A new method of valuing debt papers on a daily basis threatens to end the party in debt funds. Liquid and ultra short-term funds are very popular among investors for parking idle money. A Sebi move to enforce a shift from the current amortization-based method to a mark-to-market valuation process may lead to wide NAV fluctuations and make these schemes unattractive. The process will reflect rating downgrades etc. instantly, thus capturing real market risks
STREET PULSE: Where we stand Asian stock markets held firm and bond yields rose as hopes of diminishing US-China tensions and reduced risk of no-deal Brexit prompted investors to take profit in risk-off trade.
Read More  | SGX Nifty traded 47 points higher at 7 am (IST), signalling buoyancy ahead on Dalal Street. MSCI index for Asia-Pacific shares outside Japan rose 0.10% while Japan's Nikkei gained 0.32%. |
| US stocks rose overnight. Dow went up for fifth straight day, eking out a 74 point, or 0.3% gain; the S&P 500 closed flat while the Nasdaq shed 0.3% |
Crude oil prices rose after an industry report showed that crude stockpiles in the US fell last week by more than twice the amount that analysts had forecast. Brent futures rose 43 cents to $62.81 a barrel while WTI futures gained 47 cents to $57.87.
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The Contrarian... Auto industry leader Rajiv Bajaj of Bajaj Auto says the current crisis in India's Motown is largely due to "overproduction and stocking" by companies and to a small extent due to the economic slowdown. He says there's no need for a GST cut. The statement came days before the GST Council is scheduled to convene on September 20 when, among other things, it is expected to take a call on the industry's demand for a cut in goods and service tax on automobiles. The industry is now rapidly correcting the stock levels for Bharat Stage-VI emission norms and the problem will be sorted out by November, Bajaj said.
Read More | Gold prices may rally to $2,000 in two years>>> |
| Apple Launches iPhone 11 Starting at $699 >>> |
| New sovereign gold bond issue opens >>> |
Chinese Reforms… China has removed one more hurdle for foreign investment into its capital markets almost 20 years after it first allowed access. Global funds no longer need approvals to purchase quotas to buy Chinese stocks and bonds, the State Administration of Foreign Exchange said in a statement on Tuesday. It removed the $300 billion overall cap on overseas purchases of the assets, about two-thirds of which remain unused. It's the latest push by Chinese authorities to increase use of the yuan in international transactions, and comes as they seek out more foreign capital to balance payments.
Read More FTA Review… The Association of Southeast Asian Nations or Asean has agreed to India's long-pending demand to review the free trade agreement between the two sides. The exercise could help address India's concerns that it has not benefitted from the agreement and its goods trade deficit with the 10-member grouping has widened. The trade gap was $22 billion in FY19, up from $13 billion in FY18.
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Debt Fund Dilemma… Investors in mutual fund debt plans, especially liquid schemes, may have to brace for more uncertainty with regard to returns as the Sebi may make it mandatory for these debt products to assign the latest market price to all their bond investments from April 1. Currently, only debt papers with a maturity of over 30 days need to be valued on a mark-to-market basis. Most fund houses value the rest of the papers based on amortisation.
Read More | IL&FS road SPV lenders stare at huge haircuts >>> |
Kapoor to exit YES Bank?... Speculation is rife that Yes Bank founder and former chief executive Rana Kapoor may sell his 9.64% stake in the bank as he seeks to cut personal debt and facilitate a fresh round of fund raising by the bank to improve its capital position. Reports suggested that Kapoor is in talks with Paytm founder Vijay Shekhar Sharma which may be at a personal level, and which Kapoor neither confirmed nor denied.
Read More Meanwhile... Beleaguered British Prime Minister Boris Johnson vowed to continue with his attempts to strike a new Brexit deal with Brussels, after losing yet another parliamentary vote on Tuesday to hold an early election. Johnson slammed the Opposition for voting against his call for a snap poll next month, in the final minutes of a late-night debate ahead of a controversial five-week suspension of Parliament.
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