Impact 
Citing investor anxiety over the disclaimers flashed for the mutual fund investments, the Association of Mutual Funds in India (AMFI) - the industry body for mutual funds, is mulling ways to redraft the disclaimer - "mutual fund investments are subject to market risks. Please read the scheme information document carefully before investing."
The AMFI feels that such a disclaimer develops a fear psychosis in the minds of investors, which hinders in attracting new investors, and thus is of the view that disclaimer needs to be infused with positive flavour to encourage more investors to park their hard earned money in mutual fund schemes.
We believe that for instrument like mutual fund, which is closely linked with the capital market movement a disclaimer which reveals the risk of the investment instrument is very necessary. The capital market regulator - Securities and Exchange Board of India (SEBI) should ensure that unnecessary sweeteners aren't added in the disclaimer, which may tone the disclaimer in persuasive way, rather making the buyer of the instrument more aware. We are of the view that reporting norms for disclosure in fact sheets should be made more standardised, which can help investors to take more informed decision.
Moreover, we think that investors too should adopt a prudent approach to mutual fund investing. Remember while selecting winning mutual funds, you must do enough research, and if aren't equipped to do so must hire the services of a mutual fund expert who does that for you in a very unbiased way. | | | This Week's Poll !!!
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| | Impact
SEBI has introduced significant changes in the Initial Public Offering (IPO) rules in order to prevent price manipulation and the sharp volatility of stocks on the listing day.
The changes include the following:
- Extention of "call auction mechanism" (explained in our Financial Terms. Simplified section) to IPO process;
- Stock to trade within a price band on the listing day; and
- Mandatory trading of such stocks in the Trade-for-Trade (TFT) segment of the stock exchange for the first 10 days.
The call auction session for newly listed stocks will be conducted for an hour between 9:00 am and 10:00 am, of which 45 minutes will be allowed for order entry, order modification and order cancellation, 10 minutes for order matching and trade confirmation and the remaining 5 minutes will be the buffer period to facilitate the transition from pre-open to the normal trading session. All outstanding orders will be moved to the normal trading session at their limit price if an equilibrium price is discovered during the call auction session. Following this call auction session, according to the new SEBI norms, for shares of IPOs of sizes up to Rs 250 crore, there will be a price band of 5% of the equilibrium price achieved during the call auction. For IPOs bigger than Rs 250 crore, the price band of the stock on the first trading day will be 20% of the equilibrium price.
In our opinion, the move assumes significance in the backdrop of recent observations by SEBI on IPO irregularities resulting in sharp price fluctuations of newly listed shares. Moreover, such a development in the IPO process will instil investor confidence - more specifically retail investors' confidence as the irate price movement of the stocks will minimized to a greater extent. Giving a boost to the retail investment in the equity markets is essential for the overall growth of the Indian equity markets. | | Impact
Once again, in order to restore a balance between growth and inflation the Reserve Bank of India (RBI) maintained a status quo (maintaining its pause button) on the repo and reverse repo rates in its third quarter review of monetary policy held on January 24, 2012.
(Source: Office of the Economic Advisor, PersonalFN Research)
Hence if we assess, after bringing in 13 successive increases since March 2010 to tame the inflation bug at the cost of economic growth, the central bank is now delicately trying to poise balance between domestic economic growth and inflation; given a highly uncertain economic environment still prevailing. It is noteworthy that this is the second successive time the central bank has turned the pause button for policy rates, and this time addressing to the tight liquidity situation prevailing has also effected a CRR cut (of 50 bps).
To read a complete coverage of the RBI's third quarter monetary policy review please click here.
| | | | Weekly Facts |
| Close | Change | %Change | | BSE Sensex* | 17,233.98 | 495.0  | 2.96% | | Re/US$ | 50.11 | 0.1 | 0.26% | | Gold Rs/10g | 27,270.00 | (160.0)  | -0.58% | | Crude ($/barrel) | 109.31 | (1.1) | -1.03% | | FD Rates (1-Yr) | 7.25% - 9.40% | Weekly change as on January 25, 2012,
*BSE Sensex as on January 27, 2012.
Crude ($/barrel) as on January 26, 2012 | | |
In an interview with the Moneycontrol.com, Ashu Suyash Managing Director and Country Head of Fidelity Worldwide Investment shared her views on the key concerns for the Indian equity markets over the next 4 - 6 months and the corporate investment cycle.
Ms Suyash believes that though the growth expectations for India have declined in tandem with the fall in industrial production, high funding costs, and slowing global economic growth; slower growth rate in India will still be considerably in excess of growth achieved in the developed world. Amongst the key performance drivers, according to her to look out for in 2012 are steady improvement in infrastructure spending, progress on goods and services tax (GST), range-bound crude oil prices, and reasonable capital flows. She also thinks that India's economy is domestic growth oriented which is likely to limit the impact of a slowdown in western economies. Explaining further she said, "Furthermore, to some extent the policy challenges, high inflation and global risk are already priced into the market. In general, corporate balance sheets are healthy and quite a few top quality companies are currently trading at attractive valuations. Many companies are entering 2012 in much better shape than they did the financial crisis of 2008. As always, when economic conditions get tough, strong companies get stronger and our investment team remains focused, despite the macro uncertainty, on picking individually attractive companies from a long term perspective. We are finding some attractive valuations which give us an opportunity to buy long term growth businesses at cheap levels."
On the corporate investment front, Ms Suyash believes that the sovereign debt crisis in Europe has been a dent on business confidence. Adding to this, she says that the domestic factors such as slowdown in domestic demand, high material prices which hurt margins, lack of policy reforms and volatility in financial markets have hurt the corporate investment cycle. "Notwithstanding the unfavorable policy environment, declining inflationary risks coupled with lower interest rates could bode well for business sentiment and a revival in capex cycle," she said.
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Call Auction: Where participants buy or sell units of a good. At a call auction, participants place orders to buy or sell units at certain buying or selling prices. Orders collected during a call auction are matched to form a contract. Call auction rules vary by auction.
(Source: Investopedia) | |
QUOTE OF THE WEEK
"You must master your time rather than becoming a slave to the constant flow of events and demands on your time. And you must organize your life to achieve balance, harmony, and inner peace."
- Brian Tracy | | |