LIC cuts stake in 27 Nifty firms; sells shares worth Rs 8,000 crore.

State-run insurance giant LIC has lowered its holdings in as many as 27 of the 50 blue-chip firms forming the market benchmark index Nifty, while selling shares worth an estimated Rs 8,000 crore.

Amid stepped-up share purchase by FIIs and an uptrend in the stock market, the Life Insurance Corporation of India (LIC) appears to have booked profits in many blue-chip stocks, shows an analysis of shareholding data of Nifty companies for the three-month period ended December 31, 2012.

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it lowered its holding in a total of 27 Nifty companies during the quarter.

The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000 crore during the quarter, shows the analysis of changes in their shareholding patterns.

Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of Mahindra & Mahindra,HDFC BankBSE 1.24 %, ICICI Bank, Tata MotorsBSE -1.09 %, L&T, HDFC, WiproBSE 1.57 %, SBI, Maruti Suzuki, Dr Reddys and Bajaj Auto.

The insurance behemoth also trimmed holdings in Ambuja CementsBSE -5.10 %, CiplaBSE -3.34 %, TCS, Lupin and Asian PaintsBSE -1.73 %. A marginal decline was also witnessed in its stakes in companies such as IDFCBSE -0.25 %, Hindustan UnileverBSE -0.96 %, GrasimBSE -1.37 %, ACCBSE -3.04 %, BPCLBSE -2.30 %, Bank of BarodaBSE -0.61 %, Punjab National BankBSE -1.63 %, Sun PharmaBSE -0.63 % andTata PowerBSE 0.10 %.

On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents with purchase of shares worth an estimated Rs 4,000 crore.

The major companies where LIC has raised its stake include InfosysBSE -0.05 %, RILBSE -0.79 % and Cairn IndiaBSE -1.61 %. Other such companies are ITC, Power Grid Corp, NTPCBSE -0.10 %, Siemens, Bharti AirtelBSE 0.42 % and Hero MotoCorpBSE -1.96 %.

The state-run insurer also marginally hiked its exposure in UltratechBSE -1.96 %, Gail IndiaBSE 0.07 %,RanbaxyBSE -1.59 %, Kotak Mahindra BankBSE -1.19 % and HCL TechnologiesBSE 0.31 %, while its shareholding remained almost unchanged in companies like ONGC, Tata SteelBSE -1.01 %, BHELBSE 1.21 % and Reliance Infra.

Among the Nifty companies, LIC's holding in terms of value is estimated to be highest in ITCBSE -0.79 % (Rs 27,326 crore), followed by RIL (Rs 21,659 crore), ONGCBSE -2.02 % (Rs 17,764 crore), SBI (Rs 17,058 crore), L&T (Rs 16,800 crore), and ICICI BankBSE -1.31 % (Rs 10,006 crore).

Nifty is a well-diversified 50-stock index accounting for 22 sectors of the economy. The index represented about three- fourth of the free float market capitalisation of all the stocks listed on NSE as on December 31, 2012.

The insurance major appears to have mainly booked profits in select stocks from sectors like banks, pharma, auto, refineries and metal.

Pension schemes announced for registered labourers by Delhi govt.

A large number of registered workers under various agencies like DMRC, NBCC, PWD and CPWD were given passbooks at a function jointly organised by Delhi government and the Centre.
Labour Minister Dr A K Walia on Tuesday said the Delhi government has been implementing the best social security schemes for the welfare of building and other construction workers.
“The Delhi Building and Other Construction Workers’ Welfare Board has been collecting cess from the contractors and construction agencies to utilise the fund for welfare of such workers. The registered workers have been receiving benefits which are much better than the benefits being given to regular employees,” Walia said.
Walia said the government would train construction workers in order to enhance their efficiency. He asked all building and construction workers to get registered with the Board. “It is a very simple process, and any worker below the age of 60, who has worked 90 days in a year, can register himself by making a meagre payment of Rs 25. He will have to make payment of Rs 20 as subscription for subsequent years. By registering with the board, they become eligible for the benefits under various welfare schemes and under the Rashtriya Swasth Bima Yojana, which takes care of medical expenses amounting to Rs 30,000 per year for the member and dependants,” Walia said.
Around 1.2 lakh workers have been registered with the Board in 184 camps. “They have also become eligible for a monthly pension of Rs 1,000 per month on attaining the age of 60. Dependants will also get Rs 500 per month as pension. Rs 35 crore has been disbursed under various schemes.

LIC of India launches Jeevan Vriddhi policy.

This is a single premium non linked insurance plan where the risk cover is 5 times of premium chosen by the customer and offers excellent Guaranteed returns at Maturity. The plan, which is an ideal combination of Insurance and Returns, would be available for a limited period only up to a maximum of 120 days. A major highlight of this plan is that it offers multiple benefits to the customer, these being: Security – Five times of the single premium is being offered as the risk cover Growth – There is attractive Guaranteed Maturity Sum Assured along with Loyalty additions, if any ( based on Corporation’s experience). Convenience – One time payment only. Freedom – There is no upper limit on investment for eligible lives. Liquidity – Policy Loan is available after just one year. In the event of the unfortunate death of the Life assured during the currency of the policy, the Basic Sum Assured shall be payable which is 5 times the Single Premium excluding extra premium, if any. On Maturity, the Guaranteed Maturity Sum is Assured (which will depend on the single premium payable and the age at entry of the life to be assured) along with Loyalty Addition, if any shall be payable. Eligibility for Loyalty Addition would be considered during the last year of the policy depending upon the Corporation’s experience and the rates and terms would be as declared by the Corporation.  The Minimum Age at entry for the plan is 8 years (completed) while the maximum is 50 years (nearer birthday). The term under the policy is fixed at 10 years. The minimum Sum Assured is Rs. 1.50 lakhs while there is no upper limit. The minimum premium under the policy is Rs 30,000/- and shall increase in multiples of Rs 1000/- This is an ideal plan for all groups of people, be it youngsters who want to save a nest-egg for following their passion after putting in some years of hard work and gaining experience, or parents who want to save money for funding their young child’s higher education or for financing other needs of self or children who have grown up. The Customer shall be eligible for tax benefits on the premium under section 80C as per prevailing rules. The policy offers high liquidity through policy loan after just one year.

Mid cap stocks buck the trend.

Despite some buying interest seen in telecom, pharma and energy stocks in the final hours of trade, the indices in Indian stock markets managed to close just above the dotted line today. While the BSE Sensex closed higher by around 50 points (up 0.3%), the NSE Nifty closed higher by 16 points. Although the BSE Small Cap index too failed to make much headway into the positive, the BSE Midcap index ended higher by around 1%.

As regards global markets, Asian indices across the board closed higher today while European indices have opened lower. The rupee was placed at Rs 54.55 to the dollar at the time of writing.

The government's move to put 8.5 billion tonne (bt) coal reserves up for auction has reportedly enticed major interest from the top cash-rich PSUs in the energy space including Coal India and NTPC, vying to grab the natural resource. The firms are drawn in by the Deocha Pachami block in West Bengal's Birbhum district, which happens to be the country's largest thermal coal block, with over 2 bt coal reserves. Coal India (CIL), which already owns majority of the coal blocks in India and is the world's largest coal miner, wants to exploit the reserves alone.

As per a business daily, auto major Tata Motors, has launched a new format of passenger car showrooms and will upgrade 4-5 more such showrooms in the metros during this quarter. These showrooms comprise of video wall, wi-fi capable lounges, merchandising of accessories and lifestyle products, a cafe and play areas for kids. At present, the company has 1,000 sales points and 900 service points in the country. Recently, the company's reported a fall of 20.2% in sales (including exports) of commercial and passenger vehicles in December 2012.

IDBI Gilt Fund

An open-ended gilt fund which aims to actively invest in Government securities

Summary

Type	An open-ended gilt scheme	Face Value	Rs 10
Min. Investment: Additional Investment:	Rs. 5,000 and in multiples of Rs. 1 thereafter Rs. 1000 and in multiples of Rs. 1 thereafter	Benchmark Index	Crisil Gilt Index
Entry Load	Nil	Exit Load *	0.50% for exit within 30 days
SIP	Min Rs. 500 for Monthly SIP (of minimum 12 Months); Rs. 1,000 for Monthly SIP (of minimum 6 Months); Min Rs. 1,500 for Quarterly SIP (of minimum 4 quarters)	Expense ratio:	2.25%
Issue Opens	December 05, 2012	Issue Closes	December 17, 2012

Investment Objective*

The objective of the Scheme will be to provide investors with regular income along with opportunities for capital appreciation. The Scheme will endeavor to achieve this objective through an allocation of the investment corpus in a diversified portfolio of central government dated securities, state government securities and treasury bills.

*Source: Scheme Information Document

Is this fund for you?

IDBI Gilt Fund (IGF) is a long-term gilt fund from the stable of IDBI Mutual Fund. IDBI Mutual Fund incorporated in January 2010 is relatively a new player in the Indian mutual fund industry (it launched its first mutual fund scheme – IDBI Nifty Index Fund in May 2010, followed by a Liquid fund in July 2010).

IGF is an actively managed gilt fund focusing on sovereign rated instruments with medium to longer maturity. As the funds in the long term Gilt category invest in Government Securities having maturity of over 3 years, even IGF will focus on investing in medium to long term g-sec instruments. The funds in the Gilt category emphasize on providing credit risk-free returns by investing in Sovereign rated Government Securities (G-Secs), Treasury Bills, RBI Bonds etc. Generally investing in a long term gilt fund is advisable when interest rates are expected to consolidate or ease down, while rising interest rates may prove harmful for this category. Thus, the timing of the launch of this NFO (IGF) is appropriate as the interest rates have almost peaked-out and we may soon see downside movement in interest rates.

By launching IGF, IDBI Mutual fund has diversified its product basket across the entire spectrum of investment options to suit all classes of investors and their diverse needs. Investments in G-Secs are less favourable among retail investors due to lack of adequate knowledge and high ticket size which makes it out of the reach of many individuals.

Hence, IGF provides an opportunity to the retail investors to benefit from the impact of interest rate movement on sovereign rated instruments across varying maturities, by taking exposure into G-sec instruments having medium to long maturity.

Portfolio & Investment Strategy

Being a long-term gilt fund, IGF will primarily invest in a diversified basket of dated Government Securities and Treasury Bills, while the allocation between them will be decided on the basis of interest rate outlook for the economy. The Fund Manager will take active calls on interest rate and will position the portfolio accordingly to maximize returns from investments with requisite emphasis on liquidity and safety. The investment approach for the scheme will make it suitable for investors with an investment horizon of atleast 12 months.

The Fund Manager will calibrate the portfolio exposure (maturity, supply of securities and liquidity) depending on the interest rate outlook and overall macroeconomic environment. The funds allocation will be dynamically managed without any duration constraints and the exposure to longer dated maturities will be higher at times when the interest rate outlook is benign and exposure to shorter dated maturities will dominate the portfolio when the interest rate outlook is negative. The returns generated by the fund would be commensurate with the levels of risk taken in the portfolio. The fund manager will structure the fund’s portfolio by prudently using cash and cash equivalent instruments to create liquidity as and when needed.

While allocating its assets among various debt instruments, IGF will follow the below allocation pattern. The indicative asset allocation pattern with minimum and maximum limits for instruments is detailed in the below asset allocation table. The Fund Manager, reserves the right to alter the asset allocation for a short term period on defensive considerations.

Asset Allocation Pattern

Instruments	Allocation Range	Risk Profile (High / Medium / Low)
Government of India dated Securities	0%-100%	Sovereign
State Government dated Securities	0%-100%	Low
Government of India Treasury Bills	0%-100%	Sovereign

(Source:Scheme Information Document)

From the above asset allocation pattern, IGF has its investment scope in both central and state Government securities. Though, its overexposure towards one segment may end up with high concentration risk, but low credit risk. It however holds flexibility to shift its maturity which may help it manage interest rate risk in the rising interest rate scenario and take advantage of easing interest rate scenario.

In addition, the IGF may enter into Reverse repos in Government of India dated securities eligible for repo transactions and treasury bills of all maturities as maybe permitted by RBI. It may also hold cash or participate in the CBLO market to meet liquidity requirements. The fund holds flexibility to invest in derivatives (up to 50% of its net assets) for hedging, portfolio balancing and such other purposes as maybe permitted from time to time.

IGF however does not propose to invest in Securitized Debt/ADRs/GDRs and foreign securities.

Fund Manager Profile

The fund will be managed by Mr. Gautam Kaul – Fund Manager Fixed Income at IDBI Asset Management Ltd. Mr. Kaul is a commerce graduate and an MBA. He has over 10 years of experience in Fixed Income dealing and fund management. Prior to joining IDBI Asset Management Ltd, he was a Dealer and Fund manager Fixed Income at Religare Mutual Fund and has also been associated with Sahara Mutual Fund and Mata Securities Pvt. Ltd.

Fund Outlook

It is given that IGF will focus on government securities with flexibility to change maturity based on prevailing interest rate conditions. Being an actively managed gilt fund, the fund may have ability to do well during easing interest rate conditions. Also, it is important to note that its exposure towards longer maturity instruments will make it highly sensitive to interest rate changes, especially in rising interest rate conditions.

IGF will work like other Gilt funds that follow active management strategy and do shift portfolio maturity based on the fund manager’s view on interest rates.

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This note is authored by PersonalFN, a service brand of Quantum Information Services Pvt. Ltd., which has over 10 years of expertise in researching Mutual Funds and also provides unbiased views on Mutual funds, Insurance, Gold and Fixed Income instruments in India. PersonalFN provides premium mutual fund research and financial planning solutions to individuals. and also powers research services for Quantum Equity Fund of Funds, a product of Quantum Mutual Fund.

Jobless growth in India.

India's rapid growth during the past decade had one major qualifier. It led to stagnant employment situation in the country. The growth was mostly associated with a rapid rise in labour productivity rather than an expansion in employment. A year before the balance of payments crisis and the onset of India's liberalisation, employment and labour productivity grew at similar rates. However, in the past decade, as global and domestic economic conditions improved, growth became driven by increased labour productivity in the region.

The fact, as has become clear, is that while economic liberalisation pushed up the growth rate, it did not achieve as much in reversing the secular decline in the employment rate output since the early 1970s. Going by estimates provided by T S Papola and Partha Pratim Sahu in a paper done for the Indian Council of Social Science Research, the average annual employment growth was about 2.4% in the 1970s. In the 1993-94 to 2009-10 period, it averaged around 1.65%. According to National Sample Survey Office (NSSO) data, the employment rate has actually declined in the five-year period ended 2009-10 to 39.2% from 42% in 2004-05. In fact, the latest available employment rate is actually lower than the 39.7% reported in 1999-2000 by NSSO.

The first stint of the Congress-led United Progressive Alliance (UPA) generated a mere 400,000 jobs a year, compared with 12 m jobs annually during the tenure of the Bharatiya Janata Party (BJP)-led coalition, the National Democratic Alliance (NDA). During the period 2004-05 to 2009-10, growth in the economy averaged 8.43%, delivering the politically uncomfortable message: jobless growth. The one major change during the UPA regime was the huge transfer of resources to rural welfare schemes, especially NREGA and farm loan waivers. The one thing NREGA did for sure is create a wage-price spiral. It pushed more farmers to opt for farm mechanisation. But it did little for job creation.

These employment statistics do point to a bigger picture. There is a need to recognise the fact that without changes in the economic structure, growth does not guarantee jobs. Inclusive growth is not about cash transfers or job guarantees for unproductive jobs. Instead, it is about ensuring that the growth process itself absorbs more workers in productive jobs.

Obama says U.S. can't afford more showdowns over debt, deficits.

Fresh from the long legislative fight to prevent a "fiscal cliff" of tax hikes and spending cuts, President Barack Obama warned on Saturday that the United States could not afford further budget showdowns this year or in the future.

Obama, who returned to Hawaii for a family vacation shortly after the House of Representatives passed a compromise bill on Tuesday, said in his weekly radio and Internet address that the new law was just one step toward fixing the country's fiscal and economic problems.

"We still need to do more to put Americans back to work while also putting this country on a path to pay down its debt, and our economy can't afford more protracted showdowns or manufactured crises along the way," he said in the address, broadcast on Saturday.

"Because even as our businesses created 2 million new jobs last year - including 168,000 new jobs last month - the messy brinkmanship in Congress made business owners more uncertain and consumers less confident."

Government data released on Friday showed the U.S. unemployment rate remained at 7.8 percent in December.

Lawmakers in the Senate and the House passed legislation this week that raised tax rates for the wealthiest Americans while making Bush-era tax cuts for the middle class permanent.

It was a victory for Obama, who campaigned for re-election largely on a promise to achieve that goal.

Republicans have indicated that they are ready for another fight over the U.S. debt ceiling. Representative Dave Camp, delivering his party's weekly address, warned, at least indirectly, that they would expect spending cuts in return for raising the ceiling again.

"Many of our Democrat colleagues just don't seem to get it. Throughout the fiscal cliff discussions, the president and the Democrats who control Washington repeatedly refused to take any meaningful steps to make Washington live within its means," Camp said.

"As we turn our attention toward future discussions on the debt limit and the budget, we must identify responsible ways to tackle Washington's wasteful spending."

Obama repeated that he would not negotiate on the debt ceiling, hoping to avoid the 2011 conflict that led to a credit rating downgrade and pushed the country close to default.

"If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic," he said. "Our families and our businesses cannot afford that dangerous game again."

Obama said he was willing to do more on deficit reduction and suggested that the hike in tax rates for wealthy Americans was not the last tax change he expected to make.

"Spending cuts must be balanced with more reforms to our tax code," he said. "The wealthiest individuals and the biggest corporations shouldn't be able to take advantage of loopholes and deductions that aren't available to most Americans."