RBI’s Monetary Policy Committee has kept Repo Rate unchanged at 4% amid rising inflationary pressure and a grim economic outlook. Here are the highlights and implications of the Credit Policy.
Credit Policy Update
Mutual Fund Flows – June 2020
- Firstly, Net inflows into Equity Mutual fund schemes saw a sharp decline in June 2020.
- Moreover, SIP inflows continued their slide for the third consecutive month.
- But, average AUM of Debt Fund increased by 7.2% to INR 12.36 Lakh Crs.
Download the full report to take a look at the detailed analysis of Mutual Fund flows for the month of June 2020.
Liquid Funds – Way Forward
There has been an introduction of the following regulatory changes:
- 100% MTM in liquid Funds
- 20% of liquid portfolio to be invested in liquid assets
- Stamp duty on purchases @ 0.005%
Due to these changes, overnight and liquid funds are losing their attractiveness.
What is the impact and way forward for institutional investors who have a longer investment horizon?
Applicability & Impact of Stamp Duty on Mutual Fund Units
Finance Act 2019 have made several amendments to the Indian Stamp Act 1899.
With this change, stamp duty will be applicable on mutual fund units, effective from 1st July 2020.
Will our mutual fund investors contribute more towards the economic reforms? Check out our anaylsis report on mutual fund returns.
Mutual Fund Flows – May 2020
This report analyses the inflows/outflows to the major Mutual Fund categories over the past 3 months.
- Which category faced redemptions?
- Which category got additional inflows?
What is evident is that money was chasing quality assets.
Higher Borrowing – RBI Move Awaited
The government on Friday evening steeply revised upwards its 2020-21 borrowing programme by 53.85% to Rs 12 lakh crore. It was earlier estimated to be Rs 7.8 lakh crore, indicating that the Centre is giving shape to an imminent and sizeable fiscal package to arrest the COVID-19 related slowdown.
The above revision in borrowings has been necessitated on account of the COVID-19 pandemic.
Here is our take on the revised borrowings and what RBI can do next…
Knowledge Series: The RSI Technical Indicator
Relative Strength Index or RSI is a price momentum oscillator used widely in Technical Analysis of stock prices. This series strives to explain practical application of RSI without going into nuance of mathematics in constructing RSI.
RSI should be applied in conjunction with the current state of stock as RSI behaves differently in trending stock and in range bound stock. Thus RSI behaviour can provide insight into Trending/Trendless state of Stocks and Indices.
Please read the complete report to understand the importance of this indicator with stock examples.
Impact of SEBI Circular – 30th April
SEBI released a circular dated 30th April 2020 defining the relaxations on compliance requirements for Mutual Funds. Official circular can be found here.
All these changes have an effect on the markets. Here is our impact analysis of the effects on the market when these regulations are implemented.
What Led to the Franklin India Crisis
The financial industry in India is seeing some unusual and even some unprecedented events due to COVID19. As everyone is trying to maintain some sanity, Franklin Templeton takes an unexpected step by closing six debt fund schemes. This has definitely shaken up the Indian Mutual Fund industry.
Here’s our take on what lead FT to take this step.
Knowledge Series: COVID-19 Crisis – India VIX and Market Returns
We have all been reading about India VIX in the news. But what is VIX and what does it really mean?
In a nutshell, India VIX is a volatility index based on the NIFTY Index Option prices. The index measure the expected market volatility over the next 30 calendar days.
Read our complete article to understand how COVID affected India VIX.