Another mid-cap and small-cap oriented close-ended scheme
Joining the race to launch close-ended equity schemes, Canara Robeco recently launched Canara Robeco India Opportunities a mid-and small-cap oriented close ended equity scheme. The scheme will have tenure of three years from the date of allotment. While this scheme offers a specific allocation range of its portfolio to stocks of different market-capitalisation, will an average saver know how much to invest in such a scheme and would they be aware of the risks?
The scheme would invest 65%-90% of its assets in small-and mid-cap stocks. Between 10%-35% of the portfolio will be invested in large-cap stocks and up to 5% will be invested in micro-cap stocks. The balance part of the portfolio will be invested in debt and money market instruments. In the last six months of the tenure of the scheme, “the exposure to large-cap stocks may go up to 100%, if considered in the best interest of investors, in order to facilitate smooth completion of maturity of the scheme,” mentions the scheme information document.
The scheme defines large-cap companies as those that are among the top 150 Companies appearing in BSE 200 index or those companies whose market capitalisation is within the range of market capitalisation of top company and the 150th company of BSE 200. Stocks that appear in the CNX Midcap index or those with a similar market-cap, will be considered mid-cap stocks. The stocks appearing in the CNX Small Cap index or will a similar market-cap will be considered as small-cap companies.
Ravi Gopalakrishnan, who has 10 years experience in the capital markets will be the fund manager of the scheme.
Nifty seems trapped in the 8,430-8,530 zone
We had mentioned in Tuesday’s closing report that if NSE’s CNX Nifty goes below the previous day’s low, a short-term decline may happen. The Indian benchmark opened Wednesday in the red and stayed there for most of the time till 1pm. After that the Nifty moved higher and remained in the green zone till the end of the session. It also managed to stay above Tuesday’s low, giving hope to the bulls. The market will remain volatile on Thursday when the futures & options (F&O) of November 2014 series expires.
S&P BSE Sensex opened at 28,322 while Nifty opened at 8,450. Sensex moved between 28,261 and 28,470 and closed at 28,386 (up 48 points or 0.17%). Nifty moved between 8,439 and 8,500 and closed at 8,476 (up 13 points or 0.15%). NSE recorded a lower volume of 78.66 crore shares. India VIX fell 3.99% to close at 12.9850.
Commerce Secretary Rajeev Kher has said the Foreign Trade Policy will address the exporters' concerns of slowdown in several key markets like European Union and Japan and a lot of policy developments and diversification measures are being worked out to deal with the challenges of exports.
A report by HSBC showed that after two consecutive months of sell-offs, FIIs have net inflows of $5.3 billion in Asian equities with all markets having received positive flows in November. Of the $5.3 billion of net inflows in Asian equities, China ($2.3 billion) regained the top position as the 'most loved' market, pushing India ($1.4 billion) down to second position in the region, while Thailand was placed at the third spot.
Global rating agency Moody's said India's credit trends in 2015 will depend on steps governments takes to address high fiscal expenditures, recurrent food price inflation, and wide infrastructure deficit. The sovereign outlook for India (Baa3) remains stable. The global sovereign outlook for 2015 is also stable as a gradual global recovery supports sovereign credit quality, Moody's said in its outlook report. It released report entitled "2015 Outlook: Global Sovereigns" today.
The Appellate Tribunal for Electricity gave a favourable verdict to Gujarat State Petronet Ltd against the Petroleum and Natural Gas Regulatory Board (PNGRB). The case was related to tariff revision, and PNGRB has been asked to re-determine the tariff upward. This would be the second revision in the past six months while the first revision was 10.8%. This move pushed up gas stocks. Gujarat Gas (16.87%) was the top gainer in ‘A’ group on the BSE while GAIL (2.75%) was the top gainer in the Sensex 30 pack. Gujarat Gas hit its 52-week high today.
Rasoya Proteins (4.86%) and Kailash Auto Finance (4.76%) were among the top two losers in ‘A’ group on the BSE. The stocks continued to hit their new 52-week lows today. Zee Entertainment (3.96%), which hit it 52-week high on Tuesday, was among the top three losers in the group today.
Bharti Airtel (2.43%) was the top loser in Sensex 30 stock. It was recently in news for it signed the deal with American Tower Corporation through its international arm, Bharti Airtel International (Netherlands) BV.
US indices ended Tuesday flat. The Commerce Department reported that the US economy grew at its fastest pace in more than a decade during the spring and summer. However, readings on consumer confidence and central-Atlantic manufacturing missed forecasts.
Except for Nikkei 225 (0.14%) all the other Asian indices closed in the green. Shanghai Composite (1.43%) was the top gainer. European indices are trading in the green. US Futures too are trading higher.
According to Care Ratings, while strengthening of the US dollar has caused volatility in the currency markets, FII inflows may provide cushion to the Indian rupee against a strong dollar
The strengthening of the US dollar in recent times has caused some element of volatility in the currency markets. Given that this strengthening of the dollar is synchronous with the US recovery and likely increase in interest rates, it does need to be watched carefully. However, if the current positive trend of foreign institutional investment (FII) inflows in equities and debt securities is sustained, it will provide some cushion to the Indian rupee, says Care Ratings.
It said, given that other components of the external account like import of oil has benefited partly due to the strong dollar, as the price of oil gets calibrated to the dollar and when the dollar falls, the price of oil increases and vice-versa, there would be some countervailing force to stabilise the rupee. "The implication is that while the Reserve Bank of India (RBI) has brought about order in the balance of payments and several components like imports, external commercial borrowing (ECB) flows, and FII funds, it would also have to constantly monitor changes in the external account on account of such changes in the currency value," the ratings agency said.
According to a research note, a stronger dollar, though good for the US economy would militate at the margin for its exports, though it is still considered to be a domestic driven rather than an external driven economy unlike some of the East Asian emerging markets. "But one consequence has definitely been that commodity prices have started coming down aided also by the low growth expected in countries like China which cannot be countered by the US recovery. China is the largest consumer of metals and prices have been moving southwards since August," the report said.
Talking about impact of stronger US dollar on other currencies, Care Ratings said, while the movement of the currency for any country is dependent on the various factors that affect the balance of payments, there is prima facie reason to believe that some part of the movement can be explained by the stronger dollar. It should be mentioned here that domestic factors have also influenced such movements like the Russian ruble being affected by the Ukraine imbroglio, it added.
According to the research note, there are two direct consequences of the stronger US dollar. The price of gold which bears an inverse relation with the strength of the dollar has moved downwards to below the $1200 per ounce mark. Traditionally gold is held as a substitute for the dollar as a safe haven. With the dollar becoming stronger, it said, a trend which will probably continue to move in this direction, gold has taken a hit along with other commodities.
"There has also been a flow of funds to the US now and a movement away from the other foreign bonds. This will have an impact in the coming months on the overall flow of funds to the emerging markets which benefited from both the QE programme as well a weak dollar," the report concluded.