Equity MF folios continue to rise as the market moves higher-The Total Investment & Insurance Solutions

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28Th July 2016

Equity Mutual Fund (The Total Investment & Insurance Solutions)

Retail investors continue to flock to equity mutual fund schemes. According to CRISIL Research, equity-oriented mutual funds constitute 76% of the total retail portfolio. As the Nifty went up by 7% over the past quarter, retail equity folios too, increased for the seventh quarter in a row. As many as 0.58 million equity-oriented mutual fund folios were added in the June quarter, taking the total tally of equity folios to a high of 35.4 million. Balanced schemes, with higher orientation towards equity, too continued to ride the equity wave. The category added 109 thousand retail folios in the June quarter to push the total to 2.45 million. The Total Investment & Insurance Solutions

High net-worth individuals (HNIs) added 105 thousand folios in the June quarter. AMFI identifies HNIs as those investing Rs5 lakh or more. HNIs preferred to invest mostly in equity, debt and balanced funds. Though equity funds dominated the segment with 49% share (9.31 lakh folios), debt fund folios have increased in the past four quarters. The debt category added 42,000 folios to stand at 0.73 million folios in the latest quarter against 26,000 folios added in the previous quarter. The equity category added as many as 36,000 HNI folios, while the balanced scheme category added 18,000 folios.

Just a little of over 53.20% of retail AUM stayed in equity mutual schemes for more than two years, albeit higher than 52.94% in the preceding quarter. Of the Rs2.45 lakh crore of retail investments in equity-oriented mutual fund schemes, Rs1.30 lakh crore was held for over 24 months. In comparison, about 26.48% of HNI AUM stayed invested in equity mutual funds for more than two years, higher than 23.96% in the previous quarter. The Total Investment & Insurance Solutions

The total number of mutual fund folios touched 4.89 crore as on 30 June 2016, as per data from the Association of Mutual Funds in India (AMFI). As many as 1.3 million folios were added in the June quarter, up 2.65% sequentially. Retail folios constitute as much as 95% of total mutual fund folios. In the June quarter, 114 thousand folios were added, as compared to 170 thousand folios in the March quarter. Retail folios touched a six-year high of 46 million.

Meanwhile, the liquid retail category added 0.19 million folios to touch a record high of 0.47 million. The debt category added 0.27 million retail folios in the latest quarter compared with 0.33 million added in the preceding quarter. Moving towards the 50 million milestone mutual funds added 12.61 lakh folios, up 2.65% sequentially, in the June quarter to take the tally to a record high of 4.89 crore, according to the data disclosed by the Association of Mutual Funds in India (AMFI). The Total Investment & Insurance Solutions

Corporates continued to dominate mutual fund assets under management (AUM) with 46% share in the June quarter against 47% in the March quarter. HNIs were the second biggest contributor with 28% share. The retail segment’s share was steady at 22%. The Total Investment & Insurance Solutions

Bank strike to hit operations on Friday-The Total Investment & Insurance Solutions

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28Th July 2016

Banking operations will be impacted across the country on Friday with around 10 lakh bankers of 40 private and state-run banks striking work in protest against the central government's banking policies, a union leader said on Thursday. The Total Investment & Insurance Solutions

"The strike is on. We are not aware of any case filed by the banks or the Indian Banks Association (IBA) to restrain the nine unions of UFBU (United Forum of Bank Unions) from striking," C.H. Venkatachalam, General Secretary of the All India Bank Employees Association (AIBEA), told IANS.

Earlier this month, major bank unions deferred a two-day strike call for July 12 and 13 following a restraint order by the Delhi High Court.

The unions in the banking sector had given the strike call protesting against the merger of the five associate banks of the State Bank of India (SBI) with SBI and the privatisation of IDBI Bank.The Total Investment & Insurance Solutions

The union is opposed to the government's decision to merge the State Bank of Bikaner and Jaipur (SBBJ), State Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Mysore (SBM) and State Bank of Hyderabad (SBH) with the SBI. The Total Investment & Insurance Solutions

"The strike will involve employees and officers of public sector banks, old generation private banks and foreign banks with a total of more than 80,000 branches," he said.

According to him, the banks may be filling up the automatic teller machines (ATM) numbering around 200,000 in the country to facilitate cash withdrawals.

"We wanted to strike when Parliament is in session. Though the strike is on a Friday, the next day is a full working day for the banks. There will be no bunching of holidays," he said.

Venkatachalam said the strike was against the unwarranted banking reform measures. The Total Investment & Insurance Solutions

The nine constituent units of UFBU are: AIBEA, AIBOC, NCBE, AIBOA, BEFI, INBEF, INBOC, NOBW and NOBO.

According to Venkatachalam, unmindful of the adverse implications, the government was pursuing the reform measures in the banking sector like inadequate infusion of capital in public sector banks which will result in reduction of government's equity capital and create compulsion for higher extent of private capital leading to privatisation of banks.

He said the unions also opposed the decision to privatise IDBI Bank by reducing the government capital to less than 49 per cent, proposals of consolidation for public sector banks but expansion for private sector banks, giving licences to corporate houses to start banks, ineffective steps to recover the bulging bad loans in the banks, and rather showering concessions to the defaulters and others. The Total Investment & Insurance Solutions

"We demand that willful and deliberate defaulters should be declared as criminal offenders and punished," he said.

Venkatachalam said the total bank loans wilfully defaulted by borrowers was Rs 58,792 crore.

He said the total quantum of bad loans of the government owned banks stood at Rs 539,995 crore as on March 31, 2016.

"But the government and the RBI (Reserve Bank of India) are not taking tough measures to recover the bad loans. Even the (defaulters') names are not being published," he said. The Total Investment & Insurance Solutions

Foreign shareholding limit in Indian stock exchanges raised-The Total Investment & Insurance Solutions

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28Th July 2016

The Union Cabinet on Wednesday approved a proposal to raise foreign shareholding limit in Indian stock exchanges from 5 to 15 per cent, an official statement said. The Total Investment & Insurance Solutions

The decision, taken at a meeting of the cabinet, chaired by Prime Minister Narendra Modi, will increase shareholding limits for foreign stock exchanges, depositories, banks, insurance companies and commodity derivative exchanges.

"The cabinet has also approved the proposal to allow foreign portfolio investors to acquire shares through initial allotment, besides secondary market, in the stock exchanges," the statement said.

"The move will help in enhancing global competitiveness of Indian stock exchanges by accelerating, facilitating the adoption of latest technology and global best practices which will lead to overall growth and development of the Indian capital market," it said, adding that the approval was in pursuance of implementation of the union budget 2016-17 announcement made by Finance Minister Arun Jaitley regarding reforms in FDI (Foreign Direct Investment) policy in Indian stock exchanges. The Total Investment & Insurance Solutions

The National Stock Exchange (NSE) welcomed the Union Cabinet's decision.

"NSE has always aligned itself with global best practices. Exchange believes that government's decision is in sync with the spirit of globalisation," said its Managing Director and Chief Executive Chitra Ramkrishna. The Total Investment & Insurance Solutions

Nifty, Sensex in bull grip – Thursday closing report-The Total Investment & Insurance Solutions

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28Th July 2016

I had mentioned in Wednesday’s closing report that Nifty, Sensex might be headed higher. The major indices of the Indian stock markets rallied on Thursday and closed with gains of around 0.60% over Wednesday’s close. The trends of the major indices in the course of Thursday’s trading are given in the table below: The Total Investment & Insurance Solutions

 

Major Indices (The Total Investment & Insurance Solutions)

The Indian equity markets on Thursday closed at new highs in almost a year, riding on short covering and expectations of a major economic legislation getting parliament's approval. On a closing basis, the wider 51-scrip Nifty of the National Stock Exchange (NSE) touched a new 52-week high. The 30-scrip sensitive index (Sensex) of the BSE also reached its highest closing levels in 11 months. Healthy buying was witnessed in consumer durables, automobiles and FMCG (fast moving consumer goods) stocks. On the NSE, there were 818 advances, 638 declines and 62 unchanged. The BSE market breadth was slightly tilted in favour of the bulls -- with 1,486 advances and 1,164 declines.

The government is carefully considering the suggestions made by the trade and industry on the Goods and Services Tax (GST) Bill, a top CBEC official said here on Thursday. "We have been receiving a large number of representations from trade and industry. This is a very healthy exercise and all these suggestions and views will go into making an ideal GST," Mahender Singh, Director General (GST), Central Board of Excise and Customs (CBEC), said. He was speaking at a national conference on draft GST law organised by Associated Chambers of Commerce and Industry of India (Assocham). "It (suggestions on GST) is considered, discussed and various aspects are taken into consideration and once the final decision is taken then that will be incorporated in the final GST law," Mahender Singh said. He said some sections of the trade and industry have apprehensions that their views may not be taken into consideration. It is understandable, he said, for people to have such apprehensions in a large country with a wide variety of trade practices. The Total Investment & Insurance Solutions

Banking operations will be impacted across the country on Friday with around 10 lakh bankers of 40 private and state-run banks striking work in protest against the central government's banking policies, a union leader said on Thursday. "The strike is on. We are not aware of any case filed by the banks or the Indian Banks Association (IBA) to restrain the nine unions of UFBU (United Forum of Bank Unions) from striking," C.H. Venkatachalam, General Secretary of the All India Bank Employees Association said. Earlier this month, major bank unions deferred a two-day strike call for July 12 and 13 following a restraint order by the Delhi High Court. The unions in the banking sector had given the strike call protesting against the merger of the five associate banks of the State Bank of India (SBI) with SBI and the privatisation of IDBI Bank. The union is opposed to the government's decision to merge the State Bank of Bikaner and Jaipur (SBBJ), State Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Mysore (SBM) and State Bank of Hyderabad (SBH) with the SBI. "The strike will involve employees and officers of public sector banks, old generation private banks and foreign banks with a total of more than 80,000 branches," he said. According to him, the banks may be filling up the automatic teller machines (ATM) numbering around 200,000 in the country to facilitate cash withdrawals. "We wanted to strike when Parliament is in session. Though the strike is on a Friday, the next day is a full working day for the banks. There will be no bunching of holidays," he said. Venkatachalam said the strike was against the unwarranted banking reform measures. The Bank Nifty closed at 19,076.55, up 0.29%. The Total Investment & Insurance Solutions

US Federal Reserve on Wednesday kept federal funds rate unchanged, reiterating that it continues to closely monitor inflation indicators and global economic and financial developments. "Near-term risks to the economic outlook have diminished," said the Fed in a statement after concluding two-day monetary policy meeting. This new expression might indicate that conditions are getting more favourable for further interest rate hikes in the future. Fed officials gave more upbeat description of the economy. There was some increase in labour utilisation in recent months, pointing to a healthy labour market despite the slowdown in April and May. Household spending have grown "strongly." Inflation continues to run below the Fed's 2% target, a major concern for Fed officials. But they expected inflation to rise to the target over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labour market strengthens further. The policy to keep interest rates unchanged is good news for emerging markets like India, as it attracts foreign institutional investors.

The top gainers and top losers of the major indices are given in the table below:

 

Top Gainer (The Total Investment & Insurance Solutions)

The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions

 Asian Indices (The Total Investment & Insurance Solutions)

Global Markets & News-The Total Investment & Insurance Solutions

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27Th July 2016

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU16 +0.15%) this morning are mildly higher by +0.2% and the Euro Stoxx 50 index is up +1.1% on a +6% rally in Apple overnight and on Japanese Prime Minister Abe's announcement of a 28 trillion yen ($265 billion) fiscal stimulus package. Mr. Abe was not expected to announce the package size until next week but he likely wanted to increase the pressure on the BOJ for new monetary policy stimulus measures at its Thursday-Friday meeting. Apple in yesterday's post-close quarterly results said that iPhone demand picked up and the company's Q4 sales guidance was above the market consensus. The markets remain on edge, however, ahead of today's FOMC post-meeting statement. A negative factor for European stocks today was a -4% sell-off in Deutsche Bank after the bank said that it barely earned a profit due to a drop in trading revenue and job-reduction costs. Twitter is down -11% overnight due to disappointing Q3 revenue guidance. The Chinese stock market closed lower today after a media report that China's banking regulator is considering moves to tighten up wealth management products. The Total Investment & Insurance Solutions

Asian stocks today, except for China, closed higher: Japan +1.72%, Hong Kong +0.40%, China Shanghai -1.91%, Taiwan +0.43%, Australia +0.04%, Singapore +0.27%, South Korea unchanged, India +0.17%, Turkey +0.88%.

The dollar index (DXY00 +0.15%) this morning is trading slightly higher by +0.08%. EUR/USD (^EURUSD) is up +0.0012 (+0.11%). USD/JPY (^USDJPY) is up +0.84 (+0.80%) this morning as the yen moved lower on PM Abe's fiscal-stimulus announcement which increased the pressure on the BOJ for more monetary stimulus. GBP/USD is down -0.0037 (-0.28%) this morning despite today's slightly stronger than-expected UK Q2 GDP report of +0.6% q/q and +2.2% (vs expectations of +0.5% q/q and +2.1%). The UK Q2 GDP data precedes the June 23 Brexit vote and will not deter the BOE next week from likely cutting rates a notch.

Sep 10-year T-note prices (ZNU16 -0.07%) this morning are down -3 ticks on reduced safe-haven demand due to higher global stocks. In addition, T-notes are still seeing weakness after the poor demand for yesterday's 5-year T-note auction. The Treasury today will sell $15 billion of 2-year floating rate notes and on Thursday will sell $28 billion of 7-year T-notes. The Total Investment & Insurance Solutions

Commodity prices this morning are mildly lower by -0.16%. Sep crude oil (CLU16 -0.44%) is down by another -0.20 (-0.47%) and Sep gasoline (RBU16-0.16%) is down -0.0021 (-0.16%) after the API on Tuesday reported that Cushing oil inventories rose +1.4 million bbls and that U.S. crude oil inventories rose by +827,000 bbls. Metals prices this morning are steady to lower on a slightly stronger dollar: Aug gold (GCQ16 -0.08%) -0.7 (-0.05%), Sep silver (SIU16 -0.07%) +0.007 (+0.04%), Sep copper (HGU16 -0.56%) -0.016 (-0.70%). Grain prices this morning are mixed as the focus remains on weather: Dec corn unchanged, Nov soybeans +4.50 (+0.46%), Sep wheat -0.50 (-0.12%). Softs this morning are mixed: Oct sugar -0.15 (-0.77%), Sep coffee +1.10 (+0.78%), Sep cocoa +7 (+0.25%), Dec cotton -0.08 (-0.11%). The Total Investment & Insurance Solutions

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -1.3% with purchase sub-index -2.0% and refi sub-index down -0.9%), (2) Jun durable goods orders (expected -1.4% and +0.3% ex-transportation, May -2.3% and -0.3% ex-transportation), (3) Jun pending home sales (expected +1.2% m/m and +3.0% y/y, May -3.7% m/m and +2.4% y/y), (4) Treasury auctions $15 billion of 2-year floating-rate notes, (5) 2-day FOMC policy meeting ends with post-meeting statement (no Fed Chair press conference), and (6) EIA Weekly Petroleum Status Report. The Total Investment & Insurance Solutions

There are 54 of the S&P 500 companies that report earnings today with notable reports including: Facebook (0.82), Coca-Cola (0.58), Waste Management (0.71), Comcast (0.81), Nasdaq (0.88), Boeing (-0.94), Amgen (2.74), Whole Foods (0.37), Wynn Resorts (0.90). The Total Investment & Insurance Solutions

U.S. IPO's scheduled to price today: Kinsdale Capital Group (KNSL).

Equity conferences this week include: none.

Sep E-mini S&Ps this morning are mildly higher by +0.2% on a +6% rally in Apple overnight and on Japanese Prime Minister Abe's announcement of a 28 trillion yen ($265 billion) fiscal stimulus package. Tuesday's closes: S&P 500 +0.03%, Dow Jones -0.10%, Nasdaq +0.24%. The S&P 500 on Tuesday closed little changed. Stocks were undercut by technical selling and concern that the FOMC at its Tue-Wed meeting might adopt more hawkish language. Energy producers continued to be undercut by the ongoing sell-off in Sep crude oil prices. Stocks received support from the stronger-than-expected U.S. consumer confidence index (-0.1 to 97.3 vs expectations for a decline 96.0) and June new home sales report (+3.5%). The Total Investment & Insurance Solutions

OVERNIGHT U.S. STOCK MOVERS

Apple (AAPL -0.69%) rallied +6% in overnight trading after its earnings report included news that iPhone sales were stronger than expected and that revenue fell by less than expected. The Total Investment & Insurance Solutions

·         Twitter (TWTR -1.07%) is down -11% in overnight trading on weaker-than-expected Q3 revenue guidance of $590-610 million, far below the consensus of $681 million, which fueled recent concerns that the company is struggling to boost advertising revenue as user growth stagnates.

·          

·         Earnings reports this morning have nearly all beaten expectations. Notable results include Anthem (ANTM -1.71%) (3.33 vs 3.23 consensus), Coca-Cola ({=KO) (0.60 vs 0.58), Comcast (CMCSA -0.43%) (0.83 vs 0.81), State Street (STT +0.92%) (1.46 vs 1.27), Rockwell (ROK +2.08%) (1.55 vs 1.46), Nasdaq (NDAQ +0.09%) (0.91 vs 0.88), Waste Management (WM +0.19%) (0.74 vs 0.71),

·          

Analog Devices (ADI +3.87%) rallied +7% in after-hours trading after the earlier announcement that it is buying Linear Technology (LLTC +28.93%) for $14.8 billion at a premium of 24% to Monday's closing price. Linear Technology on Tuesday closed up +29%. The Total Investment & Insurance Solutions

·          

·         Fiesta Restaurant Group (FRGI -6.96%) rallied +2% in after-hours trading after being named to the S&P SmallCap 600 index.

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·         LogMeIn (LOGM +6.74%) rallied 19% in after-hours trading after news that the company will merge with Citrix's (CTXS +1.19%) GoTo family of products. Citrix fell -1.2% in after-hours trading on the news.

·          

·         Edwards Sciences (EW +1.72%) rallied by +6% in after-hours trading after reporting above-consensus ex-items adjusted EPS of 76 cents (vs the 70 cent consensus) and raising its 2016 earnings guidance for the third quarter in a row.

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·         Panera Bread (PNRA -4.32%) rallied +4% in after-hours trading after reporting better than expected adjusted EPS of $1.78 (vs consensus $1.74).

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·         Akamai Technologies (AKAM +0.33%) fell by -10% in after-hours trading after missing Q2 revenue estimates.

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·         Juniper Networks (JNPR +0.67%) fell -1% in after-hours trading after its Q3 earnings guidance of 48-54 cents missed the consensus of 54 cents. Q2 adjusted EPS of 50 cents was above the 47-cent consensus.

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MARKET COMMENTS

Sep 10-year T-note prices this morning are down -3 ticks on reduced safe-haven demand due to higher global stocks and on supply overhang ahead of the Treasury's auction of 2-year floating rate notes today and 7-year T-notes on Thursday. Tuesday's closes: TYU6 +2, FVU6 +0.75. Sep 10-year T-notes on Tuesday closed mildly higher on the soft stock market and the continued decline in crude oil prices, which dampened inflation expectations. T-notes were undercut by poor demand for Tuesday's 5-year T-note auction, which saw the lowest bid cover ratio since 2009. T-notes were also undercut by some concern that the FOMC at its Tue-Wed meeting might adopt more hawkish language in its post-meeting statement. The Total Investment & Insurance Solutions

The dollar index this morning is trading slightly higher by +0.08%. EUR/USD is up +0.0012 (+0.11%). USD/JPY is up +0.84 (+0.80%) this morning as the yen moved lower on PM Abe's fiscal-stimulus announcement which increased the pressure on the BOJ for more monetary stimulus. Tuesday's closes: Dollar index -0.13 (-0.13%), EUR/USD -0.0009 (-0.08%), USD/JPY -1.15 (-1.09%). The dollar index on Tuesday closed mildly lower. The yen rallied sharply by +1.09% on Tuesday on Japanese Finance Minister Aso's comment that the government will "leave actual policy measures to the BOJ," which doused hopes for a big Japanese fiscal stimulus program. The dollar found support on ideas the FOMC at its Tue-Wed meeting might adopt slightly more hawkish post-meeting statement language.

Sep crude oil is down by another -0.20 (-0.47%) and Sep gasoline is down -0.0021 (-0.16%) after the API on Tuesday reported that Cushing oil inventories rose +1.4 million bbls and that U.S. crude oil inventories rose by +827,000 bbls. Tuesday's closes: CLU6 -0.21 (-0.49%), RBU6 +0.0101 (+0.76%). Sep crude oil and gasoline closed mixed on Tuesday. Crude oil was undercut by continued technical selling as Sep crude oil fell to a new 3-month low and by continued concern about the crude oil glut and the increasing number of active U.S. oil wells. Crude oil was supported by the mildly lower dollar index and expectations for Wednesday's weekly EIA report to show a -2.5 million bbl decline in U.S. crude oil inventories. The Total Investment & Insurance Solutions