Commodity trends
Chana
Rising stocks in warehouses, coupled with sluggish demand and expectations of increasing arrivals in the coming days, kept chana prices low. Chana supplies since the past one year have been ample, due to bumper chana output in FY12-13. For FY13-14, the government has estimated record output of at 9.79 million tonnes in the ongoing rabi season. Chana futures on the NCDEX declined by 4.26% to Rs3,081/quintal for the week ending 10th April.
 
Crude Oil
Crude oil futures price on the MCX jumped by 4.73% to Rs6,246/barrel on 11th April from Rs5,964/barrel on 2nd April. Even as total crude inventories continue to climb, demand seems to have improved as consumption rose last week. US crude stocks increased by 4.03 million barrels according to the weekly report released on 9th April. Libya delayed resuming oil exports from two ports and Chinese oil imports in Q1CY14 were 8.3% higher compared to those in Q1CY13.
 
Cotton
Cotton declined sharply, due to weak overseas markets. India is estimated to export around nine million bales less cotton this year, due to expected drop in demand from the largest consumer, China. Recent cancellation of export deals to China has created negative sentiments across cotton markets. April futures prices of cotton on the MCX declined by 2.61% to Rs19,770/bale for the week ended 10th April.

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Equity mutual funds report a net outflow in March 2014, despite good sales

Equity mutual fund schemes report a net outflow of Rs1,935 crore  in March 2014, after four months of consecutive net inflows, despite a near 50% growth in sales compared to that reported in March 2013

Over the past three months, from December 2013 to January 2014, equity mutual funds reported a total net inflow of Rs1,866 crore. However, a net outflow of Rs1,935 crore in March 2014 wiped out the positive inflows of the past three months. Even though sales reported in March 2014 of Rs6,675 crore is the highest since January 2011, redemptions were even higher at Rs8,610 crore, the highest since September 2010. Investors who may have invested at the market peaks in the past would have seen this as an opportune time to exit. Unfortunately for them, at the current level, the market may not be as overvalued at the earlier peaks. However, those who are jumping in now are new investors who may neither have the patience nor the knowledge to hold for the long term if the market goes sideways now.   

On analysing the quarterly fund flows, equity mutual fund schemes have reported a 10% growth in sales of Rs15,163 crore for the quarter ended March 2014 as compared to Rs13,780 crore for the quarter ended March 2013. Redemption pressure continued with a 1% growth, leading to a net outflow of Rs309 crore for the March quarter.

With the market trending higher, fund houses have jumped at the opportunity and have launched new schemes. In March 2014, as many as six new fund offers were launched. Over the past three years ended October 2013, when the market was volatile and flat, just 30 NFOs were launched. Astonishingly, over the five month period, from November 2013 to March 2014, already 24 schemes have been launched; many of these are close-ended schemes.

However, despite the uptick in sales and new fund offerings, the number of equity mutual fund folios continues to decline. As on 31 March 2014, the total number of equity folios amounted to 29.18 million, down by 12% from 33.17 million as on 31 March 2013. Month on month the number of equity folios have been on a decline. While the regulator looks for ways to develop the mutual fund industry, introducing various policy changes, it fails to instil confidence in investors, the majority of whom are shunning mutual funds as an investment option.



 

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