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Long-term investors often remain confused between Mutual Funds and Fixed Deposits - Which one is a better option for investment?
The fact is that be it FDs or MFs, the money is lent to others, and there is always a risk associated with it. If you compare the returns of Large Cap Equity Mutual Funds with Bank FDs, the difference is huge.
Long-term investors often remain confused between Mutual Funds and Fixed Deposits - Which one is a better option for investment? Ravi Singhal, Vice-Chairman, GCL Securities Limited, says, "While a Fixed Deposit can guarantee you a fixed sum, the returns are substantially low in comparison to the similar investment in Mutual funds. A comparative analysis will present a clearer picture."
"When you invest in a Bank Fixed Deposit (FD), the banks lend this money to businesses in the form of a loan, and when you invest in Equity Mutual Funds, then Mutual Funds Asset Management Company (AMC) further invest the accrued funds in the stock market and buy the equity of companies in turn.
Whichever is the way of investment, ultimately, the money is getting invested in the businesses, and your funds have a credit risk associated with it.
On the one side, when people invest in a Bank FD, they feel relaxed and do not worry about the risks associated with the investment; however, on the other side, when they invest in Mutual Funds (MFs), they feel that their money is at risk.
The fact is that be it FDs or MFs, the money is lent to others, and there is always a risk associated with it. If you compare the returns of Large Cap Equity Mutual Funds with Bank FDs, the difference is huge.
Therefore, we must understand the risk associated with both the investment instrument in greater details.
Why Fixed Deposits?
First, let us understand how FDs are safer than mutual funds:
1. Portfolio diversification:
Banks has diversified portfolios, as they lend not only to the businesses but also to the retail customer. Banks have multiple forms of loans to attract maximum customers, such as Personal Loans, Home loans, Two Wheeler/Four wheeler loan etc. Whereas Equity Mutual Funds Companies generally invest in top 25-100 companies, on the other side banks have millions of customers under their ambit.
2. Insurance on FD:
Every FD is insured by DICGC (Deposit Insurance and Credit Guarantee Corporation), which is a wholly-owned subsidiary of the Reserve Bank of India (RBI). However, this insurance covers a maximum amount of Rs 5 Lakh. That means, in case a bank defaults, DICGC is liable to pay you the FD amount (only up to Rs 5 Lakh).
3. Returns are guaranteed:
There are no market risks associated with FDs. Hence, the returns are guaranteed by the Banks.
Mutual funds Risk analysis
Credit Risk -If you invest in large-cap mutual funds, these funds invest the accrued amount in the top 20-50 stock market listed companies of India. To understand the real worth of these companies, companies, let us understand the concept with an example of the Nifty 50 index, which represents the leading 50 companies of the Indian stock market.
The market cap (capitalisation) of these top 50 companies is Rs 113.5 Lac Crore, which is almost 60 percent of the Indian Gross Domestic Product (GDP). These companies come from 14 different sectors such as Automobile, pharma, Banks etc., and these are the top companies of their respective sectors. In fact, the Indian economy has a huge dependency on these companies, so it is next to impossible that all these companies will default at the same time, and your investment goes down the drain.
Market Risk- As you might have heard on a daily basis that Mutual funds are subject to market risk. Actually, they are. However, if you stay invested for at least ten years, Nifty 50, a leading benchmark of share market performance, has never given negative returns.
In the last 20 years, it has given an average Compound Annual Growth Rate (CAGR) of 12.3 percent and a minimum CAGR of 5.5 percent (almost current FD rates) on a ten years investment horizon.
Therefore, if you are investing for the long term, you can rely on the stock market.
Let's say, if you invest Rs 1 lakh rupees for ten years, an FD will pay you Rs 1.79 Lakh (assuming 6 percent returns). However, if you invest the same amount in Large Cap Mutual Funds, it will become Rs 3.40 Lakh (assuming 13 percent returns, which is the average of all Large Cap Mutual funds return in 5 years), which is almost 190 percent of FD returns.
Overall, you must make an investment decision keeping all the above-mentioned factors in mind because investment in an FD is secure than mutual funds, but the cost of this safety is huge, and returns are abysmally low."
Rakesh Jhunjhunwala portfolio: Experts recommend buy call for this auto stock
Irrespective of the bearish perspective in the auto sector the 'Warren Buffett of India' remained invested in the auto company with 1.29 per cent shareholding
Rakesh Jhunjhunwala has recently changes his stake in 12 portfolio stocks but he continued with his conviction in rest of the stocks that includes Tata Motors shares. Irrespective of the bearish perspective in the auto sector the 'Warren Buffett of India' remained invested in the auto stock with his same 1.29 per cent stake in the Tata Group Company. Like Rakesh Jhunjhunwala holdings in Tata Motors, market experts too have expected some bullish trend in this auto stock in immediate short-term to medium-term time-horizon. They gave 'buy' tag to Tata Motors stocks irrespective of the rising fresh Covid-19 cases in India.
Speaking on the Tata Motors share price outlook Ravi Singhal, Vice Chairman at GCL Securities said, "Tata Motors share price has already discounted at a discounted levels due to the rising Covid-19 cases in India. It is a big Tata Group auto sector company with strong fundamentals. So, once the Covid pressure eases, it would be one of the fast upside moving stocks at the Indian indices. But, one should wait for some more consolidation in the counter. Currently it has closing at around ?301 at the NSE. I would advise investors to buy Tata Motors at around ?280 levels for the target of ?340 and 370 in medium-term or from three to six month time-horizon."
Suggesting investors to buy Tata Motors for short-term time-frame Mudit Goel, Senior Research Analyst at SMC said, "One can buy Tata Motors at current market price for the target of ?332 maintaining strict stop loss at ?287."
Tata Motors share price at NSE on Friday closed at ?301.45 per stock levels.
Rakesh Jhunjhunwala portfolio: Experts suggest 'buy' on this agro chemical stock
Rakesh Jhunjhunwala has maintained his conviction in this scrip as he and his wife Rekha Jhunjhunwala have kept their stake unchanged in March 2021 quarter.
Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together hold 9.93 per cent stake in this company
Rakesh Jhunjhunwala portfolio has mainly stocks from finance, tech retail and pharma sector. Recently the 'Warren Buffett' of India changed his holdings in 12 companies, increasing stake in 5 stocks and decreasing stake in 7 companies. In rest of his portfolio stocks, Rakesh Jhunjhunwala continued with his conviction and Rallis India was one of them. The Agro Chemical company has recently made a breakout and stock market experts are expecting 'sharp' upside move in the stock in next 3 to 6 months.
Speaking on the fundamentals supporting Rallis India share price; Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Rallis India is a Tata Group company that deals in agro chemical sector. It's a zero debt company and its management guidance in the last quarterly results said that the coming quarterly numbers of the company will be positive. As the Indian Meteorological Department (IMD) has predicted normal monsoon in India, overall fundamentals of the company looks promising and one can buy Rallis India shares at current market price for both short-term and long-term, depending upon the choice of an investor."
Sharing important levels in regard to Rallis India shares Ravi Singhal, Vice Chairman at GCL Securities said, "Rallis India share price has recently made a breakout and one can buy this Rakesh Jhunjhunwala stock at current market price for three to six month target of ?340 and ?370. However, one must maintain the stop loss at ?255 while taking buy position in the scrip."
Rakesh Jhunjhunwala net worth in Rallis India
Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together hold 9.93 per cent Rallis India shares. As per the company's shareholding pattern for March 2021 quarter, Rakesh Jhunjhunwala holds 7.26 per cent stake in Rallis India while Rekha Jhunjhunwala owns 2.67 per cent stake in the company. The investor couple had same 9.93 per cent stake in the company in December 2020 quarter as well.
Experts give 'buy' tag to these pharma company stocks
Due to rise in Covid-19 cases in India, one should focus on pharma stocks as they are expected to outperform other sectors in next one to three months
Due to Covid-19 spread, pharma sector is going to receive major traction in the market leading to higher performance reflecting in their balance sheet, say experts
Amid talks of third wave of Coronavirus in India, the domestic stock market is expected to remain volatile and experts are suggesting investors to continue stock specific trade, keeping special focus on the pharmaceutical sector stocks. They are of the opinion that due to the Covid-19 in India and other countries, pharma sector is going to receive major traction in the market leading to higher performance reflecting in their balance sheet. They suggested investors to look at Lupin, Cipla and Divi's Lab shares to buy today for one to three month time-frame.
Speaking on the shares to buy today Avinash Gorakshkar, Head of Research at Profitmart securities said, "Currently, the market looks unmoved by the rising Covid-19 cases in India but if you look at the FIIs trade practice in recent days, they are fishing out their money from the Indian markets. So, any negative news on the Covid-19 in India looks dangerous for the Indian indices and hence I would recommend investors to maintain stock specific trade keeping strict stop loss. In current market scenario when the fresh Covid-19 cases in India have gone above 4 lakh mark, one should focus on pharma stocks as they are expected to outperform other sectors in next one to three months."
Asked about the pharma stocks that one can look at, Gorakshkar said that Lupin, Cipla and Divi's Lab are some of the prominent shares that one can buy at current price keeping one to three month time-horizon. However, Gorakshkar said that these stocks can be kept in one's portfolio for long-term too.
Unveiling investment strategy in Lupin shares Ravi Singhal, Vice Chairman at GCL securities said, "Lupin has recently witnessed sharp upside move and is still expected to go northward. One can buy Lupin stocks at current price for the target of Rs 1240 and 1270 maintaining stop loss at ?1122 mark."
On Cipla and Divi's Lab shares Ravi Singhal of GCL Securities said that one can buy Cipla shares at current levels for the target of Rs 1044 maintaining stop loss at Rs 844. For those who are interested in taking position in Divi's Lab shares, Singhal advised buying at around Rs 4,000 for the target of Rs 4270 and Rs 4440 maintaining stop loss at Rs 3922.
Source : (www.livemint.com)
Rakesh Jhunjhunwala Portfolio: Experts give 'buy' tag to this tech stock
Delta Corp has business in two sectors hotels and online gaming. Its hotel business is hit due to the recent Covid-19 pandemic spread in India but at the same time the pandemic has helped its online gaming business
Delta Corp is one Rakesh Jhunjhunwala stock, to which, the experts have given 'buy' tag and said that the stock is positive if an investor invests keeping log-term time-horizon in mind
Rakesh Jhunjhunwala portfolio stocks are in news these days as the market magnet has overhauled its share holdings in 12 companies. While the Big Bull increased stake in 5 companies, he decided to lower stake in 7 companies. Stock market experts are of the opinion that this overhaul could have been caused by the reasons better known to Rakesh Jhunjhunwala only as they still see some of the Rakesh Jhunjhunwala stocks to go northward from current market price. Delta Corp is one such stock, to which the experts have given 'buy' tag and said that the stock is positive if an investor invests keeping log-term time-horizon in mind.
Speaking on the fundamentals of Delta Corp shares Avinaskh Gorakshkar, Head of Research at Profitmart Securities said, "Delta Corp has business in two sectors online hotel booking and gaming. Its hotel booking business is hit due to the recent Covid-19 pandemic spread in India but at the same time the pandemic has helped its online gaming business." Gorakshkar said that once the Covid-19 crisis stablises one can expect the Delta Corp share price among the sharp upside moving stocks. However, he maintained that the stock is recommended for those who are investors and have long-term time-frame in mind.
On what should be the ideal trade strategy if an investor decides to invest in Delta Corp shares Ravi Singhal, Vice Chairman at GCL Securities said, "Delta Corp share price at NSE closed yesterday at ?148.80. One can buy this counter at current market price for the long-term targets of ?240 and ?270 keeping stop loss at ?124. However, I would advise investors to have an eye on how the third wave of Coronavirus pans out in India as the Government of India (GoI) has expected third wave of Covid-19 by November this year. If the GoI fails to contain the third wave, then the hospitality industry will have a huge hit in December, especially in Goa and Maharashtra."
Ravi Singhal of GCL Securities said that if the Indian government fails to contain the third wave of Covid-19, then it is advisable for the Delta Corp share holders to exit at ?200 per stock levels and wait for the right time to re-enter.
Rakesh Jhunjhunwala net worth in Delta Corp Company
As per the Delta Corp shareholding pattern available at the BSE website bseindia.com, Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together hold 7.50 per cent company shares in March 2021 quarter, which means the investor duo didnt changed their holdings in Delta Corp Company.
Rakesh Jhunjhunwala Portfolio: Experts give 'buy' tag to this pharma stock
Lupin shares would be one of the fastest upside moving stocks just after one trigger, say stock market experts.
Lupin shares have made a breakout around a month ago but after that it has been trading sideways, say experts
Rakesh Jhunjhunwala Portfolio: On account of highly volatile Indian stock market due to Covid-19 spread, experts have been bating in favour of pharma stocks to buy. For those investors who closely follow Rakesh Jhunjhunwala stocks, there is a piece of good news for them as experts have given 'buy' tag to Rakesh Jhunjhunwala portfolio share Lupin. They said that Lupin share price has made a breakout and after that it has been trading sideways. Experts were of the opinion that once Lupin shares starts surging, it will be one of the fastest upside moving stocks in the coming trade sessions.
Speaking on the fundamentals supporting Lupin share price for an upside swing Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Both margins and demand of the company looks promising. Apart from this, there is Covid-19 fear that is also supportive for the pharma sector stocks. Since Lupin is one of the leading pharma companies in India, it is bound to get benefit of investors moving towards pharma stocks. Apart from this, it is a Rakesh Jhunjhunwala portfolio share that also makes a big reason for the retail investors to look at this stock. My suggestion for the investors is to buy Lupin for both short-term and long-term time-frame.
Unveiling the trade strategy and Lupin share price target Ravi Singhal, Vice Chairman at GCL Securities said, "Lupin shares have made a breakout around a month ago but after that it has been trading sideways. It would be one of the fastest upside moving stocks just after one trigger. One can buy Lupin stocks for one to three month target of ?1270 maintaining strict stop loss below ?970."
Rakesh Jhunjhunwala holds 1.6 per cent stake in Lupin. According to the Lupin shareholding pattern for March 2021, Big Bull holds 72,45,605 Lupin shares.
On Tuesday, Lupin share price at NSE closed at ?1060.
Source : (www.livemint.com)
Outlook for May series: Experts see pharma, IT, metals driving gains
Roll over in Nifty and Bank Nifty from April to May is 66 per cent and 65 per cent respectively, which means market is not in overbought condition.
Pharma, IT and metal sector will be the driving force for the markets next month and any dip should be seen as a buying opportunity rather getting panic from the selloff, say experts
Outlook for May series: Taking cue from the May Series performance since 2014, roll over from April to May in Nifty and Bank Nifty and the market rally after hitting last week's low of 14151, stock market experts have predicted 2-3 per cent rise in the May option that has begun today. They said that pharma, IT and metal sector will be the driving force for the markets next month and any dip should be seen as a buying opportunity rather getting panic from the selloff. However, they advised to maintain the stop loss and strictly avoid any sell position in the May Series.
Speaking on the May Series performance since 2014 Mudit Goel, Senior Research Analyst at SMC said, "May Series has been giving positive performance since 2014 and the positive rise witnessed in this period in the series ranges from 0.5 per cent to 8 per cent, which reflects about the sentiment with which people will enter the May Series."
Standing in sync with Mudit Goel's views; Ravi Singhal, Vice Chairman at GCL Securities said, "Nifty has immediate support at 14,400 and on the upper side it may go up to 14,300. Similarly, Bank Nifty has strong support at 32,300 levels. On the upper side it may first hit 34,500 and then 36,500 in the May Series."
On the reason for being so bullish on Nifty and Bank Nifty Ravi Singhal of GCL Securities said that roll over in Nifty and Bank Nifty from April to May is 66 per cent and 65 per cent respectively, which means market is not in overbought condition and any negative sentiment won't have that much of sell off trigger that we witnessed in the middle of the April Series. Roll over in Bank Nifty April 2021 was whopping 88 per cent.
On suggestion to traders for May Series both experts advised 'buy on dips' and predicted 2 to 3 per cent rise in the May Series citing, "Any big dip should be seen as a buying opportunity and given support should be used as strict stop loss while taking buy position in the May Series. One should avoid selling in this series as overall sentiment for the series is positive."
On sectors that will fuel May Series Mudit Goel of SMC said, "Pharma, IT, metal and to some extent fertiliser sector is expected to remain favourite of the market bulls."
Source : (www.livemint.com)
Experts give 'buy' tag to SBI, ICICI Bank and Axis Bank Stocks for short term
These banking stocks have strong fundamentals and in immediate short-term they can showcase 3-5 per cent upside movement, say experts. (MINT_PRINT)
After shedding near 2 per cent last week, the BSE Sensex and NSE Nifty finally managed to close higher on Monday. According to experts, volatility in the market is expected to continue till Covid-19 fear exists in the domestic market. However, they advised stock specific trade strategy and suggested investors to look at banking stocks as the sectors looks in oversold condition. They said that banks with strong corporate business outlook can showcase 3-5 per cent upside movement in short-term and advised SBI, ICICI Bank and Axis Bank shares that one can think of buying when the market opens on Tuesday.
Speaking on which share to buy today Avinash Gorakshkar, Head of research at Profitmart Securities said, "Banking stocks are in oversold condition and there can be some upside move visible in some banking stocks. One can think of buying State Bank of India (SBI), ICICI Bank and Axis Bank shares when the market opens today. These banking stocks have strong fundamentals and in immediate short-term they can showcase 3-5 per cent upside movement."
Standing in sync with Avinash Gorakshkar's views; Ravi Singhal, Vice-Chairman, GCL Securities Limited said, "SBI, ICICI Bank and Axis Bank have strong corporate business outlook and they are expected to improve fast on the NPA front. So, these three banking stocks are expected to show sharp upside move in short-term."
Giving important levels for the stock investors in regard to SBI stocks Ravi Singhal of GCL securities said, One can buy SBI shares at current market price for short-term targets of ?375, ?400 and ?425 maintaining stop loss at ?310.
For Axis Bank shares, Singhal suggested investors to buy at current market price for targets of ?725 and ?770. He advised investors to keep accumulating Axis Bank stocks till it is above ?620. Singhal also advised investors to strictly maintain the stop loss at ?620 while taking buy position in Axis Bank shares.
For stock market investors interested in ICICI Bank shares, Singhal advised them to buy ICICI bank stocks for the short-term target of ?770.
Source : (www.livemint.com)
Experts recommend large-cap stocks amid volatile stock markets
In large-cap stocks, one will have the facility to do two-way trade and take benefit of both falling and rising trends, say experts.
In large-cap stocks, sentimental movement will be least compared to mid-cap and small-cap stocks, say experts
Amid highly volatile stock market and the number of fresh Covid-19 cases remaining above 3 lakhs for five consecutive days, stock market experts have recommended traders to switch towards large-cap stocks. They said that in large-cap stocks, sentimental movement will be least compared to mid-cap and small-cap stocks. They went on to add that in large-cap stocks, one will have the facility to do two-way trade and take benefit of both falling and rising trends.
Favouring large-cap stocks in such a volatile markets Avinash Gorakshkar, Head of Research at Profimart Securities said, Large-cap stocks give you a opportunity to trade both sides. Since the market is highly volatile and the way new cases of Covid have been rising for the last one week, the volatility in the market is expected to remain maintained this week too. So, traders are advised to maintain sell on rise strategy and shift focus towards large-cap stocks until the market volatile subsides.
Standing in sync with Avinash Gorakshkar's views; Ravi Singhal, Vice-Chairman, GCL Securities Limited said, If the trader has front line liquidity, large-cap stocks give opportunity to come out of the position at right time as its movement is limited. However, in the case of mid-cap and small-cap stocks, the movement is so fast, especially in the volatile market that we are witnessing these days that one finds it quit tough to come out of the position at the price it wants.
Both experts advised strict stop loss while taking any position in current markets and suggested large-cap banking stocks to look at. They said that large-cap corporate banking stocks like SBI, ICICI Bank and Axis Bank are poised for 3-5 per cent upside swing in this week.
Source : (money control)
When a company senses that its shares are undervalued in the open market and has surplus cash, the firm decides to go for a share buyback offer.
A share buyback opportunity is always a dilemma-laden instance. Whenever a company rolls out a share buyback plan, the million-dollar question is whether to jump in or let it go?
Will it be a wise decision in terms of returns? Here are the details of the process and the options that an investor can exercise
What is a share buyback opportunity?
Fundamentally, a share buyback is done when a company decides to buy its own stocks (shares) from the open market at a premium (greater) price.
This is done for a number of reasons such as to enhance the value of remaining shares, to increase the overall holding value or to distribute less dividend in the forthcoming instances.
What is the need for a company to go for a buyback?
Traditionally, when a company senses that its shares are undervalued in the open market and has surplus cash for the buyback, the firm decides to go for a share buyback offer.
The process of share buyback also displays that company management is confident about the financial performance of the business in the near future.
What is the standard procedure of share buyback?
There are some essential steps involved before a company goes for a buyback. As the foremost step, the company has to announce its buyback date and the offer price well in advance
This is done to ensure that whoever is holding the company share on that date is eligible to participate. The company then rolls out a tender offer letter to all the shareholders.
This letter provides the finer details of shareholding and the number of shares one is selling to the company at the buyback offer price. The letter also holds the details of the tender period.
It is to be noted that a user can authorise a broker for buyback participation. In this case, the broker transfers the stock to the company from the clients Depository Participant (DP).
Once the paperwork is completed, the total value of the shares at the buyback price is paid by the concerned company directly to the client.
How does a client benefit from the buyback offer?
In most cases, the concerned company buys back its shares at an attractive premium (increased value) to attract more shareholders.
Let us assume that the current value of a company's stock is Rs 300 per share. In case of a buyback, the company may offer Rs 330-350 or even higher price. This premium will encourage shareholders to sell the shares back to the company.
However, it is advised two-three days ahead of the buyback record date, an investor can buy and hold the stocks in his DP. This makes a shareholder eligible for the buyback offer.
An investor generally has two options:
First, the investor can keep holding until the tender period. Once the company informs the investor about the quantity they are buying back, the investor can provide the company with the required stocks. The rest of the shares can be sold in the open market.
As part of the second strategy, once the record date for the share buyback elapses, the shareholder can sell the stocks. When the company issues a tender notification, the investor can buy it from the open market and sell it back to the company.
However, both strategies have their own advantages and disadvantages.
What are the major risks involved in a share buyback programme?
Generally, the percentage of the buyback is not decided in advance. If the company had gone for a 100 percent buyback, there would be n risk involved in the buyback.However, the percentage of buyback depends on open market participation. In general, the buyback varies from 10-50 percentage.For example, if a holder has 100 shares the company announces a 35 percent buyback, the company will rebuy only 35 shares at the decided premium.
This also means that you still have 65 shares of the company listed in the open market, exposed to the risks of the share market. Therefore, it is always advised to devise ones strategy in accordance with the risk appetite. (The author is Vice-Chairman, GCL Securities Limited)
Out of 12.84% shares, Rakesh Jhunjhunwala holds 10.94 per cent of the company shares while his wife Rekha Jhunjhunwala holds 1.90 per cent shares.
A smart investor rarely changes its long-term investment strategy. Rakesh Jhunjhunwala has done the same by keeping his share holding in Nagarjuna Construction Company (NCC) Limited at the same December 2020 quarter in the March ended quarter. The Big Bull and his wife Rekha Jhunjhunwala holds 12.84 per cent NCC shares out of which, Rakesh Jhunjhunwala holds 10.94 per cent of the company shares while his wife Rekha Jhunjhunwala holds 1.90 per cent company shares. Suggesting Indian investors to take lesson from the Rakesh jhunjhunwala conviction in NCC shares and take advantage of the discounted Covid-hit markets, experts have suggested investors to buy NCC shares. They said that company is one of the quality shares that one can think of buying for both short-term and long-term perspective.
Speaking on the fundamentals of NCC stocks Avinash Gorakshkar, Head of Research at Profitmart Securities said, "When the market is at discounted level, one has the opportunity to buy quality stocks at attractive valuations. NCC is one such share that a stock market investor can think of buying in this Covid-hit market. Company's order book is attractive and its December quarter numbers were in sync with the market expectations. However, due to the rise in Covid-19 fresh cases, construction work has got hit and in coming times company may have to face shortage of construction workers due to migration of workers to their native place in the wake of lockdown imposed in certain parts of India." However, Gorakshkar said that such sentiments are temporary and once the Covid-19 comes under control, market will certainly rebound and in that case NCC share price will showcase sharp northward trend. He advised investors to buy NCC stocks for both short-term to long-term time-horizons.
Unveiling strategy for stock market investors in regard to NCC shares Ravi Singhal, Vice-Chairman at GCL Securities Limited said, "NCC shares can be bought at Rs. 71 to Rs. 72 levels for the immediate short-term target of Rs. 82 and Rs. 91. However, one can hold the counter for next three months target of Rs.121 as it is poised to showcase sharp upside movement breaking its last 52-week high of Rs. 99.85."
Source :- goodreturns
Whenever a company announces buyback, stock market investors start contemplating - what to do? Participate in share buyback? Or stay away from it? Will it give good returns? Here is the explanation of share buyback and what you as an investor should do. All questions related to share buyback answered here:-
What is share buyback?
Basically, a buyback happens when a company buys its own shares from the market at a premium price for a number of reasons like to increase the value of remaining shares, increase overall holding value or giving less dividend to the market.
Why any company does a buyback?
Generally, when a company feels that their shares are undervalued, they have surplus cash for buyback, they go for it. The buyback also shows that management is confident about the performance of their business in the future.
What's the standard procedure of share buyback?
First of all, the company going for buyback has to announce its buyback date and offer price in advance, whoever is holding the share on that date is eligible for buyback action. Then the company sends a tender offer letter to all shareholders. This letter provides details of shareholding and how many shares, he or she is selling to the company at the buyback price. The letter also keep details of the tender period; a user can give authority to the broker for buyback participation. Now, the broker transfers stock to the company from the clients DP and then the company pays directly to the client the total value of the stock at buyback price.
How a client gets benefitted from it?
The company always buys its shares at a good premium to attract more people towards the offer. Suppose the current price of the stock is Rs 300 apiece, then the company may give an offer of Rs 330-350 or even better price. Now it is advised that before 2-3 days of the buyback record date, you buy and hold the shares in your DP, then you will be eligible for a buyback offer.
Now you have two options:-
First, keep your holding until the tender period company will inform you, what quantity they are buying back from you, you provide them with the same and the rest amount you can sell.
What are the risks involved in share buyback?
If the company buys 100% of your holding, there would be no risk in this trade, but it is not decided in advance, it depends on how much participation comes from the market. Generally, the buyback ratio varies from 10%-50%. If the buyback ratio is 25% and you are holding 100 shares of the company, the company will only buy 25 shares from you, which means your 75 shares are at market risk. So you have to make your strategy accordingly.
The author Ravi Singhal, Vice-Chairman, GCL Securities Limited
Source : outlookindia
When the choice is between Bank Nifty and Fin Nifty, go for the latter, which is a complete package
Are you confused or facing a dilemma about where to invest your money - Bank Nifty or Fin Nifty? Investment should always be well-planned on the basis of logic, reasoning, fundamentals, calculations, and other relevant aspects. Let's deep dive into details of Bank Nifty vs Fin Nifty to understand which one is the better option to invest your money.
The Bank Nifty is basically a sectoral index with a focus only on banking stocks; it includes private and PSU banks. It is also one of the most actively traded indexes in the futures and options (F&O) segment and it is available for F&O trading on the NSE.
This is how Bank Nifty is calculated
A stock mix of the Bank Nifty Index
Being a sectoral index, the Bank Nifty only represents the banking sector; including the private banks and PSU banks. Bank Nifty represents the 12 most liquid and large capitalised stocks from the banking sector which trade on the NSE. It provides investors and market intermediaries a benchmark that captures the capital market performance of the Indian banking sector.
Here is the list of companies that are included in the Bank Nifty Weightage Index (Nifty Bank Index Stocks) as released by NSE India on basis of closing prices of January 31, 2021.
Kotak Mahindra Bank
State Bank of India (SBI)
IDFC First Bank Ltd.
Bank of Baroda
Punjab National Bank (PNB)
Now, as per the latest development, the Bank Nifty lot size has also been revised to 25 units from 20 units.
The Nifty Financial Services Index is designed to reflect the behaviour and performance of the Indian financial market which includes banks, financial institutions, housing finance, insurance companies, and other financial services firms. The Nifty Finance Index comprises 20 stocks that are listed on the National Stock Exchange (NSE).
This is how Nifty Financial Services Index is computed and its utility
-Nifty Financial Services Index is computed using the free-float market capitalization method, wherein the level of the index reflects the total free-float market value of all the stocks in the index relative to a particular base market capitalization value.
-Nifty Financial Services Index can be used for a variety of purposes such as benchmarking fund portfolios, launching index funds, ETFs, and structured products.
Fin Nifty's constituents
The index has 20 constituents and the weightage of each stock in the index is calculated based on its free-float market capitalization such that no single stock shall be more than 33 per cent and the weightage of the top 3 stocks cumulatively shall not be more than 62 per cent at the time of rebalancing.
HDFC BANK LTD.
ICICI BANK LTD.
KOTAK MAHINDRA BANK LTD.
AXIS BANK LTD.
BAJAJ FINANCE LTD.
STATE BANK OF INDIA
BAJAJ FINSERV LTD.
SBI LIFE INSURANCE.
HDFC AMC LTD.
SRT FINANCE LTD.
M&M FINANCIAL LTD.
Lot size is 40
The author is Vice Chairman at GCL Securities Limited
Section 80C, 24 and 80EEA of the Income Tax Act let you avail benefits of Rs 5 lakh annually.
Many first-time homebuyers often remain confused about the income tax benefits that they can avail on home loan after the purchase of their first residential property. If you are buying home first time, you are entitled to get income tax benefits on home loan under three sections Section 80C, Section 24 and Section 80EEA of the Income Tax Act. These sections let you avail home loan benefits of Rs 5 lakh annually. Let's understand with a detailed chart of the various sections.
Maximum Tax Benefits(Rs)
Tax saving component
Home Loan Principal and Stamp Duty
Home Loan Interest
Home Loan Interest
Now, let's consider a scenario that you have purchased a property in April 2021, property value is Rs 50 lakh and you have taken 80 per cent loan i.e. Rs 40 lakh on it from a financial institution (bank or NBFC) at interest rate of 7 per cent for 20 years.
Now your monthly EMI would be around Rs 31,000 and you have to pay a total amount of Rs 372,000 in first year, out of which Rs 2.77 lakh is interest component payment and Rs 95,000 is principal component amount. Suppose your annual earning is Rs 15 lakh annually, in that case you can claim Rs 95,000 (principal payment) deduction under 80C (remaining Rs 55,000 of 80C can be claimed from stamp duty payment, valid for only first year), Rs 200,000 under Section 24 and remaining Rs 77,000 interest amount under Section 80EEA.
So, first year you can take tax deduction benefits of Rs 4.27 lakh. Moreover, principal and interest paid components against home loan EMIs change every year, so it is suggested that check it in advance before you do your tax planning.
Tax benefits for second time homeowner: If you own a property and wish to buy another then tax benefits under 80EEA cannot be claimed. In the above example, now you can claim Rs 95,000 under 80C (plus Rs 55,000 against stamp duty paid in first year) and Rs 200,000 under Section 24. If the purpose of home is investment and you want to lease it on rent, in that case you can claim full amount of interest component in Section 24, which is Rs 2.77 lakh in the above case.
If the woman member of the family invests in house: As per income tax laws, there are no specific benefits in case a woman invests in the house. She can claim all the above-mentioned benefits under income tax laws similar to man. However, some state governments have given 1-2 per cent benefit of stamp duty if she is the owner of house. In Rajasthan, if you buy a house for Rs 40 lakh, then in general case, the stamp duty (including other charges) is 8.8 per cent, which is Rs 3,52,000, but if any a female member of the family buys this house, then she has to pay 7.5 per cent stamp duty, which is Rs 3,00,000. So, there is one-time saving of Rs 52,000 if a woman buys the same house.
Tax benefits for husband-wife or joint purchase: If both husband and wife purchase the house jointly, the income tax benefit rules remain the same in that case, however, both the husband and the wife can claim tax benefits in their individual files. Maximum deductions benefits cannot cross the actual amount paid, i.e. both the husband and the wife cannot take benefit of same payment. For example, the interest component is Rs 2.77 lakh and the husband has taken a tax deduction benefit of Rs 2 lakh under Section 24, then the wife can only take the benefit of Rs 77,000 under Section 24, benefit taken against interest component can never cross Rs 2.77 lakh, which is the actual paid amount. Similarly, Rs 95,000 is paid against the principal payment, so if they want to take benefit under Section 80C, either the husband or the wife can take full benefit of Rs 95,000, or they can split it as per their tax planning, but full amount benefit cannot be taken in both accounts.
The author is Vice-Chairman at GCL Securities Limited
Source :- (outlookindia)
The tax liability is computed on one's earnings and ability to show the income as non-taxable. The salaried class or the honest taxpayer is the most disadvantaged as 100% of the income tax is deducted even before the salary reaches their bank accounts.
Finance Minister Nirmala Sitharaman, while presenting the so-called "once-in-century budget" on February 1, left the honest taxpayers "high and dry" who were praised by Prime minister Narendra Modi for having helped finance the free food grain scheme and a significant humanitarian effort in dealing with the COVID-19 crisis.
PM Modi had said if the government has been able to give free food grain to the needy, its credit goes to two classes of people - farmers and honest taxpayers.
Over three weeks after the Budget, the Finance Minister, when asked about the salaried taxpayers, acknowledged that few taxpayers are burdened with taxes, and many old burdens are yet to be removed to make it reasSalaried Class - 'Most Abused Taxpayers'
The Union Budget 2021 had no income tax relief provisions to the ordinary person, especially the salaried class, the "most abused class" among the taxpayers, many of whom lost jobs or had to take drastic pay cuts during the COVID-19 pandemic.
Commenting on the situation, Mohandas Pai, chairman of Aarin Capital, in a tweet after the Union Budget 2021, said: "India's most abused taxpayers. Very sad state of salaried, and yet they are treated shabbily by tax policy! Rich farmers are pampered with huge subsidies paid by honest salariat!"
Only 1% Bears Tax Burden
To put things in perspective, out of the total population of 136.64 crores, only 5.61 crores or 4% file their Income Tax Returns, and only a mere 1.46 crore or 1% are liable to pay tax. In the past 20 years, there has been an increase of about 60% in the number of return filers but only a 20% increase in taxpayers.
The tax liability is computed on one's earnings and ability to show the income as non-taxable. The salaried class or the honest taxpayer is the most disadvantaged as 100% of the income tax is deducted even before the salary reaches their bank accounts.
Gopal Kumar Kedia, Managing Partner, G. K. Kedia & Co told ABP Live, "no income tax reliefs to the common person, especially the salaried class, left the population at large, in discontent and melancholy. The only merit of the budget was that though it didn't bring any income tax reliefs to the common person, there weren't any escalations either. But, there is more to what meets the eye."
According to Gopal Kumar Kedia, a former accountant member of the Income Tax Appellate Tribunal, the irony of the situation is that a significant contribution towards this tax-paying community of 1% of the total population is the upper-middle-class having mainly salary income.
The Milking Cow - Feeding The Holy Cows
"For long, the salaried class has been treated as a scapegoat for collecting income tax revenue by the government. While the common person pays high taxes, businesses enjoy exemptions and tax holidays, and the poor enjoy the facilities of health, transport, and what not, for free. Considering the above, it can be substantiated that salaried class is the Milk Cow who is feeding the Holy Cows, i.e., the Business Entities and the Poor," said Kedia.
The honest taxpayers won't mind if the government uses their taxes to give free food grain to the needy during the COVID-19 crisis.
The government offers various subsidies to the poor and farmers amounting to Rs 2.62 lakh crore, a part of which the honest taxpayers bear.
However, it will concern them if their hard-earned money is used to recapitalize banks that loaned cash to dishonest businessmen Vijay Mallya and Nirav Modi.
India is one of the five largest economies in the world. Global tax collection is about 14.3% of the gross domestic product (GDP), and in India, it is about 12%. Almost half of India's GDP comes from informal sectors. Agriculture, which contributes 14% of India's GDP, remains tax-free. So, the government has to push honest taxpayers harder to meet budget obligations.
When it comes to tax regimes, Indians pay one of the highest taxes and get almost nothing in terms of social security than other nations (refer to the chart below).
No Social Security For Honest Taxpayers
From the above, it is evident that India is charging a high tax rate compared to other large economies worldwide. Some countries charge high-income tax rates as India and provide superior social security in public education, public healthcare, medical, insurance, and unemployment benefits.
The public's tax comes back to them in the form of free or low-cost facilities. There is equal treatment of all taxpayers and non-taxpayers in India, except farmers and government employees, who get extra benefits in multiple terms.
12 Crore Job Loss During COVID Without Any Unemployment Benefits
According to CMIE data, over 12 crore Indians lost jobs due to the COVID-19 pandemic, and the salaried workers, many of them honest taxpayers, will find it difficult to find their jobs back.
"I think a part of income tax should be contributed to unemployment funds for taxpayers. The government can define eligibility criteria for it, like paying a minimum of Rs.1,00,000 yearly tax are eligible to get benefits and conditions to claim unemployment benefits. Like in the US, you are entitled to get unemployment claims only if the employer has terminated you from your job and are willing to join a company. But at least the people who are paying tax every year and now are unemployed with genuine reason should be taken care of by the government," Ravi Singhal, vice chairman, GCL Securities, told ABP News.
The social security tax rate is almost 8-13% (in addition to income tax) across the world, including unemployment insurance benefits and supplements, old-age, disability and survivors' pensions, family allowances, reimbursements for medical and hospital expenses, or provision of the hospital or medical services.
Some part of social security tax is paid by the employer and the remaining by employees. Like in the US, the social security tax is 12.4%, out of which 6.2% is paid by the employee and 6.2% is paid by the employer, but it gives them huge mental relief.
"The government should allocate some funds to the social security of taxpayers. It will not only boost the confidence of taxpayers but also increase the number of taxpayers in India. If not all of the above benefits, at least we can start with unemployment insurance in India," Singhal added.
Besides paying one of the highest direct taxes on income, Indians also pay one of the highest indirect taxes globally when they spend whatever is left after paying direct taxes. Buy a vehicle, pay road tax, Buy a house, pay stamp duty and registration, invest money, pay taxes on the return of investments.
Now, even the interest earned on an employee's contribution above Rs 2.5 lakh in a year will become taxable.
India's Indirect Taxes*
For example, Mr. X earns a salary of Rs 20 lakh in a private firm. He daily commutes to his office in the Fort area in Mumbai by his car from his residence in Navi Mumbai.
Total Income - Rs 20,00,000
Tax (New regime) - Rs 3,51,000
Fuel Expenses - Rs 1,80,000
Other Expenses - Rs 14,69,000
Indirect Taxes (@18%) Rs 2,64,420
Taxes on Fuel (@60%) Rs 1,08,000
Total amount paid in tax: Rs 7,23,420 or 36%
*Calculation is based on an assumption and a fictitious situation. It is not to be taken for real tax calculations.
Source : (outlookindia)
Invest 50 per cent in equity and 50 per cent in debt, and balance it from time to time
Indian stock market and its various indices are witnessing some unprecedented bull runs but this also crops up a catch-22 situation in investors' mind - whether to put extra money or hold it for time till some correction happens and share bazaar becomes stable? This is a very natural question since whenever there is such all-time highs are witnessed, it poses a risk of losing money as well.
Now, just remember the time - March 2020 and some months after it - when the lockdown was put in place in the wake of Covid-19 pandemic to contain the coronavirus spread. At that time too, stock markets were witnessing new lows every day but investors were struggling with a huge dilemma that whether to put extra money or not since as an investor one always wait for another low level so that he/she can reap hefty returns once the market bounces back.
Now, as a stock market investor, what should you do in such share bazaar scenarios of all-time highs and all-time lows and the positions in between the bull runs and bear runs?
Investors should follow the 50/50 investment strategy of American economist Benjamin Graham. So, what is this 50/50 investment strategy? How does it work? What are its benefits?
As per this formula, investors should invest 50% of their money in the equity market and 50% in the debt market, and balance it from time to time.
For example, if an investor wants to pumps in Rs 1,000 in total in the stock market, then he or she should invest Rs 500 in Debt and Rs 500 in equity.
After a particular time period, there could be two scenarios - One - your investment in debt grows to Rs 510 vs original Rs 500, and your investment in equity becomes Rs 530 vs original Rs 500. Now, your total investment value stands at Rs 1040. Further, to balance the debt vis-a-vis equity ratio of 50:50, as per the investment strategy, you have to withdraw Rs 10 from equity and invest it into debt to make it again a balanced with 50/50 investment strategy.
Now, let's focus on the second scenario. Let's assume if you get negative returns from equity or even lesser returns from the money you had put in debt; for instance, -4% returns have been fetched from equity investment and your total market value of funds in equity stands at Rs 480. In this case, , you have to withdraw Rs 15 from debt and invest in the equity market; this will make Rs 495 in both equity and debt, and that's what our ideal approach was of 50:50 debt vs equity investment. An investor should always review his/her portfolio from time to time to reap best returns from the market with the help of the balanced approach of 50:50 investment strategy.
Moreover, let's take a look at benefits 50:50 investment strategy. Majorly, there are 3 benefits of the 50/50 formula.
First of all, your investment portfolio always remains balanced because your 50% investment is in the debt market.
Second, when the equity market is at the top levels or witnessing new highs, your portfolio helps you fetch more returns. And, using this strategy you a get a peace of mind by booking some part of the profit from equity's investment lot and divert some funds towards debt investment in order to balance portfolio as per 50:50 investment approach. This strategy gives you of bigger chance to reap profits and helps you save money by no losing all profits, in case market slumps down to lows from highs.
Third, last but not the least, when the equity market is bearish, then using this 50:50 investment strategy you may always withdraw funds from debt and divert it to equity at cheaper levels. And, ultimately, using this strategy you buy equity at a low level and sell at a high level for booking big profits in future.
Various market investors use different ratios depending upon their risk appetite, but 50:50 debt vis-a-vis equity is the best ratio if you are new to the market or beginner in terms of share bazaar. Once you gain knowledge, you can change this ratio with your stock market's bull and bear experiences.
Authored by Ravi Singhal, Vice Chairman of GCL Securities
Source :- ZeeBusiness
How to save Income Tax? Top tips, options - Home loan, education loan, NPS, APY, 80CCD, 80C, house rent and more
How to save Income Tax: All of us want to save money as much as we can, provided it is legally correct.
How to save Income Tax: All of us want to save money as much as we can, provided it is legally correct. How to save Income Tax is probably one of the most searched phrases when it comes to saving money for taxpayers. All of us should always pay our income tax as it goes in nation-building and strengthening the economy. But, intelligent, planned and strategic investments can help us save some money to pave the way for a financially secure future. Ravi Singhal, Vice-Chairman, GCL Securities Limited shares his knowledge tax savings options for FY 2021-22 and lists out ways that every taxpayer must explore in order to save some income tax:-
Avail maximum benefit of 80C: If you are planning to save income tax, then you must avail the maximum benefit under 80C (Rs 1.5 lakhs per annum, as of now). One can freely choose saving instruments of their choice, like people not willing to take financial risk may go for 5-year Tax saver FD, Life insurance policies or other investment products offering fixed returns. Those who don't shy from taking risks can invest in Mutual funds under ELSS categories. There is no difference in the performance of ELSS and a normal mutual fund, except for the fact that there is a lock-in period of 3 years in ELSS category funds.
Never ever ignore 80CCD: One should also consider utilising maximum limit under 80CCD (Rs 50k as of now) to save Rs 15k by investing in NPS (National pension System) scheme or APY (Atal Pension Yojna). There is a myth that NPS gives very low returns as compared to other available products, which is absolutely wrong. You can compare the performance of all funds under this category and can choose the fund of your choice. 50% of your funds are deployed in these market-linked products and 50% in debt instruments like government bonds. This ratio is changed by fund manager every year and 100% of your funds parked in debt market till retirement. As assessee already saving 15,000 in tax so whatever you are earning is actually earning on 35,000, so your actual returns are much higher if you save under this category. However, the products under 80CCD are pension funds only, so there are some restrictions on withdrawal of funds, you must consider it before investing.
Triple benefit of home loan: Owning a home offers the triple benefit of house rent saving, property appreciation in the long term and tax benefits. If you are staying on rental property, then your rental expense is going to increase every year, whereas your EMIs is almost fixed (if interest rates do not change) Finance minister Nirmala Sitaraman in her Budget 2021 has extended timeline for availing additional tax benefit of Rs 1.5 lakhs under section 80EEA. Under Housing for All, the government is giving tax deduction benefits of up to Rs 3.5 lakhs (Rs 2 lakhs under section 24), which cannot be ignored.
Moreover, you can save tax under multiple sections as per the following schedule if you buy residential property: -
|Section||Maximum Tax Benefits||Section Maximum Tax Benefits Tax saving component Conditions||Section Maximum Tax Benefits Tax saving component Conditions|
|Section 24||Rs 2,00,000||Home Loan Interest||Assessee or any family member should be living in that house, full interest can be claimed if house is on rent.|
|80EEA||Rs 1,50,000||Home Loan Interest||
-Stamp duty value of property should be up to Rs 45 lakhs.
-Loan Section date between 01st Apr 2021 to 31st Mar 2022
- Assessee own no residential property till section of loan.
- Not claiming any amount under income tax section 80EE.
- Loan from Financial Institution only.
|80C||Rs 1,50,000||Home Loan Principal||- Property should not be sold within 5 years of possession.|
So If you claim all tax in all above components, you will be able to claim a maximum income tax deduction of Rs. 5 Lakhs
Moreover, let's take a look at summary of other options to save income tax:-
Following are the instruments comes under it
2. Payment of tuition fee (max 2 kids).3. Principal repayment of housing loan.
|80CCD||Investment in National Pension System (NPS), Atal Pension Yojana (APY).||50,000|
|80D||Premium paid for medical insurance for self, spouse and children.||25,000(50k if age is above 60)|
|Premium paid for medical insurance for parents.||25,000(50k if age is above 60)|
|80E||Interest paid on education loan for self, spouse or children. Interest paid for a period of 8 years only.||No Limits|
|80EE||Interest for the first time home owner. Home value should be <=50Lac and Loan value <=35 Lac.||50,000|
|80G||Donations to various govt. approved charities, social and govt. organizations. (50% amount can be claimed for some organization)||Max 10% of gross annual income.|
|80GG||House rent paid, where individual not getting HRA and not owning any property.||Rent paid minus 10% of total income, 25% of total income or 5000 /month whichever is lesser.|
-Authored by Mr. Ravi Singhal, Vice-Chairman, GCL Securities Limited
On February 8, the Nifty for the first time closed above 15,000 and 11 stocks, including names like Adani Ports, Bajaj Auto, & Bajaj Finance, have hit their lifetime highs.
The Nifty50 hit the magical 15,000-mark early this month and hit a fresh record high of 15,257 on February 9 but only 11 stocks in the index have reached their record highs, so far, in the month.
It should not come as a surprise as most stocks are still playing catch up. The 11 stocks that hit their lifetime highs include Adani Ports, Bajaj Auto, Bajaj Finance, Bajaj Finserv, Cipla, HDFC Bank, SBI and UltraTech Cement, data from AceEquity shows
Nine stocks like Tata Motors, M&M, L&T, Sun Pharma, ITC and Power Grid Corp are trading at 52-week highs.
The rally, which we saw in 2020 and is continuing in 2021, lifted most of the largecaps names in the index but there is plenty of upside still left in many stocks, experts say.
"Many stocks are showing that they can lead from here or take rally further such as in FMCG ITC. In pharma, Lupin and Sun Pharma. In IT, Infosys can lead from here compared to TCS. In banking, SBI. So, there are plenty of stocks in which upside is left and could well turn out to be leaders," Ravi Singhal, Vice Chairman, GCL Securities Limited, told Moneycontrol.
"In terms of Nifty target, we see the index heading towards 17,600 in the base case scenario in 2021, and in the best case, it could well hit 18,900 while in the worst-case scenario, the index could be around 15,900," he added.
The Nifty that closed above the psychological mark of 15,000 on February 8 has come a long way after it was launched in April 1996, when it traded at 1,107, with the base year of November 1995 set as 1,000.
The Nifty50 took nearly 18 years to reach 7,000, the next 8,000 points come in 6.8 years, Motilal Oswal said in a report. The Nifty 50 Index constituents make up roughly 58 percent of the total India market cap.
If we look closely, the sprint to 15k from pandemic lows of 7,600 in March 2020 has taken just 220 days.
The sharp recovery has been driven by a global liquidity backdrop, better containment of COVID-19, sharp recovery in corporate earnings and a market-friendly Budget, said the Motilal Oswal report.
"There is plenty of upside still left on the Nifty 50 names. We are looking forward towards 16,308-16,848 to 17,200 for the Nifty50," Sacchitanand Uttekar, DVPTechnical (Equity), Tradebulls Securities, told Moneycontrol.
Jashan Arora, Director at Master Capital Services, told Moneycontrol that if the Nifty50 move above 15,500, the next target will be in the range of 16,200-16,400 in 2021
Multibaggers: What should investors do?
There are 16 Nifty50 stocks that have risen 100-400 percent since April or so far in FY21, data from AceEquity showed.
Stocks that more than doubled investors wealth include names like Tata Motors, M&M, JSW Steel, Bajaj Finance, HCL Technologies, Hero MotoCorp, Bajaj Auto, and Cipla.
Data suggests that stocks that have more than doubled investors wealth since March belong to economy-linked sectors, finance as well as IT. After the recent run-up, investors can look at booking partial profits but the long-term investment argument still remains intact.
"Out of the 16 names, one can book profits in the following stocks as they are close to our revised price targets and also trading closer to their peak valuations: Adani Ports, Bajaj Finance, Bajaj Finserv, Bajaj Auto, Shree Cement and Ultratech Cement," Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities told Moneycontrol.
"We are still bullish on the banking stocks like HDFC Bank, ICICI Bank and SBI. We also like Cipla and Bharti Airtel from a one-year perspective," he said.
Uttekar of Tradebulls Securities said that the stock hitting fresh high with volumes is a good sign, which highlights the willingness of participants to buy quality irrespective of the higher pricing.
"Investors should continue to hold these stocks & maintain a trailing stop strategy based on larger degree time frames," he added.
The stock market is more about investing in the future prospect of companies and sectors. The Budget 2021 promised capex in sectors such as infrastructure, healthcare, Make in India as well as real estate. Financial services remain the top pick.
"Many companies in Nifty50 which have doubled wealth continue to have strong fundamentals and growth prospects. If anyone had invested in these companies in March 2020, they had entered at one of the best times. Despite these companies giving fabulous returns in one year, investors should continue to hold them," Harshad Chetanwala, Co-Founder- MyWealthGrowth.com told Moneycontrol.
"If required one can look at trimming as part of these companies and book profits. At present, it is will be good to hold on with these companies for some more time as a pro-growth Budget after a difficult year, the pace of recovery in economic activities, and reasonable success of COVID vaccination can add more fuel to Indias progress," he said.
Most of the sectors gave positive return in 2020 and with the Budget, which has something or the other for each and every sector, they will not disappoint investors. Hence, picking largecap names which are sectoral leaders will be a safe strategy for investors in 2021, experts say.
Given the recent run-up seen in most names, some consolidation cannot be ruled out. But, the long term trend still remains intact.
"All the sectors have rallied we can assume that there is not much upside in short term but since the longer-term trend is intact, we may see strong moves post consolidation or corrections in the index," says Arora of Master Capital Services.
Ideally one should focus on booking partial profits in the stocks they hold but it was important to remain invested, he said. "It is quite probable that India is on the cusp of a multi-year economic expansion cycle. If this pans out, the bull market will sustain and grow stronger. So remain invested in quality stocks in performing sectors," he said.
The yellow metal has given 28% returns in 2020 and promises security against inflation in the long run
What are the options that immediately strike your mind when you think of safe instruments in terms of savings and yielding better returns? Generally speaking, gold and real estate are the two most preferred options. Investment in property is proper goal-based investment and requires a lot of planning and research, but gold is something that every Indian wants to make a part of his or her investment portfolio. Especially for ladies, gold is always one of the top choices for investment.
It goes without saying that gold has a significant role in Indian celebrations, especially in marriages where it keeps a weightage of at least 20-40 per cent of the entire budget.
And, that's what makes India the second-largest consumer of gold across the globe. As far reaping profits are concerned, gold gave a return of almost 28 per cent in the year 2020 on a year-on-year basis, beating all odds of COVID-19 pandemic, whereas Sensex witnessed a growth of 16 per cent and Fixed Deposit (FD) returns stood at almost 6 per cent.
Due to COVID-19, most of the economies across the world were hit badly.
Further, the uncertainty on economic recovery drove investors to move towards safe havens of investments, which supported gold prices additionally. Moreover, the production cost of gold at the international level has witnessed a jump amid COVID-19 spread, which eventually gave a boost to gold prices.
Now, we are in 2021, and pretty well optimistic about gold because of multiple domestic and international reasons. If we pay attention to global economic scenarios, in its first press conference of 2021, the US Fed has predicted slower growth this year. Fed has kept its asset purchase budget intact at $120 billion per month. Fed chairman Jerome Powell agreed that the road to recovery will be much slower and longer than what was originally estimated by top economists. Powell made it clear that the Fed intends to maintain its current monetary policy of low-interest rates, a massive accumulation of treasuries and mortgage-backed securities.
Interestingly, the Fed has kept interest rates at near to 0 and has promised to keep it unchanged for at least 3 more years, which makes the opportunity cost of gold 0 for the US investors. US government has authorised a stimulus package of $900 billion, which is creating excess liquidity in the market and leading to higher inflation which will be supportive of gold prices.
Now, taking Indian scenarios into account is also important because India is the second-largest importer of gold. Last year, we witnessed a downfall in gold import because marriages and other celebratory functions were postponed due to government guidelines on lockdown in the view of COVID-19 pandemic.
Keeping the current situation in mind (when the vaccine has been given approval), functions that were postponed last year are most likely going to happen this year and this will create a huge demand for gold in India.
Secondly, COVID has given a boost to the usage of digital payment apps like Paytm, PhonePe, and others, which are offering a hassle-free mode of gold purchase and accumulation, which is now attracting many digital investors.
I think Sovereign Gold Bonds (SGB) offer the best investment tools. It gives you a fixed return of 2.5 per cent on a yearly basis, irrespective of gold's actual performance. The capital gains tax arising on the redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Now, if we compare gold with FD, the risk-taking appetite of investors should always be considered and taken into account. Gold has given almost 100 per cent absolute returns in the last 10 years, 15 per cent in the last 5 years, 20 per cent in the past 3 years and 28 per cent in the year 2020 despite the pandemic.
FD interest rate is almost 5-6 per cent in almost all the leading banks in India, and 7 per cent in some of the comparatively smaller banks, which is just above the inflation rate, which was 4.95 per cent in 2020, and 3.75 per cent currently in 2021, and much lower than gold returns of the past 10 years. Also, as the government is enhancing liquidity through stimulus packages, and we expect a higher inflation rate in 2021. So, for long-term investment, one should go for gold investment which always gives security against inflation in the long term. The performance of gold has been very good compared to FD. We expect the same in the future as well.
New Delhi, Feb 1 (IANS) The financial sector has seen several announcements in the Union Budget including banks recapitalisation and a ARC for stressed assets.
Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research said that the budget has made a few important announcements in financial sector reforms. It has permitted 74 per cent FDI in the insurance sector which is expected to lead to higher investments and consolidation in the sector.
While another Rs 20,000 crore has been allocated for capital in public sector banks, the budget has also announced its intent to divest its stake in two public sector banks and one general insurance company.
"This is surely a significant step ahead but the governments ability to execute it in a timely manner needs to be seen. Lastly, an ARC and an AMC is proposed to be set up to buy out stressed assets of the banking sector. We, however, will need to wait for the details in this regard before we can comment on the efficacy of such a bad bank in providing capital relief to the banks with high GNPAs," he said.
Manoj Purohit, Partner and Leader - Financial Services Tax, BDO India said that to ease access of finance and augment funds for the infra sector, the proposal of providing FPIs an entry into debt financing of REITs and InvITs will open up a large source of fresh funding for the infrastructure and real estate sectors. This will also open up a new avenue for FPIs to invest in a growing market like India.
Ravi Singhal, Vice Chairman, GCL Securities Ltd, said that the bill for the development of financial institution has shown a clear path for the growth on financial infrastructure in the Atmanirbhar Bharat. Further, the Modi government's announcement of a sharp increase in capital expenditure and thus providing Rs 5.54 lakh crore will develop momentum for financial infrastructure domain.
"Further, the announcement of the development of investor charter should also be welcome as it will protect the hard-earned money of a number of investors."
The Budget has also announced decriminalisation of offences under corporate laws. "The consolidation of securities laws, existing decriminalisation of offences under the Companies Act and the proposed decriminalisation under the LLP Act marks an important move towards making Indian corporate legal framework, simpler, business friendly and ultimately (hopefully) reducing compliance costs," said Arka Mookerjee, Partner, J. Sagar Associates.
The Budget also announced a new securities market code. The securities market code is in line with previous discussions on the NFRA. It marks a step towards streamlining the multiple laws, ordinances, guidelines and regulations. If drafted and executed in a proper manner, it will be helpful to market participants and remove any possible conflicts in the regulatory framework and will provide clarity in policy making to investors and stakeholders, he said.
Shagoofa Rashid Khan, Partner and Head Project, Investment and Advisory Head Funds, Investment and Advisory, Cyril Amarchand Mangaldas said a new development financial institution announced to target debt portfolio of 5 lakh crore. Will this be new wine in old bottle or will this be a progression on the learnings of past development finance institutions and IDF experimentation, she asked.
Khan said the long-awaited task of aligning SEBI FPI regulations with Sebi InvITs and REITs regulations has been finally announced. Debt capital to now flow easily from FPIs including ESR focussed funds and financial institutions.
She said the assets identified for NHAI and PGCIL InvITs pipeline will make these Invits very attractive and thus deepen the InvITs market.
Khan said the fine print of announcements relating to ARC and asset management company to acquire, manage and sell stressed and distressed loans to AIFs needs to be assessed. This could lead to spreading the risk and reward of such investments across wider spectrum who under the extant guidelines may not have qualified as QIBs for direct investment in security receipts such NRIs, family offices etc.
Monetisation of surplus land under government companies and sick public sector enterprises will kick start the languishing real estate sector but alignment and easing the approvals process (including change in land use, urban land celing clearances, environmental approvals, development authority approvals etc) for re-purposing these lands to profitable commercial use in order to attract foreign capital is key, Khan said.
"Despite many announcements that could lead to real estate development, it is disappointing that FM has not liberalised the FDI restrictions applicable to RE sector. The archaic restriction of three year lock-in needs to be removed to unshackle the sector," Khan said.
Union Budget 2021 Expectations LIVE: The Union Budget 2021 is almost here as Finance Minister Nirmala Sitharaman, Minister of State for Finance Anurag Thakur and senior officials of the finance ministry on Saturday participated in the symbolic 'Halwa Ceremony' that marks the beginning of compilation of budget documents. Union Budget 2021 is scheduled to be presented in Parliament on February 1, 2021.
Finance Minister Nirmala Sitharaman has promised a never before like Union Budget as the Modi government looks to give a further boost to Indian economy. Ahead of the Union Budget 2021 presentation, here are all the LIVE updates on the expectations from Finance Minister Nirmala Sitharaman and Union Budget 2021:-
Budget 2021 Expectations LIVE: Ravi Singhal, Vice-Chairman, GCL Securities Limited
"As Modi government has risen to the occasion to curb the spread of pandemic for the strengthening and revival of the India economy, we expect many big announcements from Hon'ble Union Finance Minister Nirmala Sitharaman in this Budget 2021. It goes without saying that Income Tax is one of the most important aspects of Budget, hence some relief for the common man is what we look forward to. Also, we expect crude to come under the Goods and Services Tax (GST) umbrella. In addition to all this, reduction in entertainment tax, incentives to give a boost for setting up manufacturing hubs and push for infrastructure spending will also be key areas to watch out for. Keeping above expectations in mind, we recommend, Voltas and Havells as most benefited owing to the possibility of income tax reduction and boost for the creation of manufacturing hubs. Further, BPCL is also a most benefited from our side due to 'crude may come under GST' expectation from Budget 2021. Moreover, BPCL's stake sale candidature is also one of the reasons behind most benefited recommendation. Also, Bharti Airtel, SUN TV are most benefited from our end due to Covid-19 campaign and advertisements on TV channels by the government with an aim to educate people and spread pandemic-related awareness. Tata Power can be considered from reaping additional returns due to relief measures and incentives announced by the Modi government for the renewable energy sector. Siemens and L&T should be considered as most benefited due to infra related sops and a further boost from the Modi government for the creation of manufacturing hubs. Furthermore, with an aim to boost automobile demand by phasing out old, polluting vehicles, the highly-awaited scrappage policy is also expected from this important Budget 2021. Hence, keeping in view the same, we recommend most benefit for Tata Motors, Ashok Leyland, Maruti and Shriram Transport."
National Stock Exchange of India (NSE) has received an approval from Securities Exchange Board of India (SEBI) to launch derivatives on the Nifty Financial Services Index in the futures & options segment of the Exchange. Currently, NSE offers index derivatives on only two equity indices Nifty 50 Index and the Nifty Bank Index.
The financial services sector assumes significance as the sector accounts for 33.5% of the Nifty 500 index. The Nifty Financial Services Index comprises of 20 stocks and is designed to reflect the behaviour and performance of the Indian financial market which includes banks, financial institutions, housing finance, insurance companies and other financial services companies.
A recent investment data of Foreign Portfolio Investors (FPIs) indicates, 48% of new investment flows were channelized into the financial services sector. The sector accounted for 35% of the assets under the custody of FPIs. Further, many of the asset management companies have mutual fund schemes on the financial sector theme.
The Nifty Financial Services index has a 94% correlation and a beta value of 1.2 with the Nifty 50 Index. It has a correlation of 98% with the Nifty Bank index. The Nifty Financial Services index has delivered annualized returns of 14.99% in the last 5 years.
Exchange will offer futures and options in 7 serial weekly excluding the monthly expiry and 3 serial monthly contracts. This is the first time that the Exchange will make available weekly futures for the stock index derivatives. The derivatives are cash settled with expiry day being the last Thursday of the expiry month for the monthly contracts and Thursday of the expiring week for weekly expiry contracts. The option contracts are European styled Call Option (CE) and Put Option (PE) with strike scheme of 30-1-30 and strike interval of 100.
The Exchange will launch the index derivatives on the Nifty Financial Services Index from January 11, 2021.
"Equity, gold and property are some of the safest investment options which will yield good returns as well."
Undoubtedly, the entire 2020 was marred by coronavirus crisis. There was nearly no economy in the world which didn't face the negative impact of Covid-19 pandemic. However, as compared to other countries, India performed really well and has started bouncing back to normal, that too earlier than expected. The key reason why Indian economy showing signs of positive development was the government's policies in various sectors.
According to research done by Jaipur-based stock-broking firm GCL Securities Limited, now liquidity is being witnessed in the market because of steps taken by the Central government. Commenting on the findings of the research, vice-chairman of GCL, Ravi Singhal, "Due to lockdown imposed in the wake of Covid-19 pandemic, the economy faced quite an impact but due to the stimulus packages, policies and financial aid given by the government to boost the economy, liquidity flow has been increased in the market. And, keeping in view the liquidity flow, equity, gold and property are some of the safest investment options which will yield good returns as well."
'Equity, SIP, IT shares: Good returns'
Noteworthy, due to liquidity flow enhancement and developments in infrastructure, companies are expected to pour in additional investments, which in turn will give a further boost to liquidity.
It is advised for equity-oriented mid and long term investors to invest regularly through SIP modes in the year 2021 so as to reap good returns in 2-3 years down the line.
Also, GCL research report suggests that due to Covid-19 pandemic impact, many IT companies have trimmed down their expenditures, which are expected to give benefits to these firm in future. And, hence, investment in shares of IT companies can be considered as a good option for reaping profits.
'Gold: Yellow metal due to liquidity, inflation'
Moreover, due to an increase in liquidity, investment in gold is also a good option for handsome returns. Details available of past few decades suggest that whenever inflation goes up, the returns from yellow metal also witness a jump. Overall, gold bonds or gold investment can a good option for your investment portfolio.
'Real Estate/Property/Flats/Homes: Due to low home loan rates'
Further, the findings of the GCL research report suggest that due to low-interest rates on home loans, property buying has also witnessed a jump. Nowadays, ready-to-move-in flats are being preferred by the homebuyers. The affordable and mid-segment flats have witnessed the maximum purchase. Keeping all these points in mind, if you are willing for long term real estate investment, then properties in tier-2 and tier-3 cities are good options.
(Bloomberg) -- Indian stocks fell, in line with a broad decline in Asian peers, as negotiations toward a U.S. stimulus deal showed no sign of progress needed for an agreement by year-end. The S&P BSE Sensex declined 0.3%, ending a 5-day series of consecutive gains, while the NSE Nifty 50 Index slipped 0.4%, snapping a seven-day win streak. Both gauges had touched a record high on Wednesday.
Agro-chemical maker UPL Ltd. was the worst performer on the Nifty with a 11?cline, its biggest drop since March 23, after Indian daily Economic Times reported on allegations that the companys founders had siphoned off money. The company said the allegations are motivated by malafide intentions and that no siphoning of funds took place.
The Indian market decline on Thursday appears to be a temporary pause as ample liquidity in the market has been continuously supporting a buy trend, according to Ravi Singhal, a strategist at Jaipur-based GCL Securities Ltd.
Foreign investors have purchased a net $18.4 billion of Indian equities this year through Dec. 8, are already the most since 2013, according to data compiled by Bloomberg.
Investors must focus on quality names with high margins of safety, said Binod Modi, head of strategy at Reliance Securities Ltd. A broad-based rally across all counters might not sustain for long and men would be separated from the boys in the context of potential of earnings recovery.
The rupee weakened 0.1% to 73.6662 per U.S. dollar, while the yield on 10-year government bonds was little changed at 5.92%.
Here is what leaders of India Inc. and chief economists have to say about RBI's decision to spur growth.
The Reserve Bank of India, on Friday, while keeping the key lending rates unchanged revised its growth projection for the country's real gross domestic product (GDP) to -7.5% for FY2021 from -9.5%. Here is what leaders of India Inc. and chief economists have to say about RBI's decision to spur growth.
Mr. Chandrajit Banerjee, Director General, CII: "The upward revision in RBI's GDP growth expectation to -7.5% as compared to the -9.5% it had forecasted earlier is encouraging. CII has been observing a gradual recovery seeping in over the last few months, and the industry is optimistic that this growth momentum will continue going forward as well."
Mr. Sanjay Palve, MD, Finance, Essar Capital Ltd: "The RBI governor has hinted towards green shoots of economic recovery with improved projections in GDP growth. The unchanged repo rate indicates the accommodative stance of the central bank as all efforts are being made to revive growth in the economy."
Mr. Shishir Baijal, Chairman & Managing Director, Knight Frank India: "RBI's accommodative stance in the last few months has kick-started the economy that had experienced a sudden contraction due to the pandemic. These measures have ensured both - demand stimulation and liquidity in the economy, achieved by keeping the short term borrowing rates well below the benchmark."
Mr. Rajiv Agarwal, MD& CEO, Essar Ports Ltd: "We appreciate RBI's efforts to maintain an accommodative stance. The unchanged Repo rate is understandable despite a spurt in inflation, which has been primarily driven by disruptions in the supply chain, excessive margins, and indirect taxes."
Mr. Krish Raveshia, CEO of Azlo Realty: "The RBI keeping key rates unchanged is on expected lines as inflation has been way above the RBI mandated level. The policy stance kept unchanged at Accommodative indicates further rate easing in the near future. The announcement by RBI to keep system liquidity in surplus to help growth is a big positive."
Dr. Poonam Tandon, CIO, IndiaFirst Life Insurance Company Limited: "The RBI kept the policy rates unchanged given the growth-inflation dynamics with an accommodative stance. The focus is to revive growth and spur economic activity, which has been disrupted by the Covid19 pandemic while ensuring inflation remains within the targeted range."
Mr. Deepak Sood, ASSOCHAM Secretary-General: "Given the inflationary challenges, it is no surprise that the RBI-MPC has kept the policy repo rate unchanged at four percent. However, we must applaud the MPC for staying on course with regard to the accommodative interest rate stance. What is more, Governor Mr. Shaktikanta Das has laid a lot of emphasis on the fact that economic recovery would be dependent on sustained policy support."
Mr. Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani: "The RBI's decision of keeping the repo rate unchanged was on expected lines owing to the rise in inflation in recent months. Even though the apex bank has kept rates unchanged, we still believe that there is room for financial institutions to cut down on their lending rates."
Mr. Ravi Singhal, Vice Chairman, GCL Securities Limited: "The RBI's accommodative stance to stay the repo rate unchanged is in line with what most folks within the industry were expecting. The governing agencies got to contain near-term financial risks within the face of rising inflation. CPI has reached 6.8% in Q3 FY 20, which is an alarming sign. In Q4, although it's expected to ease bent 5.8%, it's still not a healthy number."
RBI has announced to increase the transaction limit of contactless cards to Rs 5,000.
Vikas Saraogi, Vice President, Merchant Acceptance, South Asia, Mastercard: "In the last few months, there has been an exponential growth in contactless digital payments. This is because consumers are increasingly choosing to pay in a safe and hygienic way for their day to day needs. Mastercard welcomes the RBI's decision to increase the limit from Rs. 2000 to Rs. 5000 without entering a PIN on contactless transactions through NFC cards."
What did the economists say?
Dr. Aurodeep Nandi, India Economist, Vice President, Nomura: "The RBI resisted blinking despite the high inflation glare. There were two insecurities that the market had in the run-up the policy meeting one, whether the higher-than-expected inflation and growth data would trigger a rethink on the existing 'lower-for-longer' guidance on policy rates; and two, whether the RBI would look to temper the surge in liquidity to re-align money market rates with the policy corridor. On both, the RBI has essentially doubled down on its October accommodative guidance and asserted that inflation remains largely supply-side driven and that supporting growth remains its paramount priority."
Mr. Abheek Barua, Chief Economist, HDFC Bank: "The RBI kept its policy rate unchanged at 4%, as expected, and continued to keep its policy stance accommodative. Some sections of the market had anticipated the central bank to act on the rising surplus liquidity in the system in light of the increasing inflationary pressures. However, the absence of any major liquidity absorption measures in the midst of a prolonged inflationary episode and indeed the upward revision of both the RBI's growth and inflation forecasts might be somewhat puzzling."
Prithviraj Srinivas, chief economist, Axis Capital: "The RBI kept policy rates on hold and its accommodative stance + guidance unchanged as expected. This despite an upward revision to growth and inflation forecasts. The MPC has unanimously voted to keep markets calm, given the uncertain outlook. However, the governor noted in his statement that there is a small window to proactively manage supply-side disruptions and break the inflation spiral, which is fuelled by excessive margins and indirect taxes."
The RBI's Monetary Policy Committee (MPC), which recommended holding repo rates or interest rates steady is largely in line with expectations say experts.
The Monetary Policy Committee's view that inflation is likely to remain elevated, barring transient relief in the winter months from prices of perishables, was largely responsible for holding interest rates steady.
According to Shishir Baijal, Chairman & Managing Director, Knight Frank India today's announcement remains in line with the RBI's goal of nurturing growth despite the rise in inflation.
"RBI's accommodative stance in the last few months has kick started the economy that had experienced a sudden contraction due to the pandemic. These measures have ensured both - demand stimulation and liquidity in the economy, achieved by keeping the short term borrowing rates well below benchmark.
Keeping demand stimulated to maintain the current momentum would be critical for continuous acceleration of the economic recovery. Recently reviving market performance indicators, despite all odds and supported by government and central bank interventions, have enthused a great sense of relief across real estate markets in the country. Home loan interest rates, which are at the lowest, have played a key role in rekindling the latent demand in housing market by nudging home buyers to make purchase decisions even during the pandemic. RBI's decision to keep the rates unchanged will keep the momentum of demand intact to provide the much needed stability, as even while there is recovery in the economy, it is still fragile and highly volatile," said Mr Baijal.
According to Ravi Singhal, Vice Chairman, GCL Securities, the RBI's accommodative stance to stay the repo rate unchanged is in line with what most folks within the industry were expecting. "The governing agencies got to contain near-term financial risks within the face of rising inflation. Consumer Price Inflation has reached 6.8% in Q3 FY 20, which is an alarming sign. In Q4 although it's expected to ease bent 5.8%, it's still not a healthy number. However green shoots are visible within the overall economy substantiated by resilient rural consumption and up tick in urban demand. The Market will also boost on some relief could be seen in winter months for inflation cool down," he stated.
According to Ram Raheja - Director, S Raheja Realty, the real estate sector was expecting a rate cut which would give further impetus to demand and induce liquidity in the market.
"However, for the third time in a row the RBI decided to keep the repo rate unchanged for the growth of the economy and to have control over inflation maintaining an accommodative stance. While the GDP expectations for H1 2021 are on the downside, there is expectation of recovery in H2. With the next budget focusing on boosting growth, this may lead to rise in investment in safe-haven assets like real estate as prices are likely to appreciate from current levels. With the role of the real estate sector in generating employment and economic activity, we foresee 2021 as a year that makes a comeback along with the hopes of a vaccine," he stated.
(Bloomberg) -- Indias equity benchmark edged lower from yesterdays record high as investors assessed the outlook for further gains.
The S&P BSE Sensex slipped 0.1% at the close, after swinging between intraday gains and losses. NSE Nifty 50 Index was little changed, as about two shares rose for each one that fell. Both measures yesterday closed at new peaks.
We are advising clients to buy on declines as low interest rates and ample global liquidity will continue to support the market, said Ravi Singhal, a strategist at Jaipur-based GCL Securities Ltd. The higher levels will prompt some investors to book profits.
Foreign net equity purchases of $16.11 billion this year through Nov. 27 are already the most since 2014 as funds have poured in chasing returns. The relative strength index on both the Sensex and Nifty is around 70, a level that some traders read as a signal that theyre overbought.
The rupee weakened 0.2% to 73.8025 per U.S. dollar, while the yield on 10-year government bonds fell one basis point to 5.92%.
SEBI panel to consider big bang reforms in November 26 meet; T-1 settlement, zero demat balance on the cards
A Sebi-appointed advisory panel may take up some big bang reforms for discussion during its meeting on Thursday. On the agenda could be reducing settlement days to T+1, capital adequacy norms for brokers and banks needing separate entities to become clearing members.
The Securities and Exchange Board of India (SEBI)-appointed Secondary Market Advisory Committee (SMAC) will discuss big bang reforms for the capital market during its meeting on November 26.
SMAC represents all market participants, including exchanges, brokers 0and Depositaries. This will be the panels first meeting this year due to the disruption caused by Covid-19. After deliberation by the SMAC, the regulator will take these issues to the SEBI board for approval.
The committee may have four key points of discussion on the agenda for its meeting on Thursday:
SEBI is planning to cut down settlement days from T+2 to T+1. India would be the second market to implement this measure, should it go forward.
The regulator has discussed the T+1 settlement mechanism on various platforms but faced resistance from market participants, especially Foreign Portfolio Investors. However, SEBI has firm grounds for this reform as less settlement time means less risk of a default by brokers.
Speaking to Moneycontrol, a SMAC member said: If Sebi makes settlement happen on T+1 evening instead of T+1 morning, this measure could be implemented in the market.
It will make clients keep their trading and Demat accounts with the same brokering house as they will not get enough time for stock transfers, said Ravi Singhal, Vice Chairman, GCL broking firm. But T+2 settlement is causing delays in the settlement process, hence the seller gets to pay in two days.
Singhal added: T+1 settlement is good for seller clients as their funds will be free the next day and hence they can better utilise their funds. It is also good for brokers, as they have to collect margin for only one day, so it will improve overall churning of regularly traded clients.
FPIs have reservations that implementation would be difficult because of the time difference. This measure may impact volume on the cash market as FPIs account for more than 40 percent of the market.
FPI association ASIFMA (Asia Securities Industry & Financial Markets Association) has written to the Finance Minister seeking to stop this measure.
Second discussion point
SEBI has a plan to make the funds account of all clients in the books of the stockbrokers' nil once in 30 or 90 days, depending upon the preference of the clients.
The regulator is toying with the idea of making the account nil and not permitting debit balances as settlement. The limit of Rs 10,000 is also proposed to be done away with.
In the current framework, with the introduction of pledge systems, securities do not currently leave the demat account of the client. Therefore, the settlement of securities is no longer applicable. However, a margin in the form of funds continues to lie in the books of the broker and is subject to settlement.
Periodic settlement has been a norm since December 3, 2009. It requires the broker to return excess funds and securities to the clients. However, a client going into debit was also considered a settlement, as with a debit balance no account is due by the broker and it is the broker who has to take the money from the clients.
Further, 225 percent of the margin dues and an additional amount of up to Rs 10,000 could be retained by the broker subject to client consent. For example, if a client has a credit balance of Rs 1 crore with the broker, and margin dues on open positions of Rs 10 lakh, the broker can hold back up to Rs 22.5 lakh and has to compulsorily return the remaining Rs.77.5 lakh to the client as settlement.
This new norm is now under consideration, especially after the Anugrah Broking default, where client money was lying with the broker for years. SEBI has also received several complaints about a large broker, who transferred client money into a liquid fund just before settlement dates.
An office-bearer of the broker association involved in the discussion said: I believe that Sebi has got its heart in the right place. As long as the clients are not inconvenienced in their trading experience, we will support the Sebi proposals. The pledge-repledge system for example has been amazing in identifying the bad sheep in the market. These bad actors deserve exemplary punishment for tarnishing the image of the entire community. Monitoring of funds is also essential, and brokers have never objected to any measures that increase transparency.
Moneycontrol had reported on October 29 that SEBI is considering strengthening settlement norms.
Capital adequacy norms for brokers
During a recent conference of the Confederation of Indian Industry (CII), Uday Kotak, CII President and Chairman of Kotak Mahindra Bank, raised the issue of capital adequacy norms for brokers. Kotak told SEBI chairman Ajay Tyagi that the regulator should come out with a capital adequacy ratio for granting of a license to broking firms.
Separate entity to become clearing members
Currently, banks themselves become clearing members, which creates a conflict of interest. So, SEBI is planning to create norms for a separate company for clearing members.
Indias benchmark equity index climbed to a record as a ruling party alliance won a state election, adding to positive sentiment amid a pick-up in business activity.
The S&P BSE Sensex rose 0.7% to close at 43,593.67 in Mumbai, after falling by an equal measure earlier in the session. The NSE Nifty 50 Index advanced 0.9%. Both gauges completed their longest string of gains in a month to end at new peaks.
Still, both measures relative strength indexes are above 70, a level that may signal theyre overbought, while a measure of volatility climbed for a second day to a one-week high.
On higher levels, a little bit of profit-booking is expected, said Ravi Singhal, vice chairman at Jaipur-based GCL Securities Limited.
Prime Minister Narendra Modis party retained control through a coalition in the eastern state of Bihar in its first election since the pandemic struck. While India has the worlds second-largest coronavirus case count, new infections are less than half of the peak in mid-September, according to data from John Hopkins University.
Modis alliances win in Bihar suggests political immunity from the pandemic, Sonal Varma, chief economist for India and Asia, ex-Japan, at Nomura Holding Inc. in Singapore, wrote in a note. The results indicate that the prime minister remains popular, she said.
Indias emergence from the worlds biggest lockdown has triggered a revival in demand, even as Asias third-largest economy is forecast to contract this year for the first time in about four decades.
There is optimism that an economic recovery may be faster as business activity is steadily rising close to the pre-pandemic levels, said Kranthi Bathini, an equity strategist at WealthMills Securities Ltd.
As earnings season continues, 28 of the 43 Nifty 50-member companies that have announced results so far have beaten or matched analyst estimates. Coal India Ltd., Power Grid Corp. and Shree Cement Ltd. are due to report results today.
The rupee weakened 0.3% to 74.3725 per U.S. dollar, while the yield on the 10-year government bond fell 1 basis point to 5.91%
Pfizer will remain attractive in the medium term as the pharma industry continue to outperform for the next few quarters, as per market experts
Shares of Pfizer Ltd jumped almost 20% to touch its 52-week high of Rs 5875 on Tuesday morning after its parent company Pfizer Inc announced its vaccine against Covid-19 is 90?fective.
Pfizer Limited shares were trading up 7.26% at Rs 5275 in a firm Mumbai market, valuing it Rs 24,132 crore. Pfizer Inc., which is developing the vaccine with its German partner BioNTech SE on Monday, said that its experimental Covid-19 vaccine was more than 90?fective, a promising development as the world has waited anxiously for any positive news about a pandemic that has killed over 1.2 million.
According to preliminary findings, protection in patients was achieved seven days after the second of two doses and 28 days after the first. The companies said they expect to supply up to 50 million vaccine doses globally in 2020 and up to 1.3 billion doses in 2021.
A vaccine at that level of effectiveness, administered widely, is enough to break chains of infection. Pfizer Inc. shares rose as much as 15% on Monday, while BioNTech American depositary receipts surged as much as 24%.
"We are a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis. We are reaching this critical milestone in our vaccine development program at a time when the world needs it most," Pfizer Chairman and CEO Albert Bourla said in a statement.
The companies have agreed to supply deals with the US and other countries, but it's likely that front-line medical and essential workers, and at-risk groups, will receive a shot first.
With effectiveness for the first vaccines previously expected to be in the range of 60% to 70%, a rate of more than 90% "is just extraordinary," said Anthony Fauci, director of the US's National Institute of Allergy and Infectious Diseases (NIAID).
However, questions about production, distribution, and the shot's performance and capability still need to be answered, according to vaccine specialists. The Pfizer trial started less than four months ago, and how long the vaccine will confer protection and how many will benefit are almost complete unknowns for now.
Since the Pfizer vaccine uses messenger-RNA (mRNA) technology, it will need to be stored and distributed at minus 70 degrees Celsius a big challenge for India and other developing countries with under-developed cold chain infrastructure.
On the other hand, viral vector (adenovirus) vaccines typically have less stringent refrigeration requirements and can be shipped at 2-8 degrees Celsius. The vaccine candidates being developed by Oxford/AstraZeneca, Johnson & Johnson, and Sanofi/Novavax, for instance, use viral vector technology.
On the performance of the stock in the market, Sanjiv Bhasin, Director IIFL Securities, told ABP News, "Pfizer will attractive in the medium term. Besides, the whole pharma pack of stocks will continue to outperform for the next few quarters. There may be a re-rating for many pharma businesses as the vaccine unfolds."
Ravi Singhal, Vice Chairman, GCL Securities Limited, said, "Pfizer announced 90?curacy of covid vaccine, on the note, global markets have zoomed. The market is in a bull run, but a bit of profit-booking is expected on higher levels. Gap up opening due to Pfizer news people can book profit at higher levels."
India stocks fell as an elusive U.S. stimulus deal kept sentiment subdued in the region, while investors closely watched local companies earnings.
The S&P BSE Sensex fell 1.3% to 40,145.50 in Mumbai, while the NSE Nifty 50 Index declined 1.4%.
It is predominantly global factors at play here with U.S. futures down and investors also wanting to avoid the U.S. election day uncertainty, said Kranthi Bathini, an equity strategist at WealthMills Securities Pvt.
Investors remain focused on the chances of agreement on a stimulus package as Novembers election fast approaches. Still, concerns are mounting that surging virus cases could force more businesses to close.
At home, economic activity is rebounding, and foreign investors net buying of $2.2 billion in local stocks this month is the highest since August. The central banks October policy meeting minutes indicated reviving growth is a bigger priority for the newly appointed monetary policy committee than achieving an inflation target.
Low interest rates and optimism about company sales picking up during the festive season that began this month are positives supporting the stocks, said Ravi Singhal, an analyst at Jaipur-based GCL Securities Ltd. High inflation for an extended period of time remains a key risk while the U.S. election-led volatility may weigh on sentiment during the week.
In company earnings, 10 out of the 18 Nifty 50 companies that have announced results so far have either met or exceeded expectations.
The rupee weakened 0.3% to 73.8475 per U.S. dollar, while the yield on 10-year government bonds was little changed at 5.84%.
Here is a quick look at the various support and resistance from a technical point of view as provided by Mr. Ravi Singhal, Vice Chairman, GCL Securities Limited.
Nifty support zone: 11,810-11,740 points Nifty resistance zone: 11,988-12077 points
Bank Nifty support zone: 24,024-23,844 points Bank Nifty resistance zone: 24,700-25000 points
Buying zone of Nifty 11,820-11,844 points SI: 11744 TGT: 11,944-12022,12088
Bank Nifty buying zone: 24,100-24,200 Sl: 23844 TGT: 24488,24800,25000
While the markets have been buoyant over the last few weeks, the Nifty is likely to find support at 11,810-11,740 points, while the resistance is likely to be at 11,988-12077 points, according to Mr. Ravi Singhal, Vice Chairman, GCL Securities Limited. The buying zone for the Bank Nifty has been placed at 24,000 to 24,100 points.
Here are some of the technical levels as suggested by Mr. Singhal.
Key levels to watch for:
Nifty support zone 11,810-11,740 Nifty resistance zone 11,988-12077
Bank nifty support zone 24,024-23,777 Bank Nifty resistance zone 24,555-24888
Buying zone of Nifty 11,810-11,840 SI 11740 TGT 11,944-12022,12088
Bank Nifty buying zone 24,000 -24,100 Sl 23777 TGT 24488,24800,25000
Former Reserve Bank of India (RBI) governor, Raghuram Rajan has asserted that it is important for the Indian central bank to retain the inflation focus to ensure that people continue to have confidence in the Rupee.
People still have confidence in the rupee and it is very important that confidence continues. For that confidence to continue, it is important that the RBI shows commitment towards inflation, Rajan said in an interview,
If there is no expectation that it will contain inflation going forward, there will be more worries about the rupee plummeting and that could be a source of concern going forward, Rajan said.
Rajans comments are significant in the context of an ongoing debate on whether the monetary policy committee (MPC) should cut key RBI policy lending rate further or remain on status quo to guard against inflation fears. The MPC is set to announce the policy decision tomorrow after a three-day meet.
Indias retail inflation inched up to a little above 6 per cent in June from 5.84 per cent in March.
Rajan said it is critical to safeguard the credibility of the RBI.
One of the Institutions working well right now is the central bank. The credibility of RBI is one reason why the currency has not plummeted despite our inability to contain the virus, fears around our growth trajectory as well as our fiscal situation, Rajan said in the interview.
The inflation targeting regime served India well and it is important that RBI continue to emphasise that it will keep inflation within those bands, Rajan said. It (inflation targeting) has actually served us quite well and let's recognise that rather than have a whole set of dialogues, which take us nowhere, Rajan said.
The RBI has cut its key lending rate, repo, by a cumulative 115 basis points (bps) since the start of the pandemic. This, along with a liquidity infusion to the tune of Rs 8 to Rs 9 lakh crore was aimed at pushing up credit growth in the system. However, bank lending to industries will continue to be muted on account of lack of demand.
Rajan, a former chief economist with the International Monetary Fund (IMF), was RBI governor between 2013 September and 2016. Rajans tenure was a crucial phase for the Indian banking system. It was then the RBI initiated the process to identify and hidden stress in the banking system and subsequently initiated an asset quality review (AQR).
Following this, banks were forced to identify and disclose the hidden bad loans in their balance sheets. Within a few years, the Gross NPAs in the banking system shot up to over Rs 9 lakh crore from around Rs 3 lakh crore before the process.
The National Payments Corporation of India (NPCI) is looking to add near-field communication (NFC) capabilities to its Unified Payments Interface (UPI) and is reportedly in talks with payment aggregators to push the product across point-of-sale (POS) devices.
The access to POS and NFC capability will likely expand UPIs reach to offline merchants increase the peer-to-merchant transaction and compete with private payment networks, sources told Mint.
Moneycontrol could not independently verify the report.
NPCI wants to target the 5 million POS machines in India which are doing well and registering high-value transactions. Enabling NFC is the only way to tap into this it will however face resistance from offline payment aggregators and POS manufacturers, a senior banker told the paper.
Private players Mastercard and Visa expanded contactless networks using NFC through tap-on-go payments systems, they added. NFC-enabled tap-on-go cards allow customers to tap the card instead of swiping at POS terminals. The technology would also benefit NPCIs Rupay card and other similar services, besides UPI, the report said.
However, both private players already have strong partnerships with banks and POS providers, while NPCI may face some push-back as existing alliances will be challenged, the banker said, adding: It is yet to be seen how NPCI incentivises the offline payment ecosystem to adopt this offering.
NPCI and Visa did not respond to queries, the report said.
The company is further looking to collaborate with smartphone manufacturers to embed the NFC function directly into devices, and plans to then expand this to large format stores. For phone users, NPCI is also looking to collaborate with banks to issue prepaid-cards and vouchers on the UPI network as an alternative to QR-codes.
Top private banks were on the radar of the foreign institutional investors (FIIs) during October-December quarter of FY20 as they added ICICI Bank, RBL Bank and IndusInd Bank in the quarter, data from Edelweiss Securities showed.
Other than the banks, FIIs continued adding insurance names such as HDFC Life Insurance Company, ICICI Lombard General Insurance Company, SBI Life Insurance Company and ICICI Prudential Life Insurance Company, like the previous two quarters, to their portfolios.
Ahead of the upcoming Budget, the Centre is studying several options to bring down personal income tax, CNBC-TV18 reported. A final decision in the matter is expected to be taken by the Prime Minister Narendra Modi sometime early next week.
Sources told CNBC-TV18 that the finance ministry is considering various options with respect to reduction of personal income tax rates. Some of these options include slashing tax rates on personal income, in line with the suggestions of the task force on direct tax simplification; rejig of existing tax slabs; and raising the minimum personal income tax exemption limit from the current Rs 2.5 lakh.
In addition, the government is also considering ways to increase tax saving measures, one of which is via the infra bonds route. The government may allow tax saving via infrastructure bonds of up to Rs 50,000 a year, sources added.
With the Union Budget set to be tabled on February 1, there are expectations of a slew of fiscal measures being taken into consideration to bolster India's economic growth. Following the recent tax break by way of the corporate tax rate cuts, India Inc is now hopeful for a reduction the tax rates on personal income, a move the industry believes would help rejuvenate the country's drooping consumption demand.
Only buy something that youd be perfectly happy to hold if the market shut down for 10 years. That's a word of wisdom from Warren Buffett.
Moneycontrol charted the data for past 10 years for the stocks in the S&P BSE 500 index. More than 50 stocks in the index gave more than 1000 percent, returns while 169 out of 500 rose 100-900 percent in the same period, according to data from AceEquity.
On the other hand, only 0.16 percent, or 80 stocks, out of 500 gave negative returns in the last 10 years.
So if you are invested in the stocks that have growth potential and a unique business model which could sustain for a decade, multibagger returns cant be ruled out.
As many as 56 stocks from the S&P BSE 500 index gave 1000-35000 percent returns in the last 10 years. The names include Info Edge, 3M India, Page Industries, Berger Paints, Eicher Motors, Atul, Ajanta Pharma, Astral Poly, Bajaj Finance, Caplin Point and Avanti Feeds.
Note: The above list contains stocks that are part of the BSE500 index in 2020.
It makes sense for investors to hold onto stocks for more than 10 years for long-term wealth creation, but can the same stocks be considered for the next 10 years?
The first and foremost thing which investors have to understand that things change in a decade, and what worked 10 years back might not be even relevant now; hence, portfolio churning is important.
Investors should re-balance their portfolio after 10 years and book profits in stocks which have already rallied or the business model is not sustainable.
In the last 10 years, lot of changes have happened in the economy with the service sector now accounting for more than 60% of the GDP. The composition of Indices has undergone a major change in the last 10 years. There has been a shift from old economy to new economy stocks and sectors, Rusmik Oza, Sr. VP (Head of Fundamental Research-PCG), Kotak Securities told Moneycontrol.
Many non-cyclical sectors and stocks who have the businesses in the B-2-C model can continue to be wealth generators in the next 10 years. Many of the new age growing businesses will have more listed stocks in the next few years and could be the future wealth generators: he said.
Businesses like insurance, asset management, retail, healthcare, small finance banks, specialty chemicals, fintech, CRAMs, eCommerce could be wealth-generating sectors in the coming years.
With many big companies likely to hit the primary market, 2020 could be far better than 2019. In fact, it could be the best in the past five years, as suggested by experts who Moneycontrol spoke to.
Only 17 companies launched their IPOs in 2019. Dinesh Engineers withdrew its public issue due to weak market conditions during the year 2019
Hence, 16 firms (against 24 companies in 2018) raised Rs 12,362 crore in total.
The year 2020 is expected to be completely different as at least 20 companies will come out with their IPOs and the size could be far more than those launched in 2019, experts feel.
"2020 will be much better than last 5 years in terms of number of companies and size of IPOs. India is capital hungry and a good way to raise long term capital is through equities," Umesh Mehta, Head of Research, Samco Securities told Moneycontrol.
VK Sharma, Head PCG & Capital Markets Strategy at HDFC Securities also sees substantially higher number of IPOs in the 2020 compared to 2019.
As per the Prime Database (as of December 20, 2019), the size of IPOs which already received SEBI approval or awaiting nod could be more than Rs 30,000-35,000 crore.
More than 30 companies filed their draft red herring prospectus since September 2018 (including 20 in 2019 itself), of which Mazgaon Dock Shipbuilders, Route Mobile (Rs 600 crore approved by SEBI on January 1, 2020), Samhi Hotels (Rs 2,000 crore), IREDA (Rs 750 crore), Shyam Steel, Bajaj Energy (Rs 5,450 crore), Powerica, Satyasai Pressure, Annai Infra Developers have already received
approval from the SEBI for launching IPOs within a year.
The companies which filed their IPO papers in 2019 include SBI Cards & Payment Services (Rs 9,600 crore), Burger King India (Rs 1,000 crore), Puranik Builders (Rs 1,000 crore), Home First Finance (Rs 1,500 crore), Easy Trip Planners (Rs 510 crore), Equitas Small Finance Bank (Rs 1,000 crore), UTI AMC (Rs 4,000 crore), Montecarlo and Mukesh Trends Lifestyle.
Umesh Mehta said HDB Financial, SBI Cards, Burger King etc would be a few IPOs which are expected to gain limelight in 2020.
Umesh Mehta said HDB Financial, SBI Cards, Burger King etc would be a few IPOs which are expected to gain limelight in 2020.
HDB Financial, National Insurance Company, National Stock Exchange, RailTel and Indian Railways Finance Corporation are also expected to file their prospectus for IPOs soon.
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"A lot of new issues (IPOs) are lined up in 2020, some of which could have the potential to create long term wealth," Siddhartha Khemka, Senior Vice President | Head-Retail Research at Motilal Oswal Financial Services said.
But again as usual, any weak market condition/sentiment can slow down or force companies to think many times to launch IPOs, experts feel.
"Though a lot of IPO are lined up. Sailing of IPOs would be depend on 2 main factors first is pricing of the issue & second is market scenario (Sentiments), If market scenario continue to remain positive than we may
Prominent industrialists Sunil Mittal and Sunil Munjal have envisaged interest in acquiring stake in Yes Bank, reports ET Now.
Their interest is at the preliminary stage and if the deal does takes place, Mittal and Munjal would be acquiring the stake in their private capacity, which could be up to five percent, the report stated.
Another five percent may be sold to private equity investors.
Yes Bank said it continues to be in regular conversation with the Reserve Bank of India (RBI) on its fund raising drive.
In response, a Bharti spokesperson stated,We strongly deny these baseless rumors. Mr. Sunil Bharti Mittal has no plans to make any investment in Yes Bank.
Indias burgeoning automotive demand and a sustained push by the government towards electric mobility has led to nearly a dozen Chinese companies entering India over the last three-to-four years.
While some of these companies are tying up with Indian entities, others have entered on their own and are setting up manufacturing facilities and R&D centres.
These China-headquartered companies manufacture e-scooters, e-bikes, electric three-wheelers, petrol-powered performance bikes, SUVs, luxury cars, buses and construction equipment.
Lesser known Chinese entities such as Benling, CFMOTO, SUNRA, Gemopai Electric, Evoke Motorcycles to name a few have already entered India. Zhejiang Rongda Industry & Trade, Jiangsu Kingbon Vehicle and Zhejiang Linghang Electronics have partnered Indian companies to jointly produce vehicles.
Some of these companies manufacture fully electric vehicles, an area where the Indian government is taking new strides. Benling India Energy and Technology, a direct subsidiary of Guangdong Sheng-based Dongguan Benling Vehicle Technology Co, for instance has invested Rs 10 crore to set up an assembly unit in Manesar for rolling out low-speed electric scooters.
Other more widely known brands like Volvo Cars (owned by Zhejiang Geely Holding Group), MG Motors (owned by SAIC Motor Corporation), Benelli (owned by Zhejiang Qianjiang Motorcycle Group Co), Great Wall Motors Company and Sany Heavy Industry Co have established manufacturing facilities and R&D operations.
There is a clear desperation by the Chinese companies to enter India. For instance CFMOTO, a $400 million Hangzhou, China-based company, has tied up with AMW Motorcycles, which is part of the now defunct and debt-ridden AMW Motors that produces medium and heavy trucks.
Revolt Intellicorp, promoted by Micromax Mobiles founder Rahul Sharma, showcased electric bikes in June that were based on bikes produced by Shanghai-headquartered SOCO. The Revolt RV400 looks identical to the Super SOCO TS1200R.
An aggressive lot
Market watchers, however, say that the current breed of Chinese companies have a different but aggressive approach towards the Indian market compared to the earlier flock.
Earlier companies like Lifan and Beiqi Foton tried to find their footing in India. But bad product quality and corporate indecision led to their quiet exit from India. Todays Chinese companies are different, they are much more ambitious and serious about having a slice of the Indian automotive pie, said a senior executive who provides consultancy services to auto companies.
The Brihanmumbai Municipal Corporation (BMC) procured and ran several units of air-conditioned King Long buses. The BEST undertaking was forced to blacklist the company after multiple instances of the buses catching fire or breaking down. Till date many associate the buses with Chinese make, thanks to the misinformation spread by the BEST, while the buses were actually built in Punjab by JCBL. The damage to the brand, however, was done.
The Lifan Group, which had tied up with Delhi-based Monto Motors for launching cheap motorcycles in India, was partly responsible for eroding the brand image of Chinese products. Their 100cc and 125cc bikes had several quality issues leading to their eventual exit from India.
But to beat this poor brand recall, Chinese companies devised new ways. SAIC, Chinas largest car maker, decided to invoke MG Motors, a 90-year old British brand that laid in slumber for most part of the last few decades. MG (Morris Garages) recently launched its first SUV Hector (Rs 12.18 lakh) in India, which is based on the Baojun 530: an SUV sold in China.
Goldstone Infratech, an Indo-China joint venture company comprising BYD of China, changed its name to Olectra Greentech last year. Goldstone was accused by India truck and bus makers of offering buses at very low prices, backed by subsidy from the Chinese government. Goldstone emerged as one of the largest bidders for supplying electric buses to Indian cities.
It remains to be seen if the latest entrants are more successful than their predecessors.
It has been three weeks of trading since the Lok Sabha elections results were announced. BJP returned to power with a bigger mandate than 2014, adding more stability to the political scenario in the country, much to the delight of the foreign investors.
The foreign investors took this very positively especially when domestic investors were waiting for correction even before the elections. The week from May 24, 2019, till June 13, 2019, Nifty saw a return of 1.4 percent that was supported by inflows in FIIs via ETFs primarily.
Within the ETF segment, the two largest funds tracking MSCI EM did not receive any inflows as India weight is reduced in the index due to the addition of new countries.
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But the two largest funds (I Share India & Wisdom Tree) tracking MSCI/FTSE India received inflows worth $264 million on AUM of $5.45 billion, which is almost 4.84 percent of AUM, the largest in recent times.
This is in line with the historical trend that witnesses an influx of 1.3-2 times of FIIs post-election as compared to pre-election. Six months prior to Lok Sabha 2019 election FIIs bought in a total of Rs 38,800 crore. Keeping this in mind, we expect post elections six months inflows around Rs 60,000-70,000 crore, which would increase the Nifty return in a short duration.
These inflows are based on the mandate that the new government will bring in more radical measures to push the economy out of its current slump and the issues faced by the financial sector will be addressed in a much better fashion. The inflows might spread unevenly through this period as the ground data movement will also be integral to the pace at which these inflows are attracted.
We believe that as the inflows from FIIs push the Nifty returns higher, the DIIs will start adding to MF inflows, in later stages, as it takes only three to five months for retail investors to gather faith in the movement of economy and markets. Thus, DIIs participation would only come at a later stage.
Overall we believe, as of now, FIIs would continue to take Nifty at higher levels only via select stocks and there might be some inflows in select midcaps by HNIs.
(The author is Founder at Target Investing.)
Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
row become India's top crude oil supplier, meeting more than a fifth of the country's oil needs in 2018-19 fiscal year.
According to data sourced from the Directorate General of Commercial Intelligence and Statistics, Iraq sold 46.61 million tonne of crude oil to India during April 2018 and March 2019, 2 percent more than 45.74 million tonne it had supplied in 2017-18 fiscal.
India's growth trajectory holds immense potential for global stakeholders to establish energy, infrastructure and technology collaboration with the country, a UN forum here has been told.
Counsellor in India's Permanent Mission to the UN Ashish Sinha stressed on Wednesday at the ECOSOC Forum on Financing for Development Follow Up that India wanted to use growth as a mechanism to pull the maximum number of people out of poverty and improve quality of life in an inclusive manner.
"India has retained its position as the world's fastest growing major economy. Indian economy has been growing over 7 percent for several years and the forecast for the future is equally robust," he said.
Sinha noted that India improved its ranking by 23 positions in the World Bank's Ease of Doing Business rankings last year.
India's services exports rose 5.5 per cent to USD 16.58 billion in February 2018-19 from USD 15.71 billion in the same month a year ago, data from the Reserve Bank showed Monday.
However, the exports during February 2019 were lower than January's USD 17.75 billion.
Services imports in February 2018-19 declined by 3.3 per cent to USD 9.81 billion, compared to USD 10.14 billion in the year-ago month, as per the RBI data on 'India's International Trade in Services: February 2019'.
The imports stood at USD 11.3 billion during January this year.
The Dalmia Group moved the Supreme Court challenging the National Company Law Appellate Tribunal's approval for the sale of Binani Cement Ltd. to UltraTech Cement Ltd.
A three-judge bench headed by Chief Justice Ranjan Gogoi agreed to Dalmia's plea for an early hearing, and listed the case for Nov. 19, Bloomberg reported. The group is confident of getting a favourable verdict from the apex court, Dalmia Bharat's Group Chief Executive Officer Mahendra Singhi told BloombergQuint in an interview. Singhi, however, refused to share details of the grounds on which the group challenged the NCLAT's order, saying that that matter was sub judice.
On Wednesday, the appellate tribunal approved UltraTech Cement's plan to acquire debt-laden Binani Cement, holding that the rival bid by Dalmia Group was "discriminatory" to creditors of the stressed cement maker.Dalmia Bharat-led Rajputana Properties had initially emerged as the top bidder for acquisition of assets of Binani Cement. Later, UltraTech, the second highest bidder, came back with a higher offer, backed by the original promoters of Binani Cement. (Source : bloomberg)
Anil Ambani-led Reliance Communications Ltd clinched the approval of its overseas bondholders to ease the carrier's debt burden, putting the company a step closer to averting bankruptcy. The operator, which defaulted last year on a $300-million bond, got 83% of bondholders to approve the plan, the company said in an exchange filing.
"Reliance Communications bondholders approved the tender and exchange offer of $300 million bonds with an overwhelming majority of over 83%, at their meeting held today, 24 August 2018, in London. "RCom said in a statement. Following the offer, bondholders will receive cash proceeds of up to $118 million. "Bondholders will also get $55 million bonds to be issued by Global Cloud Xchange Ltd (holding company of GCX), a foreign subsidiary of RCom." the statement added. The Global Cloud Xchange bonds will be unsecured and will carry a coupon of 0.1% with maturity of four years, it added (Source : Mint)
The Securities and Exchange Board of India (Sebi) is planning to limit investor's exposure to shares and equity derivatives in line with their net worth, said three people with knowledge of the development. The move is aimed at preventing individuals from going overboard on equity investments, considered riskier than bonds.
The proposal is similar to the concept of accredited investors in some developed markets. An accredited investor is one who meets requirements regarding income, net worth, asset size, governance status or professional experience. The US regulator has adopted requirements for accredited investors to protect those who may be unable to sustain the economic risk of investing in unregistered securities. The proposal, if implemented, could impact a number of equity investors. (Source : Economic Times)