Precious metals shed some glitter

Prices drop as dollar heads up and on interest rate worries 

Precious metals ended lower on Wednesday, 08 December 2010 at Comex. Yellow metal registered modest losses while silver dropped considerably as the dollar turned strong. Profit taking was also at play together with anticipation about China's interest are decisions. 

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 $1,383.2 an ounce, lower by $25.8 (1.8%) on the New York Mercantile Exchange. Earlier this week, gold had struck a new all time high of $1,416.1. Last week, gold ended higher by 3.2%. 

Gold has surged to record high of $1,410 in early November. Prices had been on a roll since late August on expectations that Federal Reserve efforts at monetary stimulus will depress the dollar, making gold more valuable as an alternative store of wealth. 

Gold ended the month of November higher by 2.1%. It had ended October 2010 higher by 3.8%. Before this, it ended September 2010 and the third quarter higher by 5%. It was eighth consecutive quarterly gain for gold. For the second quarter, gold ended up by 12%. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 27.2%.

On Wednesday, December Comex silver futures dropped from its thirty year high figures and ended lower by $1.52 (5.1%) at $28.25. Prices had touched a high of $30.75 during intra day trading earlier this week. It was a new thirty-year high figure for silver. Prices gained 9.7% last week after gaining 15% in November. 

Before this, for the month of October, silver gained 13%, its third consecutive monthly gain. In September, silver ended higher by 12%. For the third quarter, silver gained nearly 18%. 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 71%. 

In the currency market on Wednesday, the dollar oscillated after strengthening earlier and oscillated thereafter and finished the day with fractional gain. The dollar index, which weighs the strength of the dollar against a basket of six other competing currencies, ultimately pared its losses and ended higher by 0.03%. 

The market's concerns, however, centered around China's announcement it was moving up the release date of key macroeconomic reports to Saturday from Monday. That fueled fears an interest-rate hike could come as early as this weekend, but China's statistics bureau said the change was aimed at keeping the date of the monthly release consistent with previous months. 

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. 

At the MCX, gold prices for February delivery closed lower by Rs 130 (0.63%) at Rs 20,549 per ten grams. Prices rose to a high of Rs 20,690 per 10 grams and fell to a low of Rs 20,378 per 10 grams during the day's trading. 

At the MCX, silver prices for March delivery closed Rs 1,421 (3.2%) lower at Rs 43,141/Kg. Prices opened at Rs 44,400/kg and fell to a low of Rs 42,703/Kg during the day's trading.

FIIs step up selling

Dump shares worth net Rs 1297.80 crore on 8 December 2010 

Foreign institutional investors (FIIs) dumped shares worth net Rs 1297.80 crore on Wednesday, 8 December 2010, much higher than an outflow of Rs 419.70 crore on Tuesday, 7 December 2010. 

The net outflow of Rs 1297.80 crore on Wednesday, 8 December 2010, was a result of gross purchases Rs 2493.90 crore and gross sales Rs 3791.70 crore. There was a net outflow of Rs 1306 crore from the secondary equity markets, which was a result of gross purchases Rs 2485.70 crore and gross sales Rs 3791.70 crore. The BSE 30-share Sensex had lost 238.16 points or 1.19% to 19,696.48 on that day as a newspaper report that oil marketing companies are likely to hike fuel prices following rise in global crude oil prices stoked inflation concerns.

There was an inflow of Rs 8.20 crore into the category 'primary market & others'. 

FIIs bought shares worth a net Rs 1002.20 crore in the first few days this month (till 8 December 2010). FIIs had bought shares worth a net Rs 18293.10 crore in November 2010, which was lower than an inflow of Rs 28562.90 crore in October 2010. 

FII inflow in the calendar year 2010 totaled Rs 132218.41 crore (till 8 December 2010). In dollar terms, the net equity inflow in 2010 now stands at $29.12 billion, far above last year's $17.45 billion. The annual inflows are at record level this year. 

There are a total of 1,749 foreign funds registered with the Securities & Exchange Board of India (Sebi).

Net Inflows into Income & Liquid Funds Pushes up Total AUM of MF Industry by Nearly 3% in November 2010

Mutual Fund (MF) Industry which was going through a rough time during the last two months due to huge redemption and fall in Assets Under Management (AUM), had some thing to smile for as it witnessed net inflows and surge in AUM in November 2010. 

Total Assets Under Management (AUM) of the mutual fund (MF) industry increased by 2.92% or by Rs 18887 crore to Rs 6.65 lakh crore in November against Rs 6.46 lakh crore in October. The AUM of the industry had surged primarily due to inflows into debt funds. In the industry the AUM of liquid funds surged the highest by 15.37%, followed by gold ETF by 11.85% and gilt Funds by 11.08% among others. While equity funds witnessed highest fall in AUM by 3.58%. In the month of November, the domestic stock market grappled with a series of global and local events, be it policy tightening, the Euro zone debt crisis, tensions on the Korean peninsula or the housing loan bribery case. Early in November, Sensex hit 21k for first time since January 2008 but since then, there had been selling by the investors due to various global issues. For the month, the Sensex and Nifty were down by over 2%.

The net inflow into the industry stood at Rs 18379 crore in November compared with net outflow of Rs 5742 crore in October. Huge inflows were seen in income funds (Rs 11307 crore) and liquid funds (Rs 6111 crore). 

Equity & Debt Investments by Domestic Mutual Funds

Domestic mutual funds investments in debt instruments surged once again in November, while they remained sellers in equities yet again. Mutual funds shopped debt instruments worth Rs 15182 crore in November as against net buying of Rs 10978 crore in October. Of the 20 trading sessions, mutual funds were net buyers in 15 sessions and net sellers in the remaining 5 sessions. On the flip side mutual funds selling in equities stood at Rs 100 crore in November, moreover the selling was lower than its Rs 5801 crore selling in October. Of the 21 trading sessions in November, mutual funds were net buyers in 8 sessions and net sellers in the remaining 13 sessions. 

With Sensex dipping below the 20,000 mark enabled mutual funds to buy equities at a cheaper rate. However, investors have kept booking profits from their equity schemes which lead mutual funds to end as net sellers in equities for the month of November.

Collections from New Launches

Funds mobilized from 44 newly launched schemes in November stood at Rs 11259 crore, out of which Rs 11187 crore came from 42 income funds. One open ended gold ETF - Axis Gold ETF mobilized Rs 68 crore and open ended fund of funds investing overseas - JP Morgan EEMA Equity Off Shore Fund mobilized Rs 4 crore.

The forty two close ended income funds which were launched and for which allotment was over includes Birla Sun Life FTP Series CG, Series CH and Series CI, Short Term FMP - Series 2; BNP Paribas FTF Series 19 B, Series 19C, Series 19D and Series 19E; DSP BlackRock FMP 3M Series 23 and 12M Series 9; DWS Fixed Term Fund - Series 76; Fidelity FMP - Series IV - Plan B; HDFC FMP 35D October 2010 (1) Series XVII, November 2010 (1) Series XVII, 100D October 2010 (3) Series XIV, November 2010 (1) Series XVII, November 2010 (2) Series XVII, 370D November 2010 (1) Series XVII and November 2010 (2) Series XVII; ICICI Prudential FMP Series 53 One Year Plan B and Series 54 18 Months Plan A; IDFC Fixed Maturity - EMS - 7 and HYS - 12, IDFC Fixed Maturity Bi-Monthly Series 1 and Series 2, IDFC Saving Scheme Series - 1; Kotak FMP 6M Series 10, 15M Series 6 and Series 7; L & T FMP II (November 91D A) and (November 12M A); Principal Pnb FMP 91 Days Series XXVI; Reliance Fixed Horizon Fund - XVI - Series 2, Series 3 and Series 4; Religare FMP - Series IV - Plan A (3 Months), Plan B (6 Months) and Plan C (3 Months) and Sundaram FTP AP 367 Days Series, AQ 367 Days Series and AR 367 Days Series; Tata FMP Series 29 Scheme A.

According to AMFI data on mutual funds, 247 closed ended income funds have been launched until the end of November for the calendar year 2010. These funds had collectively mobilized Rs 60817 crore. The rise in the interest rate during the calendar year had made fund houses to launch these funds. Investors have shown interest in subscribing for these funds to beat the interest rate risk.

 

Gold ETF:

Gold ETFs had put up a good show by posting an average return of about 6% in November as gold prices continue to scale to new heights. The assets under management of this category of fund have been moving upwards in this calendar year and moreover the investors have been showing desire in diverting their money into Gold ETFs. 

Gold ETFs had a net inflow of Rs 172 crore, moreover its total AUM increased by 11.85% to Rs 3464 crore in November against Rs 3097 crore in October. Another round of Quantitative Easing by the US Fed triggered the weakening of the dollar, and so, it came as no surprise that the investment demand for Gold soared, moving it past the $1400 an ounce mark for the first time ever in history.

For the fourth consecutive month, gold prices continued to rise. The month of November saw gold prices increase by 2.86%. However, factors such as, fluctuations in the dollar, FED announcement of QE II, sovereign debt fears surrounding Ireland, Chinese monetary tightening, the Korean conflict, etc. all added to higher volatility.

Liquid Funds:

Liquid fund category had seen net inflows of Rs 6111 crore in November compared with a net inflows of Rs 2283 crore in October. On the flipside, the AUM increased by 15.37% to Rs 99190 crore in November. Share of assets of liquid funds in total AUM jumped to 15% in November from 13% in October.

Income Funds:

Total AUM of income funds increased by 3.99% or Rs 12702 crore to Rs 3.31 lakh crore in November compared with October. Net inflows into this category have been to a tune of Rs 11307 crore which is higher than the net outflows of Rs 5305 crore in October. Moreover the net inflows from this category has surged to Rs 2736 crore for the year to date period of the current fiscal. Due to inflows into this category, its share in total AUM has increased to 50% in November from 49% in October.

Gilt Funds: 

AUM of gilt funds increased by 11.08% to Rs 4410 crore in November as against Rs 3970 crore in October. Net inflows into this category stood at Rs 431 crore in November as against Rs 117 crore in October. This category had witnessed net inflows for the fifth consecutive month in a row and its net inflow for the year to date period of the current fiscal stood at Rs 887 crore. 

Equity Funds:

Equity schemes of mutual funds continued to witness outflows for the sixth consecutive month, in November, following withdrawals by investors and lacklustre sales by distributors who market these schemes. However, the outflow was the smallest since June.

The net outflows from this category zoom to Rs 17534 crore for the current fiscal so far. On the other hand the total AUM of equity funds had declined by 3.58% or Rs 6587 crore to Rs 1.77 lakh crore in November. Moreover the weightage of equity funds declined to 27% of the total assets of the industry in November as against 29% in October. 

The month of November saw a lot of volatility in the market with the Sensex falling by 511.09 points (2.55%) and the Nifty by 155 points (2.58%). The fall in the equity markets impacted the performance of the funds which had exposure towards equity as well. However, Pharma Funds were the least impacted among the equity funds in November, this category of fund posted returns in range of 0.51% to 3.75%, with UTI-Pharma & Healthcare Fund ending as the top gainer in this category.

ELSS Equity:

AUM of ELSS - Equity funds declined by 3.34% to Rs 26515 crore in November from Rs 27431 crore in October. The net outflow from this category was at Rs 62 crore in November as against Rs 194 crore in October. The redemption from this category climbed to Rs 993 crore for the year to date period of the current fiscal. 

Other Funds 

Assets of balanced funds were had fell by 3.04% in November. However this category witnessed net inflows of Rs 255 crore in November. The net inflows have increased to 320 crore for the year to date period of the current fiscal which is much better than net outflows of Rs 562 crore in the year to date period of the previous fiscal.

The total AUM of Other ETFs climbed 9.59% in November. Moreover this category had net inflows of Rs 200 crore in November as against net inflows of Rs 73 crore in October.

Total AUM of MF Industry Increases by 2.92% in November 2010

Total Assets Under Management (AUM) of the mutual fund (MF) industry increased by 2.92% or Rs 18887 crore to Rs 6.65 lakh crore in November against Rs 6.46 lakh crore in October. The AUM of the industry had fell for two consecutive months prior to this increase. AUM of Liquid Funds surged the highest by 15.37%, followed by Gold ETF by 11.85% and Gilt Funds by 11.08% among others. While Equity Funds witnessed highest fall in AUM by 3.58%. 

On the other hand, the industry witnessed net inflows in November. The net inflow stood at Rs 18379 crore in November compared with net outflow of Rs 5742 crore in October. Huge inflows were seen in income funds (Rs 11307 crore) and liquid funds (Rs 6111 crore). 

Funds mobilized from 44 newly launched schemes in November stood at Rs 11259 crore, out of which Rs 11187 crore came from 42 income funds.

Precious metals witness new all time highs

Prices rise as dollar pares its gains partly 

Precious metals registered new all time highs on Monday, 06 December 2010 at Comex. Prices rose as the dollar pared its early gains to some extent. 

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 $1,416.1 an ounce, higher by $9.9 (0.7%) on the New York Mercantile Exchange. It was an all time new price for gold. The last record price it had was of $1409 it had registered on 9 November. Prices rose to a high of $1422.4 during intra day trading on Monday. Last week, gold ended higher by 3.2%. 

Gold has surged to record high of $1,410 in early November. Prices had been on a roll since late August on expectations that Federal Reserve efforts at monetary stimulus will depress the dollar, making gold more valuable as an alternative store of wealth. 

Gold ended the month of November higher by 2.1%. It had ended October 2010 higher by 3.8%. Before this, it ended September 2010 and the third quarter higher by 5%. It was eighth consecutive quarterly gain for gold. For the second quarter, gold ended up by 12%. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 28.6%. 

On Monday, December Comex silver futures ended higher by $0.46 (1.6%) at $29.73. It hit a high of $30.12 during intra day trading. It was a new thirty-year high figure for silver. Prices gained 9.7% last week after gaining 15% in November. Before today, silver has hit a string of 30-year highs in recent months, peaking at $28.91 on 9 November. 

Before this, for the month of October, silver gained 13%, its third consecutive monthly gain. In September, silver ended higher by 12%. For the third quarter, silver gained nearly 18%. 

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 66.4%. 

In the currency market on Monday, the greenback was up as much as 0.7% against a basket of competing currencies after Fed Chairman Bernanke stated in a weekend interview that the Fed could provide further stimulus to the economy, if necessary. The dollar was also driven higher as the euro dropped in response to reports of division among European leaders on the matter of increasing Europe's recently announced bailout plan. The dollar index, which weighs the strength of the dollar against a basket of six other competing currencies, ended higher by 0.3%. 

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. 

At the MCX, gold prices for February delivery closed lower by Rs 15 (0.07%) at Rs 20,783 per ten grams. Prices rose to a high of Rs 20,873 per 10 grams and fell to a low of Rs 20,755 per 10 grams during the day's trading. 

At the MCX, silver prices for March delivery closed Rs 292 (0.66%) higher at Rs 44,553/Kg. Prices opened at Rs 44,300/kg and rose to a high of Rs 45,045/Kg during the day's trading.