Bharat 22 ETF AUM drops by over Rs 3,000 crore in just one month

With a bunch of the fund’s total assets coming from rich, short-term investors, it came as no surprise when some of them redeemed their holdings one month into the investment.

Despite receiving the highest subscription for a new fund offer in the history of the Indian mutual fund industry, the Bharat 22 ETF has seen its assets under management (AUM) drop by over Rs 3,000 crore in just one month.

With a bunch of the fund’s total assets coming from rich, short-term investors, it came as no surprise when some of them redeemed their holdings one month into the investment.

Of course, as was with the total assets managed, the level by which the fund’s asset base dropped in a month is also a first for the MF industry. Some of the smaller fund houses in the country don’t even manage assets worth Rs 3,000 crore.

According to data compiled by ICICI Prudential AMC, which managed the Bharat 22 ETF, the scheme’s total AUM as on December 31 stood at Rs 6,243 crore, roughly 33 percent lower than the Rs 9,319 crore at the end of November.

The Bharat 22 ETF is a part of the government’s overall disinvestment program. After getting bids worth over Rs 31,000 crore for the ETF, the government decided to retain Rs 14,500 crore, which is more than double the scheme’s current AUM.

“ICICI Prudential AMC-managed Bharat 22 ETF saw a wide participation from across the investment categories, including retail investors. As of December 2017, only 0.6% of the number of applicants have redeemed their investments,” a spokesperson of ICICI Prudential AMC was quoted as saying by DNA Money.

The spokesperson added that in the fund house’s view, Bharat 22 ETF still remains one of the most attractive propositions in the market, allowing investors to own stakes in the crown jewels of the Indian economy.

SBI to raise Rs 20,000 crore via bonds for affordable housing

Country’s largest lender State Bank of India plans to raise Rs 20,000 crore through long term bonds to fund affordable housing.

Country’s largest lender State Bank of India (SBI) plans to raise Rs 20,000 crore through long term bonds to fund affordable housing.

SBI had earlier proposed to raise Rs 5,000 crore for the purpose.

“A proposal will be submitted to Executive Committee of Central Board (ECCB)… for approval for issuance of long term bonds of Rs 20,000 crore for financing of infrastructure and affordable housing in domestic and overseas market instead of Rs 5,000 crore intimated earlier,” SBI said in a filing to the stock exchanges.

The bank did not specify whether the borrowing would be in rupee denomination or dollar.

The executive committee of the central board is scheduled to have a meeting on January 17, it added.

Earlier this week, SBI announced plans to raise up to USD 2 billion (over Rs 12,600 crore) by issuing bonds in US dollar or other convertible currency over two fiscals to fund overseas expansion.

It said the fund-raising will take place through a public offer and/or private placement of senior unsecured notes in US dollar or any other convertible currency during 2017-18 and 2018-19.

Last month, the bank’s board had approved raising Rs 8,000 crore through various sources, including masala bonds, to meet Basel III capital norms.

Masala bonds are rupee denominated specialised debt instruments that can be floated in overseas markets only to raise capital.

The bank said it has time till March 2018 to raise the funds.

Banks in India have to comply with the global capital norms under Basel III by March 2019. Internationally agreed time frame for the same is January 2019.

Govt to revamp 300 dry ports in a bid to boost foreign trade

The decision is likely to give a fillip to foreign trade as the study will evaluate the transaction costs involved in trade.

The government is planning to revamp around 300 dry ports across the country in order to ease infrastructural obstacles faced by exporters and importers, thereby boosting foreign trade, according to a report by The Economic Times.

According to a government official who wished to remain anonymous, the commerce ministry has already started the process of reviewing laws governing dry ports, along with subsidies and the various ways in which these ports are funded. The aim is to modernise these ports in accordance with globally followed practices.

The ministry will assess the performance and functioning of inland container depots (ICDs) in approximately 10 countries. The reason behind this is the increased interest in the development of ICDs, air freight stations and container freight stations after the Rs 8 lakh crore Sagarmala project was announced.

The Sagarmala project is aimed promoting “port-led direct and indirect development” and augmenting infrastructure facilities to “transport goods to and from ports quickly, efficiently and cost-effectively”.

A dry port is an inland terminal where international freight can be handled, inspected, temporarily stored and cleared by customs. It is typically located at a place where multiple modes of transport converge and therefore, connects either a rail route or a road route to a sea port.

The decision is likely to give a fillip to foreign trade as the study will evaluate the transaction costs involved in trade. It also aims to establish new dry ports in the country, based on location and logistics.

A dry port can significantly improve the flow of cargo between ships and major land transport networks and free up capacity at congested sea ports by creating a more central distribution point.

US govt drops controversial plan on H-1B visas: Report

The controversial H-1B visa proposal which suggested that the foreigners would have to let go of their H-1B visas if their green card applications are pending with the authorities is now withdrawn, according to media reports.

The Donald Trump administration has dropped a controversial proposal that sought to tighten norms relating to H-1B visa, and among other things, suggested deporting green card applicants whose visas had expired.

US govt had earlier reported that the H-1B visa policy change, if implemented, will in anyway have a short-term impact on India. Now that the policy change has been withdrawn, it has brought in a huge relief for Indians and other foreigners working in the US.

An American publication, McClatchy, reported that the proposal was withdrawn. “The United States Citizenship and Immigration Services (USCIS) is instead considering other methods to promote the Buy American, Hire American policy,” the report said.

Hindustan Times report later quoted a USCIS official as saying that the immigration body “is not considering a regulatory change that would force H-1B visa holders to leave the United States by changing our interpretation of section 104(c) of AC-21, which provides for H-1B extensions beyond the six-year limit.”

“Even if it were, such a change would not likely result in these H-1B visa holders having to leave the United States because employers could request extensions in one-year increments under section 106(a)-(b) of AC21 instead,” the official added.

Media reports had previously quoted officials from the Department of Homeland Security as saying that the government was considering tightening the norms related to the H1-B programme.

The subsequent media coverage sparked an outrage from tech companies, which said the proposal inhibited the flow of talent and would be counter-productive.

Direct tax collections rise 18.2% in April-December

In a statement, the ministry said provisional numbers for direct taxes collections showed an 18.2 per cent growth during April-December.

Direct tax collections soared 18.2 per cent during the first nine months of current fiscal at Rs 6.56 lakh crore, the finance ministry said today.

In a statement, the ministry said provisional numbers for direct taxes collections showed an 18.2 per cent growth during April-December.

Direct taxes are made up of income tax paid by individuals, wealth tax and corporation tax paid by companies.

“The net direct tax collections represent 67 per cent of the total Budget Estimates of direct taxes for FY2017-18 (Rs 9.8 lakh crore),” the statement said.

Gross collections (before adjusting for refunds) have increased by 12.6 per cent to Rs 7.68 lakh crore during April to December, 2017.

As many as Rs 1.12 lakh crore refunds have been issued in the period.

The ministry said advance tax collection was up 12.7 per cent at Rs 3.18 lakh crore.

While the growth in corporate income tax advance tax is 10.9 per cent, that in personal Income Tax advance tax is 21.6 per cent.

News Live: Banks asked not to move NCLT against JP Associates, says report

This blog will keep track of key global and local developments impacting business and markets through the day. Important local and global political developments will also find resonance here.

The Reserve Bank of India has ordered banks not to initiate bankruptcy proceedings against Jaiprakash Associates, reports The Economic Times. The move is possibly in anticipation of legal complications after a Supreme Court ruling barred its promoters from selling or transferring assets, bankers said. The ruling was aimed at safeguarding the interests of buyers of homes being built by the company.

Jaiprakash Associates is among 28 companies that banks were directed to refer to bankruptcy court if debt resolution plans weren’t in place by the end of 2017. It is the only company in the list that has received a special dispensation from RBI in this regard, bankers said.

“The regulator has told us to ‘keep on hold’ the move to refer Jaiprakash Associates to the NCLT (National Company Law Tribunal),” a senior bank official said. “The regulator also indicated the move to keep it on hold was ‘with reference to the recent Supreme Court ruling’ that prevents the promoters from selling their assets,” he said.

Hindi as India’s official language at UN: Subject pits Shashi Tharoor against Sushma Swaraj

Sushma Swaraj and Shashi Tharoor got into a debate over Hindi as an official language for India at the United Nations, in the Lok Sabha.

The Lok Sabha on Wednesday witnessed a heated exchange between External Affairs Minister Sushma Swaraj and Congress leader Shashi Tharoor, over Hindi being an official language for India in the United Nations, as reported by Economic Times.

Sushma Swaraj explained that the procedure is long and requires two-thirds of the 193 member countries of the UN to vote in favour of Hindi being an official language in the UN, and also share the resulting financial expenditure in the process.

Swaraj said India was “attempting to get the support of countries like Fiji, Mauritius, Surinam,” where there are non-resident Indians. “When we get that kind of support and the economically weaker countries are also ready to bear the financial burden, it will become an official language,” she added.

When Shashi Tharoor challenged her on why it needs to be pushed, the Minister dismissed his remark as ‘ignorant’.

Swaraj said the government would readily spend even Rs 400 crore on this, when pointed out the process of making Hindi an official language would incur an expenditure of Rs 40 crores. She added, money would, however, not serve the purpose.

She stressed on the fact that Prime Minister Narendra Modi and she spoke at the UN in Hindi. “As far as glory of the language is concerned, the External Affairs Ministry never had so much work done in Hindi as now,” she said.

Shashi Tharoor, against this move, asked why Hindi had to be pushed as the official language when it was not even the national language of India. He demanded to know why we needed an official language at the UN at all.

“Seeking to promote Hindi raises an important question. Arabic does not have more speakers than Hindi, but Arabic is spoken by 22 countries, whereas Hindi is only used as an official language by one country — us,” he said.

He further added that any future Foreign Ministers and Prime Ministers who did not prefer to communicate in Hindi, would be put in a difficult spot and that would be unfair.

“If indeed we have a Prime Minister or Foreign Minister who prefers to speak Hindi, they can do so and we can pay to get that speech to be translated,” he explained.

“The government has to defend its position. I understand the pride of Hindi-speaking people, but people of this country who do not speak in Hindi also take pride in being Indian,” he said.

The statement did not go well with several members of the treasury benches who raised the pitch in protest.

Sushma Swaraj said Hindi was spoken in several other countries as well as by the Indian diaspora abroad. “Saying Hindi is spoken only in India is your ignorance.”

In a written reply, she said India was in touch with 129 countries to make this happen.

Auto December 2017 sales analysis: Growth exaggerated by base effect

We feel most regulatory headwinds are weakening and the situation has returned to near normal. Good monsoon, rural demand and government’s capex push are the tailwinds that will drive growth in the sector.

Auto sales in December 2017 were sharply higher year-on-year, but that’s partly because sales in December 2016 were impacted by demonetisation.

However, we believe in the durability of the emerging trends: strong growth in commercial vehicles (CV) because of good monsoon, improved rural sentiment and increased production of BS IV compliant vehicles; signs of revival in three-wheeler sales following government’s decision to end permit system and revival in exports due to improving global economy.

We feel most regulatory headwinds are weakening and the situation has returned to near normal. Good monsoon, rural demand and government’s capex push are the tailwinds that will drive growth in the sector.

Commercial Vehicle (CV) – Significant growth

The commercial sector has bounced back strongly after setbacks from  demonetization and the BS-IV transition in 2017.

Tata Motors’ reported strong sales number as its innovative Selective Catalytic Reduction (SCR) has been liked by customers. SCR helps reduce diesel engine emissions. Growth in consumption-led sectors like e-commerce, and infrastructure spending by the government funding, along with superior performance of new products increased demand for the new tonnage vehicles,

M&M reported good growth (on a low base) thanks to near normal monsoon, and rural presence of the company. The management expects the growth momentum to continue on the back of some recent refresh launches as well as the better performance of its product portfolio.

Eicher Volvo also witnessed a significant growth of 50.9 percent (Y-o-Y) during December.

Ashok Leyland continue to post strong growth (79 percent YoY) on the back of the low base, good monsoon, and improved rural demand.

Cars Segment – leader continued its mojo

The leader, Maruti, continued to top the chart in PV (passenger vehicle) segment with 10 percent growth, mainly driven by 20 percent growth in UV (utility vehicle).

For Tata Motors, passenger car segment witnessed a strong growth of 31 percent (Y-o-Y) on the back of 406 percent growth in its UV segment, led by strong demand for new generation cars.

Mahindra and Mahindra’s (M&M) passenger vehicle sales declined 7.5 percent year-on-year.

Two-wheeler (2W) segment: TVS is gaining momentum

In two-wheeler space, Eicher continued its dream run, with sales of sub-350 cc bikes growing 20 percent. Sales of 350 cc-plus bikes fell 20.4 percent year-on-year, a trend for the past few months baring October.

TVS posted a strong growth in 2W segment primarily because of 63.7 percent growth in bikes and 50.6 percent growth in scooters. Bajaj’s domestic two-wheeler sales were flat.

Hero, a formidable player in 100/110cc bikes, posted a significant growth of 43.2 percent in the month, however, the December volume was way below the monthly run rate of more than 6L units seen for the last many months.

Three-wheeler (3W): the leader posted strong numbers 

The overall three-wheeler market is showing significant improvement as is evident from the sales number for the December month. This is primarily due to the end of “Permit Raj” in Maharashtra and new 10,000 permits in Delhi. Bajaj Auto, the leader in the space, could capture the growth coming in this segment and posted a whopping 180.1 percent (Y-o-Y) growth in the domestic 3W segment.

TVS also posted a strong growth of 72.1 percent (Y-o-Y) in 3W volumes whereas Atul Auto continued to face challenges and witnessed a growth of 13 percent (Y-o-Y) in 3W volumes.

Tractors: gaining on the back of good monsoon

M&M continue to post significant growth (30.2 percent y-o-y) on the back of healthy monsoon, higher Kharif production and improved minimum support price (MSP) for farmers. The management believes that with the healthy reservoir levels and good progress on rabi sowing, the growth momentum is expected to continue in the coming months.

Escorts also posted a healthy growth of 14.2 percent.

Exports: early signs of improvement

Auto Companies had been struggling in the export markets for long. However, going by the monthly numbers, there appears to be signs of recovery. TVS and Bajaj yet again witnessed a strong growth in their exports. Eicher witnessed a significant growth of 48 percent. Escorts and Maruti struggled in the export market during December.

Bajaj Auto’s performance was on the back of stabilizing currency and retail sector in Nigeria. The management also mentioned that the geographies like Philippines, Latin America, Egypt, East Africa, and Nepal have stabilized. The management believes that the company is on track to achieve 1.5 lakh units of exports per month for the rest of year.

Tata Motors seems to have come out of its problems in export market as it posted a growth of 26 percent.

India’s first proposed high-speed Metro corridor in Mumbai to operate round the clock

The Mumbai Metropolitan Region Development Authority (MMRDA) the executing body of this project, has said that this will cater to the flyers landing late at night, to board connecting flights.

India’s first proposed high-speed Metro corridor between Mumbai International Airport and Navi Mumbai Airport will be operational around the clock, including night hours. This will make it India’s first Metro corridor to run 24X7 for all 365 days, according to a report in DNA.

The Mumbai Metropolitan Region Development Authority (MMRDA) the executing body of this project, has said this will cater to the flyers landing late at night, wanting to travel between Mumbai and Navi Mumbai to board connecting flights.

A senior MMRDA official was quoted in the reported saying the trains will run in the late hours of the night, since “it is a dedicated line for the airport”. He added \the Metro corridor will pass through residential locations in Mumbai and Navi Mumbai, which will help flyers to reach their homes late in the night.

As opposed to the Delhi Airport Metro running for almost 20 hours (from 4.45 am to 11.30 pm), Mumbai Airport Metro will be operational for 24 hours, although the frequency of trains at night will be lesser than those during the daytime.

The Mumbai and Navi Mumbai Airport Metro corridor is going to be a high-speed Metro corridor that will run at a higher speed than the other Metro corridors planned in the city.

Finance Ministry cautions against bitcoin, says ‘virtual currencies are like ponzi schemes’

Ministry of finance cautioned against risks of bitcoin trading which lack government fiat, comparing them with ponzi schemes.

The Ministry of Finance has cautioned people against investing in virtual currencies and compared them to ponzi schemes.

“There has been a phenomenal increase in recent times in the price of Virtual ‘Currencies’ (VCs) including bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their price.”

The announcement follows a string of warnings by both the Finance Ministry and the Reserve Bank of India against cryptocurrencies such as bitcoin.

Globally too, governments, regulators and experts have warned investors against jumping on the gravy train of cryptocurrencies, prices of many of which have multiplied several times this year.

The finance ministry also emphasised “the risk of the investment bubble in VCs of the type seen in ponzi schemes in which a sudden crash can mean that the investors lose all their hard-earned money.”

Since VCs are stored in a digital format, they are also vulnerable to malware and ransomware attacks, the ministry added. “The encryption in VCs like bitcoin ensures anonymity which might boost illegal activities like terror funding, smuggling being carried out online.”

The I-T department had turned on the heat on cryptocurrency exchanges earlier this month to check for tax evasion.

The RBI has already cautioned users of VCs three times in the past(December 2013, February 2017 and December 2017) about the hazards of trading in cryptocurrencies.

The statement issued by the ministry stated that “RBI has also clarified that it has not given any licence/ authorization to any entity/ company to operate such schemes or deal with bitcoin or any virtual currency. The Government also makes it clear that VCs are not legal tender and such VCs do not have any regulatory permission or protection in India. The investors and other participants, therefore, deal with these VCs entirely at their risk and should best avoid participating therein.”

Further, the Securities and Exchange Board of India (SEBI)  intends to crack down on schemes such as so-called initial coin offerings that take advantage of investors who have little understanding of the risks of investing in such cryptocurrency ventures and those who are running outright fraudulent operations.