Showing posts with label "karvy private wealth". Show all posts
Showing posts with label "karvy private wealth". Show all posts
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Thursday, 29 March 2012
Investing in 2012 by Mr. Swapnil Pawar, CIO of Karvy Private Wealth
Investment avenues for 2012 can be recommended based on careful assessment of various scenarios that may pan out. The emphasis is more on action rather than on communicating a certain "outlook". I believe the investors are often flooded with too much "outlook" and too little "actionable input". Here is an attempt to focus on the matter.
I have used what is typically referred to as scenario-building exercise. This is a powerful technique implemented by military planners, oil explorers and geo-political experts. Simply put, according to scenario analysis, the final shape of the world is a function of a few key drivers. These drivers affect the intermediate variables, which, in turn, shape the future. The important factor to consider here is the parallel impact of a given driver on different variables. Thereafter, we can easily come down to a fairly small list of candidate scenarios of how the world would shape up.
Using scenario analysis, we are trying to overcome 2 common problems typically faced in our endeavor of investment advice too specific and inherently speculative prediction on one hand, and too general and anything-can-happen sort of pseudo-prediction on the other. Real life is hard to predict. The attempt , therefore, is to forecast as few different alternative futures as possible, and design an investment strategy in that light.
I have used what is typically referred to as scenario-building exercise. This is a powerful technique implemented by military planners, oil explorers and geo-political experts. Simply put, according to scenario analysis, the final shape of the world is a function of a few key drivers. These drivers affect the intermediate variables, which, in turn, shape the future. The important factor to consider here is the parallel impact of a given driver on different variables. Thereafter, we can easily come down to a fairly small list of candidate scenarios of how the world would shape up.
Using scenario analysis, we are trying to overcome 2 common problems typically faced in our endeavor of investment advice too specific and inherently speculative prediction on one hand, and too general and anything-can-happen sort of pseudo-prediction on the other. Real life is hard to predict. The attempt , therefore, is to forecast as few different alternative futures as possible, and design an investment strategy in that light.
Wednesday, 28 March 2012
Don't rush to invest in debt instruments
The rates of return offered on small savings schemes - those of the post office, Public Provident Fund and National Savings Certificate - have been increased by up to 50 basis points (bps) from April 1.
Beside good rates, the returns are tax-free. However, there is one problem with these instruments - liquidity. Hemant Rustagi, chief executive officer of Wiseinvest Advisors, says the new rates will be good news if introduced, especially in the case of PPF.
PPF gives returns of 8.65 per cent and is tax-free. Not many debt products give such returns. It is safe and the returns are assured. These (higher rates) will make them even more attractive," he says.
However, if the rates are raised, it does not warrant taking out money from equities and parking it in a PPF.
"Over the long term, equities will give you better returns than a PPF and are tax-free, as after a year of investing, there are no long-term capital gains levied," he said. The case for an NSC or a post office monthly income scheme is weaker. Besides being illiquid, these instruments provide lesser post-tax returns. An increase of 50 bps does not make these instruments any more or less attractive.
An NSC matures in five years; you cannot withdraw mid-way, making the instrument illiquid. In December, the maturity period was reduced by a year and the interest rate raised by 0.4 per cent, to 8.6 per cent.
Second, as of now, MIS and NSC provide pre-tax returns of 8.2 per cent and 8.4 per cent, respectively. However, there are banks that offer rates of between nine and 10 per cent for the same tenured fixed deposits. The State Bank of India, for example, offers its 10-year deposits at 9.25 per cent.
While NSC, MIS and bank Fds are not tax-free, post-tax returns of bank FDs are higher than those of MIS and NSC.
These are taxed in line with your applicable income slab. While MIS and NSC are typically aimed at senior citizens, there are better options, says Suresh Sadagopan, certified financial planner.
"They have a senior citizen savings scheme, which offers a higher rate of return at nine per cent and the limit is also higher at Rs 15 lakh instead of Rs 1 lakh for the NSC or MIS," he says.
He adds these schemes are used by senior citizens who lack a source of regular income, but there are options, such as IDBI Bank's monthly or quarterly income plans.
There are also bank FD especially for senior citizens, with higher interest rates. Another issue with MIS is that it pays eight per cent interest yearly (payable every month) and if you stay invested till maturity, you would get a five per cent bonus.
But, with the rise in interest rates, the bonus has been done away with.
Tuesday, 27 March 2012
Plan your taxes the smart way!
The question we must ask ourselves is whether we are paying the right amount of taxes to national government. Are we really planning our taxes? If so, how are we going about it? are we planning it the smart way? Given rapidly changing tax laws, abolition of fringe benefit tax (FBT), new prequisites valuation rules, and the new Direct Tax Code (DTC) bill in the pipeline, we need to be really tactful and plan our taxes the smart way to meet the changing environment.
Every month tax is deducted from your salary. Now, unless you revise the pay structure to one which is more tax-friendly, you will continue to carry a lighter wallet. So, is there a way to offset this additional burden? Certainly. All you need to do is plan your taxes, claim your tax deductions and submit all your investment proofs to your employer. This will help you avoid undue tax deduction over the next 3 months.
Overall, planning is the key! Learn the facts about tax laws, plan your money spends and save your tax.
Every month tax is deducted from your salary. Now, unless you revise the pay structure to one which is more tax-friendly, you will continue to carry a lighter wallet. So, is there a way to offset this additional burden? Certainly. All you need to do is plan your taxes, claim your tax deductions and submit all your investment proofs to your employer. This will help you avoid undue tax deduction over the next 3 months.
Overall, planning is the key! Learn the facts about tax laws, plan your money spends and save your tax.
Monday, 26 March 2012
Tuesday, 20 March 2012
Wednesday, 14 March 2012
No Big Reforms This Fiscal Budget?
The Union Budget is to be announced on 16th March 2012. There is no significant expectation from the government’s fiscal policy, as there are no big reforms which will be addressed. The only thing we are expecting is slight increase in excise duty and service tax rate. We expect the excise duty to be increased from 10% to 12%. The sectors which primarily will take the hit are from this will be automobiles, cements and cigarettes.
We also expect the government to expand the service tax by having an ‘Exclusion List’ for service tax applicable as against the list of sectors where the service tax was applicable previously. All these measures are expected to boost the government’s revenues. There might also be few populist measures like the “Right to Food” bill which could be tabled this time.
A big positive step for the infrastructure sector could be abolishment of 5% import duty on Coal. This move will be positive for most of the power generating companies
Overall, fiscal deficit for FY13 is expected to be at 4.7%, although looking at the current welfare program and social spending we expect the number to exceed 4.7% levels and the realistic estimate for FY13 fiscal deficit should be around 5%, which is on back of assumption that Brent Crude will remain around 110$/barrel for full year
We also expect the government to expand the service tax by having an ‘Exclusion List’ for service tax applicable as against the list of sectors where the service tax was applicable previously. All these measures are expected to boost the government’s revenues. There might also be few populist measures like the “Right to Food” bill which could be tabled this time.
A big positive step for the infrastructure sector could be abolishment of 5% import duty on Coal. This move will be positive for most of the power generating companies
Overall, fiscal deficit for FY13 is expected to be at 4.7%, although looking at the current welfare program and social spending we expect the number to exceed 4.7% levels and the realistic estimate for FY13 fiscal deficit should be around 5%, which is on back of assumption that Brent Crude will remain around 110$/barrel for full year
Friday, 9 March 2012
HNIs are heroes of gold-ETF saga
The run-up in gold prices did not quell investor appetite for the precious metal. It only turned to exchange traded funds. Demand from gold fund-of-funds and high net worth individuals appears to have driven the rise in gold ETF assets.
According to half-year data for gold funds released by AMFI, the total number of folios under gold-ETFs stood at 4.28 lakh accounts in September 2011. This was 75 per cent higher than the total accounts in the same month of 2010. The assets under management of gold-ETFs schemes grew 187 per cent to Rs 8,184 crore.
In the above period, gold price in the domestic market had rallied 35 per cent to around Rs 2,563/gram. The net inflow into gold ETF schemes during the period was Rs 3,959 crore.
HNIs queue up
Who is buying into gold-ETFs? Though retail investors continue to be the single largest group of investors (4.12 lakh accounts) under gold-ETF schemes, there has been a rising interest among High Networth Individuals (HNI) for these funds.
From 5,433 HNI accounts in September 2010, gold-ETFs reported a total of 10,361 HNI accounts at the end of September 2011.
Ms Lakshmi Iyer, Head of Products, Kotak Mutual Fund, says: “A large number of HNIs who have long- term investment objective are diversifying into gold through gold-ETF schemes. The global uncertainty, the high inflation and the relative convenience of gold investment through ETFs are driving demand for gold funds.”
What of corporates?
Yet another piece of interesting data from AMFI is the number of corporate accounts under gold-ETFs. Corporate folios under gold-ETFs stood at 5,599 in September-2011, up from 3,310 accounts in September 2010.
So, are the 5000-odd corporates investing in gold-ETFs now? Maybe not, says Ms Iyer. “A lot of these are accounts from gold fund-of-fund schemes.” Some of these f-o-f schemes account for about 50 per cent of AUMs of some gold-ETFs, she added.
Gold fund-of-fund schemes are relatively less rewarding for a gold investor compared to gold-ETFs due to higher fund-management costs. But promotions by AMCs appear to have made them successful.
According to half-year data for gold funds released by AMFI, the total number of folios under gold-ETFs stood at 4.28 lakh accounts in September 2011. This was 75 per cent higher than the total accounts in the same month of 2010. The assets under management of gold-ETFs schemes grew 187 per cent to Rs 8,184 crore.
In the above period, gold price in the domestic market had rallied 35 per cent to around Rs 2,563/gram. The net inflow into gold ETF schemes during the period was Rs 3,959 crore.
HNIs queue up
Who is buying into gold-ETFs? Though retail investors continue to be the single largest group of investors (4.12 lakh accounts) under gold-ETF schemes, there has been a rising interest among High Networth Individuals (HNI) for these funds.
From 5,433 HNI accounts in September 2010, gold-ETFs reported a total of 10,361 HNI accounts at the end of September 2011.
Ms Lakshmi Iyer, Head of Products, Kotak Mutual Fund, says: “A large number of HNIs who have long- term investment objective are diversifying into gold through gold-ETF schemes. The global uncertainty, the high inflation and the relative convenience of gold investment through ETFs are driving demand for gold funds.”
What of corporates?
Yet another piece of interesting data from AMFI is the number of corporate accounts under gold-ETFs. Corporate folios under gold-ETFs stood at 5,599 in September-2011, up from 3,310 accounts in September 2010.
So, are the 5000-odd corporates investing in gold-ETFs now? Maybe not, says Ms Iyer. “A lot of these are accounts from gold fund-of-fund schemes.” Some of these f-o-f schemes account for about 50 per cent of AUMs of some gold-ETFs, she added.
Gold fund-of-fund schemes are relatively less rewarding for a gold investor compared to gold-ETFs due to higher fund-management costs. But promotions by AMCs appear to have made them successful.
Saturday, 18 February 2012
Singapore Airshow sees deals worth $31 billion
Major announcements include contracts for Boeing, Airbus, Pratt & Whitney, CFM and ATR. This represents a three-fold increase over the total value of deals announced in 2010 and reaffirmed Singapore Airshow's position as a must-attend event in the global aerospace and defence industry calendar.
Over four trade days, Singapore Airshow 2012 played host to some 900 exhibitors from 50 countries and 266 delegations from 80 countries who flew into Singapore to network, establish partnerships and forge new deals. In all, some 38,000 trade visitors from 119 countries visited the show during the first three trade days, compared to some 35,000 in 2010. Of these, over 30 percent were from overseas.
Some 70 percent of exhibitors at Singapore Airshow 2012 have already reaffirmed their plans to exhibit at the next airshow in 2014, underscoring the relevance of Singapore Airshow as an essential platform for them to reach out to their key markets, especially the emerging markets in Asia.
'We are pleased with our experience at the Singapore Airshow. It continues to be a great platform for us to reach out to the aviation community in the Asia Pacific region. As an industry leader, it is critical for us to have a significant presence at major airshows around the world and the Singapore Airshow ranks high on our priorities,' said Katy Padgett, manager, communications at Pratt & Whitney.
'The Singapore Airshow was an important opportunity for UK companies in the aerospace and defence sectors to promote their capabilities and identify potential joint venture opportunities. We were very pleased with the organisation and the opportunities to network with the overseas delegations,' said Adam Thomas, senior government spokesman for Britain's defence and security sector.
Jimmy Lau, managing director of Experia Events, said: 'We are delighted that deals worth over $31 billion were announced at Singapore Airshow 2012, surpassing the $10 billion worth of deals announced in 2010.'
'This reaffirms Singapore Airshow's position as the platform of choice for aviation industry representatives from around the world, targeting the Asia-Pacific markets, to come together, forge new partnerships, conduct business and conclude deals,' he said.
'We are appreciative of the ongoing support of our exhibitors, who continue to find value in showcasing their innovations and technologies at Singapore Airshow. We look forward to delivering an even better experience for our exhibitors and visitors at the next event in 2014.' Indian Air Force chief Air Chief Marshal N.A.K. Browne also visited the show on the opening day, Feb 14.
Source: http://news.in.msn.com/business/article.aspx?cp-documentid=5853799
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Friday, 17 February 2012
The rupee may strengthen further by year-end
Craig Chan, executive director and head of forex strategy & fixed income division (Asia-ex Japan), Nomura Singapore, in an interview with Business Standard's Rajesh Bhayani, shares his outlook on the dollar. He says if a convincing fiscal consolidation plan is presented in the Budget, the Reserve Bank of India could get more freedom to cut rates. We have seen a sharp fall in the rupee over the last six months and now, the rupee has appreciated sharply. Do you think the appreciation is over?
Recent measures by RBI like liberalising extra commercial borrowings, removing the cap on interest rates for deposits of non-resident Indians and measures to stem excess speculation in the forwards market has helped and inflows have resumed.
Along with the RBI steps, policy responses by the Indian government were also positive, leading to a reversal of the weakness in the rupee. In the coming Budget, if there is a convincing fiscal consolidation plan, RBI would have more freedom to cut rates. This type of policy coordination would be positive for attracting portfolio investment into the country and the rupee would certainly strengthen because of that.
Nomura is still looking at the rupee standing at 47.2 against the dollar by the year-end. Which risk factors can make the flow of portfolio money vulnerable? The global backdrop remains a major driver and the importance of this is reflected in India's financing gap.
The main concerns from our financing gap analysis are equity outflows and short-term debt obligations, which may be $25 billion if there is a rollover rate of around 70 per cent. Add to this the large current account deficit, estimated at around $65 billion this year.
Another concern is the liquidity tightness from RBI's dollar selling continuing and having an impact on the economy. This liquidity gap has been accounted for largely by the fall in currency reserves, adjusting for valuation and coupon effects. This data suggests RBI sold around $15 billion in spot and forwards.
These are just some of the factors that could pose risks to portfolio inflows. However, if this is followed by fiscal consolidation and rate cuts, which is likely, the local environment would be more conducive to capital inflows.
Any risk from the euro zone?
India's vulnerability is still intact and would re-emerge if a phase of deleveraging/repatriation emer-ges from the euro zone. That said, if recession and deflation risks deepen in the euro zone, it is likely that the European Central Bank could go for full-blown, US style quantitative easing. From a global risk perspective, this would be positive for India.
What do you think of the rupee's competitiveness vis-a-vis other currencies?
Looking from a trade-weighted perspective, our forex valuation analysis indicates the Indian currency is still around five per cent undervalued, even after considering the recent rally. This means it remains relatively competitive.
The rupee is still around 11 per cent weaker against the dollar, compared to the lows seen around August. This has helped make Indian exports and portfolio investment into India more attractive.
How do you see the dollar performing in the near future?
Nomura expects the broad dollar to strengthen marginally through the second quarter this year. However, this is being led primarily by our view of the euro's weakness.
There could be some divergence in the euro's performance against most of the G10 and emerging market currencies in the first half of the year because of negative idiosyncratic factors for the euro. These include capital flight out of euro zone fixed-income and growth underperformance. Through the second half of the year, the broad dollar weakness is expected to resume.
Do you see central banks globally acting in a coordinated manner?
When most other central banks in the region were easing their monetary policies a few months earlier, India was cautious, owing to high inflation. Now, with a cut in the cash reserve ratio, India has also indicated its easing bias. This has led to a convergence in policy with the region. But India is relatively late in changing its bias, though understandably, given the stickiness of headline and underlying inflation.
Source: http://www.rediff.com/business/slide-show/slide-show-1-inter-the-rupee-may-strengthen-further-by-year-end/20120217.htm
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Thursday, 16 February 2012
India eases merger norms in telecom sector
"Merger up to 35 percent market share of the resultant entity will be allowed through a simple, quick procedure," Communications Minister Kapil Sibal said, reading out the changes in policies governing licences, spectrum and merger norms. Sibal said that all players would henceforth need to stick to the prescribed limit on spectrum and that mergers beyond 35 percent would be allowed only in cases where it did not violate this limit.
The Supreme Court has ordered revocation of 122 licences issued in 2008 affecting a few foreign players such as Olso-based Telenor, the parent firm of Uninor, Russian Sistema which has a joint venture with Shyam Group and runs its India operations under the MTS brand, and Abu Dhabi-based Etisalat, which has 45 percent stake in Indian telecom firm Etisalat DB. Many of the affected players have hinted at exiting from their India businesses that would lead to a consolidation in the industry. The minister said that all future licences will be unified licences and allocation of spectrum will be de-linked from the licence.
"Spectrum, if required, will have to be obtained separately," Sibal said and added that 2G spectrum sharing will be permitted but in the same licence service area and the licences will be renewed after 10 years. Also, licence fee will not be uniform across all telecom licences and service areas, and will be made equal to eight percent of the adjusted gross revenue (AGR) in two yearly steps starting from 2012-13.
Service providers will also be allowed to share 2G spectrum. But the minister ruled out any possibility of allowing the same for 3G spectrum sharing.
Source: http://news.in.msn.com/business/article.aspx?cp-documentid=5850540
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The Supreme Court has ordered revocation of 122 licences issued in 2008 affecting a few foreign players such as Olso-based Telenor, the parent firm of Uninor, Russian Sistema which has a joint venture with Shyam Group and runs its India operations under the MTS brand, and Abu Dhabi-based Etisalat, which has 45 percent stake in Indian telecom firm Etisalat DB. Many of the affected players have hinted at exiting from their India businesses that would lead to a consolidation in the industry. The minister said that all future licences will be unified licences and allocation of spectrum will be de-linked from the licence.
"Spectrum, if required, will have to be obtained separately," Sibal said and added that 2G spectrum sharing will be permitted but in the same licence service area and the licences will be renewed after 10 years. Also, licence fee will not be uniform across all telecom licences and service areas, and will be made equal to eight percent of the adjusted gross revenue (AGR) in two yearly steps starting from 2012-13.
Service providers will also be allowed to share 2G spectrum. But the minister ruled out any possibility of allowing the same for 3G spectrum sharing.
Source: http://news.in.msn.com/business/article.aspx?cp-documentid=5850540
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Want to be an entrepreneur? Here's some good news...
Students and entrepreneurs can take it easy now. A group of 20 people representing the Ministry of Finance, Ministry of Micro Small and Medium Enterprises, Ministry of Agriculture, Department of Information Technology and banks like Small Industries Development Bank of India are devising methods to support their business plans.
"A special group has been formed to promote angel investment and early funding to start-ups and entrepreneurs. The group is looking at the availability of angel investment and venture capital funding, and will give recommendations on how to encourage investments from the government and the private sector and how to build that ecosystem," said a member of the group.
The group has already met four times, and by April-end a final report is expected, he added. "We want to make it easy for people to make investments. While banks, venture capital funds and financial institutions make it easier for people to set up ventures, we are considering if we can grant tax exemption (for a fixed limit) to people providing funding to start-ups," the official added.
While it largely depends on what idea an entrepreneur has, any fresh start-up will be entertained. The funding would be done through the normal channels. There are various venture capitalists, and the government is also contemplating to create some funds.
The success rate is 60-70 per cent, which is comparable to that in America. A successful business, says DST, is one which has managed to survive at least five years. Those 20-30 per cent that manage to make it big are the ones that have a turnover in excess of Rs 100 crore (Rs 1 billion).
Romesh Wadhwani, founder of Symphony Technology Group and chairman of Wadhwani Foundation, which promotes the National Entrepreneurship Network, says, "Apart from bureaucratic problems, early stage funding is hard to come by in India. "Venture capitalists here behave like private equity and private equity behaves like industrial groups. Angel funding is non-existent."
As Wadhwani puts it: "Entrepreneurs need some kind of small business and loan guarantee program which is efficient and easy to get. Venture capital is difficult to find in India even when a product or service is ready for the market.
"Unless you are a proven entrepreneur or you come from a business family or have hard assets like land and machinery, it is difficult to find ways to fund your venture." Deep Kalra, Founder & CEO of MakeMyTrip, is of the view that over the years, the funding situation for start-ups has improved. Already there are a 100-plus venture capitalists and private equity players.
"When I started 11 years ago, the situation was bleak, but now it is quite the opposite. If you have a good idea, there are several channels available for funding it," said Kalra.
Source: http://www.rediff.com/business/slide-show/slide-show-1-want-to-be-an-entrepreneur-heres-some-good-news/20120216.htm
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