Does Sebi tweaking of rules for multicap funds really shift the goal post for investors and mutual fund houses? Not much. For equity fund investors, existing schemes that are already tilted towards a specific market-cap or theme will probably merge, switch or convert into a format more aligned to their running style, while investors will have their chances to redeem or switch. As for the market, midcaps & smallcaps will surely see action based on speculations though the shift of the estimated $5 billion money is not going to happen in such a hurry. A more diversified investment is always better than a concentrated one, and the new rule change is actually in tune with that philosophy! And that augurs well.
MARKET CUES: Where do we stand >>>  | Nifty futures on the Singapore Exchange traded 23 points higher at 7 am (IST) this morning, signaling a positive start ahead for Dalal Street. |
| On Friday, Nifty50 edged higher, and formed a small bullish candle on the daily chart and a Hammer-like candle on weekly scale. It stayed above its 20-day exponential moving average, which analysts said was a positive signal. |
| Asian stocks climbed on Monday amid signs of progress toward a virus vaccine and as investors looked ahead to a US Fed meeting. South Korea led modest regional gains rising 1%. Japan's Topix rose 0.8%, Hong Kong's Hang Seng 0.4%, Shanghai Composite 0.3% and Australia's S&P/ASX 200 Index 0.5%. |
| Nasdaq fell in another volatile session on Friday, as the continuing tech selloff drove it to its worst week in months. The index closed 0.6% lower at 10,853. But the S&P500 eked out a small gain after gyrating between solid gains and steep losses. It closed about 0.1% higher at 3,340. Dow ended the day 131.06 points, or 0.5%, higher at 27,665. |
| Crude oil prices ticked higher. WTI crude rose 0.3% to $37.44 a barrel. |
| The rupee depreciated 7 paise to close at 73.53 against the US dollar on Friday tracking muted domestic equities. |
| The US dollar was little changed on Monday, as was the yen and the euro. The kiwi rose 0.3% to 66.86 US cents and the offshore yuan to 6.8272 to the greenback |
| Gold prices in India ended the week at Rs 51,280 per 10 gm. The precious metal fell by about Rs 5,000 per 10 gm from record highs of Rs 56,200 hit last month. On MCX, gold futures slipped 0.9% to Rs 51,306, while Silver futures fell 1.5% to Rs 67,970 a kg on Friday. In international markets, spot gold prices rose marginally by 0.3% to $1,947.14 an ounce on Monday. |
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Smallcaps, midcaps await more inflows… The Sebi order for multi-cap schemes to maintain a minimum 25% each of their portfolio money in large-cap, mid-cap and small-cap stocks could result in better inflows into smallcaps. 35 multicap funds are currently managing assets worth nearly Rs 1.5 lakh crore. Of the total assets, about 65% is invested in largecap stocks, 16-18% in midcaps, 8-9% in smallcaps and the balance in cash. So in about four-and-a-half months to implement Sebi's new rule for multicap funds, around Rs 12,000 crore should be shifted from largecaps to midcaps and about Rs 24,000 crore from largecaps to smallcaps. This translates into about Rs 300 crore worth of transfers daily, from largecaps to midcaps and smallcaps combined. Sebi late Sunday clarified that mutual funds are free to choose the way by which they want to comply with the revised rules.
Read More Oracle laps up TikTok's US biz… Oracle Corp is the winning bidder for a deal with TikTok's US operations, people familiar with the talks said, after main rival Microsoft Corp. said its offer for the video app was rejected. ByteDance, TikTok's parent, turned down Microsoft's previous bid to buy TikTok's US assets. A deal with Oracle is narrower, appearing more like a corporate restructuring than an outright sale, one of the people said.
Read More RBI to use more ammo to cool yields… The stage appears set for the central bank to dig into its arsenal for more potent measures to cool bond yields after it persistently rejected the demands for higher returns by potential investors in sovereign debt for the third time in a month. The tug of war between the markets and North Block's investment banker should intensify amid rising worries about fiscal deficit and the trajectory of inflation, which has breached the upper end of Mint Road's mandate.
Read More Auto firms raise output for festivals… Automobile and tractor manufacturers are stepping up production as they build inventory ahead of the main festivals, on hope that the momentum in demand seen since last month would pick up further ahead of Diwali. Companies such as Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra and Toyota Kirloskar are going full steam ahead on building stock. The current inventory with dealers is lower than last year, so they are also ramping up capacity utilisation to have adequate stock during the festive season.
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Date issue may spoil debt rejig… Even as bankers work out a restructuring plan based on the Kamath Committee recommendations, crucial differences over the start date for financial milestones and creditor pacts prescribed by the regulator and the panel could influence the number of eventual beneficiaries of the proposed loan restructuring. In its notification, the RBI has asked banks to ensure compliance to the total outside liabilities to the adjusted tangible net worth at the time of implementation itself, almost two years ahead of the FY23 deadline proposed by the Kamath panel.
Read More Loan recast to kill banks' exclusive deals… Smarter banks fear that the straitjacket one-time loan restructuring framework would kill the exclusive deals they have with borrowers. Soon after the release of the KV Kamath committee report and the RBI communiqué that followed, two leading private banks have voiced their concerns to the regulatory officials. They have sensed that their superior rights to the securities pledged by a borrowing firm and the claim on the company's cash flow will have to be given up in favour of the majority group of lenders who come together to revive a Covid-hit company.
Read More Tatas seek invalidation of SP share pledge…. Tata Sons has asked the Supreme Court to invalidate the pledging of Tata Sons shares by the Shapoorji Pallonji Group in favour of Axis Trustee Services and IDBI Trusteeship Services, according to documents filed in the court. On September 5, Tata Sons moved the Supreme Court challenging these pledges — that were created in December 2019 and April this year — as well as a fresh move by the Mistry family owned SP Group to pledge shares in favour of Canadian PE firm Brookfield Asset Management.
Read More Meanwhile... Shift from credit cards to debit cards… There has been a shift in spending from credit cards to debit cards during the first quarter of the current fiscal, as Indians held back on discretionary purchases and went digital while paying for utilities and groceries. According to data released by RBI, spending under credit cards in June 2020 was Rs 42,818 crore, which was 36% lower than Rs 67,000 crore in January 2020. On the other hand, debit card spends stood at Rs 47,252 crore, which was only 24% lower than Rs 62,153 crore pre-Covid.
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