Crude ends marginally lower

Prices pare most of their early losses as stocks gain 

Crude oil prices ended marginally lower on Tuesday, 28 September 2010 at Nymex. Prices started the day in the red but then prices rose in tandem with US stocks. Prices rose due to weak dollar. But weak consumer confidence data pushed crude price back in the red. 

On Tuesday, crude oil futures for light sweet crude for November delivery closed at $76.18/barrel (lower by $0.34 or 0.4%). 

For the month of August, crude ended lower by 8.9%. Before this, in July, crude ended higher by 4.5%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 1.6%. 

Oil witnessed its first monthly decline in August since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over. 

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies closed lower by 0.5%. 

The dollar extended losses against the euro and other major currencies after the Conference Board said its consumer-confidence index hit its lowest level since February. It dropped to a seven-month low figure of 48.5. 

Among other energy products on Tuesday, gasoline for November delivery tracked crude oil lower, however, losing less than a penny to $1.94 a gallon. Gasoline has ended close to $1.94 a gallon for the past three sessions. 

Also on Tuesday, natural gas for November delivery rose 3 cents, or 0.9%, to $3.95 per million British thermal units. That's natural gas best finish in three sessions. 

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

At the MCX, crude oil for October delivery closed higher by Rs 29 (0.84%) at Rs 3,478/barrel. Natural gas for October delivery closed at Rs 181.3, higher by Rs 3.3 (1.8%).

Gold closes above $1,300 mark

Prices register all time new highs once again 

Precious metals glittered and ended at record highs on Tuesday, 28 September 2010 at Comex. Yellow metal prices closed above the $1,300 mark for the first time ever. Silver also shone. Prices rose as dollar dropped and economic data checked in weaker than expected. 

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa. 

On Tuesday, gold for December delivery ended at $1,308.3 an ounce, higher by $9.7 (0.8%) on the New York Mercantile Exchange. This was by far an all time highest finish for the yellow metal. Gold marked new high for the eighth time in nine session. Last week, gold ended higher by 1.6%. It was the sixth weekly gains for gold in past six weeks. 

Gold ended the month of August 2010 higher by 5.6% after ending July lower by 5%. It was the worst monthly loss for gold since December 2009. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 18.8%. 

On Tuesday, December Comex silver futures ended higher by 24 cents (1.1%) at $21.71. Earlier in the day, it was trading in the red but it managed to pare losses. It was once again an all time high close for silver prices in three decades. Last week, silver ended higher by 2.7%. 

For the month of August, silver ended higher by 8%. In July 2010, silver shed 3.7%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 29%. 

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies closed lower by 0.5%. 

The dollar extended losses against the euro and other major currencies after the Conference Board said its consumer-confidence index hit its lowest level since February. It dropped to a seven-month low figure of 48.5. 

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 December delivery closed higher by Rs 114 (0.6%) at Rs 19,327 per ten grams. Prices rose to a high of Rs 19,347 per 10 grams and fell to a low of Rs 19,100 per 10 grams during the day's trading. 

At the MCX, silver prices for December delivery closed Rs 371 (1.13%) higher at Rs 33,031/Kg. Prices opened at Rs 32,604/kg and rose to a high of Rs 33,065/Kg during the day's trading.

FIIs continue buying

Inflow of Rs 894.80 crore on 28 September 2010 

Foreign institutional investors (FIIs) bought shares worth a net Rs 894.80 crore on Tuesday, 28 September 2010, on the top of a robust inflow of Rs 1,307.20 crore on Monday, 27 September 2010. 

The net inflow of Rs 894.80 crore on 28 September 2010 was a result of gross purchases Rs 3,541.40 crore and gross sales Rs 2,646.50 crore. There was an inflow of Rs 751.40 crore into secondary equity markets which was a result of gross purchases Rs 3,397.30 crore and gross sales Rs 2,646 crore. The BSE Sensex fell 12.52 points or 0.06% to 20,104.86 on that day. 

There was an inflow of Rs 143.50 crore in the category 'primary market & others', which was a result of gross purchases Rs 144.10 crore and gross sales Rs 0.60 crore. 

FII inflow in September 2010 totaled Rs 24,978.50 crore (till 28 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 84,360.20 crore (till 28 September 2010). 

There are a total of 1,726 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Birla Sun Life MF makes Addendum to its Funds

Birla Mutual Fund has given notice to investors that in case an investor has purchased Units of a scheme of Birla Sun Life Mutual Fund on more than one Business Day (either during the New Fund Offer Period, or on an ongoing basis), the Units purchased prior in time will be redeemed first. Thus, in case of valid application for redemption is made by the investor, those Units of the scheme which have been held for the longest period of time will be redeemed first i.e. on a First- in-First-Out basis. 

All other features and terms and conditions of the scheme(s) shall remain unchanged.

This addendum forms an integral part of the Statement of Additional Information/Scheme Information Document(s)/Key Information.

Principal Resurgent India Equity Fund to be Merged into Principal Growth Fund

Principal Mutual Fund has decided to merge the growth and dividend plans under Principal Resurgent India Equity Fund with the respective growth and dividend plans under Principal Growth Fund. Unitholders who are not in agreement with the aforesaid changes may redeem their units at applicable NAV without payment of exit load between 30 September 2010 and 29 October 2010.

Principal MF Announces Change in Features under 3 Schemes

Principal Mutual Fund has decided to restructure the features of Principal Child Benefit Fund, Principal Monthly Income Plan and Principal Monthly Income Plan – MIP Plus. 

Change in Features of Principal Child Benefit Fund

 

The name of the scheme stands changed to Principal Conservative Growth Fund. 

Investment objective of the scheme would be to provide long term capital appreciation and regular income by investing in equity and equity related instruments and also in debt and money market instruments. 

There shall be no plans or options available under the scheme and reference to the current portfolio/plan viz. ‘Career Builder Plan' shall stand deleted. 

The scheme would allocate 65% to 80% of assets in equity & equity related instruments. It would further allocate 20% to 35% of assets in debt and money market instruments (including unit of liquid / money market/debt mutual fund scheme(s) and securitized debt). 

Investments in securitized debt may be up to 20% of the net assets of the scheme. 

Apart from Systematic Investment Plan facility, the scheme shall also offer Systematic Withdrawal Plan and Systematic Transfer Plan facilities to the investors. 

Change in Features of Principal Monthly Income Plan and Principal Monthly Income Plan – MIP Plus

 

The allocation to equity and equity related instruments in both plans would now include allocation to units of equity mutual fund scheme(s) and accordingly the revised asset allocation pattern of the said plan(s) shall be as mentioned here below: 

Principal Monthly Income Plan would allocate upto 100% of assets in debt & money market instruments (including securitized debt upto 50%). It would further allocate upto 15% of assets in equity and equity related instruments (including units of equity mutual fund scheme(s)). 

Principal Monthly Income Plan – MIP Plus would allocate upto 100% of assets in debt & money market instruments (including securitized debt upto 50%). It would further allocate upto 25% of assets in equity and equity related instruments (including units of equity mutual fund scheme(s)).

Unitholders who are not in agreement with the aforesaid changes may redeem their units at applicable NAV without payment of exit load between 30 September 2010 and 29 October 2010.

AMFI Board Appointed New Chairman and Vice Chairman

The board of Association of Mutual Funds in India (AMFI) has appointed Mr.U.K.Sinha as the Chairman and Mr. Milind Barve as the Vice-Chairman. Presently Sinha is the Chairman and MD of UTI Asset Management Company, while Milind Barve is the HDFC Mutual Fund's Managing Director. 

Both Sinha and Barve would hold office till the next annual general meeting. Sinha takes over the reigns from Mr A.P. Kurian, who held the post since the formation of AMFI in 1995. 

MFs continue selling

Outflow of Rs 567.90 crore on 28 September 2010 

Mutual funds (MFs) sold shares worth a net Rs 567.90 crore on Tuesday, 28 September 2010, compared with an outflow of Rs 611.30 crore on Monday, 27 September 2010. 

The net outflow of Rs 567.90 crore on 28 September 2010 was a result of gross purchases Rs 467 crore and gross sales Rs 1034.90 crore. The BSE Sensex fell 12.52 points or 0.06% to 20,104.86 on that day. 

MFs sold shares worth net Rs 5606.40 crore in September 2010 (till 28 September 2010). Mutual funds had sold equities worth a net Rs 3169.60 crore in August 2010.

Precious metals continue to glitter

Gold fails to cross $1,300 mark at close 

Precious metals ended higher once again on Monday, 27 September 2010 at Comex. Yellow metal prices struck new record for the seventh consecutive session. Silver also shone. Prices rose as dollar dropped. 

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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa. 

On Monday, gold for December delivery ended at $1,298.6 an ounce, higher by $0.50 (0.03%) on the New York Mercantile Exchange. Prices closed a little shy of $1,300 level for the fourth consecutive day. During intra day trading, prices reached a high of $1301.3. This was by far an all time highest finish for the yellow metal. Last week, gold ended higher by 1.6%. It was the sixth weekly gains for gold in past six weeks. 

Gold ended the month of August 2010 higher by 5.6% after ending July lower by 5%. It was the worst monthly loss for gold since December 2009. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 18%. 

On Monday, December Comex silver futures ended higher by 7 cents (0.3%) at $21.47. It was once again an all time high close for silver prices in three decades. Last week, silver ended higher by 2.7%. For the month of August, silver ended higher by 8%. In July 2010, silver shed 3.7%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 22%. 

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies closed lower. 

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 December delivery closed lower by Rs 65 (0.35%) at Rs 19,213 per ten grams. Prices rose to a high of Rs 19,269 per 10 grams and fell to a low of Rs 19,202 per 10 grams during the day's trading. 

At the MCX, silver prices for December delivery closed Rs 88 (0.3%) lower at Rs 32,660/Kg. Prices opened at Rs 32,759/kg and fell to a low of Rs 32,579/Kg during the day's trading.

Crude ends marginally higher

Prices pare most of their early gains as stocks slip 

Crude oil prices ended marginally higher on Monday, 27 September 2010 at Nymex. Prices rose initially due to weak dollar. Then prices pared almost all their gains as oil prices fell in tandem with US equities. 

On Monday, crude oil futures for light sweet crude for November delivery closed at $76.22/barrel (higher by $0.03 or 0.01%). 

For the month of August, crude ended lower by 8.9%. Before this, in July, crude ended higher by 4.5%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 2%. 

Oil witnessed its first monthly decline in August since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over. 

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies closed lower. 

On Monday, stocks closed lower as a debt downgrade for an Irish bank reignited fears about Europe's banking system, overshadowing a fresh batch of mergers. 

Among other energy products on Monday, reformulated gasoline for October delivery which expires at the end of trading on Monday, lost less than a penny to $1.95 a gallon. Gasoline for November delivery retreated to $1.94 a gallon. 

Also on Monday, natural gas for October delivery retreated 8 cents to $3.80 per million British thermal units. The contract expires on Tuesday. That's the lowest settlement for natural gas since early September. 

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

At the MCX, crude oil for October delivery closed lower by Rs 30 (0.9%) at Rs 3,449/barrel. Natural gas for September delivery closed at Rs 178, lower by Rs 6.1 (3.3%).

FIIs continue buying

Inflow of Rs 1307.20 crore on 27 September 2010 

Foreign institutional investors (FIIs) bought shares worth a net Rs 1307.20 crore on Monday, 27 September 2010, on the top of a robust inflow of Rs 1,338.70 crore on Friday, 24 September 2010. 

The net inflow of Rs 1307.20 crore on 27 September 2010 was a result of gross purchases Rs 3669.60 crore and gross sales Rs 2362.50 crore. There was an inflow of Rs 1270.60 crore into secondary equity markets which was a result of gross purchases Rs 3628.80 crore and gross sales Rs 2358.20 crore. The BSE Sensex rose 72.20 points or 0.36% to 20,117.38 on that day. 

There was an inflow of Rs 36.60 crore into the category 'primary market & others', which was a result of gross purchases Rs 40.80 crore and gross sales Rs 4.20 crore. 

FII inflow in September 2010 totaled Rs 24,083.70 crore (till 27 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 83,465.30 crore (till 27 September 2010). 

There are a total of 1,726 foreign funds registered with the Securities & Exchange Board of India (Sebi).

MFs continue selling

Outflow of Rs 299.30 crore on 24 September 2010 

Mutual funds (MFs) sold shares worth a net Rs 299.30 crore on Friday, 24 September 2010, slightly higher than Rs 278 crore on Thursday, 23 September 2010. 

The net outflow of Rs 299.30 crore on 24 September 2010 was a result of gross purchases Rs 557.10 crore and gross sales Rs 856.40 crore. The BSE Sensex rose 184.17 points or 0.93% to 20045.18 on that day. 

MFs sold shares worth net Rs 4427.20 crore in September 2010 (till 24 September 2010). Mutual funds had sold equities worth a net Rs 3169.60 crore in August 2010.

MF outflow crosses Rs 5000 crore in September 2010

Outflow of Rs 611.30 crore on 27 September 2010 

Mutual funds (MFs) dumped shares worth a net Rs 611.30 crore on Monday, 27 September 2010, much higher than Rs 299.30 crore on Friday, 24 September 2010. 

The net outflow of Rs 611.30 crore on 27 September 2010 was a result of gross purchases Rs 462.70 crore and gross sales Rs 1074 crore. The BSE Sensex rose 72.20 points or 0.36% to 20,117.38 on that day. 

MFs sold shares worth net Rs 5038.50 crore in September 2010 (till 27 September 2010). Mutual funds had sold equities worth a net Rs 3169.60 crore in August 2010.

IRDA to allow cover for N-accidents

The Insurance Regulatory and Development Authority has decided to frame guidelines for allowing insurance cover for nuclear accidents. 

The agency is awaiting the the nuclear liability law to provide framework for the proposed rules. "Insurance companies would be happy in providing cover for nuclear accidents, if the customers show interest," Irda chairman J Hari Narayan said.

India is all set to engage in nuclear commercial trade with various countries following the clearance of a Nuclear Liability Bill in Parliament during the monsoon session. The bill now awaits for the nod of the President before becoming a law.

FIIs step up buying

Inflow of Rs 1338.70 crore on 24 September 2010 

Foreign institutional investors (FIIs) bought shares worth a net Rs 1338.70 crore on Friday, 24 September 2010, much higher than Rs 582.60 crore on Thursday, 23 September 2010. 

The net inflow of Rs 1338.70 crore on 24 September 2010 was a result of gross purchases Rs 4286.50 crore and gross sales Rs 2947.80 crore. There was an inflow of Rs 1328.90 crore into secondary equity markets which was a result of gross purchases Rs 4275.30 crore and gross sales Rs 2946.50 crore. The BSE Sensex rose 184.17 points or 0.93% to 20045.18 on that day. 

There was an inflow of Rs 9.80 crore into the category 'primary market & others', which was a result of gross purchases Rs 11.10 crore and gross sales Rs 1.30 crore. 

FII inflow in September 2010 totaled Rs 22,776.50 crore (till 24 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 82,158.20 crore (till 24 September 2010). 

There are a total of 1,726 foreign funds registered with the Securities & Exchange Board of India (Sebi).

IRDA issues detailed anti-money laundering guidelines for insurers

Guidelines covers guidelines/circulars issued up to 31 July 2010 

IRDA in its recent circular dated 24 September 2010, has cautioned insurers about possible money laundering through insurance sector. In its master circular, it has updated its AML/CFT guidelines issued in its previous circular dated 24th November 2008 for Insurers.

IRDA feels that the Insurance industry needs to be guarded against money launders who may try to convert their illegally earned money in to a legal one by investing in insurance products. This is more relevant now with the ulip products, being seen more as an investment tool than as a protection policy. 

IRDA has identified the following as vulnerable products

 

They are 1) Unit Linked Products which provide for withdrawals and unlimited top up premiums; 2) Single premium products where the money is invested in lump sum and surrendered at the earliest opportunity; 3) Free look cancellations (the big ticket cases) 

Money laundering means moving illegally acquired cash through financial systems so that it appears to be legally acquired. IRDA has issued a detailed guidelines for insurers to prevent terrorists and money launderers from investing in insurance products. Insurance products are offered to the public through trained agents of insurance companies and also through a number of alternate distribution channels like direct marketing and bancassurance etc. . 

IRDA feels that the agents and corporate agents also have a significant role in assisting the insurers in the process of identifying money launderers/terrorists in the beginning stage itself and reporting to appropriate law enforcing agency. 

In order to discharge the statutory responsibility of detecting possible attempts of money laundering or financing of terrorism, IRDA advices a AML/CFT program which should consist of 1) Internal policies, procedures and control 2) Appointment of a principal compliance officer 3) Recruitment and training of employees and agents 4) Internal control and audit 

1) Internal policies, procedures and control

 

These include implementing (KYC) know your client norms, knowing existing customers, KYC on ongoing basis, finding the risk profile of the customer, identifying his/her source of funds, verification at the time of redemption/surrender, submission of reports to Financial Intelligence Unit - India (FIU-IND) about suspicious transactions, reporting of suspicious cash transactions, reporting the receipts by non-profit organizations, record keeping and freezing of insurance policies . 

2) Compliance Arrangements

 

IRDA expects Insurers to make a detailed AML/CFT Policy regarding customer acceptance, customer identification procedure, monitoring of transactions and risk management framework. This policy should be approved by IRDA and duly filed with IRDA for information. The policy should be reviewed annually and necessary changes should be made.

It also, suggests that companies should designate a Principal Compliance Officer (PCO) under AML/CFT rules at a senior level. 

3) Recruitment and training of employees and agents.

 

Irda's other suggestions include adequate training of agents and employees involved in selling policies and processing of proposals so that AML/CFT norms are strictly adhered to. 

4) Internal control and audit

 

Insurance companies' internal audit/inspection departments should verify on a regular basis, compliance with policies, procedures and controls relating to money laundering activities.

LIC launches Swavalamban, a pension scheme for unorganized sector

The Union Finance Minister presented the Swavalamban pension scheme of LIC to the Nation as announced in the budget 2010-11 

The Finance Minister has unveiled a new pension scheme of LIC called- Swavalamban, for the workers in unorganized sector, at a function in Raghunathganj in Murshidabad district of West Bengal on 26 September. 

To encourage the people from the unorganized sector to voluntarily save for their retirement and to lower the cost of operations of the New Pension Scheme (NPS), the finance minister had announced in the Union Budget 2010-11 presented on 26 February 2010 that Government will contribute Rs 1000 per year to each NPS account opened in the year 2010-11. 

The finance minister had also announced that this initiative, "Swavalamban" would be available for persons who join NPS, with a minimum contribution of Rs 1000 and a maximum contribution of Rs 12000 per annum during the financial year 2010-11. The scheme will be available for another three years. 

The finance minister had allocated a sum of Rs 100 crore for the year 2010-11. It was expected to benefit about 10 lakh NPS subscribers of the unorganized sector. 

Swavalamban Yojana is administered by Pension Fund Regulatory and Development Authority and LIC is the Facilitator. Many workers from beedi industry and insurance agents have enrolled themselves in the new scheme. 

This new pension scheme of LIC covers members of the unorganized sector in the age group of 18 to 55. The minimum monthly premium is Rs 100, and the minimum and maximum annual premium are Rs 1000 and Rs 12000, respectively and the policy holder starts getting pension when he/she attains 60 years of age. 

The LIC has already successfully implemented social security schemes like Aam Admi Bima Yojana and Janashree Beema Yojana and now it is given the responsibility of facilitating the scheme.

ICICI Prudential MF Announces Change in Subscription Period under Two Schemes

ICICI Prudential Mutual Fund has announced change in subscription period for ICICI Prudential Long Term Floating Rate Plan and ICICI Prudential Banking & PSU Debt Fund. 

Accordingly, the schemes will not be available for fresh purchases/additional purchases/switch-ins on and from 29 September 2010 till further notice. The investors can submit applications up to 28 September 2010 before the applicable cut off time.

SBI MF Declares Dividend For Magnum Multiplier Plus Scheme 1993

Record date for dividend is 1 October 2010 

SBI Mutual Fund has declared dividend on the face value of Rs 10 per unit under dividend option of Magnum Multiplier Plus Scheme 1993. The record date for the dividend is set as 1 October 2010. 

The quantum of dividend will be Rs 7.00 per unit as on the record date. The NAV of the scheme was at Rs 63.08 per unit as on 23 September 2010. 

Magnum Multiplier Plus Scheme 1993 is an open ended equity scheme. The investment objective of the scheme is to provide the investor with long term capital appreciation/dividends along with the liquidity of an open end scheme. The scheme will invest in diversified portfolio of equities of high growth companies.

Weekly Scenario: Equity & Debt Funds Retain Their Positive Run

Strong fund flow from Foreign Institutional Investors (FIIs) had enabled front-line indices inch closer to all time peaks, despite the profit booking. Sensex and Nifty gained 2.30% and 2.27% respectively over one week period ended 24 September 2010. With Sensex breaching the 20000 level, NAV of most of the equity diversified funds touched their 52 week high. 

In the major equity fund category, NAV of Index Funds surged the most by 1.84%, Tax Savings Funds by 1.01% and Equity Diversified Funds by 0.85% during the one week period 24 September 2010. 

FMCG Funds surged 2.91%, Infotech Funds gained 1.33%, Pharma Funds added 1.23%, and Banking Funds climbed 0.79% among the sector funds. 

Indian bond yields closed mixed – the short end of the curve (1 year) witnessed a rise in yields on the back of liquidity tightening and rate hikes announced on 16 September. In contrast, yields at the long-end of the curve eased in reaction to the hike in debt FII debt investment limits and marginal cut in bond supplies. 

Among the sub categories in debt fund, Gilt – Medium & Long Term surged by 0.43%, Gilt – Short Term by 0.26%, Income Funds by 0.25%, Floating Rate Income Funds – Long Term by 0.14%, Short Term Income Funds by 0.13%, Floating Rate Income Funds - Short Term, Ultra Short Term Funds and Liquid Funds gained 0.11% each. In the ETF category, Other ETF's and Gold ETF's gained 1.49% and 0.31% respectively. 

Among the sub categories in the hybrid funds, NAV of Equity Oriented Balanced Funds surged 0.78%, followed by Debt Oriented Balanced Fund (0.37%), Monthly Income Plans (0.25%) and Arbitrage Funds (0.06%). 

Equity Diversified Funds

 

NAV of Equity Diversified Funds category gained 0.85% in the week ended 24 September 2010. Among the schemes in the equity diversified category, JM Equity Fund gained the maximum of 3.84%, followed by Reliance Quant Plus Fund which climbed 3.45%, ICICI Pru Target Returns Fund rose 2.95%, JM Large Cap Fund jumped 2.70% among others. DSP BR Small & Mid Cap Fund and JM HI FI Fund were the worst performers in this category declining 1.31% and 1.24% respectively among others. 

Tax Savings Funds

 

Tax savings Funds category gained 1.01% in the week ended 24 September 2010. HDFC Long Term Advantage Fund and Quantum Tax Savings Fund were the top performers with a return of 2.39% and 2.14% respectively during one week period. Among the other schemes in the category, Axis Tax Saver Fund rose 1.70%, Baroda Pioneer ELSS '96 climbed 1.58% and JM Tax Gain Fund surged 1.51%. Bharti AXA Tax Advantage Fund and Bharti AXA Tax Advantage Fund - Eco were the worst performer in this category declining by 0.28% each. 

Index Funds

 

All the schemes in this category ended the week as gainers. ING Nifty Plus and LICMF Index Fund – Sensex Plan were the biggest gainers in this category. Their returns stood at 2.40% and 2.38% respectively over one week time period. ICICI Pru Nifty Junior Index Fund and Benchmark S&P CNX 500 Fund ended at the bottom of the table with returns of 0.84% and 1.16% respectively. 

Sector Funds

 

NAV of Pharma Funds category advanced 1.23%, with UTI-Pharma & Healthcare Fund ending the week as the biggest gainer with an increase in NAV by 1.64%; it was followed by SBI Magnum SFU – Pharma Fund which gained 1.46%. 

Banking Funds category gained 0.79%, with JM Financial Services Sector Fund gaining 1.84% and ICICI Pru Banking & Financial Services gaining 1.16%. Reliance Banking Fund ended at the bottom of the category with a return of 0.13%. 

FMCG Funds category gained 2.91% over one week period ended 24 September 2010. ICICI Pru FMCG Fund was the top performer in this category. It's NAV appreciated by 3.96% over one week period. 

Infotech Funds category gained 1.33% over one week period ended 24 September 2010. Franklin Infotech Fund was the highest gainer which posted a return of 2.16%. 

Hybrid Funds

 

LICMF Balanced Fund and Sundaram BNP Paribas Balanced Fund were the highest gainer in equity oriented balanced fund category as their NAV appreciated by 2.45% and 2.43% respectively. Escorts Balanced Fund and ICICI Pru Child Care Plan – Gift Plan were the worst performer in this category declining 0.44% and 0.22% respectively. 

Tata Young Citizens Fund was the highest gainer in debt oriented balanced fund category as its NAV appreciated by 1.15%. SBI Magnum Children Benefit Plan was the next highest gainer by 0.81%. UTI-Mahila Unit Plan and DWS Money Plus Advantage Fund were the worst performers in this category with a return of 0.08% and 0.10% respectively. 

Debt Funds

 

Among the pure Debt funds, Birla Sun Life Gilt Plus - Regular gained 0.87%, Birla Sun Life Gilt Plus – PF Plan added 0.86%, Birla Sun Life Income Plus - Retail surged 0.82% and IDFC G-Sec Fund – PF climbed 0.82%. Religare Gilt – Long Duration was the worst performer declining 0.01%, while Tata Fixed Income Portfolio – Sch – A1 and Tata Fixed Income Portfolio – Sch – C2 declined 0.003% respectively.

Bharti AXA MF Announces Change in KYC Compliance Requirements & Investments in Derivatives

With effect from 1 October 2010 

Bharti AXA Mutual Fund has announced that in line with the revised AMFI guidelines, on and from 1 October 2010, it will be mandatory for following categories of investors to provide attested / certified copy of Know Your Customer (KYC) acknowledgement issued by CDSL Ventures Limited (CVL) for all fresh investment transactions (Purchase, Switch-in, Systematic Investment Plans, Systematic Transfer Plans, etc). The categories of investors are as follows: 

1) All non-individual investors i.e. companies, trusts, Hindu Undivided Family, societies, etc; 

2) Non Resident Indians (NRIs) (including Persons of Indian Origin (PIOs)); and 

3) Investors (individuals and non-individuals) investing through the Channel Distributors (Channel investors). 

Investments in Derivatives

 

In accordance with SEBI Circular dated 18 August 2010, clauses has been inserted under the para titled “What are the Investment Restrictions” in the Scheme Information Documents of Bharti AXA Equity Fund, Bharti AXA Tax Advantage Fund, Bharti AXA Regular Return Fund, Bharti AXA Liquid Fund, Bharti AXA Treasury Advantage Fund, Bharti AXA Short Term Income Fund and Bharti AXA Fixed Maturity Plan – Series C – Plan 1. 

The above provisions shall come into effect from 1 October 2010.

Precious metals on a roll

Yellow metal closes little shy of $1,300 mark 

Precious metals continued to strike new highs even on Thursday, 23 September 2010 at Comex. Yellow metal prices struck new record for the fifth consecutive session. Silver also shone for the second consecutive day at its three-decade highest level. Prices rose as the latest initial claims data disappointed. 

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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa. 

On Thursday, gold for December delivery ended at $1,296.3 an ounce, higher by $4.2 (0.3%) on the New York Mercantile Exchange. Prices closed a little shy of $1,300 level for the second consecutive day. This was by far an all time highest finish for the yellow metal. Last week, gold ended higher by 2.5%. It was the fifth weekly gains for gold in past six weeks. 

Gold ended the month of August 2010 higher by 5.6% after ending July lower by 5%. It was the worst monthly loss for gold since December 2009. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 20.3%. 

On Thursday, December Comex silver futures ended higher by 16 cents (0.8%) at $21.21. It was once again an all time high close for silver prices in three decades. Last week, silver ended higher by 3.5%. For the month of August, silver ended higher by 8%. In July 2010, silver shed 3.7%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 20.8%. 

The Labor Department in US reported on Thursday, 23 September 2010 that the number of people who filed new claims for unemployment benefits jumped 12,000 to 465,000 in the week ended 18 September 2010. Market had expected initial claims to rise to a seasonally adjusted 455,000. 

The report detailed that the four-week average of initial claims, which is less volatile than the weekly number, dipped 3,250 to 463,250, the lowest level since the end of July. Continuing claims fell 48,000 to 4,49 million. New claims had dropped two straight weeks before this, but part of the decline stemmed from a disruption in the government's data collection caused by the Labor Day holiday in early September. Claims often rise after the holiday. 

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 October delivery closed higher by Rs 5 (0.02%) at Rs 19,190 per ten grams. Prices rose to a high of Rs 19,245 per 10 grams and fell to a low of Rs 19,158 per 10 grams during the day's trading. 

At the MCX, silver prices for December delivery closed Rs 137 (0.42%) higher at Rs 32,561/Kg. Prices opened at Rs 32,465/kg and rose to a high of Rs 32,610/Kg during the day's trading.

Crude pares early losses

Prices rise due to optimistic economic reports 

Crude oil prices pared earlier losses and ended modestly higher on Thursday, 23 September 2010 at Nymex. Prices dropped initially due to strong dollar. Then prices moved up as economic data showed some positive signs of economic recovery. 

On Thursday, crude oil futures for light sweet crude for November delivery closed at $75.18/barrel (higher by $0.47 or 0.6%). Last week, crude ended lower by 3.7%. 

For the month of August, crude ended lower by 8.9%. Before this, in July, crude ended higher by 4.5%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is lower by 0.6%. 

Oil witnessed its first monthly decline in August since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over. 

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six competing currencies rose by 0.3%. 

The Conference Board said Thursday that its index of leading economic indicators rose 0.3% in August, compared to 0.1% in the previous month. Market had expected a 0.2% increase. In addition, the Commerce Department reported a modest rebound for existing-home sales. 

Among other data for the day, the Labor Department in US reported on Thursday, 23 September 2010 that the number of people who filed new claims for unemployment benefits jumped 12,000 to 465,000 in the week ended 18 September 2010. Market had expected initial claims to rise to a seasonally adjusted 455,000. 

The report detailed that the four-week average of initial claims, which is less volatile than the weekly number, dipped 3,250 to 463,250, the lowest level since the end of July. Continuing claims fell 48,000 to 4,49 million. New claims had dropped two straight weeks before this, but part of the decline stemmed from a disruption in the government's data collection caused by the Labor Day holiday in early September. Claims often rise after the holiday. 

In the latest weekly inventory report, the EIA reported yesterday that oil inventories for the week ended 17 September rose 1 million barrels. Oil had traded around $75.30 a barrel before the report. The report also showed that gasoline stockpiles as reported by the government rose 1.6 million barrels. Reserves of distillates, which include diesel and heating oil, rose 300,000 barrels. 

Among other energy products on Thursday, reformulated gasoline also rebounded, aided by reports of refinery work being performed in the East Coast. The October contract advanced a penny, or 0.5%, to $1.92 a gallon. 

Also on Thursday, natural gas for October delivery rose 5 cents, or 1.3%, to $4.02 per million British thermal units. That's natural gas highest close in nearly a 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. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex. 

At the MCX, crude oil for October delivery closed higher by Rs 37 (1.07%) at Rs 3,453/barrel. Natural gas for September delivery closed at Rs 183.8, higher by Rs 3.4 (1.9%).

FII buying vigour slows down

Inflow of Rs 582.60 crore on 23 September 2010 

Foreign institutional investors (FIIs) bought shares worth a net Rs 582.60 crore on Thursday, 23 September 2010, much lower than Rs 1505.40 crore on Wednesday, 22 September 2010.

The net inflow of Rs 582.60 crore on 23 September 2010 was a result of gross purchases Rs 3043.60 crore and gross sales Rs 2460.90 crore. There was an inflow of Rs 589.50 crore into secondary equity markets which was a result of gross purchases Rs 3043.30 crore and gross sales Rs 2453.80 crore. The BSE Sensex fell 80.71 points or 0.4% to 19,861.01 on that day. 

There was an outflow of Rs 6.90 crore in the category 'primary market & others', which was a result of gross purchases Rs 0.30 crore and gross sales Rs 7.10 crore. 

FII inflow in September 2010 totaled Rs 21,437.80 crore (till 23 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 80,819.50 crore (till 23 September 2010). 

There are a total of 1,725 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Kotak MF Declares Dividend For Balance Unit Scheme 99

Record date for dividend is 29 September 2010 

Kotak Mutual Fund has announced the declaration of dividend on the face value of Rs. 10 per unit under dividend option of Kotak Mahindra Balance Unit Scheme 99. The record date for dividend has been fixed as 29 September 2010. 

The quantum of dividend will be Re. 0.75 per unit as on the record date. The scheme recorded NAV of Rs. 24.553 per unit as on 22 September 2010. 

Kotak Mahindra Balance Unit Scheme 99, is an open ended balanced scheme, with the investment objective to achieve growth by investing in equity & equity related instruments, balanced with income generation by investing in debt & money market instruments.

Religare MF Announce Change in KYC Compliance Requirements

With effect from 1 October 2010 

Religare Mutual Fund has announced that pursuant to implementation of Know Your Customer (KYC) Compliance Requirements under the Prevention of Money Laundering Act 2002, Religare Trustee Company Ltd. has decided to revise the threshold limit for KYC Compliance for investment in schemes by certain category of investors. Accordingly, it would be mandatory for the following category of investors to be KYC Complaint irrespective of the amount of investment: 

All non-individual investors i.e. Hindu Undivided Family (HUF), Partnership Firms, Companies, Bodies Corporate, Public Sector Undertakings (PSUs), Association of Persons (AOP), Bodies of Individuals (BOI), Banks, Financial Institutions, Societies, Trusts, Foreign Institutional Investors (FIIs) etc.: 

Non Resident Indians (NRIs) (including Persons of Indian Origin (PIOs)); and

Investors (individuals and non-individuals) investing through the Channel Distributors (Channel investors). 

The above category of investors for the purpose of KYC Compliance shall include (a) their constituted Power of Attorney (PoA) holder in case of investments through a PoA; (b) each of the applicants in case of investments in joint names; and (c) guardian in case of investments on behalf of minor. 

The above change will be effective from 1 October 2010 and shall be applicable in respect of all investments made on or after 1 October 2010.

Escorts MF Declares Dividend Under Its Schemes

Record date for dividend is 30 September 2010 

Escorts Mutual Fund has announced 30 September 2010 as the record date for the declaration of dividend under dividend options of the following plans: 

Escorts Income Plan: Dividend – Rs 0.070 per unit. NAV: Rs 11.1447 per unit. 

Escorts Opportunities Fund: Dividend – Up to Rs 0.0981 per unit. NAV: Rs 10.2327 per unit.

NAVs for the above schemes are as on 22 September 2010. 

Escort Income Plan has an investment objective to generate current income by investing predominantly in a well diversified portfolio of fixed income securities and money market instruments with moderate risk levels. 

Escort Opportunities Fund has an investment objective to generate long term capital appreciation by predominantly moving investments in a portfolio of equity and equity related securities amongst different sectors, present or future, expected to show high earnings such as technology sector, media sector, entertainment sector, communications sector, FMCG sector, Pharmaceuticals Sector, Cyclical sector, Real Estate sector, Space Sector, Cybercity Sector etc.

MFs continue selling

Outflow of Rs 278 crore on 23 September 2010 

Mutual funds (MFs) sold shares worth a net Rs 278 crore on Thursday, 23 September 2010, lower than Rs 449.90 crore on Wednesday, 22 September 2010. 

The net outflow of Rs 278 crore on 23 September 2010 was a result of gross purchases Rs 395.90 crore and gross sales Rs 673.90 crore. The BSE Sensex fell 80.71 points or 0.4% to 19,861.01 on that day. 

MFs sold shares worth net Rs 4127.90 crore in September 2010 (till 23 September 2010). Mutual funds had sold equities worth a net Rs 3169.60 crore in August 2010.

Precious metals at all time highs

Prices falter as dollar slumps following Fed's policy statement

 

Precious metals ended substantially higher on Wednesday, 22 September 2010 at Comex. Yellow metal prices struck new record and silver once again climbed to thirty year high level. Prices shone following comments from Federal Reserve regarding latest policy announcement and dollar slumped. 

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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa. 

On Wednesday, gold for December delivery ended at $1,292.1 an ounce, higher by $17.8 (1.4%) on the New York Mercantile Exchange. During intra day trading, prices hit a high of $1,298. This was by far an all time highest finish for the yellow metal. Last week, gold ended higher by 2.5%. It was the fifth weekly gains for gold in past six weeks. 

Gold ended the month of August 2010 higher by 5.6% after ending July lower by 5%. It was the worst monthly loss for gold since December 2009. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 20%. 

On Wednesday, December Comex silver futures ended higher by a 42 cents (2%) at $21.06. It was an all time high close for silver prices in three decades. Last week, silver ended higher by 3.5%. For the month of August, silver ended higher by 8%. In July 2010, silver shed 3.7%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 20%. 

Yesterday, the latest FOMC statement indicated that the target range for the federal funds rate will be maintained at 0.00% to 0.25% and those economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The statement also indicated that the Fed is prepared to provide additional accomodation if needed. 

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six competing currencies fell by 0.8%. 

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 October delivery closed higher by Rs 169 (0.9%) at Rs 19,303 per ten grams. Prices rose to a high of Rs 19,341 per 10 grams and fell to a low of Rs 19,211 per 10 grams during the day's trading. 

At the MCX, silver prices for December delivery closed Rs 487 (1.5%) higher at Rs 32,424/Kg. Prices opened at Rs 31,990/kg and rose to a high of Rs 32,490/Kg during the day's trading.

Crude remains in the red

Prices drop due to bearish inventory data 

Crude oil prices ended little lower on Wednesday, 22 September 2010 at Nymex. Prices dropped in tandem with US equities and weekly inventory data. 

On Wednesday, crude oil futures for light sweet crude for November delivery closed at $74.71/barrel (lower by $0.26 or 0.4%). Last week, crude ended lower by 3.7%. 

For the month of August, crude ended lower by 8.9%. Before this, in July, crude ended higher by 4.5%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is lower by 1.2%. 

Oil witnessed its first monthly decline in August since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over. 

In the latest weekly inventory report, the EIA said oil inventories for the week ended 17 September rose 1 million barrels. Oil had traded around $75.30 a barrel before the report. The report also showed that gasoline stockpiles as reported by the government rose 1.6 million barrels. Reserves of distillates, which include diesel and heating oil, rose 300,000 barrels. 

Yesterday, the latest FOMC statement indicated that the target range for the federal funds rate will be maintained at 0.00% to 0.25% and those economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The statement also indicated that the Fed is prepared to provide additional accomodation if needed. 

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six competing currencies fell by 0.8%. 

Among other energy products on Wednesday, reformulated gasoline turned lower retreating 2 cents, or 0.8%, to $1.91 a gallon, the lowest price for gasoline in three weeks. 

Also on Wednesday, natural gas for October delivery added 5 cents, or 1.2%, to $3.97 per million Btus. 

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

At the MCX, crude oil for October delivery closed lower by Rs 67 (1.9%) at Rs 3,416/barrel. Natural gas for September delivery closed at Rs 180.4, lower by Rs 0.9 (0.5%).

FII inflow crosses Rs 80000 crore in 2010

Inflow of Rs 1505.40 crore on 22 September 2010 

Foreign institutional investors (FIIs) bought shares worth a net Rs 1505.40 crore on Wednesday, 22 September 2010, lower than Rs 3312.60 crore on Tuesday, 21 September 2010. 

The net inflow of Rs 1505.40 crore on 22 September 2010 was a result of gross purchases Rs 4630.30 crore and gross sales Rs 3124.90 crore. There was an inflow of Rs 1020.10 crore into secondary equity markets which was a result of gross purchases Rs 4139.70 crore and gross sales Rs 3119.50 crore. The BSE Sensex fell 59.83 points or 0.3% to 19,941.72 on that day.

There was an inflow of Rs 485.20 crore in the category 'primary market & others', which was a result of gross purchases Rs 490.70 crore and gross sales Rs 5.40 crore. 

FII inflow in September 2010 totaled Rs 20,855.20 crore (till 22 September 2010). FIIs had bought equities worth Rs 11,687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 80,236.90 crore (till 22 September 2010). 

There are a total of 1,732 foreign funds registered with the Securities & Exchange Board of India (Sebi).

FIIs investment increased by US $ 5 billion in bonds

Way to catch stable investment 

FII Investment Limit in Government Securities and Corporate Bonds Increased by US $ 5 Billion The Government has increased the current limit of Foreign Institutional Investors (Fll) investment in Government Securities by US $ 5 billion raising the cap to US $ 10 billion and the incremental limit of US $ 5 billion be invested in securities with residual maturity of over five years. The current limit of Fll investment in corporate bonds has also been increased by US $ 5 billion raising the cap to US $ 20 billion and the incremental limit of US $ 5 billion be invested in corporate bonds with residual maturity of over five years issued by companies in infrastructure sector.

The enhancement of the Fll investment cap would provide avenues for increased Fll investments in debt securities, help investment in infrastructure sector and the development of Government securities and corporate bond markets in the country. 

The policy has been reviewed in the context of lndia's evolving macroeconomic situation, its increasing attractiveness as an investment destination and need for additional financial resources for lndia's infrastructure sector while balancing its monetary policy. 

Currently, Flls can invest up to USD 5 billion and USD 15 billion in Government securities and corporate bonds respectively.

Food inflation grew by 0.1% over a week

Primary articles records 16.80% growth on Y-O-Y 

The index for primary articles group rose by 0.2 %to 178.7 (Provisional) from 178.4 (Provisional) for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at 16.80 %( Provisional) for the week ended 11 September 2010 compared with 16.22% last week.

The index for 'Food Articles' group rose by 0.1 %to 178.5 (Provisional) from 178.4 (Provisional) for the previous week due to higher prices of condiments & spices (2%) and fish-inland, urad and poultry chicken (1% each). However, the prices of masur (4%), moong and arhar (3% each), gram and jowar (2% each) and beef & buffalo meat, fish-marine and tea (1% each) declined. 

The index for 'Non-Food Articles' group rose by 0.7 %to 154.4 (Provisional) from 153.3 (Provisional) for the previous week due to higher prices of rose (18%), jasmine and raw rubber (2% each) and raw silk, rape & mustard seed and copra (1% each). However, the prices of marigold (20%) and gingelly seed (sesamum) (2%) declined. 

The index for fuel and power group remained unchanged at its previous week's level of 147.6 (Provisional). The annual rate of inflation, calculated on point-to-point basis, has also remained unchanged at its previous week's level of 11.48 %( Provisional) for the week ended 11 September 2010. 

The growth in food inflation is a concern. The growth in prices hurts all the sectors badly. To control the growing inflationary pressure, RBI has hiked interest rate with regular intervals. However the effects of these measures are visible with a lag.

Gold continues to shine

Silver drops again from its thirty-year high level 

Precious metals ended mixed on Tuesday, 21 September 2010 at Comex. Yellow metal prices struck new record but silver reversed ended lower once again. Last week, silver had registered its highest close in three decades time. Gold prices shone following comments from Federal Reserve. 

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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa. 

On Tuesday, gold for December delivery ended at $1,283.3 an ounce, higher by $7.6 (0.6%) on the New York Mercantile Exchange. This was by far an all time highest finish for the yellow metal. Last week, gold ended higher by 2.5%. It was the fifth weekly gains for gold in past six weeks. 

Gold ended the month of August 2010 higher by 5.6% after ending July lower by 5%. It was the worst monthly loss for gold since December 2009. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 18.6%. 

On Tuesday, December Comex silver futures ended lower by a 16 cents (0.8%) at $20.64. Last week, silver ended higher by 3.5%. Last week, silver had closed at its highest level in three decades. For the month of August, silver ended higher by 8%. In July 2010, silver shed 3.7%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 18%. 

Among economic reports expected for the day, the Commerce Department in US reported on Tuesday, 21 September 2010 that home construction in US increased in August 2010 and applications for building permits also grew. The gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector. 

As per the report, construction of new homes and apartments rose 10.5% in August from a month earlier to a seasonally adjusted annual rate of 598,000. That's the highest level since April. Market had expected housing starts to drop to 535,000 on a seasonally adjusted basis.

Also, latest FOMC statement indicated that the target range for the federal funds rate will be maintained at 0.00% to 0.25% and that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The statement also indicated that the Fed is prepared to provide additional accomodation if needed. 

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 October delivery closed lower by Rs 84 (0.4%) at Rs 19,018 per ten grams. Prices rose to a high of Rs 19,132 per 10 grams and fell to a low of Rs 19,008 per 10 grams during the day's trading. 

At the MCX, silver prices for December delivery closed Rs 207 (0.64%) lower at Rs 31,937/Kg. Prices opened at Rs 32,126/kg and fell to a low of Rs 31,825/Kg during the day's trading.