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Rs 7 lakh crore profit in 10 days: The…

21 June 2024
by admin

Public Sector Undertaking (PSU) stocks in India have witnessed a remarkable rally, generating a profit of Rs 7 lakh crore in just ten days. This surge is being compared to the decisive management style of Prime Minister Narendra Modi. Analysts and investors are keenly observing the factors driving this unprecedented growth.
As per a report in the Economic Times, several factors have contributed to the impressive performance of PSU stocks.One significant reason is the government’s focus on privatization and strategic disinvestment of state-owned enterprises. The recent announcement by Finance Minister Nirmala Sitharaman about the government’s plans to privatize multiple PSUs has created a positive sentiment among investors.
“The Modi government’s clear roadmap for privatization has instilled confidence among investors. The market is reacting positively to the prospect of more efficient and profitable management of these enterprises,” said an industry expert.
Moreover, the robust financial performance of many PSUs has played a crucial role in boosting investor confidence. Companies such as State Bank of India (SBI), Bharat Petroleum Corporation Limited (BPCL), and Coal India have reported strong quarterly results, further fueling the rally in their stock prices.
“PSUs are showing strong financial health, and their profitability is attracting investors. The market is recognizing the potential for significant returns from these stocks,” remarked a market analyst.
Another factor contributing to the rally is the attractive valuation of PSU stocks. Many of these stocks were trading at relatively lower valuations compared to their private sector counterparts, making them appealing to value investors. The recent rally has helped bridge this valuation gap to some extent.
“The undervaluation of PSU stocks presented a lucrative opportunity for investors. With the ongoing reforms and strategic initiatives, the potential for growth in these stocks is substantial,” said an investment strategist.
The rally in PSU stocks has also been supported by positive global market trends and increased foreign institutional investment. As global markets remain buoyant, the spillover effect has benefited Indian stocks, including PSUs.
While the rally has brought significant gains, experts caution investors to remain vigilant. The market can be volatile, and it is essential to conduct thorough research and consider long-term prospects before making investment decisions.
The recent surge in PSU stocks reflects a combination of government reforms, strong financial performance, attractive valuations, and positive global market trends. As the Modi government continues its push for privatization and strategic initiatives, the performance of PSU stocks will remain a focal point for investors in the coming months.

Science & Environment

Investors favour risk-free funds | The Express Tribune

28 May 2024
by admin

KARACHI:

Most investors have parked their savings in risk-free money market and income funds through mutual fund companies, keeping their investment notably low in the riskier Pakistan Stock Exchange (PSX). This is despite the fact that the bourse has outperformed all assets, offering a historically high return on investment of 90% in the first 11 months of the outgoing fiscal year 2023-24.

The money market and income funds have offered returns on investment of up to 20%, according to the Mutual Funds Association of Pakistan (MUFAP). The assets under management (AUM) at the mutual fund companies soared to Rs2.41 trillion in March 2024, rising by 57.5% from Rs1.53 trillion in March 2023.

A large number of investors, mostly individuals, parked their savings amounting to Rs1.19 trillion in the money market (mostly in T-bills) through the asset management companies (AMCs) in March 2024. They made the second largest investment of Rs692 billion in income funds (instruments like Pakistan Investment Bonds/PIBs and term finance certificates/TFCs). They invested a total of Rs181 billion in equity (at companies listed at Pakistan Stock Exchange/PSX) in March 2024, which remained significantly low compared to the other assets.

While talking to The Express Tribune, National Investment Trust (NIT) Chief Operating Officer Manzoor Ahmed said a large number of investors have opted to invest in the money market, earning a guaranteed return of around 20-21% without taking the risk of losing investment in equity products at PSX and other riskier instruments.

To recall, the central bank’s key policy rate stands at a record high of 22% at present, giving investors the sense they would end up earning a handsome return from the money market. MUFAP’s infographics exhibit that investment in money market and income funds has continued to rise since the central bank resumed increasing interest rates in 2019 and 2020.

Ahmed said the PSX benchmark KSE 100 Index has soared to 76,000 points at present compared to around 40,000 in June 2023, offering a return of around 90%. “This is one of the historically high returns.”

MUFAP reported the return on investment in equity at 26.09% in March 2024. Ahmed said, “This is (however) one of the happenings that the stock market has maintained the record-breaking spree for quite some time despite the interest rate remaining at historical highs.” Historically, the stock market has underperformed amid high-interest rates and vice-versa, he recalled.

He said investors have poured the second largest investment into income funds. The instruments of income funds are like PIBs and TFCs, which are long-term money market instruments. Again, on behalf of the investors, mutual fund companies have heavily invested in the long-term income funds on the outlook that the central bank would soon start the cycle of cutting interest rates. Despite expected cuts in the policy rate, the return from income funds would remain handsome at around 15% going forward, Ahmed said.

He said investors are making new investments in equity (at PSX) these days on the outlook that interest rates would go down soon. “The funds in equity are expected to ramp up as the market (PSX) may cross the 80,000 or 90,000 points threshold ahead of securing the next International Monetary Fund (IMF) loan programme and projected investment coming from friendly countries like Saudi Arabia, UAE, and Qatar.”

Shariah-compliant instruments

Another trend suggests people are quickly migrating investments into Shariah-compliant instruments through mutual fund firms from conventional ones. Infographics suggest the Shariah-compliant investment would overtake the conventional one in a matter of a few months or in less than a year.

MUFAP reported the investment in Shariah-compliant instruments stands at Rs1.15 trillion compared to Rs1.18 trillion in conventional products, suggesting a ratio of 49:51 respectively in March 2024. The ratio stood at 45:55 in 2023 and 39:61 in 2022.

Overseas investors have doubled their investment through mutual fund companies to over Rs4.03 billion in March 2024 compared to Rs2.05 billion in March 2023. The investment through digital accounts crossed over Rs8 billion in the month under review compared to Rs1.84 billion in the same month of the last year.

The major investors through mutual funds are individuals and others (including public limited companies, associated companies, and fund of funds). They have invested a total of Rs926 billion and Rs941 billion, respectively. Among other investors through the mutual fund companies are banking and financial institutions (FIs), provident funds, gratuity funds, and pension funds.

Published in The Express Tribune, May 29^th, 2024.

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Science & Environment

Paytm retail and MF investors say ‘Paytm Karo’; stock…

16 May 2024
by admin

NEW DELHI: One97 Communications, which operates the popular fintech brand Paytm, has been included in the MSCI Emerging Markets Small Cap Index.
According to the fintech company, this inclusion reflected the increasing confidence of both domestic and international investors in Paytm, as seen by the significant stake increases from foreign portfolio investors (FPIs), domestic investors, and leading Mutual Funds like Mirae and Nippon India Mutual Fund.
Paytm is one of 29 stocks included in the MSCI Small Cap Index, likely driving USD 273 million inflows, crucial for benchmarking Indian companies internationally.
The inclusion is part of MSCI’s routine review aligning with evolving market conditions, set for May 31, 2024. MSCI (Morgan Stanley Capital International) is a global leader in equity, fixed-income, and hedge fund indices.
According to Paytm, Indian mutual funds increased their holdings in Paytm during the March quarter of 2023-24. Specifically, Mirae Mutual Funds increased their shareholding to 2.39 crore shares (3.76 per cent), while Nippon Mutual Funds raised their stake to 1.66 per cent from 1.05 per cent over the same period. As a result, domestic institutional investors (DII) witnessed an increase in stake to 6.86 per cent from 6.06 per cent.
According to the shareholding pattern available with the stock exchanges, Paytm said domestic mutual funds raised their stake in Paytm by 1.77 per cent, reaching 6.15 per cent from 4.99 per cent at the end of the December quarter of the fiscal year.
Retail investors’ shareholding also went up from 12.85 per cent to 14.53 per cent sequentially while Non-Resident Indians (NRIs) also saw an increase from 0.67 per cent to 0.85 per cent, it said.
Meanwhile, FPI shareholding in Paytm rose by 2.49 per cent to 20.19 per cent in Q4-2023-24 as new investors including Tiger Pacific Capital, Societe Generale and Norway’s Government Pension Fund Global invested in the stock.
In February this year, Morgan Stanley Asia (Singapore) Pte. – ODI purchased 50 lakh shares of Paytm worth Rs 243.6 crore in a bulk deal, the company said.
Abhilash Pagaria, head, of Nuvama Alternative and Quantitative Research, remains extremely bullish on India, especially with active participation from mutual funds and HNI/retailers in the Indian equity markets. Paytm has 60.4 per cent holdings by FIIs as of the March quarter of 2023-24.
Following NPCI’s approval on March 14, 2024, to onboard OCL as a Third-Party Application Provider (TPAP) on the Multi Payment Service Provider API Model, Paytm has expedited the integration with Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank.
All four banks are now operational on the TPAP, streamlining the process for Paytm to shift user accounts to these PSP banks.
The fintech company is now focusing on UPI Lite wallet to move the users who prefer wallets for low-value everyday payments. Paytm UPI Lite acts as an on-device wallet, allowing users to store funds and make payments on the go. It offers lightning-fast payments that never fail with no pin requirement.

Science & Environment

Gold outperforms Nifty over a 5 year time frame:…

15 May 2024
by admin

Gold holds a special place in the hearts of Indians, cherished not only for its cultural significance but also as a symbol of wealth and prosperity. Recent trends indicate that this affinity for gold is not just confined to individuals but is increasingly shared by central banks worldwide. Gold is seen as a strategic asset class for investors to diversify portfolios.
In a column in ET, Amrita Farmahan, the CEO of Ambit Global Private Client says that gold has shown steady returns of mid to high teens over the last 1, 3, 5, and 7 years. Over the past 5 years, gold has even outperformed the Nifty 50, with a Compound Annual Growth Rate of 18%. It has matched Nifty returns in the last five years.

Several global trends further bolster the investment thesis for gold. Central banks, including those of China, India, and Russia, are steadily increasing their gold reserves. According to Farmahan, the trust in dollar assets was shaken when the U.S. froze dollar assets due to sanctions on Russia. Without another currency option, central banks from various countries like China, India, and Russia are actively increasing their gold reserves. Gold is becoming the preferred choice for central banks, and their buying reduces the gold available in the market.
ALSO READ | What is 24 karat gold? Know difference between 999 vs 995 fineness gold

Another factor pushing up the value of gold is the significant quantitative easing (QE) measures, along with increasing debt and interest burdens in the U.S. and Europe, she says.. Last year, U.S. debt increased by $3.1 trillion, while government revenue stood at around $4.5 trillion annually. Interest payments on debt reached approximately $870 million. Over the past 20 years, U.S. debt as a percentage of GDP has risen sharply from 55% to 122%. Additionally, the practice of money printing is expected to persist. Gold serves as a safe haven asset amid concerns of currency debasement, she adds.
In the past, gold prices surged when the Fed funds rate peaked in 2000, 2006, and 2019. These peaks in interest rates signaled economic weakness and prompted the implementation of QE. Given the expected peak in the Fed funds rate and current signs of weakening U.S. data, another round of QE seems likely. If this happens, gold prices are likely to rise once more, she says.
One more small trend is Chinese retail investors moving their money from real estate and stocks to gold. It’s expected that U.S. retail investors will do the same eventually. Currently, assets in U.S. Gold ETFs are down by a third from their highest point. Critics may question gold’s lack of regular income like cash flows or dividends. However, gold has been valued for thousands of years, indicating its enduring appeal. This suggests that the risk-reward balance for investing in gold is appealing, she adds.

Gold broke out of its usual trading range in early March. This breakout marks the fourth significant breakout since 1971, with the previous ones occurring in 1971, 1978, 2004, and 2019. Each of these breakouts has resulted in rewarding returns for investors.

In 2002 and 2019, gold saw increases due to expectations of quantitative easing. Similarly, current movements in gold prices reflect concerns about debt, quantitative easing, and the vulnerability of the U.S. dollar. Additionally, gold serves as a valuable hedge in portfolios against equities, as it typically performs well when stocks decline, providing investors with strong returns during bear markets, she says.
ALSO READ | Why is RBI buying gold? Reserve Bank of India purchases nearly 13.3 tonnes of gold in Jan-Feb 2024
Farmahan is of the view that having gold in your portfolio decreases volatility while offering appealing returns. For example, during the financial crisis of 2008, gold surged by 26% while stocks plummeted. Similarly, in 2011, gold rose by 31.7% amidst a bear market for equities. Even in 2020, amid struggles in the stock market, gold increased by 28.0%. Over the 2000s, while the S&P 500 experienced a slight annual decline of 1%, gold saw an average annual increase of 14%. These instances demonstrate gold’s track record of delivering strong returns and suggest it may continue to do so in the future.

When it comes to allocating assets, the best portfolio includes a mix of investments that don’t move in sync. It’s even better if they move in opposite directions, so if one, like stocks, isn’t doing well, others can balance it out. Gold fits this strategy perfectly. We recommend a 10% allocation to gold for moderate-risk investors. The preferred way to invest in gold is through Gold ETFs and Sovereign Gold Bond Funds, she concludes.

Science & Environment

Byju’s unable to pay salaries as funds locked: Founder…

2 March 2024
by admin

MUMBAI: Byju Raveendran, founder and CEO at troubled edtech startup Byju’s hit out at a group of investors, stating that their move to disable the company from using the funds raised through the rights issue has hindered disbursement of salaries to employees. “….I regret to inform you that we will still be unable to process your salaries…..Unfortunately, a select few (4 out of our 150+ investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries,” Raveendran said in a letter to employees on Saturday which was reviewed by TOI.“At their behest, the amount raised through the rights issue is currently locked in a separate account,” Raveendran said, adding that despite the successful closure of its $200 million rights issue, the company is facing a crisis. Byju’s said that it is making attempts to ensure that the salaries are paid by March 10.
Four of the firm’s investors— Prosus, Peak XV Partners, General Atlantic and Sofina had approached the National Company Law Tribunal (NCLT), seeking a stay on the rights issue, stating that there are serious allegations of siphoning off funds by the company’s promoters and the company is being investigated by the Enforcement Directorate (ED) and Ministry of Corporate Affairs (MCA). Although the court allowed Byju’s to go ahead with the rights issue, it passed an interim order, directing the startup to keep the funds received as part of the rights issue in a separate escrow account. The court also said that the funds should not be withdrawn till the disposal of the oppression and mismanagement suit filed by the investors against the company’s management.
“It is an agonizing reality that some of these investors have already reaped substantial profits – in fact, one of them has made a staggering eight times their initial investment in Byju’s. And yet, their actions convey a callous disregard for our lives and livelihoods,” Raveendran told employees.
The cash starved company had been banking on its rights issue to raise capital and meet its current liabilities. Byju’s will now have to call an EGM (extraordinary general meeting) to seek shareholder approval and increase authorised capital. “Countless hours have been spent exploring every possible avenue, engaging our legal teams, and advocating for your rights. However, despite our best efforts, we are left with no option but to confront the heart-wrenching reality that we are temporarily unable to provide you with the financial support you deserve,” Raveendran said.
Byju’s is locked in a bitter fight with its investors, majority of whom also voted to oust Raveendran as the CEO and restructure the firm’s family-run board.

Science & Environment

Global investors’ confidence in Pakistan rises | The Express…

23 November 2023
by admin

KARACHI:

Pakistan has won back confidence of global investors as the country risk premium fell significantly from the peak of over 14% in June while its dollar-denominated Eurobond prices rose notably.

Topline Securities CEO Mohammed Sohail said on social media platform X “Pakistan’s country risk premium has fallen significantly from its peak of 14.13% on June 27, 2023 to the current level of 3.35%. This shows building investor confidence in Pakistan post-IMF standby arrangement (SBA).”

The reduction in risk premium signals the revival of global investors’ trust in Pakistan’s equity and debt instruments from the earlier negative stance.

On the other hand, prices of Pakistan’s Eurobonds worth $1 billion maturing in April 2024 surged to 94.08 cents from near 50 cents in June.

Prices of other Eurobonds and Sukuk also maintained their uptrend since the IMF awarded a $3 billion loan programme at the end of June 2023.

Talking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said the fall in risk premium and the improvement in Eurobond prices both suggested that there was no risk of default by Pakistan on foreign debt repayment as compared to high default fears before the SBA.

The government’s decision to let foreign investors in debt and equity markets move their funds in and out of Pakistan despite default risks, has helped revive their confidence.

Read: Pakistan’s Eurobonds jump to multi-year highs

Pakistan has also recently lifted restrictions on foreign companies operating in the country on fully repatriating profits and dividends to their headquarters abroad after improvement in the country’s foreign exchange reserves.

Such companies freely repatriated profits in October, which came after an unannounced moratorium over the past about 18 months.

Though the foreign exchange reserves are still low and financing from global creditors and international investors is not materialising, Tariq noted that the IMF executive board’s approval of the release of second loan tranche of $700 million would encourage other global creditors to unlock the promised funding.

He recalled that the UAE had assured the IMF about two weeks ago that it was committed to providing promised funds to Pakistan. In addition, multilateral and bilateral creditors have pledged around $10 billion in flood relief in Geneva in January 2023.

Published in The Express Tribune, November 24^th, 2023.

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