Mutual Funds
RBI opens Rs25,000 crore borrowing window to help mutual fund industry
RBI has decided to conduct a special three-day repo auction under which banks would be encouraged to raise funds totalling Rs25,000 crore at 10.25% for on-lending to the mutual funds
 
The Reserve Bank (RBI) today opened a special borrowing window of Rs25,000 crore to help the crisis-ridden mutual funds tide over their liquidity problems.
 
As a “contingency measure”, RBI has decided to conduct a special three-day repo auction under which banks would be encouraged to raise funds totalling Rs25,000 crore at 10.25% for on-lending to the mutual funds.
 
“This facility will be made available for a temporary period until further notice,” RBI said in a notification.
 
The mutual fund industry has been facing consistent equity folio closures in the past few months due mainly to profit booking and various merger schemes in the industry.
 
Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.
 
The mutual fund industry lost more than 36 lakh investors in 2012-13. The last financial year also marked the fourth consecutive year of loss of folios by mutual funds. During the preceding three financial years, the mutual fund industry had lost over 15 lakh new investor accounts.
 
According to the latest Securities and Exchange Board of India (SEBI) data, mutual funds lost 10 lakh investors, measured in terms of individual accounts or folios, in April-June 2013-14.
 
The total investor accounts with 44 fund houses fell to around 4.18 crore at the end of June 2013, from 4.28 crore in the last fiscal (2012-13).
 
During the April-June period of 2013, the number of investor folios for equity schemes fell by 11 lakh. The total number of folios in equity funds was 3.20 crore at the end of June against 3.31 crore at March-end.
 
According to SEBI data, the total number of folios in debt funds rose by about 1.7 lakh to 63 lakh at the end of June 2013.
 
Besides, exchange traded funds (ETFs) gained 6,558 folios to 7.46 lakh investor accounts at the end of June this year.
 
Balanced schemes, which invest in the equity and debt category, shed 73,415 folios to end at 25.3 lakh at the end of June.
 

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COMMENTS

M G WARRIER

4 years ago

I am not an expert in folio management. But, how, merger of multiple folios maintained by the same account holder affect the business of the Mutual Fund? Would it not be a better idea to ask MFs to follow some transparent practice by assigning one master folio to every account holder and bring all investments of an individual under that folio with sub numbers for different schemes?

DCB’s high Q1 growth is matched by steady asset quality, says Nomura
Development Credit Bank added seven new branches during the quarter, taking the total to 101 branches during the quarter, says Nomura Equity Research
 
Development Credit Bank (DCB) continued its impressive run, with its twelfth consecutive quarter of 50%-plus y-o-y earnings growth helped by steady asset quality, stable NIMs and improved operating leverage, according to Nomura Equity Research. While reported PAT was Rs428 million, even after excluding one-time treasury gains and bad debt recovery, PAT of Rs350 million came in 17% higher than Nomura’s estimate. The bank also added seven new branches during the quarter, taking the total to 101 branches (increase in network of 17% y-o-y).
 
 
Key highlights
Loan growth of 19% y-o-y was driven by a 44% y-o-y increase in the mortgage/LAP portfolio and a 40% y-o-y increase in other retail loans (including gold loans). SME and corporate loans dropped sequentially while agri loans were flat q-o-q. The mix of mortgage/LAP as a percentage of total loans increased to 40% for June 2013, from 33% in 1QFY12. The proportion of SME loans on the books has been easing off gradually. The bank has managed to hold on to its loan yields q-o-q despite this shift in mix.
 
 
CASA (credit account savings account) deposits increased 11% y-o-y, but CASA per branch (on a one year lagged basis) has been flat at Rs270 million over the past few quarters. Nomura expects the CASA ratio to pick up again in FY14F, with the addition of 10 new branches in FY13 and seven in the reporting quarter (including three Tier-1 branches).
 
NIM (net interest margin) contracted by 8 basis points (bps) q-o-q despite core spreads staying flat q-o-q on marginally lower LDRs and likely lower yields on its bond portfolio. The retail deposit proportion was 80%. Nomura expects NIM to remain at 3.3%- 3.4% in FY14F.
 
While core fee income was steady at Rs224 million, investment book gains of Rs160 million and bad debt recovery of Rs37 million helped to drive a strong earnings beat.
 
 
GNPL (gross non-performing loans) increased by 5% q-o-q, mainly in its corporate book, while the legacy NPLs on the personal and CV (commercial vehicle) loan portfolio continued to decline. On its mortgage book, the GNPL ratio remained low at 85bps (or 122bps assuming a one-year lag). Nomura expects the headline GNPL ratio to decline going into March 2014.
 
The quarter also highlighted the impact of operating leverage playing out with the cost-income ratio dropping to 60%, from 73% in Q1FY13.
 
DCB currently trades at 1.2x our FY14F ABV and 9x Nomura’s FY14F EPS forecasts. At the target price of Rs60, DCB would trade at 1.4x FY14F ABV of Rs42.6 and 10.9x FY14F EPS of INR5.5 for an ROA of 114bps, said Nomura in its concluding remark.
 

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Nifty, Sensex in no man’s land: Wednesday Closing Report
Nifty has to break below today’s low for a downtrend to start while a close above 6,015 will be needed for a strong upmove
 
The market settled higher on gains in FMCG, consumer durables and IT sectors. Hike in FDI limits in various sectors, announced by the government last night, also supported the sentiments. Nifty has to break below today’s low for a downtrend to start while a close above 6,015 will be needed for a strong upmove. The National Stock Exchange (NSE) reported a higher turnover of 72.12 crore shares and advance-decline ratio of 521:822.
 
The market opened higher this morning boosted by the government’s announcement to ease FDI caps in various sectors in a bid to woo foreign investments. Markets in Asia were mostly higher ahead of Federal Reserve chairman Ben Bernanke’s address to the US Congress later today. On the other hand, the US markets closed lower overnight on dismal earnings from corporates.
 
The Nifty opened 17 points up at 5,972 and the Sensex resumed trade at 19,929, a gain of 78 points over its previous close. Support from consumer durables, capital goods, power, fast moving consumer goods and technology stock following the government’s FDI announcement kept the market firm in morning trade.
 
The government on Tuesday liberalised FDI limits in a dozen sectors, including allowing 100% in telecom and higher limits in “state-of-the-art” defence manufacturing, to boost the sagging economy. The FDI cap for civil aviation was, however, left unchanged at 49%.
 
The upmove saw the benchmarks hitting their intraday highs at around 1.30pm. The Nifty rose to 5,990 and the Sensex climbed to 19,983 at their respective highs.
 
However, the market soon pared its gains and slipped into the negative on pressure from realty, banking and capital goods stocks after the RBI on Monday hiked lending rates for banks.
 
The indices touched their lows in the post-noon session with the Nifty falling to 5,927 and the Sensex slipping to 19,779.  However, buying in FMCG, IT and consumer durables sectors in late trade led the market higher.
 
The benchmarks settled off the highs on the government’s decision to hike FDI limits in a host of sectors. The Nifty added 18 points (0.30%) to 5,973 and the Sensex settled 98 points 90.49%) higher at 19,949.
 
 
Among the broader indices, the BSE Mid-cap index fell 0.50% and the BSE Small-cap index fell 0.22%.
 
Six sectoral indices closed in the positive. BSE FMCG (up 3.39%); BSE Consumer Durables (up 1.10%); BSE IT (up 1%); BSE Oil & Gas (up 0.61%) and BSE Power (up 0.56%) were the top five gainers. The top losers were BSE Bankex (down 2.32%); BSE Metal (down 1.82%); BSE Auto (down 0.77%); BSE Realty (down 0.71%) and BSE PSU (down 0.64%).
 
Out of the 30 stocks on the Sensex, 15 stocks settled higher. The main gainers were Hindustan Unilever (up 9.86%); NTPC (up 3.18%); Wipro (up 2.96%); ITC (up 2.28%) and Tata Power (up 1.96%). The main losers were Tata Steel (down 3.26%); HDFC Bank (down 2.36%); ICICI Bank (down 2.29%); Mahindra & Mahindra (down 2.23%) and Jindal Steel & Power (down 2.03%).
 
The top two A Group gainers on the BSE were—Hindustan Unilever (up 9.86%) and Indraprastha Gas (up 5.76%).
 
The top two A Group losers on the BSE were—Union Bank of India (down 7.24%) and Prestige Estates (down 7.17%).
 
The top two B Group gainers on the BSE were—Nitco (up 19.99%) and Archidply Industries (up 19.97%).
 
The top two B Group losers on the BSE were—Real Realty Mgmt (down 19.94%) and Nissan Copper (down 19.27%).
 
Of the 50 stocks on the Nifty, 20 ended in the in the green. The major gainers were Hindustan Unilever (up 9.13%); Asian Paints (up 3.50%); Ambuja Cements (up 2.97%); NTPC (up 2.48%) and ITC (up 2.32%). The key losers were Tata Steel (down 3.44%); Bank of Baroda (down 3.18%); Axis Bank (down 3.08%); M&M (down 2.79%) and Ranbaxy (down 2.78%).
Markets in Asia closed mostly higher on gains in commodity-related companies and optimism ahead of Fed chief Ben Bernanke’s semi-annual policy report. China's benchmark index fell for the first time in three days despite FDI in June surging over 20% from a year earlier.
 
The Hang Seng gained 0.28%; the Jakarta Composite advanced 0.75%; the KLSE Composite rose 0.13%; the Nikkei 225 added 0.11% and the Seoul Composite surged 1.13%. On the other hand, the Shanghai Composite dropped 1.01%; the Straits Times declined 0.52% and the Taiwan Weighted shed 0.01%.
 
At the time of writing, the CAC 40 of France was down 0.40%; the DAX of Germany declined 0.510.46% and UK’s FTSE 100 fell 0.46%. At the same time, US stock futures were in the negative.
 
Back home, institutional investors—foreign and domestic—were net sellers in the equities segment on Tuesday. While FIIs pulled out funds totalling Rs357.40 crore, DIIs withdrew Rs210.55 crore from stocks.
 
The board of directors of Mawana Sugar has approved to dispose off 23,00,000 equity shares of face value of Rs5 each comprising 5% paid up equity capital held by the company in Ceratizit India Pvt Ltd, a joint venture company, for a total consideration of Rs 16 crore. The stock fell 5.81% to close at Rs7.30 on the NSE.
 
Piramal Glass’ subsidiary in Sri Lanka, Piramal Glass Ceylon PLC has on July 17, 2013 agreed to sell the balance portion of its land at Rathmalana for a consideration of Sri Lankan Rupees 415 million (equivalent to RsRs187.66 million approximately). The final sale transaction is likely to be completed on or before 30 November 2013. The stock rose 1.10% to close at Rs92 on the NSE.
 

 

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