June 13, 2017

What's happening in Madhya Pradesh wrt rule of law

"napm india" <napmindia@gmail.com>
Date: Jun 13, 2017 6:09 PM
Subject: Press Note | June 13, 2017: Leading Activists Found Shocking Anarchy in Madhya Pradesh leading to and following Death of Farmers in Police Firing & Torture

> Press Note on Mandsaur Police Firing : 13th of June
> New Delhi | June 13, 2017: Following a call given by Jai Kisan Andonlan of Swaraj Abhiyan, NAPM, Kisan Sangharsh Samiti of MP, Bandhua Mukti Morcha and several farmer organisations, a delegation of their representatives went to visit Mandsaur in Madhya Pradesh where 7 farmers were killed in a police firing on 6th of June. The delegation comprised about 25 representatives from Gujarat, Maharashtra, Tamil Nadu, West Bengal, Bihar, UP, Haryana, Rajasthan and Delhi, besides local farmers and farmer leaders. These included Ms. Medha Patkar, Swami Agnivesh, Dr. Sunilam, Paras Saklecha, Kalpana Parulekar, Avik Saha, Ajit Singh, Balakrishnan and Yogendra Yadav.
> What follows are some of the key observations made by this delegation.
> Law & Order, Legal & Human Rights – Nightmarish Situation
> ·         Democratic Rights & Human Rights at an unbelievable low in MP – Constitution & Laws of India seem not to apply here – has it ceded from the Union of India?
> ·         Police & Civil Administration of Ratlam District keep strong surveillance on, illegally stop (from visiting Mandsaur) & arrest activists like Medha Patkar, Swami Agnivesh, Yogendra Yadav & Avik Saha, with lifelong adherence to peace and non-violence, on ground of breach of peace!!
> ·         In agitation-free Neemuch District, police illegally prevent Yogendra Yadav, Dr. Sunilam, Avik Saha & Ajit Yadav from interacting with villagers; use sheer brute force to push them out of MP into Rajasthan
> ·         Delegation interacts with farmer leaders and activists and finds complete break-down of rule of law; reign of terror as Districts affected by and surrounding locations of farmers agitation cordoned off and jungle law implemented
> ·         Independent persons and agencies barred entry while full might of state appears to be influencing & torturing witnesses to the murder of farmers by police, causing disappearance of material evidence and running an extortion racket by intimidation
> Probable Background Causes of Present Situation – Deep Rooted & Long Neglected Life & Livelihood Issues of Farmers
> ·         Already un-remunerative and further downward spiraling prices of all produce (Report annexed), despite MP reporting highest agricultural growth in the country and winning prizes, seems to have lead to wide spread discontent; State Government's inaction in this crisis fuelled unrest
> ·         Non-fulfillment of ruling BJP's Manifesto promise of 50% profit above cost price compounded with the slow down of purchasing power of traders in mandis due to demonetisation completed the cycle of despair, disillusionment and discontent
> ·         Local reports complained of extreme bureaucracy at mandis & looming threat of disentitlement of rights; e.g. compulsory registration of seller-farmers only through Aadhar, downgrading of ration entitlement under PDS ration if sales above 50 quintals made, 50% payment through bank, which forthwith deducts all loans
> ·         Drought of 2 consecutive years have severely depleted the MP farmers and have led to the 4th highest farmers' suicides in the country in 2015; with added pressure of loan repayment and almost 50% price fall in produce, farmers have reached the end of their tether
> ·         Non-payment & whimsical small payments of insurance for crop loss made farmers desperate for redressal of their financial grievances    
> Murder of Farmers by State of Madhya Pradesh  
> ·         Since the State has already admitted that firing was done without any formal order and without following due process, the death of farmers in police firing is nothing but murder by machinery of state
> ·         The heinous and brutal killing of a farmer by beating and torture in the hands of police, after the gunning down of 5 farmers, is unbelievably shocking & can only be termed state sponsored terrorism
> ·         It is sad to note that Madhya Pradesh has learnt no lesson from the findings of the Commissions that investigated the Multai Firing during Congress regime, when 23 farmers were brutally gunned down; Again, there was no dialogue with the protestors before firing; such dialogue could have easily prevented this unnecessary loss of life
> We Demand
> ·         The State of Madhya Pradesh must immediately ensure remunerative price for all crops grown in Madhya Pradesh in fulfillment of the promise made by BJP in its manifesto (cost + 50%) and also ensure guaranteed purchase of the produce through market stabilization funds and other mechanisms; agriculture is a state subject and Madhya Pradesh, like Karnataka can ensure relief for farmers through agriculture price commission and allied statutory interventions  
> ·         We demand that farmers of Madhya Pradesh be given a one-time waiver of all loans, which, coupled with remunerative prices, will pull them out of the vicious cycle of debt and death though debt-trap
> ·         The State of Madhya Pradesh must immediately, in consultation with farmers organizations (1) appoint an Independent Commission headed by a sitting High Court Judge (2) prepare comprehensive TOR of the Commission to go into all circumstances that lead to the murder of farmers by police firing
> ·         The State of Madhya Pradesh must immediately register murder case against all policemen and administrative officers who ordered firing on farmers and executed the order
> ·         The State of Madhya Pradesh must immediately withdraw all cases registered against farmers in connection with the Farmers Movement in Madhya Pradesh during 1st to 10th June 2017
> ·         The State of Madhya Pradesh must immediately ensure that comprehensive crop insurance is provided for all crops grown in Madhya Pradesh and not just a few crops as presently stipulated under the PMFBY
> ·         Opposition parties like the Congress who have extended support to the farmers must establish their credential by ensuring that in the states of Punjab and Karnataka, where they are in power, there is no shooting on and killing of farmers, MSP at cost + 50% is given in terms of the recommendation of the Swaminathan Commission  and all loans of farmers are waived

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June 11, 2017

Brokerage firms' Jan-Mar performance

A story I wrote last week on brokerage firms' Jan-Mar 2017 financials -- http://www.cogencis.com/differentiators/ShareNews.aspx?newsId=937744

Institutional brokerages Jan-Mar PAT growth better than retail firms
    Profits of large domestic brokerage firms with a heavy dependence on retail clients fell in Jan-Mar even as those with a decent institutional clientele saw profits rise.
    During the quarter, trading turnover rose across the board on stock exchanges.
    The mixed performance of large brokerage firms followed a slide in the profits across the board in the December quarter.
    Cash market turnover on the National Stock Exchange of India rose 20% on quarter to 14.38 trln rupees in Jan-Mar, which was much better compared to the 10% on-quarter decline seen in Oct-Dec.
    Key factors driving up stock market trading volumes were a sharp rise in benchmark equity indices and increase in trading activity by institutional investors.
    Investor sentiments picked up in Jan-Mar after the previous quarter had seen it taking a big hit. The December quarter had seen subdued stock market activity due to the demonetisation-induced fall in corporate earnings in many sectors. Also, foreign funds outflow in Oct-Dec, on the back of uncertainties around Donald Trump's win in the US presidential elections.
    Net inflow by foreign portfolio investors in the equity cash market was 365 bln rupees in Jan-Mar, compared with a net outflow of 343 bln rupees in Oct-Dec.
    On gross turnover basis, an indicator of overall trading activity, FPIs traded more in Jan-Mar.
    The sum of FPIs' purchases and sales rose 16% on quarter to 6.44 trln rupees in Jan-Mar. This was an improvement over the 5% on-quarter fall in the previous quarter.
    Net inflow of mutual funds into the cash market fell 64% on quarter to 115 bln rupees in Jan-Mar. But they still fueled the trading momentum in the stock market as their gross cash market turnover--sum of purchases and sales--shot up by 31% on quarter to 2.34 trln rupees during the March quarter.
    The equity derivatives market of the NSE too, saw total turnover rise by 11% on quarter to 276.24 trln rupees in Jan-Mar. NSE makes up for over 99% of all equity derivatives trading in the country,
    BSE's cash market turnover jumped up 132% on quarter to 4.23 bln rupees in Jan-Mar, which stock market analysts was aided in a big part by bulk trades involving transfer of shares by promoters.
    In the previous quarter, BSE had seen it cash market turnover fall 12% on quarter to 1.82 trln rupees.

    Out of four large brokerage firms, for which Jan-Mar earnings data was available from their listed parent companies, two firms recorded on-quarter rise in profit from broking activities while two firms saw it fall on quarter.
    All these four brokerage firms saw a 9-14% on-quarter fall in profit in the December quarter.
    ICICI Securities, which operates ICICIdirect, the largest online retail broking platform in the country, is pre-dominantly dependant on revenues from its retail clients.
    The firm saw its net profit decline 6% to 830 mln rupees in Jan-Mar. It was, however, less severe than the 11% on-quarter fall in net profit recorded by the brokerage firm in the previous quarter.
    Faring better was Kotak Securities, having a decent institutional business along with national retail operations. The firm's net profit in Jan-Mar stood at 1.21 bln rupees, up sharply from 850 mln rupees in Oct-Dec.
    Kotak Securities' net profit had fallen 11% on quarter in Oct-Dec. Revenues rose 28% on quarter to 3.67 bln rupees in Jan-Mar.
    According to the firm, the firm had 1.4 mln secondary market customers at the end of March, up from 1.3 mln rupees a quarter ago. The number of its branchises and franchises, however, declined to 1,281 from 1,300.
    Edelweiss Financial Services Ltd carries out equity broking operations through its subsidiary, Edelweiss Broking, and also has a significant institutional business. The firm also other subsidiaries, including one into commodity broking business.
    In Jan-Mar, the subsidiaries of Edelweiss Financial, collectively clocked a net profit of 400 mln rupees, up 29% from the previous quarter. Their collective revenues rose 12% to 2.49 bln rupees during the March quarter.
    Retail-oriented brokerage firm, Motilal Oswal Securities, earned 1.98 bln rupees as revenue from broking activities in Jan-Mar, up 8% from the December quarter, according to an earnings presentation of the parent company, Motilal Oswal Financial Services Ltd, which is listed on the stock exchanges.
    The broking firm said the March quarter saw disproportionate high cash volumes in the market due to large-scale inter-promoter transfers.
    This led to a muted revenue growth during the quarter and the broking firm's net profit fell to 180 mln rupees in Jan-Mar from 214 mln rupees in Oct-Dec recording a 16% decline.
    In the December quarter, Motilal Oswal Securities had seen its net profit fall by a lower degree of 9% on quarter.
    These four broking firms are among the top 20 broking firms in terms of numbers of unique client codes held with the NSE. Every investor account of a brokerage firm carries a unique client code at the time of transacting on the stock exchanges.
    Data from NSE showed that as on Apr 30, these four brokerage firms had 1.20 mln unique client codes, accounting for around 26% of aggregate across all NSE brokerage firms.
    All in all, the March quarter saw an across-the-board rise in turnover on the stock exchanges and institutional investors traded more than they did in the previous quarter.
    But since retail investors were not as active as the institutional investors during the quarter, the brokerage firms with heavy reliance on retail clients did not do as well as those with a better retail-institutional mix of business.

June 09, 2017

Flows in balanced MF schemes increase multi-fold in Jan-May

An article I wrote for the news organisation I work for currently.

Flows in balanced MF schemes increase multi-fold in Jan-May
    Flows into balanced schemes of mutual funds have shown extra-ordinary growth in the last three years, with the first five months of the current calendar year witnessing more net inflow than in the whole of last year.
    As the stock market continues to run up there is a growing number of investors who perceive balanced funds to be less riskier than equity funds and at the same time giving higher returns compared to income funds, said Vivek Mahajan, head of research at Aditya Birla Money.
    Mutual fund investors are turning slightly wary of the high valuations in the stock market and are getting cautious by turning to balanced funds.
    Balanced funds are hybrid in nature investing in both, equities and debt securities, with an orientation towards either. An equity-oriented balanced fund, would have 50-65% exposure to equities and balance in debt, and vice-versa for debt-oriented balanced funds.
    The balanced funds recorded net inflows of 286 bln rupees in Jan-May this year, exceeding the net inflow of 247 bln rupees in entire calendar 2016. This is the highest in over seven years, data of flows from Association of Mutual Funds in India showed (see table).
    In May, assets under management in balanced funds crossed the one-trln-rupee mark ending the month at 1.02 trln rupees, more than double from the year ago level.
    Equity funds have recorded net inflows worth 335 bln rupees in Jan-May while income funds have seen net inflows of just 230 bln rupees.
    Last year, balanced funds saw net inflows grow 16% on year, compared to 7.7 times on-year growth in income funds' net inflow and a 46% on-year fall in net inflows in equity funds.
    But it was in 2015 when flows in balanced funds increased dramatically. In that year, the net inflow in balanced funds jumped 3.7 times on year to 214 bln rupees, even as equity funds' net inflow increased just 74% on year and that in debt funds declined by 37%.
    According to analysts, the relationship managers in financial services firms and equity brokerage firms which sell financial products to retail investors find it easy to market balanced funds to existing and new investors as a safe product.
    Since November last year, when demonetisation made investments in real estate un-attractive, and with gold prices continuing to be subdued, the entire surplus investible surplus of most investors have been ploughing into equities and debt instruments.
    In their aggressive marketing of systematic investment plans, mutual funds are giving balanced funds the same importance as they typically give to equity funds.
    For instance, in the market commentary of its latest monthly factsheet for the current month, ICICI Prudential Mutual Fund said since the uncertainty of global events cannot be ruled out the equity market could be volatile in the near term and that new or first time investors looking for equity exposure could consider SIP in ICICI Prudential Balanced Advantage Fund.
    All balanced funds which invest minimum 65% in equities qualify as equity schemes under tax rules. Tax norms allow for zero long-term capital gains liability and tax-free dividends for equity schemes of mutual funds. The tax norms do not factor in the net exposure to equities after the use of equity derivatives to hedge.
    But some mutual funds also offer a variant of balanced funds which in law are equity funds but which have a net equity exposure of less than 65%. Typically known as balanced advantage funds these schemes provide tax benefits to investors by having 65% of their corpus as investments in equity shares at all times and additional significant exposure in the equity derivatives market which hedge a good part of their equity holdings.
    For instance, ICICI Prudential Balanced Advantage Fund, which had assets to the tune of 184 bln rupees in April, had 65.11% of it invested in equities and the balance in debt securities and money market instruments. But the net equity exposure of the scheme was 50.11% since it had equity derivatives positions in the form of stock futures and index futures and options to the extent of 15% of its AUM.
    The trend of robust inflows in balanced funds may continue for some more time till the current market rally lasts, according to Aditya Birla Money's Mahajan.
    Gold ETFs or exchange traded funds, which offer investors a non-physical way of investing in gold, have been steadily losing assets in the last four years. In Jan-May of current year, too, gold ETFs have seen net outflow of 3 bln rupees.
    The table below lists the trend in net inflow in select mutual fund
categories in the last few calendar years
            Net inflow (in bln rupees)
       Balanced   Equity   Income   Gold ETFs
       --------   ------   ------   ---------
2017*     286      335      230       -3
2016      247      463     1375       -9
2015      214      851      178       -9
2014       57      490      285      -17
2013      -11      -87      270      -18
2012       -4     -141      567       18
2011       13       68     -122       40
2010        8     -162     -835       17
* till May                       
Data source: AMFI