Bill for mandatory hallmarking of more items cleared

The Bill seeks to empower the government to make hallmarking-certification of a product or process-mandatory on the grounds of public interest

New Delhi: The government today cleared the Bureau of Indian Standards (Amendment) Bill, 2011 paving the way for introduction of mandatory hallmarking of more products including gold, reports PTI.

At present, about 77 items including cement, mineral water and milk products are certified with mandatory hallmarking under the BIS Act to conform to the quality level of goods and services to consumers.

According to sources, the Union cabinet cleared the Bill, which seeks to empower the government to make hallmarking-certification of a product or process-mandatory on the grounds of public interest.

Section 14 of the BIS Act provides the consumer affairs ministry the power to make those industrial products and processes for compulsory hallmarking that are listed under the Industries Development and Regulation Act (IDRA), 1951.

"Earlier, even if the Centre wanted to make mandatory hallmarking of gold, it could not do under the present law as the yellow metal does not fall under the IDRA list. Even the profession of goldsmiths who process gold into jewellery is not on that list," sources said.

The Cabinet cleared the Bill after considering the views of the law ministry which suggested delinking the Act from the provisions of the Industries Development and Regulation Act (IDRA), 1951, sources added.

Currently, the BIS hallmarking scheme for gold jewellery is voluntary in nature.

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CMIE projects inflation at 7% in FY11-12

The Centre for Monitoring Indian Economy (CMIE) in its latest review of the country's economy stated that a moderation in inflation in food articles and textile items will be largely responsible for lower inflation in FY11-12

Mumbai: Moderation in food inflation and textile items would help ease the wholesale price index (WPI) based inflation to 7% in FY11-12, reports PTI.

"We project that WPI-based inflation will ease to 7% in 2011-12, as compared to an estimated 9% in 2010-11," the Centre for Monitoring Indian Economy (CMIE) said in its latest review of the country's economy here.

A moderation in inflation in food articles and textile items will be largely responsible for lower inflation in FY11-12, it said.

High base values will keep inflation in food articles under control and inflation in this group is projected to average 6.7% in FY11-12.

"This will be less than half of the 16.6% estimated for 2010-11 and 15.3% recorded in 2009-10," CMIE said.

In FY10-11, inflation in food items has been high largely because of higher demand.

Various employment schemes have been launched like NREGS, which provides assured employment for 100 days to rural unskilled labourers. Implementation of the Sixth Pay Commission recommendations provided a hefty rise in the wages and salaries of government employees.

Wages in the private sector have been rising too and the income of farmers is estimated to have risen by 5.1% in real terms in 2010-11, CMIE said. In 2011-12, real income of farmers is projected to rise.

Regular wages and salaries of government employees are budgeted to increase by 7%. This increase will come over a robust 55% increase in 2008-09, 30% in 2009-10 and 18.7% in 2010-11.

"Thus, the demand pressure will be largely responsible for keeping inflation at 7% in 2011-12," CMIE said.

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With the Sensex stagnant over the last three years, which funds have outperformed?

The market is facing headwinds. If the indices gyrate in a range for the next few years, which funds will outperform? While the past is no guide to the future, some funds have done exceptionally well in the last three years when the market has yielded nothing

If the market moves sideways for years, how will mutual funds perform? This is a question investors would have to face because we are in a period of rising interest rates and subdued earnings growth. Higher lending rates may lead to lower credit growth to the industrial and services sectors. With higher interest rates, rising input costs and subdued demand conditions, it is likely that firms may defer further investments in capacity expansion, which may affect overall economic growth.

Already, analysts are projecting a lower GDP growth for India for 2012. If this situation does not change, it would be hard for the market to rally. This was the situation in 1996 when inflation was in double digits and corporate earnings stagnated. While we may not be in the situation we were in 1996, it is important to know which funds can do well in a stagnant market.

One indicator is to see which of the growth funds have beaten their benchmarks over the past three years, when the Sensex yielded no returns. For this, we looked at funds that were in existence from 28 December 2007 to 29 October 2010. These were roughly the high points of the market over this period. There were 174 equity schemes in operation during this period, out of which 90 schemes outperformed, 74 schemes underperformed and nine just managed to equate their benchmark.

The top 10 outperformers gave a return of 10% on an average, whereas their benchmark gave a -2% on an average. Among the top 10 outperformers were Birla Sun Life Dividend Yield Plus with a return of 14% (benchmark CNX500 down 2%), HDFC Equity Fund with a return of 12% (benchmark CNX500 down2%), DSP BlackRock Micro Cap Fund (7%), ING Dividend Yield Fund (12%), ICICI Prudential Discovery Fund (12%), Quantum Long-Term Equity Fund (12%), HDFC Top 200 (11%),  IDFC Premier Equity Fund (10%), UTI Dividend Yield Fund (10%) and Sundaram Select Midcap (5%). While these funds may or may not be the best performers over the next few years, it is worth noting that they have navigated a very difficult period very well.

Among the worst performers, the majority-not surprisingly-were JM funds. As we had written in one of our articles earlier, "JM Financial Mutual Fund has created a unique position for itself in the mutual fund industry. Its schemes continue to be among the worst performers in whichever category they belong to and virtually across any time period." (To read the report click http://www.moneylife.in/article/81/6696.html.) This has been proved again over the last three years.  

Among the worst performers were five JM funds, which include JM Contra Fund with a return of -23% while its benchmark has given a return of -2%, JM Emerging Leaders Fund with a return of -23% while its benchmark gave a return of -1%, JM Small & Mid-Cap Fund with a return of -29% compared to its benchmark return of 1%, JM Hi Fi Fund with a return of -31% compared to its benchmark which gave a return of 0%, and JM Basic Fund with a return of -12% compared to its benchmark which gave a return of -1%. The other underperformers include SBI Magnum Midcap Fund with a return of -12%, BNP Paribas Opportunities Fund with a return of -16%, LIC MF India Vision Fund with a return of -17%, and Taurus Discovery Fund with a return of -17%.

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COMMENTS

Rahul

6 years ago

Very good Article. I suggest add to more info about fund managers also. HDFC Mututal fund Manager's systematic and diversified approach helped lot to give good return.Whereas controversial and high profile like Sandip Sabharwal sank with investors' money

Nayan

6 years ago

So, here it makes a lot sense that one should (at least a small & retail investor) go in equity market directly or via mutual fund really in staggered manner. SIP mode. One should remember that this is high risk high reward trade off. You can really gain a lot if you are patient. Now forget about long term to be 3 years or 5 years. This is now really becoming short term. Our market is now becoming highly volatile. We should now think a long term for more than 10 years or 15 years.
We should have proper allocation while making investment and monitor the investment periodically.

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