'MFs may head for consolidation as novices face test'

The mutual fund industry is likely to see consolidation earlier than expected, as many new entrants may not be able to withstand the financial stress arising from the need for higher investments, rising expenses and the importance of organized channels for distribution, says a report by consulting firm Mckinsey & Co.

The report says the new Sebi regulations have the potential to transform the asset management landscape both for AMCs and distributors.

Last month, the market regulator abolished the system of entry load from August 1, and decreed that distributors should collect their commissions directly from the investors.

This is expected to strain the profitability of both asset management companies as well as distributors. According to the Mckinsey report, portfolio management services and alternates will grow faster as the affluent/HNI segment grows and AMCs/distributors also push higher margin products. Within equity, the prevalence of closed-ended fund structures will increase, with AMCs trying to keep the churn ratio to the minimum.

Industry experts, however, believe well-positioned players should not lose sight of the opportunities presented by the new regulation, which could catalyse multiple innovations in business models for distributors as well as AMCs.

On the charge structure and the subsequent shift in dynamics, banks and national distributors (NDs) are seen as better positioned to charge customers, given their control over a larger share of customer wallet across multiple products (e.g., deposits, broking) and also their wealth management platform.

“For some, it presents an opportunity to move from transaction-led pricing to an advisory-led pricing model. This would mean adopting a ‘relationship value’ view of customers and charging them on their overall AUM, rather than on a per MF transaction basis. In parallel, the retail customer segment may evolve towards transaction-based charges for mutual fund purchase and redemption. These may be ‘tiered’, depending on ticket size, very much in the way banks currently charge for other services such as draft issuance,” the report said.

Amongst independent financial advisors (IFAs), only the bigger IFAs, with the ability to deliver enhanced service and advice to customers, are expected to be able to charge the customers. However, the smaller IFAs may not be able to charge anything to customers on an average. Hence, the impact of the regulation on distributor economics may be the greatest on IFAs, especially smaller IFAs, who act as a transaction intermediary rather than an investment advisor. Unless compensated by higher volumes, IFA revenues could be impacted to the extent of 30% revenue loss in the worst scenario.

The asset management industry in India in FY08-09 saw assets under management (AUM) declining by approximately 17% compared with year-on-year growth of approximately 50% between FY03 and FY08.

“The capital markets decline and consequent preference for debt and liquid funds resulted in a significant shift in the product mix, with the proportion of debt and liquid funds increasing significantly in FY09. Retail debt and liquid proportion increased from 23-40% between FY08 and FY09, and institutional debt and liquid proportion increased from 86-91% in the same period. Industry profitability, measured as basis points of average AUM, dropped from approximately 22 bps to approximately 14 bps, putting significant pressure on asset management companies,” the Mckinsey report said.

source: ET

Longer lock-in for Ulip funds

In an attempt to make policyholders stay invested in unit-linked insurance plans (Ulips) for a longer period, the insurance regulator may increase the lock-in period for the investment to five years from the current three.

"Yes, we are looking at increasing the lock-in period of Ulips to 5 years. In another two months, we will announce the decision," R. Kannan, member (actuary), of the Insurance Regulatory and Development Authority (IRDA), told Hindustan Times.

"In the latest circular on capping of charges, we have already asked insurers to pay the entire fund value to a policyholder after the fifth year of the policy," he added. IRDA issued a clarification two weeks ago saying that no surrender charge can be levied by an insurer after a policy completes five years.The CEO of an insurance company said, "The move is good as policyholders will earn higher return and the expenses of an insurance company will be spread over a period of 5 years." Around 80 per cent of the new business premium for insurance companies comes from Ulips and the rest from traditional plans.

source: HT

Higher lock-in for ULIPs seen helping tax funds

India's tax funds are poised to improve market share as the proposed hike in lock-in period for rival unit-linked insurance plans (ULIPs) make mutual funds the most liquid equity tax-saving instrument.

However, a large scale shift from ULIPs to mutual funds is unlikely immediately as advisers continue to promote insurance products which earn double-digit commissions on at least the first premium as against about 50-100 basis points from funds.

India's insurance regulator is considering a plan to increase the lock-in period for investments under ULIPs to five years from three years now, said R. Kannan, member actuary of Insurance Regulatory and Development Authority.

"Probably in another one month we will do this job," he told Reuters, adding the change should make ULIPs a better long-term investment vehicle.

However, the step would reduce liquidity of ULIPs, which analysts see working in favour of tax planning mutual funds, popularly known as equity linked savings scheme (ELSS), that will continue to offer a three-year lock-in.

"ELSS products will become more competitive in a way, in terms of returns, costs and holding period," said Chintamani Dagade, senior research analyst at Morningstar India, adding that such funds will attract more inflows.

"That's a good thing to happen to (fund) industry," he added.

ULIPs, which combine investment and insurance, have emerged as a popular investment product offering market-linked returns.

These plans, launched in 2001, have been the favourite of insurance seeking investors who wanted to ride the stock market, and among insurance advisers for their higher commissions.

This was evident from the success of the insurance industry when firms rode a surge in the equity market until 2007 as household savings were increasingly diverted into ULIPs, swelling insurers' new business premiums.

However, of late, the insurance regulator has initiated steps to moderate the rush to sell ULIPs. Earlier, on Aug. 20, it directed insurers not to charge any fees on surrender of such plans after five years, and in July it imposed a ceiling on some charges that ULIPs would levy from October onwards.

A higher lock-in will reduce their attractiveness, at least among savvy investors, but reversing the trend will not be easy for mutual funds, particularly after a recent regulation that restricts them from paying upfront fee to agents.

"Mainly because of the commission issues, ULIPs will be targeted by distributors... it's a sellers' market," said Dagade.

source: Reuters

MY COMMENTS -

Very well said about ELSS funds. But, if one goes by the new tax code proposal w.e.f April, 2011 - The Sec. 80/C benefit on Mutual Funds (ELSS, Pension Funds) would be no more available for investors which i feel is ULIPs favor move by government for the cause of increase in importance of Insurance & Long Term Equity.

Thought, of government is indeed very good but the one who looses is the investor. Now, from one hand the government is giving some benefit at the cost taken back from investor itself. Caution should be exercised by the government.

Indeed it is good for economy but is it fair with the investor. Let's see what happens as further things emerge.

Crude registers healthy weekly gains

Price pare earlier losses and register marginal gains

Crude prices erased earlier losses and ended higher for the day on Friday, 28 August, 2009. Prices crawled up today following some hopes about current economic scenario from the latest economic data.

On Friday, crude-oil futures for light sweet crude for October delivery closed at $72.74/barrel (higher by $0.25 or 0.3%). During intra day trading, crude fell to a low of $71.58 and also rose to a high of $73.3/barrel. For the week, crude ended higher by 9.5%. It was the biggest weekly gain for crude in three months.

For the month of July, 2009, crude ended lower by a marginal 0.6%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

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 48.8%.

Among economic reports expected on Friday, data showed that U.S. personal incomes were unchanged in July as consumer spending increased 0.2%, led by higher outlays for autos and other durable goods. In a separate report, the University of Michigan/Reuters survey showed that U.S. consumer sentiment improved in late August, but not by enough to exceed the reading from July, 2009.

EIA reported earlier during the week that U.S. crude inventories rose 200,000 barrels in the week ended 21 August, as imports jumped 14% from the prior week. In the weekly report, the EIA also reported gasoline stockpiles fell 1.7 million barrels last week while distillate fuels, which include diesel and heating oil, rose 800,000 barrels.

The report also detailed that total gasoline supplied, an implied gauge of demand for the fuel, fell 1.1% from a week ago to 9.1 million barrels a day. But total petroleum products supplied rose slightly, to 19.5 million barrels a day, as small increases in jet fuel and residual oil demand offset the decline in gasoline.

Also at the Nymex on Friday, September reformulated gasoline gained slightly to $2.0703 a gallon and September heating oil edged up to $1.8625 a gallon.

On Friday, natural gas for October delivery, the new front-month contract, fell 15.1 cents, or 4.7%, to $3.054 per million British thermal units. The EIA reported one day before that gas in storage rose by 54 billion cubic feet to stand at 3.258 trillion cubic feet during the week ended 21 Aug, 2009. Gas stockpiles were 516 billion cubic feet higher than last year at this time and 500 billion cubic feet above the five-year average.

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

Precious metals register good weekly gains

Depressed economic reports make precious metals shine

Precious metal prices rose on Friday, 28 August, 2009. Prices rose as depressed economic data increased the appeal of precious metals as a hedge against inflation.

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 December delivery ended at $958.8, higher by $11.5 (1.4%) an ounce on the New York Mercantile Exchange. For the week, gold ended higher by almost 0.4%. Year to date, gold prices are higher by 8.2%.

Gold ended July, 2009 higher by 2.8%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had 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 (7.1%) since then.

On Friday, Comex silver futures for September delivery rose by 56.4 cents (4%) to $14.784 an ounce. For the week, silver ended higher by 4.3%.

Silver ended 2.7% higher for July, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 31.8% this year. For 2008, silver had lost 24%.

Among economic reports expected on Friday, data showed that U.S. personal incomes were unchanged in July as consumer spending increased 0.2%, led by higher outlays for autos and other durable goods. In a separate report, the University of Michigan/Reuters survey showed that U.S. consumer sentiment improved in late August, but not by enough to exceed the reading from July, 2009.

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

FIIs continue buying equities

Inflow of Rs 1092.70 crore on 28 August 2009

Foreign institutional investors (FIIs) continue to make a beeline for Indian stocks. As per the data posted on the Securities & Exchange Board of India (Sebi) website, foreign funds mopped up equities worth a net Rs 1092.70 crore on Friday, 28 August 2009. The inflow was, however, lower than Rs 1342.80 crore on Thursday, 27 August 2009.

The net FII inflow of Rs 1092.70 crore on 28 August 2009 was a result of gross purchases Rs 2574.30 crore and gross sales Rs 1481.50 crore. The BSE Sensex had jumped 141.27 points or 0.9% to 15922.34 that day, its highest closing since 3 August 2009.

A solid surge in global risk appetite triggered by hopes that the global economy is recovering from a financial crisis, has boosted inflow of foreign funds in India. The cumulative FII inflow totaled Rs 40284 crore in calendar 2009 (till 28 August 2009). FIIs had pulled out Rs 29311.50 crore in the corresponding period last year.

Q1 June 2009 GDP at 6.1%

From 5.8% in Q4 ended March 2009

India's economic growth rose by 6.1% in the June 2009 quarter fuelled by four stimulus packages, government data released a little while ago showed. The country's gross domestic product expanded 5.8% in the March 2009 quarter.

Finance Minister Pranab Mukherjee last week said Asia's third-largest economy could grow around 6% in the year ended March 2010, lower than the 6.7% growth in the year ended March 2009 and after expanding 9% or more in the previous three fiscal years.

The prime minister's economic adviser, C Rangarajan, expects the economy to grow at 7-8% in 2010-11.

News Flash

India's Economy Expanded 6.1% Last Quarter, First Acceleration Since 2007 India’s economic growth accelerated for the first time since 2007, indicating the global recession’s impact on Asia’s third-largest economy is waning.

Singh's 100-Day Stock Rally Best Since 1991 as Sensex Set to Extend Gains Indian stocks rose more in the first 100 days of Prime Minister Manmohan Singh’s leadership than under any new government since 1991. Investors predict more gains as he opens up the world’s second-fastest growing economy.

Tata Motors Turns to First-Quarter Loss as Jaguar Land Rover Sales Plunge Tata Motors Ltd., the Indian truckmaker that owns Jaguar Land Rover, posted a consolidated first-quarter loss after sales at the luxury unit plunged amid the global recession.

Benchmark Sensex Index Declines; Larsen & Toubro Drops on Growth Concerns India’s stocks fell, ending a seven- day 7.5 percent rally, after the rupee fell and bonds dropped on renewed concerns the weak monsoon rainfall may derail economic growth. Metals producers sank after commodities’ prices declined.

India Bond Futures Get `Healthy' Reception in Second Try on Inflation Risk India’s second attempt in six years to start a bond futures market got a “healthy” reception as investors sought to protect debt holdings from looming inflation, Standard Chartered Plc and HSBC Holdings Plc said.

Citigroup Seeks `New Blood' for Asian Commodity Team as Oil, Metals Rally Citigroup Inc. plans to expand its commodity team in Asia at a “double-digit” pace in a bid to capitalize on rising demand for raw materials as the global economic recovery boosts metals and energy prices.

Rupee Completes Biggest Monthly Slide Since February as Stocks Deter Funds India’s rupee completed its worst month since February as Asian equity losses fueled concern global funds will pull money out of the region.

Vale, Tata Studying Coal-Mining Prospects in Mozambique, Governor Says Vale SA, the world’s biggest iron- ore producer, and Tata Steel Ltd., India’s largest steelmaker, are involved in coal-mining viability studies in northern Mozambique, a government official said.

Disney to Acquire Marvel for $4 Billion, Gaining Spider-Man, X-Men Series Walt Disney Co. said it agreed to buy Marvel Entertainment Inc. for about $4 billion in a stock and cash transaction, gaining comic-book characters including Iron Man, Spider-Man and Captain America.

Stocks Drop Worldwide, Led by China on Earnings; Yen Gains on DPJ Victory Stocks retreated from Shanghai to New York on speculation the six-month rally has outpaced prospects for earnings growth. The yen strengthened after yesterday’s landslide election victory by the Democratic Party of Japan.

Baker Hughes Buys BJ Services for $5.5 Billion, Adds to Oilfield Business Baker Hughes Inc., the world’s third-largest oilfield-services provider, agreed to buy BJ Services Co. for $5.5 billion to expand its unconventional natural-gas, deepwater and pressure-pumping businesses.

Dudley Says Fed Can Avoid More Rapid Inflation, Sees No Need to Cut Buying New York Federal Reserve Bank President William Dudley said the Fed has the tools to prevent inflation from accelerating and doesn’t need to begin trimming its balance sheet.

Qatar Holding Said to Be Seeking to Double Its Stake in Songbird Estates Qatar Holding LLC, a unit of the Persian Gulf country’s sovereign wealth fund, plans to increase its stake in Songbird Estates Plc to almost 30 percent by buying new shares issued by Canary Wharf’s biggest landlord, two people familiar with the transaction said.

Shipping Rates May Drop 50% as China Cuts Coal Imports Amid Fleet Overrun Just as global trade starts to recover, the shipping market is crashing for the second time in a year as China reduces raw-material imports and record numbers of new vessels set sail.

source: Bloomberg

Mutual funds' buying in equities slows down

Purchases worth Rs 16.80 crore on 27 August 2009

Mutual funds (MFs) bought shares worth a net Rs 16.80 crore on Thursday, 27 August 2009, lower than Rs 83.90 crore on Wednesday, 26 August 2009.

MFs' net inflow of Rs 16.80 crore on 27 August 2009 was a result of gross purchases Rs 1297 crore and gross sales Rs 1280.20 crore. The BSE Sensex rose up 11.22 points or 0.07% to 15,781.07 on that day.

MFs bought shares worth a net Rs 592.10 crore in August 2009 (till 27 August 2009). MFs had bought shares worth a net Rs 1825.50 crore in July 2009.

UTI MF Declares Dividend for Banking Sector Fund

Record date for dividend is 4 September 2009

UTI Mutual Fund has announced the declaration of dividend on the face value of Rs 10 per unit under dividend option of UTI Banking Sector Fund. The record date for dividend has been fixed as 4 September 2009.

The quantum of dividend will be 22% i.e. Rs 2.20 per unit on the face value as on the record date. The NAV of the scheme was at Rs 18.86 per unit as on 27 August 2009.

UTI Banking Sector Fund is an open end equity oriented scheme, which has the investment objective of capital appreciation through investments in the stocks of the companies/institutions engaged in the banking and financial services activities.

HDFC Banking and Financial Services Fund files offer document with Sebi

An open-ended equity scheme

HDFC Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch HDFC Banking and Financial Services Fund, an open-ended equity scheme. The new fund offer (NFO) price for the scheme is Rs 10 per unit.

The investment objective of the scheme is to generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities of companies engaged in banking and financial services.

The scheme shall offer growth and divided option. Dividend option offers divided payout and dividend re-investment facility.

The scheme would invest 65% to 100% of asset in equity and equity related securities of companies engaged in banking and financial services, with a risk profile of medium to high. The scheme would invest 0% to 35% of asset in equity and equity related instruments of companies other than banking and financial services, with a risk profile of medium to high. The scheme may invest 0% to 35% of asset in debt and money market instruments including investments in securitized debt, with low risk profile. Investment in securitized debt shall not exceed 20% of the net assets of the scheme.

Entry load charge is not applicable for the scheme. In respect of each purchase / switch-in of units, an exit load charge of 1% is payable if the units are redeemed / switched-out within 1 year from the date of allotment. No exit load is payable if units are redeemed / switched-out after 1 year from the date of allotment.

Minimum application amount for purchase will be Rs. 5000 and any amount thereafter. For additional purchase the amount will be Rs. 1000 and any amount thereafter.

The minimum subscription (target) amount of Rs. 1 crore is expected to be raised during the NFO period of HDFC Banking and Financial Services Fund.

The Scheme's performance will be benchmarked against BSE Bankex Index.

The fund managers of the scheme will be Vinay R. Kulkami and Anand Laddha.

ING MF Declares Dividend For Midcap Fund

Record date for dividend is 4 September 2009

ING Mutual Fund has announced the declaration of dividend under dividend option of ING Midcap Fund. The record date for dividend is 4 September 2009.

The quantum of dividend will be 20% on the face value of Rs 10 per unit as on the record date. The NAV of the scheme was at Rs 15.08 per unit as on 27 August 2009.

ING Midcap Fund is an open ended equity scheme, which seeks to provide long-term growth of capital at controlled level of risk by investing primarily in Mid-cap stocks. The level of risk is somewhat higher than a fund focused on large and liquid stocks. Concomitantly, the aim is to generate higher returns than a fund focused on large and liquid stocks.

Sundaram BNP Paribas MF declares dividend

Record date for dividend is 4 September 2009

Sundaram BNP Paribas Mutual Fund has declared 4 September 2009 as the record date for declaration of dividend under the dividend plan of Sundaram BNP Paribas Select Mid Cap. The fund house has decided to distribute 10% dividend (Re 1 per unit) on the face value of Rs 10 per unit on the record date.

The scheme (dividend option) recorded NAV of Rs 17.6467 per unit as on 28 August 2009.

Sundaram BNP Paribas Select Mid Cap is an open ended equity fund with an investment objective to achieve capital appreciation by investing in diversified stocks that are generally termed as midcaps.

Tata MF Delares Dividend For Tax Saving Fund

Record date for dividend is 4 September 2009

Tata Mutual Fund has announced the declaration of dividend on the face value of Rs 10 per unit in Tata Tax Saving Fund. The record date for dividend has been fixed as 4 September 2009.

The quantum of dividend will be 30% i.e. Rs 3 per unit on the face value as on the record date. The NAV of the scheme was at Rs 44.2941 per unit as on 27 August 2009.

Tata Tax Saving Fund, an open ended equity linked tax saving fund. The objective of the scheme is to provide medium to long term capital gains alongwith income tax relief to its unitholders, while at all times emphasizing the importance of capital appreciation.

JM Arbitrage Advantage Fund to accept fresh purchase of units

With effect from 1 September 2009

JM Financial Mutual Fund has decided to accept the fresh purchases of units including switch-ins and Systematic Investment Plan / Systematic Transfer Plan in JM Arbitrage Advantage Fund with effect from 1 September 2009.

Reliance MF Announces Changes to Regular Savings Fund - Debt Option

With effect from 1 September 2009

Reliance Mutual Fund has decided to revise the maximum investment limit for Reliance Regular Savings Fund - Debt Option, an open ended scheme, with effect from 1 September 2009.

Revised Maximum Investment Limit:

Accordingly the maximum investment amount per investor (across all folios) is Rs 1 crore.

Existing Maximum Investment Limit:

The maximum investment amount per investor (across all folios) is Rs 5 crore.

Reliance MF Announces Change in Fund Manager

With effect from 31 August 2009

Reliance Mutual Fund has decided to appoint Mr. Omprakash Kuckian as the Fund Manager of Reliance Equity Fund, an open ended diversified equity scheme in place of Mr. Sunil Singhania. The change will take effect from 31 August 2009.

Mutual funds step up buying

Purchases worth Rs 65.50 crore on 28 August 2009

Mutual funds (MFs) bought shares worth a net Rs 65.50 crore on Friday, 28 August 2009, higher than Rs 16.70 crore on Thursday, 27 August 2009.

MFs' net inflow of Rs 65.50 crore on 28 August 2009 was a result of gross purchases Rs 971 crore and gross sales Rs 905.50 crore. The BSE Sensex jumped 141.27 points or 0.9% to 15922.34 on that day.

MFs bought shares worth a net Rs 657.60 crore in August 2009 (till 28 August 2009). MFs had bought shares worth a net Rs 1825.50 crore in July 2009.

Crude pares earlier losses

Price rises as the dollar weakens

Crude prices erased earlier losses and ended higher for the day on Thursday, 27 August, 2009. Prices crawled up today following weakness from the US dollar.

On Thursday, crude-oil futures for light sweet crude for October delivery closed at $72.49/barrel (higher by $1.06 or 1.5%). During intra day trading, crude fell to a low of $69.83/barrel. Last week, crude ended higher by 6.1%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

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 48.5%.

In the currency market on Thursday, the dollar index which weighs the value of dollar against a basket of six other currencies fell by 0.2%.

The preliminary second quarter GDP reading showed that the U.S. economy contracted at an annualized rate of 1%, unrevised from the advance reading and better than expected. Consumer spending was revised modestly higher to show a 1.0% decline, which was also a bit better than expected.

EIA had reported yesterday that U.S. crude inventories rose 200,000 barrels in the week ended 21 August, as imports jumped 14% from the prior week. In the weekly report, the EIA also reported gasoline stockpiles fell 1.7 million barrels last week while distillate fuels, which include diesel and heating oil, rose 800,000 barrels.

The report also detailed that total gasoline supplied, an implied gauge of demand for the fuel, fell 1.1% from a week ago to 9.1 million barrels a day. But total petroleum products supplied rose slightly, to 19.5 million barrels a day, as small increases in jet fuel and residual oil demand offset the decline in gasoline.

Also at the Nymex on Thursday, September reformulated gasoline rose 4.88 cents, or 2.5%, to end at $2.0314 a gallon. September heating oil gained marginally to end at $1.8592 a gallon after finishing at $1.8520 on Wednesday.

Natural gas for September delivery dropped 6.70 cents to end at $2.843 per million British thermal units on the Nymex. EIA reported today that gas in storage rose by 54 billion cubic feet to stand at 3,258 Bcf during the week ended 21 August, 2009.

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

At the MCX, crude oil for September delivery closed higher by Rs 12 (0.34%) at Rs 3,504/barrel. Natural gas for September delivery closed lower by Rs 5.1 (3.2%) at Rs 155.1/mmbtu.

Precious metals register mixed end

Gold shines but silver drops little

Precious metal prices ended mixed on Thursday, 27 August, 2009. Gold prices rose today as the dollar slipped. But silver prices fell marginally.

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 December delivery ended at $947.4, higher by $1.6 (0.2%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by almost 0.6%. Year to date, gold prices are higher by 6.8%.

Gold ended July, 2009 higher by 2.8%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had 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 (8.5%) since then.

On Thursday, Comex silver futures for September delivery fell by 3 cents (0.2%) to $14.22 an ounce. Last week, silver ended lower by 3.9%.

Silver ended 2.7% higher for July, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 27.8% this year. For 2008, silver had lost 24%.

In the currency market on Thursday, the dollar index which weighs the value of dollar against a basket of six other currencies fell by 0.2%.

The preliminary second quarter GDP reading showed that the U.S. economy contracted at an annualized rate of 1%, unrevised from the advance reading and better than expected. Consumer spending was revised modestly higher to show a 1.0% decline, which was also a bit better than expected.

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

At the MCX, gold prices for October delivery closed higher by Rs 6 (0.03%) at Rs 15,027 per 10 grams. Prices rose to a high of Rs 15,064 per 10 grams and fell to a low of Rs 14,980 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 94 (0.4%) lower at Rs 23,296/Kg. Prices opened at Rs 23,352/kg and fell to a low of Rs 23,124/Kg during the day's trading.

FII inflow in August 2009 crosses Rs 3000 crore

Inflow of Rs 1342.80 on 27 August 2009

Foreign institutional investors (FIIs) bought shares worth a net Rs 1342.80 crore on Thursday, 27 August 2009, higher than 1036 crore on Wednesday, 26 August 2009.

FII inflow of Rs 1342.80 crore on 27 August 2009 was a results of gross purchases Rs 4109.60 crore and gross sales Rs 2766.80 crore. The BSE Sensex rose up 11.22 points or 0.07% to 15,781.07 on that day.

FII inflow in August 2009 totaled Rs 3022.30 crore (till 27 August 2009). Foreign funds had bought equities worth Rs 11,625.20 crore in July 2009. FII inflow in calendar year 2009 totaled Rs 39,192 crore (till 27 August 2009).

There are a total of 1694 foreign funds registered with the Securities & Exchange Board of India (Sebi).

News Flash

Billionaire Ross Acquires Stake in Satyam After Losing Bid for its Control Billionaire investor Wilbur Ross has acquired the second-largest stake in Satyam Computer Services Ltd.’s U.S.

Maruti Suzuki, Honda Motor Plan India Expansion as Automobile Sales Rise India’s car sales will accelerate this fiscal year as economic growth helps the country withstand a global slump in automobile demand, an industry group said, spurring Maruti Suzuki India Ltd. to increase investment.

Sensex Index Gains for Seventh Day; Bharti, Telecom Companies Lead Advance India’s stock benchmark rose for the seventh day, led by telecom shares and metals producers after the government said it aims to sell high-speed mobile phone service permits and commodities prices advanced.

Sicom Sells 4.8 Percent Stake in Maytas; Stock Surges by Trading Limit Sicom Ltd., a financier of infrastructure projects sold a 4.8 percent stake in Maytas Infra Ltd. over the past two days, exchange data showed.

Honda Motor to Increase Car Output in Indian Plant by 50% From Next Month Honda Motor Co. will increase car production in India by 50 percent from next month due to growing demand.

Emerging-Market Funds Draw Inflows on Export, Growth Optimism, EPFR Says Emerging-market equity funds received net inflows in the week to Aug. 26, rebounding from the biggest outflows in 2009, on optimism improving economic conditions in France, Germany and the U.S. will bolster exports.

India's Supreme Court to Skip Preliminary Hearings in Ambani Gas Case India’s Supreme Court agreed to skip preliminary hearings in the dispute between the billionaire Ambani brothers over the supply of natural gas and set a date for final arguments in the case.

`Strong' El Nino May Push Sugar Prices 15% Higher, Olam CEO Verghese Says Sugar prices may jump 15 percent from current levels should a “moderate to strong” El Nino hit India, the world’s second-largest producer, said Olam International Ltd. Chief Executive Officer Sunny Verghese.

Intel Raises Sales Forecast in Sign Computer Demand Reviving; Shares Gain Intel Corp., the world’s biggest chipmaker, raised its sales forecast for this quarter, adding to evidence that personal-computer demand is recovering.

Confidence Among U.S. Consumers Is Higher Than Forecast on Recovery Signs Confidence among U.S. consumers was little changed this month as reports indicated industries such as housing and manufacturing are stabilizing and the economy is on a path to recovery.

Consumer Spending in U.S. Climbed in July on `Cash for Clunkers' Program Consumer spending in the U.S. rose in July as households took advantage of the government’s “cash for clunkers” program to buy new cars.

Leverage Rising on Wall Street at Fastest Pace Since Credit Froze in 2007 Banks are increasing lending to buyers of high-yield company loans and mortgage bonds at what may be the fastest pace since the credit-market debacle began in 2007.

European Confidence in Economy Jumps More Than Forecast to 10-Month High European confidence in the economic outlook increased twice as much as economists forecast in August, adding to signs the region is emerging from the deepest recession in more than six decades.

Fed May Not Need to Buy All $1.25 Trillion in Approved MBS, Officials Say The Federal Reserve may not need to buy the full $1.25 trillion in mortgage-backed securities the central bank has authorized by year-end, two regional Fed bank chiefs said.

Toyota Shuts First Plant in 72-Year History as GM California Venture Fails Toyota Motor Corp. will shut an assembly plant for the first time in its 72-year history after the failure of a joint venture with General Motors Corp.

source: Bloomberg

Common online platform for MF soon

Mutual Funds may be among the most popular investment products, but the mechanics of investing in them are not very investor friendly. For example, it can take up three days for changes that you make to your portfolio to become effective. To make life easier, the industry is now creating an online platform, but how does it help?

Now, it could take as long as three days to try to switch from units of one fund house scheme to another, but the upcoming mutual fund industry online platform promises to end all that. CB Bhave, chairman of Sebi, said, “In case of the mutual fund industry, we don't have a central database. If you have investments in 15 different schemes then you will get 15 different statements."

The Association of Mutual Funds of India (AMFI) is acting on Bhave's words and plans to launch a common mutual fund platform in six months, with depositories NSDL/CDSL, and mutual fund registrars KARVY/CAMS as partners.The platform will help investors view their entire portfolio on a single portal and switch between schemes of different fund houses. AP Kurian, chairman of AMFI, said, "Our internal target to start operations is March 2010. The other operating platforms will get linked into this. This will be a master platform."

The four partners will share the initial cost, while fund houses will pay for the services on the platform. But the industry isn't complaining as it looks for ways to boost slumping sales and reduce costs. Even more so, after the new norms on entry/exit loads that reduced commissions. Jaideep Bhattacharya, chairman of AMFI panel, Common Industry Platform, said, "If you look at the profits of an Indian AMC, it is 6 bps lower than the world average and we are 4 bps higher when it comes to the global average of costs. So, we have to find a way to reduce costs and a technology platform will do just that."

Meanwhile, for several mutual fund investors, a common database will save a lot of hardships and will mean convenience at the click of a button. For the industry that is desperately looking to lower transaction costs, such a platform could be a game changer, a challenge though would be to set it up in about six months’ time.

source: NDTV Profit

India's household savings up 4.3 pct in 2008/09

India's household financial savings rose a modest 4.3 percent to 7.5 trillion rupees in 2008/09, led by insurance products and relatively safer bank deposits, the Reserve Bank's annual report showed on Thursday.

Savings growth, however, were down from 10 percent during 2007/08, mainly due to investment outflows from mutual funds and government securities as stock market fell during the financial year and federal bond yields rose in the first quarter of 2009.

Bank deposits controlled 58.5 percent of the household savings in 2008/09, up from 52.2 percent from a year ago as investors took shelter in the relative safety of these instruments from volatile stock and bond markets.

A fourth of total household savings went into insurance funds, up from 18 percent during the previous fiscal year ending March 2008.

source: Reuters

Crude drops for second straight day

Price drop as crude inventories rise

Crude prices dropped for second straight day pared on Wednesday, 26 August, 2009. Prices fell today as energy department reported a rise in crude inventories for last week. The strong dollar also impacted crude prices.

On Wednesday, crude-oil futures for light sweet crude for October delivery closed at $71.43/barrel (lower by $0.62 or 0.9%). Last week, crude ended higher by 6.1%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

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 47%.

EIA reported today that U.S. crude inventories rose 200,000 barrels in the week ended 21 August, as imports jumped 14% from the prior week. In the weekly report, the EIA also reported gasoline stockpiles fell 1.7 million barrels last week while distillate fuels, which include diesel and heating oil, rose 800,000 barrels.

The report also detailed that total gasoline supplied, an implied gauge of demand for the fuel, fell 1.1% from a week ago to 9.1 million barrels a day. But total petroleum products supplied rose slightly, to 19.5 million barrels a day, as small increases in jet fuel and residual oil demand offset the decline in gasoline.

In the currency market on Wednesday, the dollar firmed up during the day. The dollar index which weighs the value of dollar against a basket of six other currencies rose by 0.7%.

Also at the Nymex on Wednesday, September reformulated gasoline fell 2.44 cents, or 1.2%, to $1.9826 a gallon and September heating oil fell slightly to $1.852 a gallon.

September natural-gas futures rose 2.1 cents, or 0.7%, to $2.903 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 September delivery closed higher by Rs 19 (0.54%) at Rs 3,523/barrel. Natural gas for September delivery closed lower by Rs 0.4 (0.24%) at Rs 160.2/mmbtu.

Precious metals turn little pale

Prices drop due to the strong dollar

Precious metal prices fell on Wednesday, 26 August, 2009. Prices fell today due to 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 December delivery ended at $945.8, lower by $0.20 (0.02%) an ounce on the New York Mercantile Exchange. During intra day trading, it fell to a low of $941.2. Last week, gold ended higher by almost 0.6%. Year to date, gold prices are higher by 6.5%.

Gold ended July, 2009 higher by 2.8%. Before this, for the second quarter, gold ended higher by 0.5%. The metal had 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 (9%) since then.

On Wednesday, Comex silver futures for September delivery fell by 5.5 cents (0.4%) to $14.255 an ounce. Last week, silver ended lower by 3.9%.

Silver ended 2.7% higher for July, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 28% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the dollar firmed up during the day. The dollar index which weighs the value of dollar against a basket of six other currencies rose by 0.7%.

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

At the MCX, gold prices for October delivery closed higher by Rs 68 (0.45%) at Rs 15,032 per 10 grams. Prices rose to a high of Rs 15,045 per 10 grams and fell to a low of Rs 14,977 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 47 (0.2%) higher at Rs 23,381/Kg. Prices opened at Rs 23,423/kg and rose to a high of Rs 23,546/Kg during the day's trading.

FIIs step up buying

Inflow of Rs 1035.90 on 26 August 2009

Foreign institutional investors (FIIs) bought shares worth a net Rs 1035.90 crore on Wednesday, 26 August 2009, as against a meagre outflow of Rs 53.60 crore on Tuesday, 25 August 2009. e

FII inflow of Rs 1035.90 crore on 26 August 2009 was a results of gross purchases Rs 2812.60 crore and gross sales Rs 1776.70 crore. The BSE Sensex rose 81.38 points or 0.52% to 15,769.85 on that day.

FII inflow in August 2009 totaled Rs 1,679.50 crore (till 26 August 2009). Foreign funds had bought equities worth Rs 11,625.20 crore in July 2009. FII inflow in calendar year 2009 totaled Rs 37,849.20 crore (till 26 August 2009).

There are a total of 1694 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Inflation stood at 0.95%

Growth on week on week basis

The official Wholesale Price Index for 'All Commodities' (Base: 1993-94 = 100) for the week ended 15th August 2009 rose by 0.6% to 238.8 from 237.4 for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at -0.95 % for the week ended 15 August 2009 compared with 1.53% last week and 12.82% during the week ended 6 August 2008.

The index for primary articles group rose by 2.1% to 268.4 from 262.9 for the previous week. In this group, t he index for 'Food Articles' group rose by 3.2% to 270.) from 262.0 for the previous week due to higher prices of fish-inland (25%), eggs (10%), masur (8%), milk and moong (5% each), condiments & spices (4%), fruits & vegetables and jowar (3%), mutton and arhar (2% each) and urad and maize (1% each). However, the prices of fish-marine (9%) declined.

The index for 'Non-Food Articles' group declined by 0.5% to 240.3 from 241.4 for the previous week due to lower prices of groundnut seed (3%). However, the prices of castor seed (2%) and raw rubber, raw silk, rape & mustard seed and cotton seed (1% each) moved up.

The index for fuel and power group remained unchanged at its previous week's level of 338.2.

The index for manufactured group rose by 0.1% to 206.4 from 206.1 for the previous week.

The index for 'Food Products' group rose by 0.7% to 234.2 from 232.5 for the previous week due to higher prices of sugar and khandsari (2% each) and cotton seed oil (1%). However, the prices of gur and salt (1% each) declined. The index for 'Textiles' group declined by 0.1% to 143.6 from 143.7 for the previous week due to lower prices of hessian cloth and hessian & sacking bags (2% each) and texturised yarn (1%).

The index for 'Chemicals & Chemical Products' group rose by 0.2% to 228.0 from 227.5 for the previous week due to higher prices of epoxy resins (72%) and acid (all kinds) (1%). However, the prices of caustic soda (sodium hydroxide) (1%) declined. The index for ' Basic Metals Alloys & Metal Products' group rose marginally to 255.2 from 255.1 for the previous week due to higher prices of steel ingots (plain carbon) and zinc ingots (1% each). The index for 'Machinery & Machine Tools' group declined by 0.1 % to 171.8 from 171.9 for the previous week due to lower prices of hydraulic machine (2%).

India's headline inflation is moving in negative zone but growth on week on week basis has been adding stress on price level and indicating underline price pressure. On other hand consumer price index and food inflation are continuously moving upward along with higher money supply which will push inflation on higher side in long term. At this note , RBI may think of tightening monetary policy.

News Flash

India's Central Bank Signals Higher Borrowing Costs on Inflation Threat India’s central bank indicated it may raise borrowing costs as the “accommodative” policy it started in October threatens to stoke inflation.

Sensex Advances for Sixth Day; Bharti Airtel Leads Gain on Merger Report India’s benchmark stock index rose for a sixth day, its longest winning streak in more than four months. Bharti Airtel Ltd. gained on reports that it may agree to a potential $23 billion merger deal sooner than expected.

Tata Steel Swings to First-Quarter Loss on Production Cuts in Corus Unit Tata Steel Ltd., India’s biggest producer, posted an unexpected loss in its first quarter because of lower prices and production cuts at unit Corus.

India to Complete 3G Wireless Spectrum Auction in 3 Months, Minister Says India, the world’s second-largest mobile-phone market by users, aims to complete an auction of licenses for high-speed wireless services within three months, Communications Minister Andimuthu Raja said.

UBS Sets India's Sensex Index Target at 20,000 by March 2011 on Economy India’s Bombay Stock Exchange Sensitive Index may rise to 20,000 by March 2011, helped by a recovery in the economy and company earnings, UBS AG said.

Harley-Davidson to Start Selling Motorcycles in India as U.S. Growth Slows Harley-Davidson Inc., the biggest U.S. motorcycle maker, plans to start sales in India from next year as it seeks growth in emerging markets to offset a slump in domestic demand.

Monsoon Rains in India 5% Below Average in Week Ended Aug. 26, Bureau Says India’s monsoon rainfall, the main source of irrigation for the nation’s 235 million farmers, was above average in most parts of the country, helping crops of rice, sugar cane and soybeans reeling from moisture stress.

India Swaps Exaggerate Risk of 2009 Central Bank Rate Increase, DBS Says India’s swap rates are exaggerating the risk of the central bank raising borrowing costs, providing investors an opportunity to profit by receiving fixed payments, DBS Group Holdings Ltd. said.

Citigroup Appoints Duttagupta as Head of Asia Wealth Management Business Citigroup Inc., the world’s biggest financial services company, named Debashish Duttagupta as head of its wealth management business in Asia.

Indians to Shop More This Festive Season Amid Signs of Economic Recovery Indian consumers, undeterred by scanty rainfall, will buy more refrigerators, microwaves and TVs this festival season amid signs the world’s second-fastest growing economy is recovering from the global recession.

FDIC List of Problem U.S. Banks Rises to 416, Putting Reserve Fund at Risk The U.S. added 111 lenders to its list of “problem banks,” a jump that suggests rising bank failures may force the Federal Deposit Insurance Corp. to deplete a reserve fund that shrank 40 percent this year.

Economy in U.S. Shrank 1% in Second Quarter, Less Than Economists Forecast The U.S. economy took a first step toward recovering from the worst recession since the 1930s in the second quarter as companies reduced inventories, spending started to climb and profits grew.

Boeing Advances After Saying 787 Will Still Be Profitable With 2010 Launch Boeing Co. jumped the most since December in New York trading after saying it still expects the 787 Dreamliner program to be profitable following a $2.5 billion third-quarter charge for the delayed plane.

Lloyds May Sell Part of Fund Management Unit, Weighs Scottish Widows IPO Lloyds Banking Group Plc may sell part of its fund management business, including a possible initial public offering of Scottish Widows, to raise cash after its bailout, two people familiar with the talks said.

AIG May Raise Less Than $2 Billion Target in Sale of Taiwan Insurance Unit Bidders for American International Group Inc.’s Taiwanese life insurance unit may offer less than the U.S. insurer’s $2 billion target, three people with knowledge of the matter said.

Lacker Says Fed May Not Need to Buy All $1.25 Trillion of Mortgage Bonds The Federal Reserve may not need to buy the full $1.25 trillion in mortgage-backed securities the central bank has authorized by year-end as the economy improves, Richmond Fed President Jeffrey Lacker said.

Royal Bank, Toronto-Dominion, National Beat Estimates on Trading Revenue Royal Bank of Canada and National Bank of Canada reported record profits and Toronto-Dominion Bank’s earnings topped analysts’ estimates as Canadian lenders benefited from surging trading revenue and a housing market rebound.

source: Bloomberg

HSBC MF Revises Exit Load Structure For Various Funds

With effect from 28 August 2009

HSBC Mutual Fund has revised the exit load structure for HSBC Equity Fund, HSBC India Opportunities Fund, HSBC Progressive Themes Fund, HSBC Midcap Equity Fund, HSBC Emerging Markets Fund, HSBC Dynamic Fund. The change will be effective from 28 August 2009.

Revised Exit Load structure (including HSBC SIP/HSBC STP/HSBC SIP Plus)

Revised Load Structure:

Accordingly, 1% of an exit load will be charged if units are redeemed / switched out within 1 year from the date of investment.

If redeemed / switched out after 1 year, the exit load will be Nil.

No load in case of switches between equity schemes of HSBC fund houses.

Birla Sun Life Mutual Fund Declares Dividend for Tax Relief '96

Record date for dividend is 31 August 2009

Birla Sun Life Mutual Fund has announced dividend under dividend option of Birla Sun Life Tax Relief '96. The record date for the declaration of dividend is 31 August 2009.

The quantum of dividend is 40% i.e. Rs 4.00 per unit on the record date on face value of Rs 10 per unit. The NAV of the scheme was at Rs 78.41 per unit as on 25 August 2009.

Birla Sun Life Tax Relief '96 an open ended equity linked savings scheme with a lock-in of 3 years with the objective of long term growth of capital through a portfolio with a target allocation of 80% equity, 20% debt and money market securities.

Tata MF Announces Changes in Equity Opportunities Fund

With effect from 01 September 2009

Tata Mutual Fund has decided to make changes in the asset allocation pattern of Tata Equity Opportunities Fund, with effect from 01 September 2009.

Accordingly the scheme will invest 65% to 100% of asset in equity and equity related instruments, with a high risk profile and 0% to 35% of asset in Debt including money market instruments. It would have a risk profile of low to medium. Investments by the scheme in securitized debt will normally not exceed 50% of debt and money markets.

Tata MF Announces Change in Equity P/E Fund

With effect from 1 October 2009

Tata Mutual Fund has announced introduction of two dividend trigger options under the existing Dividend option of Tata Equity P/E Fund (TEQPEF). Accordingly existing dividend option will split into two options i.e. Dividend Trigger Option A (Trigger A) and Dividend Trigger Option B (Trigger B), with effect from 01 October 2009.

Under Trigger A, the fund will initiate the declaration of dividend when there is an appreciation in NAV by 5% and NAV by 10% for Trigger B in a calendar quarter.

In case of Trigger B, the fund will initiate the declaration of dividend when there is an appreciation in NAV by 10% in a calendar quarter.

For the calendar quarter October-December 2009, NAV as on 30 September 2009 would be the base NAV for trigger of 5% / 10% appreciation. For subsequent quarters the base NAV would be the NAV as on last ex-dividend date or NAV as on 30th September 2009 whichever is later.

No dividend will be declared, if the NAV does not reach to the trigger level and irrespective of the appreciation level of the NAV, not more than one dividend will be declared in a particular calendar quarter. Further, it is also possible that trigger level is reached only option A & not for option-B, in that case dividend will be declared only in Option A.

Tata Motors invites FDs from public to raise Rs 1,500 cr

Within less than a year, the country's largest auto maker, Tata Motors, has come to the public for the second time to raise about Rs 1,500 crore via fixed deposit schemes, offering up to 9.88 per cent annual interest for a three-year deposit.

In a public announcement, the firm today said on a minimum fixed deposit of Rs 20,000 for two and three years, it would offer 8 per cent and 8.75 per cent interest respectively under the quarterly income plan.

Under another scheme of cumulative deposit plan, Tata Motors, which met with cold response from investors to its two separate rights issues last year to raise Rs 4,147 crore to partly fund its Jaguar and Land Rover deal, would offer 8.58 per cent interest on a minimum deposit of Rs 20,000 for two years and 9.88 per cent for three years.

Though the company has not said how much it plans to raise through this exercise, sources close to the development said Tata Motors is likely to raise about Rs 1500 crore from the public. It would be a part of the company's capex plan for the next few years.

source: ET

Gold attached to $950 as traders search for direction

Fresh buying on MCX as prices stay above Rs 15k convincingly

Gold stayed glued near $950 per ounce mark today, reluctant to move up either ways as traders took their time in understanding the underlying momentum in the commodity, which has been finding good support in the face of strong investment demand and rising commodity prices. Traders are searching for a clear direction in the metal as there are talks of prices succumbing to selling pressure with the broad zone of $900-925 being visited yet again.

Investment demand for gold remained very strong in the second quarter of 2009, rising 46% on year earlier levels as investors continued a flight to quality. Overall demand for gold fell back from recent high levels as weak economic conditions and high gold prices combined to impact demand. Although gold demand remains very high on a historical basis, total demand in Q2'09 was down 9% on the levels of a year earlier, a 6% decline in $US value terms to $US21.3b.

The WGC also said that China could overtake India as the world's largest gold consumer within the next 10 years, or even as early as within the next five years. Gold only accounts for 2% of the total reserves held by China's central bank. If China's reserves continue to grow rapidly, more gold would be required just to maintain a constant proportion. China is the largest holder of US government bonds and more than once, they have expressed their concern about the value of the dollar.

Euro slipped a little in London after gaining fervor post an upbeat piece of economic data from Germany. Business conditions have improved above expectations in Germany in August, according to the Ifo Index, which rose to 90.5 from 87.3 in July, beating experts expectations of a reading around 89.0, showing furthe3r signs of recovery on Euro Zone's main economy.

The Assessment about the current economic conditions, has improved to 86.1 in August from 84.3 in July, and the business expectations rose to 95.0 in August from 90.4 in July. German gross domestic product (GDP) grew by 0.3 percent in the second quarter of 2009, official data confirmed on Tuesday, boosted by private consumption and net trade as imports slumped.

Earlier in Asia, the U.S. dollar moved in a tight range against major currencies in cautious trading Wednesday, after rebounding during North American trade. The Euro/ USD pair was quoting at 1.4290 when last seen, easing from a high of 1.4352.

Gold has been largely unmoved over the last 48 hours and the COMEX Gold futures for December edged up to a high of $951.70. The counter was last seen quoting at $949.30, up $3.30 per ounce from the previous close.

MCX Gold futures for October are trading at Rs 15035 per 10 grams, up Rs 71 per 10 grams or 0.47% from the previous close. The open interest is up 1.80%, indicating fresh buying as further evidence of Rs 15k getting breached convincingly stemmed out today.

Crude registers steep drop

Price pare earlier gains as US budget deficit expands

Crude prices pared earlier gains and ended lower on Tuesday, 25 August, 2009. Prices rose earlier during the day as consumer confidence in US showed signs of improvement. But then prices slipped as U.S. government report showed the highest federal deficit in more than six decades.

On Tuesday, crude-oil futures for light sweet crude for October delivery closed at $72.05/barrel (lower by $2.32 or 3.1%). During intra day trading, it rose to a high of $75. Last week, crude ended higher by 6.1%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 52% since then. Year to date, in 2009, crude prices are higher by 48%.

The Congressional Budget Office estimated on Tuesday that the budget deficit will total $1.6 trillion in 2009. At 11.2% of gross domestic product, that will be the highest level since World War II.

Earlier during the day, the Conference Board reported that consumer-confidence index in US rose to 54.1 in August from an upwardly revised 47.4 in July.

In the currency market on Tuesday, the dollar firmed earlier during the day. But the dollar earlier came under pressure after reports showed U.S. home prices rose in June and consumer confidence rose in August. The dollar also remained relatively low on announcement about the nod to President Barack Obama's reappointment of Federal Reserve Chairman Ben Bernanke to serve a second term. The dollar index which weighs the value of dollar against a basket of six other currencies fell by 0.4%.

Also at the Nymex on Tuesday, September reformulated gasoline fell 4.21 cents, or 2.1%, to $2.007 a gallon, and September heating oil dropped 6.75 cents, or 3.5%, to $1.8559 a gallon.

September natural-gas futures fell 4.1 cents, or 1.4%, to $2.882 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 September delivery closed lower by Rs 112 (3.1%) at Rs 3,504/barrel. Natural gas for September delivery closed lower by Rs 2.1 (1.3%) at Rs 160.6/mmbtu.

FIIs in selling mode

Outflow of Rs 53.60 on 25 August 2009

Foreign institutional investors (FIIs) sold shares worth a net Rs 53.60 crore on Tuesday, 25 August 2009, as against a huge inflow of Rs 848.60 crore on Monday, 24 August 2009.

FII outflow of Rs 53.60 crore on 25 August 2009 was a results of gross purchases Rs 2039.30 crore and gross sales Rs 2092.90 crore. The BSE Sensex rose 59.72 points or 0.38% to 15,688.47 on that day.

FII inflow in August 2009 totaled Rs 643.60 crore (till 25 August 2009). Foreign funds had bought equities worth Rs 11,625.20 crore in July 2009. FII inflow in calendar year 2009 totaled Rs 36,813.30 crore (till 25 August 2009).

There are a total of 1691 foreign funds registered with the Securities & Exchange Board of India (Sebi).

NSE to launch trading in interest rate futures

On 31 August 2009

The National Stock Exchange (NSE) has announced the launch of trading in interest rate futures (IRF). Trading in IRF will begin on Monday, 31 August 2009, NSE said in a circular.

The bourse has decided to waive transaction charges for trading in IRF initially. The waiver is till 31 December 2009. The decision to waive transaction charges initially has been taken to encourage active participation by members, NSE said.

News Flash

Sensitive Index Gains; Tata Consultancy, Infosys Rise on U.S Consumer Data India’s benchmark stock index rose to a three-week high, led by Infosys Technologies Ltd. and other software services providers, after consumer confidence surged unexpectedly in the U.S., the largest market for their products.

Rupee Drops a Third Day on Speculation Refiners, Importers Buying Dollars India’s rupee weakened for a third day on speculation the nation’s importers bought foreign currency to meet month-end payments.

Aptech Says Chinese Affiliate Beida Jade Planning to Sell Shares in U.S. Aptech Ltd. said its affiliate in China plans to sell shares in the U.S. providing an opportunity to India’s second-largest computer education company to benefit from its investment.

Wholesale Prices in India Decline for 11th Consecutive Week on Commodities India’s wholesale prices declined for an 11th straight week as oil and commodity costs fell from last year’s record highs.

Aban Offshore Shares Climb to Highest Level in 10 Months After Rig Orders Aban Offshore Ltd., India’s largest oil rig company, surged as much as 20 percent in Mumbai trading after saying it signed contracts to provide equipment.

Cairn India to Start Crude Oil Production From Rajasthan Field on Aug. 29 Cairn India Ltd., a unit of U.K.- based explorer Cairn Energy Plc, will start producing crude from its largest field in Rajasthan state on Aug. 29, an area that will help increase the nation’s oil output by 20 percent.

Ten-Year Government Bonds Rally as Central Bank Prepares to Purchase Debt Indian 10-year bonds gained the most in at least six weeks after the central bank said it will purchase existing government debt at an auction tomorrow.

Asian Stocks Advance on China Earnings, U.S. Consumer Confidence Report Asian stocks advanced, lifting the MSCI Asia Pacific Index to a two-week high, as Chinese companies increased earnings and a U.S. consumer confidence report beat economist estimates.

United Spirits Falls in Mumbai as Talks to Sell Stake to Diageo Plc Fail United Spirits Ltd., India’s biggest liquor maker, fell as much as 4.3 percent in Mumbai after talks with Diageo Plc to sell a minority stake collapsed as the companies failed to agree on the valuation.

U.S. Durable Goods Orders Jump 4.9% on Aircraft; Ex-Transport, Gain 0.8% Orders for U.S. goods meant to last several years jumped in July by the most in two years, stoked by a surge in demand for aircraft and communications equipment.

Stock-Index Futures in U.S. Fall After Some Goods Orders Miss Forecasts U.S. stock-index futures declined, suggesting the Standard & Poor’s 500 Index will reverse yesterday’s gain, as growth in orders for durable goods besides cars, trucks and aircraft missed forecasts and China sought to rein in its economy.

German Business Confidence Climbs More Than Forecast as Economy Rebounds German business confidence rose for a fifth month in August, suggesting Europe’s largest economy will gather strength after shaking off its worst recession since World War II.

Natixis Parent Will Guarantee $50 Billion of Riskiest Assets; Shares Soar Natixis SA received a guarantee from its parent covering about 35 billion euros ($50 billion) of risky assets and said it may return to profit in the third quarter, driving the stock up as much as 43 percent.

April Thank You From Obama Began Process of Embracing Bernanke Nomination President Barack Obama was meeting top economic advisers April 10, Good Friday, as regulators prepared stress tests for the largest U.S. banks, when he turned to Federal Reserve Chairman Ben S. Bernanke.

Chevron's $42 Billion Gas Project Wins Environmental Approval in Australia Australia approved Chevron Corp.’s A$50 billion ($42 billion) liquefied natural gas venture on a remote island, adding stricter conditions to quell environmental concerns about the nation’s biggest resources project.

source: Bloomberg

ING MF Announces Change Switch in / Switch Out Facilities

With effect from 28 August 2009

ING Mutual Fund has announced changes in switch in/switch out facilities for the following schemes, with effect from 28 August 2009

Accordingly switch out from any scheme of the fund house shall be allowed to ING Optimix Global Commodities Fund, ING Real Estate Fund and ING Latin America Equity Fund at applicable NAV, subject to applicable loads. However, switch out from ING Optimix Global Commodities Fund, ING Real Estate Fund and ING Latin America Equity Fund, at applicable NAV subject to applicable loads.

In case of switch transactions from one scheme to another the allocation shall be in line with redemption payouts. All switches will be subject to minimum application amount in the target scheme

ING MF Changes Exit Load Structure for Various Schemes

With effect from 28 August 2009

ING Mutual Fund has decided to revise the exit load structure for ING Domestic Opportunities Fund, ING Nifty Plus Fund, ING Core Equity Fund, ING Contra fund, ING Balanced Fund, ING Mid Cap Fund, ING Dividend Yield Fund, ING Optimix Multi Manager Equity Fund, ING Latin America Equity Fund, ING Optimix 5 Star Multi Manager FoF scheme, ING Optimax Asset Allocator Multi Manager FoF Scheme, ING Optimix Global Commodities Fund and ING Global Real Estate Fund (Retail & Institutional option). The change with effect from 28 August 2009.

Revises Load Structure:

Accordingly for all application amounts, an exit load of 1% will be charged if redeemed on or before 365 days from the date of allotment. The exit load charge will be nil, if redeemed after 365 days from the date of allotment.

The exit load structure shall be applicable for all prospective investments i.e. Systematic Investment Plan, Systematic Withdrawal Plan and Systematic Transfer Plan