| |
Aug 8, 2001
S&P downgrade could hit income funds
Standard & Poor, (S&P) has downgraded India’s rating to BBB– (negative) from BBB (stable). This could have an adverse impact on income funds in the short term.
According to reports appearing in leading business dailies, S&P cited the financial scams as one of the factors that influenced the downgrading apart from the widening fiscal deficit, sharp increase in government debt and failure to privatise government companies.
| OPEN-ENDED, INCOME FUNDS |
NAV(Rs) |
1-WEEK |
1-MONTH |
6-MONTHS |
12-MONTHS |
INCEPTION |
| PNB DEBT FUND (G) |
13.9 |
0.3% |
0.7% |
10.0% |
20.2% |
16.6% |
| KP INC BUILD G |
17.2 |
0.3% |
1.2% |
9.6% |
18.4% |
14.0% |
| IDBI PRI DEP BOND G |
11.8 |
0.3% |
1.3% |
9.1% |
18.2% |
18.0% |
| K BOND WHOLESALE G |
12.7 |
0.3% |
1.0% |
9.0% |
17.4% |
14.6% |
| DSP ML BOND G |
17.1 |
0.3% |
1.1% |
8.7% |
17.1% |
13.2% |
| ZURICH HIGH INT G |
17.1 |
0.4% |
1.2% |
8.7% |
16.6% |
13.1% |
| K BOND-DEP G |
12.5 |
0.2% |
0.9% |
8.7% |
16.6% |
13.7% |
| KP CHILD ASSET |
14.9 |
0.2% |
1.0% |
7.2% |
16.3% |
14.6% |
| PRU ICICI INC G |
14.7 |
0.3% |
1.1% |
8.2% |
16.3% |
13.3% |
| TEMPLETON INC G |
17.8 |
0.2% |
0.9% |
8.0% |
16.2% |
13.9% |
(Returns over 12 months are annualised)
The move could have a depressing effect on bond prices in the short term. This looks more likely when one considers that bonds are witnessing a ‘bull run’ so to speak. However, newspaper reports carried comments from State Bank of India (SBI), Bank of India (BoI) and ICICI to the effect that the impact from the downgrade will be marginal as the country’s financial health was by and large sound and there is no concern big enough to merit a downgrade.
However, there is a perception and then there is the reality and there is no way to be sure what will dominate over the coming days. In the short term, there could be a decline in bond prices as sentiment normally takes over in moments like this one. If bond prices do fall, then debt and gilt fund net asset values (NAVs) could witness a decline. But income funds are for long-term investors in which case the rough must be taken with the smooth.
More Views on News
Mar 10, 2016
An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.
Feb 29, 2016
Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.
Feb 12, 2016
PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.
Feb 2, 2016
Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.
Feb 1, 2016
Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.
More Views on News
Most Popular
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
More
Copyright © Equitymaster Agora Research Private Limited. All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results. SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407 | |
|
|
Equitymaster requests your view! Post a comment on "S&P downgrade could hit income funds". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!