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Mumbai: The Reserve Bank of India (RBI) may have to take a fresh look at its long-standing caps for foreign ownership of government debt as lumpy inflows expected over the next couple of years due to global bond index inclusion alter a critical landscape for the Centre's debt manager.In March 2020, the RBI introduced a new category for foreign investment in central government bonds - the Fully Accessible Category (FAR). Sovereign bonds falling in this category are fully open for investment without restrictions. Meanwhile, in a potential source of ambiguity, the RBI's current cap for foreign investment in central government bonds is 6% of the outstanding stock of securities. This limit was specified in an April 2022 notification.While the FAR category did not attract large foreign flows for three years, overseas players have poured almost $10 billion into the FAR bracket since JP Morgan said in September 2023 that Indian bonds would be included on its emerging market index from June of this year.108507472With Bloomberg also having announced inclusion of Indian bonds in one of its indices starting 2025 and other index managers likely to do so going ahead, clarity on what happens to the 6% limit may be required."Once the FAR securities were introduced, the concept of the limit became redundant. Obviously, it was a decision taken in consultation by the government and the RBI. The idea must be that they can always calibrate the issuance of FAR bonds at a later date if needed. That must be the thought process behind the introduction of FAR securities," said A Prasanna, head of research at ICICI Securities Primary Dealership.Sources aware of the developments said that over the past year, the RBI has had held internal discussions on the matter of the limit, with the central bank likely at some point to clarify a new position.An email sent to the RBI seeking comment on the matter did not receive a response till the time of publication.As on March 13, combined FPI investment in the general category, the long-term category and the FAR category was at Rs 2.5 lakh crore, Clearing Corporation of India data showed. The latest position for the total outstanding stock of central government bonds is Rs 102.65 lakh crore, RBI data showed.Citigroup's CEO recently projected inflows worth $40 billion from index inclusion, while HSBC estimated flows worth $35-45 billion over 15 months. Bank of America's head of India trading predicted flows worth $32-35 billion.In the 11 years since signs of a tighter US monetary policy sparked a 'taper tantrum' of foreign outflows and wreaked havoc on the rupee and the domestic bond market, the RBI has kept a very close eye on overseas investment in government bonds.Over the last couple of years, the RBI has adroitly managed large-scale overseas fund outflows in the wake of aggressive US rate hikes, with the central bank's formidable arsenal of foreign exchange reserves ensuring that the rupee remains relatively unscathed amongst its peer currencies.

Mumbai: Kotak Institutional Equities said most mid-cap and small-cap stocks are still trading at 'full-to-lofty' valuations and well above their fundamental values despite the sharp correction in recent weeks. The brokerage said many low-quality stocks may still have a 'long way to fall'."We are not sure if the correction marks a reversal of the market to fundamentals and numbers from sentiment and narratives," said Kotak's analysts including Sanjeev Prasad in a client note.Till Wednesday, the sharp selloff in mid-cap and small-cap stocks resulted in 50 stocks with market capitalization exceeding ₹500 crore tumbling between 25% and 65% in March so far. Around 130 stocks slumped 20% to 25% in this period. Mid-cap and small-cap stocks, however, rebounded on Thursday in a relief rally.Kotak said the recent correction in broader markets is quite small in the context of the large returns of the past year. "We note that 61% of mid-cap. and 63% of small-cap. stocks have given more than 30% return in the past year even as the bulk of the mid-cap and small-cap stocks have given negative returns in the past one month," said the firm's analysts.The brokerage said valuations of the majority of the mid- and small-cap stocks are 'quite expensive'.Kotak said high return expectations and strong returns in the past three years may have reinforced their direct participation in mid- and small-cap stocks. "We are not sure if there will be any change in the investment behaviour and optimistic view of non-institutional investors as a result of the recent correction and cautionary statements of the regulator," they said.

NEW DELHI: Electric vehicle (EV) makers will need to ensure a high degree of localisation for the models subsidised under the Electric Mobility Promotion Scheme (EMPS). They also need to provide a three-year or 20,000-km comprehensive warranty to two-wheeler buyers — and an 80,000-km warranty on three-wheelers — to be eligible for the scheme.EMPS replaces the Faster Adoption & Manufacturing of Electric Vehicles in India (FAME II) programme.“The manufacturers’ comprehensive warranty will have to cover the EV battery, the most crucial component of the vehicle, besides ensuring that there are adequate facilities for after-sales service for the life of sold vehicles,” a senior government official told ET.Reduced IncentivesWhile FAME II also had a three-year mandatory warranty component after an amendment, it was silent on after-sales service. It also did not say whether the manufacturers’ comprehensive warranty would include the battery.Like FAME, EMPS will also subsidise sales of EVs. But the incentives on offer and the categories being supported have been drastically reduced.FAME II started in 2019 and will run until the end of this month. EMPS is being seen as a special bridge scheme that will run for four months from April 1 to minimise disruption in EV sales due to the FAME programme lapsing.EMPS will likely be the precursor to a broader scheme for electric vehicles that’s expected to be announced in the budget for FY25 after the elections, officials indicated.According to the EMPS policy document, vehicles that are manufactured in India will be eligible to be subsidised. “EMPS is different from FAME II, a phased manufacturing programme, allowing EV makers to import parts while they localised in the interim,” a second official said.In the new scheme, companies will need to ensure they have component manufacturing in place before claiming any sops. This has been done to prevent any possible misuse, he said.According to the document, only cells and the battery management system can be imported. The traction battery pack, inside which these components go, is to be assembled domestically.Further, all other components such as the power and control wiring harness, wheel rim integrated with hub motor, and traction motor controller need to be manufactured in India.

Average returns by 27 stocks in the S&P BSE Capital Goods index are nearly three times higher than those given by S&P BSE Sensex in the financial year 2024 so far. Out of these, seven stocks have given multibagger returns of up to 458% during this period and yet trading at a nearly 30% discount from their 52-week high.The returns by S&P BSE Capital Goods index in FY24 so far have been 64% versus 23% by S&P BSE Sensex. Smallcap counter Transformers & Rectifiers (India) tops the charts with 458% returns in FY24 so far. It was trading at a discount of 19% from its 52 week high. Incorporated in 1994, Transformers & Rectifiers manufactures a wide range of transformers, which conform to the quality expectations of both the domestic and the international market. Ace investor Madhuri Madhusudhan Kela has 3.91% stake in the counter. In the current quarter the stock has gained 38% while its highest returns have come in the June 2023 quarter where the stock has appreciated by 73%. The others are Shilchar Technologies (381%), Advait Infratech (330%), HPL Electric & Power (244%), Bharat Heavy Electricals (BHEL, 221%), Sanghvi Movers (188%) and Action Construction Equipment (166%). 108503080For Shilchar Technologies, returns in Q4FY24 so far have been 43.45% while highest returns came in the September quarter at 67.13%.Advait has delivered 101% returns so far in this quarter which is also its highest in the last four quarters.HPL Electric's highest returns in the last four quarters were in the September quarter at 63.96% while in the current three-month period so far, the returns have been to the tune of 16%. State-run BHEL has given 16% returns in this quarter but its highest returns in FY24 was 49.33% in the September quarter.Sanghvi Movers Q4FY24 returns so far have been 23% while maximum returns of 41.41% were accounted for in the September quarter.Action Construction's Q4 returns stand at 30.63% while top returns of 40.55% was reported in the September quarter.Nilesh Jain, Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking remains positive on BHEL for a target of Rs 260+. The stock is in an uptrend and taking support at 50-dma at Rs 220, he added.Analyst Aamar Deo Singh, Senior Vice President-Equity, Commodity & Currency at Angel One, said that BHEL appears to have made a short-term top with the stock losing over 12% in the week so far. The stock has strong support around the Rs 180-200 which could offer good buying opportunities whereas resistance is seen around the Rs 250-260 zone, he added.He warns against the overall market sentiments which have been dented amid profit booking coupled with mixed global and domestic trends. (Inputs by Ritesh Presswala)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

India's Petroleum Ministry on Thursday announced that prices of petrol and diesel in the country would be reduced, starting Friday, March 15, after oil marketing companies (OMCs) decided to revise prices across the country. "Oil Marketing Companies (OMCs) have informed that they have revised Petrol and Diesel Prices across the country. New prices would be effective from 15th March 2024, 06:00 AM," the Ministry said in a post on X (formerly Twitter). After the price revision goes into effect, petrol in the national capital is set to cost ₹94.72 per litre, down from ₹96.72 per litre, while prices in Mumbai, Kolkata and Chennai are set to drop to ₹104.21 per litre, ₹103.94 per litre and ₹100.75 per litre, respectively.Diesel prices are set to drop to ₹87.62 per litre in the national capital, while Mumbai, Kolkata and Chennai will see prices drop to ₹92.15 per litre, ₹90.76 per litre and ₹92.34 per litre, respectively."Reduction in petrol and diesel prices will boost consumer spending and reduce operating costs for over 58 lakh heavy goods vehicles running on diesel, 6 crore cars and 27 crore two-wheelers," the Petroleum Ministry added in its post.

Four states accounted for over half of the country’s renewable energy potential, with Rajasthan having the highest share, followed by Maharashtra, Gujarat and Karnataka, according to data released by the Ministry of Statistics and Programme Implementation Thursday.“The geographic distribution of the estimated potential of renewable power shows that Rajasthan has the highest share of about 20.3%,” the ministry stated in the Energy Statistics 2024.Maharashtra, Gujarat and Karnataka have a 32% share.India had utilised just 8% of its total estimated renewable power potential of 2,109.7 GW in FY23, with nearly a quarter of small hydro and biomass energy in place compared to the potential.An ET analysis found that wind power was the most underutilised resource, with just 3.7% of installed capacity compared to the potential. The share of installed capacity in terms of solar was higher at 8.9% and much more significant at 35.1% for large-hydro projects.“India’s Energy mix has been seeing a shift from more conventional resources of energy to renewable sources,” the report stated.India plans to increase its renewable capacity installation to 500GW by 2030, by which time it will have utilised nearly 40% of its potential in solar power and just 10% of the potential in wind energy. “The financial year 2022-23 has witnessed a growth of 12.20% over last year in the installed capacity of RES (Renewable Energy Sources, other than Hydro) under utility; while that of thermal sources grew only at 0.49%,” it further added.Wind, solar, and large hydro had the highest potential, with the wind having a power capacity of 1,163.9 GW and a solar power potential of 749 GW.