Category: Finance

Foreign Portfolio Investors (FPIs) have demonstrated their confidence in the Indian equity market by pumping a staggering Rs 37,316 crore in May. This substantial investment, the highest in the past six months, can be attributed to the robust macroeconomic fundamentals and the reasonable valuation of Indian stocks. FPIs play a crucial role in the Indian economy as they bring in foreign capital and contribute to market liquidity. This article explores the recent surge in FPI investments in Indian equities, the factors influencing their decisions, and the potential impact on the markets.

Foreign Portfolio Investors (FPIs) and Their Investment in Indian Equities

Definition and Role of FPIs

Foreign Portfolio Investors, also known as Foreign Institutional Investors (FIIs), are entities that invest in the financial markets of a country other than their own. These investors include mutual funds, pension funds, endowment funds, sovereign wealth funds, and hedge funds. FPIs bring in substantial foreign capital, enhancing the liquidity and depth of the Indian equity market.

Recent Investments by FPIs in Indian Equities

Data available with the depositories reveals that FPIs made a net investment of Rs 37,316 crore in Indian equities during the month of May. This follows their net investment of Rs 36,239 crore in November 2022. The sustained buying by FPIs has significantly contributed to the upward momentum of the NSE benchmark index Nifty, which has gained 2.4 percent so far in May.

Factors Influencing FPI Investments

Several factors influence the investment decisions of FPIs in Indian equities. Himanshu Srivastava, Associate Director – Manager Research at Morningstar India, highlights that a resolution on the US debt ceiling and positive domestic macroeconomic data could attract fresh asset flows from foreign investors. Shrey Jain, founder and CEO of SAS Online, emphasizes that the outlook for FPI flows has improved due to the completion of the quantitative tightening cycle in the US and India’s recent outperformance compared to global equities.

Reasons for FPIs’ Increased Investment in Indian Equities

Strong Macroeconomic Fundamentals

The strong domestic macro-outlook of India, coupled with healthy growth prospects and a resilient performance of various industries, has fueled FPIs’ optimism towards Indian equities. Factors such as the encouraging trajectory of inflation, the pause stance of the Reserve Bank of India (RBI), and India’s favorable growth prospects amidst a recessionary global scenario have contributed to this positive sentiment. Nitasha Shankar, Head – PRS Equity Research at YES Securities, acknowledges the reasonable valuations of the equity market as another factor driving FPIs’ interest.

Reasonable Valuation of Stocks

FPIs perceive Indian stocks to be reasonably valued, making them attractive investment options. The current earning season has provided further support to this perspective, indicating better growth prospects for Indian companies. This, combined with the overall performance of the Indian equity market, has further strengthened the case for FPI investments.

Outlook for FPI Flows

Experts anticipate a favorable outlook for FPI flows in Indian equities. The completion of the quantitative tightening cycle in the US and India’s relative outperformance compared to global equities have contributed to this positive projection. These factors, along with the strong macroeconomic fundamentals and reasonable valuation of Indian equities, make the Indian market an attractive destination for foreign investors.

Impact of FPI Investments on Indian Markets

Potential Positive Effects on the Markets

The significant investments by FPIs have the potential to generate positive effects on the Indian markets. Increased liquidity, market depth, and enhanced investor sentiment can contribute to a bullish market trend. This influx of capital can fuel economic growth, support the development of Indian companies, and encourage domestic investments.

NSE Benchmark Index Performance

The sustained buying by FPIs has resulted in a 2.4 percent increase in the NSE benchmark index Nifty during May. This upward momentum is expected to continue, driven by the confidence FPIs have shown in the Indian equity market.

FPI Investments in Other Asset Classes

In addition to equities, FPIs have also invested Rs 1,432 crore in the Indian debt market so far in May. These investments diversify FPI portfolios and contribute to overall market stability. The presence of FPIs in multiple asset classes strengthens the resilience of the Indian financial system.

Outlook for FPI Investments in Indian Equities

Comparison with Other Markets

India stands out as one of the best-performing markets amidst global struggles. Markets such as Japan, Taiwan, South Korea, and Brazil have experienced similar positive trends. FPIs are recognizing the potential of the Indian market and allocating their investments accordingly.

Sector-wise Investments by FPIs

FPIs have displayed a broad interest across various sectors, including automobiles, capital goods, healthcare, oil and gas, telecom, and financial services, particularly banking. This diversification of investments indicates confidence in the growth prospects of different sectors within the Indian economy.

The Indian government recently announced a major change to simplify international transactions. The government announced that international debit and credit card users can now make payments of up to Rs 7 lakhs per financial year without being subject to LRS and TCS limits. Education and health payments will also benefit from TCS treatment.

This decision streamlines international transactions and makes them easier for consumers. The government wants to simplify cross-border payments by exempting international debit and credit card payments from LRS limits.

Payment Limit Changes

Under the new rules, individuals can use their international debit or credit cards for payments up to Rs 7 lakhs per financial year without LRS or TCS restrictions. This payment limit reduction eases international transactions significantly. It enables more convenient and valuable transactions.

International Transactions

The government’s exclusion of international card payments from LRS limits and TCS streamlines international transactions. The government wants to streamline payment processes by removing unnecessary restrictions. Business, education, and personal cross-border transactions will benefit from this.

Resolving Questions

Concerns about the Liberalized Remittance Scheme’s July 1, 2023, Tax Collection at Source (TCS) on small transactions prompted the government’s decision. To address these concerns and eliminate procedural ambiguity. The government’s initiative shows its commitment to transparent and seamless international transactions.

Stakeholder Responses

The Ministry’s TCS on international credit card spending under the RBI’s liberalized remittance scheme (LRS) has drawn criticism from experts and stakeholders. Critics say this could hinder business and reduce international spending. The government emphasizes that this step was taken to ensure clarity and avoid procedural ambiguity, facilitating smoother transactions.

Execution Plans

The government will issue separate amendments to the Foreign Exchange Management (Current Account Transactions Rules), 2000 to implement the changes. These changes will simplify international LRS transactions. The upcoming amendments aim to simplify international payments so people can make them without hassle.

The recent gathering of finance chiefs from the Group of Seven (G7) advanced economies in Niigata, Japan, has brought attention to their efforts in addressing China’s increasing global influence. While the G7 did not explicitly single out China as a threat in their communique, it is evident that the world’s second-largest economy will play a significant role in the upcoming summit in Hiroshima.

Outreach to Emerging Nations

During the three-day meeting, the G7 finance chiefs made their first outreach to emerging nations in 14 years. The objective was to engage countries such as Brazil, the Comoros, India, Indonesia, Singapore, and South Korea. The focus of these discussions primarily revolved around tackling issues such as debt and high-level infrastructure investment. These initiatives can be seen as a tacit counter to China’s ambitious Belt and Road initiative, which has been expanding its influence across various regions. It is worth noting that these discussions reflect the changing global order, where the dominance of the United States has diminished, and no clear grand design has emerged in the shifting power dynamics.

Japan’s Initiatives

As the host of the G7, Japan successfully convinced its counterparts to launch a new program by the end of 2023 aimed at diversifying supply chains for strategically important goods away from China. The G7 comprises the United States, Britain, France, Japan, Italy, Germany, and Canada. However, the finance chiefs’ closing communique did not explicitly mention a U.S.-proposed idea for narrow restrictions on investment in China. This omission suggests a potential rift within the group regarding the extent to which they should pressure Beijing. While the idea was discussed in Niigata, Japanese officials chose not to disclose further details due to the sensitivity of the matter.

Balancing Interests

It is crucial to recognize that China remains a vital market for most G7 countries, particularly for export-reliant economies such as Japan and Germany. China-bound exports account for a significant 22% of Japan’s overall shipments. Consequently, both Japan and the United States aim to win over countries, including those in the Global South, by offering promises of foreign direct investment and aid. This strategy aligns with U.S. President Joe Biden’s efforts to strengthen alliances with African nations in the face of China’s growing presence on the continent. Similarly, Japan’s Prime Minister Fumio Kishida embarked on visits to Egypt, Ghana, Kenya, and Mozambique this month to solidify partnerships.

Addressing Debt Vulnerabilities

In a joint statement issued on Saturday, the G7 finance chiefs emphasized the urgency of addressing debt vulnerabilities in low- and middle-income countries. They specifically mentioned Zambia, Ethiopia, Ghana, and Sri Lanka. Although China was not directly mentioned, the statement highlighted that foreign investments in critical infrastructure “may pose risks for economic sovereignty” and must not undermine the economic sovereignty of host countries.

Treasury Secretary Janet Yellen expressed concerns in March about Beijing’s lending activities, arguing that they left developing countries “trapped in debt.” The United States is actively working to counter China’s influence in international institutions and lending. Discussions regarding China’s economic coercion against other countries took place during the G7 finance leaders’ meeting, according to a Japanese finance ministry official. As a result, it is likely that the G7 summit will hold a special session to address this issue.

The Challenge of Influencing the Global South

Atsushi Takeda, the chief economist at the Itochu Economic Research Institute, emphasizes the challenge faced by the G7 in attempting to sway the Global South. Emerging economies in this region carefully weigh their best interests and find it difficult to align themselves solely with the West or China.

The G7’s attempt to influence the decision-making process of the Global South is met with cautious consideration. These emerging economies understand the importance of maintaining a delicate balance between their economic interests and geopolitical relationships. They are aware that aligning too closely with one side may have repercussions on their autonomy and sovereignty.

China’s rise as a global economic powerhouse has presented these countries with new opportunities for trade, investment, and infrastructure development. Many nations in the Global South have benefited from China’s Belt and Road initiative, which has brought much-needed investment in critical sectors such as transportation, energy, and telecommunications. However, they also recognize the potential risks associated with growing dependency on China.

The G7’s outreach efforts aim to present an alternative vision, one that offers economic cooperation, investment, and assistance while upholding principles such as transparency, sustainability, and respect for the rule of law. By engaging with countries in the Global South, the G7 hopes to demonstrate that they can provide a viable and mutually beneficial partnership that fosters economic growth, stability, and development without compromising their sovereignty.

Nevertheless, the G7 faces several challenges in winning over these nations. The Global South countries are aware of the complexities of international relations and the need to navigate the competing interests of major powers. They carefully evaluate the benefits and risks associated with partnerships, considering factors such as economic growth, technological advancements, and political influence.

In an announcement made on Friday, leading pharmaceutical company Cipla revealed its consolidated financial results for the fourth quarter and full year ending March 31, 2023. Cipla’s impressive financial results showcased remarkable growth and profitability during this period, highlighting the company’s strong performance and successful execution of its strategies. These results have enabled Cipla to achieve significant milestones, solidifying its position as a key player in the pharmaceutical industry. As we delve into the details of Cipla’s financial performance, we will explore the factors driving its success, the key achievements that contributed to its impressive results, and the growth strategies that have propelled the company forward. Additionally, we will discuss Cipla’s upcoming plans and the promising outlook for its future based on its outstanding financial performance.

Consolidated Financial Results

Cipla reported a remarkable 45% increase in profit after tax for the fourth quarter, reaching Rs.536 crore, compared to Rs.362 crore in the corresponding period of the previous year. This substantial growth demonstrates the company’s ability to generate higher profits and reinforces its position in the pharmaceutical industry. Additionally, Cipla’s consolidated revenue experienced a solid 9% surge, amounting to Rs.5,739 crore in comparison to Rs.5,260 crore in the previous year’s quarter.

Looking at the full fiscal year 2022-2023, Cipla achieved a profit after tax of Rs.2,802 crore, reflecting an 11% increase from the previous year’s figure of Rs.2,517 crore. Furthermore, the company’s revenue for the year reached Rs.22,753 crore, highlighting consistent growth and solid performance in the market.

Milestones and Achievements

During this financial year, Cipla accomplished significant milestones that further strengthened its position in the pharmaceutical landscape. One notable achievement was the crossing of Rs.730 million+ revenue for the first time, showcasing the company’s growth trajectory and market prominence. Additionally, Cipla achieved its highest-ever quarterly sales of $204 million, underscoring its ability to generate substantial revenue.

Cipla also provided updates on its product pipeline and clinical trials. The company revealed that three differentiated products are currently undergoing clinical trials, with filings targeted in the upcoming financial year. Moreover, Cipla remains committed to developing complex generics, including peptide injectables, and stated that the filings for these products are on track. These initiatives highlight Cipla’s focus on innovation and its dedication to expanding its product portfolio.

Strong Market Position and Growth Opportunities

Cipla continues to hold robust ranks and market positions in key therapy areas such as Asthma and COPD, Anti-biotics, Cough and Cold, and Probiotics. The company’s commitment to research and development, coupled with its strategic approach, has allowed it to maintain a strong foothold in these critical therapeutic segments. Furthermore, Cipla reported consistent growth in emerging markets for active pharmaceutical ingredients (API), with positive developments observed in the European markets as well.

Growth Strategies and Future Outlook

When asked about the business growth plan for the current quarter and the upcoming financial year in the Indian market, Umang Vohra, CEO of Cipla, expressed confidence in surpassing the industry growth rate. Vohra emphasized that Cipla has consistently outperformed the industry in the past three years and aims to continue this trend, particularly in terms of profitability.

Regarding mergers and acquisitions, Vohra stated that such plans are always under consideration for the Indian business. Cipla actively seeks opport unities to acquire strategic product portfolios and brands that align with its areas of interest and business strategy.

Expansion and New Product Launches

In addition to launching new products, Cipla intends to focus on developing generics for drugs that are set to lose patent protection this year. This approach allows Cipla to capitalize on market opportunities and further diversify its product offerings. Vohra highlighted the upcoming launches in the diabetes category, as several drugs are expected to go off-patent, presenting an opport unity to introduce cost-effective alternatives. Additionally, Cipla has already made strides in the field of heart failure medication and plans to expand its offerings in respiratory medicine with the launch of combination drugs in the third and fourth quarters of the financial year.

Diversification and New Product Launches

In terms of diversification, Cipla has a well-defined strategy for the introduction of new products. Umang Vohra shared that the company will focus on a mix of diversification and new product launches in the current year. This approach allows Cipla to explore new therapeutic categories while also expanding its existing product portfolio. The company aims to meet the evolving needs of patients and healthcare providers, providing them with innovative solutions and improved treatment options.

 

Even after making the most of their savings and investment opportunities, a significant number of women continue to struggle with meeting their basic needs. When there is an immediate requirement but just a limited quantity of money available, loans are often the first alternative that is examined to meet the requirement. Raising the interest rate on personal loans makes it more challenging for borrowers to repay the loans. Gold loans are not only swift but also very affordable for moms. This makes them an attractive financial option.

Gold financing?

A significant number of Indian private families possess unused gold assets, which they might potentially put up as collateral for gold loans. Gold loans are a viable option for addressing unforeseen expenditures in areas such as higher education, marriage, and the launch of a new company.

Gold loans offer quick money.

Indian ladies who need financial help can get gold loans. Indian mothers can apply for gold loans without any paperwork or waiting. This is crucial in an emergency.

No income or credit history bias.

Loans for gold are available to female borrowers regardless of their income, credit history, or CIBIL score. Both employed and jobless women stand to benefit from this.

Flexible Loans

Gold loans allow Indian moms to start businesses, pay for their children’s education, or meet unexpected expenses. This may help women gain financial autonomy and a brighter future.

Flexible Repayment

EMIs, part payments, and bullet payments are gold loans. This allows women to choose a repayment plan that fits their finances and ensures they can return the loan without accruing more debt. Women can also choose an affordable payback plan.

Gold Loans

Many banks offer gold-secured loans to Indian mothers. The banking institution will appraise the gold’s value and determine the loan amount. The gold asset will be stored securely till the loan is repaid.

 

 

Several mid-cap mutual funds have given very high returns in the last 10 years. Data on the website of the Association of Mutual Funds in India (AMFI) as of April 21 shows that there are at least 11 mid-cap funds that have given a return of over 19% under the direct plan in 10 years. Even the regular plans of most of these schemes have given a return of over 18%.

While there is no assurance that these mid-cap funds will continue to give such high returns in the future, investors may consider starting a SIP in these schemes after taking advice from their financial advisors. That said, the following is a list of the 11 top-performing mid-cap funds with over 19% returns in 10 years (as per AMFI website data on April 21, 2023).

Kotak Emerging Equity Fund

The direct plan of Kotak Emerging Equity Fund has given a return of 21.61%, while the regular plan has given a return of 20.16% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

Edelweiss Mid Cap Fund

The direct plan of Edelweiss Mid Cap Fund has given a return of 21.43%, while the regular plan has given a return of 19.97% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

SBI Magnum Midcap Fund

The direct plan of the SBI Magnum Midcap Fund has given a return of 20.77%, while the regular plan has given a return of 19.65% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

Invesco India Mid Cap Fund

The direct plan of the Invesco India Mid Cap Fund has given a return of 20.51%, while the regular plan has given a return of 18.67% in 10 years. The scheme tracks the S&P BSE 150 MidCap Total Return Index.

HDFC Mid-Cap Opportunities Fund

The direct plan of HDFC Mid Cap Opportunities Fund has given a return of 20.31%, while the regular plan has given a return of 17.23% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

Tata Midcap Growth Fund

The direct plan of the Tata Midcap Growth Fund has given a return of 19.96%, while the regular plan has given a return of 18.76% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

UTI Midcap Fund

The direct plan of UTI Midcap Fund has given a return of 19.92%, while the regular plan has given a return of 18.90% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

Baroda BNP Paribas Midcap Fund

The direct plan of Baroda BNP Paribas Midcap Fund has given a return of 19.66%, while the regular plan has given a return of 18.02% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

ICICI Prudential Midcap Fund

The direct plan of the ICICI Prudential Midcap Fund has given a return of 19.10%, while the regular plan has given a return of 17.99% in 10 years. The scheme tracks the NIFTY Midcap 150 Total Return Index.

Disclaimer: Above content for informational purposes only, based on AMFI website data as of April 21, 2023. Mutual Funds subject to market risks. Consult financial advisor before investing.