RIL acquires a majority stake in Fynd

Mukesh Ambani- led RIL's seventh major acquisition this year - FYND, a startup backed by investors like Google, for Rs295 crore in its push for online-to-offline (O2O) commerce.

The deal being, routed through Reliance Industrial Investments and Holdings, will give RIL an option of investing another Rs100crore in the Mumbai based startup and it will own 87.6% stake. It will give an exit option to Fund's investors. All the founders are from IIT-Bombay.

Credit Policy review

The Monetary Policy Committee (MPC) today voted 4-2 in favour of cutting the policy repo rate by 25bps to 6.00%. Further, 5 members voted in favour of maintaining the policy stance at “neutral”, while one voted for changing it to “accommodative”. The reverse repo rate now stands at 5.75% and the cash reserve ratio (CRR) remains unchanged at 4.0%.

In other measures, RBI decided to permit banks an additional carve out of 2% of their Net demand and Term Liabilities (NDTL) from Statutory Liquidity Ratio (SLR) holdings, in a phased manner over one year, for the purpose of computing their Liquidity coverage ratio (LCR).

RBI lowered its inflation projections to 2.4% for Q4 FY19 (from 2.8% earlier), 2.9-3.0% in H1FY20 and 3.5-3.8% in H2 FY20 (from 3.2-3.4% in H1FY20 and 3.9% in Q3 FY20) with risks broadly balanced. According to RBI, assuming normal monsoon, headline inflation is expected to remain soft in the near term primarily on account of (1) weak food inflation, (2) fall in household inflation expectations and (3) moderating impact of lower than expected core inflation. Further, oil prices have inched up recently but outlook is uncertain due to production cuts by OPEC partly negated by concerns over global demand.

RBI also revised down the growth outlook to 7.2% for FY 20 with 6.8-7.1% in H1FY20 and 7.3-7.4% in H2 FY20 (as against earlier estimate of 7.2-7.4% in H1 and 7.5% in Q3 FY20). RBI acknowledged that economic activity in domestic economy is moderating and growth is facing resistance, particularly due to global growth concerns. Further, volatility in global financial markets, trade tensions and geopolitical uncertainties could adversely impact growth prospects.

As per RBI, investment activity is recovering but is supported mainly by government push on roads and affordable housing. Private consumption is stable and likely to strengthen due to focus on public spending in rural areas and tax benefits announced in budget. RBI acknowledged the need to improve private sector investment activity, which has been lagging. Against this backdrop, the MPC decided to reduce the policy repo rate by 25 bps while maintaining the stance of monetary policy at neutral.

Conclusion and Outlook

The MPC’s decision to reduce policy rate by 25bps was in line with market expectations. Given the near term inflation outlook remains benign and growth is moderating, it could provide some space for further policy easing. However, any future action by RBI is likely to be data dependent and we maintain that this rate cut cycle is likely to be a shallow one, in our opinion.

By further increasing the carve out from mandated SLR for the purpose of LCR calculations by 2%, RBI has improved banks’ flexibility to provide credit. However, on the flip side, demand for the dated Gsec will be adversely impacted as it further increases the already excess SLR holdings of banks, especially PSU banks.

Large increase in gross market borrowings in FY20 over FY19 along with low demand for government bonds due to excess SLR in the banking system could put upward pressure on yields. Even though the near term inflation outlook remains benign due to low food prices and range bound oil prices, we prefer to maintain a cautious stance. This is due to a modest uptick in growth expected in FY20, credit growth outpacing deposit growth and likely fiscal pressures.

In view of the above, the short to medium end of the yield curve continues to offer better risk adjusted returns than the long end. Hence, we continue to recommend investment in short to medium duration debt funds.

Reliance: After Bonus just wait and watch

Reliance's past history have shown the stock to correct itself after a bonus but this time, RIL has left its investors yearning for more.
Market analyst are of the opinion that there is lot more left on RIL platter, which has gained over 46 percent since the beginning of this year.
Multiple factors that are leading to this optimism- Reliance's strong showing during the first quarter of this year led by the core segments and the fact that most of its big (profitable) investments are complete and have already started yielding results.
Its consumer business is expected to grow in importance and would mark a major shift.

Basics of investment is must for Single Mothers

Women usually get scared with the idea of handling money and remain indecisive - often turns out to be a problem if for some reasons they are forced to live on their own and this problem becomes more ugly if they gave children with them and they have to secure the financial future of all of them having zero knowledge about finance and investing.

First few steps to start managing their investments:
# Never give management of your money to a relative
# Open a fixed deposit account as your first investment in a good bank and keep money in it
# Must educate yourself with the basics of finance and investing
# To gain experience of investment start with a small amount from the money kept in your FD ( fixed deposit)
# Understand financial planning and if needed get in  touch with a financial planner for a fee
# Choose your planner by relying on strong references
# Financial planner must have a minimum 2-3 years of experience
# For a good long term investing experience you have to have a disciplined approach to saving and investing
# Keep calm during markets short term volatile phases
# Trust SIPs for investing in mutual funds. SIPs average out costs, neutralise negative impact of volatility.

Know the risks in your investment

Risks in investment are of two types- namely market risk ( also called systematic risk) and company - specific risk ( called unsystematic risk ). Market risk is induces by market forces, which are external to the company.
Company specific risks are induced by factors internal to the company.
In short, systematic risk affects all businesses in that particular sector while company specific risk affects only the company in question.
Market risk are too difficult to predict but it can be possible to diversify the company specific risk and allocate the investment across various other companies. Allocations will help reduce the risk that parking all the investment in one company or a small set of companies induces. This is to ensure that prices of all the companies do not move up or down at the same time. It can be done by only one way and that's called "Correlation".

Basics of Finance investment for Single Mothers

Women usually get scared with the idea of handling money and remain indecisive - often turns out to be a problem if for some reasons they are forced to live on their own and this problem becomes more ugly if they gave children with them and they have to secure the financial future of all of them having zero knowledge about finance and investing.

First few steps to start managing their investments:
# Never give management of your money to a relative
# Open a fixed deposit account as your first investment in a good bank and keep money in it
# Must educate yourself with the basics of finance and investing
# To gain experience of investment start with a small amount from the money kept in your FD ( fixed deposit)
# Understand financial planning and if needed get in  touch with a financial planner for a fee
# Choose your planner by relying on strong references
# Financial planner must have a minimum 2-3 years of experience
# For a good long term investing experience you have to have a disciplined approach to saving and investing
# Keep calm during markets short term volatile phases
# Trust SIPs for investing in mutual funds. SIPs average out costs, neutralise negative impact of volatility.

World's largest oil recovery programme

Cairn India is about to launch the world's largest enhanced oil recovery programme, investing about $760 million in the site where its first oil was discovered in the Thar desert of Rajasthan.

Cut the flab to stay financially fit this year

Today there is just too much of financial flotsam that just a passbook and a notebook is not enough to keep check on your investments. Its time to clean up the financial wardrobe
Let's see how
1. Its wise to to not to have more than two bank accounts. Choose bank with a wider reach so that you don't have to change one when you Re relocating or changing job.
2. Asset Allocation:
# review portfolio every year
# check under performers and schemes with high expenses and low returns
# don't go for more than 8-10 funds
# avoid new funds
3. Keep only two cards.
# go for EMI options to pay delayed outstanding
# close the card with a high interest rates
4. Do not invest in more than three or four policies . ideally go for policies that can vè closed after certain no of years.
5. Use you hindsight while investing in stock market. Don't follow the tide. It takes a lot of time for money to grow even in the markets.
6. The Loan portion ideally should not exceed 40% of your monthly pay.
Lastly Play wise for a Happy New Year :)

Eyebrow raised over CESE acquisition

Kolkata-based private sector power major CESC Ltd has acquired an IT-BPO company, Firstsource Solutions Ltd (FSL), last week.  Many thought of it as an investment of the $2- billion RP-Sanjiv Goenka group.

On the one hand, CESC generates Rs 400 crore (the acquisition cost of FSL) of cash in just 5 months. The company is run at a healthy debt-equity of 0.5:1. Taking into considering heavy financing in two upcoming projects (through SPVs), the aggregate debt-equity of the group’s power business is an impressive 1.1:1. 

On the other hand, the group is forced to hold back its plan to invest in power sector. The problem of plenty may only increase with acquisition of a profit making FSL and, the improving fundamentals of Spencer’s. Listing of the retail arm may also bring home more cash.

Meaning of underwriting

Term of the Day  Underwriting The underwriter (normally known as investment banker ) brings a new security issue to the investors in an offering. In this case, the underwriter guarantees a certain price for a certain number of securities to the party that is issuing the security (in exchange for a fee). Thus, the issuer feels secured that they will raise a certain minimum from the issue, while the underwriter bears the risk of the issue. Thus it is the process of insuring someone or something. The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.

Mutual Fund- Indian Capital Market

 Capital market regulator Sebi has taken the first step to revive mutual fund houses, twist rules to step up retail participation in IPOs, and made it easier for companies to raise funds and for promoters to dilute stake.

Also, investors will soon be able to apply for shares offered in a public issue online through their stock broker. Electronic issuance of initial public offerings, ore-IPOs as the name suggests, can be done online to save time and reduce the paperwork involved.

But investing in MFs will be become a little more expensive for those in metros and top cities while retail investors could receive more shares in IPOs. Sebi, in its board meeting on Thursday, sketched an incentive formula as per which existing mutual fun investors and those residing in top cities would subsidise new investors from smaller cities and towns.
The regulator has allowed cash transactions in mutual fund schemes to the extent of Rs 20,000 to make investing easier for small investors in rural areas.

Get started your tax investments now

The financial year has begun and there's no better time to get started on your tax investments than right now. The most common mistake is that investors only wake up on the cut-off data given by their HR department to make their tax-saving investments when they should start at the beginning of the financial year itself. Focus on your financial goals and tax planning will happen automatically, as our IT Act gives tax breaks for everything from life insurance to savings. the biggest mistake is to look at financial goals, tax planning and investments separately.
Investors should start off by setting a target amount of their savings-and spend-for the financial year ahead.
 For instance, identify when your big cash flow requirement will come up during the year and where you will source the funds to meet it. Of course, the Rs 1 lakh limit under Section 80C is already crowded as it includes everything from employers provident fund (EPF) to investments in equity-linked savings schemes (ELSS). 
The ELSS continues to be an attractive option. The younger you are, the more equity-oriented should your investments be. Also since the EPF contribution is fully invested in debt, it makes sense for tax payers under 40 to put some of their 80C limit into equity with a tax benefit.

Caution:

An investor who already has adequate exposure to equity should not invest in ELSS just fo tax break, especially if he can't afford the three year lock-in

Personal finance

Sure shot plan
NSC (National Savings Certificate) & PPF (Public Provident Fund) are the popular small savings schemes. Because they provide tax deductions. If the tax benefit from NSC goes it will be dead instrument. PPF investors stand to be the biggest beneficiary of the changes in the small savings schemes. It has been proposed that the max. investment limit in PPF will be increased to 1lakh, that is the exemption limit available under section 80C of the income tax act.
The interest rate on PPF is also likely to go up from 8% at present. This is because long-term money is always costlier tha short term funds. Any tightening of interest rates by the Reserve Bank affects the short end of the G-sec yield curve the most- the long term yield curve remained almost flat since march 2010 when the apex bank began the tightening of the interest rates.
It also means that the rate volatility in PPF will be much less than in small savings instruments.
PPF cn give many tax saving equity options a run for their money in the new tax regime

Happy Diwali

itz late but we still have the habbit to celebrate still have energy and stock :)
Here dhanteras is a occasion where people buy gold or some items as a good wish. tz a sort of investment. Now inflation is so high and market so volatile that middle class people face hard time to decide the way of investment. With all the thinking I find the best way of investment is to invest in Gold. Its an asset for future but then theres a also question of its quality so my dad gave a gud advice. I agree to dad and went straight to HDFC bank to buy gold. Bank provide certificate which gurantees its quality and moreover its not only an asset but also in future I can avail loan any time and too in less hassles.......
:)

Sebi's first step towards regulation

The Securities capitals and Exchange Board of India took the first step towards regulating alternative investment funds- the private pools of capital in which institutions or high networth individuals invest.
It proposed the minimum amount in a portfolio management scheme be raised to Rs 25lakh from Rs 5lakh at present and that all kinds of private pools should be registered with the market regulator.
“All portfolio managers who seek to pool assets such as for investing in unlisted securities should be required to register as an alternative investment fund” .

Where are the foreign investors? Not in Asia

Asian shares and investment grade bonds look very cheap on paper, but may not yet attract foreign investors, suggesting there is more downside to markets before a solid recovery.

The worst global crisis in a lifetime has shown up Asia's vulnerability as a region built on trade, with record falls in exports and industrial output from South Korea to Taiwan and big losses at blue chip companies such as Sony Corp.

That problem is compounded by another.

In an environment of frayed nerves where the first impulse is flight, it pays to be in more liquid and more developed markets such as Europe and the United States.

That shift is made easier in a world of cheap securities and attractive deals from government-guaranteed bank debt to corporate bonds from the likes of Nokia.

"The liquidity and technicals tend to be better within developed markets as they are established and well understood," said Brayan Lai, a credit analyst at Calyon in Hong Kong.

"There's no huge push to go searching for returns, as in the past, because everything is just cheap right now and there are opportunities everywhere."

Foreign investors plowed $160 billion into Asian stock markets excluding Japan in 1998-2006, but last year alone pulled out $64 billion, according to HSBC estimates.

Despite modest advances into some markets this year, they have not returned in big enough numbers to make much of a dent.

After a record 53.3 per cent drop last year, the MSCI index of Asian stocks outside Japan fell 7.7 per cent in January. Sure, that also reflects local selling, but foreigners own close to a third of overall Asian shares.

Purchases by overseas investors helped the MSCI Asia ex-Japan index provide compound returns of 22 per cent from 2003-07, HSBC said. That will be hard to match as investors shift to other assets.

"The days of 22 per cent are over," wrote HSBC strategist Garry Evans. "This all says that we may be in for a long period of non-trending stock markets."

Foreign investors also remain wary of Asian credit markets -- a segment where they account for the bulk of trading -- with regional corporate spreads still far above those in the United States and Europe.

"I'm not a believer that an IG rally has begun," said Scott Bennett, a fund manager at Aberdeen Asset Management in Singapore, referring to investment-grade bonds.

"You can't ignore that there's a lot of bad economic data out from the US and Asia. GDPs are slowing down, fiscal deficits are rising, and fourth quarter numbers are hitting new lows," he noted.

CHEAP ASIA

The lack of foreign investors defies some compelling mathematics.

The price-to-earnings ratio for Asian stocks excluding Japan for the 12 months ahead sank to an historic low of 8.7 in November, before recovering to 10.8 as of mid-January, according to Thomson Reuters data.

That's cheaper than the SandP 500 index .SPX, which fell to a low of 9.5 in November and traded at 11.2 last month.

In credit, the Asia iTRAXX index soared to a record high of around 650 basis points in late October. The current levels of 350 bps marks a solid recovery, but still implies a default level worse than the Asian financial crisis a decade ago.

Equally compelling are data showing a region reeling from the slowdowns in key markets in China and the United States, with double-digit falls in exports and output from Singapore to Seoul.

Corporate results are also grim. Sony has forecast a record annual operating loss and Toyota Motor Corp (7203.T) has forecast its first annual operating loss as demand for new cars withers amid the global economic slowdown.

That's not to say Asian financial markets won't recover, but it's hard to see big rallies.

Manpreet Gill, Asia strategist at Barclays Wealth, reckons investors need to watch for opportunities to add risk, especially in investment-grade bonds. The question is one of timing.

"We think investment-grade bonds will perform well over the year, but possibly not right away," he said. "You need liquidity and some risk appetite to return to credit markets.

"For us, it's always been one of the necessary conditions for a return to risky assets in general, whether it be equities or investment-grade bonds."