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Analysts see gold price hitting Rs 40,000 per 10 g by the end of the year

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gold


With more and more global investors turning risk averse, gold prices continued to head north and reached a level of $1500 per ounce on Wednesday. In India’s futures market, October futures have already seen levels of Rs 37,800 per 10 gram, and analysts are eyeing the Rs 40,000 level by December-end.


In Mumbai’s physical market standard gold (995 purity) was on Wednesday trading at Rs 36,850, nearly Rs 1,000 lower than in the futures market due to a discount of around Rs 550 per 10 gram in the spot market following a lack of demand. The futures prices were high due to two months’ cost of carrying positions as the futures contracts were set to expire in October.



Smuggled gold was also selling sharply lower as the spot market price was not giving the physical market any room for discount. Some traders and consumers were also selling large quantities of gold added to the supplies in the market at a time when demand had dried up. However, in India, gold prices might still rise further, in spite of low demand.


ALSO READ: Jewellers return to unorganised sector, hurt by high taxes on imported gold


Gnanasekar Thiagarajan, director, Commtrendz Research, said: “The safe-haven demand, combined with a looming recession on the back of failed trade talks, is seeing a lot of money moving into bullion — gold and silver. More tit-for-tat tariffs could push the world economy into a sustainable recession.” He sees prices moving from $1,490 at present to $1,520-25 per ounce by August-end in the near term. This according to him means that a price of Rs 38,500/39,000 could be expected on MCX futures.


Analysts see gold price hitting Rs 40,000 per 10 g by the end of the year




In the current financial year, gold has so far emerged as the best return-giving asset class with an FY20 return of 16.5 per cent, outshining all other major asset classes. There is no sign of other markets like equities giving returns that are better than gold in the near future. Once investors are convinced that they will have to live with high gold prices, demand will also come and investors will still have something more to earn from gold.


“With growing concerns over further escalation in the US-China trade war, the next level for gold can be $1,520. In MCX, gold futures price could touch Rs 38,800-39,000 by October. If the rupee weakens to 72 a dollar, even Rs 40,000 per 10 gram won’t be a surprise,” said Jay Prakash Gupta, director, Moneylicious.

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Sitharaman’s sops for NBFCs may perk up lending, ease liquidity stress

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Illustration by Binay Sinha


To further ease the liquidity stress in the non-banking sector and nudge them to revive their lending activities, Finance Minister (FM) Nirmala Sitharaman on Friday announced a slew of measures for non-banking financial companies (NBFCs) and housing finance companies (HFCs). The government hopes this will result in more credit support for purchase of houses, vehicles, and consumption goods.


The government has provided additional support of Rs 20,000 crore to the stressed housing finance companies from National Housing Bank (NHB). With this, the additional liquidity support for the HFCs from NHB has gone up to Rs 30,000 crore.



In the Union Budget last month, the FM had encouraged public sector banks (PSBs) to buy high-quality pooled assets of NBFCs up to Rs 1 trillion for which the government would provide a one-time six-month partial credit guarantee for the first loss of up to 10 per cent.


The Reserve Bank of India (RBI) had also chipped in by tweaking banks’ bond-holding norms. This will allow banks to borrow an additional Rs 1.34 trillion exclusively for buying such pooled assets and giving loans to NBFCs. The FM on Friday said this partial credit guarantee scheme will be monitored at the highest level in each bank. Through this, it is expected that many of the assets will get quickly pooled and NBFCs will receive the necessary liquidity. “NHB has already settled some of the issues. NBFCs are receiving money from the banks and are moving towards funding,” said Sitharaman.


Sanjaya Gupta, managing director, PNB Housing Finance, said “This will support growth and ease the liquidity crunch. HFCs will now get an additional Rs 20,000 crore from NHB. The initiatives have potential to kick start the real estate sector.”


The government has also permitted NBFCs to use Aadhaar-authenticated bank KYC to avoid repeating the same process when a customer approaches it for credit. This has been a long-standing demand. The necessary changes in the Aadhaar regulations and Prevention of Money Laundering Act rules will be made, the FM said.


“This will streamline the process and also reduce frauds,” said Raman Aggarwal, chairman, Finance Industry Development Council.


The government has also asked PSBs and NBFCs to fast-track their collaboration to provide credit to micro, small and medium enterprises, small traders, self-help groups, and micro finance industry client borrowers.

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PACL Case: Sebi panel invites expression of interest for 28,974 properties

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Sebi


A committee headed by Justice R M Lodha has invited expression of interest (EoI) from prospective buyers for a total of 28,974 properties belonging to PACL Group.


Market regulator Sebi had set up a committee headed by former Chief Justice of India R M Lodha following a Supreme Court order to refund money to investors in the matter of PACL Group.



As per the notice issued by Sebi, the committee has divided the total 28,974 properties belonging to PACL group in four zones — east, west, north and south — with maximum properties being located in the southern zone.


Regarding PACL properties, the apex court’s order dated July 30 observed “we also leave it open to the committee to receive any further offers and to explore them after duly publishing a further notice on the website,” the notice said.


In pursuance of apex court’s order, the committee “invites Expression of Interest from prospective buyers clearly indicating therein, list of properties in each zone, its circle rate, the offer amount and other relevant details,” the Friday notice said.


“The proposal should be for properties in each zone aggregating in value not less than Rs 1,000 crore,” the notice added.


The notice further said that the last date of receipt of proposals is September 9.


PACL, also known as Pearl Group, had raised Rs 60,000 crore from public in the name of agriculture and real estate businesses and was found by Sebi to have collected these funds through illegal collective investment schemes over 18 years.

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Improved market access for domestic retail investors with Aadhaar-based kYC

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Markets, Investors, Indices, Stocks


The government will allow Aadhaar-based KYC for domestic retail investors, and necessary amendments to the rules under the Prevention of Money Laundering Act will be issued.


Announcing a slew of measures to boost the economy, the government said the Depository Receipt Scheme 2014 is expected to be operationalised soon by Sebi. “This will give Indian companies increased access to foreign funds through American Depository Receipt (ADR)/ Global Depository Receipt (GDR),” she said.



In order to improve market access for the domestic retail investors, Aadhaar-based KYC will be permitted for opening of demat account and making investment in mutual funds. In this regard, necessary notification for amendments in PMLA rules would be issued.

Besides, steps would be taken with regard to offshore rupee market.


“To bring offshore rupee market to domestic stock exchanges and permit trading of USD-INR derivatives in GIFT IFSC, Ministry of Finance is working with RBI to introduce this measure shortly,” the government said.

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