasuries Climb After China Says Its Reserve-Currency Policy Is `Stable' Treasuries rose for a third day, with 10-year yields touching the lowest in a month, amid a rush by investors to U.S. dollar assets as the quarter and month come to an end.

Apple's Chief Executive Steve Jobs Returns to Work After Liver Transplant Steve Jobs is back at work at Apple Inc., returning to his job as chief executive officer as planned after taking medical leave in January.

Porsche Says Qatar Made Offer for Stake in Car Maker, Volkswagen Options Porsche SE, after rejecting an offer from Volkswagen AG to buy the luxury sports-car maker’s operations, said Qatar made a bid for a stake in the holding company and options that can be converted into VW shares.

Enterprise Products to Buy U.S. Pipeline Operator Teppco for $3.3 Billion Enterprise Products Partners LP agreed to buy Teppco Partners LP for about $3.3 billion, combining pipeline operators controlled by Houston billionaire Dan Duncan to create the biggest U.S. energy partnership.

Bond Dealers Say Worst Over for Treasuries as Demand Soars at Debt Sales Wall Street’s largest bond-trading firms say the worst may be over for investors in Treasuries after government securities posted their biggest first-half losses in at least three decades.

source: Bloomberg

Religare Banking Fund announces dividend

Record date for dividend is 3 July 2009

Religare Mutual Fund has approved to declare dividend under dividend option of retail plan of Religare Banking Fund, an open ended banking sector fund. The record date of dividend distribution is 3 July 2009.

The quantum of dividend will be 7.50% i.e. Re 0.75 per unit on face value of Rs 10.00 per unit. The NAV of the retail plan recorded at Rs 12.48 per unit and as on 26 June 2009.

The fund was launched in May 2008. The investment objective of the scheme is to generate long-term capital growth from a portfolio of equity and equity-related securities of companies engaged in the business of banking and financial services.

Tata Dividend Yield Fund offers dividend

Record date for dividend is 3 July 2009

Tata Mutual Fund has approved 3 July 2009 as record date for declaration of dividend under dividend option of Tata Dividend Yield Fund.

The quantum of dividend will be Rs 15% i.e. Rs 1.50 per unit on face value of Rs 10 per unit. The NAV of the scheme was at Rs 15.6855 per unit as on 25 June 2009.

Tata Dividend Yield Fund is an open-ended equity scheme, with an investment objective to provide income distribution and /or medium to long term capital gains by investing predominantly in high dividend yield stocks.

DSP BlackRock Enhanced Equity Fund seeks Sebi's approval

Seeking enhanced performance using 130/30 (long/short) portfolio structure

DSP BlackRock Mutual Fund has filed offer document with Securities and Exchange Board of India (Sebi) to launch DSP BlackRock Enhanced Equity Fund, an open-ended equity diversified scheme. The face value of the new issue will be Rs 10 per unit.

Features of the scheme:

Investment objective: The primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in equity and equity related securities of companies listed in stock exchanges in India. The Investment Manager will endeavor to have a long exposure in equity and equity related securities (including equity derivatives) up to a maximum of 130% of the net asset value and short exposure through equity and equity related securities (including equity derivatives) up to a maximum of 30% such that the net equity exposure does not exceed 100% of the net asset value of the Scheme.

Investment option: The scheme offers two plans viz. regular and institutional plan with growth and dividend option. The dividend option further offers dividend payout and dividend reinvest facility.

Minimum application amount: The minimum investment amount under regular plan will be Rs 5000 and in multiples of Re 1 thereafter and under institutional plan minimum investment amount will be Rs 5 crore and in multiples of Re 1 thereafter.

The scheme seeks to collect a minimum subscription amount of Rs 1 crore during NFO period.

Asset allocation: The scheme will invest 65-130% in long exposure in equity and equity related securities of companies listed in Indian Stock Exchanges (including equity derivatives) with high risk profile. It will have investment exposure of 0-30% in short exposure in equity and equity related securities of companies listed in Indian Stock Exchanges (including equity derivatives) with high risk profile. The scheme will invest up to 35% in debt and money market securities with low to medium risk profile.

The net equity exposure i.e. long exposure less short exposure to equity and equity related securities cannot exceed 100% of the net asset value of the Scheme.

Load structure:

Regular Plan: Entry load: For investments less than Rs. 5 crore the scheme will levy an entry load of 2.25% of the initial value of Rs. 10 during NFO/applicable NAV during continuous offer. For investments of Rs. 5 crore and above, no entry load will be charged.

No entry load on direct applications, i.e. applications not routed through a distributor/agent/broker.

Exit load: For investment amount less than Rs 5 crore, 1% will be the exit load for holding period less than 6 months from the date of allotment. 0.50% exit load for holding period more than 6 months but less than 12 months from the date of allotment. While no exit load will be levied for holding period more than 12 months.

Institutional Plan: There will be no entry load and exit load.

Benchmark index: Benchmark for comparing the performance of the Scheme is BSE 100.

Fund Manager: Apoorva Shah will be fund manager for the scheme.

Mutual funds continue buying

Purchases worth Rs 369.60 crore on 26 June 2009

Mutual funds (MFs) bought shares worth a net Rs 369.60 crore on Friday, 26 June 2009. Though substantial the inflows were much lower than Rs 691.60 crore in the preceding trading session on Thursday, 25 June 2009.

MFs' net inflow of Rs 369.60 crore on 26 June 2009 was a result of gross purchases Rs 1,219.70 crore and gross sales Rs 850.10 crore. The BSE Sensex surged 419.02 points or 2.92% to 14,764.64 on that day.

MFs have bought shares worth Rs 944.10 crore in June 2009 (till 26 June 2009).

Mutual funds are deploying fresh investor funds in the market. The recently concluded new fund offer of Reliance Infrastructure Fund received a strong investor response, with estimated collections of Rs 2500-Rs 3000 crore. As the name suggest, the fund is focused on the infrastructure sector.

Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India.

Precious metals add further glaze

Gold and silver rise as dollar sheds gains

Precious metal prices rose at USA on Thursday, 25 June, 2009. Prices rose today as the dollar shed much of its earlier gains. Dollar gave up gains today after the initial jobless claims data in US checked in worse than expected.

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, gold for August delivery ended at $939.5, higher by $5.1 (0.5%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 0.5%. Year to date, gold prices are higher by 8%.

Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Thursday, Comex silver futures for July delivery rose 9.5 cents (0.7%) at $14.005 an ounce. Last week, silver ended lower by 4.5%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 28.6% this year. For 2008, silver had lost 24%.

The Labor Department reported on Thursday, 25 June, 2009 that first-time filings for state unemployment benefits rose unexpectedly in the week ended 20 June, 2009. For the week ended 20 June, initial claims rose 15,000 to 627,000. This is the highest level since the week ended 16 May, 2009. The latest four-week moving average for initial claims fell 500 to stand at 617,250.

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

At the MCX, gold prices for August delivery closed higher by Rs 66 (0.45%) at Rs 14,679 per 10 grams. Prices rose to a high of Rs 14,705 per 10 grams and fell to a low of Rs 14,617 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 121 (0.54%) higher at Rs 22,491/Kg. Prices opened at Rs 22,372/kg and rose to a high of Rs 22,575/Kg during the day's trading.

Crude surpasses $70 again

Crude rises as militants attack pipeline in Nigeria

Crude prices at Nymex crossed $70 on Thursday, 25 June, 2009. Prices rose today after militants attacked a key pipeline in Nigeria, the fifth largest oil exporter to the U.S. Prices also rose as energy department's weekly inventory report showed yesterday more than expected drop in crude inventories for last week.

On Thursday, crude-oil futures for light sweet crude for July delivery closed at $70.23/barrel (higher by $1.56 or 2.3%). For the first time crude crossed $70 in a week. Last week, crude ended lower by 3.3%.

Crude had ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 53% since then. Year to date, in 2009, crude prices are higher by 39.8%.

EIA reported yesterday that crude inventories fell 3.8 million barrels in the week ended 19 June, 2009. Market was expecting a decline of 1.2 million barrels. Refiners boosted production in anticipation of higher fuel demand in the summer driving season. U.S. refineries ran at 87.1% of their operable capacity last week.

The government also reported that gasoline inventories increased by 3.9 million barrels last week, more than the buildup of 1 million barrels expected. Distillate inventories rose by 2.1 million barrels last week. Gasoline production stood at 9.2 million barrels a day last week, up 1% from the previous week. Total implied demand for petroleum products over the last four-week period has averaged 18.3 million barrels a day, down by 6.6% compared to the similar period last year

Also at the Nymex on Thursday, July reformulated gasoline rose 5.58 cents, or 3%, to $1.8983 a gallon and July heating oil gained 3.82 cents, or 2.2%, to $1.7763 a gallon.

Natural gas for July delivery gained 8.3 cents, or 2.2%, to $3.844 per million British thermal units. EIA reported today that U.S. natural gas inventories rose 94 billion cubic feet in the week ended 2 July, 2009. Market had expected an increase between 96 billion and 100 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 July delivery closed at Rs 3,428/barrel, higher by Rs 93 (2.8%) against previous day's close. Natural gas for July delivery closed at Rs 194.8/mmbtu, higher by Rs 4.6/mmbtu (2.4%).

FIIs step up selling

Outflow of Rs 1038.10 crore on 25 June 2009

Foreign institutional investors (FIIs) sold shares worth a net Rs 1038.10 crore on Thursday, 25 June 2009, much higher than Rs 601.30 crore on Wednesday, 24 June 2009.

FII outflow of Rs 1038.10 crore on 25 June 2009 was a result of gross purchases Rs 4,111.50 crore and gross sales Rs 5,149.60 crore. The BSE Sensex lost 77.11 points or 0.53% to 14,345.62 on that day.

FII inflow in June 2009 totaled Rs 1,925.90 crore (till 25 June 2009). FII inflow in calendar year 2009 totaled Rs 23,245.30 crore (till 25 June 2009).

There are a total of 1668 foreign funds registered with the Securities & Exchange Board of India (Sebi).

News Flash

Tata Has First Annual Loss in Seven Years as Jaguar, Land Rover Sales Fall Tata Motors Ltd., the Indian truck maker that owns Jaguar and Land Rover, posted its first annual loss in at least seven years after sales at the luxury units plunged amid the global recession.

Unitech Said to Be Raising $277 Million Selling Stock to Large Investors Unitech Ltd., India’s second-biggest developer, is selling shares worth 13.34 billion rupees ($277 million) to big investors, a person familiar with the sale said.

Sun Pharmaceutical Falls in Mumbai After U.S. Seizes Caraco Generic Drugs Sun Pharmaceutical Industries Ltd., the nation’s most valuable drugmaker, fell in Mumbai trading after the U.S. drug regulator confiscated generic medicines made by its unit Caraco Pharmaceutical Laboratories Ltd.

Sensex Rises, Led by Sterlite, Metal Producers; Sun Pharmaceutical Plunges Indian stocks rose, driving the benchmark index to the biggest advance in two weeks. Sterlite Industries (India) Ltd. led gains on optimism increased state spending and the economic recovery may spur demand.

India Stocks, Fairly Valued, May Still Rise 14% in 12 Months, Nomura Says Indian stocks are “fairly valued” after a 49 percent advance this year and further gains depend on government policies to boost economic growth and pare a budget deficit, Nomura Holdings Inc. said.

South Asia's `Historic Elections' May Spur Economic Integration in Region South Asia’s “historic elections” in the past 18 months have advanced democracy in the region and may spur economic integration, said Sheel Kant Sharma, secretary general of the South Asian Association for Regional Cooperation.

Subhiksha Holders Agree on Revival, Debt Restructuring, Subramanian Says Subhiksha Trading Services Ltd., the Indian retailer that closed stores after it ran out of cash, is confident its debt recast will be completed “well before” the end of next month after negotiations with stakeholders.

India's Five-Year Bonds Rise on Interest-Rate Outlook, Demand From Banks India’s five-year bonds gained for a fourth day on speculation borrowing costs around the world will remain low after the U.S. Federal Reserve held interest rates near zero earlier this week.

Consumer Spending in U.S. Rises, Incomes Jump on Obama's Stimulus Efforts Consumer spending rose in May as benefits from the Obama administration’s stimulus plan spurred a jump in American incomes, a sign that efforts to revive the economy are starting to pay off.

U.S. Stocks Drop as Americans' Savings Rate Hits 15-Year High, Oil Falls U.S. stocks fell and were poised for the first two-week decline since March after the highest American savings rate in 15 years spurred concern that consumer spending will slow and oil retreated. The dollar dropped after China’s central bank reiterated a call for a worldwide currency.

JPMorgan Chase, Citigroup Step Up `Jumbo' Lending for Most Expensive Homes JPMorgan Chase & Co. and Citigroup Inc. are expanding in “jumbo” mortgages used to buy the most expensive homes, helping revive a market that shriveled amid a three-year jump in homeowner defaults.

Treasury Plans to `Quickly' Sell Warrants From Banks Repaying TARP Funds The Treasury plans to sell warrants obtained as part of the financial bailout “quickly” after banks repay government shares.

Banks Reap Record $9.8 Billion Trading Derivatives in Quarter, U.S. Says The U.S. banking industry said it made $9.8 billion during the first quarter trading derivatives and securities as investors started returning to the markets amid signs the recession bottomed.

Magna Seeks `Extreme' Concessions From GM Opel Workers, Labor Leader Says Magna International Inc. is seeking “extreme” concessions from workers at General Motors Corp.’s Opel division less than a month after making pledges that won Germany’s backing for acquiring the unit, a union official said.

New Mexico Subpoenaed for Aldus Equity Records by U.S. Justice Officials Federal prosecutors subpoenaed New Mexico’s $6.3 billion teachers pension fund for records related to Aldus Equity Partners, a consultant that advised it on private equity investments.

source: Bloomberg

Birla Sun Life MF discontinues Yearly SIP with Critical illness insurance

With effect from 30 June 2009

Birla Sun Life Mutual Fund has decided to discontinue Yearly SIP with Critical Illness Insurance, an add-on facility, offered under Birla Sun Life Tax Relief'96, an open ended equity linked saving scheme with a lock-in of 3 years, with effect from 30 June 2009.

Application forms of Yearly SIP with Critical Illness Insurance received, by any mode after the closure will be rejected. Investors who are already enrolled to the plan will continue to receive the cover as per the terms and conditions mentioned date 3 December 2008.

DSP BR MF Changes in Dedicated Fund Manager

With effect from 23 June 2009

DSP BlackRock mutual fund has appointed Vinit Sambre as a new dedicated fund manager for DSP BlackRock World Gold Fund and DSP BlackRock Natural Resources and New Energy Fund with effect from 23 June 2009. Earlier, these funds were handled by Aditya Merchant.

Mutual funds turn net buyers in June 2009

Purchases worth a heavy Rs 691.60 crore on 25 June 2009

Mutual funds (MFs) bought shares worth a net Rs 691.60 crore on Thursday, 25 June 2009, much higher than Rs 389.30 crore on Wednesday, 24 June 2009.

MFs' net inflow of Rs 691.60 crore on 25 June 2009 was a result of gross purchases Rs 1,955.30 crore and gross sales Rs 1,263.70 crore. The BSE Sensex lost 77.11 points or 0.53% to 14,345.62 on that day.

MFs were net buyers of shares worth Rs 574.40 crore in June 2009 (till 25 June 2009).

Mutual funds are deploying fresh investor funds in the market. The recently concluded new fund offer of Reliance Infrastructure Fund received a strong investor response, with estimated collections of Rs 2500-Rs 3000 crore. As the name suggest, the fund is focussed on the infrastructure sector.

Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India.

Precious metals rise further

Gold and silver rise ahead of Fed's policy statement

Precious metal prices rose at USA on Wednesday, 24 June, 2009 ahead of the Federal Reserve's afternoon monetary-policy statement. Traders mulled over the fact that Fed won't be able to move quickly enough to withdraw the trillions of dollars thrown at the financial system, which could lead to higher inflation. That would encourage more purchases of precious metals, an alternate source for investment. Prices rose today despite the strong dollar.

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 August delivery ended at $934.4, higher by $10.1 (1%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 0.5%. Year to date, gold prices are higher by 7.5%.

Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Wednesday, Comex silver futures for July delivery rose 7 cents (0.5%) at $13.91 an ounce. Last week, silver ended lower by 4.5%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 27.2% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the dollar rallied after the Federal Reserve left interest rates unchanged and said it will continue to buy Treasurys and other securities as previously announced. The dollar index, which measures the strength of the dollar against a basket of six other currencies, rose as much as 0.8%. Federal Reserve policy makers began a two-day meeting yesterday. The central bank has held its benchmark interest rate near zero since December.

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

At the MCX, gold prices for August delivery closed higher by Rs 128 (0.88%) at Rs 14,613 per 10 grams. Prices rose to a high of Rs 14,823 per 10 grams and fell to a low of Rs 14,463 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 73 (0.32%) higher at Rs 22,631/Kg. Prices opened at Rs 22,304/kg and rose to a high of Rs 22,631/Kg during the day's trading.

Crude registers marginal drop

Crude prices drop as dollar rallies

Crude prices at Nymex dropped today after rising initially on Wednesday, 24 June, 2009. Prices fell today as the dollar rallied again. Prices fell despite energy department's weekly inventory report which showed more than expected drop in crude inventories for last week.

On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $68.67/barrel (lower by $0.57 or 0.7%). Earlier during the day, it hit a high of $69.86. Last week, crude ended lower by 3.3%.

Crude had ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 53% since then. Year to date, in 2009, crude prices are higher by 37.5%.

EIA reported today that crude inventories fell 3.8 million barrels in the week ended 19 June, 2009. Market was expecting a decline of 1.2 million barrels. Refiners boosted production in anticipation of higher fuel demand in the summer driving season. U.S. refineries ran at 87.1% of their operable capacity last week.

The government also reported that gasoline inventories increased by 3.9 million barrels last week, more than the buildup of 1 million barrels expected. Distillate inventories rose by 2.1 million barrels last week. Gasoline production stood at 9.2 million barrels a day last week, up 1% from the previous week. Total implied demand for petroleum products over the last four-week period has averaged 18.3 million barrels a day, down by 6.6% compared to the similar period last year

In the currency market on Wednesday, the dollar rallied after the Federal Reserve left interest rates unchanged and said it will continue to buy Treasurys and other securities as previously announced. The dollar index, which measures the strength of the dollar against a basket of six other currencies, rose as much as 0.8%. Federal Reserve policy makers began a two-day meeting yesterday. The central bank has held its benchmark interest rate near zero since December.

Also at the Nymex on Wednesday, July reformulated gasoline fell 5 cents to end at $1.843 a gallon and July heating oil dropped 3.10 cents to finish at $1.738 a gallon.

July natural gas futures fell 11.80 cents to end at $3.761 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 July delivery closed at Rs 3,335/barrel, lower by Rs 6 (0.18%) against previous day's close. Natural gas for July delivery closed at Rs 190.2/mmbtu, lower by Rs 5.6/mmbtu (2.8%).

FIIs continue selling

Outflow of Rs 601.20 crore on 24 June 2009

Foreign institutional investors (FIIs) sold shares worth a net Rs 601.20 crore on Wednesday, 24 June 2009, slightly lower than Rs 658.20 crore on Tuesday, 23 June 2009.

FII outflow of Rs 601.20 crore on 24 June 2009 was a result of gross purchases Rs 1,602.90 crore and gross sales Rs 2,204.10 crore. The BSE Sensex rose 98.72 points or 0.69% to 14,422.73 on that day.

FII inflow in June 2009 totaled Rs 2,964 crore (till 24 June 2009). FII inflow in calendar year 2009 totaled Rs 24,283.40 crore (till 24 June 2009).

There are a total of 1668 foreign funds registered with the Securities & Exchange Board of India (Sebi)

Inflation continue to be in negative zone for the second week of June 09

Higher CPI quash benefits of WPI

The official Wholesale Price Index for all commodities for the week ended 13 June 2009 rose by 0.6% to 234.2 from 232.7 for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at -1.14% for the week ended 13 June 2009 as compared to -1.61% for the previous week and 11.80% during the corresponding week of the previous year.

All the major components of WPI recorded an increase from their previous week level. The index of primary articles rose by 0.1% to 256.3 from 256.0 for the previous week. Index of food and non-food articles move up from their pervious week levels. The index for food articles group rose by 0.2% to 251.2 from 250.8 for the previous week due to higher prices of tea and jowar (2% each) and arhar (1%). However, the prices of bajra (4%) and eggs (2%) declined. While index for non-food articles group also rose marginally to 236.0 from 235.9 for the previous week due to higher prices of raw jute (2%) and raw silk and rape & mustard seed (1% each).

The index for fuel, power, light and lubricant rose by 0.4% to 327.5 from 326.2 for the previous week due to higher prices of aviation turbine fuel (12%), light diesel oil (10%), furnace oil (3%) and naphtha (1%).

The major driver of WPI index, manufactured product rose by 1.0% to 205.8 from 203.8 for the previous week. The index for textiles, rubber and plastic products, chemicals and chemical products, transport equipment and parts rose from their previous week level. The index for textiles group rose by 0.7 % to 142.7 from 141.7 for the previous week due to higher prices of other cotton yarn and cotton yarn-'hanks (2% each) and cotton yarn-cones and synthetic yarn (1% each). The index for chemicals and chemical products group rose by 4.8 % to 228.2 from 217.7 for the previous week due to higher prices of capsules other than vitamin & antibiotics (58%) and liquid chlorine (1%).

However among manufactured product the index for food products, beverages tobacco and tobacco products, non-metallic mineral products, basic metals alloys and metal products, machinery and machine tools declined from their previous week levels.

Looking at the rise in all major indices of WPI, the plunge in WPI, only have a statistical significance. The higher base has led to a fall in WPI. However in real terms the situation is quite different. The soaring food prices, have put pressure on the daily consumption basket, reflected in the rising CPI. In addition to this the rise in CPI for May month is the highest in more in 13 years. It is the first time in more than a decade that consumer inflation in May has crossed the 10%-mark for the month. Point to point rate of inflation based on the CPI-AL and CPI-RL increased from 9.09% in April 2009 to 10.21% during May 2009.

Surge in CPI neutralises the effect of lower WPI for end users and is adding stress on expansionary monetary policy as well. The rise in CPI put ceiling on further softening of the key interest rate. In addition to this, lower monsoon forecast by India Meteorological Department (IMD) raised the concern for Kharif output. IMD downgraded rainfall over the country as a whole in the month of July 2009 which is likely to be 93% compared with 96% of its Long period average (LPA) and that in the month of August is likely to be 101% of LPA both with a model error of 9 %. The dismal expectation about the monsoon adversely affects the production of major crops like paddy, jawar, maize, groundnut, sugarcane, cotton, and soyabean. The worsen output of all these factors led to increase in the price level of agri products, which will push WPI and CPI index on elevated level.

News Flash

India Wholesale Prices Decline for Second Consecutive Week as Demand Slows India’s wholesale prices declined for a second straight week as demand slowed in an economy growing at the weakest pace in seven years.

Singh May Struggle to Achieve 9% Economic Growth as Monsoon Rains Falter India’s Prime Minister Manmohan Singh may find it hard to return Asia’s third-largest economy to 9 percent growth as insufficient rains reduce harvests.

Rupee Declines, Reversing Earlier Gain, on Speculation Importers Selling India’s rupee fell, reversing earlier gains, on speculation importers such as Indian Oil Corp., the nation’s largest refiner, were buying foreign exchange to settle month-end bills.

Sensitive Index Falls on India Monsoon Concern; Hindustan Unilever Drops Indian stocks fell as Hindustan Unilever Ltd. led declines by companies relying on rural sales after an official predicted lower rainfall.

India Raises Sugar Cane Prices Paid to Farmers to Boost Plantings, Output India, importing sugar for the first time in three years, raised the price of cane it pays farmers by 33 percent to stem a decline in production and cut reliance on overseas purchases.

Tata Steel Turns to Fourth-Quarter Loss as Production Drops at Corus Unit Tata Steel Ltd., India’s biggest producer, swung to a loss in its fourth quarter after incurring costs to reorganize operations at its U.K. unit Corus.

Lanka IOC to Spend $30 Million to Double Retail Outlets as Civil War Ends Lanka IOC Plc, a unit of India’s largest oil refiner, plans to spend $30 million to double the number of its retail outlets and benefit from a revival in the South Asian island’s economy after the end of the civil war.

Indian Budget Deficit May Widen to Highest in 19 Years, Credit Suisse Says India’s budget deficit may widen to a 19-year high as the government borrows more to compensate for dwindling tax receipts, according to Credit Suisse Group AG.

U.S. Stocks Gain, Led by Energy, Retail Shares; Bed Bath & Beyond Climbs U.S. stocks advanced for a third day as better-than-estimated earnings at Bed Bath & Beyond Inc. lifted retailers and higher oil prices triggered gains in energy shares, overshadowing an unexpected jump in jobless claims.

Bernanke Says Central Bank Acted With `Highest Integrity' in Merrill Deal Federal Reserve Chairman Ben S. Bernanke said the central bank acted with the “highest integrity” in talks on Bank of America Corp.’s takeover of Merrill Lynch & Co., defending his record against some lawmakers who have alleged officials’ actions were inappropriate.

Bank of America to Post Loss as It Builds Reserves, Citigroup Analyst Says Bank of America Corp. will post a second-quarter loss as it builds reserves to cushion defaults on credit cards and consumer loans, Citigroup Inc. analyst Keith Horowitz said.

Banks Fight Obama's Planned Consumer Agency to Shield Rising Fee Revenue U.S. banks are fighting the Obama administration plan to create a consumer agency for financial services as they seek to protect fees, such as credit-card penalties that have almost doubled to $19 billion in five years.

Stanford Judge Weighs Bail for Texas Financier Accused of $7 Billion Fraud A bail hearing for R. Allen Stanford, the Texas financier accused of swindling investors in a $7 billion Ponzi scheme, has begun in Houston.

source: Bloomberg

Insurance industry defends itself on high commissions

Already on the back foot for high costs, insurance firms have said they are loaded with high capital requirements. Speaking at a round-table discussion on the life insurance sector's contribution to the Indian economy, SB Mathur, secretary general of the Life Insurance Council (a self regulatory body of life insurance companies) said, "The assets under management of life insurance companies as on March 2009, excluding LIC, is Rs 1,18,400 crore, which is supported by a capital of Rs 24,833 crore."

"On the other hand, mutual funds with assets under management of Rs 4,17,300 crore as on March 2009 are supported by a capital of approximately Rs 3000 to Rs 4000 crore. The insurance business is highly capital intensive with promoters required to infuse capital regularly for several years," said Mathur.

Referring to high commissions on insurance policies, Mathur said, "Not all products have 40 per cent first-year commission. The commission varies according to the type and tenure of the product. The total premium of the industry has grown 8 times while commissions have grown only 5 per cent."

source: Hindustan Times

Ulips to be simplified, standardised

After a long delay, the controversial Unit Linked Insurance Plans (Ulips) known for their complex charge structures, names and jargon, are set to come under common standards. The Life Insurance Council (a self-regulatory body of 22 life insurance companies) has decided to standardise the formula to calculate charges linked to Ulips and also make uniform the nomenclature of charges, to enable customers to make easier comparisons between policies and plans.

At present, insurers use different terminologies and have divergent methods of deducting charges. Often, buyers have complained that this makes the task of selection more complicated for them.

Speaking at an industry round-table, SB Mathur, the council's secretary-general, said, "We have initiated an exercise to standardise the nomenclature and have a common method for calculating the charges. This will make it easier for buyers to compare products across companies.""We have also proposed to the insurance regulator that the benefit illustration also give the internal rate of Return (IRR) on a product," he said. Ulips are insurance-cum-investment products where a part of the premium goes towards a life insurance cover while the rest is invested in equities or government securities, as preferred by a policyholder.

source: Hindustan Times

Tata MF files an offer document with Sebi

Plans to launch Money Market Fund

Name of Fund: Tata Money Market Fund

Scheme: An open ended money market scheme

Investment Objective: The investment objective is to create a highly liquid portfolio of money market instruments so as to provide reasonable returns and high liquidity to the unitholders.

Investment Options: The scheme will offer institutional and retirement funds plan with growth and dividend option. The dividend option will have dividend re-investment, fortnightly dividend (payout/re-investment) option and monthly dividend option (payout/ re-investment)

Asset Allocation: The scheme shall generally be invested its entire corpus in money market securities with low risk profile. No investments will be made in securitised and other debt instruments.

The scheme shall make investment in / purchase debt and money market securities with maturity upto 91 days only.

NFO price: Rs 10 per unit

Load structure: The scheme will not charge any entry nor exit load.

Minimum Investment Amount: The minimum investment amount under the institutional plan is Rs 1 crore per application and in multiples of Re 1 thereafter. And the minimum investment amount under the retirement plan is Rs 10000 and in multiples of Re 1 thereafter.

Minimum Target amount: The Fund seeks to collect a minimum targeted amount of Rs 2 crore during NFO.

Benchmark Index: CRISIL Liquid Fund Index.

Fund Managers: Chintan Mehta will manage the fund.

Sahara Super 20 Fund Floats on

NFO period from 25 June-23 July 2009

Name of Fund: Sahara Super 20 Fund

Scheme type: The scheme is an open-ended growth scheme

New Fund Offer Opens on: 25 June 2009

New Fund Offer Closes on: 23 July 2009

Investment Objective: The investment objective of the scheme would be to provide long-term capital appreciation by investing in predominantly equity and equity related securities of around 20 companies selected out of the top 100 largest market capitalization companies, at the point of investment.

Investment Options: The scheme offers growth option and dividend option. The dividend option offers dividend re-investment facility.

Asset Allocation: The fund will invest up to 65-100% in equity and equity related instruments belonging to top 100 stocks by market capitalization at the time of investment. While the endeavor of the scheme would be to construct a portfolio of 20 stocks, at times the portfolio may comprise of more/less than 20 stocks owing to certain market conditions with high-risk profile. Up to 35% exposure will be in debt and money market instruments including securitised debt with low to medium risk.

Investments will be in foreign equity and equity related securities, ADRs/GDRs up to 20% of the corpus. Investment on securitized debt will not normally exceed 50 % of the debt component of the scheme. The Fund will predominantly invest only in those securitization issuances, which are of investment grade, at the time of making an investment.

Face Value: Rs 10

Entry Load: The scheme will charge an entry load of 2.25%.

Exit Load: For investments of less than Rs 1 crore, no exit load will be charged. For investment of equal to or more than Rs 1 crore the fund carries 1.00% an exit load if redeemed on or before 1 year from the date of allotment of units. If redeemed beyond 1 year from the date of allotment, the scheme will not ask exit load.

Minimum Investment Amount: The minimum investment amount for the scheme is Rs 5000 and in multiple of Re 1 thereafter.

Minimum Target amount: Rs 1 lakh

Benchmark index: S & P CNX Nifty.

Fund Manager: Mr. A. N. Sridhar

Mutual funds step up buying

Purchases worth Rs 389.30 crore on 24 June 2009

Mutual funds (MFs) bought shares worth a net Rs 389.30 crore on Wednesday, 24 June 2009, much higher than Rs 81.90 crore on Tuesday, 23 June 2009.

MFs' net inflow of Rs 389.30 crore on 24 June 2009 was a result of gross purchases Rs 886.90 crore and gross sales Rs 497.60 crore. The BSE Sensex rose 98.72 points or 0.69% to 14,422.73 on that day.

MFs were net sellers of shares worth Rs 117.20 crore in June 2009 (till 24 June 2009).

The selling by mutual funds was despite fresh inflows into equity schemes. Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India.

India, China to propel the next recovery

Recession may be crippling economies across the globe especially those of the developed world, but the BRIC countries (Brazil, Russia, India, China) appear to be on track to recovery. Does this mean that these four nations are in a sense decoupled from the developments in the West? Maybe not, as the slowdown in these economies have made clear.

However, the Economist has something interesting to report in that the business cycles of America and Europe (which have converged) and those of India and China (which have converged) have decoupled. Not only that, these nations are not as dependent on exports as they are believed to be (in comparison to the other developing countries) and in fact, have a large domestic market to turn to if the export markets slow down. Further, the financial systems of the BRIC nations are not as liberalized as that in the developed world, which has proved to be a blessing in disguise as the global financial crisis has shown. Moreover, their governments have also increased government spending and loosened monetary policy all of which is expected to be beneficial. Thus, it is apparent that the clout of Brazil, Russia, India and China has increased considerably and the likely possibility of them having a major say in global matters can certainly not be ruled out.

Source: The Economist

Moreover, the Organisation for Economic Co-operation and Development (OECD), the club of developed countries is pinning its hope on the BRIC countries to power the next recovery. However, we remain cautious of any claims that the developing countries can manage to remain isolated from the world economy and grow on their own. Investors burnt their fingers really badly the last time such claims were made not so long ago.

Crude climbs up

Crude prices rise as crude inventories are expected to fall

Crude prices at Nymex once again crawled above the $69 mark on Tuesday, 23 June, 2009. Prices rose today as traders anticipated that tomorrow's inventory report will show drop in crude inventories for last week. The weak dollar also pushed up crude price.

On Tuesday, crude-oil futures for light sweet crude for July delivery closed at $69.24/barrel (higher by $1.74 or 2.6%). Last week, crude ended lower by 3.3%.

Crude had ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 53% since then. Year to date, in 2009, crude prices are higher by 38.2%.

Traders are anticipating that tomorrow's weekly inventory data to show that U.S. commercial crude stocks dropped 1.2 million barrels for the week ended 19 June.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell as much as 1.3%. Federal Reserve policy makers began a two-day meeting today. The central bank has held its benchmark interest rate near zero since December.

Also at the Nymex on Tuesday, July reformulated gasoline rose 3.35 cents, or 1.8%, to $1.8932 a gallon and July heating oil gained 4.15 cents, or 2.4%, to $1.769 a gallon.

July natural gas futures sank 5.4 cents, or 1.4%, to $3.879 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 July delivery closed at Rs 3,341/barrel, higher by Rs 52 (1.6%) against previous day's close. Natural gas for July delivery closed at Rs 195.8/mmbtu, lower by Rs 2/mmbtu (1%).

Precious metals shine

Gold and silver rise as dollar sheds yesterday's gains

Precious metals registered modest gains at USA on Tuesday, 23 June, 2009. The weak dollar increased the appeal of precious metals as a hedge against inflation thereby pulling their prices up.

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 Tuesday, gold for August delivery ended at $924.3, higher by $3.3 (0.3%) an ounce on the New York Mercantile Exchange. During intra day trading, it earlier rose as high as $927.30 and dropped to a low of $913.20. Last week, gold ended lower by 0.5%. Year to date, gold prices are higher by 6.5%.

Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Tuesday, Comex silver futures for July delivery rose 14 cents (1%) at $13.85 an ounce. Last week, silver ended lower by 4.5%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 26.7% this year. For 2008, silver had lost 24%.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell as much as 1.3%.

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

At the MCX, gold prices for August delivery closed lower by Rs 23 (0.15%) at Rs 14,485 per 10 grams. Prices rose to a high of Rs 14,510 per 10 grams and fell to a low of Rs 14,410 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 35 (0.15%) higher at Rs 22,297/Kg. Prices opened at Rs 22,215/kg and fell to a low of Rs 22,074/Kg during the day's trading.