In another round of Conversations, we bring you Raghu Vohra, founder at Blackstone Valley Group speaking about How Fixed Income Funds work :   Raghu speaks of how global funds that are called “fixed income” work, of mandates and investments and all that. Add to that a quick note on Puerto Rico and other happenings. In conversation with Deepak Shenoy, we learn that: Fixed Income funds can invest beyond bonds Mandate just as important as regulation Bond managers decision making processes The craziness that’s in Puerto Rico and Greece Hope you like it!… (Read On…)

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The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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A big Ambit report is doing the rounds – they predict that real estate will fall big time . We are seeing a broad-based real estate pullback, with prices correcting in most tier-1 and tier-2 cities alongside sharp drops in transaction and new launch volumes. The drivers for this slowdown are a mix of supply-side factors (banks have pulled back lending to developers) and demand-side factors (the Black Money Bill has created fear amongst speculators). The result is not just a drop in demand for building materials and challenges for lenders with big mortgage, LAP and housing finance books, but also a generalised slowdown in GDP growth, as the sector which drives 50% of India’s capex and 30% of its jobs conks off. The drivers, they say: Heavy inventory (Mumbai and Delhi have over 10 quarters of unsold apartments) Property prices are falling in Tier 2 cities as well Foot falls at registration offices have fallen Banks have cut lending to RE esp commercial RE Subsidies have been cut, so pilfering and parking in RE has been curtailed Squeeze on black money through the black money bill Rise in the “guidance value” rates that increase the “white” component of a purchase Some Good Charts ICICI has the most exposure to RE: Indiabulls housing has the highest relative LAP (Loan against Property) portfolio: India has one of the highest spreads between rental yields and interest rates: Our view:A Fall is on the Cards We have been noticing a slow down in real estate for around a year now, and it’s looking rough.… (Read On…)

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We don’t usually do personal finance posts on this forum, but since we’d discussed this a while back on the groups, we thought it’s a good idea to post more information. The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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I’ve been bearish on IT in the longer term, and in a long post I explain why I think we are at an inflexion point for Indian IT . Over the last quarter, results have been pathetic: HCLTech , Wipro and Infy showed less than 5% earnings growth YoY, and TCS and Tech Mahindra actually showed -30% or lower earnings growth for the March quarter. While TCS had a one time component (bonus) we saw their recent results for the June quarter showing less than 5% earnings growth YoY. And Wall Street Journal has a story on how cloud services are eating up IT sector earnings : The value of outsourcing deals signed in 2014 shrank 17% to $120.4 billion from $145.5 billion a year earlier, according to consulting company KPMG LLC. Indian companies are losing business to firms that have led the way into the cloud, such as International Business Machines Corp., Amazon.com Inc. … (Read On…)

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India’s trade continues to show two very distinct signals. First, that the deficit is down. Look at the merchandise trade stats for June 2015: the deficit is just $10 billion, which is about as low as it has been in the last few months. Imports are lower both due to lower crude oil imports (due to the lower crude prices, not lower consumption) and lower gold imports (which is both due to lower gold prices and lower consumption). Gold imports are down 37% from last year ( DNA ) and in volume terms has fallen from 221 tonnes for the AMJ quarter 2014 to 203 tonnes in 2015. ( Hindu ) This is great for the current account, where gold has been the make-or-break for us. If you take away gold imports, we actually are a surplus on the current account! The Bad Part: Trade Volumes In The Toilet But wait.… (Read On…)

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The RBI has new “ Guidelines for Prepaid Instruments for Mass Transit System “. This is like telling people now, in 2015, that you are allowed to wear a seat belt inside a car. (Meaning: we’re doing it already!) Mass transit systems like the Mumbai railways, the Delhi Metro or even the tiny little Bangalore Metro have had prepaid cards or tickets for a very very long time. Bangalore’s bus system thrives on multiple layers of prepaid tickets (monthly, weekly, daily!). Season passes for many commute types have been available forever, so why these rules? Because RBI says the word “semi closed”. The Mass Transit system (like Railways) can have other merchants on their platforms, where you could potentially use the card to make payments. I presume this is for purchasing food or water from the platform vendors, for instance. Here’s the rules: The semi-closed PPIs will be issued by the mass transit system operator (PPI-MTS) after authorisation under the Payment and Settlement Systems Act, 2007 to issue and operate such semi-closed PPIs; The PPI-MTS will necessarily contain the Automated Fare Collection application related to the transit service to qualify as PPI-MTS; Apart from the mass transit system, such PPI-MTS can be used only at other merchants whose activities are allied to or are carried on within the premises of the transit system ; The PPI-MTS issuer will ensure on-boarding of merchants (only those permissible as under (iii) above) following due procedure applicable to any other PPI issuer; The PPI-MTS will have minimum validity of six months from the date of issue; The issuer may decide upon the desired level of KYC, if any, for such PPIs; The PPI-MTS issued may be reloadable in nature and at no point of time the value / balance in PPI can exceed the limit of Rs. … (Read On…)

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So Manoj Nagpal highlights a consumer forum case in which: Mihan Kisku takes policies worth Rs. 13 lakh from ICICI Pru Life in August 2008 He dies of a heart failure in October 2008 (RIP) In September 2009 – note: ONE YEAR after Mr. Kisku’s death – ICICI Pru Life refuses to pay, saying “material information was not disclosed”. They say he didn’t tell them he had blood pressure problems. His wife took the case to the district consumer forum, where she won and was awarded the full 13 lakh plus 3 lakh compensation. On 31 Jan 2012, more than three  years after Mr. Kisku’s death. ICICI tried more stunts here, claiming that Mr. Kisku didn’t provide the right age proof, but was overruled. ICICI then appealed to the state forum which decided, after THREE YEARs in Feb 2015, that ICICI needs to pay. ICICI Pru Life then took this to the National Commission, which has again ruled in Ms. … (Read On…)

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In this webinar conducted via Capitalmind.in, Puneet Khurana, the founder of Stoic Advisors, takes us through a process of allocations across a portfolio. This post is for Capital Mind Premium subscribers only.

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RBI is doing an OMO sale of government bonds today, and has sold Rs. 8270 cr. worth bonds. Why? This is a good question. Why does RBI sell bonds? Who gets the money? Answer: Not the government. Sure, RBI sells government bonds (as a merchant banker) on every Friday. That’s when the government gets money. A lot of it. 15,000 cr. will be sold just this Friday. But that’s not the same thing as this OMO sale. When the government sells bonds, the RBI is just a banker, organizing the sale through an auction. But RBI also owns some government bonds on its own. RBI is a separate entity and has its own balance sheet, and on that, it owns assets like dollar reserves, rupee bonds etc. It doesn’t buy them from the government (it’s not allowed to) but it buys them from the market, as purchase operations. It has done this consistently in the past, buying bonds on the market as required.… (Read On…)

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