SEBI has again tightened the compliance screws on Indian MFs. Mutual Funds will now have to mandatorily report change in investment terms to rating agencies. SEBI has mandated that all mutual funds must immediately report any change in terms like the extension of maturity of debt funds to the rating agencies and to the valuation agencies simultaneously. Earlier, funds had to only report such changes to the valuation agencies but were not under obligation to report the same to rating agencies. This shift will enable rating agencies to make a more informed judgement on the fund ratings.
According to an NDTV report, the government was unlikely to participate in the DHFL bailout. To avoid setting a wrong precedent, the government has reportedly decided to stay away from bailing out Dewan Housing. DHFL operations have come to a standstill with outstanding loans to banks and other creditors of Rs.100,000 crore. Apparently, the government does not want to get into a private sector company as it could create expectations in other similar cases too. DHFL is currently going through a forensic investigation for siphoning of funds to related entities from the company flows.
There was a return of all-round optimism in the stock markets as the Nifty closed above 12,000 marks. The US Indices gained as clarity emerged on the trade deal. On Thursday, the Nifty finally closed above the psychological 12,000 mark while the Sensex also closed at an all-time high. US markets as well as the European markets rallied on Thursday after China clarified that the US had expressed its willingness to rollback the earlier tariff hikes in a phased manner. The deal is expected to be signed at a neutral venue around middle of December and that is likely to address the global growth issue in a major way.
After a long gap the second REIT issue is expected to hit the market as Raheja Realty is slated to raise $500 million via the REITS route. Raheja Realty is likely to become the second entity after Embassy Office Parks REITS to raise money through the REITS route and also to get the REIT listed. Raheja plans to raise close to $500 million (Rs.3,550 crore) from the Indian markets. Earlier, Embassy had raised Rs.4,750 crore through its REITS IPO and the stock price had performed very well post listing. REITS are pass through instruments that help developers monetize assets and investors to buy financial assets.
Brent Crude bounced by 144 bps to $62.63/bbl on Thursday almost negating all the losses of Wednesday. After there were clear indications that both the US and China had agreed to a phased reduction in tariffs, the equity and oil markets bounced back sharply. The rollback of tariffs will be accompanied, analysts expect, with a strong China stimulus package too. However, gold prices eased to $1487/oz on Thursday on trade deal euphoria. On Thursday, gold lost some of its sheen after the imminent trade truce pulled up risky equities and worked against the safe haven investments like gold. However, the correction in gold price was just about 20 bps. There has been a steady accumulation of gold by central banks and that has typically left spot gold prices hovering around the $1500/oz mark.
The shape of the trade deal may be finally emerging. US-China agreed to roll back tariffs in a phased manner as part of Phase 1 of deal. Both China and the US will roll back their earlier penal tariffs on each other in a phased manner giving the first big hope to markets that the trade deal could happen quite soon. Global markets had been worried about the delay as the US and China generates over $40 trillion or close to 50% of the world GDP. Other issues like Huawei and security will be taken up in Phase 2 and they remain contentious issues. Trump had been keen to close the deal before the 2020 elections.
