  | | November 02, 2012 | | | | | | | Weekly Facts | | | Close | Change | %Change | | BSE Sensex* | 18,755.45 | 130.1 | 0.70% | | Re/US$ | 53.71 | (0.1) | -0.24% | | Gold Rs/10g | 30,940.00 | 175.0 | 0.57% | | Crude ($/barrel) | 109.41 | 0.8 | 0.72% | | FD Rates (1-Yr) | 7.50% - 8.90% | Weekly change as on November 01, 2012
*BSE Sensex as on November 02, 2012 | |
Impact 
Although the banking system has evolved and technology is acting as an enabler, there are many who still find banking to be a tedious task with copious paper work involved and authentications required. But now, the Reserve Bank of India (RBI) has proposed a slew of measures which could actually simplify banking for you.
Primarily the central bank intends to simplify the stringent Know-Your-Customer norms prevailing at present, which could make banking easy for the common man. "It is proposed to review the existing KYC norms for simplifying them within the provisions of the Prevention of Money Laundering Act and international standards," RBI said in its second quarter policy review.
The central bank also intends to launch a pilot project, using "Aadhar" data, which could be used to authenticate banking transactions at ATMs and merchant terminals.
Also with some countries such as Britain, moving away towards discontinuation of cheque system, the central bank has decided to prepare a discussion paper on dis-incentivising issuance and usage of cheques and place it for public comments by this December. At present, the central bank intends to nationally role out it "cheque truncation" system, wherein flow of the physical cheque issued by a drawer to the drawee branch, will be stopped in the truncation process by sending an electronic image of the cheque to the drawee bank (along with the relevant information like the MICR fields, date of presentation, presenting banks etc.).
We are of the view that, if the RBI is indeed successful to put in effect the aforesaid reforms it could deepen the banking system, as banking could be made easy for the common man. Linking "Aadhar" data to banking transactions at ATMs and merchant terminals, could lead to fewer authentications processes, thereby facilitating customers to transact with ease. Likewise, cheque truncations could speedup up collection of cheques and therefore enhance better service to customers and reduce the scope of clearing related frauds and also minimise cost of collection of cheques.
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Impact
Although the Indian equity markets depicted signs of exhaustion in the month of October 2012 by losing nearly 2.0%, the Foreign Institutional Investors (FIIs) continued to exude confidence in the Indian equity markets after slew of measure taken by Government (in the month of September 2012) and commitment to fiscal consolidation being evident. In the month gone by they (FIIs) net bought to the tune of Rs 11,547 crore.
Data as on October 29, 2012
(Source: ACE MF, PersonalFN Research)
But domestic mutual funds seemed worried and net sold to the tune of Rs 2,254 which led them to maintain their selling streak. Although, the Government did bring in slew of reform measures, fund managers were helpless due to continuous pressure of redemption from equity mutual fund investors, as they preferred to either book profits, or were wary of the exhaustion in the market.
We believe that while FIIs are exuding confidence in the Indian equity markets, they seem to be closely watching the corruption charges and the political backlash thereto, and amid this how the reforms would be put to work. Also they also seem to wary about the debt crisis in the Euro zone, but are investing in India as the country still offers an appealing economic growth rate as compared to the developed economies. Domestic mutual funds are cautious about the tainted political canvas, as it raises concerns over how reforms would actually be put to work and fiscal consolidation would be achieved.
It is noteworthy that, as an investor while taking an investment decision it is imperative that you be cognisant about all such macroeconomic and political factors, which can facilitate you to take a prudent investment decision which is congruence to your investment objective and risk appetite.
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Impact
As consumers we are often price conscious; and this trait is even followed while insuring own health. While buying a health insurance policy, many are sensitive to the price they pay for insuring (i.e. the premium) and often take a decision considering that to be paramount. Thus when we find the insurance company increasing the premium erratically, we find it rather discomforting and express annoyance. Many policyholders have in the past accused health insurance companies of hiking premiums manifold at the time of renewal without offering any explanation for the revision.
But now to crack the whip, the insurance regulator - the Insurance Regulatory and Development Authority of India (IRDA) is taking coherent stance in line with this price sensitive behaviour, whereby it has asked health insurance companies to indicate premium to be paid by the policyholder in the first five years while filing new products for its approval. To know how this could be in the interest of policyholders, please click here.
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Impact
Many of you may have witnessed that, since the last couple of years the Indian equity markets have typically moving in a range and there's been a lull in the Indian equity markets. But interestingly, retail investors have been the only ones who in the thirst for faster wealth creation (through listing gains), have evinced interest in the Initial Public Offerings (IPOs). For instance, last year at least four IPOs had seen zero participation from Qualified Institutional Buyers (QIBs) - which includes foreign institutional investors (FIIs), mutual funds and insurance companies, amongst others; and the issues have managed to sail through just on the back of oversubscription from the retail category. Incidentally, some of these IPOs were later banned by the capital market regulator - the Securities and Exchange Board of India (SEBI) for irregularities and violation of norms.
But now being concerned over this zero participation from QIBs, SEBI has said spill-over from the retail category to the QIB category in IPOs will not be permitted. To read more about this news and know our view over it, please click here.
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- The online trading platform seems to be catching the fancy of many tech-savvy investors for transacting in mutual funds, thereby taking mutual funds to a new hue. The average daily volumes on online stock exchange platforms for mutual fund transactions have seen nearly a five-fold jump in recent months compared to last year. The average daily turnover on Bombay Stock Exchange's (BSE's) StAR MF platform has leapt from a diminutive Rs 3 - 5 crore in 2011 to Rs 27.70 crore so far this month, it being the highest since its inception in December 2009. Likewise, the National Stock Exchange's (NSE's) MFSS too has clocked an average daily volume of Rs 9.5 crore in the past couple of months against Rs 2.25 crore in 2011.
We are of the view that, although tech-savvy investors are enthused to transact in mutual funds through the online platform, we believe that mainly the large investors are opting to transact via the online platforms as it is convenient and avoids paper work. Likewise with the BSE accepting units of all liquid schemes available on its platform as collateral for its trading segments such as equity / derivatives, too has contributed increase in average daily turnover along with the revival in the market sentiments in the last couple of months.
- Parag Parikh Financial Advisory Services made its debut into the Indian mutual fund industry, and intends to give deep fee discounts to investors in its equity scheme (to be launched in January 2013) by charging an asset management fee of only 2.0%.
Likewise, mid-sized private lender - Yes Bank, too received board approval to foray into the mutual funds business.
We are of the view that, in times when exiting mutual fund houses are striving to get every penny from investors there are some who are exploring opportunities in the asset management business due to high savings rate in the country. But given the fierce competition in the industry, we may even witness consolidation and even few exiting the space.
While investing in mutual funds, we recommend that you invest in mutual fund scheme from fund houses which have been in existence from at least three years and which have a proven track led by strong investment processes and systems followed. It is imperative to ascertain your investment object and invest in mutual fund schemes prudently.
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Health Insurance: A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured. Health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly. Health insurance is often included in employer benefit packages as a means of enticing quality employees.
Source: Investopedia
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Quote : "Don't think money does everything or you are going to end up doing everything for money." - Voltaire
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