Cricket let you dance; so with Financial Markets!

Generally I refrain from writing on issues not related to finance, but cricket is no longer unlinked to financial world. The industry bets high amount of money in ethical and unethical manners which helps both ways. After making a historic win over Men in Green, Men in Blue finally conquered the excitement and gifted a beautiful gift to all Indians who stood still on Mar 30, 2011 from their regular work. One Billion plus prayers worked for us. Now the focus shifts to India vs Sri Lanka. The online domains are already filled with slogans favoring India like Ram Sena on its way to conquer Ravan Sena, Lanka. Both the teams are at their best; India has to work on its negatives. It is just few hours away from 1983 historic day, after which we could not witness.

Out of these hopes, the question arises – are there any relationships between cricket and financial world? What are the best chances that India would win? Exactly 28 years back i.e. in 1983, all the days and dates match with those of 2011. So, we have a strong chance we would repeat the history. Also, in 1983, the current finance minister Shri Pranab Mukherjee was the then finance minister under then Prime Minister Indira Gandhi. Though there does not emerge any correlations on these happenings, superstitions and astrological theories have always surrounded the game of cricket. Also, the current networking age or the age of Twitters, Facebook or Orkut, the positive correlations emerge like a rising sun in the east.

Cricket is considered as a religion in Indian sub-continent which boasts of world’s major population. Luckily, the ICC World Cup 2011 would have remained in this continent even if we had lost the match against Pakistan. Examining the relationships between Cricket and Stock Market, the events suggest that large sporting events do affect the sentiments of viewers which ultimately become investors. Depending upon their mood swings, stock prices move through crests and troughs.  Mishra and Smith (2010) have already shown that there is an asymmetric relationship between the performance of the Indian Cricket team and stock returns on the Indian Stock Market. While a win by the Indian cricket team has no statistically significant upward impact on stock market returns, a loss generates a significant downward movement in the stock market. When Sachin Tendulker, India's most popular cricketer plays, the size of the downward movement in returns is larger. However, in last few trading days, when the cricket fever is on, markets have moved upwards. Though there are reasons, the continuous wins support the correlations. This time, it has worked positively.

Even Aiyar and Ramcharan (2010) suggest that it is lucky for international cricketers to play their debut Test (international) match at home.

A good start may have a persistent, positive impact in other fields, too. Nonetheless, selection committees appear to systematically penalize both bowlers and batsmen for the misfortune of debuting abroad—and systematically penalize bowlers more than batsmen. It would therefore seem likely that similar biases are widespread among employers of all kinds, for whom performance metrics are more ambiguous, differences in initial conditions harder to judge, and the decision itself unlikely to be second-guessed by millions of opinionated fans around the globe.

Whatever the reasons be, Indians hype the situation beyond the limits and looks into all permutations and combinations. Why? The betting is on, boss! A large part of Indian financial market is conceptually linked to bettors. Let India play its natural game! Let them give 100% to win 110 crores hearts. Also, we stand united.

Enjoy the game!

Let the Cricket win! Let India win!

Probably by this time, Indians must have reworked their schedules for the deadliest fight between India and Pakistan; mind it – it is not a battle ground war but the craziness has gone beyond it, the craziness for Cricket. Welcome to the Semi-Final Cricket match of ICC world Cup 2011 between India and Pakistan. Until now, fans across the countries have started exchanging verbal feuds especially women of both countries. And everyone knows – when women fight, they forget the conclusions. All the social-networking sites have been fired with online campaigns in favor of India. Probably everyone is eyeing this world cup as the last world cup for cricket’s own god Sachin R. Tendulkar.

But are we just concerned to win this semi-final? Is lifting the World Cup not equally important? And the craziness has gone beyond limits; truly said India sleeps Cricket, speaks Cricket, drink Cricket et al.

Shaila Baghail, a cricket enthusiast rather an India enthusiast, an ex-navy officer, an entrepreneur and my Aerobics trainer walked down from Navy Nagar to Siddhivinayak Temple, covering a crazy distance of 19 km in scorching heat of Mumbai to offer prayers at the temple for India’s win in this crucial hotheaded fight. Should we call her a crazy fan or did she pour her blessings and mind to India wholeheartedly? The media reports that crazy fans have been lining through the days and night in Mohali outside the stadium to get tickets despite the officials claiming that they have been sold out. People luckier to get few tickets have been black-marketing after adding a single zero or double zeroes on the actual price of ticket. So, a ticket worth Rs. 5,000 has been selling at Rs. 50,000, even costlier than Olympics. India Inc. has gone beyond their rule books; while many companies have relaxed their employees to leave early in 2^nd half, some have arranged big-screen in their auditoriums. 

Today, the match got politically involved too after the Pakistan PM accepted Indian counterpart invitation to watch this fierce fighting live at Mohali, very near to Lahore, once a part of India pre-1947.

Let the craziness remain! All Indians would owe to their team if India manages to win. But the question arises – are we close to ICC World Cup 2011, a feat unachieved since 1983. Let the spirit of game prevail!

Innovation reaches to Indian Investors – Try MOSt Shares NASDAQ-100 ETF

Imagine some of the most innovative companies on the globe; probably you would name Google, Apple, Ebay, Amazon or others etc. They have presence almost all over the globe. Now, if you want to buy these companies, you need to find an Indian broker who offers the facility to buy foreign shares. Probably there are very few brokers in India who offer to buy foreign shares; and that too comes at high cost ranging 1 - 4 per cent. Moreover, your investment will fall under the foreign investment limit of        $ 2,00,000. So, as an individual, you can’t invest more than US $ 2,00,000.

Here come your solutions – Invest in MOSt Shares NASDAQ-100 ETF

Motilal Oswal Mutual Fund, after trying the domestic innovations in the form of M50 (a large cap oriented fund) and M100 (a mid cap oriented fund) – these funds got wide acceptance from investors – launched MOSt Shares NASDAQ-100 ETF, India’s first US Equity ETF providing exposure to US and International firms on NASDAQ Index.

Why MOSt Shares N100?

·         The fund provides unique access to World’s most innovative firms; all non-financials including some market leaders like Google, Apple, Cisco, Baidu and many more.

·         It is Rupee dominated investment and does not fall under the foreign investment cap of US $ 200,000.

·         It is a passive investing with no discretion to Fund Manager; that too comes at a lower cost (relatively at 1 per cent).

·         Very low-correlation of NASDAQ-100 with India’s major indices – around 0.29 with Sensex and Nifty – thus, providing the ideal diversification option for domestic investors.

·         The NASDAQ-100 has a healthy mix of all sectors – Technology, Consumer Services, Health Care, Industrials, Telecommunications, Consumer Goods, Oil & Gas and Basic Materials – with around 60 per cent of holdings falling under Technology.

·         The NFO being treated as Other than Equity Product (since the investment is made outside India) will offer Double Indexation Benefit as the AMC claims that the allotment would happen before March 31, 2011.

Why NASDAQ-100 Index?

·         No doubt NASDAQ-100 Index® (NDX) is one of the widely watched indices in the world. It includes 100 of the largest domestic and international non-financial securities listed on The NASDAQ Stock Market based on market capitalization.

·         NASDAQ-100 comprises the A (Apple) to Y (Yahoo) of innovation. Comparatively, the index has sound fundamentals, low valuation, low correlation with Indian markets and global spread of innovation.

Performance Analysis (NASDAQ-100 vs Nifty)

One can suspect why an investor needs to diversify beyond India if he is getting better returns in India only. It is imperative to state that the decoupling story no longer holds true in India vis-à-vis to developed economies. However, the low correlation of NASDAQ-100 against major Indian indices makes a strong case on the performance of NASDAQ-100. The long term growth story of NASDAQ-100 is still intact as relevant from the historical performance of NASDAQ-100 vs Nifty.

While in 1-year and 3-years category, NASDQ-100 has beaten Nifty by good margin, in other categories, it lagged Nifty. However, in 15-years category, (In India, hardly any investor keeps his money locked for 15 years), the NASDAQ-100 has bitten Nifty by almost 300bps.

Why MOSt Shares N100 at this juncture?

Most emerging markets have dramatically come out of the global financial crisis since the fall of Lehman Brothers at faster pace in comparison to its developed counterparts; however, the inflationary pressure kept on building too, thanks to hike in commodities’ prices around the globe, supply-side issues including demand related factors. Also, there had been geo-political tensions arising from Tunisia spreading to Egypt, then Libya and now Bahrain. The natural catastrophe in Japan colliding with the man-made catastrophe (Nuclear Plants blast and leakage) has further worsened the situation. The global crude prices have gone beyond US $ 111 per barrel and it is estimated if the similar trends continue, it can touch US $ 200 per barrel.

Moreover, the developed countries followed the Tortoise race in ‘Hare and Tortoise’ race and have started recovering from the financial crisis recently. They have been showing signs of increased employment, higher productivity and increasing economic growth. So, in a nutshell, the United States is expected to re-emerge as an engine driving global growth.

Words of Caution

Diversification is the key to investors’ portfolio to minimize the losses and the N100 fits in due to low correlations with Indian indices. However, any uneven and significant movement of rupee-dollar exchange rate against can have a bearing on returns. Also, in the long run, Indian equities may outperform US equities as the strong domestic consumption story still remains intact.

Happy Investing!

Inflows to Equity continued; total inflows upped by Rs. 25,757 cr

The growth saga in Equity continues with a net inflow in Equity categories – Equity, ELSS and Balanced. The Equity category saw a net inflow of Rs. 2,495 crore, the highest inflow since July 2009. This positive figure is also for the third time in a row month-wise. However, the net assets of Equity dwindled due to fall in broader markets and outflows of foreign ‘hot moneys’. While the FIIs were the net sellers to the tune of Rs. 4,584 crore in Equity, Mutual Funds were the net investors to the tune of Rs. 1,477 crore. In totality, the Equity AUM nosedived to Rs. 1.59 lakh crore in Feb 2011 from Rs. 1.65 lakh crore in Jan 2011.

Total AUM also upped

The total industry AUM also rose to Rs. 7,07,412 crore in Feb 2011 from Rs. 6,91,080 crore in Jan 2011, a gain of 2.36 per cent. Also the total inflows were Rs. 25,757 crore in Feb 2011. The industry witnessed a strong inflow in Income Funds specially closed ended FMPs which saw 65 NFOs collecting a total sum of Rs. 17,232 crore in Feb 2011. The banks also upped its investment in Mutual Fund instruments predominantly in Income Funds and Liquid/Money Market Funds which saw inflows of Rs. 13,708 crore and Rs. 8,770 crore during the month. As on Feb 11, 2011, the banks’ combined investment reached to Rs. 95,018 crore compared to Rs. 13,483 crore in Dec 31, 2010.

New FMPs continued pouring in

The high interest rate scenario and tight liquidity in the financial system prompted Mutual Fund houses to launch FMPs which have become investors’ favorites. The tight liquidity has sent the CD/CP rates haywire crossing 10 per cent. Moreover, banks have also been building its balance sheets through subscription in Certificate of Deposits (CDs) as the financial year closes in. During the month, a total of 65 FMPs and Hybrids Funds were launched.

Other categories too saw inflows

The other equity categories such as ELSS, Balanced Funds and Other ETFs saw inflows to the tune of Rs. Rs. 348 crore, Rs. 216 crore and Rs. 480 crore respectively. The Gold ETF category also witnessed its successive positive inflows to the tune of Rs. 25 crore; lower than the last month figure of Rs. 125 crore. However, the gilt fund category and FOF investing overseas saw outflows to the tune of Rs. 271 crore and Rs. 14 crore respectively.

New Funds enter into industry

A total of 5 funds came into existence in open end category with 3 funds in Income category and 2 funds in Equity category. In close-ended category, 65 funds were launched in Feb 2011 which mostly consisted of FMPs and Hybrid Funds.

- Happy Investing!