Opening Bell 31.07.2014

Your world at 9am

world equity markets 2014-07-31

Equities

Major
DAX(DEU) -0.62%
CAC(FRA) -1.22%
UKX(GBR) -0.50%
NKY(JPN) +0.35%
SPX(USA) +0.01%
MINTs
JCI(IDN) -0.19%
INMEX(MEX) -0.31%
NGSEINDX(NGA) +0.20%
XU030(TUR) +0.51%
BRICS
IBOV(BRA) -0.42%
SHCOMP(CHN) -0.02%
NIFTY(IND) +0.55%
INDEXCF(RUS) -0.14%
TOP40(ZAF) -0.99%

Commodities

Energy
Brent Crude Oil -0.26%
Ethanol +0.00%
Heating Oil -0.62%
Natural Gas +0.03%
RBOB Gasoline -0.43%
WTI Crude Oil -0.68%
Metals
Copper +0.06%
Gold 100oz -0.05%
Palladium +0.13%
Platinum -0.05%
Silver 5000oz +0.00%

Currencies

USDEUR:-0.05% USDJPY:-0.03%

MINTs
USDIDR(IDN) +0.02%
USDMXN(MEX) +0.09%
USDNGN(NGA) +0.08%
USDTRY(TUR) +0.09%
BRICS
USDBRL(BRA) +0.65%
USDCNY(CHN) +0.04%
USDINR(IND) -0.13%
USDRUB(RUS) +0.17%
USDZAR(ZAF) +0.25%
Agricultural
Cattle -0.11%
Cocoa +1.21%
Coffee (Arabica) +1.25%
Coffee (Robusta) +0.64%
Corn -0.76%
Cotton -0.06%
Feeder Cattle +0.10%
Lean Hogs -0.55%
Lumber +1.99%
Orange Juice -4.04%
Soybean Meal +0.28%
Soybeans -0.04%
Sugar #11 +0.12%
Wheat -0.14%
White Sugar +0.30%

Must reads

ITC Ltd chairman Y C Deveshwar believes rich Indian entrepreneurs investing in real estate in US are showing investment opportunities in India in poor light. (DNA)ITC 354.95 -1.10 (-0.31%)

If they build, will you buy? A quarterly survey, based on responses from developers and financial institutions such as private equity funds, and banking and non-banking financial companies, shows sentiments are upbeat. (LiveMint)

Maybe you can buy shares in AIL? Arvind Ltd has approved demerger and transfer of its real estate business to Arvind Infrastructure Ltd (AIL). The company also said that AIL will be separately listed on stock exchange. (TOI) ARVIND 231.35 0.70 (0.30%)

Because, when you run the math, only builders, banks gain when you take loan to invest in realty. (TOI)

Flipkart, Amazon and various other e-commerce players are now in the India Shining v2.0 phase. They should probably talk to the Indian infrastructure companies who participated in India Shining v1.0 first before rushing headlong into the same “300 million consumer class” story. (WSJ)

Good luck!

Mutual Fund League Tables

AMFI puts out AUM statistics of mutual funds once a quarter. Here are some key take aways.

The Top 5 Dominate

Between 2009 and 2014, the top 5 players have remained the same: HDFC, ICICI, Birla Sun Life and Reliance. And their share has remained more-or-less the same: 56.96% in 2009 and 54.6% now.

32 out of a total of 46 funds have less than 2% share, 29 have less than 1%

mutual-fund-aum-share

There are way too many schemes

There are 1066 equity schemes (all permutations and combinations.) The top 2 schemes (both from HDFC) have more than 10% of AUM and the top 10 have about 30%. The rest of them fight for scraps.

equity-scheme-aum-share

Direct plans even the playing field

… a bit.

PPFAS has a 5% share of all direct plans.

direct-scheme-aum-share

However, Direct plans are yet to make a dent

Equity AUM under direct plans have doubled since last year. This ought to be giving distributors sleepless nights…

direct-regular-scheme-aum-share

Opening Bell 30.07.2014

Your world at 9am

world equity markets 2014-07-30

Equities

Major
DAX(DEU) +0.58%
CAC(FRA) +0.48%
UKX(GBR) +0.29%
NKY(JPN) +0.27%
SPX(USA) -0.45%
MINTs
JCI(IDN) -0.19%
INMEX(MEX) -0.19%
NGSEINDX(NGA) -0.60%
XU030(TUR) +0.51%
BRICS
IBOV(BRA) -1.00%
SHCOMP(CHN) -0.24%
NIFTY(IND) -0.54%
INDEXCF(RUS) +0.60%
TOP40(ZAF) +0.68%

Commodities

Energy
Brent Crude Oil -0.17%
Ethanol +0.00%
Heating Oil -0.26%
Natural Gas -0.13%
RBOB Gasoline -0.23%
WTI Crude Oil +0.19%
Metals
Copper -0.06%
Gold 100oz +0.04%
Palladium +0.40%
Platinum -0.15%
Silver 5000oz +0.00%

Currencies

USDEUR:-0.03% USDJPY:+0.00%

MINTs
USDIDR(IDN) +0.08%
USDMXN(MEX) +0.00%
USDNGN(NGA) -0.15%
USDTRY(TUR) -0.32%
BRICS
USDBRL(BRA) +0.40%
USDCNY(CHN) -0.06%
USDINR(IND) +0.05%
USDRUB(RUS) +0.15%
USDZAR(ZAF) +0.08%
Agricultural
Cattle +0.20%
Cocoa +0.97%
Coffee (Arabica) -0.39%
Coffee (Robusta) +0.00%
Corn -0.28%
Cotton +0.50%
Feeder Cattle +0.17%
Lean Hogs -0.37%
Lumber +0.06%
Orange Juice -2.06%
Soybean Meal -0.05%
Soybeans -0.33%
Sugar #11 -1.89%
Wheat +0.24%
White Sugar -1.03%

Must reads

The finance ministry has said that the income of the Alternative Investment Funds will be taxed at the maximum rate of 30% (DC)

CCI issues show-cause notices to Sun Pharma and Ranbaxy and asks why the deal should be cleared as it will lead to market domination. (LiveMint) SUNPHARMA 772.50 -18.45 (-2.33%) RANBAXY 565.00 -13.85 (-2.39%)

Britain’s new inflation index-linked gilt maturing in 2058 was so heavily oversubscribed that it was priced at a negative real yield. This means investors are willing to pay a small fee to the government in return for being compensated for inflation. (FT)

Good luck!

Bonds, Rates and USDINR Update

The Yield Curve

Lets put the current zero-coupon yield curve in context.

Jan 2011 vs. Now

yieldCurve.2011-01-18.2014-07-25

Jan 2012 vs. Now

yieldCurve.2012-01-02.2014-07-25

Jan 2013 vs. Now

yieldCurve.2013-01-01.2014-07-25

Indian 10 yrs vs. US

After the initial Modi euphoria, the spread between Indian 10 yrs and US 10 yrs started to revert back to its mean:

ust-ind-10yr-spread.2011-01-18

Total Return Indices

Investors in the long bond are yet to recover from the July 2013 draw-down but this year is looking good. Long-bond might just be the place to be as the RBI is widely expected to get into easing mode later this year/early next year.

Cumulative Returns Since 2000

Short
short bond total return

Intermediate
intermediate bond total return

Long
long bond total return

Cumulative Returns Since 2010

Short
short bond returns since 2010

Intermediate
intermediate bond returns since 2010

Long
long bond returns since 2010

Bond ≠ Boring

Returns have been volatile for bond investors.

gsec monthly returns

Can’t really sell “stability” here.

USDINR

A new normal past the euphoria and the hangover?

USDINR.2013

USDINR.2010

In closing

With inflation somewhat stabilizing and the NDA-II government wanting to kick start growth, bonds are getting interesting again. And when rates start moving, currencies cannot be far behind.

Stay updated on the latest news related to Indian interest rates here. Its curated.