News Bulletin and Market Update: 01/10/2021

Market Update

▫️Indian markets continued to fall for 3rd straight day, as weak overseas sentiment weighed on the domestic markets.

▫️Sensex and Nifty plunged to 59,126 (-0.48%) and 17,618 (-0.43%).

▫️ Market Breadth was almost flat with advance decline of 906:901. However, midcap and small cap indices outperformed the benchmark and closed positive.

▫️ Volatility eased down yesterday, with VIX falling more than 2%.

▫️ Sectorwise PSU Bank, Pharma and Realty supported the markets, while IT, Auto, Metal and Media dragged the bourses.

▫️Ruppee fell by 9 paise to close at 5 week low of 74.23, due to risk averse sentiments and foreign fund outflows. The ruppee has fell by 59 paise in last 5 sessions.

▫️ Gold prices remained below 46,000 mark, due ro subdued global cues.

▫️Crude oil prices fell slightly after OPEC nations mulled to expand output to counter the increasing oil demand.

▫️US approved the bill to extend debt limit, easing concerns from US Govt shutdown. However, there was 3rd weekly rise in jobless claims that infused fears of slowing economic recovery.

▫️As a result, US indices ended negative with a fall of more than 1%. Overall US markets ended the September quarter with a fall of 4.3%, highest since March’20.

▫️US Futures are trading negative this morning, complimented by very weak opening of Asian markets. SGX Nifty is down by 176 points (or by 1.0%), reflecting tough Friday for the Indian markets.

News Bulletin

▫️ Govt. has raised domestic gas price by 62% to $2.9/mmBtu. Negative for power, tile and fertilizers. City gas prices may rise. (ONGC & RIL will gain)

▫️ India’s core industry growth touched 11.6% in August.

▫️Rise in crude oil and coal prices to hurt the manufacturers input costs.

▫️NCLT orders ZEE to hold a Board Meeting for conducting EGM as per request of its shareholders (Invesco).

▫️Fiscal Deficit touched only 31% of the FY22 target by August, reflecting increasing in government revenue.

▫️ Govt. has kept interest rates on PPF and NSC unchanged.

▫️ Home registrations in Mumbai jumped by 35%, in September (best in 10 years).

▫️ India’s current account balance recorded a surplus of $6.5 billion in June quarter.

▫️ Govt. tied up Microsoft to launch digital skills program, for development of youth.

▫️Amid rising crude oil prices, domestic petrol and diesel prices have reached all time high.

▫️India Australia to sign Free Trade Agreement by 2022 end.

▫️Airtel to invest ₹5,000 crore in data centre expansion, to boost its other sources of revenue.

▫️Maruti expects to cut production by 40% at 2 of its plant due to semiconductor shortage.

▫️ Sterling and Wilson Solar have repaid loans worth ₹740 crores ahead of the deadline.

▫️Adani Energy has procured 40MW solar power project.

▫️Tata Steel has divested its 100% stake in Singapore based NatSteel holdings for $172 million.

▫️RBI’s new auto debit rules kick in from today (recurring transactions would require customer approval).

▫️Non Food, bank credit grew 6.7% in August.

▫️Bank of India raised ₹1,800 crores.

▫️ Aditya Birla AMC IPO fully subscribed on Day 2.

▫️ India’s hotel industry is on swift recovery path, and will clock 50% of the pre pandemic revenue in FY22.

▫️MCX partnered with TCS for transformation of its trading platform.

This is for educational purposes only.

Market Update and News Bulletin: 30/09/2021

Market Update

▫️Indian markets continues their sell off on Wednesday, amid weak global markets, rising treasury yields and rising inflation concerns.

▫️Indian bond market is also seeing wide selling as there has been 5-15 bps increase in the bond yields.

▫️At the end of the day, Sensex and Nifty closed at 59,413 (-0.43%) and 17,711 (-0.21%).

▫️ Private Banks, Financial Services and Auto dragged down the market. Whereas, IT, Pharma, PSU Bank, Metal, Energy and Realty restricted the fall.

▫️Market breadth turned positive with advance decline ratio of 1019:766. Further midcap and smallcap indices also ended positive.

▫️Ruppee fell 8 paise to 74.14 against dollar (1 month low), due to month end dollar demand, rising treasury yields and stronger dollar overseas.

▫️ Oil prices fell marginally on Wednesday, after US oil inventories rose more than expected.

▫️ Gold prices continue to fall and reached 45,500 mark on Wednesday, as dollar is now trading at 1 year high.

▫️US market ended higher on Wednesday after the govt’s decision to lift the partial ban on debt limit.

▫️US futures are trading in green territory this morning, while Asia has opened mix. SGX Nifty is flat reflecting silent start for the Indian markets.

▫️Stocks in F&O ban: SUNTV.

News Roundup

▫️State telecom operator BSNL has asked govt. ₹37,000 crores to stay afloat.

▫️Piramal Enterprises has completed the insolvent DHFL takeover by paying its creditors ₹34,250 crores.

▫️ Govt. loan scheme of ₹4.5 lakh crore has been extended by 6 months to March’22.

▫️Indian Overseas Bank has been removed from RBI’s Prompt Corrective Action watchlist.

▫️Invesco moved to NCLT against Zee, for removal of CEO Punit Goenka.

▫️L&T is in discussion to merge its thermal power business with the Indian unit of Singapore-based Sembcorp Industries.

▫️ Govt. is considering to come up with PLI scheme for power equipment manufacturing.

▫️China is facing severe power crunch due to coal shortage and strict emission norms. Chinese govt. has asked railway firms and local coal bodies to smoothen coal supply.

▫️ Govt. to launch IPO of ECGC in FY23, and infuse ₹4,400 crore of capital support in the company. ECGC is the largest export credit insurance company of India.

▫️OPEC expects India’s oil demand to reach pre pandemic level in 2021.

▫️RIL backed appointment of Saudi Aramco’s non-executive chairman, as the Company’s independent director, while two institutional investors voted against it.

▫️ Persistent Systems to acquire US based Software Corporation International, Shree Partners and India based Shree Infosoft for a total of $60 million.

▫️ Spicejet has collaborated with Ease My Trip for holiday bookings.

▫️ Britannia joined hands with Accenture to boost its digital transformation.

▫️ Housing sales have more than doubled in 7 cities of India in the July-Sep quarter.

▫️NTPC (India’s largest power producer) to raise ₹18,000 crores via bonds.

▫️ Flipkart to deploy 2,000 EVs (2 and 3 wheelers) in its delivery fleet, ahead of festive season sale.

▫️HDFC Bank issued 4 lakh credit cards since August, after RBI lifted the ban.

▫️ Standard Life sold 5% stake in HDFC AMC for ₹3,060 crores.

▫️A whistle blower alleged that HDFC bank asked for fee from customers if they submit forged documents, instead of reporting it to authorities.

▫️Aditya Birla AMC IPO was subscribed 56% on Day 1.

▫️Induslnd Bank invoked pledged shares of McLeod Russell and acquired 4.79% stake in the company.

▫️US govt. to lift debt limit on govt funding to avoid the near term crisis.

▫️ Govt. may raise GST on garments and footwear from 5% to 12%.

▫️Coal India to increase coal supplies to the power sector.

▫️ Alstom India to bid for India’s 7 infra projects worth €1Billion.

▫️ Chinese troubled real estate company Evergrande to raise $1.5 bn by selling its stake in banking company.

▫️Vedanta may be in race to acquire Shipping Corporation of India from the government.

This post is for educational purposes only.

Market Update and News Bulletin: 24/09/21

Market Update

▫️Indian markets witnessed a record high session yesterday, on back of global markets support and smart local economic recovery.

▫️Sensex and Nifty jumped to 59,885 (+1.63%) and 17,823 (1.57%).

▫️All sector indices were positive yesterday, with real estate outperforming the benchmark, supported by Banks and financial services.

▫️ Market Breadth was positive with Midcap and Smallcap indices extending gains. Advance:Decline ratio was healthy at 1123:680.

▫️Ruppee recovered the previous session lost ground and gained 23 paise to close at 73.64, on account of strong trend in domestic equity market and sell of in US Dollar overseas.

▫️Oil prices touched 2 month high (Brent Crude above $77), due to supply side woes, low inventory and rising oil demand.

▫️Gold prices fell sharply after Fed’s decision to ease bond purchase program and hike rates sooner than expected.

▫️US Markets surged yesterday, as there were no surprises by Fed’s policy outcome, suggesting swift economic recovery.

▫️This morning US futures are trading marginally positive after a stellar closing on Thursday. Asia is trading fairly positive, while SGX Nifty is flat.

▫️ Stocks in F&O ban: CANBK, IDEA, IBULHSGFIN, ESCORTS, IRCTC and PNB.

News Bulletin

▫️ Indian crude oil refiners processed 10 month low output in August, due to maintenance work at several plants. (-ve for oil refining co.s)

▫️Vedanta to delist its ADR from New York Stock Exchange.

▫️All states have agreed for ₹ 3 lakh crore revival of power distribution companies (+ve for power sector). PFC and REC to lend ₹85k crores to power distribution companies.

▫️Infy reported the IT website is still facing some glitches.

▫️PM meet leading American CEOs to spur investment in India.

▫️Govt to meet Moody’s on 28Sep, and seek improvement in India’s sovereign rating.

▫️Jindal Steel and Power wins the bid for Odisha’s Kasia Iron Ore Mine.

▫️2/3 of India’s eligible population has been vaccinated with atleast 1 dose.

▫️Ola to expand EV to more scooters, bike and cars in coming quarters (industry disruption, this can be Jio moment for the automobile industry)

▫️Jio added 6.51 million subscribers, Airtel added 1.94 million subscribers while Voda Idea lost 1.43 million subscribers in July.

▫️Tejas Network got optical network expansion order of Airtel.

▫️US Business activity grows at slowest pace in September in 12 months.

▫️BPCL-SBI card launched co branded contactless rupay credit card.

▫️RBI in a continued attempt to pump out excess liquidity will buy ₹15,000 crores govt bond from open market on Sep 30.

▫️IIFL fiance to raise ₹1,000 crores via bonds.

▫️ Bookings up in Indian hotel industry, occupancy rate above 70%.

This post is for educational purposes only.

Which is best for you, Index Fund or ETF?

You might have heard of the two terms Index Fund and ETF before, but you may not be aware of their obscure features. Your investment portfolio is incomplete without them. Inclusion of Index Fund or/and ETF in the investment portfolio provides the required diversification and helps in long term wealth creation . Hence, they form an essential part of every good investment portfolio.

We often get queries from our readers, which one to choose between the two. On the face, Index Funds and ETF may look like twins, but in reality they are different and have different finger prints. Here we will try to explain both the financial products, and will help you to decide, which one to choose for yourself.

What is an Index Fund?
In simple terms, Index Fund is a category of Mutual Funds, whose portfolio is similar to that of a stock market index. The stock market index can be any; Nifty50, BSE Sensex, Nifty 100, etc. For example, HDFC Index Fund- Sensex, consists of all the 30 stocks which are part of the BSE Sensex, and in the same proportion. For instance, if Reliance Industries has 18.5% weight-age in Sensex, then the HDFC Index Fund-Sensex, will also try to invest 18.5% of their total Asset Under Management in Reliance Industries. Hence, one can infer that the return generated by HDFC Index Fund-Sensex will be very similar to that of the BSE Sensex.

Index fund is a passive investment fund, i.e. its target is to achieve same return of that of the benchmark. The fund manager doesn’t have to scratch his head over investment strategies and stock picking, all he has to do is replicate the portfolio of the fund with that of the chosen Index. Hence, expense ratio (fund management charges) for these type of funds is very low.

What is an ETF?
ETF or Exchange Traded Funds, as the name suggests are funds that are traded on exchange, (i.e. listed on a stock exchange) and comprises of equity, bonds, or metals or a combination thereof. Generally, Equity ETFs are passive funds and mimic a stock market index, similar to that of an Index Fund. However, unlike Index Funds, ETFs are listed on exchange. The price of an ETF on the exchange is almost similar to its net asset value (NAV). For example: SBI ETF – Nifty 50, tracks the Nifty50 in a homogeneous manner. Return on SBI ETF -NIfty 50, is almost similar to the performance of Nifty 50.

One can buy ETF on the stock exchange just like any other stock. Hence, by buying just one unit of SBI ETF – NIfty50, one can get exposure to the entire 50 stocks of Nifty 50. It is as simple as it looks.

Now, after reading about both, you might be confused, which one is better. Don’t worry, we have juts the correct solution for your confusion. Which is better Index Fund or ETF?

Systematic Investment Plan (SIP): If you are a SIP lover and need a reminder every month to invest or save, you should go with Index Fund. An Index Fund gives you the SIP option. However, the same option is not available in ETF, as ETF is not a mutual fund scheme and trades on the exchange like any other stock.

Expense Ratio: Expense ratio is the annual cost paid to fund manager by investors for management of the fund. Although expense ratio of Index Fund is low, but in comparison to ETF, it is higher. For instance, expense ratio of Index Funds typically range between 0.15% to 0.50%, whereas for ETFs, it is usually between 0.05% to 0.20%. So, why would you give the Index Fund manager higher fees for just replicating the Nifty50. It is because of the convenience offered by Index Fund.

Convenience: Once you start a SIP in Index Fund, the entire headache is now with the fund manager. Your money will be automatically invested in the Fund, every month. You don’t have to do any transaction by yourself. However, in ETF, you have to place order for the ETF through your DEMAT/Trading account, which may be little difficult for a newbie. When to place the order, how to place, at what price to place the bid, etc. So, if you are a complete newbie and want the convenience of the Index Fund, you can incur higher expense ratio and invest in Index Fund, to get a peaceful sleep.

Expenses: While investing in ETF, you will have to incur brokerages and demat account charges, which is not there in case of Index Fund. All in all, if the amount being invested in ETF is large and you invest lump sum in ETF once in a while, then brokerage charges will be lower compared to the expense ratio incurred in Index Funds.

Control: ETF offers you complete flexibility and control over your investment. You can invest in ETF on any trading day at any trading time, which is not feasible in Index Fund. Net Asset Value of an Index Fund is only available at the end of the day, while for ETF it is available throughout the day. If you have fair market knowledge and you are sure of your timings, you can go for ETF, as that will allow you to invest your money, when the markets are down and sell your investment when markets are high.

Dividends: In case of Index Funds you have an option to choose, that whether you want the dividends from portfolio stocks to get reinvested or receive the same in cash in your bank account. As a long term investor it is always advisable to go for reinvestment option. There is no reinvestment option in case of ETF, you are forced to receive dividends in your bank account. If you want to reinvest dividends in ETF, then you will have to manually investment the dividend money in ETF by yourself.

Tracking Error: Tracking error measures the deviation of the fund from its benchmark. Since both Index Funds and ETFs replicate their respective benchmarks, tracking error in case of both is low. Nevertheless, tracking error is little higher in Index Funds compared to ETF, as the index fund manager has to keep some amount in liquid funds for unit redemption, which is not the case with ETF. If you want exact return like the benchmark, then ETF is more suitable financial product for you.

Tax Implication: Tax on Index Fund is charged at the time of redemption of units. You will incur Capital Gains tax for your Index Fund. If Index Fund units are sold before 12 months, the Short Term Capital Gains Tax of 15% will be applicable. While, if they are sold after 12 months, the Long Term Capital Gains Tax of 10% will be charged, over ₹1 lakh of capital gains. Equity ETFs are taxable in the same manner as the Index Fund. You may also be taxed on the dividends received from ETF.

Final Verdict:
Overall, merits and demerits of Index Funds and ETFs are quite balanced. Nonetheless, Index Fund is suitable for new investors who are not active in markets, lack investment discipline and desire convenient investing experience. On the contrary, knowledgeable folks, with fair bit of stock market experience and having the desire for control and flexibility over their investments should go for ETFs.

Thanks for reading! Hope this will help you in your investment journey!
#rare4share, Keep sharing the rare!