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A keenness to ensure compliance to regulatory guidelines has led the RBI to initiate strong actions against entities like HDFC Bank, Mastercard and American Express, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday.
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Launched in the year 2004, the open ended equity scheme is pre-dominantly invested into mid-cap stocks. The fund’s performance is benchmark to Nifty Midcap 100 TRI Index. The scheme is available as both direct and regular fund with annual recurring expense being 0.61% and 1.71%, respectively, as on July 31, 2021. The mid size fund has an asset size of Rs. 6725.8 crore and is categorized as a high risk fund as per the Mutual fund risk-o-meter. NAV of the fund as on August 5, 2021 is 200.86.
SIP in the fund can be planned for a minimum sum of Rs. 500 while for lump sum payment the minimum investment needed is of Rs. 5000. Rs. 10000 monthly SIP started in the fund is now worth Rs. 5.30 lakh.
Top holdings of the fund include Mphasis, Emami, Bayer CropScience, Birlasoft, Sundaram Finance etc.
Notably among the mid cap funds that have completed 10 years, L&T Midcap fund tops the chart with a 19.97% 5-year average daily rolling return over a ten-year period and has outperformed S&P BSE Mid Cap Index by 4.19%.
This mid cap fund from the Edelweiss AMC is CRISIL 4-Star rated and has outperformed the benchmark Nifty Midcap 100 TRI over the one year period with return to the tune of 81.87%. The fund was launched in the year 2007 and since launch has yielded return of 12.16%.
The assets under management of the fund are to the tune of Rs. 1486 crore and is again a moderately high risk plan given the mid cap exposure. Last NAV of the fund was 47.74. There applies an exit load of 1% in case of redemption before a period of 1 year.
SIP in the fund can be started for Rs. 500. A monthly SIP of Rs. 10000 started 3 years hence has grown to Rs. 6.13 lakh, i.e. a substantial growth during the period.
Top stocks in the fund’s portfolio include stock like Mphasis, Laurus Labs, Shriram Transport Finance, SRF, Dalmia Bharat, Gujarat Gas etc.
This is comparably a large fund attracting 10.48% of the investment into the category of Rs. 14,133 crore. Expense ratio of the fund is pegged at 1.82%. Both CRISIL and Value Research have accorded the fund a 4-Star rating.
Since launch in 2007, the fund has delivered a return of 14.29% and over the last year has underperformed the benchmark by a margin, delivering 78.67% during the past one year.
SIP in the fund can be planned for a minimum sum of Rs. 1000, while for the lump sum investment you need Rs. 5000. An investment of Rs. 10000 via monthly SIP started 3 years ago is now worth Rs. 6 lakh.
Top holdings of the fund include Supreme Industries, Coromandel International, Persistent Systems, The Ramco Cements, Thermax etc.
With a sizeable fund size to the tune of Rs. 12869 crore, the mid cap fund from the house of DSP Mutual fund is among the top performing funds over the last 10 years that has beaten the benchmark index. The fund is put under the high risk category and last NAV as on August 5, 2021 is 89.30. DSP Midcap fund carries an expense ratio of 1.83% which is lower than the category average.
63% of the corpus is invested into mid-cap stock, with remaining funds deployed in large cap and small cap stocks. Top stock holding of the fund include Balkrishna Industries, Max Financial, Supreme Industries, Atul Ltd., IPCA etc.
Over a 1-year period, the fund has delivered return of 56.11% underperforming the benchmark index.
SIP in the fund can be planned for a minimum of Rs. 500, while lump sum investment can also be made for just Rs. 500. SIP started in the fund 3 years ago has now become Rs. 5.52 lakhs.
Though the recent performance in mid cap funds has been outstanding in line with overall equities market withthe S&P BSE Mid Cap index delivering the second best returns on a year to date basis, investors can simply not be bogged down by impressive returns. They need to understand and be mindful that experts currently are advising caution when investing in such funds as the broader markets have seen a sharp rally of late.
“Macro-economic shocks over the last few years like demonetization, hastily implemented GST, IL&FS crisis & Covid-19 induced lockdowns have helped the large companies become larger and stronger, supported by scale and balance sheet strength. The smaller companies, however, have weakened and lost market share. Against this backdrop, when Covid-19 related uncertainty still lingers on, midcap valuations are close to all-time highs. We believe the markets are opting to ignore the risks associated with investing in smaller companies, but this could quickly reverse if global liquidity dries up or we encounter a Covid-19 third wave. We would advise the investor to tread with caution in the midcap & small-cap space,” said Sorbh Gupta, Fund Manager- Equity, Quantum AMC.
But definitely with a longer investment horizon of more than 3-years you can add these mid-cap funds to your kitty to generate a higher return over the investment term but at the same time be prepared for any moderate losses.
Mutual fund investment is subject to risk with exposure to stock market. Investors are advised to do their own research and take professional help before making any investment decision. Investments listed and suggested here are just for information and should be construed as investment advice.
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Of these parameters, the thresholds in respect of four parameters relate to operational performance of the borrowing entities, viz. Total Debt to EBIDTA ratio, Current Ratio, Debt Service Coverage Ratio and Average Debt Service Coverage Ratio. These ratios are required to be met by March 31, 2022.
“Recognising the adverse impact of the second wave of COVID-19 and the resultant difficulties on revival of businesses and in meeting the operational parameters, it has been decided to defer the target date for meeting the specified thresholds in respect of the above four parameters to October 1, 2022,” RBI Governor Shaktikanta Das said.
He said the RBI would continue to monitor the over 100 measures to ensure that the benefit percolates down to the targeted stakeholders.
“Against this backdrop and based on our continuing assessment of the macroeconomic situation and financial market conditions, certain additional measures are being announced today,” he said.
On-tap TLTRO
The scope of the on-tap TLTRO scheme, initially announced on October 9, 2020, for five sectors, has been extended to stressed sectors identified by the Kamath Committee in December 2020 and bank lending to NBFCs in February 2021. The operating period of the scheme was also extended in phases till September 30, 2021. Given the nascent and fragile economic recovery, it has now been decided to extend the on-tap TLTRO scheme further by a period of three months, i.e. till December 31, 2021.
Marginal Standing Facility relaxation
On March 27, 2020, banks were allowed to avail of funds under the marginal standing facility (MSF) by dipping into the Statutory Liquidity Ratio (SLR) up to an additional one per cent of net demand and time liabilities (NDTL), i.e., cumulatively up to 3 per cent of NDTL. To provide comfort to banks on their liquidity requirements, including meeting their Liquidity Coverage Ratio (LCR) requirement, this relaxation which is currently available till September 30, 2021, is being extended for a further period of three months, i.e., up to December 31, 2021. This dispensation provides increased access to funds to the extent of Rs 1.62 lakh crore and qualifies as high-quality liquid assets (HQLA) for the LCR.
LIBOR transition
The transition away from London Interbank Offered Rate (LIBOR) is a significant event that poses certain challenges for banks and the financial system. The Reserve Bank has been engaging with banks and market bodies to proactively take steps. The Reserve Bank has also issued advisories to ensure a smooth transition for regulated entities and financial markets.
In this context, it has been decided to amend the guidelines related to (i) export credit in foreign currency and (ii) restructuring of derivative contracts,” Das said.
Banks will be permitted to extend export credit in foreign currency using any other widely accepted Alternative Reference Rate in the currency concerned. Since the change in reference rate from LIBOR is a “force majeure” event, banks are also being advised that change in reference rate from LIBOR/ LIBOR related benchmarks to an Alternative Reference Rate will not be treated as restructuring, he said.
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| Current market price | Rs 222.75 |
|---|---|
| Target price | Rs 290 |
| Gains | 30.00% |
According to Motilal Oswal healthy demand momentum has been witnessed across key segments/key channels (except T&B OEM) since Jun’21 for Apollo Tyres. The brokerage says that the European Union operation margin is benefitting from the restructuring at the Netherlands plant. The pricing also offers some comfort for the company. Interestingly, Apollo Tyres raised the prices by 3-4% in the first quarter of FY 2021-22 and also raised the prices by another 3-4% in the month of July.
Capital expenditure in FY22 is estimated at Rs 20 billion at the consolidated level, with India business capital expenditure at Rs 18 billion (residual for the AP plant ramp-up and maintenance capital expenditure ) and Rs 2 billion for EU (for maintenance). It foresees the next leg of expansion for PCR in FY24 for addressing demand in India as well in the EU.
Apollo Tyres offers the best blend of earnings growth and cheap valuations. The stock trades at 12.3x/9.6x FY22E/FY23E consolidated EPS. We maintain our Buy rating with a target price of Rs 290 per share (12x Sep’23E consolidated EPS),” Motilal Oswal has said in its report.
Apollo Tyres is one of the leading tyre manufacturers in the country and abroad. It markets its products under our two global brands: Apollo and Vredestein. Apollo Tyres has multiple manufacturing units in India, the Netherlands and Hungary.
| Current market price | Rs 151 |
|---|---|
| Target price | Rs 200 |
| Gains | 35.00% |
Brokerage firm, Motilal Oswal also has a buy on the stock of GAIL, with a target on the stock of Rs 200, from the current levels of Rs 151. GAIL is India’s leading natural gas company with diversified interests across the natural gas value chain of trading, transmission, LPG production & transmission, LNG re-gasification, petrochemicals, city gas, E&P, etc.
According to Motilal Oswal GAIL reported an EBITDA in line with its estimate, as better performance in Gas Trading and LPG and Liquid HC business offsets lower profitability in the Petchem segment (impacted due to the planned shutdown in 1QFY22).
GAIL reported an EBITDA in line with our estimate, as better performance in Gas Trading and LPG and Liquid hydro carbon business offsets lower profitability in the petrochemicals segment (impacted due to the planned shutdown in 1QFY22). Valuing the core business at 10x Sep’23E adjusted EPS of Rs 15.7 and adding investments, we arrive at our target price of Rs 200 per share. The stock is trading at 8.8 times FY23E P/E and 5.7 times FY23E EV/EBITDA. We reiterate GAIL as our top pick in the largecap oil and gas space,” the brokerage has said.
Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are at record highs, with the Nifty crossing the 16,000 points mark.
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The Reserve Bank of India (RBI) has decided to defer the deadline for achievement of four financial parameters under Resolution Framework 1.0 for Covid related stress to October 1, 2022.
The four parameters — Total Debt to EBIDTA ratio, Current Ratio, Debt Service Coverage Ratio and Average Debt Service Coverage Ratio — relate to operational performance of the borrowing entities. Originally, these ratios were required to be met by March 31, 2022.
RBI said the deferment in deadline is in view of the adverse impact of the second wave of Covid-19 and the resultant difficulties on revival of businesses and in meeting the operational parameters.
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The Reserve Bank of India (RBI) has revised upwards retail inflation projection for FY 22 to 5.7 per cent from 5.1 per cent, even as it retained real GDP projection at 9.5 per cent.
The revised quarterly retail inflation projections are: 5.9 per cent in Q2 (5.4 per cent earlier projection); 5.3 per cent in Q3 (4.7 per cent); and 5.8 per cent in Q4 (5.3 per cent) of 2021-22.
“Since the start of the pandemic, the Monetary Policy Committee (MPC) has prioritised revival of growth to mitigate the impact of the pandemic. The available data point to exogenous and largely temporary supply shocks driving the inflation process, validating the MPC’s decision to look through it,”RBI Governor Shaktikanta Das said.
The Governor observed that supply-side drivers could be transitory while demand-pull pressures remain inert, given the slack in the economy.
He emphasised that a pre-emptive monetary policy response at this stage may kill the nascent and hesitant recovery that is trying to secure a foothold in extremely difficult conditions.
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Here you can check your eligibility and the minimum or maximum entry age according to HDFC Life.
| Parameters | Minimum | Maximum | |
|---|---|---|---|
| Age at entry (last birthday) | 40 years | 80 years | |
| Single Life | Joint Life | No Limit | |
| Purchase Price In Rs | 2,23,048 (Yearly) | 2,22,635 (Yearly) | |
| 2,26,560 (Half-yearly) | 2,26,140 (Half-yearly) | ||
| 2,28,416 (Quarterly) | 2,27,992 (Quarterly) | ||
| 2,29,592 (Monthly) | 2,29,166 (Monthly) | ||
| Annuity payout (Rs) per frequency | 12000 (Yearly) | No Limit | |
| 6000 (Half-yearly) | |||
| 3000 (Quarterly) | |||
| 1000 (Monthly) | |||
| Source: HDFC Life |
The annuity rates differ depending on the purchase price range. According to HDFC Life, the purchase price bands are as follows:
| Band | Purchase Price (Excluding GST) |
|---|---|
| BAND 1 | Less than Rs. 2,00,000 |
| BAND 2 | Rs. 2,00,000 to Rs. 4,99,999 |
| BAND 3 | Rs. 5,00,000 to Rs. 9,99,999 |
| BAND 4 | Rs. 10,00,000 to Rs. 24,99,999 |
| BAND 5 | Rs. 25,00,000 and above |
| Source: HDFC Life |
By citing an example, HDFC Life has stated on its official website that “For a 60-year old male annuitant who wishes to purchase a life annuity with return of purchase price with corpus of Rs 25 lacs will get monthly annuity of Rs 11,213. Likewise, for a 60-year old male and 55 year female, who wishes to purchase a Joint life annuity with 100% annuity to secondary annuitant with return of purchase price with corpus of Rs 25 lacs will get monthly annuity of Rs 11,071.”
Through ECS/NEFT, the annuity payment will be instantly credited to your registered or specified bank account. From the date of purchase of the plan, the annuity will be paid in arrears at the end of the specified annuity payment frequency. This means that annuity payouts for annual frequency will occur one year after purchase, half-yearly frequency will occur six months after purchase, quarterly frequency will occur three months after purchase, and monthly frequency will occur one month after purchase. Annuity payments for other than yearly frequencies shall be as follows:
| Frequency | Annuity Instalment (per frequency) |
|---|---|
| Half-yearly | 98.45% of Yearly Annuity x ½ |
| Quarterly | 97.65% of Yearly Annuity x ¼ |
| Monthly | 97.15% of Yearly Annuity x 1/12 |
Survival Benefit
For Single Life: For Life Annuity with Return of 100% of Purchase Price: Annuity Payments will be made in arrears for as long as Annuitant is alive, as per the chosen mode of annuity payment.
For Joint Life: For Joint Life Last Survivor Annuity with Return of 100% of Purchase Price (ROP) on death of the last survivor: Annuity will be paid in arrears for as long as the Primary Annuitant and/or Secondary Annuitant is alive, as per the chosen mode of annuity payment.
Death Benefit
For Single Life: For Life Annuity with Return of 100% of Purchase Price: On death of the Annuitant, the annuity payment shall cease immediately. The Purchase Price shall be payable to nominee(s) / legal heirs.
For Joint Life: For Joint Life Last Survivor Annuity with Return of 100% of Purchase Price (ROP) on death of the last survivor:
Maturity Benefit: There is no maturity benefit provided under this plan.
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The Reserve Bank of India (RBI) plans to conduct four variable reverse repo rate (VRRR) auctions in the fortnight beginning August 13 till September 24, to absorb surplus liquidity from the banking system.
RBI Governor Shaktikanta Das underscored that the VRRR auctions should not be misread as a reversal of the central bank’s accommodative monetary policy stance.
The quantum of VRRR will increase by ₹50,000 crore with each auction. The first VRRR will be for ₹2.50 lakh crore, the second (on August 27) will be for ₹3 lakh crore, the third (on September 9) will be for ₹3.5 lakh crore, and the fourth will be for Rs 24 lakh crore.
There has been a high appetite for VRRR, going by the bid-cover ratio. Das assured that the system-level liquidity will still be more than ₹4 lakh crore after the conduct of four VRRR auctions.
The RBI will continue with its overnight fixed-rate reverse repo auction.
The surplus liquidity in the banking system was at ₹8.5 lakh crore as of August 4.
The Governor said RBI will conduct two more Government Security Acquisition Programme (G-SAP) operations of ₹25,000 crore each on August 12 and 26.
The purchase of G-Secs will be across the yield curve.
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The Monetary Policy Committee has decided to keep key rates unchanged amidst rising inflationary pressures.
“The MPC voted unanimously to keep the policy repo rate unchanged at 4 per cent. It voted with a 5:1 majority to continue with the accommodative stance as long as necessary to support growth,” RBI Governor Shaktikanta Das, who chairs the MPC, said on Friday after the bi-monthly meeting.
The six-member MPC has kept the repo rate (the interest rate at which banks borrow from the RBI to overcome short-term liquidity mismatches) steady at four per cent since it last cut this rate by 40 basis points from 4.40 per cent in May 2020.
Retail inflation has remained for two consecutive months above the RBI’s upper target range of six per cent. It stood at 6.36 per cent in June.
The MPC met in the shadow of the two recent inflation trends above the tolerance band of inflation target, Das said, adding that economic activity has broadly evolved in line with expectations in June and the economy is recovering from the second wave. Monsoon is doing well and some high-frequency indications are picking up.
Economic activity is likely to gather pace with progressive vaccination, he further said.
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The Reserve Bank of India (RBI) has extended the on-tap Targeted Long Term Repo Operations (TLTROs) scheme by three months till December 31, 2021.
This is in view of the nascent and fragile economic recovery.
The RBI had, on October 9, 2020, first announced that it will conduct on tap TLTRO with tenors of up to three years for a total amount of up to ₹1 lakh crore at a floating rate linked to the policy repo rate. The scheme was available up to March 31, 2021, but was later extended.
Liquidity availed by banks under the scheme has to be deployed in corporate bonds, commercial papers, and non-convertible debentures issued by the entities in five specific sectors. This scheme was further extended to stressed sectors identified by the Kamath Committee in December 2020 and bank lending to NBFCs in February 2021.
The liquidity availed under the scheme can also be used to extend bank loans and advances to these sectors.
Investments made by banks under this facility are classified as held to maturity (HTM), even in excess of 25 percent of total investment permitted to be included in the HTM (held to maturity) portfolio.
All exposures under this facility will also be exempted from reckoning under the large exposure framework (LEF).
As per RBI data, under on-tap TLTRO, banks had availed ₹5,000 crore on March 22, 2021, and ₹320 crore on June 14, 2021.
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