Sebi Mulling Relaxed Norms For REITs, InvITs, Startups Listing

New Delhi: To make domestic capital markets more attractive, regulator Sebi has lined up wide-ranging relaxations to its norms for REITs and InvITs and an easier set of listing rules for startups.

Several attempts are being made to garner due attention from business houses in the country but all the efforts failed leading to Sebi reconsidering the proposal to give further relaxations.

The Securities and Exchange Board of India (Sebi) will consider these regulations in its board meeting next month, according to sources.

A consultation process is already underway for making the InvITs(Infrastructure Investment Trusts), REITs (Real Estate Investment Trusts) Regulations and to review the framework for

Institutional Trading Platform (ITP) for startups.

Sebi had notified the REIT and InvIT Regulations in 2014, allowing setting up and listing of such Trusts, which are very popular in some advanced markets. However, no single Trust has been set up as yet as investors wanted further measures, including tax breaks, to make these instruments more attractive.

While the government provided for certain tax benefits in the Budget this year, Sebi has now decided to further relax the rules.

Sebi's board is expected to consider an easier set of norms on REITs and InvITs. It may allow the REITs and InvITs to have up to five sponsors, as against the current norm for maximum three.

Under the proposal for REITs, Sebi would allow up to 20 per cent investment by such trusts in under-construction projects, up from a maximum of 10 per cent allowed currently.

Besides, relaxations would be made to provisions relating to compliance of minimum public holding norms, as also for investments by the associate entities of the trustees.

Sebi also proposed to rationalise the requirements under the Related Party Transactions, under which approval of 60 per cent unitholders apart from related parties, is required for passing a related party transaction.

Further, approval is required of 75 per cent unitholders, apart from related parties, for passing special resolutions such as change in investment manager, investment strategy and delisting of units.

Under the proposal for InvITs, Sebi may allow such trusts to invest in two-level SPV (special purpose vehicle).

The regulator plans to remove the restriction on the SPV to invest in other SPVs, thus allowing InvIT to invest in a holding company which subsequently holds stake in SPVs.

Currently, InvIT holds a controlling stake in SPVs that do not invest in other SPVs.

Besides, it is proposed to reduce the mandatory sponsor holding in InvIT to 10 per cent of the total units of such units on a post-issue basis for a period of three years, from the current requirement of 25 per cent.

The current requirement may limit monetisation for sponsors and reduce release of capital for them. Further, in certain circumstances, it may lead to sponsors putting money out of their own pocket in the InvIT to maintain the required 25 per cent stake.

Regarding startups, Sebi plans changes to the framework of Institutional Trading Platform (ITP), which has not seen much traction even though it was put in place in august 2015. Not a single startup has been listed on this platform till date.

The valuation concern has also discouraged startups for listing on the platform.

The rules were brought in to encourage Indian startups and entrepreneurs to remain within the country rather than go overseas for raising funds.

Sebi would consider an easier framework that allows more investor categories, relaxed shareholding norms and reduced trading lot amount.

Stay Away From Welspun India, Warn Analysts After 48% Fall In 4 Days

Welspun India shares were locked down in lower circuit for the fourth straight session on Thursday. Shares of one of the world's largest textile manufacturers have shed nearly 50 per cent of their value since Monday, leading to a market cap erosion of over Rs 4,500 crore.

Welspun India shares have crashed, following Target Corp's decision last week to cancel its contract with the company over the substitution of Egyptian cotton with non-Egyptian cotton in bedsheets and pillowcases sold between August 2014 and July 2016.

On Wednesday, Bed Bath & Beyond Inc became the fourth company to initiate review of Welspun India's bedding products. Wal-Mart and JC Penny have earlier initiated review of Welspun's products.
NDTV Profit spoke to three analysts to know if investors should buy Welspun India following the sharp selloff this week.

Gaurang Shah of Geojit BNP Paribas said investors should not buy Welspun India, unless somebody is a "great fan" of the company.

"There is too much news flows and the management's clarification is not helping. More cancellation of contracts is possible," Mr Shah said.

Technical analyst Sarvendra Srivastava also advised investors to stay away from Welspun India.

"When there is a corporate governance issue or when a company's trust is at stake, this market penalizes the stock... Welspun India is coming down on its own weight," he added.

Market analyst Sharmila Joshi said there are concerns that other textile manufactures may also get impacted because of the controversy around Welspun India.

"Either it's a deliberate mistake or some slip up of gigantic proportions... Investors should wait for clarity before buying this stock," she added.

Welspun India shares were down 10 per cent at Rs 53.55 as of 09.45 a.m., underperforming the 0.3 per cent gain in the broader Nifty.

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Rupee Slumps To 67.21 Against Dollar

Mumbai : The rupee depreciated by 16 paise to trade at fresh three-week low of 67.21 against the dollar at the forex market today following increased demand for the American currency from importers and banks.

The dollar firmed up against some global currencies on US interest rate hike hopes this year after the Federal Reserve Vice Chairman Stanley Fischer said country's economy was picking up, which weighed on the rupee, forex dealers said. However, a higher opening of the domestic equity markets capped the rupee's losses, they added. The local currency on Friday tumbled by 24 paise to close at three-week low of 67.05 against dollar on sustained demand for the US currency from banks and importers amid rise in crude oil prices. 

Meanwhile, the benchmark BSE Sensex recovered 57.53 points or 0.20 per cent to 28,134.53 in early trade.

Tokyo Stocks Open Higher On Weaker Yen

Tokyo stocks opened higher on Monday as the yen weakened further on speculation over central bank monetary policies and lifted investor sentiment.

The Japanese currency fell against the dollar for a second day after US Fed Vice Chairman Stanley Fischer signalled in a speech on Sunday that a 2016 rate hike is still under consideration.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda said in an interview published Saturday in the Sankei newspaper that there is "sufficient chance" the bank will add to its massive easing at next month's policy meeting.

The benchmark Nikkei 225 index climbed 0.52 percent, or 85.41 points, to 16,631.23 in opening deals, while the broader Topix index of all first-section shares rose 0.54 percent, or 6.99 points, to 1,302.66.

The dollar was trading at 100.59 yen in early Tokyo trade, up from 100.20 yen in New York.

"We expect the US dollar to consolidate this week with a modest upside bias," Elias Haddad, a senior foreign-exchange strategist at Commonwealth Bank of Australia said, Bloomberg News reported.

"There is room for US interest rate expectations to adjust a bit higher this week," Haddad said.

Investors are also awaiting a series of US and Japanese economic data due this week for further clues on central bank policies, analysts said.

"Investors will be focused on Fed Chair Janet Yellen's speech at the Jackson Hole symposium (Friday), but we don't expect her to provide any strong steer on the timing of the next rate hike," Capital Economics said in a note to clients.

The annual gathering of US and foreign central bankers in the US state of Wyoming is closely watched for their comments on the state of the global economy and monetary policy.

Piramal Enterprises Surges 15% In Just Three Days

Shares of Piramal Enterprises surged as much as 5 per cent today to Rs 1,854, hitting fresh 52-week high after the company announced acquisition of a US-based drug manufacturing firm.

Piramal Enterprises, which will be part of NSE's Nifty Next 50 basket from September 30, has rallied 15 per cent in three days. The Nifty Next 50 rejig was announced on Friday.

In a statement to the BSE aftermarket hours yesterday, Piramal Enterprises said that its US  subsidiary has entered into an agreement to acquire 100 per cent stake in Ash Stevens in an all-cash deal for up to $53 million. 

 Ash Stevens is a focused on development and manufacturing of high potency active pharmaceutical ingredients (APIs), which are substances used in the manufacture of drugs. The US-based company primarily operates from a FDA-approved commercial manufacturing facility located in Michigan.

Ash Stevens had revenue of $18.3 million in FY15. The transaction is expected to be completed by the end of this month.

Piramal Enterprises said the acquisition will add niche potent molecule manufacturing capabilities to its pharma solutions business.

Led by billionaire Ajay Piramal, Piramal Enterprises has presence in industries like healthcare, financial services, healthcare information management, glass packaging and real estate.

Piramal Enterprises has strongly outperformed the benchmark index in the past six months, surging over 90 per cent. The company had reported robust June quarter numbers, with net profit surging 32 per cent to Rs 231 crore on strong sales growth.

At 11:40 a.m., shares of Piramal Enterprises were up 1.3 per cent at Rs 1,794 as compared to a flat Nifty50 index.

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Hike Messenger Raises $175 Million Led By Tencent, Foxconn

New Delhi: Messaging platform Hike Messenger on Tuesday said it has raised $175 million in a new round of funding led by Tencent Holdings and Foxconn Technology Group, valuing the company at about $1.4 billion.

Existing investors - Tiger Global, Bharti and Softbank Group - also participated in this round.
This is the fourth venture capital round and the biggest to date for Hike, a company founded by Kavin Bharti Mittal, son of Bharti Enterprises Chairman Sunil Mittal.

The company said it is looking at acquisitions in technology and people, but ruled out an IPO in near future.

The latest round of funding takes the total investment to over $250 million so far.
"We will be investing this amount in services, people, office space and some long term bets in areas of machine learning, computer vision," Kavin Mittal said at a conference.

When asked if the company plans to go for an IPO, he said "it's too soon in our journey. We are only three-and-a-half years into the business. It typically takes 6-8 years for business to reach maturity".

In January 2016, Hike had announced it has a base of 100 million users. As much as 95 per cent of Hike users are based in India and 90 per cent of them are young and below the age of 30 year.
Hike users on an average exchange 40 billion messages per month, he added.

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Cipla Rises 3% Despite Missing Q1 Estimates

Shares of Cipla Ltd jumped nearly 3 per cent to hit intraday high of Rs 531.10 even after the pharma company reported lower-than-expected net profit in the June quarter.

The Mumbai-based pharmaceutical company's profit numbers were impacted by the Indian government's measures to cut drug prices.

Cipla's net profit came in at Rs 365 crore, compared with expectations of Rs 376 crore. On an annual basis, Cipla's net profit declined 44 per cent. A sharp jump of 40 per cent in research and development expenses also hurt the profit numbers. 

During the quarter, Cipla's operational profit came in at Rs 611 crore as against Rs 1,035 crore during the same quarter last year.

Meanwhile, CLSA has upgraded Cipla to 'outperform' from 'underperform'. It sees favourable risk-reward ratio at current levels and expects earnings growth will be strong in FY18-19. CLSA has a target price of Rs 570 per share.

On a year on year basis, Cipla shares are down 18 per cent.

As of 10:06 a.m., shares of Cipla traded 1.11 per cent higher at Rs 521.75, outperforming the Nifty which was trading on a flat note.

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Rupee Edges Higher Against Dollar, Rises To 66.82

Mumbai: The rupee recovered 7 paise to 66.82 against the US dollar in early trade on Tuesday on selling of the US currency by exporters and banks amid a higher opening in the domestic equity market.

Besides, weakness in the dollar against other currencies overseas supported the rupee, dealers said.

Moreover, domestic equities jumped, fuelling the uptrend. The rupee had lost 4 paise at 66.89 against the US dollar in Friday's trade due to sustained dollar demand from banks and importers.x

Meanwhile, the benchmark BSE Sensex rose by 37.64 points or 0.13 per cent to 28,190.04 in early trade today.

Infosys Loses RBS Deal, 3,000 Jobs To Go; Shares Fall

Infosys shares slumped over 3 per cent on Tuesday, following Royal Bank of Scotland's decision to cancel a project to set up a separate bank in the United Kingdom. RBS announced last week that it will not pursue its plan to separate and list a new UK standalone bank, Williams & Glyn (W&G), for which Infosys was a key technology partner.

The cancellation of the deal is likely to hit Infosys revenue to the tune of $40-$50 million during the current fiscal year, analysts said. This could translate into earnings per share cut of 1-2 per cent and job losses over the next few months, they added.

"Infosys has been a W&G program technology partner for consulting, application delivery and testing services, and subsequent to this decision, will carry out an orderly ramp-down of about 3,000 persons, primarily in India, over the next few months," Infosys said in a statement.

The loss of the five-year 300-million pound RBI deal could force Infosys to downgrade its FY17 revenue guidance for the second time this year, analysts said. Infosys had in July cut its annual sales outlook citing weak demand, which triggered a selloff in the stock. Infosys shares are down 10 per cent since July 14.

However, analysts told NDTV Profit that the weakness in Infosys shares is a good opportunity to accumulate the stock.

"The RBS deal accounts for just 0.4 per cent of Infosys' consolidated revenue... These are all normal business events, one should not give too much importance," said G Chokkalingam of Equinomics Research & Advisory.

SV Prasad of Chime Consulting said Infosys is the counter one should buy for exposure in the IT space. "Whenever it bounces, it bounces back very well," he added.

Infosys was the top Nifty50 loser today. As of 09.40 a.m., the stock traded off the day's low, down 1.8 per cent at Rs 1,042.95. Infosys underperformed the broader Nifty that traded flat.

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Petrol To Be Cheaper By Rs 1/Litre, Diesel By Rs 2

New Delhi: Price of petrol was cut by Rs 1 a litre and diesel by Rs 2 per litre on Monday, the fourth reduction in rates since July.

Petrol will now cost Rs 60.09 a litre in Delhi from midnight as compared to Rs 61.09 a litre currently, said Indian Oil Corp (IOC). The price of diesel will cost Rs 50.27 per litre as against Rs 52.27.

The price was last cut by Rs 1.42 a litre in case of petrol and by Rs 2.01 per litre for diesel on August 1.
 
"The current level of international product prices of petrol and diesel and rupee-dollar exchange rate warrant a decrease in selling price of petrol and diesel, the impact of which is being passed on to the consumers with this price revision," IOC said.

The movement of prices in the international oil market and rupee-dollar exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes, IOC added.

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Sensex Edges Lower, Nifty Hovers Around 8,650; Infosys Falls 3%

9:27 a.m.: Sensex edged lower in opening deals while 50-share Nifty was hovering around its crucial psychological level of 8,650 on the back of selling in index heavyweights like Infosys, Tata Motors, Larsen & Toubro and Sun Pharma.

The Sensex fell as much as 62 points to hit low of 28,091 and Nifty declined 25 points to 8,647.

Infosys was the top Nifty loser, the stock fell 3 per cent to Rs 1,035 after RBS cancelled a 5-year order for launching new bank. Infosys was technology partner for the new bank and order loss could hit annual revenue by $40-50 million. EPS estimates could be cut by 1-2 per cent and Infosys will cut 3,000 jobs over the next few months.
Tata Motors, Tech Mahindra, Larsen & Toubro, BHEL, Zee Entertainment, Bharti Airtel, HDFC, Hero MotoCorp and Bosch Ltd were also among the laggards.

On the other hand, Power Grid, BPCL, Yes Bank, Hindalco, HCL Tech, ITC, Cipla, Lupin and Adani Ports were among the gainers.

On the sectoral front, realty, IT auto, capital goods and consumer durable stocks were witnessing selling pressure while buying was seen in select banking, power and FMCG shares.

The broader markets were trading flat. The BSE mid-cap index jumped 0.18 per cent and the small-cap index climbed 0.03 per cent.

8:00 a.m.: Sensex and Nifty are set to open on a flat note in trades today tracking subdued trading of Nifty futures on the Singapore Stock Exchange.

The Nifty futures traded on the Singapore Exchange traded 0.07 per cent or 6 points lower at 8,710.

Meanwhile, most of the other Asian share markets were also trading with a negative bias. Japan's Nikkei was 0.27 per cent, Taiwan Weighted fell 0.41 per cent and Shanghai Composite was down 0.07 per cent.

Overnight, all three major U.S. stock indexes ended at all-time highs on Monday, extending their record-setting climb of the past few weeks as the dollar's weakness boosted commodity-related shares.

The S&P 500's earnings recession that began in the third quarter of 2015 is on track to end in the fourth quarter. Estimates show profit growth of 8.3 percent for S&P 500 earnings in the fourth quarter, Thomson Reuters data shows.

The Dow Jones industrial average ended up 59.58 points, or 0.32 percent, at 18,636.05, the S&P 500 gained 6.1 points, or 0.28 percent, to 2,190.15 and the Nasdaq Composite added 29.12 points, or 0.56 percent, to 5,262.02.

Back home, foreign institutional investors bought shares worth Rs 1,203.71 crore while domestic investors sold shares worth Rs 392.47 crore on Friday.

Infosys will be on investors' radar after RBS canceled a 5-year order for launching new bank. Infosys was technology partner for the new bank and order loss could hit annual revenue by $40-50 million. EPS estimates could be cut by 1-2 per cent and Infosys will cut 3,000 jobs over the next few months.

SP Apparels Makes Market Debut, Jumps 8%

SP Apparels shares jumped nearly 8 per cent to Rs 288.75 on its market debut, against the issue price of Rs 268.

The garment maker's IPO was oversubscribed nearly three times during August 2-4.

The portion set aside for qualified institutional buyers (QIBs) was oversubscribed 2.21 times, while non-institutional investors 5.10 times, as per NSE data.
Retail investors portion was oversubscribed 1.90 times. Price band for the IPO was fixed at Rs 258-268 per share.

This was the 16th IPO to have hit the market so far this year. SP Apparels is a manufacturer and exporter of knitted garments for infants and children.

At 10:17 a.m., shares of SP Apparels were up 6.5 per cent at Rs 285.4 against it issue price. In comparison, Nifty50 index was up 1 per cent.

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Aditya Birla Nuvo Sinks 25% On Merger Announcement With Grasim

Aditya Birla Nuvo sank as much as 25 per cent on Friday following its merger announcement with subsidiary Grasim Industries.

Post the merger, Aditya Birla Nuvo's financial services business will be spun off into a separate entity.

Under the deal, shareholders of Aditya Birla Nuvo will get 3 shares of Grasim for every 10 shares of Aditya Birla Nuvo. When Aditya Birla Financial Services is spun off from Grasim, shareholders will get seven shares of the financial services company for each share held in Grasim.
Analysts say the share swap ratio appears to be in favour of Grasim.

"Grasim, which is already a holding company becomes even more bigger conglomerate, to that extent it is slightly negative. Already it is trading at 40-50 per cent discount to its subsidiary Ultratech, now I think the discount will widen further given all these unrelated business are coming in to it," market expert Rakesh Arora told NDTV Profit.

"As of now it is not clear what benefit the minority shareholders are getting," he further added.

Meanwhile, global brokerage CLSA said the merger adds complexity and raises uncertainty on capital allocation.

As of 10.03 a.m. Aditya Birla Nuvo shares traded 18.60 per cent lower at Rs 1,271.9 while Grasim Industries shares were down 2.1 per cent lower at Rs 4,444.25. In comparision the broader Nifty was up 0.84 per cent.

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Aditya Birla Nuvo Q1 Profit Falls 57% To Rs 305 Crore

New Delhi: Diversified company Aditya Birla Nuvo on Thursday reported a 56.79 per cent decline in consolidated net profit at o Rs 305.15 crore for the fiscal first quarter that ended on June 30, 2016.

The company had posted a net profit of Rs 706.23 crore for the corresponding period a year ago.

Total income from operations was up marginally at Rs 3,194.36 crore in the period under review as against Rs 3,188.22 crore in the corresponding period a year ago, Aditya Birla Nuvo (ABNL) said in a filing to the BSE.

 "...net profit at Rs 305 crore de-grew year-on-year due to reduction of ABNL's share in Idea's net profit by Rs 148 crore. Net profit of Idea Cellular declined from Rs 855 crore to Rs 220 crore due to rise in interest and amortisation costs pertaining to the spectrum acquired in the earlier years," ABNL said.

Income from other financial services was up 43.32 per cent at Rs 918.48 crore during the quarter under review as against Rs 640.82 crore a year ago.

Textiles segment revenue was down 14.70 per cent at Rs 351.59 crore in the quarter under review as against Rs 412.19 crore in the year-ago period.

Similarly, revenue from agri-business was down 25.41 per cent at Rs 500.96 crore in the quarter under review as against Rs 671.66 crore in year-ago period.

Shares in ABNL, on Thursday, settled 3.5 per cent higher at Rs 1,565.70 apiece on the BSE, whose benchmark Sensex index finished up 0.31 per cent.

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BSE Head Sees Tighter Algo Trading Rules As Boon For Markets

Mumbai: Proposals by Securities and Exchange Board of India (SEBI) to tighten rules on algorithmic trading could help boost confidence in markets and won't hurt the country's second biggest bourse, the head of Indian exchange operator BSE Ltd told Reuters.

The main capital markets regulator last week unveiled a discussion paper on various limits on algo traders, including reduced speed limits at which trades are executed, due to concerns about fair access to markets.

"Well-designed forward looking regulations create better trust," Ashishkumar Chauhan, chief executive of BSE, Asia's oldest exchange, said in an interview with Reuters late on Wednesday.

"We are not worried about undue impact on our business," he said, adding that he expects the new rules could actually boost, rather than decrease trading volumes.

Algorithmic trading has become a major source of income for both the BSE and its larger rival the National Stock Exchange Ltd. The new rules could come into force as both exchanges look to go public.

The BSE is soon expected to file a listing application that bankers estimate could value the exchange at about $750 million to $1 billion.

About 90 percent to 95 percent of the BSE's order flow is currently being generated by algo trading, and some 40 percent to 50 percent of executed trades also being driven by such systems.

Algo traders have warned that the SEBI proposals, which are not yet final, are too restrictive and could force trading into overseas markets.

Indian markets have rallied in recent months on expectations of a recovery in earnings as the government has made progress in advancing some reforms, including recently passing a landmark goods and services tax.

($1 = 66.8800 Indian rupees)

Sun Pharma Shares Slump After Taro's Q1 Announcement

Sun Pharma shares slumped nearly 4 per cent on Thursday, following the earnings announcement of its US subsidiary Taro Pharma. Sun Pharma was among the top losers in the Nifty50 today.

Taro Pharma, which contributes 25 per cent to sales of Sun Pharma, on Wednesday reported 8.6 per cent rise in Q1 sales at $233.8 million on a smaller base. However, the company said that volumes slightly decreased. Taro Pharma's gross profit of $182.8 million increased $11 million in Q1.

"Sales from new products are beginning to accelerate. However, we continue to experience increased competitive intensity," said Kal Sundaram, CEO of Taro Pharma.


Taro's R&D expenses increased 23.2 per cent to $17.9 million, while selling, marketing, general and administrative expenses slightly decreased.

In another negative development, Taro Pharma's competitor Perrigo cut its 2016 guidance for the second time, citing higher price erosion.

Sun Pharma shares were down 1 per cent at Rs 809.20 as of 11.33 a.m., underperforming the broader Nifty that was up 0.3 per cent.

Rupee Slips To 66.90/Dollar In Early Trade

Mumbai: The rupee was trading lower by 18 paise at 66.90 against the US dollar in early trade today on higher demand for the American currency from importers and banks amid a lower opening in the domestic equity market.

Dealers attributed the rupee's fall to increased demand for the US currency, but dollar's weakness against some currencies overseas restricted the losses.

The rupee had ended higher by 12 paise at 66.72 against the US currency in yesterday's trade on dollar selling by banks and exporters on the back of persistent foreign capital inflows.

Meanwhile, the benchmark BSE Sensex fell 73.70 points or 0.27 per cent to 27,701.18 in early deals.

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Falling Interest Rates, Higher Taxes...Are Bank FDs Worth It?

Banks fixed deposits are among the most popular instruments among Indians as they provide fixed-guaranteed return. Though safety of capital and guaranteed returns are the two virtues of bank fixed deposits, tax inefficiency takes the charm away from them. The interest earned on fixed deposits is fully taxable.

Currently, banks are offering an interest of 7 per cent on five-to-ten-year deposits. But with inflation hovering around six per cent, the post-inflation and post-tax return for a person in the highest tax bracket is almost negligible.

So for those looking for better tax-efficient alternatives, here are some of the options:
1) Debt mutual funds: These are mutual funds which invest in debt papers like corporate debt, and government securities of various maturities and have the potential to deliver better returns than fixed deposits. "Banks deposits go through cycles and won't be able to offer higher returns in a falling interest rate scenario but as debt funds invest in a variety of instruments, they can deliver better returns, said Vidya Bala, head of mutual fund research at FundsIndia.

In a falling interest rate scenario, while new fixed deposits will give lower returns, debt funds actually tend to benefit and can even give double-digit returns, she added.

Apart from this, debt funds are more tax efficient than bank fixed deposits. Returns from debt funds after three years are subjected to 20 per cent tax but they can be adjusted against cost of inflation, thus reducing the tax impact to negligible levels. Short-term gains on debt funds are added to the income of the investor and taxed as per the slab, just like fixed deposits.

2) Arbitrage funds: An arbitrage fund is a type of equity mutual fund that tries to take advantage of the price differential (of the same asset) between the cash and derivatives (future) markets. The entire equity portfolio is hedged as they buy the same stock in cash and derivative markets. Their returns are comparable to that of debt funds. The biggest advantage they have is that they enjoy the same tax status as that of equity funds. Therefore, capital gains after one year as well as dividend received from arbitrage funds are tax free.

"The main attraction of arbitrage funds is taxation of returns but investors should keep in mind that unlike bank fixed deposits, returns from arbitrage funds is not fixed," says Jitendra Solanki, a certified financial planner.

However, it is the complexity of the product that keeps many investors away from these funds, say experts.

3) Tax-free bonds: As the name suggests, the interest income earned from these bonds are tax free. As they are issued by government entities, they are as safe as fixed deposits. This financial year, however, there would not be fresh issues of tax-free bonds. Since tax-free bonds are traded on exchanges, investors looking to put money in these bonds can buy them from secondary markets.

However, investors investing tax-free bonds should keep the liquidity factor in mind. As these bonds are thinly traded on exchanges, they may not be able to sell them whenever they would want to. Also, investors should consider the price at which the bonds are available in the secondary market.

"Investor should understand if they are buying at a right price and if the yields will continue to be attractive for them. The yield of a bond is the coupon rate divided by the market price of the bond," Ms Bala said.

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HDFC, Max Financial In Spotlight After Merger Of Life Insurance Business

Shares of HDFC and Max Financial Services were in spotlight today. HDFC's live insurance arm HDFC Standard Life Insurance reached agreement on Monday to take over smaller rival Max Life Insurance in an all-stock deal to create the nation's top private life insurer valued at nearly $10 billion.
 
HDFC Life shareholders would own 69 per cent of the new company and Max Life shareholders 31 per cent.
 
As part of the deal, Max Life is to be merged into parent Max Financial Services, which in turn will combine its life insurance business with HDFC Life, making it a publicly traded company.
Based on the current share price of Max Financial, the combined entity will be valued at about Rs 65,000 crore, said HDFC Life Chief Executive Amitabh Chaudhry.
 
In the first stage of the transaction, Max Life shareholders will get one share of Max Financial Services for every 4.98 shares of Max Life. In the deal to combine their life insurance businesses, Max Financial Services' shareholders will get 2.33 shares of HDFC Life for every Max Financial share held.
 
As of 9:49 a.m., shares of Max Financial Services traded 0.2 per cent higher at Rs 546.80 while HDFC was down 0.64 per cent at Rs 1,358.65.


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Idea Cellular Tumbles To 52-Week Low On Q1 Profit Slump

Idea Cellular shares slumped 6 per cent to their 52-week low on Tuesday, after the mobile carrier posted a 74 per cent drop in its June quarter net profit. India's third largest telecom company posted a net profit of Rs 220 crore in Q1, missing a consensus forecast of Rs 435 crore, according to Thomson Reuters data.

Idea Cellular attributed the profit slump to one-time finance cost for spectrum and lower voice revenues. Idea Cellular's voice volumes declined 1 per cent sequentially, while growth in the data segment also moderated.

Idea, along with India's biggest telecom company Bharti Airtel Ltd and Vodafone's India unit, have been investing heavily and slashing rates for their 3G and 4G services to retain customers as an impending launch of Reliance Industries telecom service launch expected to happen this year.
Idea said almost 1.8 million customers are now on Idea's 4G network while Reliance has a subscriber base of 1.5 million, according to its latest annual report.
Brokerage CLSA downgraded Idea Cellular to "sell" from "outperform" and cut the target price on the stock to Rs 94, citing high burden of spectrum. Idea's margins declined on higher network operating costs, it said.

As of 10 a.m., Idea Cellular shares traded 5.14 per cent lower at Rs 97.80, underperforming the broader Sensex that was down 0.10 per cent.

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Rupee Edges Lower Ahead Of RBI Monetary Policy Review

Mumbai: The rupee edged lower by 3 paise to 66.87 against the dollar in early trade on Tuesday on fresh buying of the American currency by importers ahead of RBI policy.

Forex dealers said strength in the dollar against some other currencies overseas and a weak trend in the domestic equity market in early trade also weighed on the rupee.

On Monday, the local currency ended seven paise lower at 66.84 on fresh dollar demand form banks and importers on the back of strong dollar in overseas markets.
Meanwhile, the benchmark BSE Sensex was trading 55.20 points, or 0.20 per cent, down at 28,127.37 in early trade.

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Essar Oil To Invest Rs 1,600 Crore To Upgrade Refinery, Boost GRM

Jamnagar: The country's second largest private sector refiner Essar Oil has chalked out plans to invest Rs 1,600 crore to upgrade its Vadinar refinery in Gujarat and boost gross refining margins over the next two-three years.

"Our 20 MMTPA Vadinar refinery is looking at earning an additional $1.50 (per barrel of crude) on its Gross Refining Margin (GRM) on the back of Rs 1,600 crore of investments.

"We have already invested Rs 400 crore during a 28-day planned shutdown of the refinery in September-October last year," Essar Oil Managing Director and CEO Lalit Kumar Gupta told PTI here.

"A further Rs 1,200 crore will be invested to make additional upgrades in the various refinery units over the next 2-3 years," he said.

The project will be funded through internal accruals only as company generates $1 billion EBIDTA and saves good amount of money every year, Mr Gupta said.

The shutdown or turnaround activity involved not just routine inspection and maintenance, but also entailed the conversion of the VGO-HT unit into a mild hydrocracker (MHC) unit and the setting up of facilities to process High Acid (TAN) crudes.

Ever since, the refinery has been able to convert its entire VGO (vacuum gas oil) production into higher margin products, he said.

Over the next 2-3 years, Essar Oil will invest Rs 1,200 crore to upgrade its naphtha hydro treater (NHT), isomerisation unit, continuous catalytic reformer (CCR) units and also facilities for further recovery of sulphur to improve its margins.

According to C Manoharan, Director-Refinery, Essar Oil, "Post the shutdown, we have been able to modify our crude blend to process higher quantities of ultra-heavy and high TAN crudes, and increase the production of high value distillates.

This has enabled Essar Oil to improve its crude and product mix significantly, which is reflected in our financial performance." Mr Gupta said, "We are committed to making our refinery among the best in the world through efficient deployment of resources. We will take a path of safety and sustainability in reaching our goals. We believe in setting new benchmarks for the industry with our efforts."

"With the shutdown having been successfully completed, EBITDA and PAT in the current financial year is expected to be significantly higher because of the full availability of the refinery, stable crude oil prices," added Mr Manoharan.

Refinery margins at Essar Oil have remained continuously above the industry benchmarks. In the quarter ended June 30, 2016, the CP-GRM of $10.29/bbl (unaudited) bettered the IEA margin for Singapore complex refineries by around $6/bbl.

The shutdown and subsequent investment decisions were taken with an eye on the surging demand for petro products in the country over the medium and long term.

The Vadinar refinery currently produces about 9 per cent of India's refining capacity and is also among the world's most complex refineries.

It has processed 91 types of crudes, including the dirtiest crudes available. The refinery is capable of producing high quality Euro IV and V grade products.

Commenting on retail operations, Gupta said the company runs a network of 2,470 operating retail outlets, while 2,850 additional outlets are in various stages of implementation.

"Essar Oil has a target of reaching 4,300 operational outlets by the end of FY17. The total capital investment in these outlets would be about Rs 2,100 crore, which will be mostly infused by franchisees. Once completed, the retail operations will have 5,000 outlets and generate employment for about 20,000 people," he said.

Essar Oil is also in talks to sell 49 per cent stake to OAO Rosneft of Russia and about 23.5 per cent to other oil trading companies.

With reference to the stake sale, Mr Gupta said, "Russians have not taken equity. As and when they buy, we will see about buying oil from Russia."

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Union Bank Shares Tumble After Q1 Profit Fall

Mumbai: Shares in Union Bank of India fell as much as 7.3 per cent on Monday in their biggest single-day fall in nearly seven months, after the state-run lender reported its first-quarter profit plunged 68 per cent on higher bad loans.

Union Bank said on Saturday net profit fell to Rs 167 crore for the three months to June 30, from Rs 519 crore a year earlier.

Gross bad loans as a percentage of total loans rose to 10.16 per cent as of end-June from 8.7 per cent at end-March, and compared with 5.53 per cent as of June 2015.
As of 10.02 a.m., Union Bank shares were trading at Rs 129, down 5.91 per cent as against a 0.2 per cent gain in the broader NSE Nifty.

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InterGlobe Aviation Shares Slump On Q1 Profit Drop

Shares of InterGlobe Aviation, the company that runs low-cost carrier IndiGo Airlines, slumped 7 per cent on Tuesday. Traders attributed the selloff in the stock to weak quarterly numbers.

InterGlobe had on Monday reported a 7 per cent fall in net profit for the fiscal first quarter on account of competitive air fares. InterGlobe's average yield (measure of average fare paid per mile, per passenger) dropped 8 per cent during the quarter because of fall in average ticket prices.

"We have posted yet another profitable quarter. However, profitability was lower than last year primarily because of competitive fare pressures," said InterGlobe president Aditya Ghosh.

Net profit for the April-June quarter fell to Rs 592 crore, from Rs 639 crore a year ago, while total income from operations rose 8.7 per cent to Rs 4,579 crore.

Market expert Hemindra Hazari said InterGlobe Aviation had run ahead of its fundamentals, so the correction was around the corner.

Technical analyst Ashish Chaturmohta said IndiGo has corrected sharply from Rs 1,150 - Rs 1,100 levels to around Rs 900, so a big fall in unlikely.

"Some amount of base is being formed in this stock and buying interest could emerge around Rs 880 to Rs 900 in IndiGo," he added.

IndiGo is India's largest airline, flying about one in three passengers in the country's booming air travel market, and it increased its fleet size to 109 during the quarter.

The airline said it is slowing down deliveries of Airbus' A320neo narrow-body planes to allow engine  supplier Pratt & Whitney to catch up on the production of upgraded engines.

"The A320neo operations continue to be a challenge," InterGlobe said in its statement.

Pratt & Whitney, a unit of United Technologies Corp, has encountered problems with slow engine start-up times and erroneous engine software messages in the new engine, already causing a delay in the delivery of planes to Indigo.

IndiGo has ordered a total of 430 A320neo aircraft, making it one of the European plane maker Airbus' largest customers.

The company also reduced its debt by Rs 459 crore to Rs 2,786 crore by retiring debt related to three aircraft taken on a finance lease.

As of 09.45 a.m., InterGlobe Aviation shares traded 5 per cent lower at Rs 924, underperforming the broader Nifty that was up 0.4 per cent.

Shares of other carriers - Jet Airways and SpiceJet - also fell 1-3 per cent, reflecting bearish sentiments around the aviation sector, post IndiGo's weak numbers.

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