July 25, 2018

Mixed impact expected of delivery-based settlement in stock F&O

A news article I contributed a couple of months back for the news organisation I work for presently:

Mixed impact expected of delivery-based settlement in stock F&O:

Come July, exactly 17 years after trading in it started, the single stock futures and options segment of the National Stock Exchange of India will witness delivery-based settlements, albeit in 46 of 207 stocks.

On the expiry date of the July contracts in derivatives the final settlement in 46 stocks will be through delivery and not on a cash basis.
Vikram Limaye, Managing Director of NSE, said, "In markets where underlying cash market for the stocks is liquid and prices converge smoothly on the expiry day, settlement methodology, whether cash or physically settled, will not make much of difference."

As head of NSE, Limaye has to be prepared since his exchange attracts 99% of the country's equity derivatives trading takes place, and his competitor, the BSE, already settles single stock derivatives through delivery and not cash.

In early April, the Securities and Exchange Board of India issued a directive to the stock exchanges to move stocks which did not fulfil newly enhanced eligibility criteria for being in the single stock derivatives list into delivery-based settlement.

So, as the April-end derivatives contracts expired and new contracts for July expiries were introduced, the NSE announced that the July expiry contracts of single stock derivatives in 46 out of 207 stocks will be physically settled.

These 46 stocks did not meet the newly enhanced eligibility criteria which included higher limits for recent average daily market capitalisation, median quarter-sigma order size, average daily delivery value and market wide position limits.

A majority of these stocks are mid-cap stocks and it included names such as Just Dial Ltd, NHPC Ltd, NIIT Technologies Ltd, Reliance Power Ltd, Siemens Ltd and Wockhardt Ltd.

But what follows afterwards is more significant for the market. The SEBI directive also said that even stocks which meet the enhanced eligibility criteria would be moved to physical settlement in a phased and calibrated manner.

It has not set a date for that, though.

According to NSE's Limaye, more stocks could be taken to physical settlement when the experience of the first lot of stocks provides the evidence that the change in settlement methodology led to a marked improvement in market quality.

In a physical settlement, at the end of the expiry date, all open long positions in single stock derivatives have to result in the investor effecting the final market to market margin payment and taking delivery of the shares. On the other side, all open short positions have to result in the investor taking delivery of shares and making payment of the final marked to market margin call.

This procedure is different from a cash settled mode where the longs and shorts do not take or give actual delivery shares. They have to pay or receive the final settlement profit or loss in case, when the expiry takes place.

The final settlement profit or loss is computed as the difference between the previous day's marked to market settlement price and the final settlement price of the relevant single stock derivatives contract.

Given the difference in modality of physical settlement from that of cash settlement, the market participants expect new risks to emerge.

For one, some participants think physical settlement creates a risk of short squeeze for short sellers.

In this case, investors with open short positions have to deliver shares if they let their contracts expire. Most short positions are pure short positions but are a part of any of several strategies deploying simultaneous trades in derivatives and cash market.

Thus, the short investor most likely will not have shares to deliver. He has to borrow the shares first.

And, here the importance of the securities lending and borrowing mechanism on the stock exchanges comes into play.

NSE's Limaye said traders usually cover their positions and have been using the securities lending and borrowing mechanism irrespective of the settlement methodology.

In fact, in a physical settlement system, there could be some positive impact on securities lending and borrowing mechanism's usage by market participants, he said.

However, some traders are worried since lending of shares is usually from institutional investors and the physical settlement will create a dependence on them for the supply of shares in the securities lending and borrowing mechanism.

Besides, securities lending and borrowing is not a preferable option for many as its involves paying interest, and having to buy the shares back from the market to replace the stock to complete the trade, a dealer with a mutual fund said.

"The physical settlement step by the regulator is to increase the internal strength of the equity derivatives market by ensuring only strong participants participate," said Sahaj Agarwal, vice president and head of derivatives at Kotak Securities.

At the same time the idea is to deter those who speculate heavily without financial capacity to incur heavy losses when things go wrong, he said.

In the last two years, single stock futures has contributed 9-12% of the total equity derivatives market turnover and single stock options has contributed another 6-7%.

Bulk of the total turnover is in index options trades which make up for 77-82%. Index futures' contribution in the last two years has been in the 3-5% range.

So, whatever the impact on volumes physical settlement will have on single stock derivatives, it won't shake up the overall derivatives market.

Index derivatives make up for bulk of volumes, and physical settlements are not possible in index derivatives. They will always be cash settled.

June 16, 2018

which funds sold manpasand beverages stock in may?

A story I wrote yesterday


Four of seven fund houses sold Manpasand Beverages' shares in May
    Three of seven mutual funds which held shares of Manpasand Beverage Ltd sold them completely in May while one fund house sold half the shares it held in the company, according to data from brokerage East India Securities.
    The fund house action was not surprising as the company's statutory auditor, Deloitte Haskins & Sells LLP had resigned suddenly on May 26 triggering a sell-off in the shares.
    Manpasand Beverages' shares fell by over 40% in the week following the auditor's resignation. As of close of trade today, the company's shares were quoting at 157.70 rupees on the National Stock Exchange, 65% below the share price on May 25, the day before the auditor's resignation.
    Interestingly, however, three fund houses which had holdings in Manpasand Beverages added more shares during the month, the data under review showed.
    But completely exiting the stock in May were Kotak Mahindra Mutual Fund, Baroda Pioneer Mutual Fund and BOI AXA Mutual Fund. The schemes of Kotak Mahindra MF sold 51,000 shares of Manpasand Beverages in May, and those of Baroda Pioneer MF and BOI AXA MF sold 30,000 shares and 25,313 shares, respectively.
    Another fund house BNP Paribas Mutual Fund sold 297,728 shares of Manpasand Beverages, reducing its total holding in the company by half.
    It was not clear whether these fund houses sold their holdings before or after May 26.
    The selling fund houses collectively held 0.6% stake in the company as of Apr 30, and BNP Paribas MF which did not exit completely held 0.26% stake as of May 31.
    Their small holdings made it easier for them to sell without triggering a further slide in the company's shares.
    But three mutual funds which held higher stakes in Manpasand Beverages as of Apr 30 did not sell any shares of the company at the end of May and, on the contrary, they added shares.
    The schemes of Motilal Oswal MF, which held 6.41 mln shares as of Apr 30, bought 320,556 more shares in May, increasing its stake in Manpasand Beverages to 5.9% from 5.3%.
    In a note to investors following the resignation of the company's auditor, Motilal Oswal Mutual Fund said it will take a call on its investments after the company's Jan-Mar earnings and the stance of the new auditor, Mehra Goel and Co.
    The fund house had justified its investment in Manpasand Beverages saying the company remains a key beneficiary of a consumer shift to fruit-based drinks from carbonated ones.
    SBI Mutual Fund's schemes bought 44,440 shares of Manpasand Beverages in May increasing the fund house's stake in the company to 4.5% from 4.4%, and ICICI Prudential Mutual Fund's schemes bought 89,901 shares of the company taking its stake to 1.1% from 1.0%.
    Scheme-wise data from Cogencis' Corporate Fundamental Database showed that of the three schemes of Motilal Oswal MF which held shares of Manpasand Beverages, MOSt Focused Long Term Fund bought 295,448 shares of the total 320,556 shares bought by the three schemes collectively.
    In the case of ICICI Prudential MF, nearly all the fresh purchases of 89,901 shares of Manpasand Beverages in May was in ICICI Prudential Indo Asia Equity Fund which did not have prior holding in the company.
    Among selling fund houses, BNP Paribas had three schemes holding shares of Manpasand Beverages as of Apr 30 and each of them sold nearly half their respective holdings in May.

Number of Manpasand Beverages' shares held by mutual funds

May 31 Apr 30
Motilal Oswal MF 6,727,683 6,407,127
SBI MF 5,111,156 5,066,716
ICICI Prudential MF 1,283,827 1,193,926
BNP Paribas MF 292272 590,000
Kotak Mahindra MF 0 51,000
Baroda Pioneer MF 0 30,000
BOI AXA MF 0 25,313

May 02, 2018

how "Thousands of People have lost their livelihoods to India's 'secret nuclear city'

From: "ESG List" <dissemination@esgindia.org>
Date: 01-May-2018 22:32
Subject: An Appeal for your Support as The News Minute reports how "Thousands of People have lost their livelihoods to India's 'secret nuclear city'" and other updates from ESG

Over the past decade, Environment Support Group has worked with Amrit Mahal Kaval Hitarakshana aagu Horata Samithi (AMKHS) in highlighting the widespread environmental and human rights violations that is being caused in Challakere, Chitradurga district of Karnataka due to the promotion of India's "science city".  Over 10,000 acres of Amrit Mahal Kavals, pristine grassland ecosystems that local communities have protected for centuries, were secretively diverted between 2007-14 to locate a range of military, industrial, defence, nuclear, research and energy facilities as part of this 'science city'. If ever there was a case to consider science as an hegemonic project, this is it. 

As years have rolled on, local communities are distressed by denial of access to their commons which they consider was 'grabbed' from them illegally and secretively.  Barring a few hundred acres, large swathes of these commons have not been put to any productive use.  Instead, the Kavals have been walled off to prevent communities from grazing their livestock and watersheds have been destroyed.  This has intensified the suffering of over 300,000 people and their 250,000 livestock living in about 65 impacted villages.  A variety of social and health infrastructure that was constructed by the local Panchayats over time, such as Goshalas (animal shelters), breeding centres (in collaboration with the Animal Husbandry department), schools, hospitals, roads and walking paths has become dysfunctional. Unable to support pastoral and agricultural activities, hundreds of families are migrating in search of alternate livelihoods. For those that remain, the long drought has made life extremely difficult.

AMKHS, a network of impacted communities and various supportive organisations and individuals, has tried its best to draw the attention of the Government and the wide public to the distressing conditions in the impacted villages.  Environment Support Group  approached the National Green Tribunal against such illegal promotion of this 'science city'. In response, NGT endorsed the petitioners' concerns and directed the State and 'science city' proponents to not proceed without securing necessary environmental and other clearances.  NGT had also directed that the traditional rights of impacted communities and biodiversity must be protected.   Subsequent efforts, including those under the direction of the Chief Information Commissioner of India, reveal that several project proponents have commenced operations without compliance with law and in violation of the NGT directions. Thus the egregious violation of human and environmental rights in the impacted villages continues with impunity.

Please view this video report on the prevailing situation in Challakere made by Raksha Kumar for The News Minute.

To secure the rights of the impacted communities, and to protect the unique biodiversity of the this semi-arid grassland, and also to respond to the distressing conditions of the impacted communities, ESG is working with AMKHS on advancing a variety of initiatives. This includes the need for a Resource Centre to help rehabilitate and rebuild thousands of forfeited livelihoods. Local communities are also keen that legal efforts are initiated to secure their environmental and human rights.  All this needs your support and cooperation, and we fervently appeal to you make a monetary contribution to support these causes.  If you wish to volunteer in support of these causes, please contact us or write to hemavathi @esgindia.org.

We are also happy to share that a critical examination of the 'science city' on the basis of screening of "Beerappa's Angst", a film conceptualised by Bhargavi S. Rao and Leo F. Saldanha for AMKHS, is being hosted by two premier academic/research institutes of India:  Sthayi of International Centre for Theoretical Sciences, Bangalore and Ashoka Trust for Research in Ecology and Environment at its Bangalore campus. Details of these two independent events are enclosed.  In case you wish to participate in these discussions, please RSVP the hosting organisations.

We also share with you the latest edition of Environment Justice Matters.

To know more about ESG, please visit our website.   

Thank you for your solidarity and support.

ESG Team

Environment Support Group
1572, Ring Road, Banashankari II Stage
Bangalore 560070. INDIA
Fax: +91-80-26713316

February 26, 2018

Gold MF schemes outperform other equity, debt schemes in last 2 months

A story I wrote, for the media company I work for presently, last week on gold ETFs & gold saving funds outperforming all other mutual fund categories, year to date, as equity markets waver & bond yields continue to rise

 Gold MF schemes outperform other equity, debt schemes in last 2 months

    Returns from gold saving funds and gold exchange traded funds have seen an uptick in the last few months on the back of a traction in the price of physical gold in the London bullion market.
    This has coincided with the recent decline in equity market and rise in bond prices. And, as a result, the gold funds category has outperformed equity and debt fund categories so far this calendar year.
    The year-to-date return of the gold saving funds category stood at 4.1% as of Feb 21, according to data from Value Research. This was significantly higher than 0-1% returns delivered by fund categories such as liquid funds, ultra short term debt fund and credit opportunities debt funds.
    Equity fund categories have been in the red in year-to-date performance, with equity multi cap funds down 4.6% and equity large cap funds down 2.6%, the data under review showed.
    The outperformance of gold saving funds has come on the back of gold ETFs touching one-year high in the last one month.
    HDFC Gold ETF, for instance, touched a one-year high on Feb 16, while Reliance Gold BEEs touched a one-year high on Jan 25.
    Domestic mutual fund schemes investing in gold include gold exchange traded funds. Gold saving funds do not invest directly but instead invest in the units of domestic gold ETFs.
    Gold ETFs are designed to mimic the price performance of physical gold in the London bullion market, carrying only the risk of foreign exchange rate fluctuations.
    On the London bullion market, the gold price touched a one-year high of $1,360.25 an ounce on Jan 25. Since then, it has shed some of the gains, but the positive effect on the performance of gold ETFs tracking the gold prices has remained.
    Gold prices have risen on the back of buying in two largest gold markets in the world--India and China. In January, India was loading up gold in preparation of the ensuing wedding season and China was readying for the lunar new year, said Chirag Mehta, fund manager of Quantum Gold Fund at Quantum Asset Management, in a monthly outlook note to investors.
    "In times of geo-political risks, weakening dollar or impending Fed rate cuts, gold has been perceived to be a safe haven currency," Abhishek Bisen, fund manager at Kotak Mutual Fund told Cogencis.
    The dollar index's recent nosedive to 88 mark led to sharp spike in commodities in general, and gold benefitted from the same and became one of the best performing asset classes in last three month, said Bisen, who manages Kotak Gold ETF.
    The outperformance of gold saving funds in the last two months follows a year-long period when it was underperforming almost all the fund categories during last year.
    As calendar 2017 ended, gold saving funds had turned in annual returns ranging from 2.3% to 3.9%. In contrast, equity multi-cap funds delivered annual returns ranging from 25% to 51%, and short term debt funds' annual returns came in between 5.2% and 9.4%.
    Gold prices in London bullion market had a golden run in 2010-2012. Around half the gains seen in this period were erased in 2013-2015. In 2016, gold prices rebounced again for a short while.
    The table below lists the returns from different mutual fund categories as of Feb 21:

                     YTD      6-month   1-year
                     ---      -------   ------
                              (in %)
Gold funds           4.1       4.5       2.2
Debt: Liquid         0.9       3.2       6.5
Debt: Ultra ST       0.9       2.9       6.4
Debt: Credit Opp.    0.7       2.3       7.1
Debt: Short Term     0.6       1.8       6.1
Debt: Income        -0.1       0.0       4.9
Debt: Dynamic Bond  -0.6      -1.1       3.6
Debt: Gilt          -1.6      -3.6       2.0
Equity: Large Cap   -2.6       5.9      16.4
Equity: Multi Cap   -4.6       7.3      18.6
Equity: Small Cap   -6.1      15.7      30.7
Equity: Mid Cap     -6.2       8.7      20.9
YTD: year to date


February 16, 2018

The case of PNB, Nirav Modi & Mehul Choksi -- 2 (Gitanjali Gems)

The case of PNB, Nirav Modi & Mehul Choksi -- 2 (Gitanjali Gems)

Mehul Choksi is named in CBI's FIR of Jan 30, 2018 He is MD of Gitanjali Gems Ltd, & the case could link to this company & its subsidiaries/associates

Gitanjali Gems Ltd
Consolidated financials (in Rs crore)
               EBITDA*      PAT**
H1FY18    472             133
FY17        930              166
FY16        910             104
*Earnings before interest, tax, depreciation & amm.
**Profit after Tax
Company has postponed Oct-Dec '17 results disclosure. No new date given.

Gitanjali Gems consolidated Net Debt (Long Term + Short Term - Cash) (in Rs crore) at the end of:
Sep'17     6,900
Mar'17     7,700
Sep'16     7,600
Mar'16     7,600
Figures are approximate

Auditors note in Gitanjali Gems FY17 (2016-17) Annual Report:
As of 31-Mar-17
Principal+Interest due in FY17 not paid to:
ICICI Bank (external commercial borrowings):$9.8 mln (around Rs 64 crore)
Bank of Baroda (ECB): $0.7 mln (Rs 5 crore)
LIC (non-convertible debentures): Rs 3.5 crore

As per Gitanjali Gems' annual report for FY17 (2016-17):
- working capital facilities from banks overdrawn by Rs 31 crore in FY17 due to non-servicing of interest
- outstanding working capital borrowing balance as of 31-Mar-2017 was Rs 4,994 crore, carrying interest rate charge of 5-13%
- the amount due for Principal+Interest payment in FY18 (2017-18) on external commercial borrowings is $43.5 mln (Rs 282 crore).

February 15, 2018

The case of PNB, Nirav Modi & Mehul Choksi -- 1 (Timeline)

The case of PNB, Nirav Modi & Gitanjali Gems -- 1 (Timeline)

Timeline in Nirav Modi - Punjab National Bank PNB scam case:

Feb 5: Media reports CBI filing FIR against Nirav Modi, Mehul Choksi (MD of Gitanjali Gems Ltd) & 2 others in a Rs 280 crore cheating case based on complaint by PNB

Feb 6: A tweet from says bookies were hearing about a Rs9,200cr scam on PNB matter

Feb 7: Gitanjali Gems informs stock exchange that Mehul Choksi is not involved in the dealings in the case (as reported by PTI on Feb 5) & is being falsely implicated

Feb 8: Gitanjali Gems informs stock exchange its Board Meeting will be held on Feb 14 to approve results for Oct-Dec 2017 quarter

Feb 13: Gitanjali Gems informs stock exchange board meeting of Feb 14 to approve Oct-Dec results is postponed as "due to certain pressing contingencies the quarterly results of the Company couldn't be finalized....."

Feb 14: PNB informs stock exchange it detected fraudulent transactions... worth $1771 million... in its branch.. (& that) the matter is already referred to law enforcement agencies.

General detail:
Nirav Modi's cos in India inclde Firestar Diamond International Pvt Ltd & Firestar International Pvt Ltd

February 10, 2018

Algo trading - no cause for panic: SEBI's Tyagi

"No cause for panic from Algo Trading... Algo trading adds liquidity to the market": SEBI chairperson Tyagi in today's press conference in response to my question to him on whether he agrees with the view that algo trades can accentuate any panic selling in the stock market.

February 02, 2018

Budget: Cap gains tax, dividend tax to reduce mis-selling by MFs

Story I wrote yesterday on impact of Budget move on LTCG and dividend distribution tax on mutual funds:


[C] BUDGET: Cap gains tax, dividend tax to reduce mis-selling by MFs
Cogencis, Thursday, Feb 1

    By Rajesh Gajra
    NEW DELHI - Equity schemes and equity-oriented hybrid schemes of mutual
funds will be hit by the Budget's imposition of a 10% tax on long term
capital gains from investments in equity oriented schemes of mutual funds.
    This came on the back of a similar 10% long term capital gains tax on
investments in equity shares of listed companies.
    Long term capital gains arise when an investment is sold off after a
minimum holding period of one year at a profit.
    The capital gains tax on equity funds will be applied prospectively with
January 31 being the base date for determining the cost of acquisition. The
derived capital gains will be taxed at 10% without inflation indexation
    The Budget has also made dividends declared by equity oriented funds
subject to a 10% dividend distribution tax.
    The impact of the new tax proposals will be widely felt by the mutual
fund industry.
    Just last year, the industry witnessed saw record inflows into equity
funds last year. In calendar 2017, equity funds saw net inflow of 1.49 trln
rupees, four times more than in the previous year.
    Further, since the definition of equity oriented funds covers all mutual
fund schemes which invest more than 65% of its assets in equity shares, the
long term capital gains tax will also cover several hybrid funds where the
equity investments form more than 65% of assets size.
    In the second half of last year, when some investors got concerned with
the high valuations of stocks in the equity market, fund houses aggressively
marketed equity-oriented hybrid funds as a safe bet.
    Hybrid funds attracted strong net inflow of 881 bln rupees last year, 4.2
times more than in calendar 2016.
    A chunk of this inflow went into equity-oriented hybrid funds which were
investing 65-80% in equities and the balance in debt securities.
    Further, the monthly and quarterly dividend plans of hybrid funds were
pushed the hardest in an attempt to lure investors who would generally invest
in bank deposits and were disappointed with falling interest rates on bank
    In fact, 41% of average assets under management of all hybrid funds in
the quarter ended September were in dividend plans, with the balance being in
growth plans.
    The 10% dividend distribution tax on dividends by equity oriented funds
will make dividend plans less attractive than before, and any one trying to
push dividend plans at the cost of growth plans will not find it easy any
more, G Pradeepkumar, CEO of Union Asset Management Co told Cogencis.
    The long term capital gains tax and the 10% tax on dividends will reduce
churn and reduce mis-selling, according to Aashish Somaiyaa, MD and CEO of
Motilal Oswal Asset Management Co.
    According to Pradeepkumar, the government had to levy a dividend
distribution tax on dividends as otherwise fund houses would have
circumvented the capital gains tax by using dividend plans to distribute
gains on investments to investors.
    Interestingly, the tax arbitrage between debt funds and equity funds
(including equity-oriented hybrid funds) will also reduce.
    According to Rajeev Thakkar, chief investment officer of PPFAS Mutual
Fund, taxation may cease to be a crtical factor in selection asset classes by
mutual fund investors.
    While long term capital gains tax on equity funds will be at 10% without
inflation indexation benefit, that on debt funds will continue to be at 20%
with inflation indexation benefit, he said.
    "Say a debt fund generates 8% returns and inflation is 5%. The tax will
come to about 20% on 3% or 0.6%. This comes to slightly less than 10% of the
returns," said Thakkar.
    According to Jimmy Patel, MD & CEO of Quantum Asset Management Co, fund
Houses may have to realign the income distribution strategy on their schemes,
and fund houses prone to use dividend stripping may get reigned in.  End

February 01, 2018

No more buoyancy in Personal Income Tax recepits expected?

In today's Budget 2018-19 presentation, the government's confidence in buoyancy in Personal Income Tax receipts appears to have waned.

Check these figures:

YoY change for Personal Income Tax receipts:
20%   (FY18 Revised Estimate to FY19 Budget Estimate)
25%   (FY17RE to FY18BE)
18%   (FY16RE to FY17BE)

Corresponding figures for Corporate Tax receipts:

YoY change:
10%   (FY18 Revised Estimate to FY19 Budget Estimate)
 9%     (FY17RE to FY18BE)
 9%     (FY16RE to FY17BE)

January 20, 2018

Net inflow in existing equity funds touch six-month low in Dec

A story I wrote earlier this week (in the media company I write for currently) on inflows in domestic MFs"

Net inflow in existing equity funds touch six-month low in Dec

    Existing open-ended equity funds saw net inflow slow down to a six-month low in December, as investors were guarded with many turning to investing in hybrid funds and alternative investment funds instead.
    Last month saw net inflow of 106.2 bln rupees flow into existing equity funds, sharply lower than the previous month's level of 173.7 bln rupees and the lowest in six months, data from Association of Mutual Funds in India showed.
    The analysis excluded close-ended funds and subscriptions garnered by new fund offers.
    The fall of net inflow of open-ended equity funds to a six-month low in December was primarily on account of a spurt in redemptions during the month to 220.6 bln rupees which was the highest monthly redemption level in more than a year.
    Redemptions have risen in the past two months. In the Nov-Dec period, total redemptions stood at 392.9 bln rupees, significantly higher than 256.9 bln rupees seen in the previous two months of September and October.
    High networth investors are booking profits in some of their current holdings in equity schemes of mutual funds and re-deploying the funds with alternative investment funds and portfolio management schemes, according to Kavitha Menon, a Mumbai-based investment advisor.
    According to Rishi Kohli, Managing Director at Pro Alpha Systematic Capital, lot of high networth investors and family offices with liquidity but scared of current high levels of equity markets were pouring in money into alternative investment funds that promise steady returns with negligible risk and 8-12% range of post tax returns which some of them are offering.
    This is reflected in the declining on-month growth rates in assets held by corporate investors and high networth investors in equity funds, excluding tax-saving funds.
    Assets held by corporate investors, which include family offices, in equity funds last month grew marginally by 0.1% on month to 1.11 trln rupees. In November, the same had seen an on-month assets growth of 4.2%.
    High networth investors' assets in equity funds rose 5.3% on month to 2.43 trln rupees in December, compared to a higher on-month growth of 5.9% in the previous month.
    Alternative investment funds are regulated by Securities and Exchange Board of India. They are separate from mutual funds as they raise funds from investors privately and have to raise at least 10 mln rupees from an investor in any new scheme.
    Further, the sponsor of an alternative investment fund is required to itself invest a minimum of 2.5% of a scheme corpus.
    As per last available data from Securities and Exchange Board of India, alternative investment funds had raised funds to the tune of 137 bln rupees in the Jul-Sep quarter, which was close to double the 72 bln rupees amount raised in the previous quarter.
    Net inflow in existing equity funds fell to a six-month low in December also due to retail investors slowing down in their rush to invest in equity funds.
    Assets held by retail investors in equity funds, excluding tax-saving funds, grew by 4.5% on month in December to 3.07 trln rupees. In the previous month, the same had recorded an on-month growth of 5.3%.
    According to Menon, retail investors were being advised by mutual fund agents to shift from investing in equity funds to investing in equity-oriented hybrid funds.
    Fund houses and brokerage firms which act as mutual fund distributors have been aggressively marketing hybrid funds to retail investors under the premise that these funds will partially protect their capital and yet give them better returns from the equity market.
    This is also seen from the fact that last month investors ploughed in investments worth 98 bln rupees in the net (gross inflow minus gross outflow) in hybrid funds. It was the highest monthly net inflow in at least last two years.
    With equity markets touching new highs in the current month, and valuations rising still further, the equity funds will continue to find it difficult to attract large new investments from investors, big or small.
    The table below lists the last one year trend in open-ended equity fund inflows

                     Existing funds                   New fund offers
         -----------------------------------------    ---------------
         Gross inflow   Gross outflow   Net inflow     Subscription
         ------------   -------------   ----------     ------------
                             (In bln rupees)
Dec '17      327         221             106              5
Nov '17      346         172             174             25
Oct '17      276         122             154              3
Sep '17      323         135             188              0
Aug '17      282         111             171             21
Jul '17      252         144             108              0
Jun '17      233         170              63              2
May '17      207         123              84              4
Apr '17      184         103              80              2
Mar '17      256         203              53              0
Feb '17      182         138              44              1
Jan '17      156         120              36              2