India Insight

Equity mutual funds record best monthly performance since Jan 2012

India’s diversified equity funds posted their best monthly performance since Jan 2012 as the benchmark Sensex scaled record highs in October, with bets on sectors such as banking and capital goods boosting mutual fund returns.

Such schemes, which form the largest category of equity funds in India by number and assets, rose 9.2 percent on average, mirroring returns on the 30-share BSE Sensex, data from fund tracker Lipper, a Thomson Reuters company, showed.

The Sensex hit an all-time closing high in October — and went on to touch a life high on Nov. 1 ahead of the Diwali weekend — bolstered by foreign inflows of around $3.5 billion after the U.S. Fed decided to delay stimulus tapering.

“Liquidity has overtaken the economic scenarios, probably this is likely to continue for a couple of months,” said R.K. Gupta, managing director at Taurus Mutual Fund. “The outlook for mutual funds looks slightly better. Over a period of time, most of the mutual funds are taking care that profit booking is an ongoing exercise.”

Other than large-cap stocks, funds’ investment in smaller shares also paid off, as the BSE mid-cap index rose 9 percent while the small-cap index gained 7.9 percent. These stocks collectively accounted for more than a third of such funds’ assets by end-September, separate data from Morningstar India showed.

Markets this week: Sensex gains 3 percent, Tata Motors surges 10 percent

The BSE Sensex rose 3 percent during the week, ending in the green for four of the five trading sessions. Improved guidance from Infosys, hopes of a U.S. deal to avoid a default on its debt and the RBI’s decision to cut a key overnight interest rate helped sentiment.

Data released on Thursday showed India’s trade deficit narrowed to a two-and-a-half-year low in September, raising hopes for a significant reduction in the country’s current account deficit.

The rupee ended at 61.07/08 per dollar, helped by good dollar sales by corporates and as emerging currencies rose with risk sentiment improving.

Markets this week: Sensex falls 2.6 percent, Jindal Steel slumps 9 percent

After rising for four consecutive weeks, the BSE Sensex fell 2.6 percent in the last five trading sessions, as a surprise repo rate hike by the Reserve Bank of India (RBI) on Sept. 20 dampened investor confidence and battered banking shares.

Rate-sensitive sectors were hurt — the banking index and the realty index lost over 7 percent in the week. YES Bank fell 14.5 percent, SBI lost 6 percent while shares of DLF slumped 13 percent.

While analysts expected the new RBI chief Raghuram Rajan to hold rates last week, expectations for monetary policy have suddenly shifted towards further tightening after the rate hike, a recent Reuters poll showed.

Markets this week: Sensex gains 2.7 percent, Maruti surges 11 percent

By Ankush Arora and Sankalp Phartiyal

The BSE Sensex rose 2.7 percent in the week ending September 20, as foreign inflows and the U.S. Federal Reserve’s surprise decision to continue with its bond-buying programme boosted market sentiment.

The benchmark index, which is now up 9 percent in September and has gained for four consecutive weeks, touched its highest level since November 2010 on Thursday after the Fed’s surprising move. Analysts said the U.S. central bank’s decision could lead to a resurgence of portfolio flows into emerging markets such as India.

On Friday, the Reserve Bank of India stunned markets by raising the repo rate by 25 basis points (bps), but some of the recent rupee support measures were trimmed. The Indian currency gained 2 percent in the last five sessions and ended the week at 62.23/24 per dollar.

Markets this week: Sensex gains 2.4 percent; L&T, Tata Power surge

September is turning out to be a good month for Indian shares, as key stock indexes extended gains in the last four sessions. Monday was a market holiday.

The BSE Sensex gained 2.4 percent, while the broader Nifty rose nearly 3 percent as foreign institutional investors (FIIs) extended buying into Indian equities. A recovery in the rupee, which posted its best week in 15 months, also boosted sentiment.

Profit-taking dented markets mid-week as caution also prevailed ahead of a series of macroeconomic events scheduled next week, including August inflation data due on Monday and the likelihood of U.S. Fed’s decision to announce a reduction in its monetary policy stimulus. RBI will review its policy on September 20.

Markets this week: Sensex gains 3.5 percent, ICICI surges 19 percent

The BSE Sensex rose 3.5 percent for the week ending September 6, as sentiment on Dalal Street was boosted after Raghuram Rajan took charge as the new governor of the Reserve Bank of India.

Rajan kicked off his term with a bang on Wednesday, announcing several measures to support the rupee and unveiling steps to liberalise financial markets and the banking sector. Hopes that the government might announce a one-time hike in diesel prices to cut its steep import bill also helped the stock market.

The rupee rose to its strongest against the dollar in nearly two weeks on Friday, rallying on growing expectations the unit has been badly oversold. A Reuters poll shows that the Indian unit has likely bottomed out.

Sensex loses 3.75 percent in action-packed month

The BSE Sensex lost 3.75 percent in August, its worst monthly performance since February, as worries over foreign outflows were exacerbated by the rupee that fell to record lows.

India’s current account deficit and a struggling economy still worry market participants.  Data showed on Aug. 31 that June quarter GDP grew at 4.4 percent, below analysts’ estimates.

The rupee recovered in the last few trading sessions of the month, closing around 65.75 per dollar after falling to a life low below 68. Still, the unit lost 8.1 percent in August, its biggest monthly fall since at least 1995.

Bharti Airtel, NTPC top Sensex losers this week

By Sankalp Phartiyal and Ankush Arora

The BSE Sensex recovered on Thursday and Friday after the index lost around 700 points in the first three trading sessions of the week. However, the index still ended down 0.4 percent as a weak rupee, concerns over foreign flows and uncertainty over the end of the U.S. Fed’s stimulus plan kept investors on the edge.

As a worsening current account deficit and inflation loomed large, the rupee hit fresh record lows below 65 per dollar in the week ending Aug. 23. However, gold prices and bonds rallied.

Fitch Ratings has warned Asia’s third-largest economy of a downgrade if the government fails to soothe tensions in the financial market. JP Morgan and HSBC downgraded Indian shares to ‘neutral’.

Markets this week: BHEL is top Sensex loser

By Ankush Arora and Sankalp Phartiyal

The BSE Sensex had been headed for a week of gains until upbeat U.S. jobs data triggered fears of a soon-to-start tapering of the Fed’s monetary stimulus, pulling the benchmark down by a percent for the week ending Aug. 16. The broader Nifty slumped 4 percent on Friday, marking its biggest daily drop in almost two years.

The rupee also fell to a new record low of 62.03 versus the dollar on Friday despite the Reserve Bank of India (RBI) and the government’s continued efforts to prop up the currency.
New measures by the RBI to restrict how much Indian citizens and companies can invest abroad raised fears of outright capital controls that could spook foreign investors, hurting the rupee further.

The outlook remains bleak as Indian shares marked their fourth consecutive weekly fall, totalling a decline of 7.7 percent.

Some investors in India look to the stars for stock advice

The 2008 financial crisis gutted Girish Kumar’s portfolio value by 90 percent. So much for technical and fundamental analysis. The 42-year-old textiles businessman from Jaipur turned to astrology, and now he says the stars guide him to a profit every month.

Kumar is part of a group of Indians who think that analysing the positions of the planets, stars and other celestial bodies can predict the direction of the stock market and suggest which companies and sectors deserve their money.

“There is something in this universe that makes it run. I believe in that,” said Kumar, who pays an astrologer 100,000 rupees a year, about $1,700, for stock market advice.

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