Crude ends lower after a long time

Prices drop as weak consumer confidence data raises demand concerns

Crude prices dropped after a long time on Tuesday, 23 February 2010. Prices slipped as the dollar strengthened due to weak economic data that hit the wires today. Weaker than expected consumer confidence data has raised demand concerns for crude in coming months.

On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $78.86/barrel (lower by $1.45 or 1.8%). Last week, crude gained 7.7%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 0.7%.

In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by more than 3%.

Among the major economic data expected for the day, the Conference Board reported on Tuesday that consumer confidence fell sharply in February as Americans turned more pessimistic about job prospects and the U.S. economy. Just a month after touching a 16-month high, the consumer Confidence index sank 11 points to 46.0 from an upwardly revised 56.5 in January. It's the lowest reading since April 2009.

Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report earlier this month. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.

Among other energy products on Tuesday, gasoline for March delivery fell 5.02 cents, or 2.4%, to settle at $2.0656 a gallon on the New York Mercantile Exchange. Prices had advanced 9.7% in the previous five days. Heating oil for March delivery dropped 4.65 cents, or 2.2%, to settle at $2.0323 a gallon on the exchange, the first loss in six days.

Also on Tuesday, natural gas for April delivery declined 10 cents, or 2%, at $4.81 per million British thermal units.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009.  

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 48.8% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 42 (1.13%) lower at Rs 3,657/barrel. Natural gas for March delivery closed lower by Rs 0.9 (0.4%) at Rs 226/mmbtu.

Bullion metals drop for second straight day

Prices shed glaze as weak data pushes up dollar

 

Precious metal prices ended lower for second straight day on Tuesday, 23 February 2010. Prices slipped as the dollar strengthened due to weak economic data that hit the wires today.

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

On Tuesday, gold for April delivery ended at $1,103.2 an ounce, lower by $9.9 (0.9%) an ounce on the New York Mercantile Exchange. Last week, gold gained 3.1%. For January 2010, gold lost 1.2%. Year to date, gold is higher by 0.8%.

On Tuesday, March Comex silver futures ended lower by 33 cents (2%) at $15.89 an ounce. Last week, silver ended higher by 4.1%. In January 2010, silver shed 3.9%. Year to date in FY 2010, silver has dropped by almost 3.9%.

In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by more than 3%.

Among the major economic data expected for the day, the Conference Board reported on Tuesday that consumer confidence fell sharply in February as Americans turned more pessimistic about job prospects and the U.S. economy. Just a month after touching a 16-month high, theconsumer Confidence index sank 11 points to 46.0 from an upwardly revised 56.5 in January. It's the lowest reading since April 2009.

The World Gold Council reported last week that demand for gold climbed 2.6% in the fourth quarter from the prior three-month period. Gold consumption increased to 819.7 metric tons with prices averaging 15% more on a quarter-to-quarter basis. Conversely, demand for gold fell 24% in the fourth quarter from a year ago, and was down 11% in 2009 versus the year earlier.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end.Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for April delivery closed lower by Rs 101 (0.6%) at Rs 16,591 per ten grams. 

Prices rose to a high of Rs 16,767 per 10 grams and fell to a low of Rs 16,557 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 406 (1.6%) lower at Rs 24,854/Kg. Prices opened at Rs 25,333/kg and fell to a low of Rs 24,780/Kg during the day's trading.

FIIs turn buyers in calendar year 2010

Inflow of Rs 743.80 crore on 23 February 2010

Foreign institutional investors (FIIs) bought shares worth a net Rs 743.80 crore on Tuesday, 23 February 2010, much higher than Rs 39.60 crore on Monday, 22 February 2010.

FII inflow of Rs 743.80 crore on 23 February 2010 was a result of gross purchases Rs 2107.90 crore and gross sales Rs 1364.10 crore. There was an inflow of Rs 634.20 crore into secondary equity markets which was a result of gross purchases Rs 1997.80 crore and gross sales Rs 1363.60 crore. The BSE Sensex rose 49.27 points or 0.3% to 16,286.32 on that day.

There was an inflow of Rs 109.60 crore in the category 'primary market & others', which was a result of gross purchases Rs 110.10 crore and gross sales Rs 0.50 crore.

FII inflow in February 2010 totaled Rs 844.80 crore (till 23 February 2010). FII had sold equities worth Rs 302.70 crore in January 2010. FII inflow in the calendar year 2010 totaled Rs 344.30 crore (till 23 February 2010).

There are a total of 1,707 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Financial News FLash

Stocks in India Decline as Railway Orders Fan Concern About Federal Budget Indian stocks fell for the first time in three days after the government held off any increase in orders for new railway wagons, fueling concern more economic stimulus measures will be curbed in the Feb. 26 budget. 

India, Biggest Potash Importer, May Offer Sellers Lowest Price in 4 Years India, the world’s biggest potash importer, may offer the lowest price in four years in annual talks with suppliers after Chinese buyers secured reduced terms, said three industry officials with direct knowledge of the plan.

 

State-Run Indian Railway to Cut Food-Grain Freight Rates to Damp Inflation Indian Railways cut freight rates for food grains to help tackle inflation and sought investments from companies to augment Asia’s oldest network.

 

Billionaire Balwa's DB Realty Dips 12% on Debut, Mirrors Indian Developers DB Realty Ltd., India’s first developer to sell shares this year, declined in its trading debut in Mumbai, mirroring losses in real estate stocks.

 

American Tower Agrees to Buy Essar Telecom to Expand in Emerging Markets American Tower Corp.’s Indian subsidiary agreed to acquire the Essar Group’s tower unit for about $430 million to increase its presence in emerging markets.

 

India Will Invite Applications for Third-Generation Licenses From Feb. 25 India will begin inviting applications for licenses to operate third-generation mobile telephone networks from Feb. 25 and will start the auctions on April 9, according to an e-mailed statement from the telecom ministry today.

 

Bonds Snap Two-Day Gain on Speculation Government Borrowing May Increase India’s 10-year bonds fell, snapping a two-day gain, on speculation government borrowings will rise in the new financial year starting April 1.

 

Singapore Withdraws Red Carpet for Overseas Workers on Political Concern After luring investor Jim Rogers, actor Jet Li, Filipino maids and Bangladeshi construction workers with one of Asia’s most open immigration policies, Singapore is becoming a little less welcoming to foreigners.

U.S. Stocks Jump After Bernanke Testifies Low Rates Needed to Spur Demand U.S. stocks rose, halting a two-day drop in the Standard & Poor’s 500 Index, after Federal Reserve Chairman Ben S. Bernanke said the economy still requires low interest rates to spur demand.

 

Bernanke Backs Audit of Fed Loan Programs, Naming of Borrowers After Delay The Federal Reserve will back legislation to let congressional auditors probe its emergency- lending programs and identify, “after an appropriate delay,” firms that borrowed, Chairman Ben S. Bernanke said.

 

Sales of New Homes in U.S. Unexpectedly Declined in January to Record Low Sales of new homes in the U.S. unexpectedly fell in January to the lowest level on record, a sign that an extension of a government tax credit may not be enough to rekindle demand.

 

Goldman Sachs Is Unpopular Because Its Success `Brings Envy,' Corzine Says Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, is unpopular because some people envy its performance, said Jon Corzine, the company’s former chairman and chief executive officer.

 

Toyota's Recalls Are Result of Putting Profit Ahead of Safety, Towns Says Toyota Motor Corp. faces record recalls of defective vehicles because it placed profit first, according to the head of a committee that will question the company’s president today.

 

Credit-Default Swaps Show Europe Contagion Won't Hit U.S.: Credit Markets The risk that a government funding crisis in Europe will spread across the Atlantic Ocean is declining, bolstering corporate bond markets in the U.S., credit-default swaps show.

 

Pimco Buys High-Yield Corporate Bonds in Credit Rating `Barbell' Strategy Pacific Investment Management Co., manager of the biggest bond fund, is buying debt at opposite ends of the high-yield ratings scale as it seeks investments that can provide returns in a slower-growth environment. 

source: Bloomberg

IDFC Capital Protection Oriented Fund – Series I Floats On

NFO Period from 24 February to 24 March 2010 

IDFC Mutual Fund has launched a new fund named as IDFC Capital Protection Oriented Fund – Series I, a three year close ended income scheme. The New Fund Offer (NFO) price for the scheme is Rs 10 per unit. The new issue is open for subscription from 24 February and closes on 24 March 2010.

The investment objective of the scheme is to protect the capital by investing in high quality fixed income securities as the primary objective and generate capital appreciation by investing in equity and equity related instruments as a secondary objective.

The scheme offers dividend and growth option.

The scheme would allocate up to 16% of assets in equities & equity related securities with high risk profile. It would further allocate 84% to 100% of assets in debt securities & money market instruments (of which up to 30% would be in securitized instruments) with low to medium risk profile. Equity Derivatives (futures and options) may be used in place of cash equities with the condition that the total notional exposure together with the investments in equities will not exceed the allocation of the corpus towards equity investments at any point of time.

The minimum investment amount is Rs 5,000 and in multiples of Rs 10 thereafter.

The fund seeks to collect a minimum subscription (minimum target) amount of Rs 1 crore under the scheme during the NFO period.

Entry and entry load charge shall be nil for the scheme.

The Scheme's performance will be benchmarked against CRISIL MIP Blended Index. 

Ashwin Patni will be the fund manager for the scheme.

Tata PSU Equity Fund files offer document with Sebi

An open ended equity scheme 

Tata Mutual Fund has filed an offer document with Securities and Exchange Board of India (SEBI) to launch Tata PSU Equity Fund, an open ended equity scheme. The new fund offer (NFO) price for the scheme will be Rs 10 per unit.

The investment objective of the scheme is to generate capital appreciation by investing predominantly (i.e. at least 65% of the Corpus) in equity /equity related instruments of public sector undertakings (PSUs).

The scheme offers two option viz. growth option & dividend option. Dividend option has sub-option of dividend pay-out and dividend re -investment.

The scheme would allocate 65% to 100% of asset in equity and equity related instruments of Public Sector Undertakings, up to 35% in other equity & equity related instruments, up to 35% in foreign securities with high risk profile. It would further invest up to 35% of assets in debt & money market instruments with low medium risk profile.

Entry load will be nil for the scheme. Exit load charge will be 1% of the applicable NAV if redeemed on or before expiry of 365 days from the date of allotment, for Non-SIP transactions. For SIP transactions, the exit load charge will be 1% of the applicable NAV if redeemed within 24 months from the date of allotment.

Minimum application amount will be Rs 10,000 and in multiples of Re 1 thereafter. For additional investment by existing investor, the minimum amount will be Rs 1,000 and in multiples of Re1 thereafter.

The minimum subscription (target) amount of Rs 2 lakh is expected to be raised during the NFO period. 

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

The fund managers of the scheme will be M. Venugopal and Dinesh Da Costa.

The real woes of investing in realty

A typical salaried person spends her entire working life, building nest egg for herself and her dependents. We put money in bank FDs, buy post office schemes, invest in mutual funds, subscribe to multiple insurance schemes and invest our life-long savings in real estate .

We do all this to make sure that our dependents are not forced to cut their lifestyle after our retirement.

In real life, however, things do not always work to be as planned. Quite often, when the monthly salary cheques stop arriving, we realize that the financial planning falls short of the target forcing painful adjustments for retirees.

It gets even nastier if you suddenly have to meet large unexpected expenses such as medical emergency in the family. And we have seen this happening in families where prime breadwinner has retired from a cushy government job and receives generous pensions.

So what can lead to such a situation given that Indians are one of the biggest savers in the world? A typical urban household saves nearly a quarter of his/her recurring income on a regular basis. If planned diligently, this savings would grow into a large pool at the end of your working days. So what can go wrong? Among the common causes of such a mishap is over investment in a particular assets either because we fall in love with it or due to lack of opportunity.

Former is particularly severe in the case of traditional favourites such as real estate and life insurance policies. Real estate assets, especially a residential property, have a special lure in urban India given the housing shortage in the country and the fact that relative to income, real estate prices in India are one of the highest in the world.

Not surprisingly, for those who can afford, house is typically their biggest investment and one that can eat up bulk of their life-long disposable income.

But the lure of a house doesn’t stop at a roof over your head. It has now transformed into one of the most popular asset classes for upwardly-mobile urban India.  

And surprisingly, real estate investment doesn’t seem to carry any of negative attributes associated other assets such as equities (risky and unfaithful) and banks and post-office deposits (poor real returns).

The scramble to secure a pie of the lucrative real estate market has turned into frenzy ever since the government announced a tax-break on housing loans opening floodgates to the private sector investment in real estate projects. It’s not uncommon to find individuals owning three or even four residential properties. But this over reliance on real estate as financial planning tool can turn out to be a liability in old age. Consider this, post retirement, an individual needs an income stream that is regular, fairly predictable, can rise with the increase in inflation and most importantly easy to administer.

For all, its advertised virtues, real estate fails on the most of the above criteria. As mentioned above, a house is most often the largest investment for any individual, but it is seldom the biggest source of income/cash flows for a retiree.

This is because post-tax yields (i.e. rents adjusted for municipal taxes, income tax on rental income and maintenance costs) are pitifully low in India. 

For instance, in Mumbai, yields in most localities range from 2-3%, and this doesn’t take into account the effort involved in extracting even this nominal amount. Find a “nice and trustworthy” tenant, prepare a lease deed, get it registered and renew the agreement every 11 months and every few years find a new tenant.

Proponents of real estate investment, however, push it as a capital appreciation tool. This requires one to sell the property at the opportune time. This is, however, easier said than done. Even in a market as liquid as Mumbai, it may take months to find a right buyer at the right price.

And even longer for the cash to land in your pocket. And this involves a fair amount of footwork and not to talk of the documentation involved. If a real estate transaction is so complex and time-consuming in Mumbai, you can imagine the situation in other parts of the country. Young people or those in the working age group can still hope to do the necessary running around.

But the same cannot be said about retirees. They need an asset that is no-nonsense and has almost zero transaction cost and can be liquated in the shortest possible time.

But what if you need cash quickly and an amount that is much less than the market value of the property? Not surprisingly, even for people with large real estate portfolio, it is hardly ever the prime source of cash-flow .

This is fine as long as you are working, but post retirement, it could prove fatal. Recently, I came across an old couple, who own six properties between themselves and their son, but can’t afford a medical surgery and the post surgery expenses, despite the fact that one of them earns a decent pension.

They are now caught in a bind — they can’t rent their vacant houses for fear of losing its control; but neither are they able to sell it despite their best efforts. Instead, if they had invested in fewer properties and had diversified portfolio, including equities, bank FDs, post-office deposits coupled with a medical insurance, their old age would have been much happier.

The lesson is clear: the life is uncertain, so spreads your bets and never fall in love with an asset just because it is in circulation.   

Bullion metals end lower

Prices drop in tandem with US stocks and crude price

Precious metal prices ended lower on Monday, 22 February 2010. Prices slipped in synchronization with US stocks and crude prices. A steady dollar also pressured bullion metal prices.

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 April delivery ended at $1,113.1 an ounce, lower by $9 (0.8%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,131.5. Last week, gold gained 3.1%. For January 2010, gold lost 1.2%. Year to date, gold is higher by 1.7%.

On Monday, March Comex silver futures ended lower by 15 cents (1.2%) at $16.22 an ounce. Last week, silver ended higher by 4.1%. In January 2010, silver shed 3.9%.Year to date in FY 2010, silver has dropped by almost 1.9%.

US stocks traded in the red with mild losses for most part of the day on Monday mainly bogged down by the healthcare sector.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies erased earlier losses and rose marginally against the euro.

The World Gold Council reported last week that demand for gold climbed 2.6% in the fourth quarter from the prior three-month period. Gold consumption increased to 819.7 metric tons with prices averaging 15% more on a quarter-to-quarter basis. Conversely, demand for gold fell 24% in the fourth quarter from a year ago, and was down 11% in 2009 versus the year earlier.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for April delivery closed lower by Rs 124 (0.73%) at Rs 16,692 per ten grams. Prices rose to a high of Rs 16,889 per 10 grams and fell to a low of Rs 16,652 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 253 (0.99%) lower at Rs 25,260/Kg. Prices opened at Rs 25,586/kg and fell to a low of Rs 25,150/Kg during the day's trading.

Crude ends up

Crude prices rise in tandem with higher gasoline price 

Crude prices pared earlier losses and ultimately ended little higher on Monday, 22 February 2010. Prices were volatile, pared earlier losses, and rose following higher gasoline prices. Strikes at Total SA refineries and depots in France boosted prices of refined products.

On Monday, crude-oil futures for light sweet crude for March delivery closed at $80.16/barrel (higher by $0.25 or 0.3%). The March contract expired today. Last week, crude gained 7.7%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is higher by 1.1%.

US stocks traded in the red with mild losses for most part of the day on Monday mainly bogged down by the 

healthcare sector.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies erased earlier losses and rose marginally against the euro.

Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report earlier this month. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.

Among other energy products on Monday, gasoline rose 3.01 cents, or 1.4% to end the session at $2.1158 a gallon in New York.

Natural gas fell to its lowest price in 11 weeks in New York on Monday in anticipation of milder weather that would cut demand for the heating fuel. Natural gas for March delivery fell 14.9 cents, or 3% to settle at $4.895 per million British thermal units. Gas fell 7.8% last week.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 48.8% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 12 (0.32%) lower at Rs 3,699/barrel. Natural gas for February delivery closed lower by Rs 8.2 (3.5%) at Rs 225.1/mmbtu.

FIIs continue buying

Inflow of Rs 39.60 crore on 22 February 2010

Foreign institutional investors (FIIs) bought shares worth a net Rs 39.60 crore on Monday, 22 February 2010, much lower than Rs 293.40 crore on Friday, 19 February 2010.

FII inflow of Rs 39.60 crore on 22 February 2010 was a result of gross purchases Rs 1538.20 crore and gross sales Rs 1498.60 crore. There was an outflow of Rs 56.80 crore from secondary equity markets which was a result of gross purchases Rs 1441.70 crore and gross sales Rs 1498.50 crore. The BSE Sensex rose 45.42 points or 0.28% to 16,237.05 on that day.

There was an inflow of Rs 96.50 crore in the category 'primary market & others', which was a result of gross purchases Rs 96.60 crore and gross sales Rs 0.10 crore.

FII inflow in February 2010 totaled Rs 100.90 crore (till 22 February 2010). FII had sold equities worth Rs 302.70 crore in January 2010. FII outflow in the calendar year 2010 totaled Rs 399.60 crore (till 22 February 2010).

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

Financial News Flash

Stocks in India Gain on Prediction India's Government Will Boost Spending India’s benchmark stock index rose for a second day as investors predicted the government will maintain spending to boost the economy. 

India Calls Fiscal Stimulus a `Short-Term' Move Before This Week's Budget India’s fiscal stimulus is a “short-term measure” to support economic growth, junior finance minister Namo Narain Meena said, signaling the government may remove some tax incentives in this week’s budget.

 

Maruti Suzuki Declines Most in a Month After Recalling 100,000 Hatchbacks Maruti Suzuki India Ltd., the nation’s largest carmaker, fell the most in almost a month after announcing a recall covering about 100,000 A-star hatchbacks to fix faulty fuel pumps.

India Debt Sales May Rise 2 Percent in Coming Year to Record, Survey Shows India will borrow a record 4.6 trillion rupees ($100 billion) next fiscal year as debt payments double and the government only gradually withdraws policies to support economic growth, a survey showed.

 

Religare Enterprises to Invest Up to $1 Billion in Global Asset Managers Religare Enterprises Ltd., the Indian financial services company owned by billionaire Malvinder Singh, said it may invest as much as $1 billion buying stakes in asset management companies worldwide.

 

Rupee Strengthens as India May Accelerate Sales of State Assets in Budget India’s rupee strengthened for a second day on speculation the government will this week announce plans to bring forward sales of public companies, helping draw investment from abroad.

 

Edserv Forecasts Sales Will Surge on Indian Schools Demand for Software Edserv Softsystems Ltd., an Indian company that provides placement services and online training to job seekers, forecasts sales will reach 1.5 billion rupees ($21.7 million) next year as it adds clients and products.

 

Rural Electrification Gets Bids for 3.14 Times Offer After Overseas Bids Rural Electrification Corp., an Indian state-owned lender for power projects, got bids for 3.14 times the shares on offer, aided by bids placed by overseas investors.

Consumer Confidence in U.S. Falls to 10-Month Low as Outlook for Jobs Dims Confidence among U.S. consumers fell in February to the lowest level in 10 months, a sign that concern about job prospects may hold back the spending needed to sustain the recovery.

 

Treasuries Gain After Decline in Consumer Confidence Bolsters Note Auction Treasuries gained after a report showing a larger-than-forecast decline in consumer confidence bolstered demand at the government’s auction of a record-tying $44 billion in two-year notes.

 

FDIC Said to Prepare Sales of Bonds Backed by Failed U.S. Lenders' Assets The Federal Deposit Insurance Corp. may start selling bonds tied to the assets of failed banks as soon as next month.

 

Buffett Defies Downgrades as Berkshire Credit Risk Drops to 17-Month Low Warren Buffett’s name in credit markets is stronger than it’s been since 2008 as debt investors defied downgrades to his Berkshire Hathaway Inc. and pushed down the price of default protection on the firm.

 

Harvard's Rogoff Sees `Bunch' of Sovereign Defaults, U.S. Belt-Tightening Ballooning debt is likely to force several countries to default and the U.S. to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks.

 

Legg Mason Applies With SEC to Manage Exchange-Traded Funds for First Time Legg Mason Inc. applied to run actively managed exchange-traded funds for the first time in its 27-year-history as a public company, seeking to capture a slice of the asset-management industry’s fastest-growing segment.

 

Recalls by Toyota Expose Weakness of U.S. Law Spurred by Firestone Deaths Toyota Motor Corp.’s recalls of millions of vehicles show that a law passed after fatal crashes of Ford Explorers with Firestone tires a decade ago isn’t working, former U.S. safety regulators say. 

source: Bloomberg

IDFC MF Announces Change in Premier Equity Fund

IDFC Mutual Fund has announced that IDFC Premier Equity Fund shall not accept further subscriptions (other than by way of SIPs / STPs) at the end of business hours on 26 February 2010.

With effect from 26 February 2010, the STP amount for IDFC Premier Equity Fund shall be reduced to Rs 10 lakh from Rs 25 lakh.

IDFC Premier Equity Fund is an open ended equity scheme which has the investment objective to generate long-term capital growth from an actively managed portfolio of predominantly equity and equity related instruments.

Mutual funds in buying mode

Inflow worth Rs 88.90 crore on 22 February 2010 

Mutual funds (MFs) bought shares worth a net Rs 88.90 crore on Monday, 22 February 2010 as against an outflow of Rs 148.10 crore on Friday, 19 February 2010.

The net inflow of Rs 88.90 crore on 22 February 2010 was a result of gross purchases Rs 488.30 crore and gross sales Rs 399.40 crore. The BSE Sensex rose 45.42 points or 0.28% to 16,237.05 on that day.

MFs sold shares worth net Rs 214.10 crore in February 2010 (till 22 February 2010). MFs sold shares worth net Rs 1311.30 crore in January 2010.

Public and Private Sector MFs see inflow in January 2010

Redemption amount of Private Sector MFs declines by 15.34% 

Net inflows into mutual funds during January 2010 have brought delight to the industry, as it has bounced back from net outflows it witnessed in December 2009. Securities and Exchange Board of India (Sebi) released data on status of public and private sector mutual funds (MFs) for April- January 2010. There has been inflow of Rs 97241.53 crore in January 2010, from an outflow of Rs 157204.07 crore in December 2009. However, the mobilisation of funds has declined by 49.45% in January 2010. 

 Fall in mobilisation

The MFs mobilisation of fund declined by 49.45% to Rs 392653.06 crore in January 2010 from Rs 776811.36 crore in December 2009.

Private sector MFs' collection increased 13.51% to Rs 656236 crore in January 2010 from Rs 578134 crore in December 2009. UTI MF collected Rs 88413 crore, and others public sector MFs mobilisation declined to Rs 351996 crore in January 2010. The public sector MFs mobilisation declined to Rs 263583 crore in January 2010, which less than Rs 198677 crore in December 2009.

The repurchase amount of the industry was recorded at Rs 787496.33 crore in January 2010. The industry had a net inflow of Rs 97241.53 crore in January 2010 compared with a net outflow of Rs 157204.07 crore in December 2009.

The redemption amount of private sector MFs declined by 15.34% to Rs 588374.68 crore in January 2010 from Rs 694958.87 crore in December 2009. Net inflow of private sector was Rs 67861.64 in January 2010 from a net outflow of Rs 116824.98 crore in December 2009.

UTI MF had witnessed repurchase amount of Rs 74060.94 crore, while other public sector MFs at Rs 125060.71 crore. The redemption amount of public sector MFs declined 16.71% to Rs 199121.65 crore in January over Rs 239056.56 crore in December 2009. The UTI fund house recorded net inflow of Rs 14351.9 crore and other public sector MFs had inflow of Rs 15027.99 crore in January 2010. Overall, net inflow of public sector increased to Rs 29379.89 crore in January 2010 from net outflow of Rs 40379.09 crore in December 2009.

Public and Private sector MF in April- January 2010

The net asset of the industry rose to Rs 758712.47 crore in April-January 2010. Net assets of Fund of Funds schemes were recorded at Rs 1044.88 crore in April- January 2010.

Net asset size of private sector mutual funds was Rs 590491.22 crore, a share of 77.83% in the total net asset size of the industry in April- January 2010.

Public sector mutual funds contributed about 22.17% to total net assets of the MF industry in April- January 2010. Net assets of the public sector mutual funds were at Rs 168221.25 crore in April- January 2010. Net asset size of UTI MF was worth Rs 77017.23 crore, contributing 10.15% to total mutual fund assets in April- January 2010. Other public sector MFs contributed 12.02% with assets of Rs 91204.02 crore during the same period.

The fund mobilisation recorded at Rs 8294390.1 crore in April- January 2010. Private sector MF collection has been registered at Rs 6371319.47 crore in April- January 2010.

UTI MF collected Rs 715492.87 crore, and others public sector MFs mobilized Rs 1207577.77 crore in April- January 2010. The public sector collectively gathered Rs 1923070.63 crore in April- January 2010.

The repurchase amount of the industry was recorded at Rs 8055509.31 crore in April- January 2010. The industry had an inflow of Rs 238880.79 crore in April- January 2010.

The redemption amount of private sector MFs was recorded at Rs 6195287.46 crore in April- January 2010. Net inflow in private sector MF stood at Rs 176032.01 crore in April- January 2010.

UTI MF had witnessed repurchase amount of Rs 687685.14 crore, while other public sector MFs posted redemption amount at Rs 1172536.71 crore. The UTI fund house recorded an inflow of Rs 27807.73 crore and other public sector MFs had inflow of Rs 35041.05 crore in April- January 2010. Overall public sector MFs had net inflow of Rs 62848.78 crore in April- January 2010.

Taurus MF declares dividend for its Taurus Tax Shield Scheme

Record date for dividend is 26 February 2010. 

Taurus Mutual Fund has announced 26 February 2010 as the record date for declaration of dividend under Taurus Tax Shield Scheme (Dividend plan).

The fund house has decided to distribute 20% (Rs 2 per unit on face value of Rs 10 per unit) as dividend on the above mentioned record date.

Taurus Tax Shield Scheme is an open ended equity linked tax saving scheme with objective to provide long term over the life of the scheme through investments predominantly in equities besides tax benefits.

Birla Sun Life MF declares dividend for its schemes (Dividend Plan)

Record date for dividend is 26 February 2010 

Birla Sun Life Mutual Fund has announced 26 February 2010 as the record date for declaration of dividend under dividend plans of Birla Sun Life Buy India Fund, Birla Sun Life Millennium Fund and Birla Sun Life India Opportunities Fund.

The fund house has decided to distribute 12.50% (Rs 1.25 per unit on face value of Rs 10 per unit) under Birla Sun Life Buy India Fund, 7.50% (Rs 0.75 per unit) under Birla Sun Life Millennium Fund and 10.00% (Rs 1.00 per unit) under Birla Sun Life India Opportunities Fund as dividend on the above mentioned record date.

Birla Sun Life Buy India Fund, Biria Sun Life Millennium Fund and Birla Sun Life India Opportunities Fund recorded NAV of Rs 22.42 per unit, Rs 13.59 per unit and Rs 18.87 per unit, respectively as on 18 February 2010.

Birla Sun Life MF declares dividend

Record date for dividend is 26 February 2010 

Birla Sun Life Mutual Fund has announced 26 February 2010 as the record date for declaration of dividend under dividend plans of Birla Sun Life MNC Fund, Brila Sun Life Advantage Fund and Birla Sun Life India Dividend Yield Plus.

The fund house has decided to distribute 37.50% (Rs 3.75 per unit on face value of Rs 10 per unit) under Birla Sun Life MNC Fund, 62.50% (Rs 6.25 per unit) under Birla Sun Life Advantage Fund and 6.50% (Rs 0.65 per unit) under Birla Sun Life India Dividend Yield Plus as dividend on the above mentioned record date.

Birla Sun Life MNC Fund, Birla Sun Life Advantage Fund and Birla Sun Life India Dividend Yield Plus recorded NAV of Rs 74.77 per unit, Rs 89.33 per unit and Rs 13.57 per unit, respectively as on 18 February 2010.

DSP BlackRock declares dividend for its DSP BlackRock Opportunities Fund

Record date for dividend is 26 February 2010

 

DSP BlackRock Mutual Fund has announced 26 February 2010 as the record date for declaration of dividend under the regular plan of DSP BlackRock Opportunities Fund.

The fund house has decided to distribute Rs 3.00 per unit on face value of Rs 10 per unit as dividend on the above mentioned record date.

DSP BlackRock Opportunities Fund is an open ended growth scheme, seeking to generate long term capital appreciation and whose secondary objective is income generation.

Reliance MF Revises SIP Provision

With effect from 22 February 2010 

Reliance Mutual Fund has decided to change Scheme Information Document (s), Key Information Memorandum cum Application Form / Micro SIP Form of all schemes of Reliance Mutual Fund where 

Systematic Investment Plan (SIP) is available. The change will be effective from 22 February 2010.

Revised SIP Provision:

Accordingly, an investor shall have the option of choosing for 1 or more than 1 SIP in the same scheme and in the same month. SIP debit dates shall be 2nd, 10th, 18th or 28th. However, more than one SIP for the same date is not allowed. To register multiple SIP in the same scheme/same month, separate ECS/Auto Debit Mandate Forms have to be submitted.

Mutual funds continue selling

Outflow worth Rs 148.10 crore on 19 February 2010 

Mutual funds (MFs) sold shares worth a net Rs 148.10 crore on Friday, 19 February 2010, slightly higher than Rs 133 crore on Thursday, 18 February 2010.

The net outflow of Rs 148.10 crore on 19 February 2010 was a result of gross purchases Rs 618.50 crore and gross sales Rs 766.60 crore. The BSE Sensex fell 136.21 points or 0.83% to 16,191.63 on that day.

MFs sold shares worth net Rs 303 crore in February 2010 (till 19 February 2010). MFs sold shares worth net Rs 1311.30 crore in January 2010.

Crude glides up

Crude stays little shy of $80

Crude prices ended higher on Thursday, 18 February 2010. Drop in distillate inventories as reported in the latest weekly inventory report was the main reason for the rise in prices. Mixed economic data and build up in crude inventories partially restricted crude's rise.

On Thursday, crude-oil futures for light sweet crude for March delivery closed at $79.06/barrel (higher by $1.73 or 2.2%). During intra day trading, prices fell to a low of $76.32. Last week, crude gained 4%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 0.1%.

The EIA reported today that U.S. crude stockpiles rose by 3.1 million barrels in the week ended 12 February. The EIA also said gasoline supplies rose by 1.62 million barrels, more than the 1.5 million barrels forecast. However, distillates fell by 2.94 million barrels on the week, far greater than the 1.6 million barrels expected.

Among economic report scheduled for the day, The Labor Department in US reported Thursday, 18 February 2010 that the number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week. Market was expecting initial claims to rise to about 447,000. The four-week average of initial claims fell by 1,500 to 467,500, about 20,000 more than expected. State jobless claims have risen in five of the seven weeks so far in 2010.

Separately, the Labor Department in US also reported on Thursday, 18 February 2010 that U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil.

Among other energy products on Thursday, gasoline for March delivery rose 6.3 cents to $2.07 a gallon, and heating oil for the same month was up 4.4 cents, or 2.2%, at $2.05 a gallon.

Also on Thursday, the EIA said that natural gas in storage fell by 190 billion cubic feet in the 12 February. Market had been looking for a drawdown of between 188 billion and 192 billion cubic feet. Natural gas for March delivery was finished down 21.6 cents, or 4%, at $5.17 per million British thermal units in electronic trading.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 48.8% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 69 (1.9%) higher at Rs 3,628/barrel. Natural gas for February delivery closed lower by Rs 7.2 (2.9%) at Rs 240.2/mmbtu.

Precious metals register marginal drop

Prices recover from intra day lows as dollar remains steady

Yellow metal prices ended little lower on Thursday, 18 February 2010. Gold pared some of its earlier losses and ended little lower for the day as the dollar remained steady. Silver prices also 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 Thursday, gold for April delivery ended at $1,118.7 an ounce, lower by $1.4 (0.3%) an ounce on the New York Mercantile Exchange. During intra day trading, it rose to a high of $1,124.6 and fell to a low of $ 1,098.1. Last week, gold gained 4%. For January 2010, gold lost 1.2%. Year to date, gold is higher by 2.2%.

On Thursday, March Comex silver futures ended lower by 2 cents (0.1%) at $16.078 an ounce. Last week, silver ended higher by 4.1%. In January 2010, silver shed 3.9%. Year to date in FY 2010, silver has dropped by almost 0.9%.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.2%.

Among economic report scheduled for the day, The Labor Department in US reported Thursday, 18 February 2010 that the number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week. Market was expecting initial claims to rise to about 447,000. The four-week average of initial claims fell by 1,500 to 467,500, about 20,000 more than expected. State jobless claims have risen in five of the seven weeks so far in 2010.

Separately, the Labor Department in US also reported on Thursday, 18 February 2010 that U.S. wholesale prices rose a seasonally adjusted 1.4% in January on double-digit increases in gasoline and home heating oil.

The World Gold Council reported yesterday that demand for gold climbed 2.6% in the fourth quarter from the prior three-month period. Gold consumption increased to 819.7 metric tons with prices averaging 15% more on a quarter-to-quarter basis. Conversely, demand for gold fell 24% in the fourth quarter from a year ago, and was down 11% in 2009 versus the year earlier.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for April delivery closed higher by Rs 19 (0.11%) at Rs 16,775 per ten grams. Prices rose to a high of Rs 16,845 per 10 grams and fell to a low of Rs 16,527 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 65 (0.26%) higher at Rs 25,112/Kg. Prices opened at Rs 25,026/kg and rose to a high of Rs 25,340/Kg during the day's trading.

FIIs in selling mode

Outflow of Rs 28.90 crore on 18 February 2010

Foreign institutional investors (FIIs) sold shares worth a net Rs 28.90 crore on Thursday, 18 February 2010 as against an inflow of Rs 1223.90 crore on Wednesday, 17 February 2010.

FII outflow of Rs 28.90 crore on 18 February 2010 was a result of gross purchases Rs 2048.30 crore and gross sales Rs 2077.20 crore. There was an outflow of Rs 286.10 crore from secondary equity markets which was a result of gross purchases Rs 1791.10 crore and gross sales Rs 2077.20 crore. The BSE Sensex fell 101.07 points or 0.62% to 16,327.84 on that day.

There was an inflow of Rs 257.20 crore in the category 'primary market & others'.

FII outflow in February 2010 totaled Rs 232.10 crore (till 18 February 2010). FII had sold equities worth Rs 302.70 crore in January 2010. FII outflow in the calendar year 2010 totaled Rs 732.60 crore (till 18 February 2010).

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

LIC disallowed to buy over 10% stake in companies

Life Insurance Corporation of India (LIC) would not be allowed to increase its stake to more than 10% in Indian companies. But, the LIC can retain the stake in companies where it already holds more than 10% of the stake.

Insurance Regulatory and Development Authority (IRDA), an insurance regulator, does not allow insurers to hold more than 10% stake in any company. However, the IRDA has not asked LIC to trim the stake in firms, where it is in excess of 10%, but, LIC has been asked not to buy more than 10% of stake in future.

Financial News Flash

Share Sales in India May Surge 33% This Year as Market Rebounds, Citi Says Indian equity and equity-linked offerings may jump by as much as a third this year as companies and the government tap a growing pool of domestic capital and the economy recovers, according to Citigroup Inc. 

India Must Cut Budget Deficit for Effective Monetary Policy, Panel Says India must cut its 16-year high budget deficit starting next financial year to make monetary policy effective in damping inflation, the Prime Minister’s Economic Advisory Council said.

 

DLF, Hindalco Fall as Stocks Decline on Concern Stimulus Will be Unwound Indian stocks fell the most in two weeks on concern the government may withdraw measures to bolster the economy next week, after the 

Federal Reserve raised its discount rate for the first time in more than three years.

 

India Should Take `Urgent' Steps to Buy White Sugar, Government Panel Says India, the biggest sugar consumer, should take “urgent steps” to import refined sugar to meet a deficit of 3 million to 5 million tons, a government panel said.

 

Standard & Poor's Places Bharti Airtel on CreditWatch Negative on Zain Bid Bharti Airtel Ltd. has been placed on CreditWatch with negative implications by Standard & Poor’s Ratings Services.

 

Aluminum Product Demand in Asia May Climb on Recovery, Novelis Unit Says Demand for aluminum-rolled products may climb in Asia this year, boosted by the economic recovery, according to the region’s biggest producer.

 

Rupee Declines for a Second Day After Federal Reserve Raises Discount Rate India’s rupee weakened for a second day as prospects the U.S. is moving closer toward raising interest rates diminished the appeal of higher-yielding regional assets funded with cheap dollar loans.

 

Rural Electrification Share Sale Gets Lowest First-Day Bids for Government Rural Electrification Corp. got bids for 29 percent of the stock offered in a sale, the worst opening-day response to equity sold by India’s government, as investor appetite for shares waned.

 

Reliance Extends Decline on Concern Lyondell Bid May Exceed $14.5 Billion Reliance Industries Ltd., India’s biggest company by market value, fell for a second day in Mumbai trading on concern that the company may increase its bid to buy bankrupt LyondellBasell Industries AF.

 

Bonds in India Complete Fourth Weekly Loss on Concern Debt Sales Will Rise India’s 10-year bonds completed a fourth weekly decline, the longest losing streak since October, on speculation the government will increase its debt sales from a record in the year starting April 1.

U.S. Consumer Prices Increase Less Than Forecast in Sign Inflation Subdued The cost of living in the U.S. rose in January less than anticipated and a measure of prices excluding food and fuel fell for the first time since 1982, indicating the recovery is generating little inflation.

 

Dollar Advances, Stocks Decline as Federal Reserve Increases Discount Rate The dollar rose and stocks ended a four-day rally after the Federal Reserve lifted the discount rate, a sign that the central bank is ready to reverse emergency stimulus. Losses in U.S. equities were limited and Treasuries rose after consumer prices increased less than estimated.

 

`Who Pays Wins' as UBS, Merrill Lynch Lure Bankers With Salary Increases Bank of America Corp. and UBS AG, which eliminated jobs over the past two years as they received government aid, are luring bankers in London from competitors by as much as doubling base salaries, recruiters said.

 

Foreclosures in U.S. Set Record as Unemployment Thwarts Housing Recovery A record number of Americans were in danger of losing their homes in the fourth quarter, even as new delinquencies declined, the Mortgage Bankers Association said.

 

Blackstone Considers Joining Simon in Offer for Mall Owner General Growth Blackstone Group LP, the world’s largest private-equity firm, may join Simon Property Group Inc.’s bid to buy bankrupt General Growth Properties Inc., two people with knowledge of the discussions said yesterday.

 

Medicare Cuts May Threaten UnitedHealth, Humana Profit on Advantage Plans Medicare may announce cuts of as much as 4 percent in government payments to U.S. health insurers for policies serving the elderly, threatening profit growth at UnitedHealth Group Inc., Humana Inc. and HealthSpring Inc. 

source: Bloomberg