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Mumbai: Sundaram BNP Paribas Mutual Fund (MF) has launched a select thematic fund, PSU Opportunities Fund, an equity fund that would primarily invest in public sector companies. The units of the fund are priced at Rs. 10 apiece and will be open for subscription from November 25-December 23, 2009, reports Financial Chronicle.

"Public sector units (PSUs) are a direct play in the high-growth sectors of the Indian economy with added comfort of a large-cap profile. The listed PSU universe is marked by high-quality firms with clear ownership and business structures, focused business and robust financials. PSU firms enjoy a position of dominance in several sectors such as oil and gas, banking insurance, mining and utilities," said J Venketesan, the Portfolio Manager for the fund.

According to Sundaram BNP Paribas Mutual Fund, PSUs today account for about 30 percent of the market capitalisation on the National Stock Exchange (NSE) and stocks of such companies are likely to undergo a re-rating in the next five to 10 years. "We are looking to collect around Rs. 350-400 crore from the new fund offer," said Sunil Subramaniam, Executive Director, Sales and Marketing, Sundaram BNP Paribas Asset Management Company. The market cap of the PSU segment has risen from about Rs. 90,000 crore to Rs. 15,10,254 crore in this decade.

Mumbai: Indian equities markets shut shop Thursday on a downtrend, with a key index losing two percent or 344.02 points from its previous close even as the total turnover touched an all-time high of Rs.1.59 lakh crore.

The sensitive index (Sensex) of the 30-scrip Bombay Stock Exchange (BSE) opened the day at 17,199.05 points against Wednesday's close at 17,198.95 points, and closed at 16,808.87points. The stock chart for 52-week is given on left.



Around the same time, at the National Stock Exchange (NSE), the broader 50-share S&P CNX Nifty was ruling at 5,001.75 points against the previous close at 5,108.15 points, reflecting a loss of 2.08 percent or 106.4 points.

Broader market indices were also in the red, with the BSE midcap index down 1.41 percent and the BSE small cap index ruling 0.95 percent lower. The market breadth was negative, with 866 stocks advancing, 1,878 scrips declining and 69 remaining unchanged.

The British Pound retraced the previous day’s decline against the greenback and crossed back above the 20-Day SMA (1.6619) to reach a high of 1.6729, and the currency may continue to appreciate going into the North American trade as the economic docket reinforces an improved outlook for the U.K. Taking a look at overnight price action shows the GBP/USD tipped lower following the upward revision in the third quarter GDP report however, the pound-dollar remains higher on the day following the rise in risk appetite.

The preliminary GDP report showed economic activity weakened 0.3% during the third quarter amid an initial forecast for a 0.4% contraction, while the annualized rate slipped 5.1% from the previous year versus the 5.2% decline seen in the advanced reading. The breakdown of the report showed private consumption held flat from the second quarter, which topped forecasts for a 0.2% drop, while business investments slipped 0.3% versus projections for a 3.3% decline, and conditions are likely to improve throughout the remainder of the year as the expansion in monetary and fiscal policy continues to support the real economy. However, as policy makers see a risk for a protracted recovery, market participants speculate the Bank of England to expand its asset purchase program over the coming months in an effort to stem the downside risks for growth and inflation, and expectations for further easing is likely to weigh on the interest rate outlook as the central bank maintains an “open mind” for future policy.

The Euro rallied against the U.S. dollar for the third day and rose to a fresh yearly high of 1.5097 during the overnight trade, and the single-currency may continue to retrace the sell-off from the previous year as market participants raise their appetite for risk. As trader sentiment improves, we could see the EUR/USD work its way above 1.5100 over the remainder of the week as U.S. traders go off-line in observance of the Thanksgiving holiday, and thin trading conditions could spark increased volatility in the euro-dollar as risk trends continue to drive price action in the foreign exchange market. Nevertheless, the economic calendar showed consumer confidence in Germany unexpectedly weakened for the second month in December as the GfK index slipped to 3.7 from 4.0 in the previous month, and the data foreshadows a weakened outlook for private spending as households face a weakening labor market paired with tightening credit conditions.

The greenback weakened across the board, with the USD/JPY tumbling to a low of 87.56, and the pair looks poised to test the yearly low at 87.15 as equity futures foreshadow a higher open for the U.S. market. Nevertheless, personal spending in the U.S. is expected to rise 0.5% in October after contracting 0.5% in the previous month, while personal incomes are projected to increase 0.1% during the same period after holding flat in September. Moreover, durable goods orders are forecasted to rise 0.5% in October after advancing 1.0% in the previous month, while new home sales are anticipated to increase 0.4% after contracting 3.6% in September, and the data is likely to encourage an improved outlook for future growth as the economy emerges from the worst recession since the Great Depression.

The British pound lost 1 percent against the US dollar and nearly 2 percent versus the Japanese yen over the course of the past week as the minutes from the Bank of England’s November meeting led the markets to price in fewer rate increases over the next 12 months. The vote count showed that seven Monetary Policy Committee members voted to expand the Asset Purchase Facility (APF) by £25 billion to £200 billion, but one voted for no change while another voted to increase the APF by £40 billion. This suggests that the BOE may be open to expanding the APF later on, and evidence of this will only be amplified by disappointing news.

Looking to this week’s event risk, Tuesday’s data is expected to show that total business investment fell for the fifth straight period in the third quarter, this time at a rate of 3.9 percent. Declines generally don’t bode very well for broader growth, as companies that aren’t investing aren’t likely to be experiencing improved activity or hiring workers. On the other hand, the BBA’s measure of loans approved for house purchases is projected to rise for the seventh straight month in October to 44,000 from 42,088, signaling percolating demand and potentially, increasing prices.

On Wednesday, the second reading of UK GDP for the third quarter is anticipated to be revised slightly higher to a quarterly rate of -0.3 percent from -0.4 percent, and an annual rate of -5.1 percent from -5.2 percent. This will continue to reflect the sixth straight quarter of contraction, and the only way the British pound is likely to respond in a positive way is if GDP surprisingly rises on a quarterly basis. That said, traders also need to keep in mind that US markets will be closed on Thursday for the Thanksgiving holiday and will close early on Friday, and as a result, volumes will be lower than usual, which may contribute to either flat price movements or extremely choppy trade. The latter may dominate, though, as US-based event risk will be very high. From a technical perspective, FXCM SSI – a contrarian indicator – positioning recently flipped to net long, suggesting GBPUSD could be in for further declines. Additionally, the pair’s break below a rising trendline drawn from the October 13 lows and bearish weekly candle formation leads us to maintain a bearish outlook on GBPUSD.

The Japanese Yen outperformed last week as capital retreated from stocks, commodities and FX carry trades funded in the perennially low-yielding currency. A bland domestic economic calendar and thin liquidity conditions around the Thanksgiving holiday in the US promise more risk-driven volatility ahead.

Although scheduled event risk is ample on next week’s Japanese data docket, the market-moving potential of upcoming releases is limited at best. The Bank of Japan’s monthly report is unlikely to yield much more insight than traders already derived from the most recent interest rate decision. An up-tick in the jobless rate after three consecutive months of moderation coupled with parallel declines in retail trade and household spending will reflect now-familiar concerns about the ebbing effects of fiscal stimulus and should come as no surprise after the central bank’s constant admonitions about a weak consumption outlook. Likewise, another negative yearly consumer price index reading should not be shocking after both monetary and fiscal authorities acknowledged the economy had firmly retreated back into deflationary territory last week, with the BOJ adding that rising oil prices will offer help in that regard in the months to come.

The trajectory of risky assets seems likely to be a far more potent catalyst for price action. Although the earnings season is winding down, the US calendar offers a hefty dollop of market-moving releases that could shake things up on Wall St and consequently translate into Yen volatility. Most notably, the second revision of US third-quarter GDP is expected to be trimmed to 2.9% from the 3.5% initially reported, with at least some of the reduction accounted for by a lower personal consumption levels. Consumer confidence, new home sales, and durable goods orders data is also on tap. Thursday’s Thanksgiving holiday adds another dimension to the potential for sharp swings in prices, with any moves heading into the end of the trading week likely to be amplified by thin liquidity conditions and so make the realization of a break past key support and resistance levels that much more likely. This is especially important for USDJPY, where prices are flirting with trend-defining double bottom support in the in the 87.09-88.23 area.

There is a lot to watch when trading the euro in the days and weeks ahead. In the background, we have a withdrawal of stimulus that is starting to build momentum, developing interest rate expectations and concerns that the Euro-region economy will fall behind in the bid for recovery as government spending tapers off and exposes the true cut of the nation’s health. However, traders will more concerned with what is in the foreground. A range of notable economic indicators will offers some sense of predictability for volatility. But, the intense threat of an impending break and trend revival rests with intangible fundamental dynamics like liquidity and the influence of a domineering US dollar.

It should come as no surprise to any trader that risk appetite is the primary catalyst and fundamental fuel for the financial markets. After an eight-month trend founded largely on the investors’ need to reinvest funds and take advantage of a historical rally; we have seen confidence turn into hesitation and concern. No other currency translates this sentiment into price action quite like EURUSD does. A big-picture look at this pair shows an intact, rising trend of higher lows from March; but the past few weeks have turned to chop that is starting to develop an ominous bias. This unnatural sense of calm is reason enough to worry about a potential breakout this week; but aligned with the unusual market conditions that back this liquid pair up, the probability for a violent end seems far more remarkable. Though a true trend development will come on the basis of underlying sentiment, the currency market will likely take its cues from the US dollar – which has been battered for its safe haven qualities. Adding to the torrential calm, the US markets (adding the greatest single injection of liquidity in the world) is looking at an extended holiday weekend starting Thursday; and in turn, a full-week of notable economic releases will be condensed into just a few days. A constant application of event risk and shallow market depth may be the final ingredients for a breakout.

For its own part, the European economic docket is stocked with significant market-movers of its own. At the start of the week (before US liquidity drains), we will be offered a thorough reading of sentiment and growth. The German GfK consumer and IFO business confidence readings will define growth expectations into the months ahead. The former will be particularly important considering the German Finance Ministry recently suggested fourth quarter regional growth would slow from the strong third quarter showing owing to consumers’ efforts to retrench themselves as jobs and wages recede. Perhaps the most visible release of the week, the second (final) reading of 3Q GDP will offer much needed detail on the health of the various sectors. It is important to weigh how much of the recovery to this point is on the back of German citizens, businesses, trade and government. However, trumping the quarterly figure for timeliness, we will also see the first measurements of the November PMI figures. Though they cover predominantly service and manufacturing based activity, it is considered a good gauge for broader growth. Then, after the US markets close up shop early, euro traders will have many more notables including German CPI and Euro Zone confidence readings for most of sectors.

In the above mix of scheduled and unscheduled risk, we will likely find the break in EURUSD – whose liquidity alone will likely carry those other euro crosses that don’t already have a direct link to risk along with it. However, we should not lose sight of the big picture. After we see a meaningful reversal in speculative influences, the influence surrounding forecasts for growth and interest rates as well as efforts to improve fiscal health will likely gain prominence.

The US Dollar finished the week higher against all major currencies except the Japanese Yen, but the downtrodden currency failed to break key range highs against the Euro and other important counterparts. Forex markets remained highly indecisive and traders were seemingly unwilling to bust the Euro/US Dollar exchange rate from its multi-week range. Our DailyFX 1-Week Volatility Index continues to trade near its lowest levels of the year, and it seems FX Options traders are pricing in similar range trading for the holiday-shortened trading week ahead. A number of historically market-moving economic releases may nonetheless force sharp intraday price moves through mid-week trade—especially given the state of relative unease across key asset classes.


The North American Thanksgiving holiday means that markets will likely become illiquid through later-week trade, but earlier-week price action could produce big US Dollar moves on several important reports. The first on the ledger is the admittedly unpredictable Existing Home Sales report, which often goes unnoticed but occasionally produces great equity market volatility. The following day brings the second release for Q3 Gross Domestic Product figures, Conference Board Consumer Confidence survey results, and the minutes from the Federal Open Market Committee’s most recent policy-setting meeting. All three events have been known to force considerable moves in the S&P 500 and US Dollar, and it remains important to watch for surprises from each.

Fed Chairman Ben Bernanke recently shook US Dollar markets when he said that the Fed was paying close attention to exchange rate moves. Markets will pay very close attention to any and all references to the US Dollar through the Fed’s discussions—especially as the Greenback trades near significant lows versus the Euro and other key counterparts. We admittedly put low odds on any explicit mention of the US Dollar in the Fed minutes, but such low expectations could make for extensive volatility if we do see the Fed talking the dollar higher. Suffice it to say, traders should be on the lookout for post-Fed financial market price moves. Personal Income and Spending, Durable Goods Orders, and New Home Sales reports round out the week of significant US Dollar event risk. Any one of these releases could likewise spark big moves—especially in the relatively illiquid trading session before the US holiday.

The US Dollar remains in an uneasy range against major counterparts, and exceedingly low volatility expectations suggest that it may remain restricted through the week ahead. Many weeks ago we argued that extremely one-sided FX Futures and Options positioning meant that a substantive US Dollar correction was inevitable. We have indeed seen the Greenback bounce off of range lows, but positioning has subsequently corrected and does not necessarily point to further Dollar gains. This leaves us in a very uncertain position, and we may need to wait for a large shock across financial markets to force substantive shifts in trends. FX Options put low odds on any such occurrence in the week ahead, however, and low volatility expectations leave markets primed for further range trading.