Three things to know for Teji Mandi investors on November 9, 2020
Three things to know for Teji Mandi investors on November 9, 2020
Teji Mandi

Big bull: An eternal hopeful

"I am 80% less frustrated today than I was in June." Ace investor Rakesh Jhunjhunwala said in an interview with a private channel.

He further reiterated that after the slow start, the pace of reforms is now picking up in India. It will take India towards double-digit economic growth in the next five years.

The government’s agriculture and labour reforms in recent months along with RBI's measures to boost liquidity have placed the market in a high growth trajectory. As a result, foreign institutional investors have been net buyers in the equity market since April. However, the Covid situation needs to be constantly monitored in our opinion. If the cases start rising in India, like the US and Europe, it could derail the recovery which is still at a nascent stage.

Tough time ahead for Joe Biden:

Before Joe Biden could settle in the comforts of the White House, the path ahead appears full of challenges for the president-elect.

For starters, it seems likely that the Republicans are going to dominate the Senate. It will be difficult for Biden to push through key legislation necessary to act upon his key poll promises. Besides, Biden is taking over at a time when coronavirus cases are rising in the US. His government will need to act fast on the stimulus package and create a roadmap for government spending to revive the economy.

In our opinion, Apart from Covid, Biden's key priority would be to get the US back into the international alliances that the Trump administration withdrew from. It includes the Paris climate agreement, the security situation in Afghanistan, and Syria & a trade deal with China. Decisions on all these matters will require an extremely tactful approach from the Biden administration to get the Republican-dominated senate on board.

SEBI introduces the 'Flexi Cap' category: Will it change anything?

First, a little background: In September, SEBI had introduced a new categorization for multi-cap funds to replace the ‘Multi-Cap’ category. It also raised the minimum equity investment limit from 65% to 75%, with 25% investment, each allocated between large-caps, small-caps and mid-caps.

Most of the multi-cap schemes were loaded with large-cap stocks and the intention was to encourage AMCs to increase their exposure to small-caps & mid-cap stocks as well. However, the announcement didn't go down well with fund managers due to the scarcity of attractive investment opportunities outside the top-100 universe of Nifty stocks. Now, after several presentations through AMFI, SEBI has decided to rename the earlier multi-cap category as Flexi Cap and retracted their investment in equities to 65% (Same as prior to September 2020). Not to mention, the directive of allocation quota of “25% each” between large-cap, small-cap and mid-cap has been removed.

This is clearly a step back on part of SEBI as mutual funds will again go back to their old ways and keep their portfolio large-cap heavy. Albeit, now under the banner of 'Flexi cap' schemes. In short, except for the name, nothing has changed.

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