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For private circulation

Vol 1 Issue 3 March 2012

A Monthly Financial News Letter from RBG Commodities

Race On On!

ETF
Exchange Traded Fund xchange Traded
A simple, Single Instrument to tap opportunities with nominal risk Exchange Traded Fund (ETF) is an Instrument which tracks an Index (for e.g. Sensex, Nifty), a Commodity (for e.g. Gold , Silver) or a basket of assets like an Index fund, which always trades on exchange platform similar to stock or other instruments in exchanges. ETFs experience price changes exchanges. throughout the day as they are bought and sold. In India ETF based on Equities, Gold, Debt and World Indices are available.

General Financial News

Minimum investment amount in PMS raised to Rs 25 lakh

Press Trust Of India / Mumbai Feb 11, 2012, 00:33 IST

Congratulations to all A.P.s and Business Partners who won the Race On contest for the month of February. Thanks to all our Authorized Person / Business Partner for their active participation.

We expect that in coming years, ETF is going to get more participation than Mutual funds. The key attraction of the ETF is key that, it is available for trading throughout the day just like stocks, while Mutual funds are traded at the end of the day (EOD) at net asset value (NAV). Moreover, ETF have lower operating Moreover expenses than mutual funds, which is highly beneficial to retai retail

To keep the retail investors away from the portfolio management portfolio schemes (PMS), SEBI on Friday raised the minimum investment amount of clients for such schemes from Rs 5 lakh to Rs 25 lakhs.

SEBI catches social networking fever

Press Trust Of India / New Delhi Feb 13, 2012, 00:30 IST

Investors. Another Important attraction is that, the investor can fix buying or selling price of units by simply watching trading screen. Investors can purchase ETF through any registered Broker of Exchanges just like purchase equity. In India, ETF are regulated by SEBI (Securities Exchange Board of India). According to the provisions of SEBI, the ETF sponsor can appoin Market makers or Authorized participant to provide liquidity of the ETF units. appoint provide Usually an Exchange traded fund has the following set of participants, Sponsor, Authorized Participant, Custodian, Exchange and Investors. In India many Mutual funds are acting as Sponsors to various ETF's. A mutual fund sponsor when he senses a market for gold ETFs, approaches authorized participants to arrange for required physical gold. If these two comes to an understanding, the fund sponsor (ETF spo sponsor) files a prospectus with SEBI. Once the regulator gives approval, the ETF sponsor collects money from retail investors . and gets physical gold through authorized p participants and keeps it with the Custodians. The ETF sponsor ipants . provides ETF units back to the retail investors. Once the New Fund Offer Period is over, the ETF sponsor does s not deal with the retail investors directly. The gold ETF is listed on the exchange and the units are traded just like any other Stock. Authorized participants, who are market makers, act as intermediaries between retail investors and th gold ETF pants, the sponsor through the Exchange. Authorized participants get creation units from the gold ETF sponsor in exchange xchange. of physical gold. Creation unit usually comprises of 1000 grams of physical gold and in return the authorized of participants get gold ETF units worth the physical gold. Authorized participants then take care of creating the takes market by supplying gold ETF units as per the demand. A gold ETF unit usually represents either one gram of represents gold or half gram of gold so that small investors can buy. The gold ETF sponsor arranges for safe custody of the physical gold. Usually, specialists called Custodians do this job for sponsors for a fee. The gold ETF sponsor is d. Custodians responsible for quality of gold and safety of gold. The gold ETF sponsor takes adequate insurance for physical sible gold. The gold ETF sponsor can also invest in money market instruments up to the percentage mentioned in the offer document. In NSE, nearly 15 ETFs are listed under Equity category, nearly 12 ETFs are listed under Gold category, 2 listed ETFs are listed under World Indices Category and one ETF is listed under the Debt category. Most of these ETFs are actively traded on the Exchange. Now a days, a great increase in participation is being witnessed in raded Gold based ETFs; it is a smart way of Investing in Gold for Retail Investors. Sandeep Chandran, RBG Research

The Securities and Exchange Board of India (SEBI seems to and (SEBI) have got attracted to the benefits of using social networks like Twitter and Face Facebook for spreading its message among investors eading and, to snoop on discussions at these platforms as part of its nd, these investigation activities. The mark watchdog is hiring information market technology specialists, whose role would include keeping track of such platforms for market related information and discussions. market-related They are also conside considering to have an official presence on Twitter and other networks to strengthen its information dissemination process.

SEBI warns investors against PMS frauds

BS Reporter / Mumbai Mar 02, 2012, 00:29 IST

The Securities and Exchange Board of India (SEBI) on Thursday nd ) warned investors against dealing with unauthorized portfolio management schemes (PMS). It has come to the notice of SEBI that some entities are soliciting It the general public to entrust their funds and securities to them a and offering portfolio management and advisory services without obtaining certificate of registration from SEBI to act as a portfolio ificate manager. Investors should not deal with such unaut unauthorized service providers, SEBI said in a release.

SEBI ask FMP s to curb investment in high FMPs yielding investments.

MUMBAI: As investors rush to put money in fixed maturity plans (FMPs), - one of the hottest mutual fund products - capital market regulator SEBI is trying to make sure that the bets don't backfire badly. In the last few weeks, fund houses coming out with new FMPs have been asked by senior SEBI officials to spell out the s sectors they will refrain from investing in.

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EQUITY MIRROR
Last Month was really a great surprise to the Equity market participants. Bench Mark Nifty shot up from the levels of 5200 to the levels above 5600 in just 16 trading days. The major reason was the positive cues from the Euro Zone, especially in terms of approval of Greece austerity plan. The Global Indices performed remarkably well with the announcement of Greece austerity Plan and also with couple of positive economic news from the US. Indian equity markets attracted a lot of Foreign Institutional funds during this period. We are expecting that the markets will continue the positive trend for the month. Nifty has resistance around 5730 levels and support is seen around 5150 levels. Participants are keenly watching the budget announcement, which is scheduled for 16th March. There are some unconfirmed rumours spreading in the market about STT (Securities Transaction Tax), that it may be lowered to attract more participants to Equity market. Any such news about lowering of tax may drag the market to higher levels. Another major announcement is expected in Infrastructure sector in terms of tax sops. Such reductions will attract huge funds to this sector. Pre/post Budget days may give a huge opportunity to the intraday players. Markets seem to be in volatile trend these days. We are expecting zigzag movements in the market. Intraday traders can adopt the strategy of protective put or call for trading in these days. we can also expect opportunities in the Banking, Infrastructure, Power Sector etc. The sudden spike in the market may attract more participants to the Equity segment. Investors who are looking for long term prospects can definitely enter the market in around levels of 5000 -5100 levels on Nifty. The sectors like Capital Goods, Banking, Manufacturing and FMCG are expected to perform extremely well in the years to come. According to the data released by the Commerce & Industry Ministry, only four segments viz., Electricity, Cement, Coal and Fertilizers recorded a positive growth in January 2012, raising concerns for the industry and the Government. The decline in growth of eight industries Crude Oil, Petroleum Refinery products, Natural gas, Fertilizers, Coal, Electricity, Cement and Finished steel indicates a slowdown in economy. We think that the high interest rates prevailing in the Economy may be the reason for this slowdown. With couple of positive economic news like lowering of the inflation numbers etc., may lead RBI to decrease key rates, by which the Banks can offer loans and advances at lower rates.

COMMODITY MIRROR
Most of us dream of winning a bumper lottery. Last month, buying Gold, Pepper or Guar seed Contracts were equal to buying a lottery. The prices of these contracts rose to higher levels within few trading days almost in a straight line, which gave a rare opportunity for commodity market participants to tap enormous gains. Pepper: Pepper Prices rose from the levels of Rs.295 to Rs. 395 in just 12 trading days. Pepper turned hot due to the non availability of pepper in the spot market, even though January March is the harvesting season in India. Good domestic demand amid tight supply scenario pushed the market up to such higher levels that the sellers were said to have demanded more than Rs 370 per kg for farm grade pepper. At the same time tug of war between both the bulls and bears also kept the market highly volatile. There were no sellers even when the harvesting reached its peak during the current season. We are expecting a cool off in pepper prices. Technically Pepper seems to have good support around 35530 levels and resistance seen around 39530 levels. In the long run, we are expecting that prices to be at higher levels. Rubber: Last month rubber traded in the range of 188 / Kg 196 / Kg levels. According to Bloomberg, Natural rubber may advance in the next three months because of a seasonal reduction in output and expanding demand from China and India, quoting the Association of Natural Rubber Producing Countries. Production from the member countries, representing 92 percent of global supply is expected to increase by 2.6 percent. At the same time, demand from other members accounting for 57 percent of users may grow by 4.4 percent. Technically, Rubber has support around 185 / kg levels, below that 178 is also a good support, where as Resistance is seen around 193 / kg levels and above that 201 also a good resistance. Gold: Gold witnessed a bullish rally in the month of February especially towards the end due to positive economic flows from Europe and US. Weakening of Dollar was the main reason for this bullish trend. Gold futures dropped more than $77 an ounce on 29th February Wednesday and posted a loss for February, as Federal Reserve Chairman Ben Bernanke failed to offer an indication of further quantitative easing, boosting the dollar and pressuring dollar-denominated gold. Gold also fell as upbeat U.S. economic data dulled safe-haven demand for the metal and as investors digested news that the European Central Bank offered a larger-than-expected amount of loans to the regions Banks. Base Metals: In connection with the Greeces second bailout, European Governments awarded 130 billion Euros ($173 billion) to Greece last month. Base Metal prices traded at high levels based on this news and the weakening of US dollar coupled with favorable consumer confidence data from the US. The activity in the physical market was comparatively low in the last month and that the complex is instead being driven by momentum trading and fund interest. London based Traders warned that soft physical demand, especially in Asia, will likely cap the near-term upside for some metals such as copper, nickel and zinc. We are cautious on Base Metals for the Month. RBG Research Team

RBG Research Team

INTERNET TRADING

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Disclaimer: This electronic news letter is only an information service. Informations are collected from different sources which are believed to be reliable, but are not guaranteed by RBG Commodities about the accuracy. RBG Commodities does not assume any responsibility or liability resulting from the use of the information given.

Editorial Board: Shijo Jose, Sandeep Chandran, Vishal Dand. RBG Commodities Limited, VI/93, Jew Town, Cochin 682002. Tel: 0484-2588841/44/48/09