The Week Gone by : June 13 - June 18' 2011

The world Gone by : June 13 - June 18' 2011

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World This Week - May 15th - May 21'2011

World this Week : May 16 - May 21 2011

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India ranks among the top destinations for global equity investors!

When it comes to global fund flows, India easily ranks among the top destinations for global equity investors, who have pumped in a record net $29 billion so far in 2010.

STV is the ratio of traded turnover to market capitalization and a high ratio signifies better liquidity. Globally, investors are attracted to markets with a high STV, as it means a lower impact cost. Again, impact cost is the deviation from the ideal price that an investor would have otherwise paid for buying or selling a stock. This happens when the ‘buy’ or ‘sell’ order is large compared with the trading volume in the stock.

Experts attribute factors like concentration of trading in a few companies, high-promoter holding and low retail participation in India to this trend. STV for the NSE and BSE stood at around 60% and 20%, respectively, this year, compared with over 100% for stocks in Australia , Korea, Shanghai, Shenzhen, Taiwan and Tokyo, among others , according to data by World Federation of Exchanges (WFE).

India is still in many ways in the first wave of entrepreneurship due to which promoter holding is very high. Also, large number of fresh issuances is leading to increase in market cap but low turnover.

The impact of STT and low arbitrage opportunities has kept the high volume creators and arbitrageurs away from the market and unavailability of single tick-data does not allow for high frequency trading,” he said. Promoter shareholding in India is over 50% in the Indian market, compared with 10-15 % in countries like the US.

Source :ET

Smart moves to ride rising interest rates

Fixed deposits rates are on the rise. Though the investors living on interest income are happy about it, they are finding it difficult to catch the peak.The biggest challenge an investor faces in a rising-rate scenario is to identify the peak and lock in the rates around that level.

A better way to deal with a rising interest-rate scenario is to invest in floating-rate bond funds that invest in short-term instruments whose interest rates float in sync with benchmark rates. The other option is to invest in liquid-plus funds. Smart investors can start by putting in a good chunk of money in liquid plus funds.

As the rates rise, they keep locking in money in fixed maturity plans (FMPs) at regular intervals. This ensures that the money is deployed at attractive yields and saves you from the risk of missing the peak.

If the rates on the long-term fixed income instruments, such as bonds having a 5-10 year maturity , rise, then the prices of these bonds fall. As prices dip, investors lose money.

Hence, it is better to avoid mutual fund schemes that invest in long-term instruments. Of course, if you are of the opinion that the rates have already peaked on long-term instruments, you may consider investing in long-term funds to earn good returns over the next couple of years.

Equity investors are also not spared by interest rate movements. Interest is the price of one key raw material – money. Hence, when the interest rates rise, the profitability of companies with debt on books goes down.

Investors should avoid interest-rate sensitive sectors such as real estate, automobiles and consumer durables as a large chunk of demand for these goods is satisfied using borrowed funds.

Source : ET

FMCG – Fast moving sector!

India’s fast moving consumer goods (FMCG) sectors is moving fast northwards, it is expected to grow even further owing to strong economic growth, rise in rural and urban income and to support good monsoons.
The sector grew 11.4% in last quarter ending June and further mellowed the growth rate owing to high inflationary pressures and ever rising prices of raw materials.
In coming months the sector is poised to grow betting on expanding its rural footprints and overseas acquisitions.
Our in-house experts also highlighted the emergence of strong regional players across categories such as food, laundry and soaps, further highlighting the risks of increased competition eating into the market share of established players. But the biggest challenge to the growth story is posed by counterfeit products and increased multiple taxation, counterfeit products alone grossed an annual loss of Rs 2700 crores to the sector.
Despite all this the sector is truly following its core philosophy of Fast Moving northwards.

Source: Reuters/Multiple

Indian equity market holds a lot of opportunities!

India provides tremendous opportunities for financial inclusion via penetration and development in the Indian equity market today, a survey conducted by Nielsen Company said.

The top 5 cities in India contribute 84 per cent to trading in 2009-10, a figure up by 6 per cent from 2001-02. Cash trading volumes from Mumbai and Delhi alone account for 65 per cent of cash trading and 60 per cent of mutual funds volume.

The survey polled 1,207 current and potential retail investors from 12 cities across all geographic zones and levels of development, ages and occupation; 60 corporate, including banks and financial institutions, from the 4 metros and 120 SMEs from clusters in 12 cities throughout India.
There is also a great opportunity to impart financial knowledge. Nearly 94 per cent of retail investors have shown a strong willingness to participate in financial training programmers if they were to be offered in their vicinity.

The survey identified an appreciation of mobile phones as an enabler, a positive perception of competition as delivering better services and lowering trading costs and a desire for receiving financial training across the country. A clear majority of 56 per cent of retail investors across the country see mobile phones as the preferred channel that will likely enable them to participate in the equity market.

Source:Economic Times

Did you know about the Art funds?

An Art Fund works much like a Mutual Fund, the difference being that the former invests in Art. The funds aim at investing in diversified portfolio of select works by leading artists and providing investors with the opportunity to profit from leveraging the fund's pooled purchasing power. Art funds are a fairly recent phenomenon in India, and are cumulatively estimated to command AUM of 239 crore under management according to the India Wealth Report .

Art funds forms one of the alternative assets in which the individual investors invest; you can also check out the the break–up of the amount of wealth under each sub-category of Alternative assets by taking a look at the India Wealth Report.

India Wealth Report releasing this 23rd September 2010

We at Karvy Private Wealth are extremely happy to announce the release of India Wealth Report unfolding the striking aspects of existing Wealth in India.

This report would not only take you through the unexplored trends about the existing wealth and its distribution but also how it is expected to grow manifold in the coming years. This report holds the key to your investment decisions, long term forecasts and the investments capabilities that would allow you to emerge as a winner!

Here’s your golden opportunity to Get more out of life!

You can Visit this www.facebook.com/karvywealth link to view the complete report on 23rd of September 2010.

Publish Post

India third most powerful nation says the US report

India is listed as the third most powerful country in the world after the US and China and the fourth most powerful bloc after the US, China and the European Union according to a new report released in US.

In 2010, the US tops the list of powerful countries/regions, accounting for nearly 22% of the global power.

The US is followed by China (more than 12%), European Union (more than 12%), India (nearly 8%). India is followed by Japan, Russia and Brazil with less than 5% each.

According to this international futures model, by 2025 the power of US, EU, Japan and Russia would decline while that of China, India and Brazil would increase, even though there would be no change in this listing. By 2025, the US would still be the most powerful country of the world, but it would have a little over 18% of global power. The US would be closely followed by china (nearly 16%), EU (14%) and India (10%).

Source: TOI

Ground Rules before you plan for Fixed Deposits!

Over the last few months many companies have observed that the demand of Fixed Deposits has considerably gone up after the inflation entered into double digit territory making the banks offer not a very great deal of return.

Here are a few things that you should consider before investing in any company:
Can you part with the money: Before investing in a company you should ask for yourself  whether you can actually part with the money for the term you have chosen for the deposits, this is because compared to MF’s or bank FD’s, corporate FD’s are not very liquid.

Does the name ring a Bell? : Before investing it is always advisable to check with your financial adviser about the credentials of the company. You can always check with the ratings in order to see where the company stands.

Know the Risk: Just like the stock market, the company deposit space is also inhabited by a variety of species, depending on which the interest rates could vary.

How much should you invest?: Remember one thumb rule ‘ Never put your eggs in one basket’, just because a company is offering better interest rate you need not rush in to put in your entire corpus. It always makes sense to diversify your investment.

Source: Economic Times

The Undercover Economist - Economics of everyday life.

Ever wondered why the gap between rich and poor nations is so great, or why it’s difficult to get a foot on the property ladder, or why you can’t buy a decent second-hand car? This book offers the hidden story behind these and other forces that shape our day to day lives, often without our knowing it.

This books is an interesting read,aptly worthy of being called as the playful guide to the economics of everyday life.

Unleashing the potential of rural India!

With the country’s economy progressing at a good rate, the India rural markets have started gaining a lot of popularity as they have become more promising, Experts believe that are a lot of factors that are creating investment opportunities in the rural India lately.

The increase in procurement prices [the government sets the minimum support price -- MSP -- for many farm products] has contributed to a rise in rural demand. A series of good harvests on the back of several good monsoons boosted rural employment in agricultural and allied activities.
Policy measures like the waiver of agricultural loans to the tune of US$13.9 billion and the NREGS have really escalated the stated of rural economy.

With the increased number of banking facilities in rural India, the purchasing power is also expected to grow in the coming years, bringing about a change in the buying capacity. Rural India is evolving as a market for durable goods, telecom as a lot of companies have started offering products keeping in mind the needs of the rural lifestyle.

If you plan to venture out into the rural India, you would have to consider these options in terms of product offering:
1.The affordability of the product which you offer in rural markets is very important to be considered as the income level in rural India differs from that of urban areas.
2.Size and the design of your product should be such that it suits the rural lifestyle and their durability requirements.
3.Convenience orientation is again one of the aspects that you would have to consider as the rural consumer is very skeptical about accepting new technology.
4.Long term benefit: If you offer a product with a greater shelf life and flexible usage that would perfectly match the need of rural consumers.


Source: WSJ

What are gold ETFs?

What is gold ETF’s?

Gold ETF is a financial instrument like a mutual fund whose value depends on the price of gold. As the price of gold rises, the price of the ETF is also expected to rise by the same amount.

Similarly, a fall in the price of gold will also be reflected by a drop in the price of the ETF. However, unlike a mutual fund, the units of gold ETF have to be purchased or sold on the stock market.

Merits of investing in Gold ETFs :

Gold ETFs have the advantages such as lack of making charges, impurity risk, resale hassles, absence of wealth tax and long-term capital gains tax.

According to financial experts, investors can invest a small part of their portfolio in this fund for the purpose of diversification and hedging.

Have you assessed the real value of your business yet?

Early stage venture capital investing in India is emerging as the flavor of the season propelled by the country’s burgeoning economy, so essentially it becomes very important for one to valuate one’s business before approaching an investor.

Here are some simple pointers that would help you know what the investors actually look at before funding your enterprise:

Commercial aspects: The commercial aspects of the venture including its core markets, target audience, market reach and the scalability options.

Skill set: The skill of a start up’s management team – A strong team with relevant industry experience, contacts and track record which will attract a premium valuation.

Analyzing finances: Estimating the potential cash flows, capital required during its life cycle and the return on the capital invested.

Totality: The total value of cash, assets and intangibles already invested by the entrepreneur into the venture.

Investors generally believe that aspiring entrepreneurs should be better prepared to hard sell their ideas and company to gain a fair valuation. Not to forget an investor would also take into point the return on investment which is very crucial.

It becomes the responsibility of the entrepreneur to convince the investor the potentiality of the business and how it can become big given a time frame of 4- 5 years.

Source : ET

Advantages of Monthly Imcome plans!

Explanation: MIPs are hybrid instruments that invest small part of their portfolios in equities and the remaining in debt and money markets instruments.

Their portfolio is essentially biased towards debt, but a small exposure to equity is added as a kicker.

Advantages of MIPs:
MIPs provide a monthly income to investors & investors can decide periodicity at which he wants the dividends, which could be monthly, quarterly half yearly or annually.

Legendry investors of all time!

It becomes very imperative for us to know about some people who have taught the world great things, who have made a difference, most importantly, who have sent many examples to inspire thousands and beyond. Here’s presenting to you some of the greatest financial guru’s of all time.

1.Warren Buffett

Warren must be the most famous of them all because he is currently still running his own company and buying and selling investments.He is one of the world’s richest men who only wishes that he works past 100 years of his lifetime.

2.Jim Rogers

Jim Rogers is a hedge fund manager who co-founded The Quantum Fund in the 1970s and subsequently made 42 times the investment in the next decade. His fame however didn’t rise until after he retired in 1980 as he made bold calls such as predicting China’s huge growth, the rise in commodity price as well as the credit crisis months before the gigantic collapse of the market in October of 2008.

3.Peter Lynch

Hired initially as an intern at Fidelity Investments, Peter Lynch eventually turned the Magellan Fund from $18 million under management to more than $14 billion. His most famous investment philosophy is “Invest in what you know” which is very easy to understand for the retail investor.

4.Benjamin Graham

Perhaps more an educator than an investor, Benjamin Graham is considered one of the first to teach about value investing. His students include the likes of Warren Buffett and was very influential in providing his students with a sound investment framework. In fact, Warren Buffett described Graham as the second most influential person after Buffett’s own father.

Source:investorschool.com

5 thumb rules to become a great investor

Generally savvy investors have certain traits in common which makes them a pro at handling markets in all their variety, here’s what you need to know to be a great investor:

Understanding the Risk:
Understanding risk is essential to developing an investment strategy that works and produces repeatable performance over time. As individuals, we need to be aware of the times we are irrational in our thinking about investing.
By clearly understanding the potential for loss, investors can allocate their funds among long-term, mid-term, and short-term investments.

Understanding how emotions influence investing decisions:
A good investor has a plan, which is disciplined, which does not get caught up in unnecessary assumptions. Good investors do not allow their decisions to be ruled by emotions. The field of behavioral finance gives us some good insights into the most common mistakes people make and how to avoid them.

Diversification across asset classes and industry sectors:
A well-diversified portfolio includes large-company, mid-size, and small-company stocks. Both value and growth styles are reflected, as well as domestic and foreign stocks. Generally, you will overweight large cap investments, as they tend to have lower-risks than do mid- or small-cap stocks.
Research shows quite clearly that an equal weighting between value and growth styles of investing produces better returns over a longer period than does each style alone.

Timely re-balancing your portfolio:
Once you have your diversification model set up, it is important to stay the course. There will be times when you will feel you've erred as one style (value or growth), or one asset class (large cap or small cap) outshines the other.
The temptation is to add funds to the outperforming investment, or at the very least to let your winners run and sell your losers. Rather than doing either of these, the strategy that produces the best returns is to rebalance your portfolio yearly.

The importance of staying invested:
Besides rebalancing, you'll want to stay invested.
It's difficult, if not impossible, to time the market. So whatever portion you decide to put into equities should stay unless something changes in your personal situation requiring that you have less volatility and more income

Source : Rediff

There is some migration of ultra-HNI segment - Hrishikesh Parandekar, CEO, Karvy Private Wealth.

There is some migration of ultra-HNI segment because of natural growth in economy and such clients may acquire the wherewithal to invest into single PE deals. This could be one possible reason for the increase in single PE deals from HNI investors says Hrishikesh Parandekar, CEO, Karvy Private Wealth.

The number of such deals has increased of late adds Parandekar. “Ultra- HNI investors were doing single PE deals much before investing into professional PE funds came into vogue.”

“However, the scale of investing both in single deals and into PE funds has indeed increased in the recent years. As investors become more informed of the risks and possible returns from directly investing, this upward trend will continue into PE as on investment class he says.

For Ultra-HNI business owners, investing in PR space is a way of diversifying from their single-stock ownership in their companies, something we are strong advocates of” Says Parandekar.

“Unfortunately, most singe PE-deal investments by ultra-HNI and super-HNI business owners have been in companies in a space related to their own business, because that is a space they understand.”

“Hence, from a pure risk diversification perspective, it doesn’t help much. The objective is purely to regenerate superior returns from a space they understand more.”

Source : DNA

More gain With Karvy Private Wealth’s ‘Equity Investment Service’

It’s a popular belief that equities as an asset class have always given best returns to the investors in the long term. Karvy Private Wealth will help you balance the unpredictability in the market with the attractive returns it gives through our in-depth knowledge of market functioning and changing trends. With Karvy Private Wealth you get the option of either purchasing equities to build your portfolio or avail of our comprehensive trading solutions in the cash and F&O segment with an online and offline facility.

Our equity investment strategies are derived from a broad understanding of your profile and risk return expectations. Backed soundly by in depth research our experienced team of research analysts and advisors will guide you with appropriate customized solutions. Moreover we will constantly monitor your portfolios and suggest portfolio rebalancing based on not just the quality of stocks but also on your risk appetite.

Listed below are the services we that offer:

1) Research – The reports that we publish on regular basis are:

a) Daily technical report

b) Fundamental research report

c) Trading calls

d) Weekly market outlook

e) Weekly daily reports

f) Results preview and Result analysis, and

g) View on the economy.

2) Portfolio clean-up: Karvy Private Wealth offers you a comprehensive evaluation and clean-up of your existing equity portfolio.

3) Portfolio Management Services (PMS): Investing can be time-consuming and requires in-depth knowledge of industry with a constant watch on market. Karvy Private Wealth’s ‘Portfolio Management Service’ is the answer to those who need an expert to help manage their investments.

We tailor your portfolio after a thorough research backed by the expertise of our PMS team. If the amount of your investment is large we can also choose to go for our NDPMS i.e. Non discretionary PMS.

4) Margin Funding – Through margin funding an investor can apply for a larger number of shares by leveraging the funds that he or she has a margin with any of the institutions offering margin funding for IPOs.

5) Futures and Options trading – With futures trading you can customize your risk return strategies and benefit from more specific market views. Through options trading you can buy or sell the underlying security at a predetermined expiry date in future.