India received ~1.6 lakh crore in FII flows last calendar year when most Asian and emerging markets witnessed outflows. This is encouraging stuff one would say. However, this is not the complete story.
The total flows in Secondary markets (Debt + Equity but not including FDI deals in primary markets) are marginally positive. It means as yields collapsed, FIIs switched from Indian debt to Indian equities.
In fact, last 6 CYs (2015-2020) net flow in debt & equity is negligible.
"Right now, we're in an absolute raging mania. We've got commentators encouraging companies to do stock splits. Companies then go up 50%, 30%, 40% on stock splits. That brings no value, but the stocks go up"
"I have no clue where the market is gonna go in the near term. I don't know whether it's going to go up 10%; I don't know whether it's going to go down 10%," Druckenmiller said. "But I would say the next three-to-five years are going to be very, very challenging"
"The merging of the Fed and the Treasury, which is effectively what's happening during Covid, sets a precedent that we've never seen since the Fed got its independence," Druckenmiller said. "It's obviously creating a massive, massive mania in financial assets."
(1) The minimum margin requirement for BUYING stocks from the client can be 20% of the trade value instead of (earlier decided) full 100% VAR+ELM
In such case, broker will make up for the difference between this 20% and VAR+ELM from its own capital. Most will be happy to do so
(2) 20% margin is NOT required for selling holdings from DP if your broker is doing EPI by 7:30 pm on T-day. Contact your broker to ensure this. Most are doing it as that means higher efficiency and more business.
The global economy is recovering at a modest pace after bottoming out in April, with data showing much improvement from May to July. But how long can this pace be sustained? Will social distancing measures and restricted global travel cap the recovery?
Those remain key questions as we gauge the "new normal" across major economies.
Sure, things are getting better with time but how much "better" can things be when there are fears of a second wave brewing in many countries/regions once again?
The health crisis remains a key factor to keep an eye out for and in countries with less fiscal space to act, not addressing the virus situation will just lead to the economic and potentially financial crisis worsening in the coming months.
Every decision of the #MSDhoni retirement shows evolved thinking - The Date (15th Aug signifying his army association in last few years), the time (1929 hours when sun set at the southernmost point of India at Cape #Comorin)...
His last Instagram message (#Sahir Ludhianvi lyrics to show how any success or failure is just a fleeting moment) and taking decision at a time when there will be no media interaction (#CSK players are in bio bubble before departure for IPL).
His records, both as a player and as a captain are there for everyone to see but his biggest legacy will lie in how easy he can get detached from the game even while staying fully focused.
It's that time of the season again when Divestment talks during a bull run gathers momentum (with little results)
LIC IPO is back on the table with advisors being chosen. Fair enough!
A thread below on why LIC IPO is not going to be a cakewalk
(a) LIC is the largest #DII in India handling $500bn #investment portfolio. LIC act stipulates that all #receipts and payments need to be made out of that fund only. In case govt divest 10% stake (min stake required as per #SEBI regulations), who will do the corpus handling?
(b) LIC act stipulates that the insurer distribute 5% surplus p.a to GOI as #dividend. Most pvt insurers prefer higher ratio to shareholders. Any change in this ratio requires approval from both houses of #parliament. Even investors would insist on clarity before committing $
The content supply is a major issue now. With new movies going directly to OTT and actual shootings happening in a calibrated (and slower than usual) manner, means there will be dearth of content in next few months.
Q1 is a no-revenue quarter for over 95% of world cinemas. Even in countries like Sweden, NZ, China and South Korea where cinema halls have been opened, the footfalls are no where close to the pre C-19 levels.
A thread on divergence between economic data and market performance
When a coin is dropped from the top of a 50-story building, snapshots at 25th floor and again at 10th floor may be interesting for a photographer, or physicist (due to time frame) but it makes little difference.
That is the scenario with economic data (except its slower). Data is going to get worse.
It is hardly surprising that activity has slowed down dramatically when broad parts of the major economies have shut down in light of Covid-19.
One way of looking at this is to assume that the virus has disappeared and the damage has happened in the normal course of economy. We were not exactly sky-rocketing pre-Covid for that matter.
Economic stimulus, by definition, is action by the government to encourage private sector economic activity by engaging in targeted, expansionary monetary or fiscal policy.
Policy tools often used to implement economic stimulus include lowering interest rates, increasing government spending, & QE, to name a few. All these tools are means to stimulate demand & spur consumption to keep the economic cycle moving.
However, how providing a loan or credit to a section of the society can be considered as a stimulus package? By a similar measure, can we treat it as income in our books instead of showing it as a liability so that we never have to repay it?
The lockdown in India has been extended by another 2 weeks but considerable relaxation has been given in Orange and Green Zones to restart activity.
This is a good step to reopening the economy but as usual, requires multiple clarifications over the new instructions.
Some of the green zones (specially in North-East) have recorded single digit Covid-19 cases or deaths so far. Not allowing full inter-state travel via rail, airways or opening up of hospitality industry in these zones is beyond explanation.
The allowing of e-commerce companies to only deliver essentials in the Red zone is again confusing policy play as most MSME companies cannot restart operations effectively till goods are not procured from them.
In an unprecedented move, a Mutual fund declared winding up 6 credit risk funds (CSF) overnight having 26,000 crore in AUM. This has caused undue anxiety amid investors as they cannot buy, sell or redeem their units.
(a) Liquidity, Maturity profile and #Credit quality for CSFs should be checked thoroughly before investing. This particular MF had redemption issues earlier with Essel, #ADAG and #Vodaphone exposure. This is not a new issue, but extension of previous investment calls.
(b) #Emergency fund cannot be invested in debt funds specially credit risk funds. If you were doing this, it's time to get a financial advisor on board. If he has recommended these funds, time to change your advisor.