Teji Mandi: Three things investors should know on February 15, 2021
Teji Mandi

Infra push on a full swing :

In a major shift to its material usage policy, the government has done away with restrictions on the use of steel in highway construction.

Earlier, contractors were allowed to use steel produced by primary producers only.

Now, the Road Transport Ministry has removed all such restrictions. All steel – whether produced from ore, billets, pellets or melting of scrap - would be allowed for National Highway construction. However, the steel needs to meet quality parameters.

Steel prices have remained elevated off late, leading to af shortage of the material. Considering this, the new policy will hit two birds with one stone. It will allow road contractors to source cheaper steel. It will eventually lead to supply improvement and increase the speed of work.

It will also help to reduce the overall project cost to a great extent. On the downside though, it will be very difficult to track the quality of steel being used. The government will need to ensure that safety checks and procedures are properly followed.

MFs growing reliance on REITs and InvITs :

Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InvITs) are emerging as trusted instruments for mutual funds.

As per a Moneycontrol report, MFs’ allocation in REITs and InvITs has grown by 45% over the last year to Rs 1,495 crore. Currently, 20 schemes from 10 fund houses have invested in REITs and InvITs. ICICI Prudential MF topped the list by holding Rs 1,142 crore worth of such assets. It is followed by Aditya Birla Sun Life MF that held investments worth Rs 186 crore in these instruments.

Currently, the real estate market is witnessing a revival. And, the rental yield prospects are also improving post covid disruption. With interest rates on fixed income instruments at a historically low level, these assets are providing an attractive stable income option to mutual funds.

However, these instruments are very new for the Indian market. The knowledge and awareness about them are very limited. Hence, we advise a retail investor to properly understand these products and their mechanism first before venturing into them.

Betting big on EVs :

MG Motor is expecting India's electric vehicle market to nearly double to 10,000 units in 2021. The company is also targeting to gain ~30% share of this growing market.

As per the company's Indian president, the company receives EV orders of ~200 units per month. Encouraged by this positive response, MG Motors is now seeking to expand its presence to over 31 cities in 2021.

MG Motors is also working on improving EV infrastructure in India. It is in talks with various potential partners to manufacture the EV battery in India. And, even targeting to launch an additional EV sport utility vehicle at a lower price point using the localized battery.

The company has also tied up with Tata Power to install DC chargers across 60 cities and has already executed charging stations in 20 cities.

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