Kotak Emerging Equity Scheme to be converted into Open Ended Scheme

Kotak Mutual Fund has announced the conversion of Kotak Emerging Equity Scheme, a three year close ended equity growth scheme into an open ended equity growth scheme with effect from 31 March 2010.

Unitholders of the scheme who are not in agreement with the conversion may redeem their units at applicable NAV or switch to other open-ended schemes of the fund house without payment of exit load between 1 March 2010 and 30 March 2010 (both days inclusive). Kotak Emerging Equity Scheme will be an open ended scheme from the business day immediately following the closure of exit option period i.e. 31 March 2010. No action is required in case the unitholders are in agreement with the aforesaid conversion.

The exit load charge will be 1%, for exit within 1 year from the date allotment and nil for exit after 1 year from the date of allotment of units. The load structure shall be applicable to units allotted on or after 31 March 2010.

Kotak Emerging Equity Scheme is a close ended equity growth scheme with the investment objective to generate long-term capital appreciation from a portfolio of equity and equity related securities, by investing predominantly in mid and small cap companies.

Source: http://profit.ndtv.com/2010/02/26095857/Kotak-Emerging-Equity-Scheme-t.html

Union Budget 2010: Market borrowing lower than estimates

Bond market dealers have welcomed the union government’s debt borrowing targets for FY11, saying the lower numbers could lead to a short term rally in dated securities. Though bond yields fell immediately after the finance minis-ter’s speech, they were trading higher than the previous close at 14.45 hrs.

The yield on India's 10-year benchmark bond yield traded at 7.89% at 14.45 hrs. It had ended at 7.83% on Thursday. Dealers said this was due to uncertainity about Market Stabilisation Scheme (MSS) bonds that would be un-wound in the coming fiscal.

“There is no bad news, which is a positive in the short-term. But a government borrowing programme of Rs 4.57 lakh crore is sizeable and would drain out a lot of liquidity” said Ashish Vaidya head of fixed income currencies and commodities trading at UBS. “I will not be surprised if the 10-year bond ends the year at 8%”

Finance minister Pranab Mukherjee said on a gross basis, the government would raise Rs 4.57 lakh for FY11, compared with Rs 4.51 lakh cr in the current year ending March. Dealers had predicted this figure would be in the range of 4.6 lakh cr to Rs 4.9 lakh cr.

Net borrowing target (the amount after accounting for the scheduled bond redemptions that pump liquidity) stands at 3.45 lakh cr, compared with about RS 3.97 lakh cr this year.

“The target announced is largely in line with what market expectations,” said Prasanna Patankar, senior vice president at STCI, a bond house. “However the market is not clear about the MSS securitities desequestration required for the next year, hence there is a sell off” he added.

Market watchers say the budget has addressed the key issues of containing fiscal slippage and outlined a clear roadmap for the next three years. The finance minister projected the fiscal deficit for the next fiscal year at 5.5%, which was lower than market expectations.

SS Raghavan, head of treasury at IDBI Gilts, another bond house said he expects the ten-year yield to fall to 7.75% in the short term.

Source: http://economictimes.indiatimes.com/markets/bonds/Union-Budget-2010-Market-borrowing-lower-than-estimates/articleshow/5620037.cms

Budget raises borrowing to new record, bonds hit

Government plans record levels of borrowing next year and will count on surging economic growth to help cut its fiscal deficit, putting pressure on the central bank to be more aggressive in its monetary tightening. Finance Minister Pranab Mukherjee told parliament the government plans to increase market borrowing by 1.3 per cent in his $239 billion budget, pushing bond prices lower as investors anticipated a flood of fresh debt supply.

Analysts said the borrowing plan cements the likelihood that the central bank will raise interest rates at its next meeting on April 20 as policymakers scramble to keep surging food inflation from spreading to the wider economy and fueling social unrest. "Given that the fiscal stimulus withdrawal was not strong, the Reserve Bank of India (RBI) may have to be more aggressive in its policy tightening," said Robert Prior-Wandesforde, HSBC senior Asian economist in Singapore.

Many watchers praised the plan to reduce the fiscal deficit to 5.5 per cent of GDP in the new year from 6.9 per cent this year, with further declines in coming years, and a central bank deputy governor said the budget addressed concerns on fiscal discipline. Mukherjee announced plans to hike spending on social and agricultural programmes popular among voters, and adjusted taxes to put more money in the hands of the middle class. But some analysts said India had missed a chance to take more aggressive fiscal measures as Asia's third-largest economy gathers speed, reinforcing perceptions that the coalition government may not have the heart to make tough decisions.

The budget focused on keeping the economic recovery robust, but there was little mention of reforms, such as freeing state fuel and food subsidies, that investors say could help India rival China's years of double-digit growth rates. Some heavy economic stimulus brought in last year was trimmed, but not chopped, with rollbacks of certain tax breaks. "The first challenge before us is to quickly revert to the high GDP growth path of 9 per cent," Mukherjee told parliament. The 74-year-old minister is known for deftly appeasing India's myriad of caste and ethnic groups rather than pushing visionary reforms. The decision to spend more on agriculture in particular is bound to please a key rural support base that helped re-elect the Congress-led government last year.

RATE HIKES AHEAD

Financial markets focused on whether the government would pay more than lip service to imposing fiscal discipline and start weaning itself off aggressive deficit spending that risks pushing up companies' borrowing costs. Usha Thorat, a deputy governor at the Reserve Bank of India, said the deficit outlook was in line with expectations. "From our point of view one of very important thing was the fiscal consolidation. So, I think one would say it is positive for lesser inflation," she told reporters.

The deficit figure was slightly better than a Reuters poll forecast of 5.6 per cent and in line with government expectations. Gross borrowing for the new fiscal year will total 4.57 trillion rupees ($99 billion), below a Reuters poll forecast for 4.61 trillion but above a record 4.51 trillion rupees expected in the current year ending in March, Mukherjee said. For highlights of the Indian budget, click "With the fiscal deficit expected to be still high over the next fiscal year, it is clear that the onus will be on the RBI to hike rates in coming months in order to move policy settings closer to neutral and to deal with emerging inflation pressures," said Brian Jackson, strategist at Royal Bank of Canada.

SPENDING AND REVENUE

Total government spending will rise nearly 9 per cent in the next fiscal year, while revenues will rise nearly 18 per cent as the economy recovers. In one politically charged effort to raise revenue, the government said it would raise prices of gasoline and diesel fuel for the first time in 7 months. Mukherjee also pencilled in expected revenue of 400 billion rupees from the sale of stakes in government companies, a figure that some observers said was ambitious. India's economy grew 6 per cent in the December quarter, short of a Reuters poll forecast of 6.8 per cent, as farm output fell 2.8 per cent after a poor summer drought.

The slowdown in spending growth may help ease inflation, some analysts said. High food prices helped push wholesale price inflation to 8.56 per cent in January. Opposition lawmakers boycotted much of the budget session, saying government plans to increase fuel prices would further add to the woes of millions of Indians hit by high prices. The yield on benchmark 10-year government bond fell as much as 6 basis points earlier on Friday but erased that move on worries over high government borrowing.

The yield on the benchmark 10-year government bond ended at 7.86 per cent, four basis points higher than Thursday's close. Stocks ended 1 per cent higher after Mukhjeree announced measures aimed at increasing domestic consumption.

Source: http://economictimes.indiatimes.com/markets/bonds/Budget-raises-borrowing-to-new-record-bonds-hit/articleshow/5621690.cms

HDFC unveils Fixed Maturity Plans - Series XII

The New Fund Offer of HDFC FMP 13M March 2010, under HDFC Fixed Maturity Plans - Series XII, a close ended open scheme, will open for subscription on 02 March 2010 and close on 10 March 2010.

The objective of the scheme will be to generate income through investments in Debt/Money market and Government securities maturing on or before the maturity date of the respective plans.

The scheme will allocate 60-100% in Debt and Money market instruments (including securitized debt up to 75 of the net asset of the plan) and 0-40% in government securities.

The units of HDFC FMP 13M March 2010 will be listed on NSE.

Source: http://profit.ndtv.com/2010/02/26110201/HDFC-unveils-Fixed-Maturity-Pl.html

Sinor new AMFI CEO, charts out road map

Former ICICI Bank and Indian Banks' Association CEO, HN Sinor was today appointed as Association of Mutual Funds of India's Chief Executive Officer with immediate effect. The current AMFI Chairman, AP Kurian announced that he will retire at the end of his term in September.

Speaking to CNBC-TV18 on what needs to be done, Sinor says AMFI has not moved towards a self-regulatory organisation (SRO). "The Securities and Exchange Board of India is regulating the industry as AMFI did not perform the self-regulatory organisation role." He added that AMFI's evolution towards a self-regulatory organisation would be a better choice.

Reviewing agent code of conduct and ethics is top of Sinor's agenda. He promises to put in place an ombudsman structure for investor grievance. "There is need for co-ordination between trustees, asset management companies and regulators. There is also need for fair trade practices, no mis-selling to small investors, and honesty, transparency towards small investors."

Here is a verbatim transcript of the exclusive interview with HN Sinor on CNBC-TV18. Also watch the accompanying videos.

Q: What more does AMFI need to do?
A: You see on the SRO (Self Regulatory Organisation) concept while I do accept that at some point of time we need to move in that particular direction, but it is a process of evolution. I don’t know to be very honest about many micro issues which are there.

But yes one basic issue as I look at it is that at the retail end when you have a large number of small investors, I think fair trade practices, being honest and transparent to small investors, not to try and missell to this segment of people and creating some kind of trust in this mutual fund industry by the small investor is very important.

Now whether it comes through regulation or self regulation. Maybe I would put it this way that SEBI is expecting industry to comply because perhaps AMFI has not moved towards self regulation. But it is too early for me to really react on this. But yes at some point of time evolution towards SRO would be a better choice.

Q: We have seen a situation where the regulator has set up a committee which has started interacting more with trustees and investors and somewhere one gets the impression that AMFI has been reduced to more like a club of asset management companies and has had probably very little interaction with trustees and investors. Do you think that is something that AMFI needs to change?
A: I do agree with you that we need to look at some kind of coordinated approach with trustees on one side, asset management companies and the regulators. So I don’t think that we can overlook any of the stakeholders in this industry.

Q: On the one hand we do have a code of ethics, we do have AMFI as a certifying agency for agents. But it is very sad that there has been practically very little enforcement of that. In fact I don’t even think half a dozen agents have been suspended for misselling in the entire history of AMFI till now. Is that going to be one of your priority areas to look at not just tightening perhaps the code of ethics but also enforcing it in a manner that actually benefits investors?
A: If I have to look at the top of the agenda, this is one area that I would like to do the first, which is to review the code of conduct, the code of ethics, fair practices for the small investors, having some kind of a structure of ombudsman within the system where grievances can be aired and rectified. I think this is what will be uppermost in my mind.

Source: http://www.moneycontrol.com/news/mf-news/sinor-new-amfi-ceo-charts-out-road-map_443590.html

IDFC MF announces change in IDFC Premier Equity Fund

IDFC Mutual Fund has announced that IDFC Premier Equity Fund shall not accept further subscriptions (other than by way of SIPs / STPs) at the end of business hours on February 26, 2010.

With effect from February 26, 2010, the STP amount shall be reduced to Rs 10 lacs from Rs 25 lakh.

IDFC Premier Equity Fund is an open ended equity scheme. The investment objective of the scheme is to generate long-term capital growth from an actively managed portfolio of predominantly equity and equity related instruments.

Source: http://www.moneycontrol.com/news/mf-news/idfc-mf-announces-changeidfc-premier-equity-fund-_443478.html

Bonds rise on hopes that FM will rein in fiscal deficit

The 10-year bonds had their biggest twoday gain in six weeks on speculation that finance minister Pranab Mukherjee in his Budget this week will cut subsidies and rein in the deficit from a 16-year high.

The benchmark 10-year yields dropped to a two-week low as the government said last week it will allow higher urea prices and free price controls on some fertilisers in a bid to reduce subsidies it pays farmers. The budget deficit may narrow to 5.5% of gross domestic product in the year starting April 1, from 6.8%, according to C Rangarajan, the government’s top economic adviser.

“Right now, there are expectations the deficit will ease as the recent increase in fertiliser prices suggest the government is keen on some fiscal consolidation,” Roy Paul, assistant manager of treasury at Federal Bank in Mumbai.

“The direction of bond yields will depend on the Budget.” The yield on the 6.35% note due January 2020 declined four basis points to 7.79%, according to the central bank’s trading system. The price climbed 0.26, or 26 paise per Rs 100
face amount, to 90.22.

India will borrow a record Rs 4.6 lakh crore next fiscal as debt payments double and the government only gradually withdraws policies to support economic growth, according to the median estimate of 13 economists and investors surveyed by a media group.

Source: http://economictimes.indiatimes.com/markets/bonds/Bonds-rise-on-hopes-that-FM-will-rein-in-fiscal-deficit-/articleshow/5609926.cms

Religare to invest up to $1 bn in asset managers

Religare Enterprises, the Indian financial services company owned by billionaire Malvinder Singh, said it may invest as much as $1 billion buying stakes in asset management companies worldwide.

Religare agreed to buy a majority stake in Northgate Capital LLC, a private equity and venture capital company that manages about $3 billion in assets and has offices in San Francisco and London, the New Delhi-based company said in a statement distributed by PRNewswire.

Religare, controlled by the former owners of Ranbaxy Laboratories, set up its own mutual fund business in 2008 and bought Hichens, Harrison & Co, London’s oldest company of stockbrokers, in the same year. The money manager has said it plans to open 100 branches in the first three years of operation.

Religare shares rose as much as 6.1 per cent, the most in intraday trading in more than five weeks, to Rs 390 in Mumbai. The stock traded at Rs 376.25 as of 9:28 am local time.

Jefferies & Co and Religare Capital Markets Ltd were the financial advisers to Religare Enterprises. Credit Suisse Securities (USA) LLC was the adviser to Northgate, according to the statement.

Source: http://www.business-standard.com/india/news/religare-to-investto-1-bn-in-asset-managers/386627/