SEBI issues guidelines for Alternative Investment Funds (AIFs)
Stock market regulator SEBI issued guidelines to benchmark performance of AIFs, including venture capital funds and the AIF industry, to streamline disclosure norms.
The regulator has released a template for Private Placement Memorandum (PPM) for these funds, classifying them under three categories.
In a circular, the regulator said it has been decided to introduce the template for PPM, subject to certain exemptions, as well as put in place mandatory performance benchmarking for AIFs, PTI reported.
The performance benchmarking guidelines “shall not apply to Angel Funds registered under sub-category of Venture Capital Fund under Category I-AIF,” the circular said.
Sensex rises for the fourth consecutive session
Benchmark index rose for the fourth straight session on RBI's accommodative stance as the central bank left the policy rate unchanged, PTI reported .
The 30-share BSE Sensex settled 163.37 points, or 0.40 per cent, higher at 41,306.03. It hit an intra-day high of 41,405.43.
Similarly, the broader NSE Nifty rose 48.80 points, or 0.40 per cent, to 12,137.95.
According to experts , RBI’s stance bodes well for investors despite no change in policy rates.
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Expert give thumbs up to RBI's to spur growth and increase money supply
Economists and financial experts have given a thumbs up to RBI's widely expect status quo on repo rate , and other announced to boost the economy and improve money supply, PTI reported .
The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das unanimously decided to keep the repo rate unchanged at 5.15%.
According to Rajni Thakur, Economist, RBL Bank, MPC’s decision was on expected lines.
“The changes in development and regulatory policies however were a positive surprise and could potentially turn out to be a big support to the troubled sectors in the economy,” Mr. Thakur said.
ArcelorMittal reports a net loss of $2.5 billion for 2019
The global steel giant ArcelorMittal posted a net loss of $1.9 billion for the December ending quarter, PTI reported . The company completed acquisition of Essar Steel India in December 2019. Simultaneous, it formed a joint venture with Nippon Steel Corporation to own and operate Essar Steel.
ArcelorMittal Chairman and CEO Lakshmi N Mittal said, “2019 was a very tough year, clearly reflected in our significantly reduced profitability. However, our cash generation remained strong helping to reduce net debt to the lowest ever level.”
The company reported a “net loss attributable to equity holders of the parent” of $1.9 billion in the fourth quarter.
ArcelorMittal follows January to December fiscal year.
Five-fold jump in deposit insurance won't hit banks' balance sheets
A hike in deposit insurance, allowed in the budget won't hit bank balance sheets, B.P. Kunungo, RBI deputy governor told reporters during the post policy conference, as reported by PTI .
The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance cover on bank deposits. Currently the cover is capped at one lakh rupees. Finance Minister Nirmala Sitharaman, in her budget Speech, allowed for a five-fold increase in the insurance cover.
A crisis at the Punjab & Maharashtra Cooperative (PMC) Bank , following the failure of a number of cooperative banks, has brought the need to hike the deposit insurance cover to five lakh rupees.
Monetary policy will be very accommodative in 2020: Das
RBI Governor Shaktikanta Das says:
* as in the past year, monetary policy will be very accommodative in 2020
* RBI has no plans to monetise fiscal deficit
* five-fold hike in deposit insurance not to have large impact on bank balance sheets
* there is room for more monetary policy steps, and MPC will act ahead of time as it did last year
* monetary policy transmission remains sizeable so far
* monetary policy constrained by uncertain inflation outlook
* long-term repos will help in better monetary policy transmission PTI
Rs 1-lakh-cr repos to help better monetary transmission: RBI
RBI Governor Shaktikanta Das on Thursday said the decision to conduct new one-year and three-year repos worth Rs 1 lakh crore, is aimed at ensuring better monetary policy transmission.
In the sixth bi-monthly policy, the Reserve Bank of India (RBI) announced term repurchase agreements (repos) of one-year and three-year tenors of appropriate sizes for a total amount of Rs 1 lakh crore at the policy repo rate, from the fortnight beginning on February 15.
“It is an effort to ensure better monetary policy transmission. It will enable banks to reduce their lending rates,” Das told reporters in the post policy conference.
The RBI has cumulatively cut the repo rate by 135 basis points since February 2019 to a nine-year low of 5.15 per cent.
He said monetary transmission across various money market segments and the private corporate bond market has been sizable. PTI
RBI seeks to balance growth and inflation risks
The Reserve Bank of India (RBI) held rates steady on Thursday and retained an accommodative policy stance as it sought to support faltering growth and avoid stoking already high inflation levels.
The central bank has its work cut out as the economy is forecast to grow 5% in the year ending in March, its weakest pace in 11 years. A rapidly-spreading coronavirus outbreak in China has also heightened concerns around the world of a damaging blow to global growth.
Economists polled by Reuters had expected the RBI's Monetary Policy Committee (MPC) to leave its key repo rate unchanged at 5.15% and reverse repo rate at 4.9%.
All six members of the MPC voted to keep rates steady and retain the accommodative monetary policy stance.
COMMENTARY:
Anagha Deodhar, Economist, ICICI Securities, Mumbai
“Given the expected inflation trajectory, we do believe there is room for one residual rate cut, possibly in the August policy. While inflation is likely to remain elevated until Q2FY21, the room for easing will open up only at the beginning of Q3.”
“There are already some green shoots of recovery in manufacturing. Sustaining manufacturing momentum is important from a growth perspective. Improving credit flow to manufacturing units and ensuring better transmission of interest rates should be the primary focus.”
The coronavirus could shave off 100bps from China's Q1 GDP growth and around 30 basis points from annual growth. Hence, sectors in India which are heavily dependent on China, like base metals and chemicals, could suffer.”
Deepthi Mary Mathew, Economist, Geojit Financial Services, Kochi
“It was an expected move by the RBI, maintaining the repo rate unchanged at 5.15%. With the inflation rate breaching the upper band, it will take time for the central bank to revive the rate cuts. By maintaining an accommodative stance, there is scope for rate cuts once the inflation rate falls back to a comfortable level.” PRITHVIRAJ SRINIVAS, CHIEF ECONOMIST, AXIS CAPITAL, MUMBAI
“There is more steam left in the RBI's rate-cutting cycle, but very limited (maximum another 25 to 50 basis points) and that depends on how quickly the food inflation shock dissipates.
Looking at the central bank's CPI inflation trajectory, it is safe to say RBI could wait to see how the next monsoon rains pan out before taking a call to lower policy rates.
We believe that the budget's impact on growth is neutral.”
Joseph Thomas, Head of Research - Emkay Wealth Management, Mumbai
“In the recent policy pronouncements, the RBI had very clearly indicated that the requirements of growth should get precedence over stability, against the conditions of sluggish economic growth and the fall in consumption and investment demand.
It was widely expected that the RBI was likely to continue with the pause till there is greater visibility on the inflation front. At this juncture, rate modification is not required as the interbank market has a huge surplus of close 3 trillion rupees ($42.08 billion) to support the liquidity requirements of the system, and this alone will ensure that the short-term rates do not move up.”
Garima Kapoor, Economist - Institutional Equities, Elara Capital, Mumbai
“The recent high prints of CPI inflation have altered the RBI's rate-cutting trajectory. While CPI inflation will cool off from the recent highs as vegetable prices ease, we are unlikely to see inflation cooling below 6% until June 2020. We continue to expect the MPC to stay on hold through CY2020.
Given the still subdued growth outlook and elevated trajectory for CPI inflation till mid-2020, we believe any room for a rate cut may only emerge towards Q4FY20.
There isn't any impact from the coronavirus outbreak in India as yet. But it needs to be watched very closely, especially since the pace at which it is spreading is swift. The disruption of global supply chains and its ramifications for India need to be watched closely”
Shubhada Rao, Chief Economist, Yes Bank, Mumbai
“(The RBI's rate decision is) in line with expectations. It is likely to maintain a status quo in the near term. With an inflation forecast of 3.2% factored in for Q3 FY21, in conjunction with our forecast, we expect RBI rate action in October 2020 monetary policy. (We) expect 25 bps rate cut then”
Rupa Rege Nitsure, Group Chief Economist, L&T Financial Holdings, Mumbai
“Today's monetary policy response is the most optimum in the current circumstances.
By keeping the stance at accommodative, by granting CRR exemption against the loans given to the stressed sectors and extending a one-time restructuring for MSMEs, etc, the policy has strengthened the stimulus package announced by the Union Budget.” Reuters
RBI has many other tools to revive growth, not just interest rates: Das
After leaving benchmark interest rates rates unchanged in the second consecutive policy review, RBI governor Shaktikanta Das on Thursday said the central bank has many other instruments to address the sluggishness the economy, not just interest rates.
The Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy pegged GDP growth for FY21 at 6 per cent, but guided towards an uncertain inflation outlook.
In a January 31 release, the National Statistical Office (NSO) had revised down real GDP growth for FY19 to 6.1 per cent from 6.8 per cent provided in the provisional estimates of May 2019. Given this, the central bank noted that the economy is still plagued by deep output gaps.
“The RBI has several instruments to address the sluggishness in the growth momentum,” Das told reporters at the customary post-policy conference.
The monetary policy committee (MPC) kept the policy repo rate unchanged at 5.15 per cent, continuing with the accommodative stance to revive growth.
The governor said the continuity in policy from last pause should not be read as a pointer to future actions. “While the decision is as per expectations, it is important not to discount RBI,” he said. PTI
Highlights of RBI’s sixth bi-monthly monetary policy statement for 2019-20
Following are the highlights of RBI’s sixth bi-monthly monetary policy statement, 2019-20:
* Policy rate kept unchanged at 5.15 pc
* GDP growth for 2020-21 fiscal pegged at 6%
* Upward bias expected in overall food prices on account of vegetables, pulses
* Accommodative stance to revive growth maintained; inflation to remain elevated in short-run
* Retail inflation projection revised upwards to 6.5% for January-March quarter
* Breakout of Coronavirus may impact tourist arrivals, global trade
* Rationalisation of personal income tax rates in the 2020-21 Budget to support domestic demand
* Need for adjustment in interest rates on small saving schemes outlined
* Pricing of loans by banks for the medium enterprises to be linked to an external benchmark effective April 1
* Time for restructuring of GST-registered MSME loans extended till December 2020, from March 2020 at present
* Revised regulations for housing finance companies to be issued
* RBI to periodically publish a composite ‘Digital Payments Index’ (DPI) from July 2020 to capture the extent of digitisation of payments
* Framework for a Self-Regulatory Organisation (SRO) for digital payments to be issued
* Pan India Cheque Truncation System (CTS) to be made operational by September
* Extension of date of commencement of commercial operations of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by one year, allowed
* Crude prices likely to remain volatile
* Foreign exchange reserves stood at USD 471.4 billion on February 4, 2020
* Net FDI rose to USD 24.4 billion in April-November 2019, against USD 21.2 billion a year ago
* Net foreign portfolio investment (FPI) stood at USD 8.6 billion in 2010-20 (till February 4) as against net outflows of USD 14.2 billion in the year ago period
* All six members of Monetary Policy Committee vote in favour of maintaining status quo on interest rate
* Next meeting of the MPC scheduled during March 31, April 1 and 3, 2020. PTI
RBI revises upwards retail inflation projection to 6.5% for Jan-Mar quarter of this fiscal
The Reserve Bank of India on Thursday revised upwards its retail inflation projection for the last quarter of the current fiscal to 6.5 per cent owing to likely increase in input costs for milk and pulses amid volatile crude oil prices.
Going forward, the inflation outlook is likely to be influenced by several factors like food inflation, crude prices and input costs for services, RBI said.
On food inflation, RBI said it is likely to soften from the high levels registered in December and the decline is expected to become more pronounced during the fourth quarter of this fiscal as onion prices ease following arrivals of late kharif and rabi harvests, the Reserve Bank of India (RBI) said in its last bi-monthly monetary policy revealed on Thursday.
Besides, crude prices are likely to remain volatile due to unabated geo-political tensions in the Middle East on one hand, and uncertain global economic outlook on the other.
Moreover, there has been an increase in input costs for services, in recent months, it added.
The RBI has kept the key repo rate unchanged to 5.15 per cent.
“Taking into consideration these factors, and under the assumption of a normal south west monsoon in 2020-21, the CPI inflation projection is revised upwards to 6.5 per cent for Q4:2019-20 (January-March 2020); 5.4-5 per cent for H1:2020-21 (April-September 2020); and 3.2 per cent for Q3:2020-21 (October-December), with risks broadly balanced,” RBI said.
The recent pick-up in prices of non-vegetable food items, specifically in milk due to a rise in input costs, and pulses due to a shortfall in kharif production, are all likely to sustain, RBI said.
RBI further said that the actual inflation outcome for Q2 at 5.8 per cent overshot projections by 70 bps, primarily due to the intensification of the “onion price shock” in December 2019 on account of unseasonal rains in October-November.
In its previous monetary policy in December 2019 as well, the RBI had raised its inflation projection to 5.1-4.7 per cent for the second half of the current fiscal on the back of spike in prices of vegetables such as onion and tomatoes. PTI
RBI estimates GDP to expand at 6% in FY21
The Reserve Bank of India on Thursday projected the economy to expand by 6 per cent during the next financial year, pegging it at the lower end of the GDP growth estimate of the Economic Survey.
The survey, tabled in Parliament last month, estimated the GDP growth during FY21 at 6-6.5 per cent.
After three-day deliberations, the Monetary Policy Committee (MPC), headed by Reserve Bank of India (RBI) Governor Shaktikanta Das, observed that the economy continues to be weak and the output gap remains negative.
Real GDP growth for 2019-20 was projected at 5 per cent in the December 2019 policy.
The central bank said that for 2020-21, the growth outlook will be influenced by several factors, including level of private consumption, and external factors.
It said private consumption, particularly in rural areas, is expected to recover on the back of improved Rabi crop prospects. The recent rise in food prices has shifted the terms of trade in favour of agriculture, which will support rural incomes.
The easing of global trade uncertainties should encourage exports and spur investment activity, it said.
“The breakout of the coronavirus may, however, impact tourist arrivals and global trade,” it added.
Also, the rationalisation of personal income tax rates in the Union Budget 2020-21 should support domestic demand along with measures to boost rural and infrastructure spending.
Taking into consideration different factors, RBI said “GDP growth for 2020-21 is projected at 6.0 per cent — in the range of 5.5-6.0 per cent in H1 and 6.2 per cent in Q3,”
The government has said the Union Budget presented by Finance Minister Nirmala Sitharaman has a host of steps to spur economic growth, which is estimated to have slowed to a decade-low of 5 per cent in the current fiscal. PTI
India rice exports hit 8-year low as price rise dents demand
India's rice exports in 2019 fell 18.1 % from a year ago to their lowest in eight years, government data shows, as demand moderated from key Asian and African buyers due to higher prices.
The south Asian country's exports stood at 9.87 million tonnes in 2019, the lowest since 2011, and down from 12.05 million tonnes in 2018, according to data compiled by the ministry of commerce and industry.
India is the world's biggest exporter of rice. Reuters
RBI holds rates steady as expected amid accelerating inflation
The Reserve Bank of India held rates steady on Thursday in a bid to combat inflation that has accelerated to its highest levels in more than five years, but the central bank retained its accommodative monetary policy stance as growth remains lacklustre.
The central bank's Monetary Policy Committee (MPC) decided to leave the key repo rate unchanged at 5.15% and the reverse repo rate at 4.9%.
All six committee members voted in accord, and the decision was in line with expectations of economists polled by Reuters. Reuters
Bearish bets re-emerge on Asia FX as virus outbreak fuels growth fears
Investors wary about the economic impact of the coronavirus outbreak spreading from China turned bearish on most Asian currencies and went short on the baht for the first time since May 2019, a Reuters poll showed.
Market sentiment took a sharp turn for the worse, a fortnight after investors turned long on all Asian currencies for the first time since June 2017, on concerns the new coronavirus could dent growth in China and the region. The virus death toll in mainland China surged over the last two weeks to 563 from 17, with more than 28,000 confirmed cases.
Prospects soured for the Thai baht, Asia's worst performing currency this year, as the fast-spreading virus weighs on the struggling economy that is heavily reliant on Chinese tourism and trade. Thailand's central bank unexpectedly cut its benchmark interest rate for a third time in six months on Wednesday, taking it to a record low of 1%.
The bulk of the responses from the 16 poll participants came in before the rate decision. Rebounding into bear territory, short positions in the Chinese yuan and the South Korean won were at their highest since mid-October 2019. However, risk sentiment has stabilised over hopes that China's central bank would introduce further stimulus measures to boost liquidity and stabilise the economy. Bearish positions in the Singapore dollar outpaced that of its peers, with short bets on the currency climbing to their highest in more than five months.
The Singapore dollar posted its steepest drop in two years on Wednesday after the Singapore central bank said the currency has room to weaken as the virus outbreak hits its economy though it added its current policy stance remains appropriate. The dovish monetary policy stance has prompted investors to price in possible central bank rate cuts across the region. Central banks in the Philippines and India are due to hold their respective policy meetings later in the day.
The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies. Reuters
India plans to fully electrify rail network in the next 4/5 years
India hopes to electrify its entire railway track in the next 4-5 years, railway minister Piyush Goyal said on Thursday, as part of the network's efforts to cut its carbon footprint.
Goyal said currently 55% of the railway network uses electricity while the remainder is on diesel.
He said solar power generation capacity of 20 GW will be installed by 2030 for railways. Reuters
Yuan jumps to 2-week high as Beijing cuts tariffs on some US goods
China's yuan jumped to a two-week high against the dollar on Thursday, after sentiment got a boost from the government's decision to cut tariffs on some U.S. goods.
China said on Thursday it would halve tariffs on some goods imported from the United States starting from 1:01 p.m. local time (0501 GMT) on Feb. 14 and reiterated it hopes it can work with Washington to eventually scrap all tariffs in bilateral trade. The reductions come about three weeks after the two countries signed the Phase 1 trade deal in Washington.
Beijing's decision caught many traders off guard and investors interpreted it as a fresh sign of further de-escalation in the Sino-U.S. trade dispute at a time when China is struggling to contain a fast-spreading coronavirus epidemic that has killed more than 500 people. Onshore spot yuan opened at 6.9720 per dollar, leapt to a high of 6.9601 at one point, the strongest since Jan. 23.
As of 0418 GMT, it was changing hands at 6.9611, 142 pips firmer than the previous late session close. Offshore yuan also followed the trend, strengthening to a high of 6.9590 per dollar. “It seems (the Chinese cabinet) is asking the United States not to rush and give us trouble now,” said a trader at a Chinese bank, adding Beijing's latest decision was unexpected.
Several traders said the virus outbreak in China had raised market concerns whether China will be able to implement the Phase 1 trade deal reached with the United States. The tariff reduction was a sign of China's sincerity it would stick to the deal, traders and analysts said. Prior to market opening on Thursday, the People's Bank of China (PBOC) lowered the midpoint rate for the sixth straight trading day to 6.9985 per dollar, 162 pips or 0.23% weaker than the previous fix. Thursday's midpoint fixing was the weakest since Dec. 25, 2019.
“In the short term, development of China's virus epidemic will continue to affect the yuan's movements,” analysts at OCBC Wing Hang Bank said in a note early on Thursday. Reuters
China says to halve tariffs on some US imports
China said on Thursday it will halve tariffs on some goods imported from the United States starting from 1:01 p.m. local time (0501 GMT) on Feb. 14 and reiterated it hopes it can work with Washington to eventually scrap all tariffs in bilateral trade.
China's finance ministry said in a statement that tariffs on some goods will be cut to 5% from 10% previously, while tariffs on some goods will be lowered to 2.5% from 5% previously.
China hopes it and the United States can abide by the trade deal they agreed to and implement it well in order to boost market confidence, push bilateral trade development and aid global economic growth, the ministry added. Reuters
Rupee opens at 71.22 against USD ahead of RBI policy decision
The Indian rupee opened on a cautious note at 71.22 against the US dollar in opening trade on Thursday, registering a rise of 3 paise over its previous close as investors exercised caution ahead of the RBI’s monetary policy outcome.
The Reserve Bank of India (RBI) is scheduled to announce the outcome of its sixth bi-monthly monetary policy statement for 2019-20 later in the day.
Forex traders said positive opening in domestic equities and foreign fund inflows supported the local unit, but rising crude oil prices and strengthening of the US dollar weighed on the domestic currency.
The rupee opened at 71.22 at the interbank forex market, then lost ground and fell to 71.28, down 3 paise over its last close.
The rupee had settled at 71.25 against the US dollar on Wednesday.
Brent crude futures, the global oil benchmark, rose 1.70 per cent to USD 56.22 per barrel.
Foreign institutional investors remained net buyers in the capital markets, as they purchased shares worth Rs 248.94 crore on Wednesday, as per provisional data.
Domestic bourses opened on a positive note Thursday with benchmark indices Sensex trading 197.37 points up at 41,340.03 and Nifty up 44.50 points at 12,133.65. PTI
Sensex rises over 100 points ahead RBI monetary policy outcome
Market benchmark Sensex jumped over 100 points in opening session on Thursday ahead of the outcome of Reserve Bank of India’s monetary policy review amid strong cues from global markets.
The 30-share BSE index was trading 125.32 points or 0.30 per cent higher at 41,267.98, and the broader NSE advanced 46.20 points, or 0.38 per cent, to 12,135.35.
In the previous session, Sensex ended 0.87 per cent or 353.28 points higher at 41,142.66. While, Nifty rose 109.50 points, or 0.91 per cent, to settle at 12,089.15.
Meanwhile, on a net basis, foreign institutional investors bought equities worth Rs 248.94 crore, while domestic institutional investors purchased shares worth Rs 262.75 crore on Wednesday, data available with stock exchanges showed.
HCL Tech, ITC, Maruti, Bajaj Finance, Hero MotoCorp and TCS were the top gainers in the Sensex pack.
While, Kotak Bank, NTPC, PowerGrid and HDFC were the laggards.
According to traders, investors are bullish ahead of outcome of the Reserve Bank of India’s (RBI) sixth bi-monthly monetary policy statement for 2019-20.
This will be the central bank’s last monetary policy for the current financial year.
According to experts, the RBI is likely to maintain status quo on rates as well as its monetary policy stance, and to continue an accommodative stance to support growth.
Further, strong gains in global markets have also boosted investor sentiment here, traders said,
Bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with significant gains.
Exchanges on Wall Street too ended higher on Wednesday.
Brent crude oil futures rose 1.65 per cent to USD 56.19 per barrel.
The rupee was trading flat against the US dollar at 71.27 in morning session. PTI
It’s too early to take a call on Air India: Tata Sons chief
Tata Sons Chairman N Chandrasekaran said on Wednesday it is “too early” to take a call on Air India, in which the government has decided to sell its entire 100 per cent stake.
“It is too early...” Chandrasekaran told PTI when asked if Tata Group would be putting bid for the Air India stake purchase at the Auto Expo here.
The comments came in the wake of reports in a section of media saying that Tatas appear to be moving closer to a decision to bid for Air India in partnership with Singapore Airlines.
The Tata group has already started working on the structure for such buyout, including a merger of AirAsia India, in which they hold 51 per cent in Air India Express, a 100 per cent subsidiary of the government-owned national carrier.
The Central government last month issued a preliminary information memorandum (PIM), initiating the process to divest its entire stake in the national air carrier. PTI
