Mutual Funds
Hang Seng BeES yet to attract investors

The scheme was the first ETF with global exposure; however, the market response has been tepid so far

Benchmark Mutual Fund's Hang Seng BeES or Hang Seng Benchmark Exchange Traded Scheme launched in March this year is yet to become popular. It is the first foreign index based exchange-traded fund (ETF) listed in India (on the National Stock Exchange). Hang Seng BeES gives Indian investors an exposure to the Hong Kong and Chinese markets.

Trading volumes of Hang Seng BeES continue to be low, leading to low liquidity and wide bid-ask spread. At the end of the day today, the 'buy' price was Rs1,252 and the 'sell' price was Rs1,265. Total traded volumes today were just 156 units with a total turnover of Rs1.96 lakh. On an average, just 277 units were traded per day in August on the NSE. The turnover on the BSE is negligible. The open-ended passively managed fund was launched on 15 February 2010.

The Hang Seng index is a popular indicator of the performance of the Hong Kong stock market. HSBC Holdings, Bank of China, Hang Seng Bank and China Mobile are some of its constituents.

There have been a number of ETF launches by fund houses but investor appetite for such funds continues to remain low. Recently, Birla Sun Life Mutual Fund filed a draft offer document to launch its Nifty ETF. Benchmark Mutual Fund plans to launch six open-ended ETFs like IT BeES, FMCG BeES, SERVICES BeES, ENERGY BeES, PHARMA BeES, and REALTY BeES. Currently there are 22 ETFs listed on the NSE and the Bombay Stock Exchange (BSE).

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What is India’s real GDP growth? 8.8% or 3.7%?

While the real GDP growth at factor cost is estimated at 8.8%, at market prices, Nomura estimates the same at just 3.7%. But that depends on whether you trust government data

India's gross domestic product (GDP) expanded by 8.8% in the quarter to June on the back of robust manufacturing growth. However, there is a substantial divergence between the real GDP growth at factor cost and the real GDP growth at market price. This also raises questions about the validity of data collected and disbursed by the government.

While the real GDP growth at factor cost is estimated at 8.8%, the same at market prices is estimated at just 3.7% due to the difference in net indirect taxes, which suggests that taxes are falling while subsidy payments have risen substantially, contradicting the recent evidence of improving government finances, says broking company Nomura India in a research note.

However, one wonders whether the government data is correct at all. "In our view, domestic demand may have started moderating, but it is surely not as weak as suggested by the demand-side GDP components. Indeed, other real activity indicators on auto sales, capital goods output, machinery equipment production and government expenditure all suggest strong domestic demand. The data may be revised higher at a later stage, but the current readings are puzzling," said Nomura India in a report.

According to the government data, private consumption slumped to 0.3% year-on-year (y-o-y) in the quarter to end-June from 2.6% in quarter to end-March, fixed investment has dropped to 3.7% from 17.7%, government consumption growth was negative and both export and import growth contracted. The demand side, therefore, paints a completely different and a much weaker picture than the robust outlook presented by the supply side, Nomura India said. 

The preliminary expenditure-side GDP estimate can often be subject to subject to significant revision, due to statistical anomalies and estimates of inventory change. "Given the strong momentum in the service sector, especially wholesale and retail trade, we believe there can be significant scope for revision in private consumption and investment. At this stage, we would not be overly concerned," said Barclays Capital in a note.

According to the data released by the Indian government on Tuesday, the economy grew by an impressive 8.8% during the quarter ended June on the back of robust manufacturing growth, as against 6% in the corresponding quarter of the last fiscal. Agriculture and allied activities grew by 2.8%, higher than 1.9% in the year-ago period. Manufacturing expanded by a strong 12.4% in April-June, 2010 against a mere 3.8% growth rate in the same period last year.

Nomura India said," We see downside risks to our GDP estimate of 9% y-o-y in FY11. Nomura's composite leading index is pointing towards a slowdown, suggesting that June may mark the peak quarterly GDP growth in FY11. We are currently reviewing our estimates with a mind to downgrade."

"The June quarter GDP growth of 8.8% was slightly below our estimate of 9%. Though agriculture growth was sluggish at 2.8% y-o-y, given the strong monsoons this year, we expect agriculture to revive in the next 3 quarters clocking full year growth of about 5%. The details on the expenditure side were slightly disappointing as private consumption and gross fixed capital formation growth was sluggish in real terms, though we expect private consumption growth to improve due to better rainfall and consequent moderating food inflation," said Ashutosh Datar, economist, IIFL.

According to a PTI report, Planning Commission deputy chairman Montek Singh Ahluwalia said that wholesale price inflation will fall to around 6% by December. Inflation had slid back to single-digits at 9.97% after five months in July. Food inflation, however, has been above 10% since the last week of July. "It is certainly true that with the growth being high there is no particular need for loosening monetary policy from the growth point of view," Mr Ahluwalia said.

The Reserve Bank of India (RBI) continues to describe managing inflation and anchoring inflation expectations as its policy priorities. "We expect non-food manufacturing inflation to remain sticky and strong job growth to encourage further demand-side pressures. However, we believe favourable base effects and moderation in growth momentum will have a tempering influence on the manufacturing sub-components, in line with the RBI's inflation expectations. We expect the RBI to hike the repo and reverse repo rates by 25 basis points (bps) on 16th September to take the rates to 6% and 4.75%, respectively," said Barclays Capital.

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6 years ago

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EXCISEDUTY 14.14
COST OF PETROL 22.07
TOTAL RETAIL PRICE 63.16

MORE THAN 40RS IS COLLECTED BY TAX WHEN CRUDE WAS SELLING AT 135$ PETROL WAS AT54RS
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HPCL PROFIT 2142+90 CR
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Economy will grow not less than 8.5% in FY'11: FM

New Delhi: Buoyed by the encouraging first quarter gross domestic product (GDP) numbers, finance minister Pranab Mukherjee today expressed confidence that the economy will grow by not less than 8.50%-8.75% this fiscal, reports PTI.

"The numbers are quite encouraging ... more encouraging point is 12.4% growth which has been registered in the manufacturing sector. I think the highest growth rate in the last 11 quarters ... I do hope it will be possible to maintain this level of growth," Mr Mukherjee told reporters here.

According to the official data released today, the economy grew by 8.8% during the quarter to June.

However, certain sectors like financial services restrained the growth in economy, which had recorded 6% growth rate in April-June 2010-11.

The show-stopper for the quarter is the manufacturing sector, which expanded by a strong 12.4% in April-June, 2010, against a mere 3.8% growth rate in the same period last year.

The minister, however, said that more is required in the agriculture sector to ensure sustainable growth.

"I am happy that manufacturing sector has registered satisfactory growth level which means that there has been more employment generation and job creation ..."

"We shall have to reach the 4% growth in agriculture to have sustainable growth ... Keeping that in view, I am quite confident that whatever was projected in the Economic Survey while projecting the Budget for the year that GDP growth will not be less than 8.5% to 8.75%," Mr Mukherjee said.

Agriculture and allied activities grew by 2.8%, higher than 1.9% in the year-ago period, but it is no where between the target of 4% pegged by the government in the medium term.

Construction grew by 7.5% compared to 4.6%. Among services, financial, insurance and real estate services expanded by just 8%, against a growth rate of 11.8% in the year-ago quarter, while community social and personal services growth slowed down to 6.7 per cent, against 7.6% a year ago.

However, trade, hotels and communication services rose by 12.2%, against 5.5% during April-June 2009.

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