Dhanalaxmi Bank is in the news for wrong reasons. First, employees union accused the lender of manipulating of accounts and later its MD & CEO resigned due to serious differences with other Board members
The already troubled Dhanlaxmi Bank faced another blow after it reported a net loss of Rs36.87 crore for the quarter ending December 2011 compared with a net profit of Rs7.26 crore a year ago period.
In a filling to the Bombay Stock Exchange (BSE), the Kerala-based lender said that capital adequacy ratio for the third quarter of 2011 stood at 9.88% from 13.39% a year ago. The non-performing asset also fell to Rs33.82 crore from Rs40.42 crore in December 2010.
The bank has been the centre of controversy after its union accusing it of manipulating the accounts. Recently the managing director and chief operating officer (CEO) Amitabh Chaturvedi resigned from the bank over his differences with the management.
Moneylife was the first one to report the All-India Bank Officers Confederation (AIBOC) alleged that the bank has manipulated accounts and provisioning, has a mismatch in asset-liability resources, maintains poor capital adequacy ratio and has huge dependence on call money borrowing. It has also accused the bank for ignoring social banking and financial inclusion. Subsequently, last year in November, the RBI conducted an inspection and issued a 15-point Monitorable Action Plan (MAP) to Dhanlaxmi Bank.
Recently, the Dhanlaxmi Bank Officers Organisation (DBOO), the trade union of the bank has hit out hard on him the recently resigned managing director (MD) and chief executive officer (CEO) Amitabh Chaturvedi and its management for the poor plight of the bank and meticulously hiding all the facts from the public. In a circular issued, DBOO said that the bank which booked profit of Rs57 crore in 2009, is about to show dismal result for the December 2011 quarter.
Goldman Sachs plans to launch an equity diversified scheme which offers nothing different from the 216 similar schemes which are currently available in the market
Goldman Sachs Mutual Fund which took over Benchmark Mutual Fund last year plans to launch an equity diversified scheme—Goldman Sachs India Equity Fund according to the offer document filed with the Securities and Exchange Board of India (SEBI). This would be the first diversified equity scheme launched by the mutual fund company. The new fund would join the list of three other equity-oriented schemes managed by the company which include Goldman Sachs Derivative Fund, Goldman Sachs Equity & Derivative Opportunities Fund and an index fund— Goldman Sachs S&P 500. These funds were part of Benchmark Mutual Fund. The India Equity fund will invest greater than 80% of its assets in equity and equity related securities and the remaining in debt securities and money market instruments. The performance of the scheme would be benchmarked against the S&P 500 index.
The new scheme will add on to the list of 200 plus equity diversified schemes already available in the market and this is excluding index funds and sector funds. The holdings of many equity diversified funds are remarkably similar. Moneylife did an analysis of equity diversified funds that have declared their holding in December 2011. 207 funds that declared their holding invested in a total of just 637 stocks. 43 of these stocks are repeated in 50 or more schemes. Reduce the number of stocks and you will find that 10 stocks are present in more than 100 schemes. ICICI Bank is present in around 145 schemes and Reliance Industries is present in around 139 schemes. Around 46 schemes invest in a same set of 10 stocks and around 175 schemes pick from a set of just 20 stocks.
However, even with selection of the same stocks, what separates the best from the rest is proper market timing and asset allocation, which only a few fund managers possess. We all know that investing in equities is risky, but investing in the wrong fund can be even worse. Therefore it is essential to analyse the portfolio of the equity fund before investing and not to forget the long-term past performance of the fund.
As for Goldman Sachs, there is no long-term history of fund management company in India, managing money for retail investors. This fund comes under the new management of Benchmark altogether. The only other equity oriented funds that are managed by the company include two arbitrage funds and one index fund, all of which were launched by Benchmark Mutual Fund. All the three funds have underperformed the benchmark in the last one-year, two-year and three-year period ending 10 February 2012. Prashant Khemka, chief investment officer (active equity), would be the new fund manager and this would be the first scheme managed by him. He comes in with 14 years of experience.
Though Goldman Sachs is a big name in global investment banking, securities and investment management worldwide, one should be wary before investing. As in a recent study conducted by Moneylife showed that many big names in the industry owned funds that turned out to be the worst performers (Read: Equity Mutual Funds to avoid at all costs).
We would suggest invest in funds with a proven track record through a systematic investing plan. Investing in this fund can wait.
Nifty may reach the level of 5,665. If it does so without a correction, watch out!
Optimism that Greece would stand by its austerity measures boosted the global markets, including India. All-round buying support from institutional investors saw the market make a northward journey right from the opening bell. Today the Nifty broke all its short-term resistance to close at 5,532, its highest since 27 July 2011. Yesterday we had mentioned that the index should cross the level of 5,430 to see the uptrend regaining strength. We may now see the benchmark going up to 5,665 if it manages to make a higher high and higher low. The National Stock Exchange (NSE) saw a huge volume of 131.06 crore shares. However, while more gains seem to be on the cards, the market seems to entering a danger zone. A further rise would look like a parabolic rally which usually ends up with a big decline, even if it is temporary.
The market opened on a firm note on continuing institutional support and positive cues from the Asian markets, which were seen with good gains in morning trade. Broad-based buying resulted in all 50 stocks on the Nifty trading higher in initial trade. The Sensex added 151 points to open above the 18,000 mark and the Nifty started the day with a gain of 45 points at 5,461, 45 points, both showing their best opening since 2 August 2011. The opening figures of both benchmarks were also their intraday lows.
The rally continued to strengthen in the morning session on across-the-board buying supported by positive third quarter earning reports from local companies. While the market pared a small part of its gains in noon trade, the momentum picked up once again after the European markets opened with gains.
The indices hit their intraday highs at around 3pm with the Nifty scaling 5,542 and the Sensex jumping to 18,231. However, the market gave up some of the gains, but closed in the positive for the third straight day. The Nifty gained 116 points (2.14%) to settle at 5532 and the Sensex jumped 354 points (1.98%) to finish trade at 18,202.
The advance-decline ratio on the NSE was in favour of the gainers at 1271:489.
Among the broader indices, the BSE Mid-cap index jumped 2.10% and the BSE Small-cap index climbed 1.33%.
Barring the BSE Oil & Gas index (down 0.32%), all other sectoral gauges settled higher. They were led by BSE Realty (up 5.01%); BSE Capital Goods (up 4.01%); BSE Power (up 3.56%); BSE Bankex (up 3.55%) and BSE Auto (up 3.33%).
Tata Motors (up 6.91%); DLF (up 6.05%); Tata Power (up 6%); Larsen & Toubro (up 5.06%) and BHEL (up 4.53%) were the top Sensex gainers. Reliance Industries (down 1.43%); Cipla (down 0.75%) and Hindustan Unilever (down 0.75%) were the losers on the index.
Reliance Power (up 12.85%); Jaiprakash Associates (up 8.11%); Tata Motors (up 7.39%); Axis Bank (up 7.11%) and DLF (up 6.46%) were the key gainers on the Nifty. The top laggards on the Nifty were RIL (down 1.23%); HUL (down 0.96%); Cipla (down 0.68%); Cairn India (down 0.57%) and Sun Pharma (down 0.24%).
Markets in Asia finished in the green on optimism from Greece that it would stay committed to its harsh austerity measures, a much-needed requirement to secure a fresh bailout. Besides, reports that the Chinese central bank would continue to invest in Eurozone government bonds also helped the gains.
The Shanghai Composite surged 0.94%; the Hang Seng jumped 2.14%; the Jakarta Composite added 0.01%; the Nikkei 225 climbed 2.30%; the Straits Times rose 0.81%; the Seoul Composite advanced 1.13% and the Taiwan Composite settled 1.54% higher. Bucking the trend, the KLSE Composite fell by 0.30%. At the time of writing, the key European bourses were trading with gains of over 1% and the US stock futures were in the positive.
Back home, foreign institutional investors continued their buying spree—they were net buyers of stocks amounting to Rs1,030.12 crore on Tuesday. On the other hand, domestic institutional investors were net sellers of shares totalling Rs408.64 crore.
Healthcare major, Apollo Hospitals, said on Wednesday that it would add 1,000 beds by the end of next fiscal at an investment of around Rs720 crore. At present, Apollo Hospitals has a capacity of over 8,500 beds across 54 hospitals within and outside India. The stock gained 1.63% to close at Rs624.45 on the NSE.
Paint major Berger Paints India has forayed into the construction chemicals sector and has fixed a sales target of Rs25 crore in the first year of operation. Towards this end, the company today launched a new range of construction chemicals and new roof paint under its ‘Home Shield’ banner. The stock rose 1.32% to settle at Rs103.90 on the NSE.
Chennai-based, Gemini Communication has bagged contract from a large telecom operator to offer solar power to 1,000 telecom towers in 2012-13. The contract is expected to fetch revenues of Rs60 crore. Powering a telecom tower with a diesel genset typically costs around Rs80,000 a month, but with solar energy the cost could be brought down to Rs50,000. The stock declined 1.15% to close at Rs25.80 on the NSE.