Citizens' Issues
Monsoon likely to be just below normal, says IMD

India is likely to experience below-average monsoon rainfall during 2014, if the El Nino weather pattern affects the four-month-long rainy season, says IMD

The India Meteorological Department (IMD), in its first official forecast on Thursday, has said that the Southwest monsoon rainfall this year is likely to be just below normal.

 

In a statement, the Met Deparment said, "The experimental ensemble forecast based on IMD SFM indicates that the rainfall during the 2014 monsoon season between June to September averaged over the country as a whole is likely to be 88% ± 5% of long period average (LPA)."

 

The probability of emergence of El Nino phenomenon, the warming sea surface temperatures in the Pacific that can trigger drought in countries including India, during the four month monsoon period are around 60%, IMD added.

 

"Quantitatively," it said, "the monsoon rainfall during the four month period June-September is likely to be 95% of LPA."

 

IMD’s forecast comes with an error margin of 5%. LPA is the average of seasonal rainfall over the country as a whole from 1951 to 2000 estimated at 89 cm.

 

The 5 category probability forecasts for the Seasonal (June to September) rainfall over the country as a whole is given below:


The weather body, however, did not issue any region-wise forecast for the monsoon rains. Normal monsoon is categorised as rainfall between 96 and 104% of the 50 year average.

 

Lesser than normal precipitation can trigger drought and impact agricultural output thereby resulting in lower economic growth and could spike inflation. A good monsoon is crucial for crops like rice and sugarcane as about two-third of the farm lands are rainfed.

 

Last week, Pune-based chief Monsoon forecaster of IMD, Shivanand Pai has cautioned that a weak El Nino weather pattern can trigger a drought in India around July. (http://www.moneylife.in/article/monsoon-problems-due-to-el-nino-effect/37073.html)

 

El Nino refers to a warming of water in the Pacific Ocean every three to five years that lasts for about 18 months.

 

India experienced drought conditions in 1997 and 2009 when El Nino weather pattern was observed. Yet, a moderate El Nino in 2002 resulted in one of the worst droughts in India, in the past 100 years!

 

Pai's caution is supported by the Australian Meteorological Bureau who have stated that there are 70% chance for El Nino to occur, while the US Climate Prediction Centre feels that it has 50% chances. Either way, if El Nino occurs, Indian agriculture output can be in trouble.

 

The El Nino conditions in the equatorial Pacific continues to be neutral. “However, the sub-surface temperatures in the tropical pacific have warmed to the levels generally observed prior to an El Nino event. Latest forecast from a majority of the models also indicate warming trend in sea surface temperatures over the equatorial Pacific reaching to El Nino level during the southwest monsoon season with a probability of around 60%,” IMD added.

 

In addition, IMD said it is also carefully monitoring the sea surface conditions over the Pacific and the Indian Oceans that have a strong influence on the monsoon.

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Supreme Industries Q3 net profit down 23% to Rs58.34 crore

Supreme Industries' March quarter net profit fell to Rs58.34 crore on higher costs and sluggish industrial demand

Supreme Industries Ltd, a leading plastics player in the country, reported a 23% lower third quarter net profit on sluggish demand and increase in costs.

For the quarter to end-March, Supreme Industries said its consolidated net profit fell 23% to Rs58.34 crore from Rs75.83 crore while its total revenues, including sales, increased 9.54% to Rs1,005.23 crore from Rs917.68 crore, same period last year.

“Continuing slowdown in industrial and material handling product segment coupled with hailstorm and unseasonal rains during February and March in many parts of the country adversely affected overall demand. The company envisages annual growth in product volume around 6% and product turnover between 16% to 18% during the current year over previous year, ” the company said in a regulatory filing.

During the March quarter, Supreme Industries sold 72,339 MT of plastic goods worth Rs957.69 crore, an increase of 9% compared with a year ago period. It achieved 3% volume growth and 9% product value growth during March quarter.

Supreme Industries said it consumed raw material worth Rs709.11 crore, 19.33% higher than  Rs594.25 crore, a year ago period.

“Raw material prices remained at elevated level during the current year. Increase in raw material prices have been absorbed by the respective products albeit with a lag due to sluggish business environment,” the  company in its filing.

Supreme Industries closed Wednesday marginally down at Rs481 on the BSE, while the S&P BSE Sensex ended the day flat at 22,876.

For more stock results, check out this page

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New fund offers of small- and mid-cap mutual funds

L&T Mutual Fund and Birla Sun Life Mutual fund have launched two close-ended equity schemes that will invest in small-cap stocks

With most small- and mid-cap schemes delivering double digit returns over the past year, fund houses seem to be using this opportunity to attract investors. L&T Mutual Fund has a launched a new scheme— L&T Emerging Businesses Fund and Birla Sun Life Mutual Fund has launched a new close-ended equity scheme—Birla Sun Life Emerging Leaders Fund - Series 1. Both are close-ended ended mutual fund schemes investing in small- and mid-cap stocks. With a high allocation to small- and mid-cap stocks, investors should be aware of the risks associated with the scheme, especially since it is a close-ended scheme with no prior track record.
 

Further details of the schemes:
 

L&T Emerging Businesses Fund
 

This is a two year closed-ended equity scheme with automatic conversion into an open-ended equity scheme on completion of two years from the date of allotment. As the name suggests, the scheme would invest in emerging businesses or in other words, small-cap stocks. The scheme will invest at least 50% of the portfolio in small-cap stocks. Small-cap stocks means companies that are beyond top 200 companies based on the market capitalization. The Benchmark for the Scheme is S&P BSE Small Cap Index

As per the asset allocation defined in the scheme information document, the equity scheme will invest 50%-100% of its assets in stocks of small-cap companies. The fund mangers will have the freedom to invest as much as 35% in Indian and foreign equity securities, not necessarily small-cap stocks. The scheme would also have the option to invest up to 35% of its assets in debt and money market instruments.
 

The scheme will be managed by three fund managers. S.N. Lahiri, who has over 21 years of experience and Rajesh Pherwani, who has 16 years of experience will be managing the equity portion of the scheme. Abhijeet Dakshikar, who has 10 years of experience, will be managing the investments in foreign securities.
 

Other details of the scheme
 

NFO Period
 

22 April 2014 to 6 May 2014
 

Application Amount
 

During NFO period:
 

Minimum Initial Application Amount - Rs5,000 per application and in multiples of Re1 thereafter
 

During the 2 year period from the date of allotment:
 

The Units of the Scheme will not be available for subscriptions/switch-in during the initial period of two years. Units may be redeemed on or after the Conversion/Maturity Date.
 

Post Conversion/Maturity Date:
 

Minimum Initial Application Amount- Rs5,000 per application and in multiples of Re1 thereafter
 

Minimum Additional Application Amount - Rs1,000 per application and in multiples of Re1 thereafter
 

Minimum Amount/Number of Units for Redemption - Rs1,000 or 100 Units

 

Expense Ratio (maximum permissible):
 

Maximum total expense ratio (TER) permissible under Regulation 52(6)(c)(i) and (6)(a): 2.50%
 

Additional expenses under Regulation 52 (6A)(c): 0.20%
 

Additional expenses for gross new inflows from specified cities (as mentioned in note II below): 0.30%
 

Exit load
 

For purchases during the NFO period and 2-year period from the date of allotment: NIL

For purchases post conversion/maturity date: If redeemed within one year from the date of allotment or purchase applying First-in First-Out basis: 1% of the applicable NAV

 

Birla Sun Life Emerging Leaders Fund - Series 1
 

It will invest mainly in small- and mid-cap companies. With most small- and mid-cap schemes delivering double digit returns over the past year, fund houses seem to be using this opportunity to attract investors. The scheme, which has a lock-in period of three years, would invest over 80% of it assets in equity stocks, of which, over 70% will be invested in small- and mid-cap stocks and the remaining would be invested in other equities. The scheme would also have the flexibility to invest as much as 20% of its assets in debt and money market investments.
 

For the purposes of this scheme, large caps; mid caps, small caps will be considered as under (as per data available on BSE):
 

Large-cap - Stocks which are ranked as top 100 by market-cap will be termed as large-caps;
 

Mid-caps - Stocks which are ranked 101-200 by market-cap will be termed as mid-caps;
 

Small-caps - Stocks which are ranked 201 & beyond by market-cap will be termed as small-caps
 

The performance of the scheme will be benchmarked to the S&P BSE Midcap Index. Hitesh Zaveri would be the fund manager of the scheme. He has an overall experience of around 10 years in the financial markets.
 

Other details of the scheme
 

NFO Period
 

New Fund Offer Opens: 25 April 2014 | New Fund Offer Closes: 30 April 2014
 

Purchase
 

Minimum of Rs5,000/- and in multiples of Rs10/- there after during the New Fund Offer period.
 

Expense Ratio (maximum permissible):
 

Maximum total expense ratio (TER) permissible under Regulation 52(6)(c)(i) and (6)(a): 2.50%
 

Additional expenses under Regulation 52 (6A)(c): 0.20%
 

Additional expenses for gross new inflows from specified cities (as mentioned in note II below): 0.30%

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