Though investments in tax-saving schemes increased over the previous month, sales of other schemes declined leading to a net outflow of Rs163 crore in February
Equity mutual schemes have not witnessed a single month of inflow over the last nine months. The months of December 2012 and January 2013 saw a jump in equity sales. However, sales in February 2013 could not keep up with the previous two months. Equity MF sales in December and January amounted to Rs4,343 crore and Rs5,599 crore, respectively. Sales in February dipped to Rs3,713 crore despite the fact the equity linked savings schemes (ELSSs) contributed to 9% of the sales; the highest since March last year. Even redemptions, which amounted to Rs3,876 crore, were the lowest in the last eight months. But still, due to the poor sales, equity schemes witnessed another month of outflow.
There were no new fund offers that closed in the previous month. A reason for the dip in sales could be that distributors are more focussed on pushing Rajiv Gandhi Equity Saving Schemes (RGESSs) to their clients due to the high commission involved (Read: High value applications perverting RGESS, while SEBI remains mum) As most of these NFOs would be closing in March, it would be interesting to see the quantum of inflows brought in by these schemes.
Though redemptions from equity schemes were lower compared to the previous months, the number of folios declined by nearly 2.30 lakh to 3.34 crore in February, from 3.36 crore folios in January. We have been constantly highlighting the decline in folios in our earlier articles as well. We had mentioned that as on 31 March 2009 the number of folios stood at 4.17 crore, but since then there has been a constant reduction in folios. As of now the number of folios is down by nearly 20% since 2009.
Equity assets under management (AUM) fell by over 7% from Rs1.90 lakh crore in January to Rs1.76 lakh crore in February. The S&P BSE Sensex declined by 5% over the period.
The government will continue to take policy measures to revive investments spending that will help to stabilize private corporate capex, says Morgan Stanley
The slower growth in central government spending, which is about 14.5% of GDP (gross domestic product), means that GDP growth rates will be constrained in the near term even as growth has already slipped to a 10-year low in FY2013. The moderation in central government expenditure growth will act as a natural drag on aggregate demand and hence GDP growth. Moreover, rural consumption, which had earlier benefitted from fiscal transfers and high rural wage growth, will also moderate as support from these factors wanes. While moderation in CPI should help urban real income growth, without a strong recovery in employment growth, overall consumption growth recovery will be slow. Consequently, in the near term, the importance of capex and exports as growth drivers will increase, says Morgan Stanley.
Some of the key factors affecting private investment sentiment over the last three years have been volatile global capital markets, relatively high energy prices, inflation and cost of capital and corruption-related investigations and slowdown in execution of the government’s administrative machinery. While the government’s recent efforts to revive investment have helped improve public capex (largely state-owned enterprises and government departments), private investment trend has been weak.
Most indicators of capex imply that investment to GDP is stabilizing at low levels. While public sector capex appears to be recovering, private capex remains weak, points out Morgan Stanley.
“We are building in a gradual recovery in export growth based on developed markets growth trajectory and assume that the government will continue to take policy measures to revive investment spending that will help to stabilize private corporate capex. We believe that developed markets’ domestic demand outlook and policy measures to revive investment spending are the key anchors for economic revival,” argues Morgan Stanley. “Indeed, we have consistently argued that measures other than monetary policy are more crucial for reviving investment. In this regard, the government has taken a number of steps to prevent the persistent decline in investment to GDP. Moreover, the budget for Fy2014 announced small measures to encourage investment such as tax allowance for investment and higher quota of tax-free infrastructure bonds,” the global investment bank added.
The finance minister has indicated that the government intends to allow public/private partnerships in the coal industry, reviews of oil & gas exploration policy to move from profit-sharing to revenue-sharing contracts, and the announcement of a policy to encourage exploration and production of shale gas. Some of these proposals are slightly longer term in nature and thus the impact on investment growth would take time.
The report concludes with the forecast, “We are currently building in a gradual recovery in GDP growth in FY2014 to 6% (lower than the earlier estimate of 6.2%) as compared to our estimate of 5.1% for FY2013.”
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Almost two years after Moneylife exposed Speak Asia, a multi-level marketing (MLM) company that lured lakhs of people from India into its trap, ‘survey’ companies continue to thrive. Getcashforsurveys.com is sending emails to thousands of people, especially from India, with a promise to pay $50 (about Rs1,000) when you take your first paid survey. It claims, “There are thousands of companies out there who are willing to pay for your opinions regarding their products. This is an important part of product research, and they rely on people just like you for your honest opinion!”
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