Economy and Realty at glance- June 2012

GDP at a nine year low of 6.5%, high inflation at 7.55%. Ironically, in the fight between taming inflation and propelling growth, we are losing out on both

- Revenues of top-25 realty companies declined 9.30% in Q4FY12, mainly on account of low sales off-take due to higher prices and higher mortgage rates.

- The Realty Index on Bombay Stock Exchange (BSE) has dropped by more than 26% during the last one year compared to a 10% fall in the Sensex during the last fiscal year. In order to bring back the enthusiasm of the investor community into the sector, real estate companies will have to focus on factors such as improving cash flow position, lowering inventory, reducing debt and increasing profit margins

- RBI in its mid quarter review of monetary policy in June reaffirms that cheap interest rate is a far-fetched expectation in the wake of high inflation rate

- During the March 2012 quarter, interest cost as a percentage to sales stood at 15% compared to only 8% reported during the March 2010 quarter

- Although international crude oil price has declined by 20% since the beginning of the last fiscal year, the price of domestic fuel has gone up because the depreciation in Indian currency against USD by 25% during the same period has made import of crude oil expensive

- The Indian Rupee has depreciated by 18%, 8% and 32% against the British Pound, Euro and Yen respectively. Hence, a stubbornly high inflation rate will defer a lower interest rate regime

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

Indian tech pioneers, making money reach millions!

We all know how ATMs have become an inseparable part of our lives making it a lot easy for us to deal with day to day money requirements.

Here’s a story of these two Tech Pioneers who went out of their way to design a low cost ATM for the rural India. Not too long ago when Lakshminarayan Kannan set out to design a low-cost ATM to help deliver banking to the rural poor.

That was the time when he teamed up with Mr.Vijay Babu of Vortex to turn his inexperience into an advantage to create an ATM that would be suitable for various villages across India. This sentiment as meant for the good took a positive turn later on, soon after which they came up with Gramteller a low cost robust ATM, which today is a great success.

It is these few very people with a vision for our country, who inspire us to keep moving in the journey of life.

For all the ambitious, young and would-be investors!

Here are some quick and useful tips for all the young and would-be investors:

1. Deal with the debt first: You need to deal with all your debt first as it really makes a difference, For example: if you’re paying 17 percent on a credit card, the first place to “invest” is to wipe out that debt. While stocks have outperformed many other types of investments over time, their long-term average return is around 10 percent. Paying off a 17 percent credit card is like earning 17 percent with no risk – a much wiser choice.

2. Separate short-term and long-term goals: For most people, saving is different from investing – you save for things you want in the near future, say within a few years. Investing is long-term: money you won’t need for five years or more. For short-term savings, keep your money safe.

3. Don’t be afraid to start small: A lot of people think you have to be rich to buy stocks. You don’t. In fact, starting soon is much more important than starting big.

4. Ask other people what they do: It never hurts to ask, especially if you’re new to investing. Never guess, and definitely don’t invest based on tips or hype. Listen to trusted, experienced investors instead.

5. See what your employer offers: Many companies have retirement plans, PFs etc, which you can buy into straight out of your paycheck. This is indeed a good way to save.

Source:moneytalksnews.com

Things like refrigerator, microwave oven, computers and ice-creams to be used to measure WPI!

You know what's common to Ovens, Jewelry, Ice-cream, Towels, Washing Machines, Footballs & VCD players?

Answer: They are some of the things the government will now use to calculate wholesale inflation.

Some key important things that you must know about the new wholesale price index:

The base year against which the price rise is measured has been advanced by a decade from 1993-94 to 2004-05.

The new WPI index would concentrate more on accuracy and indication about the actual price movement in real time.

The new series would comprise of different weight-age levels, relative to the changes in the economy over a period of time. For instance, the weight of manufactured products would surge from 63.74% as per 1993-94 base price levels to 64.97% now.

Interestingly, the new WPI index now also includes the more commonly used items such as refrigerator, washing machine, microwave oven, computer and Television sets – which have now turned into basic needs, from wants. In fact, even Consumer items widely used by middle class such ice-cream, mineral water, readymade and instant food products, canned meat, leather products, dish antenna and even precious metals like gold and silver finds its place in the new index.

India Adds to the Glitter!

Gold prices touched a record as high as Rs 19.145 per ten grams in the last few weeks as the demand for the yellow metal continued to be strong.

Even in an uncertain global economic situation gold seems to be the preferred destination of investors’ money. Besides the individual investors there are indications that even big pension funds and central banks, which are getting worried about the government bonds, are also actively buying gold.

According to the World Gold Council India has been the largest gold market in terms of Volume. Around 18,000 tons of gold sits in the hands of private Indian consumers.
The retreat of good monsoon and arrival of festivals the gold demand for gold is further expected to rise.

What is keeping the Indians glued to gold?
Basically, investors are looking to protect themselves against inflation, currency and market volatility. With the ongoing economic volatility gold offers retail investors simplicity, transparency and security in highly volatile markets.


Source: Outlook money (22nd Sept)

ETF- One of the intersting options for investors!

Despite the fact that markets have improved since the beginning of the year the sessions have been choppy and the investors are weary as there is a sense of uncertainty among them.
And obviously every investing avenue faces the downside risks and exchange-traded funds or ETFs is no exception.

So as an investor what should be your strategies for protecting your ETFs during the down market times? Should you sell it or hedge it?
What is ETF?
Exchange-traded funds or ETFs is fast becoming as one of the most popular emerging options for the investors.
And for the uninitiated an exchange-traded fund is a security that stalks a commodity or an index or a group of assets such as index fund but differs in the trading aspect.
ETFs are traded like stocks on an exchange with changes in their pricing impacted by the buying and selling happening there.

Reasons why you should sell your ETFs during a down market situation:
Your risk tolerance: Probably the number one reason to sell your ETFs during down market is your risk tolerance. If you think you have had enough of losses or feel that you cannot take further risks then probably it is time to sell your ETFs.
How does this benefit you? If the market conditions had already made a dent on your capital, then selling your ETFs will save your remaining capital.
Stop orders: This is another effective tool to protect your portfolio. It is a tool having similar stop techniques as used in stocks like trailing per cent stops, limit stops and volatility stops and other such alternatives.
How does this benefit you? Stop orders could help you close out a position at a preset amount to minimize losses.
Selling will get you cash: During down market you can sell your ETFs if you are in need of immediate money for some purpose. This way you can keep some gains and get cash to meet your requirements.

Advantages of ETFs:
1.During a market downturn, ETFs have different provisions in everyday tools for doing allocation of assets in line with your risk appetite and tolerance and your financial goals.
2.You can allocate assets in various classes by reducing your portfolio exposure to equity capitalisations, assets and sectors that could take a hit in a down market.
3.Another strategy would be to over- or underweight your portfolio that will help tone down the downside risk.
4.Sector rotation is another important protection strategy in times of a downturn.
5.ETFs offer an excellent scope to identify, reposition and reinvest in those sectors that are stronger at different points like the expansion and prosperity points along the business cycle, the typical long-term pattern of changes in GDP the industry sectors follow.

Source : Rediff

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

11 IPO’s to hit the market, are you ready to take a leap?

People planning to invest money in primary market would have a number of choices to book their savings this month, as about a dozen of companies are expected to bring out their IPOs in September.

If you are planning to take a leap into the IPO market, here are some important things which you would have to keep in mind.
1. The promoter’s background: This is by far the most important element. However good the product, technology or market, it is the promoters who run the company. Find out about their track record, their other interests, and performance of other group companies in order to keep yourself well informed.

2. The company's balance sheet: If you want to be an investor, it's time to start reading and understanding a balance sheet. Pay attention to the topline and the bottomline, major variances; but most importantly, consider carefully the extraordinary items and notes to accounts.

3. Risk factors: Though risk factors are not very clearly spelt out, a careful reading would still give enough information of the downsides. Try to do an impact analysis of the critical risk factors.

4. Shareholding pattern: It is important to know who the major shareholders of the company are and what their shareholding pattern will be after the issue.

5. Value, not price or par: An offering at the face value of Rs 10 is not necessarily cheap. The 'par value' system often gives you the impression that no premium is being charged.

6. Compliance record and litigations: Find out whether group companies have been diligent in filing their returns to various bodies such as the stock exchanges and registrar of companies.
 The prospectus will disclose all major litigation cases filed against the company's directors and promoters, as well as against group companies. Avoid companies that are deeply mired in litigations.

7. Underwriters and investment bankers: Underwriters add to the issue's strength. An underwritten issue today does not denote weakness requiring an underwriting support, it shows that there are intermediaries who after assessing the risks have decided to back the issue.
 Also, before investing in an issue, look at the names of its investment bankers and check out their past track record.

Source : Rediff