CHECK THESE FACTS OUT BEFORE INVESTING IN AN IPO…

     After a fairly long lull of over 5 years between 2010 and 2015, IPOs are back in the reckoning over the last couple of years. Apart from quality IPOs like Alkem, Dr. Lal Pathlabs, Interglobe Aviation, Avenue Supermart and Sankara Building Products that performed exceedingly well after their listings, IPOs on an average have performed very well post listing in the last 2 years. Additionally, there has been quality paper hitting the market. After ICICI Pru Life became the first insurance company to get listed through an IPO, both SBI Life and HDFC Life are following closely behind with their IPOs. Additionally, two PSU general insurers viz. GIC RE and New India Assurance are also planning an IPO. While IPOs raised $2 billion in the fiscal year 2016-17, we are likely to see IPOs of nearly $5 billion in the fiscal year 2017-18.

      

            

     

IS IT TIME FOR THE RBI TO CUT RATES MORE AGGRESSIVELY?

Over the last few weeks there have been some key data points that have raised concerns over the pace of rate cuts adopted by the RBI. It may be recollected that back in February 2017, the Monetary Policy Committee (MPC) had shifted its monetary stance from  “Accommodative” to “Neutral”. Over the last few quarters there have also been some real concerns about falling GDP growth rate. For example, the GDP growth rate for the first quarter ended June 2017 has come in at a low of 5.7%, which is a full 100 basis points lower than the Chinese rate of growth. While this fall in growth can be partially attributed to the demonetization, there is obviously more to it than meets the eye.                                                                                   Source:-Angel Broking Blog.

                                                                                

How India ranks in forex reserves among peers?

   There is an interesting irony in the chart below Saudi Arabia used to have forex reserves of over $750 billion prior to 2014. Over the last 3 years Saudi Arabia has depleted over $250 billion worth of forex reserves trying to balance its budget at a time when it was selling oil at below the breakeven rates. This has resulted in the dividends of cheap oil getting transmitted to countries like India. That perhaps explains why India’s forex reserves have surged from $274 billion in 2014 to $394 billion in 2017. There is one more contrast in the top-8 list as depicted in the chart below The other 7 countries have built their forex reserves largely on the strength of their strong trade related earnings. India runs a large trade deficit of nearly $150 billion per year but this forex reserves are largely driven by FPI and FDI investment.                                       

                                                                                                                                      Source:-Angel Broking Blog.

 

DEMONETIZATION AND GST COMBINE TO PUT PRESSURE ON Q1 GDP.

   

The Reuters consensus estimate for GDP growth for the first quarter ended June 2017 was slightly lower at 6.6%. However, the GDP growth for first quarter announced on 31st August was nearly 100 basis points lower than the Reuters consensus. For the quarter ended June 2017, the MOSPI announced India’s annualised GDP growth at 5.7% with the Gross Value Added (GVA) growth at 5.6%. Before getting into the granular details of the GDP growth, it needs to be remembered that GDP growth was one of the key advantages that the Indian economy enjoyed over China. In fact, just a year back when China was growing its GDP at 6.5%, India was growing its GDP at 7.5% making India the natural magnet for foreign portfolio investments and FDI flows.                                                                        

                                                                                                                       Source:-Angel Broking Blog.

WHY THE PROPOSED CHANGE TO OPTION EXPIRY RULES ARE IMPORTANT.

    The regulator has been consulting the exchanges about a proposed tweak to our existing equity and index options expiry rules. When a trader buys an option, he will be required to choose whether the option is for excise on expiry or not. This case specifically pertains to in-the-money options and the entire anomaly arises due to the different system of imposing securities transaction tax (STT) when an in-the-money option is left for expiry on the expiry day. To understand this proposed modification in rules, let us first understand the concept of in-the-money options in greater detail and why this discrepancy in the calculation of STT becomes so important.