Posts Tagged ‘equity investments’

Are Retail Investors Staging a Comeback in Country’s Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

In what could be viewed as a sign of revival of retail interest in the country’s primary market, the initial public offering of Indiabulls Power has received over 31,000 applications from retail investors on the first day of its issue.

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Although the retail portion of the offering remained under subscribed, the interest was more than what was seen in three major IPOs of the fiscal — NHPC, Oil India and Adani Power.

According to an analysis, NHPC‘s over Rs 6,000 crore issue received 30,474 retail applications on the first day.

Adani Power‘s Rs 3,610 crore issue got only 15,000 such applications.

The Rs 4,982 crore issue of OIL received 7,700 applications.

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“Retail investors are gradually staging a comeback and it is a pleasant surprise for the primary market,” SMC Capital Equity Head Jagannadham Thunuguntla said.

The Rs 1,700-crore initial public offer of Indiabulls Power, which hit the market yesterday, got subscribed nearly six times, as flooded the counter with maximum number of bids.

However, bids from retail investors on the first day of subscription accounted for only 37 per cent of the shares reserved for them.

🙂

Positive Undertones in the Economy – Part 2 :)

Positive Undertones In The Economy

Extending to the yesterday’s post on the positive undertones of the economy in the markets and investors tips, here we coming up with the more factors which investors should use for picking up fundamentally good stocks.

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1. Reality companies hike rates by 15%

Reality sector is witnessing a substantial demand, especially in the mature markets, after the prices dropped a few months ago.

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With the gradual return of residential property buyers, prices in NCR and Mumbai areas have moved up 10-15%.

How long these prices will sustain is hard to determine, but this indicates the confidence of investors.

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2. India..in Better Position

India can be considered as “balanced” in terms of investment and consumption with savings rate of 35% and consumption of 65% of its GDP.

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The fastest growing China leans towards investment, whereas most of the western countries are weighted more towards consumption.

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If we compare India’s Sensitive Index with its other Asian peers, Sensex is valued at 17.6 times estimated earnings where as China’s Shanghai Composite Index trades at 22 times earnings and the MSCI Asia Pacific Index is valued at 24 times.

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So, India remains very attractive and it is an opportune time for Indian companies to grab market share.

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3. Developments in the rest of the economy 🙂

If we see the positive economic numbers across the globe, it seems that world economy is moving towards recovery.

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Australian economy surprised with a jump in growth in the second quarter.

US have witnessed a growth in the current quarter GDP, US manufacturing and housing sectors appears to be gathering pace, quarter’s results came better than expected.

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European economies like France and Germany continued their gradual emergence from the worst crisis in decades and company results showed an upturn.

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4. Concerns Over Weak Monsoon!

Everyone is expecting that poor rains would push up food prices in the short-term, due to the reduced yield of kharif crop and it would add to inflationary pressures.

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But at the same time, we should also know that Indian agriculture is not limited to agro commodities only, but it is well diversified into horticulture, livestock and fisheries and their share in total output of the agricultural sector is increasing.

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Total agricultural output accounts for only 18.5 % of the gross domestic product and the kharif crops like cereals, pulses and oilseeds account for only 20% of it.

Moreover, government spending in rural areas will mitigate the effect of diminished monsoon rains.

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So, Looking at the above factors, India growth story remains strong in the long run.

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So, one can go for the companies, which will benefit from “Economic growth” like power plants, roads, service providers like banking and engineering sector.

Thanks 🙂

Positive Undertones in the Economy – Part 1 :)

positive undertones of economy

We had a positive Q1FY10 result, which boosted the sentiments of investors regarding the economic recovery.

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But are we actually out of it?

Though the earnings were encouraging but if we analyze it, the results had a “bottom-line growth”… may be because of the lower costs of raw material, huge cost cutting, profit from other sources like stake sale or stock market trading etc.

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With lower interest rates, government spending in rural areas and lower base year, I am very much optimistic for Q2FY10 that these results would be “revenue driven”.

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Top line growth is not only good for the company and stock market but also for the economy as a whole.

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Apart from the Q2FY10 numbers, there are positive undertones in the markets and investors should use these undertones for picking up fundamentally good stocks.

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Those are :

1. Measures for fiscal deficit

The GoI is taking several measures to reduce the fiscal deficit.

Disinvestment is high on the priority list.

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As private spending is increasing, Govt. is reducing need for stimulus.

A large part of deficit is contributed by the oil subsidy.

For this, the ministry of petroleum is lowering the subsidy burden in Kerosene and LPG.

Recently, improved tax compliance with new tax code and enforcement through the recently initiated Unique Identification Project are other steps to control the deficit.

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2. Accelerating production

India’s industrial production posted the fastest pace in the last 16 months in June, which shows that India has endured the worst of the global recession.

The reason can be low interest rates, which has given confidence to the consumers to borrow to buy vehicles or other factory-made goods.

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3. Capital flows to India

Another positive trigger can be the capital flows to India, which is expected to increase because of better medium-term growth and faster recovery prospects.

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The Q1FY10 early indicators suggest that NRI deposits, FII portfolio inflows and inward FDI flows have generally been strong, as compared to the net capital outflows witnessed in the last two quarters of 2008-09.

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4. Exports seen at $167 bn in FY10

For Indian Export Organisations, India’s exports are expected to touch around $167 billion, almost the same level of last year in FY10.

The commerce ministry looks ambitious and optimistic and has come up with foreign trade policy for the next 5 years, whereby; it aims to have an export of $ 200 billion by FY11.

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This will ultimately improve the declining trend of exports and will give thrust to employment-oriented sector like Textiles and Gem Jewellery.

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5. The New Tax Code

The new tax code has simplified the tax laws and will result in better compliance and a broader tax base.

The resulting incremental tax revenues will first reduce the fiscal deficit. This is a net positive.

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People, there are many other factors and Positive undertones in the economy which indicates towards the betterment of the economy and stock market.

We would come up with the rest of factors in Part 2 of the topic in next blog. 🙂

Stay Tuned 😉

India’s industrial production posted the fastest pace in the last 16 months in June, which shows that India has endured the worst of

the global recession. The reason can be low interest rates, which has given confidence to the consumers to borrow to buy vehicles

or other factory-made goods.

Shape your child’s future through MF investment

child investement plans

Retirement and children’s education are the biggest worry of young parents in metros these days. 🙂
Financial advisors say most queries they receive are related to these two crucial issues.

It is rare to find a parent who hasn’t thought of or bought a children’s insurance plan.

🙂

Children’s education is one of the top priorities of urban couples these days. They rightly believe education will be a costly affair, especially if the kid wants to study abroad.

However, when it comes to planning for the event, only some get it right. Most people buy the wrong products without realising that they won’t be able to achieve their goals.

Wrong products may range from fixed deposits and public provident fund to insurance plans.

Interestingly, these experts are unanimous that the equity route, especially via mutual funds (MFs), is preferable to fund the child’s long-term needs.

🙂

We get long queries from parents who want to plan for their children’s future. Though many people opt for insurance products, there are several others who go for mutual funds,’’ says an expert.

“We ask them to take the equity route generally if it is a newborn baby or a very small child. This is because they can benefit from the possibility of higher returns and power of compounding during the accumulation phase,’’ he adds.

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There is a number of schemes in the equity domain. How does one go about it?

For example, you have the option of large-cap funds, mid-cap funds, diversified schemes, index schemes, sectoral and thematic schemes among others under the equity umbrella.

A diversified large-cap scheme is also recommended. One should also avoid thematic schemes that may not last longer as we are talking about 15-20 years here.

🙂

Other experts too advocate index schemes as an option for novices in the stock market.

Since many of these young parents don’t have the experience of investing in stocks, they can go for index schemes with low tracking error (the difference between the index and scheme’s performance) and lower cost.

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Index schemes invest in stocks that form a particular index, that too in the exact weightage each stock has on the index. It is a passive form of investing and considered a cost effective option.

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There are a few things experts want you to remember while investing for children.

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One, always pick up a scheme that has been around for at least five years and been a consistent performer during bull and bear phases.

Also take the money out of equity investments and park it in a safer avenue at least three years before the actual event.

Once you have accumulated the corpus, you should focus on preserving it till the actual event.

You can use the entire corpus if you have to make lump sum payment or use the proceeds from it to fund regular fees.

🙂

Child’s higher education is top priority for urban parents.

Many parents rely on wrong products to achieve the goal.

Equity route is considered best if you have at least 10 years.
You can consider investing in diversified equity scheme or index scheme

Make sure you are picking up a consistently performing scheme.
Transfer money to safer avenues three years before the actual event.

🙂

Retirement and children’s education are the biggest worry of young parents in metros these days. Financial advisors say most queries they receive are related to these two crucial issues. It is rare to find a parent who hasn’t thought of or bought a children’s insurance plan. “Children’s education is one of the top priorities of urban couples these days. They rightly believe education will be a costly affair, especially if the kid wants to study abroad,’’ says a wealth manager, who doesn’t want to be named. “However, when it comes to planning for the event, only some get it right. Most people buy the wrong products without realising that they won’t be able to achieve their goals,’’ he adds. Wrong products may range from fixed deposits and public provident fund to insurance plans. Interestingly, these experts are unanimous that the equity route, especially via mutual funds (MFs), is preferable to fund the child’s long-term needs.

“We get long queries from parents who want to plan for their children’s future. Though many people opt for insurance products, there are several others who go for mutual funds,’’ says Hemant Rustagi, CEO, Wiseinvest Advisors, a wealth management firm. “We ask them to take the equity route generally if it is a newborn baby or a very small child. This is because they can benefit from the possibility of higher returns and power of compounding during the accumulation phase,’’ he adds.

There is a plethora of schemes in the equity universe. How does one go about it? For example, you have the option of large-cap funds, mid-cap funds, diversified schemes, index schemes, sectoral and thematic schemes among others under the equity umbrella. “I would recommend a diversified large-cap scheme. One should also avoid thematic schemes that may not last longer as we are talking about 15-20 years here,’’ says Rustagi. Other experts too advocate index schemes as an option for novices in the stock market. “Since many of these young parents don’t have the experience of investing in stocks, they can go for index schemes with low tracking error (the difference between the index and scheme’s performance) and lower cost,’’ says the wealth manager. Index schemes invest in stocks that form a particular index, that too in the exact weightage each stock has on the index. It is a passive form of investing and considered a cost effective option.

There are a few things experts want you to remember while investing for children. One, always pick up a scheme that has been around for at least five years and been a consistent performer during bull and bear phases. “Never go for ‘flash in the pan’ kind of performance. You should make sure the scheme is actually looking to generate long-term returns rather than taking unnecessary risks to post huge returns during a particular phase,’’ says the wealth manager. Hemant Rustagi also wants you to take the money out of equity investments and park it in a safer avenue at least three years before the actual event. “Once you have accumulated the corpus, you should focus on preserving it till the actual event. You can use the entire corpus if you have to make lump sum payment or use the proceeds from it to fund regular fees,’’ he says.

NO KIDDING WITH JUNIOR’S EDU

Child’s higher education is top priority for urban parents

Many parents rely on wrong products to achieve the goal

Equity route is considered best if you have at least 10 years

You can consider investing in diversified equity scheme or index scheme

Make sure you are picking up a consistently performing scheme

Transfer money to safer avenues three years before the actual event