Dalmia Bharat Reports Disappointing Q3 Results, Sees Limited Short-Term Growth

Business, Equities, Expert Views, Investor Forum, Markets - May 15, 2020

Credit risk funds. Should you invest?

Credit risk funds. Should you invest?

Credit risk funds are debt funds that lend not less than 65% of their portfolio in the lower rated instruments (less than AA rated papers). The borrowers have to shell out higher interest charges to compensate for their lower credit rating, which translates into a higher risk for the lender due to an increased possibility of default. Although, these funds lend mostly for short duration. They are still one of the riskiest in the category.

These funds are ideal for an investment horizon of at least 3-5 years. There is a high probability of incurring losses if held for short term.These funds tend to deliver higher returns than Bank Fixed Deposits thereby involving higher risk.

Portfolio with Credit Risk Funds fetches:

• Higher Return : These funds take high risks and invest that money in the low risk instruments and the returns generated are higher as compared to other funds.

• Tax Benefits: These funds are tax-efficient as the Long Term Capital Gains (LTCG) is flat 20% where as if the assessee is in 30% slab still LTCG will be taxable at 20%.

• Extended Supervision: In these funds, fund managers play a very significant role in obtaining remarkable returns. Credit rating alone is not the only basis of decision making. There are various parameters such as the company’s scope of expansion, its potential and business model.

For instance,

ICICI Prudential Credit Risk Fund is presently giving return of +8.64% p.a.

Kotak Credit Risk Fund is presently giving return of +7.44% p.a

HDFC Credit Risk Fund is presently giving return of +7.55% p.a

Debt, hybrid mutual funds see large outflows in April

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Z47 Launches $400M Fund for India's Tech Boom

Equities, Market News, Markets - May 9, 2020

BSE, NSE to launch rupee derivative contracts

The NSC IFSC and India INX have introduced rupee derivatives which will help in bringing much needed added liquidity in the economy. This will supplement their customers with several investment options.

The motive behind introduction of rupee derivatives:

The CEO of NSE, Vikram Limaye communicated to the media that the introduction of rupee derivatives will help in the development of (Gujarat International finance tech) GIFT IFSC as a hub of global financial services. This IFSC platform will help in the rupee exposure of non resident participants. This non residents’ participation will also enhance the IFSC’s extended trading hours and USD settlement. They’ve already received permissions for offering securities trading in any currency except the Indian rupee.

Importance of introduction of rupee derivatives:

Mr. Limaye added that this measure will enhance the efficiency of Indian rupees’ price discovery. It will be done by eliminating the onshore and offshore markets’ segmentation. It will also allow for trading and hedging using rupee derivatives contracts to their trading partners viz. IFSC entities and banking units. The Finance Minister Nirmala Sitharaman did the inauguration of the rupee derivatives contract. The contract will be having a lot size in NSE IFSC – Rs 20 lacs and India INX – Rs 10 lacs and the contract will be settled in cash.

The futures and options:

The futures at the NSE IFSC will have in total three monthly expiry contracts . The options at NSE IFSC will have total seven weekly and three monthly expiry contracts. For the other one i.e India INX, there will be in total eleven weekly and twelve monthly contracts. In the past few months due to the corona virus pandemic crisis, there is an acute volatility faced by the currency markets. The introduction of rupee derivative contracts in the IFSC will lead to more stability during these situations.

The Contracts:

The chairman of India INX, Ashishkumar Chauhan communicated to the media that the size of contract will be Rs 10 lacs and the trading is made available from 8th May 2020, 3:30 pm IST. The trading is for both the pairs viz. USD-INR and INR-USD. He added that for the USD-INR product, many of the people like the exporters, importers, traders, etc associated with any kinds of businesses have expressed their keen interest. The Gandhinagar GIFT City is the only IFSC situated in India having zero short term, zero long-term, zero stamp duty and zero transaction taxes as of now.

Each and every businessman interested should consider trading and hedging using rupee derivatives contracts at the GIFT City. The MD and CEO of India INX, V Balasubramaniam communicated to the media that he looks towards the best participation of members and international participants. This will be the first launch of offshore Indian rupee derivatives contract.

What are liquid funds? Find more

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Aarti Industries Ltd Q1 FY23 Result Updates.

Economy, Market News, Markets - May 6, 2020

Investors get relief with standardized digital KYC process

Investors get relief with standardized digital KYC process

Know Your Customer (KYC) process generally contain heaps of paper work regarding customer identity and customer acceptance policy. All this makes the KYC process very lengthy and tedious. However, e-KYC is the option available to users but, for e-KYC stock brokers and various online mutual fund platforms didn’t have any standardized or unique set of procedures. E.g. In Person Verification (IPV) is completed by allowing customers by sending their recorded video to the concerned broker while some send their representative to the client’s home for the completion of In Person Verification (IPV).

New standard and unique procedure for Digital KYC:

Due to the unusual wake of Covid-19, the Indian government and Securities Exchange Board of India (SEBI) came up with standard and unique procedure for Know Your Customer (KYC). Media reports noted that Securities Exchange Board of India (SEBI) fetched responses from various brokers about how the KYC process is executed presently and then they released new standardized norms of how digital KYC should be executed.

Details regarding Aadhar based KYC:

A notification was published by Finance ministry of India on 22nd April 2020, regarding KYC process to be completely digitized for transactions through some institutions. Notification states that 9 institution’s viz. Link Intime India Pvt Ltd, CDSL Ventures Ltd, Bombay Stock Exchange (BSE), CAMS Investor Services Pvt Ltd, Central Depository Services (India) Ltd, and National Stock Exchange (NSE) can now undertake Aadhar based e-KYC. Notification noted that all the 9 institutions follow all the standards of privacy and security under the Aadhaar Act 2016.

Details regarding Online KYC:

Securities Exchange Board of India (SEBI), clarified the KYC process and its functioning. SEBI notified various online services that Mediators can practice for completion of KYC process.

Some of online KYC are followed:

Aadhaar eSign

Aadhaar eSign is the method recommended by government, in which we can digitally sign a document using Aadhaar. It will be equivalent to the normal sign we do, i.e. physical sign using pen. This will be completed using One-Time Password (OTP).

Digilocker

Digilocker is an initiative of Central government. It allows an individual to store their personal documents online using cloud storage provided by Digilocker. It provides free upload of documents up to 1 GB. Users can store their PAN card, Driving Licence and other important documents. Digilocker is fully secured, while creating an account. The 12 digit Aadhaar number is compulsory and further every time you login to Digilocker, a 4 digit One-Time Password (OTP) will be sent on the linked mobile number with Aadhaar. Digilocker allows you to sign digitally through their platform. Securities Exchange Board of India (SEBI), allowed verification of documents for KYC process using Digilocker. Documents uploaded on Digilocker can be treated as original documents.

In Person Verification (IPV)

In Person Verification (IPV) can be done effortlessly by using mediator’s portal or application. For IPV, a representative from the mediators can connect client through video call and ask some relevant questions. Investor can complete their In Person Verification (IPV) by presenting their original documents on video call.

The complete procedure of KYC:

The complete KYC procedure will be executed online as per SEBI norms by using broker’s application and online portals. They can cross verify clients by name and all the personal details uploaded by them on Digilocker with digital sign. IPV using video call will ensure all the proofs provided by client are genuine. Aadhaar authentication will be done by the Unique Identification Authority of India (UIDAI) whereas PAN authentication will be done by the database available in Income tax department.

Provision made to check the authentication of bank account is very simple. ₹1 will be deposited in a client’s bank account to verify all the details. This is termed as “Penny Drop” mechanism. Once all the verification is done, clients can download all the documents, do E-Sign on each document and upload it back to the portal. Another way customer can follow is to print all the documents, sign them, and upload the scan copy of it in the portal. Due to all this new measures started by government, investing online is an easy-going task.

Pre-GST CENVAT credit available till 30th June revised

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Currency, Markets - May 4, 2020

Cryptocurrency EOS dips by 11%

Cryptocurrency EOS dips by 11%

EOS token, the digital money of the EOS network, faces a critical fall. Digital money EOS, on 4th May 2020, was seen trading at a cost of $26,993, down by 10.50%. This was the most critical fall in the estimation of cryptographic forms of money since March 12. The fall incited a decrease of the market capitalization of EOS to $25,750 B, or 0.00% of the complete capitalization of all cryptographic forms of money. While prior pinnacles capitalization of EOS was $175,290 B.

In the previous 24 hours, the EOS was exchanging between $26,956 to $28,443. Over the most recent 7 days, digital money EOS felt the stagnation rate as it only got displaced by 1.25%. The EOS measure of cash exchanged in the recent 24 hours was $41,130 B. The course was differed in the range from $26,900 to $31,138 over the most recent 7 days.

Right now EOS is still underneath 88, 25% from their pinnacle esteems, adding up to $22.98, which was arrived at April 29, 2018.

News regarding other digital forms of money:

Bitcoin was last exchanging at $8.671,4, showing a fall of 5.16% during the day. The Ethereum exchanged $20,354 , dropping 6.71%. The market capitalization of Bitcoin – $1,613,378 B or 0.00% of the all out capitalization of digital money, while showcase capitalization of the Ethereum – $231,391 B or 0.00% of the complete capitalization of the financial exchange.

Jio Platforms acquire investment from Silver Lake

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Economy, Market News, Markets - May 4, 2020

Jio Platforms acquire investment from Silver Lake

Jio Platforms acquire investment from Silver Lake

After the announcement of Facebook-Jio deal worth $5.7 billion a few weeks ago, Silver Lake, a technology investment firm is to invest $750 million (Rs. 5,655.75 crores) in telecommunications giant Jio Platforms Ltd. The investment is for 1.15% stake of the company at an equity value of Rs.4.90 lakh crores.

The Deal:

As per the deal announced by Reliance Industries Limited and Jio Platforms Limited, Silver Lake will invest $750 million in Jio platforms. This investment represents an equity value of Rs 4.9 lakh crores of Jio platforms and takes Jio’s enterprise value to Rs. 5.15 lakh crores. It represents 12.5% premium to the valuation of the investment made by Facebook which bought 9.99% of Jio Platforms Ltd.

Reliance Industries’ wholly owned subsidiary, Jio Platforms mainly focuses on next generation technologies. Reliance Jio Infocomm is a wholly owned subsidiary of Jio Platforms Limited which offers voice over LTE on its 4G network. The regulatory and customary approvals for the transaction are yet to be received. The financial advisor of Reliance Industries was Morgan Stanley. The legal counsel were ASB & partners and Davis Polk and Wardwell.

Statements by the CEO:

Reliance Industries Chairman and MD, Mukesh Ambani said that Silver Lake is one of the best technology and Finance firm. RIL is delighted and encourages such global technology relationships which will help them to transform the Indian Digital Society.

The Co-CEO and Managing partner of Silver Lake, Egon Durban said that Jio Platforms has great potential and has the power to bring low-cost Digital services to their customers and also to the small businesses population.

How will this deal help the economy?

Jio platforms stated that the COVID-19 pandemic has caused several economic disruptions globally and in India. This partnership with one of the the best technology investors, Silver Lake will have a significant role in revitalization of the Indian economy. The investment by Silver Lake will further help Jio in developing the world class digital platform it has built, powered by Broadband connectivity, Smart Devices, IoT, Blockchain technologies, etc.

Silver Lake is a technology investment firm with over 43 billion combined AUM and committed capital. They have nearly 100 investment and operating professionals worldwide. On 30th April 2020 while announcing its quarterly and annual financial results Reliance Industries said that it will achieve zero net debt status. The company has received proposals from other strategic and financial investors for a similar sized investments. They will announce it the coming months.

India may cap stimulus package to protect credit rating

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Economy, Market News, Markets - May 2, 2020

India may cap stimulus package to protect credit rating

What does Sovereign Credit Rating Interpret?

Sovereign Credit Rating refers to the evaluation of debt paying capacity of a country based on their previous credibility of how previous debt is settled off. Sovereign Credit Rating are published by credit rating agencies. They are estimated by credit rating agencies like Standard & Poor’s (S&P), Moody’s, Fitch Ratings.

Importance of sustaining decent Sovereign Credit Rating:

For all developing countries, it is vital to maintain a decent Sovereign Credit Rating for overall growth of the economy. Decent Sovereign Credit Rating will aid to attract Foreign Direct Investment in the country.

Sovereign Credit Rating of India:

In the preceding year, Sovereign Credit Rating of India by Moody’s was negative, but afterwards they revised it to stable. Previously, Fitch Ratings forecasted growth rate of India will slow down its pace to 4.6% in the end of FY20 as compared to growth rate of 6.8% in FY19.

Regulating Indian Sovereign Credit Rating:

The Indian Government has limited the comprehensive spending on the unexpected spread of COVID-19 to ₹4.5 lakh crore. Additionally, they mentioned its important to have a detailed check on Indian Sovereign Credit Rating for safeguarding the economy.

Credit rating agencies stared demotion in their rating have been started in many countries. Thus different Credit rating agencies warned India if government tries to spend excess funds to curb the spread of COVID-19 virus. It may degrade the fiscal outlook of the country. In mid-March, the government disbursed ₹1.7 lakh crore to fight against the pandemic.

Major concern of everyone, is the Indian economy is stable?

A recent survey conducted by Federation of Indian Chambers Of Commerce & Industry (FICCI) and Dhruva advisors shows that businesses in India may slack their position in the market in near future. FICCI stated that responses from the survey highlights that the government should immediately come up with revival plans especially in Industry sector.

All the small and large companies are on pay cut including the prime minister and the president. Many SME’s gave up their office space due to pilling of a huge amount of rent and to keep control on their expenditures.

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Infosys to LTIMindtree: IT Stocks Climb on Fed Relief

Economy, Market News, Markets - May 2, 2020

SEBI demands info on unlisted bonds

SEBI demands info on unlisted bonds

The SEBI has asked the mutual fund industry to share information pertaining to the holdings in unlisted bonds. These are securities which cannot be traded in the Indian bond market. This is due to the corona virus outbreak which has froze the entire bond market, It has made the fund managers unable to sell or pledge their funds.

Data to be submitted to SEBI:

SEBI has asked the mutual fund industry to provide details regarding the assets under management of holding unlisted NCD schemes. Adding to it, the details of investments in unlisted bonds and the share in such bonds.

Extending the deadline:

SEBI has directed the mutual fund industry to decrease the investment in unlisted NCDs to 15% by the end of March and to 10% by the end of June 2020. Looking into the current scenario of the mutual fund industry, SEBI has increased the deadline by 6 months. In the month of October, the mutual fund industry was prohibited from investing in unlisted bonds by SEBI. This led to illiquidity of unlisted commercial papers and unlisted NCDs in securities.

Shut down of 6 debt funds by Franklin Templeton:

Recently, Franklin Templeton shut down 6 debt funds which comprised nearly 32% of the total value of unlisted papers. SEBI has asked the Association of Mutual Funds in India to give the details regarding the total portfolio’s investment breakup in such unlisted NCD schemes. It must include the residual maturity of listed and unlisted bonds and the details regarding other listed securities.

An industry person said to the media that some of the listed bonds are illiquid in the current market. SEBI will probably scrutinize the level of risk and stress the system if the redemption continues. These are particularly related to the mid sized companies with unlisted NCDs. It is because the terms and conditions are not easily available for such unlisted papers.

Friday’s deadline:

The deadline given by the SEBI to fund houses was Friday. A source said to the media that Friday was a bank holiday and the stock exchanges were closed. Hence, they didn’t expect an email from SEBI asking for the data. Many funds have been redeemed leading to an increase in the bond yields. Many mutual fund industries have asked banks to avail loans to increase the liquidity position. The fund industries would generally take an overdraft facility from banks to meet their cash flow needs.

Losses borne by AMCs when funds are borrowed:

A fund manager said that whenever the mutual fund schemes borrow, they have to pay interest to the extent of average portfolio yield. Mostly the borrowings are higher than portfolio yields and the difference is to be borne by the Asset Management Company. 20% of its AUM can be borrowed by the mutual fund schemes.

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The biggest Downfall of Nvidia in the market history

Business, Market News, Markets - May 1, 2020

Volatility for Hindustan Unilever to continue

Volatility for Hindustan Unilever to continue

India’s largest fast-moving consumer goods company announced its Q4 results on April 30. The company witnessed a downfall in volume by 7% in this quarter. The performance has been affected by the effects of Covid-19 since the second half of March. As per the Q4 result, Profit Before Tax (PBT) decreased by 10.6% and Net Profit decreased by 1.2%. The revenue of the company decreased by 9.4% to Rs 9.011 crore. The EBIDTA margin decreased by 160 basis points and growth decreased by 7%.

Impact on performance due to COVID-19:

The spread of COVID-19 affected the company from mid-march. This decline is due to the lock-down all across the world to control the spread of the COVID-19 pandemic. This has impacted the demand and supply chain. Beauty and personal care contributes 42% of sales, which is down by 14%. Other categories like homecare and food & refreshments are both down by 4% and 7% respectively. Only a part of the health and refreshment is a client base which includes tea and coffee. Even the recently purchased diet portfolio of the firm, comprising of Horlicks and Boost, does not count as a market base.

Other elements affecting stock prices are currency and crude oil price fluctuations. According to Sanjiv Metha, Chairman and Managing Director stated the human influence of the pandemic is unclear and they are completely committed to collaborating with the government to ensure that we solve the crisis. Instability in input expenses and currency will increment, with liquidity constrains prone to keep on developing. As indicated by HUL, it is hard to guess the market growth. The organization is currently running at around 70% of the normative standard and is planning to increase this in the coming days.

Strategies to improve efficiency:

Strategies to increase productivity are reduction in non-essential spending, Capex optimization, inventory management, credit allocation, emphasis on receivables, investment stability, etc. HUL has increased production in main categories such as sanitizers and handwashes. They are now working with shorter preparation cycles, improving the supply chain and increasing efficiency.

About the stock:

HUL has a Market cap of Rs.5,15,708 crore. The stock’s last traded price was Rs.2,195 and was 1.65% low. HUL’s 52 weeks low is 1656 and 52 weeks high is 2,614. The stock is likely to be corrected due to its overvaluation and extension of lockdown in the highly affected areas. This is disturbing for financial specialists, proposing that market request can not bounce back long after the lockout has finished.

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Currency, Markets - May 1, 2020

Drawbacks of Cryptocurrency Exchanges

Drawbacks of Cryptocurrency Exchanges

What is a Cryptocurrency?

The word Cryptocurrency is originated from two distinct words i.e. Crypto which refers to Data encryption and Currency which refers to Medium of exchange. Cryptocurrency exists only in digital form and it is intangible. Cryptocurrency can be termed as an alternative to hard cash and plastic money, which we use in daily life for making payments.

Does Indian Government support the legality of Cryptocurrency?

In 2018, Reserve Bank of India (RBI) notified a complete ban on purchase and sale of Cryptocurrency in India. Subsequently, petitions have been filled by various Association in Supreme Court of India staring at the legality of Cryptocurrency. In early March 2020, Supreme Court of India lifted the ban on Cryptocurrency in India. Thus, Cryptocurrency is NOT legal in India, only trading is legal. However, Indian government clearly stated that Cryptocurrency cannot be termed as legal tender.

Mechanism of how the Cryptocurrency is traded:

The entire trading of Cryptocurrency is done virtually on various online platforms. People can buy and sell Cryptocurrency virtually by using centralized or decentralized exchanges.

Centralized Vs Decentralized Exchanges:

Centralized Exchanges refers to the exchanges which is operated by a recognized exchange. They are similar to well organized Financial market. All the transactions of the Cryptocurrency are carried by the recognized exchange with no hassle borne by traders. All the private data /keys are in the custody of the exchanges. Centralized Exchanges provide users with decent UI and an extra two step authentication safety feature ensuring the maximum security of their account. The major disadvantage of these exchanges are if they get hacked, traders will slack all the money invested in Cryptocurrency.

List of some well-known Centralized Exchanges:

Binance

Bittrex

Bitfinex

Coinbase

Kraken

Decentralized Exchanges doesn’t control the private keys. Users have the complete authority and control on their trades, funds and private keys. Everything is managed by the users itself, giving them the maximum transparency and flexibility. Although, Decentralized Exchanges have their own disadvantages like poor UI, low liquidity and doesn’t deal with huge amount of transaction. Trading on Decentralized exchanges is a tedious task with many steps to perform before the trade executes. In Decentralized exchanges every transaction has to be signed by you.

List of some well-known Decentralized Exchanges:

WavesDex

Bancor Protocol

Kyber Network

EtherDelta

AirSwap

Drawbacks of Cryptocurrency Exchanges:

As the complete trading of Cryptocurrency is carried digitally, cybersecurity issues are the major concerns while trading the Cryptocurrency. Exchanges have all your private data like email-id, personal details, details about all the transactions and IP address. There is high risk of the website getting hacked and losing the invested money. Such incidents occurred in 2019 when personal data was stolen and huge amount of funds were demanded by hackers.

World’s well-know centralized exchange, Binance was robbed by 7,000 Bitcoins from their online platform. Binance is famous for its security and innovative products. Beside all this, hackers committed the offense. Later, the loss suffered by the customers were borne by the company but this shows how risky it is to deal with Cryptocurrency.

Overcoming Centralized & Decentralized Exchanges Drawbacks:

Alternative for Centralized & Decentralized Exchanges can be the platforms where instant Cryptocurrencies are exchanged without any compulsion of registration and submission of all your personal details.

In the market, ChangeNow is a platform which provides the similar service as mentioned above. ChangeNOW is a non-custodial crypto swap which does not demand any kind of government proof ID, address proof, contact number or email ID. In this platform, users do not need to verify themselves. In simple words, ChangeNow is just a swapping tool. All the major Cryptocurrency is available for trade in this trading platform. This tool can be used by anyone in the world. The platform claims they use an automated risk management system to check all transactions. This can help to gain the trust of traders.

Nonetheless, this cannot be picked as an ideal platform to trade Cryptocurrency. Even this platform has its own set of drawbacks. The major drawback is this platform is a bit high-priced as compared to other. In a nutshell, the trader should keep all the advantages and disadvantages of all the trading platforms available and choose wisely, whichever fits all their needs flawlessly.

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Why gold funds saw a record weekly inflow — and what it signals for Indian investors

Commodities, Economy, Market News, Markets - May 1, 2020

Gold set for best month in 4 years

Gold set for best month in 4 years

On 30th April, the gold prices had a surge, en routing to its best month in the last 4 years. This is because of the increase in expectations about the monetary ease provided by the central banks and the continuous stress over the global recession which increased the demand. Spot gold showed a surge of 0.2% at $1,713.75 per ounce by. The US gold futures showed an increase of 1.1% to $1,732.10 per ounce.

How the gold prices surged?

Eugen Weinberg, the Commerzbank analyst stated the immense monetary support received at the movement is helping gold. Regardless of the increasing risk appetite, the gold prices stayed above $1700 ounce even though it has faced pressure from the equity markets. Carlo Alberto De Casa, Kashif analyst of Activtrades said to the media that the investors will remain confident about quick solutions for the coronavirus. The central banks will be forced to print a large amount of money leading to hyperinflation in such economic turmoil.

Interest rates:

United States Federal Reserve preserved the interest rates and it should be left unchanged for sometime. The unexpected monetary influence provided by both the European Central Bank and the Federal Reserve will probably increase the demand for gold in the future.

Over the last six weeks, the European Central Bank left the interest rates unchanged after revealing various stimulus measures including a plan to buy 1.1 trillion euros worth of debt this year. The Federal Reserve kept the interest rates near zero on April 29. They also promised to extend the emergency series of measures needed to help the battered and bruised economy.

In the first quarter, the US economy contracted at its shortest pace since the Great Recession. In the second quarter, it is likely to show a more sharper contraction. The Bullion showed an increase of more than 9% in the last month. It is boosted by several stimulus measures from the central banks to handle damage caused from the corona virus outbreak. The unchanged lower interest rates will reduce the alternative cost of holding non yielding gold. It is always considered as a risk against inflation and canker currency.

Amazon Pay Later introduced in India

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