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World Bank projects 6.4% economic growth in India in 2015
Indian economy is likely to grow at 6.4% in 2015 and accelerate further in the next year on the back of steps being taken by the Narendra Modi-led NDA government, World Bank President Jim Yong Kim has said. Speaking at the Vibrant Gujarat summit, he said the World Bank was committed to catalysing a vibrant India and there is much reason for optimism. After slowing to sub-five percent growth in the previous two financial years, the economy has started showing signs of pick-up as it expanded by 5.7% and 5.3% in the second and third quarter of 2015.
M&A deals jump 25% in 2014 to near record-high at $37 billion
Overall deal activities hit near record-high in 2014 with the value of announced mergers & acquisitions involving domestic companies reaching $37 billion, a full 25.5% jump over 2013. This is a little short of the record level of $37.6 billion worth deals closed in 2011. The average M&A deal size for transactions climbed up to $79.1 million in 2014 compared to $67.6 million in 2013 as more deals were announced valued above $500 million, according to Thomson Reuters/ Freeman Consulting data. However, total cross-board M&As dropped a massive 39.2% to $13.9 billion compared to 2013 as both inbound and outbound activities declined. Inbound M&As fell 27.2%, while outbound deals plunged 65%.
Economy on right track; FY17 GDP could rise to 7%: Macquarie
The Indian economy is moving on the right track with efforts to fast track reforms, raising prospects of pick up in growth from 5.4% in FY15 to 7% by fiscal year 2017, says a Macquarie report. According to the global financial services firm, FY16 would be a notable year for India with gradual improvement in economic growth and declining inflationary pressures amid falling global commodity prices and policy initiatives. The pick up in real economic activity is likely to be supported by a step-up in investments, faster implementation of reforms and addressing the supply side issues. Macquarie noted that the government's reform momentum is improving.
FDI hike would benefit Indian private non-life insurers: Moody's
The increase in foreign direct investment (FDI) limit by 23% to 49% is expected to alleviate the capital pressure on Indian private non-life insurers, global credit rating agency Moody's Investor Service (MIS) has said. Increased foreign investment would alleviate the current capital pressure on non-life insurers and add to their buffers against potential investment losses from the volatile capital markets, MIS said in a statement. Their widened access to foreign capital would also allow them to lower their dependence on domestic funds. According to MIS, Indian private non-life insurers stand to benefit by the government's decision to increase the FDI limit as they are relatively pressured for capital and poor underwriting performance.
Real estate investment trusts may get taxation relief
The real estate investment trusts (Reits), notified last year, have so far found few takers due to taxation-related issues. To address this, the Central Board of Direct Taxes (CBDT) wants this market instrument to be made exempt from minimum alternate tax (MAT). The idea behind granting a 'pass-through' status to Reits was not to levy MAT on those. It is a technical issue that we are working to resolve, according to a source. Reits are a security instrument that sells on bourses like a stock and invests in real estate - properties or mortgages. Under the current rules, the tax department has deferred capital gains tax on transfer of shares. But MAT, which a transferor has to pay at 18.5 per cent to 20 per cent, is proving a deal-breaker, given the substantial immediate cash outflow involved. Foreign investors swapping shares for Reit units, though, do not have to pay MAT.
Gold jewellery demand likely to rise 10% in 2015: ICRA
Jewellery demand in the domestic market is expected to rise by 10% to $32 billion in 2015 on the back of improving consumer sentiments, says a report by ICRA. We expect domestic demand for gold jewellery to rise 10% in calender year 2015 to $32 billion on the back of subdued pick up during 2014, the rating agency said in 'Indian Gold Jewellery Retail Industry' survey. The demand has been stable since Q4 of CY13 and lower prices, easing regulations and improving consumer sentiment are likely to provide impetus in the coming months, it said. The last quarter of CY2014 is likely to make up for the initial demand slump and the aggregate demand for the year is estimated at $29 billion, the report added.
Planning Commission renamed as 'Neeti Ayog'
The Planning Commission, established in 1950, will now be called 'Neeti Ayog' in its new avatar, months after Prime Minister Narendra Modi announced that it will replaced by a new body. The decision comes nearly three weeks after Modi held consultations with chief ministers at a meeting where most favoured restructuring of the socialist-era body but some Congress Chief Ministers opposed disbanding of the existing set-up. Modi had announced in his Independence Day speech that the Planning Commission would be replaced by a new body which is in sync with the contemporary economic world. There were indications that the new structure will have the Prime Minister, some Cabinet ministers and chief ministers along with technocrats and experts in various fields.
2014 the best year of job growth in US since 1999
The US unemployment rate has dropped to 5.6 per cent with the addition of over 2.5 lakh new jobs last month, making 2014 the best year of job growth since 1999. The unemployment rate declined by 0.2 percentage point to 5.6 per cent in December, and the number of unemployed persons declined by 383,000 to 8.7 million, the Department of Labor Statistics said in its latest monthly report released. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.7 million, respectively, it said.
China Factory-Gate Deflation Deepens on Commodity Price Fall
China's factory-gate prices extended a record stretch of declines, with the sharpest drop in two years in December, suggesting room for further monetary easing. The producer-price index slumped 3.3 percent from a year earlier, compared with the median projection for a 3.1 percent decline in a survey of analysts by Bloomberg News. Tumbling oil and metal prices have extended the run of producer-price declines to a record 34 months, adding to deflationary pressures worldwide as China's export prices drop. Economists anticipate the central bank will follow up a November interest-rate cut with further reductions, and with lower reserve requirements for lenders.
U.K. Manufacturing Production Rises; Trade Gap Narrows on Oil
U.K. manufacturing output rose the most in seven months in November, as total industrial production suffered an unexpected decline due to maintenance at some North Sea oil fields. Factory production increased 0.7 percent from October, exceeding the 0.3 percent median forecast of economists in a Bloomberg News survey, according to data published. Industrial output fell 0.1 percent, with oil and gas extraction dropping 5.5 percent, the most since January. The Bank of England left its key interest rate at a record-low 0.5 percent as a weakening euro area holds back U.K. economic growth and impedes rebalancing.
Japan's ruling coalition approves corporate tax cuts to spur growth
Japan's ruling coalition has approved a tax reform plan that will cut corporate taxes from April and pledges further reductions in coming years in a bid by Prime Minister Shinzo Abe to boost profitability and bolster economic growth. The plan approved by Abe's Liberal Democratic Party and its coalition partner Komeito would cut the overall effective corporate tax rate by 2.51 percentage points to 32.1 percent from April and then to 31.3 percent the following year. Japan's top effective corporate tax rate is 34.6 percent, among the highest in the major economies. The average corporate tax rate stands around 25 percent among OECD economies.
HDFC retain its top slot, ICICI Pru records highest AAUM gain in Dec quarter
HDFC Mutual Fund retained its top slot, in terms of average assets under management (AAUM) in December quarter. According to the latest data published by AMFI, HDFC AMC's AAUM increased by Rs. 8,975 crore from Rs. 1.41 lakh crore during September quarter to Rs. 1.50 lakh crore in December quarter. ICICI Prudential ranked second with AAUM of Rs. 1.36 lakh crore. ICICI Pru recorded highest growth in AAUM among all AMCs in absolute terms with its assets increasing by Rs. 9,093 crore from Rs. 1.27 lakh crore to Rs. 1.36 lakh crore during the same period. Among the top 15 AMCs, all fund houses except Tata and SBI, saw an increase in their AAUM. The industry's AAUM exceeded the Rs 11-trillion mark during the quarter. Average AUM rose by 4.4 per cent, to Rs 11.12 trillion (including fund of funds) in the quarter ended December 2014.
Equity funds mop up Rs.15,000 crore in December
The year 2015 gets off on a high note for the Indian mutual fund industry. Thanks to mark to market gains and inflows in existing schemes as well as new fund offers, the total AAUM of equity mutual funds (including ELSS) has reached an all-time high at Rs.3.20 lakh crore in December, shows the latest AMFI data. In December, equity mutual funds received net inflows of over Rs. 6,650 crore. Investors poured in over Rs.15,000 crore in December in equity funds (new launches and existing schemes) while redemption stood at Rs. 8,500 crore. While a large part of inflows (Rs.12,665 crore) came in existing funds, new fund offers mopped up Rs.2,582 crore. AMFI data shows that 13 new close end equity funds were launched in December which collectively mopped up Rs. 2,222 crore.
SEBI may allow MFs to invest unclaimed money in liquid funds
SEBI may allow fund houses to deploy the unclaimed mutual fund dividend and redemption proceeds lying in bank fixed deposits to be invested in liquid funds. It is learnt that some fund houses had requested SEBI that they should be allowed to launch liquid funds exclusive meant for managing unclaimed proceeds. This matter was discussed in SEBI MF Advisory Committee meeting held in Mumbai recently. Fund houses are supposed to deploy unclaimed proceeds three months after it remains unclaimed in money market securities. Sometimes, AMCs do not find it feasible to park money in money market due to operational difficulties. So, a majority of fund houses currently deploy this money in bank fixed deposits.
HDFC retain its top slot, ICICI Pru records highest AAUM gain in Dec quarter
HDFC Mutual Fund retained its top slot, in terms of average assets under management (AAUM) in December quarter. According to the latest data published by AMFI, HDFC AMC's AAUM increased by Rs. 8,975 crore from Rs. 1.41 lakh crore during September quarter to Rs. 1.50 lakh crore in December quarter. ICICI Prudential ranked second with AAUM of Rs. 1.36 lakh crore. ICICI Pru recorded highest growth in AAUM among all AMCs in absolute terms with its assets increasing by Rs. 9,093 crore from Rs. 1.27 lakh crore to Rs. 1.36 lakh crore during the same period. Among the top 15 AMCs, all fund houses except Tata and SBI, saw an increase in their AAUM. The industry's AAUM exceeded the Rs 11-trillion mark during the quarter. Average AUM rose by 4.4 per cent, to Rs 11.12 trillion (including fund of funds) in the quarter ended December 2014.
Equity funds mop up Rs.15,000 crore in December
The year 2015 gets off on a high note for the Indian mutual fund industry. Thanks to mark to market gains and inflows in existing schemes as well as new fund offers, the total AAUM of equity mutual funds (including ELSS) has reached an all-time high at Rs.3.20 lakh crore in December, shows the latest AMFI data. In December, equity mutual funds received net inflows of over Rs. 6,650 crore. Investors poured in over Rs.15,000 crore in December in equity funds (new launches and existing schemes) while redemption stood at Rs. 8,500 crore. While a large part of inflows (Rs.12,665 crore) came in existing funds, new fund offers mopped up Rs.2,582 crore. AMFI data shows that 13 new close end equity funds were launched in December which collectively mopped up Rs. 2,222 crore.
SEBI may allow MFs to invest unclaimed money in liquid funds
SEBI may allow fund houses to deploy the unclaimed mutual fund dividend and redemption proceeds lying in bank fixed deposits to be invested in liquid funds. It is learnt that some fund houses had requested SEBI that they should be allowed to launch liquid funds exclusive meant for managing unclaimed proceeds. This matter was discussed in SEBI MF Advisory Committee meeting held in Mumbai recently. Fund houses are supposed to deploy unclaimed proceeds three months after it remains unclaimed in money market securities. Sometimes, AMCs do not find it feasible to park money in money market due to operational difficulties. So, a majority of fund houses currently deploy this money in bank fixed deposits.
The Insurance Laws (Amendment) Ordinance 2014 introduced
The government issued an ordinance on 27th December furthering insurance sector reforms which were stagnating for quite some time. The enhancement of the foreign equity cap from 26% to 49% with the safeguard of Indian Ownership and Control is a critical aspect of the Ordinance, which will potentially enhance capital availability and can potentially attract up to Rs 50,000 crore from overseas investors. The Ordinance aims at amending the existing laws to remove archaic and redundant provisions and empower IRDA to enable more effective regulation. The ordinance, promulgated by the President, will be taken up for consideration and passage in the next session of Parliament, beginning February. The Ordinance also substantially enhances the penalty provisions to ensure better compliance to insurance laws in the interests of the consumers.
FDI hike would benefit Indian private non-life insurers: Moody's
The increase in foreign direct investment (FDI) limit by 23% to 49% is expected to alleviate the capital pressure on Indian private non-life insurers, global credit rating agency Moody's Investor Service (MIS) has said. Increased foreign investment would alleviate the current capital pressure on non-life insurers and add to their buffers against potential investment losses from the volatile capital markets, MIS said in a statement. Their widened access to foreign capital would also allow them to lower their dependence on domestic funds. According to MIS, Indian private non-life insurers stand to benefit by the government's decision to increase the FDI limit as they are relatively pressured for capital and poor underwriting performance.
Real estate investment trusts may get taxation relief
The Real Estate Investment Trusts (REITs), notified last year, have so far found few takers due to taxation-related issues. To address this, the Central Board of Direct Taxes (CBDT) wants this market instrument to be made exempt from minimum alternate tax (MAT). The idea behind granting a 'pass-through' status to Reits was not to levy MAT on those. It is a technical issue that we are working to resolve, according to a source. Reits are a security instrument that sells on bourses like a stock and invests in real estate - properties or mortgages. Under the current rules, the tax department has deferred capital gains tax on transfer of shares. But MAT, which a transferor has to pay at 18.5 per cent to 20 per cent, is proving a deal-breaker, given the substantial immediate cash outflow involved. Foreign investors swapping shares for Reitunits, though, do not have to pay MAT.
Mutual Fund Industry figures
| Type | As on 31.12.14 | Change from 31.03.14 | 2013-14 | 2014-15 | Change in Assets | ||||
| No. of Schemes | No. of Folios | No. of Schemes | No. of Folios | Net Purchases | Assets on 31.03.14 | Net Purchases | Assets on 31.12.14 | ||
| A. Income/Debt Oriented Schemes | 1,353 | 71,25,780 | 14.86% | 3.76% | 63,340 | 6,00,945 | 32,341 | 6,90,817 | 14.96% |
| i. Liquid/Money Market | 53 | 3,14,935 | 0.00% | 9.35% | 24,098 | 1,33,280 | 27,961 | 1,78,491 | 33.92% |
| ii. Gilt | 45 | 58,437 | 2.27% | 1.99% | 1,868 | 6,115 | 2,402 | 9,025 | 47.59% |
| iii. Debt | 1,251 | 67,52,379 | 16.16% | 3.53% | 40,547 | 4,60,672 | 1,791 | 5,02,154 | 9.00% |
| vi.Infrastructure Development | 4 | 29 | 0.00% | 0.00% | 563 | 879 | 188 | 1,147 | 30.52% |
| B.Growth/ Equity Oriented Schemes | 408 | 3,03,92,991 | 12.40% | 4.15% | 9,269 | 1,91,107 | 50,385 | 3,19,477 | 67.17% |
| i. ELSS | 51 | 61,44,353 | -1.92% | -4.13% | 1,642 | 25,547 | 362 | 36,257 | 41.92% |
| ii. Others | 357 | 2,42,48,638 | 14.79% | 6.48% | 7,627 | 1,65,560 | 50,022 | 2,83,220 | 71.07% |
| C. Balanced Schemes | 25 | 18,90,487 | -16.67% | -27.66% | -1,986 | 16,793 | 6,266 | 24,490 | 45.84% |
| D.Exchange Traded Fund | 45 | 7,12,352 | 12.50% | 1.07% | 596 | 13,205 | 411 | 13,890 | 5.19% |
| i. Gold ETF | 14 | 4,87,507 | 0.00% | -3.01% | 2,294 | 8,676 | 1,159 | 7,188 | -17.16% |
| ii. Other ETFs | 31 | 2,24,845 | 19.23% | 11.18% | 2,890 | 4,528 | 748 | 6,702 | 48.00% |
| E.FoF Investing Overseas | 30 | 1,55,371 | 11.11% | -14.64% | 1,101 | 3,191 | 638 | 2,668 | -16.38% |
| Grand Total | 1,861 | 4,02,76,981 | 13.61% | 1.84% | 53,783 | 8,25,240 | 87,942 | 10,51,343 | 27.40% |
Source: SEBI. Note: Data for No. of Schemes also includes serial plans.
AUM Breakup – Scheme Type Wise
Real estate investment trusts may get taxation relief
The Real Estate Investment Trusts (REITs), notified last year, have so far found few takers due to taxation-related issues. To address this, the Central Board of Direct Taxes (CBDT) wants this market instrument to be made exempt from minimum alternate tax (MAT). The idea behind granting a 'pass-through' status to Reits was not to levy MAT on those. It is a technical issue that we are working to resolve, according to a source. Reits are a security instrument that sells on bourses like a stock and invests in real estate - properties or mortgages. Under the current rules, the tax department has deferred capital gains tax on transfer of shares. But MAT, which a transferor has to pay at 18.5 per cent to 20 per cent, is proving a deal-breaker, given the substantial immediate cash outflow involved. Foreign investors swapping shares for Reitunits, though, do not have to pay MAT.