Buying into such upheavals pays off in the medium term
Sandeep Singh Posted online: Monday , October 22, 2007
The fund managers of Standard Chartered Premier Equity must be doing something right, as the scheme has delivered the second-highest return among all diversified equity funds over the past year. It’s why we caught up with Rajiv Anand, head of investments, Standard Chartered Asset Management Company, and asked him to make sense of what was going on in the market and to look ahead. Our correspondent put the questions to Anand, and this is what he said.
What’s your take on Sebi’s proposed change in regulations for participatory notes (PNs)?
We have been seeing unprecedented foreign capital inflows, and these flows are not being absorbed into the economy fast enough. As a result, the rupee has been appreciating. The pace of appreciation is being controlled by the Reserve Bank of India through regular intervention in the foreign exchange market. This action, however, creates huge liquidity in the banking system, which, in turn, needs to be sterilised by the RBI through various measures like issuance of MSS bonds, increase in CRR and the daily repo window.The current measure is just one more instrument being used to manage or control capital flows, especially those that are speculative, rather than of a long-term nature. Earlier, we have also seen curbs on inflows through the external commercial borrowings route. The impact of that on inflows has been minimal.Flows into India will remain strong as long as global investors seek out compelling long-term growth stories. The question is how can we increase the absorption capacity of the Indian economy. This is very critical as we are in a situation where the huge inflows are having a negative impact on certain parts of the economy, resulting from an appreciating rupee. On the other hand, we also need foreign inflows to fund growth. Managing these two aspects is a key challenge going forward.
As fund managers, do such upheavals change the way you manage your equity funds?
We believe that corporate earnings will continue to remain strong and the macro fundamentals remain robust. History has shown that buying into such upheavals pays off in the medium term.
Even at 19,000, the Sensex is discounting its expected March 2008 earnings at about 20 times, which is not bad. However, deeper, there are stocks, especially those who have driven this rally, whose valuations have doubled in a short period of time. For instance, ABB is quoting at a PE of 70-odd. Aren’t many stocks overvalued?As fund managers, we don’t buy the market. We buy into companies with strong growth potential. Therefore, one needs to look at PEs not on a standalone basis, but in conjunction with the growth potential of the company. Having said that, clearly, there are pockets of overvaluation in the market, where earnings expectations look rather optimistic.Current valuations don’t factor in the execution risk over the next few years. Therefore, one needs to closely monitor the execution of expansion plans on a company to company basis. Only those companies that don’t disappoint on this front will be rewarded by investors.
What’s your advice to small investors now?
What are the checks and balances they should employ? And what are the excesses they should guard against?Investors need to manage their return expectations to more realistic levels. They also need to have a long-term perspective to equity investing, as short-term volatility can hurt their financial health. Lastly, avoid leverage positions unless you are a seasoned investor, as the impact of short-term volatility gets exaggerated for investors who have taken leveraged positions.
The first batch of Q2 results are out. On a year-on-year basis, revenues of 150 companies have grown 24 per cent, net profit 40 per cent, which is pretty good. Is that an ‘early bird’ surge or is it representative of the larger set also?
We believe that corporate India is in fine fettle. Barring a few sectors like pharma, auto and auto ancillaries and, perhaps, cement, it should, by and large, meet the expectations of the market. And this strong earnings growth should sustain.
Which are the sectors and stories you are bullish on?
And which are the ones losing steam?We believe the Indian economy will be driven by two key growth engines: infrastructure spending and consumption driven by changing demographics. Therefore, we are bullish on stocks that are within these two themes or sectors that cater to these two themes. These would include the entire power landscape, construction, capital goods, financial services and telecom, to name a few.By the same token, we are more cautious on themes whose success is driven by global considerations, given the headwinds from slowing US growth and an appreciating rupee. Basically, all export-oriented sectors like IT, textiles and auto ancillaries.
The rupee just keeps appreciating. Will the restrictions on PNs reduce the pace of that rise? What’s your outlook on IT stocks now?
The restrictions may reduce inflows in the short term, but given the strength of global capital flows and visibility of growth of the Indian economy, it is inevitable that flows will reassert themselves in the medium term. IT is currently facing headwinds from an appreciating rupee and wage inflation. One will need to see how these businesses cope in such a situation, and manage growth and margins.
http://www.expressmoney.in/news/Buying-into-such-upheavals--pays-off-in-the-medium-term/92339.html
Overseas Investment $ 2 Lakh
BUY GOOGLE ON NASDAQ...
Sandeep Singh
Posted online: Monday , October 15, 2007
Earlier this year, when Tata Steel was looking to acquire Corus, many Indian investors were more than just bystanders to a defining moment in Indian business. Several among them were buying and selling shares of not just Tata Steel, but also shares of Corus listed on the London Stock Exchange and the New York Stock Exchange (NYSE), something they couldn’t have done barely a couple of months back.
That new-found range in choice came from the progressive easing of rules relating to overseas investment. First, the Reserve Bank of India increased the limit Indians could remit abroad, from $25,000 to $50,000 to $1,00,000 and, last month, to $2,00,000. Then, it eased norms for where all Indians could invest. Financial services providers have been working on putting the cross-border transaction linkages, and it is gradually coming together, more in some asset classes than in others.
StocksLast week, ICICIdirect, started giving its subscribers the option to transact on the three leading US stock exchanges, namely NYSE, Nasdaq and the American Stock Exchange. Reliance Money has had this option since January, not just on US exchanges, but also on several other stock exchanges through its partner, CMC Capital Markets.
To start, ICICIdirect subscribers, for instance, have to fill up a registration form and a tax exemption form (so that your capital gains are taxed only in India and not is the US too), and pay a one-time fee of Rs 999. Within three days, ICICIdirect will open an account for you with its foreign partner, Penson Financial Services, on the ICICIdirect platform itself.
In order to buy shares, you need to first transfer dollars into your overseas account with Penson. This transfer, which can be done through ICICI or any other bank, normally takes one to three days, with the bank levying a nominal charge for converting your rupees into dollars and remitting it. For every transaction, ICICIdirect will charge a brokerage of 0.75 per cent of the transaction value or $9, whichever is higher. Reliance Money, as in the domestic market, is dirt-cheap. Says Sudip Bandyopadhyay, director and chief executive officer, Reliance Money “Through CMC Capital Markets, we are charging just 0.05 per cent of transaction value.”
Besides a transaction platform, Indian brokerages also give investors financial information on companies. This is, however, purely of information nature, not advisory. Says Anil Kaul, head-retail, ICICIdirect: “In developed markets, there are rules on who can give advice and who can’t.”
The RBI’s rules let you invest in financial securities provided you take delivery in them. So, for instance, in shares, ICICIdirect lets you buy and sell stocks, American Depository Shares (ADS), index options for hedging, and exchange-traded funds (ETFs). Your universe of stocks has suddenly expanded manifold. Indicatively, there are 3,612 listed securities on the NYSE, several of them from companies whose products and services you might have used and admired.
The US dominates with 3,128 companies. Other geographies are also represented, with companies from other geographies having ADS listings. From India, there are 11 companies who have ADS listed on the NYSE, including one that is not listed in India, namely BPO major WNS Holdings. Says Kaul: “This product will grow as people will look to diversify their equity exposure. But it will also require educating investors.”
Besides product knowledge, two such issues are taxation and currency movement. Overseas share and mutual fund transactions are taxed at a higher rate than those done in India. Long-term capital gains tax is 20 per cent with indexation benefits, short-term capital gains tax at the marginal rate. The other variable is currency. If the rupee appreciates against the dollar, you get fewer rupees when you bring back your dollar.
Mutual FundsIn mutual funds, educating investors is the second step. At the moment, mutual funds and distributors are busy educating themselves on how they can sell the idea of foreign mutual funds to Indian investors. On a parallel track, mutual funds registered in India with Sebi have been launching overseas funds, but these are investments made in rupees, and are hence outside the $200,000 limit. Also, the range in this is rather limited and the themes very broad, centred primarily around geographies.
What will form part of the $2,00,000 limit are funds floated abroad. In the US alone, there are about 8,000 schemes, which can either be inviting or intimidating. Says Amar Pandit, financial planner, “If you are not savvy, choosing a scheme can be a tough task.”Even if you are able to choose a scheme, investing in it is an arduous process. Overseas mutual funds — for instance, Vanguard — can’t come to India and offer their overseas schemes because they need to be registered with Sebi. A chief executive officer of a fund house told us that a proposal to this effect has been lying with Sebi for two-and-a-half years.
Mutual funds in India and distributors can go ahead, but they are still working things out. So, for instance, Fidelity Mutual Fund in India can offer schemes of its US parent. Or, a distributor like Bajaj Capital can tie up with a foreign distributor. Says Rajiv Deep Bajaj, managing director, Bajaj Capital: “We are still studying the modalities.” Adds Kaul: “Regulations allow it. We need to see if there is enough demand.” For now, the only way you can invest in foreign funds is if you do the spadework yourself. That means contacting a fund house abroad, opening an account with it and remitting money to it to buy units.
Real estateReal estate too is a work-in-progress. Several European and Southeast Asian countries allow non-residents to buy property, which doesn’t come cheap. Even if you have the purchasing power, your choices are limited. There are some real estate advisory firms who facilitate land purchase abroad, but for earmarked parcels only.
One such firm is UK Land Investment, which is facilitating the purchase of ex-agricultural land in New Addington, Bromley, Kent. Says Subash Bhat, director (legal and commercial), UK Land Investment India: “You have to comply with KYC norms. If your purchase price exceeds the per year remittance limit of $2,00,000, you can even make deferred payments.”
On your part, there are many rules to conform to. The payment is remitted from your bank account in India to a bank account in UK. At the time of transfer, the bank will ask you to fill up FEMA Form A2, provide your PAN card, and give a certificate from a CA verifying the source of your funds. You might even have to make a personal visit to get the land registered and complete the paperwork.
What’s needed is one-stop shops, who have a range of properties to offer and the wherewithal to carry out the transaction for you. Sandalwood Residential Property Consultants, a division of Jones Lang Lasalle Meghraj, is eyeing a mid-2008 start. Says Raminder Grover, chief executive officer, Sandalwood: “We have been getting inquiries for Malaysia, Dubai and the UK. We will provide residential property consultancy across the globe. We will help identify properties and facilitate processes, including legalities.”
CommoditiesOne of the conditions laid down by the RBI for overseas investing is that trades have to lead to delivery, which makes commodity investing unfeasible. In time, as markets open up further and more players enter the fray, even these norms will be relaxed and access will increase. The day is not far when you won’t just be able to buy and sell Corus shares, but also take a position on steel prices.
STOCK MARKETWhat now?On August 21, when the sub-prime tremors intensified, the BSE Sensex fell to 13,989, and experts forecast a period of lull. Fifty days on, 18,000 has been scaled, and new all-time highs touched. On its Friday closing of 18,419, the Sensex is up 32 per cent since its August low, as an abundance of liquidity has followed favourable currency movement and strong fundamentals into India.The burning question: is irrational exuberance setting in or is this the India story at work? Even at 18,500, the Sensex PE, based on projected 2007-08 earnings, works out to about 22. That’s not ridiculous, but fair value.The movement is more in the frontline companies. In the BSE-500, of the 85 companies that have a market cap of above Rs 10,000 crore, 53 touched their highs since October 1. By contrast, of the 92 companies with a market cap of less than Rs 1,000 crore, only seven hit their highs during this period. Metals, real estate, oil and gas, and capital goods gained big, pharma and IT crawled. While the growth can’t be denied, what might be of concern is the speed of this rise. But if you are in it for long haul, fits and starts shouldn’t bother you.
http://www.expressmoney.in/news/BUY-GOOGLE-ON-NASDAQ .../92306.html
Sandeep Singh
Posted online: Monday , October 15, 2007
Earlier this year, when Tata Steel was looking to acquire Corus, many Indian investors were more than just bystanders to a defining moment in Indian business. Several among them were buying and selling shares of not just Tata Steel, but also shares of Corus listed on the London Stock Exchange and the New York Stock Exchange (NYSE), something they couldn’t have done barely a couple of months back.
That new-found range in choice came from the progressive easing of rules relating to overseas investment. First, the Reserve Bank of India increased the limit Indians could remit abroad, from $25,000 to $50,000 to $1,00,000 and, last month, to $2,00,000. Then, it eased norms for where all Indians could invest. Financial services providers have been working on putting the cross-border transaction linkages, and it is gradually coming together, more in some asset classes than in others.
StocksLast week, ICICIdirect, started giving its subscribers the option to transact on the three leading US stock exchanges, namely NYSE, Nasdaq and the American Stock Exchange. Reliance Money has had this option since January, not just on US exchanges, but also on several other stock exchanges through its partner, CMC Capital Markets.
To start, ICICIdirect subscribers, for instance, have to fill up a registration form and a tax exemption form (so that your capital gains are taxed only in India and not is the US too), and pay a one-time fee of Rs 999. Within three days, ICICIdirect will open an account for you with its foreign partner, Penson Financial Services, on the ICICIdirect platform itself.
In order to buy shares, you need to first transfer dollars into your overseas account with Penson. This transfer, which can be done through ICICI or any other bank, normally takes one to three days, with the bank levying a nominal charge for converting your rupees into dollars and remitting it. For every transaction, ICICIdirect will charge a brokerage of 0.75 per cent of the transaction value or $9, whichever is higher. Reliance Money, as in the domestic market, is dirt-cheap. Says Sudip Bandyopadhyay, director and chief executive officer, Reliance Money “Through CMC Capital Markets, we are charging just 0.05 per cent of transaction value.”
Besides a transaction platform, Indian brokerages also give investors financial information on companies. This is, however, purely of information nature, not advisory. Says Anil Kaul, head-retail, ICICIdirect: “In developed markets, there are rules on who can give advice and who can’t.”
The RBI’s rules let you invest in financial securities provided you take delivery in them. So, for instance, in shares, ICICIdirect lets you buy and sell stocks, American Depository Shares (ADS), index options for hedging, and exchange-traded funds (ETFs). Your universe of stocks has suddenly expanded manifold. Indicatively, there are 3,612 listed securities on the NYSE, several of them from companies whose products and services you might have used and admired.
The US dominates with 3,128 companies. Other geographies are also represented, with companies from other geographies having ADS listings. From India, there are 11 companies who have ADS listed on the NYSE, including one that is not listed in India, namely BPO major WNS Holdings. Says Kaul: “This product will grow as people will look to diversify their equity exposure. But it will also require educating investors.”
Besides product knowledge, two such issues are taxation and currency movement. Overseas share and mutual fund transactions are taxed at a higher rate than those done in India. Long-term capital gains tax is 20 per cent with indexation benefits, short-term capital gains tax at the marginal rate. The other variable is currency. If the rupee appreciates against the dollar, you get fewer rupees when you bring back your dollar.
Mutual FundsIn mutual funds, educating investors is the second step. At the moment, mutual funds and distributors are busy educating themselves on how they can sell the idea of foreign mutual funds to Indian investors. On a parallel track, mutual funds registered in India with Sebi have been launching overseas funds, but these are investments made in rupees, and are hence outside the $200,000 limit. Also, the range in this is rather limited and the themes very broad, centred primarily around geographies.
What will form part of the $2,00,000 limit are funds floated abroad. In the US alone, there are about 8,000 schemes, which can either be inviting or intimidating. Says Amar Pandit, financial planner, “If you are not savvy, choosing a scheme can be a tough task.”Even if you are able to choose a scheme, investing in it is an arduous process. Overseas mutual funds — for instance, Vanguard — can’t come to India and offer their overseas schemes because they need to be registered with Sebi. A chief executive officer of a fund house told us that a proposal to this effect has been lying with Sebi for two-and-a-half years.
Mutual funds in India and distributors can go ahead, but they are still working things out. So, for instance, Fidelity Mutual Fund in India can offer schemes of its US parent. Or, a distributor like Bajaj Capital can tie up with a foreign distributor. Says Rajiv Deep Bajaj, managing director, Bajaj Capital: “We are still studying the modalities.” Adds Kaul: “Regulations allow it. We need to see if there is enough demand.” For now, the only way you can invest in foreign funds is if you do the spadework yourself. That means contacting a fund house abroad, opening an account with it and remitting money to it to buy units.
Real estateReal estate too is a work-in-progress. Several European and Southeast Asian countries allow non-residents to buy property, which doesn’t come cheap. Even if you have the purchasing power, your choices are limited. There are some real estate advisory firms who facilitate land purchase abroad, but for earmarked parcels only.
One such firm is UK Land Investment, which is facilitating the purchase of ex-agricultural land in New Addington, Bromley, Kent. Says Subash Bhat, director (legal and commercial), UK Land Investment India: “You have to comply with KYC norms. If your purchase price exceeds the per year remittance limit of $2,00,000, you can even make deferred payments.”
On your part, there are many rules to conform to. The payment is remitted from your bank account in India to a bank account in UK. At the time of transfer, the bank will ask you to fill up FEMA Form A2, provide your PAN card, and give a certificate from a CA verifying the source of your funds. You might even have to make a personal visit to get the land registered and complete the paperwork.
What’s needed is one-stop shops, who have a range of properties to offer and the wherewithal to carry out the transaction for you. Sandalwood Residential Property Consultants, a division of Jones Lang Lasalle Meghraj, is eyeing a mid-2008 start. Says Raminder Grover, chief executive officer, Sandalwood: “We have been getting inquiries for Malaysia, Dubai and the UK. We will provide residential property consultancy across the globe. We will help identify properties and facilitate processes, including legalities.”
CommoditiesOne of the conditions laid down by the RBI for overseas investing is that trades have to lead to delivery, which makes commodity investing unfeasible. In time, as markets open up further and more players enter the fray, even these norms will be relaxed and access will increase. The day is not far when you won’t just be able to buy and sell Corus shares, but also take a position on steel prices.
STOCK MARKETWhat now?On August 21, when the sub-prime tremors intensified, the BSE Sensex fell to 13,989, and experts forecast a period of lull. Fifty days on, 18,000 has been scaled, and new all-time highs touched. On its Friday closing of 18,419, the Sensex is up 32 per cent since its August low, as an abundance of liquidity has followed favourable currency movement and strong fundamentals into India.The burning question: is irrational exuberance setting in or is this the India story at work? Even at 18,500, the Sensex PE, based on projected 2007-08 earnings, works out to about 22. That’s not ridiculous, but fair value.The movement is more in the frontline companies. In the BSE-500, of the 85 companies that have a market cap of above Rs 10,000 crore, 53 touched their highs since October 1. By contrast, of the 92 companies with a market cap of less than Rs 1,000 crore, only seven hit their highs during this period. Metals, real estate, oil and gas, and capital goods gained big, pharma and IT crawled. While the growth can’t be denied, what might be of concern is the speed of this rise. But if you are in it for long haul, fits and starts shouldn’t bother you.
http://www.expressmoney.in/news/
Interviews on Sharp market rise
HAS THE MARKET LOST ITS MIND?
Sandeep Singh
Posted online: Monday , October 15, 2007 at 1332 IST
TUSHAR PRADHAN, Chief investment officer, AIG Mutual Fund
‘No, this rise is backed by growth’It’s neither a bubble nor an overstatement. The rise is backed by growth. That reading is backed by numbers. By conservative estimates, I expect earnings of Sensex companies to grow 17 per cent in 2007-08, 15 per cent in 2008-09. At 18,500 levels, the Sensex is discounting its 2007-08 earnings 22.3 times, 2008-09 earnings 19.2 times. Those valuations might look marginally only on the higher side, but consider this: for 2005-06, we had projected Sensex companies to post earnings growth of 13 per cent; they managed 31 per cent. The market knows all.However, we are still in the boom-bust mindset. In that state, one starts to ignore the GDP growth forecast of 8.5-9 per cent a year for the next five years. In fact, 9 per cent GDP growth suggests the earnings potential of this market has been understated. The market is not an arbiter of reality, but of perception. Today, utility companies are growth companies, as they are helping build infrastructure. However, I do feel the excitement on them is a little more than they merit. What I also don’t like about this market is that people are talking too much in general terms. More than the index, the focus should be on companies, as there are many businesses that have not experienced the current surge.There are risks. If the political situation gets volatile, we might see market reducing its intensity, but only for a while. There is a lot of FII money coming in. Even if interest rates are reduced in India, hedge funds might move out, but not FIIs. Yes, mutual funds have been net sellers, but that’s primarily to meet redemptions.I continue to believe in Indian equities as a long-term investment.Investors need to look at long-term opportunities in equities to build wealth, which is something that doesn’t change with market movement. Invest regularly, for five, 10, 15 years, which is best done through a mutual fund.
AMITABH CHAKRABORTY, President, equities, Religare
‘No, it’s being driven by liquidity, fundamentals’The two major reasons for the market rally are fundamentals and liquidity. FIIs (foreign institutional investors) are pumping in big money into India and China — both markets that held their own even as other markets reeled under the impact of the sub-prime contagion. The appreciation in the rupee against the dollar has aided this trend, because FIIs are also making an additional return on the currency exchange on exit.Drilling down, the second-quarter results have started trickling in.For 2007-08, we expect revenue growth of the Sensex companies to be around 21 per cent, operating profit growth at 17 per cent and net profit growth at 19 per cent. We believe the Sensex EPS for 2008-09 will be Rs 1,010. That gives a forward PE of about 18, which suggests there is scope for further growth. Among sectors, we are bullish on construction, telecom and cement.Elsewhere, DLF will replace Dr Reddy’s in the Sensex from November 19, which should see increased investor participation in the real estate scrip. Some strong IPOs have also hit the market and done well, the most noticeable being PowerGrid. So, there are many factors behind the rise. There are risks, but even if those eventualities materialise — the political situation and high oil prices — the damage will be limited and cause only a slight stagnation in the market.Still, a long-term approach to investing is a must. Small investors should not indulge in day trading, as intra-day volatility in the Sensex is expected to average 600 points. Invest only in stocks you know and companies you understand, not because someone has asked you to.Invest for a five- to 10-year period, and don’t get flustered by periodic market volatility.
PARAG PARIKH, Chairman, Parag Parikh Financial Advisory Services
‘Yes, prices are running way ahead of the story’The reasons for the current rise in the market go beyond fundamentals. Bull runs are not led by fundamentals; in fact, fundamentals follow the run. Right now, the market is being pulled primarily by liquidity and sentiment. There is a lot of irrationality in the market. People are willing to pay sky-high valuations, and some of this thinking can be attributed to inexperience. There are no retail investors in this market, there are only retail punters. For now, every one believes the market can only go up and can’t come down. The market is currently filled with people who have never seen a bear market, and so they don’t know how a market can come crashing down.In such a scenario, where everyone believes the market can’t be derailed, even a small change or a touch of negativity or a random event can pull the trigger. It could be, for instance, political instability, recession in the US; economic growth in Europe is also slowing down. This market hasn’t discounted those situations. In the past few days, we saw the Left threatening to withdraw support to the government, but the market ignored it. India is a great economic story, but this market might be getting ahead, way too ahead, of that story.It’s also a changing market. This market has little for ‘value’ investors, who typically buy when valuations are down. There are very few stocks trading at a discount to their intrinsic value. There are stocks available at fair valuations. Invest in them, but only if you are here to stay. If you are simply looking to ride the wave, be warned, the stakes are high — the market can punish you bad.
http://www.expressmoney.in/news/HAS-THE-MARKET-LOST-ITS-MIND/92303.html
Sandeep Singh
Posted online: Monday , October 15, 2007 at 1332 IST
TUSHAR PRADHAN, Chief investment officer, AIG Mutual Fund
‘No, this rise is backed by growth’It’s neither a bubble nor an overstatement. The rise is backed by growth. That reading is backed by numbers. By conservative estimates, I expect earnings of Sensex companies to grow 17 per cent in 2007-08, 15 per cent in 2008-09. At 18,500 levels, the Sensex is discounting its 2007-08 earnings 22.3 times, 2008-09 earnings 19.2 times. Those valuations might look marginally only on the higher side, but consider this: for 2005-06, we had projected Sensex companies to post earnings growth of 13 per cent; they managed 31 per cent. The market knows all.However, we are still in the boom-bust mindset. In that state, one starts to ignore the GDP growth forecast of 8.5-9 per cent a year for the next five years. In fact, 9 per cent GDP growth suggests the earnings potential of this market has been understated. The market is not an arbiter of reality, but of perception. Today, utility companies are growth companies, as they are helping build infrastructure. However, I do feel the excitement on them is a little more than they merit. What I also don’t like about this market is that people are talking too much in general terms. More than the index, the focus should be on companies, as there are many businesses that have not experienced the current surge.There are risks. If the political situation gets volatile, we might see market reducing its intensity, but only for a while. There is a lot of FII money coming in. Even if interest rates are reduced in India, hedge funds might move out, but not FIIs. Yes, mutual funds have been net sellers, but that’s primarily to meet redemptions.I continue to believe in Indian equities as a long-term investment.Investors need to look at long-term opportunities in equities to build wealth, which is something that doesn’t change with market movement. Invest regularly, for five, 10, 15 years, which is best done through a mutual fund.
AMITABH CHAKRABORTY, President, equities, Religare
‘No, it’s being driven by liquidity, fundamentals’The two major reasons for the market rally are fundamentals and liquidity. FIIs (foreign institutional investors) are pumping in big money into India and China — both markets that held their own even as other markets reeled under the impact of the sub-prime contagion. The appreciation in the rupee against the dollar has aided this trend, because FIIs are also making an additional return on the currency exchange on exit.Drilling down, the second-quarter results have started trickling in.For 2007-08, we expect revenue growth of the Sensex companies to be around 21 per cent, operating profit growth at 17 per cent and net profit growth at 19 per cent. We believe the Sensex EPS for 2008-09 will be Rs 1,010. That gives a forward PE of about 18, which suggests there is scope for further growth. Among sectors, we are bullish on construction, telecom and cement.Elsewhere, DLF will replace Dr Reddy’s in the Sensex from November 19, which should see increased investor participation in the real estate scrip. Some strong IPOs have also hit the market and done well, the most noticeable being PowerGrid. So, there are many factors behind the rise. There are risks, but even if those eventualities materialise — the political situation and high oil prices — the damage will be limited and cause only a slight stagnation in the market.Still, a long-term approach to investing is a must. Small investors should not indulge in day trading, as intra-day volatility in the Sensex is expected to average 600 points. Invest only in stocks you know and companies you understand, not because someone has asked you to.Invest for a five- to 10-year period, and don’t get flustered by periodic market volatility.
PARAG PARIKH, Chairman, Parag Parikh Financial Advisory Services
‘Yes, prices are running way ahead of the story’The reasons for the current rise in the market go beyond fundamentals. Bull runs are not led by fundamentals; in fact, fundamentals follow the run. Right now, the market is being pulled primarily by liquidity and sentiment. There is a lot of irrationality in the market. People are willing to pay sky-high valuations, and some of this thinking can be attributed to inexperience. There are no retail investors in this market, there are only retail punters. For now, every one believes the market can only go up and can’t come down. The market is currently filled with people who have never seen a bear market, and so they don’t know how a market can come crashing down.In such a scenario, where everyone believes the market can’t be derailed, even a small change or a touch of negativity or a random event can pull the trigger. It could be, for instance, political instability, recession in the US; economic growth in Europe is also slowing down. This market hasn’t discounted those situations. In the past few days, we saw the Left threatening to withdraw support to the government, but the market ignored it. India is a great economic story, but this market might be getting ahead, way too ahead, of that story.It’s also a changing market. This market has little for ‘value’ investors, who typically buy when valuations are down. There are very few stocks trading at a discount to their intrinsic value. There are stocks available at fair valuations. Invest in them, but only if you are here to stay. If you are simply looking to ride the wave, be warned, the stakes are high — the market can punish you bad.
http://www.expressmoney.in/news/HAS-THE-MARKET-LOST-ITS-MIND/92303.html
Interview- Rajat Jain
‘Don’t invest more than 10-15% abroad’
Sandeep Singh
Posted online: Monday , October 08, 2007
International funds are the flavour of the season, with several funds targeting specific geographies — emerging markets, Asia, India and China, and so on — hitting, or waiting to hit, the market. While the deluge is recent, Principal Mutual Fund was one of the first to launch an overseas fund, PNB Global Opportunities, in March 2004. Chief investment officer Rajat Jain expects a lot of activity in this overseas investing space. In an interview to our correspondent, Jain spoke about a range of issues related to overseas investing.
Principal Global Opportunities Fund, was among the first overseas funds to be launched. How is it doing and do you have any plans to launch more international funds?The scheme is doing well. When we launched it, it was a Rs 15 crore fund. Today, its corpus is Rs 610 crore. Since only the amount invested is considered to calculate the overseas limit of $300 million for a fund house, and the scheme has grown a lot on performance, it can still take on more investments. This fund invests fully in international markets. As of now, we don’t have any plans to launch a fund where 65 per cent is invested in India and the rest overseas.
Recently, the overseas investment limit for a fund house was increased from $200 million to $300 million. Are you happy with such gradual hikes? Or, would you like to see a higher limit or be completely done away with?We welcome the recent hike in limits for offshore investment by Indian mutual Funds. The industry is yet to utilise the current investment limits for such investments. However, my sense is that the limits will get up used faster now as investors see the benefits of diversification and investing in offshore investments using mutual funds.
What is the breadth of overseas products investors can expect from your fund house?Globally, Principal manages funds in different categories like US equities, global equity, emerging markets equity, fixed income and real estate, among others. We will look to launch products in India that give value to investors here and which are likely to find good demand. However, there is currently no product on the anvil in this space.
How much of an investor’s portfolio should go into overseas funds?It can’t be a very large part of your equity allocation. Although emerging markets are growing well, I would suggest capping overseas exposure at 10-15 per cent. Also, only existing investors should invest in overseas funds. New investors should stick to domestic funds.
But aren’t domestic share valuations stretched?I look at the market in two parts. The first is performance of the Indian economy and government spending. The second is the flow of funds. As far as the economy goes, there is a gradual slowdown. Still, GDP growth of 8.5 per cent is expected, and there’s not much concern on that front. Corporate profit growth is expected to remain at about 15 per cent a year over the next five years.India moves in tandem with global markets now. In the long run, though, the differentiation in performance comes in. India has a strong capital expenditure cycle and strong visibility. Infrastructure sectors will continue to do well.At the same time, there will be meaningful volatility, which will create opportunities.
Which infrastructure sectors in particular?The highest growth is expected in power, roads and telecom. Regulations in these sectors have matured and are stable. Earlier, regulations were evolving, but now we have workable model in these sectors, and things are working well. Demand is not an issue. Also, funding is, by and large, coming through. I see a lot of value creation in these three sectors.
Even the power sector can be divided further. Which segment will see the maximum growth?Suppliers to companies in the power industry. A lot of investment is needed in transmission and distribution. So, companies who go down the chain have good potential to grow.
What are the risks that this may not pan out as planned?It can only be regulatory changes. Regulations need to be stable. If any stringent regulations come in, people putting money will get wary.
Still, one has to pick the right companies. What parameters do you focus on while picking stocks?We give the maximum importance to management, as they are the trustees to our investment.So, we look for good, competent managements. Then, comes the business. Here, we try to see if the company has any unique edge — for example, the cheapest product, efficiency of scale for a commodity business. We try to see if there is a fundamental change happening in the company that could make it better. Is the company getting into new areas, which will impact it positively and help it better the market? Finally, we look at valuations.
What’s your take on the proposal to waive entry loads on investments made directly and through the Internet?It will be good for investors, but the advisory role of distributors will be missed.
But not all advice offered by distributors is of the highest quality. And neither do all investors seek advice.The quality of advice is gradually changing. Increasingly, new distributors are coming in, and giving good long-term advice. I meet distributors in my capacity as a fund manager or chief investment officer, and I can see the quality of questions they ask. Their level of knowledge is good. They ask questions on behalf of investors.
Now, there are reports that Sebi might ask mutual funds to not just waive loads for certain types of investments, but also ask funds to charge less as expenses?We feel the fee structure for mutual funds in India is competitive and in line with that in developed markets. Besides, the fund industry has managed to spread the investment culture in the country, and the cost of reaching out to the customer is high on account of infrastructural issues and technology costs.
http://www.expressmoney.in/news/Dont-invest-more-than-10-15-abroad/92271.html
Sandeep Singh
Posted online: Monday , October 08, 2007
International funds are the flavour of the season, with several funds targeting specific geographies — emerging markets, Asia, India and China, and so on — hitting, or waiting to hit, the market. While the deluge is recent, Principal Mutual Fund was one of the first to launch an overseas fund, PNB Global Opportunities, in March 2004. Chief investment officer Rajat Jain expects a lot of activity in this overseas investing space. In an interview to our correspondent, Jain spoke about a range of issues related to overseas investing.
Principal Global Opportunities Fund, was among the first overseas funds to be launched. How is it doing and do you have any plans to launch more international funds?The scheme is doing well. When we launched it, it was a Rs 15 crore fund. Today, its corpus is Rs 610 crore. Since only the amount invested is considered to calculate the overseas limit of $300 million for a fund house, and the scheme has grown a lot on performance, it can still take on more investments. This fund invests fully in international markets. As of now, we don’t have any plans to launch a fund where 65 per cent is invested in India and the rest overseas.
Recently, the overseas investment limit for a fund house was increased from $200 million to $300 million. Are you happy with such gradual hikes? Or, would you like to see a higher limit or be completely done away with?We welcome the recent hike in limits for offshore investment by Indian mutual Funds. The industry is yet to utilise the current investment limits for such investments. However, my sense is that the limits will get up used faster now as investors see the benefits of diversification and investing in offshore investments using mutual funds.
What is the breadth of overseas products investors can expect from your fund house?Globally, Principal manages funds in different categories like US equities, global equity, emerging markets equity, fixed income and real estate, among others. We will look to launch products in India that give value to investors here and which are likely to find good demand. However, there is currently no product on the anvil in this space.
How much of an investor’s portfolio should go into overseas funds?It can’t be a very large part of your equity allocation. Although emerging markets are growing well, I would suggest capping overseas exposure at 10-15 per cent. Also, only existing investors should invest in overseas funds. New investors should stick to domestic funds.
But aren’t domestic share valuations stretched?I look at the market in two parts. The first is performance of the Indian economy and government spending. The second is the flow of funds. As far as the economy goes, there is a gradual slowdown. Still, GDP growth of 8.5 per cent is expected, and there’s not much concern on that front. Corporate profit growth is expected to remain at about 15 per cent a year over the next five years.India moves in tandem with global markets now. In the long run, though, the differentiation in performance comes in. India has a strong capital expenditure cycle and strong visibility. Infrastructure sectors will continue to do well.At the same time, there will be meaningful volatility, which will create opportunities.
Which infrastructure sectors in particular?The highest growth is expected in power, roads and telecom. Regulations in these sectors have matured and are stable. Earlier, regulations were evolving, but now we have workable model in these sectors, and things are working well. Demand is not an issue. Also, funding is, by and large, coming through. I see a lot of value creation in these three sectors.
Even the power sector can be divided further. Which segment will see the maximum growth?Suppliers to companies in the power industry. A lot of investment is needed in transmission and distribution. So, companies who go down the chain have good potential to grow.
What are the risks that this may not pan out as planned?It can only be regulatory changes. Regulations need to be stable. If any stringent regulations come in, people putting money will get wary.
Still, one has to pick the right companies. What parameters do you focus on while picking stocks?We give the maximum importance to management, as they are the trustees to our investment.So, we look for good, competent managements. Then, comes the business. Here, we try to see if the company has any unique edge — for example, the cheapest product, efficiency of scale for a commodity business. We try to see if there is a fundamental change happening in the company that could make it better. Is the company getting into new areas, which will impact it positively and help it better the market? Finally, we look at valuations.
What’s your take on the proposal to waive entry loads on investments made directly and through the Internet?It will be good for investors, but the advisory role of distributors will be missed.
But not all advice offered by distributors is of the highest quality. And neither do all investors seek advice.The quality of advice is gradually changing. Increasingly, new distributors are coming in, and giving good long-term advice. I meet distributors in my capacity as a fund manager or chief investment officer, and I can see the quality of questions they ask. Their level of knowledge is good. They ask questions on behalf of investors.
Now, there are reports that Sebi might ask mutual funds to not just waive loads for certain types of investments, but also ask funds to charge less as expenses?We feel the fee structure for mutual funds in India is competitive and in line with that in developed markets. Besides, the fund industry has managed to spread the investment culture in the country, and the cost of reaching out to the customer is high on account of infrastructural issues and technology costs.
http://www.expressmoney.in/news/Dont-invest-more-than-10-15-abroad/92271.html
GOLD Investment
SHINING THROUGH
Sandeep Singh
Posted online: Monday , October 08, 2007 at 1521 IST
In the universe of gold investing, two significant things happened last month. One, gold prices, the world over, hit levels last seen in 1980. Two, back home, DSP Merrill Lynch World Gold Fund, a recently-launched mutual fund that invests in shares of gold mining companies overseas, opened for repurchase. Its return between August 23, when its new fund offer (NFO) closed, and October 3: a stunning 28.8 per cent.
Investment outlookThe scheme has, of course, benefited from the upward trend in gold. Since September 3, the per ounce price of gold has increased by 10.4 per cent, from $672 to $742. The trigger for this latest surge came on September 18, when the US Federal Reserve cut interest rates. The dollar took another tumble, as lower interest rates made it less profitable to hold the US currency.
Investors started trimming their dollar assets and started stocking up on other currencies and assets, including gold, which is widely seen as an alternative for dollar. Says Abheek Barua, chief economist, HDFC Bank: “With the dollar depreciating, gold seems to be emerging as the asset of choice, and is expected to remain fairly strong.”
This is not a new story. The dollar has been in decline since mid-2001, as the financial excesses of the US started catching up with it. The US is nursing a massive current account deficit, due to which the dollar’s stock is falling. Central banks and institutions that once stocked up on dollars are now dumping it in favour of gold (See graphic: The reasons). Says Anup Maheshwari, head of equities and corporate strategy, DSP Merrill Lynch Fund Managers: “Generally, bull runs in commodities last 13-15 years. The current run has been on for seven years now. It hit a peak in 1980, of $800 per ounce. Adjusted for inflation, the equivalent value would be $1,600, which I expect in three years.”
Not everyone shares Maheshwari’s bullishness. Madan Sabnavis, chief economist, National Commodity and Derivatives Exchange Limited, is guarded. “The dollar can’t just keep on depreciating against the Euro, as it hurts European exporters. Europe cutting rates will lend some stability to the dollar.” Bhargava Vaidya, gold analyst, is on the other end. “Demand won’t be strong at this price. Moreover, Gold is its biggest enemy, as it never gets destroyed. It can be reused, which acts as a constraint on demand,” he says. Depending on whom you believe, the outlook ranges from bullish to mild. That hasn’t changed.
Investment optionsWhat has changed is the ways in which you can invest in gold. Barely 10 months ago, investing in gold meant buying jewellery, bars and coins, which entailed hassles like assessing it for purity and storing it safely. Since then, we have seen the mutual fund industry offer innovative products to invest in gold. On cost and convenience, they are the best way to invest in gold, much superior than traditional modes, especially if you are investing only a small sum.
Jewellery. The only reason to buy jewellery is if you plan to use it. The traditional form of investment suffers from many shortcomings. You have to be a judge of purity. Not only there’s no standard pricing, you pay the jeweller a premium at the time of purchase and see a small deduction at the time of sale. Then, there are making charges.
Lastly, the tax structure is the least friendly of all gold investing avenues. The threshold for capital gains tax is three years — less than three years is short term, more than three years is long term. By comparison, in financial instruments like gold ETFs, it is one year. On top of that, you have to pay wealth tax on gold held in physical form: 1 per cent of the incremental amount above Rs 15 lakh. So, if you have gold worth Rs 20 lakh, you will have to pay a wealth tax of Rs 5,000 (1 per cent of Rs 5 lakh). By comparison, gold funds are exempt from wealth tax.
Coins and bars. Increasingly, not just jewellers, banks have also started selling gold bars and coins. Coins, for instance, are available in varying sizes of 2 gm, 3 gm, 5 gm, 8 gm and 10 gm. While purity is not as much of an issue as it is with jewellers — banks assure purity — other limitations of jewellery remain. Storage is an issue, as is the punishing tax structure. Also, to ensure purity, banks charge a premium of 5-20 per cent, which is a fairly high cost to pay for an investment.
Gold ETFs. Gold ETFs get around all these limitations. They give you an exposure to gold without the headache of holding it. In February, Benchmark Mutual Fund launched a gold exchange-traded fund (ETF); subsequently, UTI and Kotak also launched gold ETFs.
The fund house holds the gold, and hence deals with the risk of storage and purity, and these cannot be passed on to you. What you hold are units in dematerialised form, as you do in a stock or mutual fund. The fund declares an NAV, based on which you buy and sell. Each ETF unit essentially represents one gram of gold, which you can buy and sell from the secondary market as and when required. Since the market price will be linked to the spot price of gold at all times, you have a near-mirror exposure to the asset.
A gold ETF is the most cost-efficient way of investing in gold. When you buy or sell, all you pay is the transaction cost (brokerage plus demat costs), which is usually 0.6-1 per cent. By comparison, a jeweller charges a mark-up of 5-7 per cent over the spot price, banks charge 10-20 per cent more.
DSP Merrill Lynch World Gold fund. The newest offering is also the most popular in the mutual funds space. Launched in August, DSP Merrill Lynch World Gold Fund has a corpus of Rs 600 crore — double that of the three ETFs combined. This is a feeder fund. It simply routes its corpus to a global Merrill Lynch fund called Merrill Lynch International Investment
Funds-World Gold Fund, which has invested in gold mining companies like Barrick Gold, Impala and Newcrest Mining. At all times, at least 90 per cent of the domestic fund’s corpus will be in its sister overseas fund.
Gold’s return to favour has given a big boost to the fund’s first returns. Says Maheshwari: “Gold equity has remain ignored for quite some time now, and companies have been trading at relatively low valuations. Generally when gold prices move up by X, gold equity moves up by 1.5X, though the reverse is equally true.”
That statement of Maheshwari neatly outlines the high risk, high reward proposition of this fund. An investment in this fund is influenced not just by the outlook on gold, but also by the outlook on the mining industry and company-specific factors. Says Vaidya: “The mining industry is a highly geared industry. Such an investment is only for those people who are willing to take the mining industry risk.” Unless you are prepared to that higher risk, stick to gold ETFs.http://www.expressmoney.in/news/SHINING-THROUGH /92277.html
Sandeep Singh
Posted online: Monday , October 08, 2007 at 1521 IST
In the universe of gold investing, two significant things happened last month. One, gold prices, the world over, hit levels last seen in 1980. Two, back home, DSP Merrill Lynch World Gold Fund, a recently-launched mutual fund that invests in shares of gold mining companies overseas, opened for repurchase. Its return between August 23, when its new fund offer (NFO) closed, and October 3: a stunning 28.8 per cent.
Investment outlookThe scheme has, of course, benefited from the upward trend in gold. Since September 3, the per ounce price of gold has increased by 10.4 per cent, from $672 to $742. The trigger for this latest surge came on September 18, when the US Federal Reserve cut interest rates. The dollar took another tumble, as lower interest rates made it less profitable to hold the US currency.
Investors started trimming their dollar assets and started stocking up on other currencies and assets, including gold, which is widely seen as an alternative for dollar. Says Abheek Barua, chief economist, HDFC Bank: “With the dollar depreciating, gold seems to be emerging as the asset of choice, and is expected to remain fairly strong.”
This is not a new story. The dollar has been in decline since mid-2001, as the financial excesses of the US started catching up with it. The US is nursing a massive current account deficit, due to which the dollar’s stock is falling. Central banks and institutions that once stocked up on dollars are now dumping it in favour of gold (See graphic: The reasons). Says Anup Maheshwari, head of equities and corporate strategy, DSP Merrill Lynch Fund Managers: “Generally, bull runs in commodities last 13-15 years. The current run has been on for seven years now. It hit a peak in 1980, of $800 per ounce. Adjusted for inflation, the equivalent value would be $1,600, which I expect in three years.”
Not everyone shares Maheshwari’s bullishness. Madan Sabnavis, chief economist, National Commodity and Derivatives Exchange Limited, is guarded. “The dollar can’t just keep on depreciating against the Euro, as it hurts European exporters. Europe cutting rates will lend some stability to the dollar.” Bhargava Vaidya, gold analyst, is on the other end. “Demand won’t be strong at this price. Moreover, Gold is its biggest enemy, as it never gets destroyed. It can be reused, which acts as a constraint on demand,” he says. Depending on whom you believe, the outlook ranges from bullish to mild. That hasn’t changed.
Investment optionsWhat has changed is the ways in which you can invest in gold. Barely 10 months ago, investing in gold meant buying jewellery, bars and coins, which entailed hassles like assessing it for purity and storing it safely. Since then, we have seen the mutual fund industry offer innovative products to invest in gold. On cost and convenience, they are the best way to invest in gold, much superior than traditional modes, especially if you are investing only a small sum.
Jewellery. The only reason to buy jewellery is if you plan to use it. The traditional form of investment suffers from many shortcomings. You have to be a judge of purity. Not only there’s no standard pricing, you pay the jeweller a premium at the time of purchase and see a small deduction at the time of sale. Then, there are making charges.
Lastly, the tax structure is the least friendly of all gold investing avenues. The threshold for capital gains tax is three years — less than three years is short term, more than three years is long term. By comparison, in financial instruments like gold ETFs, it is one year. On top of that, you have to pay wealth tax on gold held in physical form: 1 per cent of the incremental amount above Rs 15 lakh. So, if you have gold worth Rs 20 lakh, you will have to pay a wealth tax of Rs 5,000 (1 per cent of Rs 5 lakh). By comparison, gold funds are exempt from wealth tax.
Coins and bars. Increasingly, not just jewellers, banks have also started selling gold bars and coins. Coins, for instance, are available in varying sizes of 2 gm, 3 gm, 5 gm, 8 gm and 10 gm. While purity is not as much of an issue as it is with jewellers — banks assure purity — other limitations of jewellery remain. Storage is an issue, as is the punishing tax structure. Also, to ensure purity, banks charge a premium of 5-20 per cent, which is a fairly high cost to pay for an investment.
Gold ETFs. Gold ETFs get around all these limitations. They give you an exposure to gold without the headache of holding it. In February, Benchmark Mutual Fund launched a gold exchange-traded fund (ETF); subsequently, UTI and Kotak also launched gold ETFs.
The fund house holds the gold, and hence deals with the risk of storage and purity, and these cannot be passed on to you. What you hold are units in dematerialised form, as you do in a stock or mutual fund. The fund declares an NAV, based on which you buy and sell. Each ETF unit essentially represents one gram of gold, which you can buy and sell from the secondary market as and when required. Since the market price will be linked to the spot price of gold at all times, you have a near-mirror exposure to the asset.
A gold ETF is the most cost-efficient way of investing in gold. When you buy or sell, all you pay is the transaction cost (brokerage plus demat costs), which is usually 0.6-1 per cent. By comparison, a jeweller charges a mark-up of 5-7 per cent over the spot price, banks charge 10-20 per cent more.
DSP Merrill Lynch World Gold fund. The newest offering is also the most popular in the mutual funds space. Launched in August, DSP Merrill Lynch World Gold Fund has a corpus of Rs 600 crore — double that of the three ETFs combined. This is a feeder fund. It simply routes its corpus to a global Merrill Lynch fund called Merrill Lynch International Investment
Funds-World Gold Fund, which has invested in gold mining companies like Barrick Gold, Impala and Newcrest Mining. At all times, at least 90 per cent of the domestic fund’s corpus will be in its sister overseas fund.
Gold’s return to favour has given a big boost to the fund’s first returns. Says Maheshwari: “Gold equity has remain ignored for quite some time now, and companies have been trading at relatively low valuations. Generally when gold prices move up by X, gold equity moves up by 1.5X, though the reverse is equally true.”
That statement of Maheshwari neatly outlines the high risk, high reward proposition of this fund. An investment in this fund is influenced not just by the outlook on gold, but also by the outlook on the mining industry and company-specific factors. Says Vaidya: “The mining industry is a highly geared industry. Such an investment is only for those people who are willing to take the mining industry risk.” Unless you are prepared to that higher risk, stick to gold ETFs.http://www.expressmoney.in/news/SHINING-
Bank Deposit
GOOD TO GO
Sandeep Singh
Posted online: Monday , October 08, 2007 at 1506 IST
For the retired and the elderly looking for a regular income, here’s another worthy investment option: ICICI Regular Income Bonds. The bank is offering four investment options: annual and monthly interest payouts for a tenure of five years and three months, and for 10 years. The standout option is monthly payout for 10 years, on which the bank is offering an interest rate of 9.57 per cent. Illustratively, an investment of Rs 10 lakh will give a monthly interest of Rs 9,570.
Several banks, ICICI included, are offering 10 per cent on their fixed deposits, but that’s generally for tenures of up to five years. ICICI’s Regular Income Bonds are offering that rate over 10 years. Given that interest rates might be near their peaks, those are top terms to lock into today for the best part of your fixed-income portfolio (See table: The peer comparison).
These bonds also insulate senior citizens from certain other inconveniences they face in other fixed-income avenues. ICICI will deduct TDS of 11.3 per cent, but it will conform to the government-mandated easier norms for senior citizens (those over 65 years). Interest income up to Rs 10,000 per year won’t invite any TDS. Even if it’s over Rs 10,000, senior citizens can stop the bank from deducting tax by submitting Form 15H.
This issue closes on Friday. ICICI has set the issue size at Rs 500 crore, with the option to retain another Rs 500 crore. In case of oversubscription, the allotment will be on a pro-rata basis. Further, 70 per cent of the issue is earmarked for those applying for 50 bonds or less. The bonds, which don’t have any lock-in, will be listed on the BSE and NSE, giving investors another exit option.
http://www.expressmoney.in/news/GOOD-TO-GO/92276.html
Sandeep Singh
Posted online: Monday , October 08, 2007 at 1506 IST
For the retired and the elderly looking for a regular income, here’s another worthy investment option: ICICI Regular Income Bonds. The bank is offering four investment options: annual and monthly interest payouts for a tenure of five years and three months, and for 10 years. The standout option is monthly payout for 10 years, on which the bank is offering an interest rate of 9.57 per cent. Illustratively, an investment of Rs 10 lakh will give a monthly interest of Rs 9,570.
Several banks, ICICI included, are offering 10 per cent on their fixed deposits, but that’s generally for tenures of up to five years. ICICI’s Regular Income Bonds are offering that rate over 10 years. Given that interest rates might be near their peaks, those are top terms to lock into today for the best part of your fixed-income portfolio (See table: The peer comparison).
These bonds also insulate senior citizens from certain other inconveniences they face in other fixed-income avenues. ICICI will deduct TDS of 11.3 per cent, but it will conform to the government-mandated easier norms for senior citizens (those over 65 years). Interest income up to Rs 10,000 per year won’t invite any TDS. Even if it’s over Rs 10,000, senior citizens can stop the bank from deducting tax by submitting Form 15H.
This issue closes on Friday. ICICI has set the issue size at Rs 500 crore, with the option to retain another Rs 500 crore. In case of oversubscription, the allotment will be on a pro-rata basis. Further, 70 per cent of the issue is earmarked for those applying for 50 bonds or less. The bonds, which don’t have any lock-in, will be listed on the BSE and NSE, giving investors another exit option.
http://www.expressmoney.in/news/GOOD-TO-GO/92276.html
Stock Picks
STOCK MARKET:
Sandeep Singh
Posted online: Monday , October 01, 2007 at 1405 IST
Reliance Industries: Businesses to rely on
The one stock that has fuelled this rally more than others is Reliance Industries. The company is one of the few large companies offering a heady cocktail of businesses that are stable and profitable (petrochemicals and petroleum) and new businesses that could turn out to be just as big and profitable (retail, and oil and gas exploration).
In the last three years, the Mukesh Ambani-led company's revenues have increased from Rs 69,093 crore to Rs 1,10,405 crore, or a compounded annual growth rate (CAGR) of 16.9 per cent. Higher product prices have led to net profit increasing at a faster CAGR of 32.4 per cent to Rs 11,943 crore. Net margin has increased from 7.4 per cent in 2003-04 to 10.8 per cent in 2006-07. At its current price of Rs 2,296, the stock discounts its earnings for the trailing four quarters by 27.5 times. While there are small upsides for the company to be had by factors like the current rupee appreciation (lower crude import bill), the company is well placed to grow, while maintaining its profitability. When it comes to building something from scratch, few, if at all any, do it better than Reliance Industries. Still a buy for the long term.
STOCK MARKET: NTPC: Could trip on valuations
Posted online: Monday , October 08, 2007 at 1351 IST
On Thursday, 29 BSE ‘A’ Group stocks hit their all-time highs. Among them was the country’s largest power-generation company, NTPC, which has surged 45.7 per cent in just three months to Rs 228. What gives? Agreed, the power sector is coming alive, with the government following up reforms with intent and spending. Obviously, NTPC, being the largest player in thermal power, will get its share of business, if not more. NTPC has a total commissioned capacity of 54,754 mw, of which 26,850 mw is fully owned by it and the rest through joint ventures. Thus, it controls over 20 per cent of the total installed power capacity in India, while generating 28 per cent of power. In the eleventh five-year plan, the government has set a generation target of 68,869 mw, some of which will be commissioned by NTPC.
While its business prospects are strong, spare a thought for what this spike has done to its valuations. On July 4, NTPC was quoting at a PE of 18.6. Now, it’s 31.2. Historically, the market has given good utility companies PEs of 10-15. Even factoring in the growth shot from new projects, current valuations seem high, and NTPC could trip on it.
STOCK MARKET: Unitech: Nifty moves
Posted online: Monday , September 17, 2007 at 1353 IST
Call it the index effect. On September 11, the National Stock Exchange (NSE) announced that Unitech will replace IPCL from October 5, making it the first real estate stock to enter the index. Since then, the share has appreciated from Rs 254 to Rs 282, or 9.9 per cent. Unitech has been doing well, recording a three-year compounded annual growth in revenues and net profit of 91 per cent and 312 per cent, respectively. But this latest spike seems to have less to do with its prospects and more to do with entering a club where more investors want a piece of it.
Many investments are linked to indices like the Sensex and the Nifty. There are many index funds whose portfolio mirrors the Nifty. There are many FIIs who invest, or do futures and options trading, only in index stocks. All these institutional investors will rush to recalibrate their portfolios. Trading in IPCL’s shares will be suspended following its merger into Reliance Industries. And Unitech will enter more investor portfolios. This will create a spike in demand. But this is a short-term effect. In the long run, Unitech the company holds the fate to Unitech the stock.
STOCK MKT: Tata: The ‘Rs 1 lakh’ question
Posted online: Monday , September 10, 2007 at 1409 IST
A few years ago, Tata Motors took a bold turn to diversify into passenger cars. The stakes in its Rs 1 lakh car, scheduled to be launched by mid-2008, might not be as high as they were back then, but they do have the ability to steer the company on to a higher profit trajectory and a higher market share. The call on the small car project is essentially the call to make on Tata Motors today.
If the car is a success, it can do wonders to Tata Motors' numbers. But if it doesn't capture the numbers, the company will feel the weight of the large investment it is sinking into the project. Going by the track record of the Tatas, the aggressive pricing and what the competition has under their bonnets, the odds are in favour of the Tatas.
At its current price of Rs 698, its stock trades at a PE of 13.5. Its commercial vehicles business is growing well, and cars (Indica and Indigo) is managing to weather slowdowns. Over a three-year period, the company has registered a CAGR of 27 per cent in sales and 30 per cent in net profit. That might slow a tad, but even then is a good reason to own the stock. And if the Rs 1 lakh car turns out to be a hit, so will be the stocks.
Sandeep Singh
Posted online: Monday , October 01, 2007 at 1405 IST
Reliance Industries: Businesses to rely on
The one stock that has fuelled this rally more than others is Reliance Industries. The company is one of the few large companies offering a heady cocktail of businesses that are stable and profitable (petrochemicals and petroleum) and new businesses that could turn out to be just as big and profitable (retail, and oil and gas exploration).
In the last three years, the Mukesh Ambani-led company's revenues have increased from Rs 69,093 crore to Rs 1,10,405 crore, or a compounded annual growth rate (CAGR) of 16.9 per cent. Higher product prices have led to net profit increasing at a faster CAGR of 32.4 per cent to Rs 11,943 crore. Net margin has increased from 7.4 per cent in 2003-04 to 10.8 per cent in 2006-07. At its current price of Rs 2,296, the stock discounts its earnings for the trailing four quarters by 27.5 times. While there are small upsides for the company to be had by factors like the current rupee appreciation (lower crude import bill), the company is well placed to grow, while maintaining its profitability. When it comes to building something from scratch, few, if at all any, do it better than Reliance Industries. Still a buy for the long term.
STOCK MARKET: NTPC: Could trip on valuations
Posted online: Monday , October 08, 2007 at 1351 IST
On Thursday, 29 BSE ‘A’ Group stocks hit their all-time highs. Among them was the country’s largest power-generation company, NTPC, which has surged 45.7 per cent in just three months to Rs 228. What gives? Agreed, the power sector is coming alive, with the government following up reforms with intent and spending. Obviously, NTPC, being the largest player in thermal power, will get its share of business, if not more. NTPC has a total commissioned capacity of 54,754 mw, of which 26,850 mw is fully owned by it and the rest through joint ventures. Thus, it controls over 20 per cent of the total installed power capacity in India, while generating 28 per cent of power. In the eleventh five-year plan, the government has set a generation target of 68,869 mw, some of which will be commissioned by NTPC.
While its business prospects are strong, spare a thought for what this spike has done to its valuations. On July 4, NTPC was quoting at a PE of 18.6. Now, it’s 31.2. Historically, the market has given good utility companies PEs of 10-15. Even factoring in the growth shot from new projects, current valuations seem high, and NTPC could trip on it.
STOCK MARKET: Unitech: Nifty moves
Posted online: Monday , September 17, 2007 at 1353 IST
Call it the index effect. On September 11, the National Stock Exchange (NSE) announced that Unitech will replace IPCL from October 5, making it the first real estate stock to enter the index. Since then, the share has appreciated from Rs 254 to Rs 282, or 9.9 per cent. Unitech has been doing well, recording a three-year compounded annual growth in revenues and net profit of 91 per cent and 312 per cent, respectively. But this latest spike seems to have less to do with its prospects and more to do with entering a club where more investors want a piece of it.
Many investments are linked to indices like the Sensex and the Nifty. There are many index funds whose portfolio mirrors the Nifty. There are many FIIs who invest, or do futures and options trading, only in index stocks. All these institutional investors will rush to recalibrate their portfolios. Trading in IPCL’s shares will be suspended following its merger into Reliance Industries. And Unitech will enter more investor portfolios. This will create a spike in demand. But this is a short-term effect. In the long run, Unitech the company holds the fate to Unitech the stock.
STOCK MKT: Tata: The ‘Rs 1 lakh’ question
Posted online: Monday , September 10, 2007 at 1409 IST
A few years ago, Tata Motors took a bold turn to diversify into passenger cars. The stakes in its Rs 1 lakh car, scheduled to be launched by mid-2008, might not be as high as they were back then, but they do have the ability to steer the company on to a higher profit trajectory and a higher market share. The call on the small car project is essentially the call to make on Tata Motors today.
If the car is a success, it can do wonders to Tata Motors' numbers. But if it doesn't capture the numbers, the company will feel the weight of the large investment it is sinking into the project. Going by the track record of the Tatas, the aggressive pricing and what the competition has under their bonnets, the odds are in favour of the Tatas.
At its current price of Rs 698, its stock trades at a PE of 13.5. Its commercial vehicles business is growing well, and cars (Indica and Indigo) is managing to weather slowdowns. Over a three-year period, the company has registered a CAGR of 27 per cent in sales and 30 per cent in net profit. That might slow a tad, but even then is a good reason to own the stock. And if the Rs 1 lakh car turns out to be a hit, so will be the stocks.
Reverse Mortgage
House that!
Sandeep Singh
Posted online: Monday , October 01, 2007
Sometimes, the Kumars (name changed) wish they were younger and fitter. Wistfully, these 60-somethings, living in a middle-class Delhi suburb, recount their tale. He retired from government service seven years ago and got a pension. But it proved to be insufficient when medical problems beset both, and surgeries and medicines started eating into their savings. When their two children refused help, it looked grim. But then, one day, he read about a new product called ‘reverse mortgage’, and it looked like a doorway to a better financial life.
The Kumars had a house. They couldn’t rent it out, but they learnt they could turn it into an income stream in their lifetime, while continuing to live in it. They got in touch with Punjab National Bank (PNB), one of the two players with a reverse mortgage product. PNB assessed the value of their property at
Rs 1.1 crore. It sanctioned a loan on 80 per cent of this (Rs 91 lakh), and structured this loan into monthly payments (like an EMI that you receive).
PNB is paying the Kumars Rs 42,000 per month for 10 years. Says Kumar: “We are able to manage our finances better. The payout takes care of our monthly medical bills and other critical expenses for now.” After 10 years, the payments will stop, but the Kumars can continue living in their house. Only when both of them die will the bank acquire their house. It will offer the Kumars’ legal heirs the option to repay the ‘loan amount’ and take the house. If they don’t, the bank will sell the property and recover its loan amount. Any excess amount over the loan amount generated through the sell-off will be given to the legal heirs of the Kumars.
At present, PNB and Dewan Housing Finance offer reverse mortgage schemes; more banks are expected to join the fray soon, including Allahabad Bank, Bank of Baroda, and Corporation Bank. A reverse mortgage product can be availed by anyone who owns a house, is retired and is above the age of 60 years. While only the monthly payout option is currently available, even a lumpsum is under consideration. The amount of monthly payment is based on the property value, the interest rate charged and the payment tenure (See table: The two options). Like the Kumars, many elderly couples who have a house but not enough income can use that house to ensure a better financial life for themselves in their lifetime.
http://www.expressmoney.in/news/House-that!/92240.html
Sandeep Singh
Posted online: Monday , October 01, 2007
Sometimes, the Kumars (name changed) wish they were younger and fitter. Wistfully, these 60-somethings, living in a middle-class Delhi suburb, recount their tale. He retired from government service seven years ago and got a pension. But it proved to be insufficient when medical problems beset both, and surgeries and medicines started eating into their savings. When their two children refused help, it looked grim. But then, one day, he read about a new product called ‘reverse mortgage’, and it looked like a doorway to a better financial life.
The Kumars had a house. They couldn’t rent it out, but they learnt they could turn it into an income stream in their lifetime, while continuing to live in it. They got in touch with Punjab National Bank (PNB), one of the two players with a reverse mortgage product. PNB assessed the value of their property at
Rs 1.1 crore. It sanctioned a loan on 80 per cent of this (Rs 91 lakh), and structured this loan into monthly payments (like an EMI that you receive).
PNB is paying the Kumars Rs 42,000 per month for 10 years. Says Kumar: “We are able to manage our finances better. The payout takes care of our monthly medical bills and other critical expenses for now.” After 10 years, the payments will stop, but the Kumars can continue living in their house. Only when both of them die will the bank acquire their house. It will offer the Kumars’ legal heirs the option to repay the ‘loan amount’ and take the house. If they don’t, the bank will sell the property and recover its loan amount. Any excess amount over the loan amount generated through the sell-off will be given to the legal heirs of the Kumars.
At present, PNB and Dewan Housing Finance offer reverse mortgage schemes; more banks are expected to join the fray soon, including Allahabad Bank, Bank of Baroda, and Corporation Bank. A reverse mortgage product can be availed by anyone who owns a house, is retired and is above the age of 60 years. While only the monthly payout option is currently available, even a lumpsum is under consideration. The amount of monthly payment is based on the property value, the interest rate charged and the payment tenure (See table: The two options). Like the Kumars, many elderly couples who have a house but not enough income can use that house to ensure a better financial life for themselves in their lifetime.
http://www.expressmoney.in/news/House-that!/92240.html
Reliance Power
STOCK MARKET:
Reliance Power: Where’s the power?
Sandeep Singh
Posted online: Monday , October 15, 2007
Is this reminiscent of the excesses of the mid-nineties or what? On Friday, a pink paper reported that shares of Reliance Power — a Reliance ADA Group company that is more on paper than on the ground, and has recently filed its papers with Sebi for a huge IPO — were being ‘traded’ at a premium to the expected issue price in the grey market in Rajkot.
What are they paying the premium for? It’s baffling. The company has government approval to set up power projects with an installed capacity of 24,200 mw, which includes the recently-awarded 4,000 mw ultra-mega power project in Sasan and its planned mega project in Dadri, UP. Once those are up and running, they should bring in the profits. But the commissioning date of Sasan is April 2016 and there’s no date for Dadri. In fact, if all goes as per schedule, the company’s first revenues will come only in March 2010, with the commissioning of a 600 mw project. So, why this mad rush to buy into a business that is on paper and whose shares don’t even exist today? Excesses of a bull run?
http://www.expressmoney.in/news/STOCK-MARKET:-Reliance-Power:-Wheres-the-power/92299.html
Reliance Power: Where’s the power?
Sandeep Singh
Posted online: Monday , October 15, 2007
Is this reminiscent of the excesses of the mid-nineties or what? On Friday, a pink paper reported that shares of Reliance Power — a Reliance ADA Group company that is more on paper than on the ground, and has recently filed its papers with Sebi for a huge IPO — were being ‘traded’ at a premium to the expected issue price in the grey market in Rajkot.
What are they paying the premium for? It’s baffling. The company has government approval to set up power projects with an installed capacity of 24,200 mw, which includes the recently-awarded 4,000 mw ultra-mega power project in Sasan and its planned mega project in Dadri, UP. Once those are up and running, they should bring in the profits. But the commissioning date of Sasan is April 2016 and there’s no date for Dadri. In fact, if all goes as per schedule, the company’s first revenues will come only in March 2010, with the commissioning of a 600 mw project. So, why this mad rush to buy into a business that is on paper and whose shares don’t even exist today? Excesses of a bull run?
http://www.expressmoney.in/news/STOCK-MARKET:-Reliance-Power:-Wheres-the-power/92299.html
Open Offers- What to do
KEEP YOUR OPTIONS OPEN
Sandeep Singh
Posted online: Monday , September 24, 2007
Over the next five days, non-promoter shareholders of Essar Steel, India’s fourth-largest steel company by sales, have a decision to make. The company’s promoters, the Ruias, who hold 87.1 per cent of Essar Steel’s equity, want to buy the balance 12.9 per cent from the public, and delist the company. As per delisting rules, the Ruias have set the floor price at the stock’s six-month average price, Rs 38. Shareholders can accept the offer; or they can quote their price through a formal process on the stock exchanges; or they can wait and watch.
It’s a choice that shareholders of DLF and Bharti Airtel in their previous incarnations had to face. It’s a choice that shareholders of Deccan Aviation are currently facing, in a different context. With India Inc getting bigger and broader, and seeing more large equity investments, mergers and acquisitions, the number of open offers is only bound to increase. How should you respond to such buyout propositions?
What are open offers?There are two reasons why an open offer is made. One, the ‘takeover code’ is triggered. If any investor buys more than 15 per cent of a company’s equity, by law, it has to offer an exit option to other shareholders for at least 20 per cent of the company’s equity. In recent times, for example, UB Group’s acquisition of Deccan, Blackstone’s purchase of Gokaldas Exports.Two, the promoters want to delist their company’s shares. It could be because they don’t want to share the fruits of their business with others or because they don’t want public scrutiny or because they think their shares are undervalued. This delisting intent is most active among multinationals, many of which were forced to list in the seventies under Fera (Foreign Exchange Regulation Act).
What are your options?The rules related to takeovers and delisting have set guidelines for the open offer price. It’s the six-month average share price. Says Kamlesh Gandhi, country head-investment banking, Religare: “Six-month average is fair. One year is too long, as many more factors can influence price. Two weeks is too small and open to manipulation.” If a stock is not traded frequently, besides price paid by the acquirer, other financial parameters like book value and PE ratio also come into play.
As an investor, you don’t have a say in the open offer price. You can take it or leave it. However, in case of delisting, the rules empower you to influence the exit price. Companies wanting to delist have to go through a reverse book-building process on the stock exchanges. As the name suggests, it’s the book-building process used to price IPOs (initial public offers) in reverse. Rather than quote a price you are willing to buy the shares at, you quote the price at which you are willing to sell. Starting from the offer price, the price at which 90 per cent of shares tendered in can be accepted is called the exit price. However, the choice to offer it or not lies with the promoters.
Reverse book-building is intended to give investors a say in setting the price. More often than not, it throws up a higher price than the floor price. For instance, Essar Shipping, another company of the Ruias, went in for a reverse book-building exercise in March. Against the floor price of Rs 31.62, the exit price was set at Rs 50, and even then only 61 per cent of the balance shares were tendered in. Similarly, in January, Eicher offered a floor price of Rs 150, but the reverse book-building process threw up an exit price of Rs 265.
What should you do?If you go by performance records over the last four years, the verdict is split. Roughly, in half the cases, investors have done better than the market by accepting the open offer. In the other half of cases, they would have done better had they availed off the open offer, and simply reinvested that money in the market (See box: Not an open and shut case).
In general, investor participation in open offers is low. For instance, in 2006-07, 90 companies came out with takeover-induced open offers.
Of these, 54 were subscribed less than 10 per cent, and 73 less than 50 per cent. Holcim got barely 0.15 per cent of Gujarat Ambuja in its open offer in April 2006. Says Gandhi: “Subscription levels are low, as investors mostly feel if someone is buying a stake, good things must be happening to the company.” But as the subsequent share performance shows, that may or may not be true.
The decision to tender in your shares should be based on the company’s business prospects. If it’s a takeover, says Gandhi, “I give maximum weightage to the new management and the purpose of the acquisition.” Adds Ashok Jain, chairman and managing director, Arihant Capital: “There is no correlation between the open offer price and future stock performance. It’s a qualitative issue that depends on the company’s future performance.” So, for instance, the call that Deccan shareholders have to make today is whether the company will turn profitable under the stewardship of Vijay Mallya.
Since it draws from the market price, the offer price generally represents the current value of a business. This may or may not be a fair representation. Also, you hold the stock keeping the company’s future in mind, which the offer price may not capture. So, if you think the business is promising and price is less than what your company is worth, stay on.
If you feel the price being offered is more than its worth, tender your shares. Says S.N. Lahiri, senior vice-president (equity), DSP Merrill Lynch Mutual Fund: “Sesa Goa, for example, is in the iron ore business, which has lots of potential. Prices of iron ore have increased by 25-30 per cent in recent times. I don’t see many investors applying to this one.”
The one situation where an additional variable enters the picture is delisting. If the promoters control more than 90 per cent of the company’s equity, they can delist the shares. You can still hold on to your shares, but you will find it difficult to sell. That doesn’t mean when a promoter makes an open offer with the intention of delisting, you should tender in your shares.
Under Sebi regulations, even if a company’s shares get delisted, you can sell your shares to the promoter at the open offer price for six months from the date of delisting. Beyond that, it is up to the promoters to accept — and that’s a risk. Keep that in mind when faced with an open offer or delisting buyout.
Sandeep Singh
Posted online: Monday , September 24, 2007
Over the next five days, non-promoter shareholders of Essar Steel, India’s fourth-largest steel company by sales, have a decision to make. The company’s promoters, the Ruias, who hold 87.1 per cent of Essar Steel’s equity, want to buy the balance 12.9 per cent from the public, and delist the company. As per delisting rules, the Ruias have set the floor price at the stock’s six-month average price, Rs 38. Shareholders can accept the offer; or they can quote their price through a formal process on the stock exchanges; or they can wait and watch.
It’s a choice that shareholders of DLF and Bharti Airtel in their previous incarnations had to face. It’s a choice that shareholders of Deccan Aviation are currently facing, in a different context. With India Inc getting bigger and broader, and seeing more large equity investments, mergers and acquisitions, the number of open offers is only bound to increase. How should you respond to such buyout propositions?
What are open offers?There are two reasons why an open offer is made. One, the ‘takeover code’ is triggered. If any investor buys more than 15 per cent of a company’s equity, by law, it has to offer an exit option to other shareholders for at least 20 per cent of the company’s equity. In recent times, for example, UB Group’s acquisition of Deccan, Blackstone’s purchase of Gokaldas Exports.Two, the promoters want to delist their company’s shares. It could be because they don’t want to share the fruits of their business with others or because they don’t want public scrutiny or because they think their shares are undervalued. This delisting intent is most active among multinationals, many of which were forced to list in the seventies under Fera (Foreign Exchange Regulation Act).
What are your options?The rules related to takeovers and delisting have set guidelines for the open offer price. It’s the six-month average share price. Says Kamlesh Gandhi, country head-investment banking, Religare: “Six-month average is fair. One year is too long, as many more factors can influence price. Two weeks is too small and open to manipulation.” If a stock is not traded frequently, besides price paid by the acquirer, other financial parameters like book value and PE ratio also come into play.
As an investor, you don’t have a say in the open offer price. You can take it or leave it. However, in case of delisting, the rules empower you to influence the exit price. Companies wanting to delist have to go through a reverse book-building process on the stock exchanges. As the name suggests, it’s the book-building process used to price IPOs (initial public offers) in reverse. Rather than quote a price you are willing to buy the shares at, you quote the price at which you are willing to sell. Starting from the offer price, the price at which 90 per cent of shares tendered in can be accepted is called the exit price. However, the choice to offer it or not lies with the promoters.
Reverse book-building is intended to give investors a say in setting the price. More often than not, it throws up a higher price than the floor price. For instance, Essar Shipping, another company of the Ruias, went in for a reverse book-building exercise in March. Against the floor price of Rs 31.62, the exit price was set at Rs 50, and even then only 61 per cent of the balance shares were tendered in. Similarly, in January, Eicher offered a floor price of Rs 150, but the reverse book-building process threw up an exit price of Rs 265.
What should you do?If you go by performance records over the last four years, the verdict is split. Roughly, in half the cases, investors have done better than the market by accepting the open offer. In the other half of cases, they would have done better had they availed off the open offer, and simply reinvested that money in the market (See box: Not an open and shut case).
In general, investor participation in open offers is low. For instance, in 2006-07, 90 companies came out with takeover-induced open offers.
Of these, 54 were subscribed less than 10 per cent, and 73 less than 50 per cent. Holcim got barely 0.15 per cent of Gujarat Ambuja in its open offer in April 2006. Says Gandhi: “Subscription levels are low, as investors mostly feel if someone is buying a stake, good things must be happening to the company.” But as the subsequent share performance shows, that may or may not be true.
The decision to tender in your shares should be based on the company’s business prospects. If it’s a takeover, says Gandhi, “I give maximum weightage to the new management and the purpose of the acquisition.” Adds Ashok Jain, chairman and managing director, Arihant Capital: “There is no correlation between the open offer price and future stock performance. It’s a qualitative issue that depends on the company’s future performance.” So, for instance, the call that Deccan shareholders have to make today is whether the company will turn profitable under the stewardship of Vijay Mallya.
Since it draws from the market price, the offer price generally represents the current value of a business. This may or may not be a fair representation. Also, you hold the stock keeping the company’s future in mind, which the offer price may not capture. So, if you think the business is promising and price is less than what your company is worth, stay on.
If you feel the price being offered is more than its worth, tender your shares. Says S.N. Lahiri, senior vice-president (equity), DSP Merrill Lynch Mutual Fund: “Sesa Goa, for example, is in the iron ore business, which has lots of potential. Prices of iron ore have increased by 25-30 per cent in recent times. I don’t see many investors applying to this one.”
The one situation where an additional variable enters the picture is delisting. If the promoters control more than 90 per cent of the company’s equity, they can delist the shares. You can still hold on to your shares, but you will find it difficult to sell. That doesn’t mean when a promoter makes an open offer with the intention of delisting, you should tender in your shares.
Under Sebi regulations, even if a company’s shares get delisted, you can sell your shares to the promoter at the open offer price for six months from the date of delisting. Beyond that, it is up to the promoters to accept — and that’s a risk. Keep that in mind when faced with an open offer or delisting buyout.
Sensex at 17K
Forget points and look at the percentage
Sandeep Singh
Posted online: Thursday, September 27, 2007
When the BSE Sensex, the bellwether for Indian stocks, briefly crossed another rubicon — 17,000 — today, the usual round of celebrations followed. From the perspective of sentiment and valuations, the rise from 16,000 to 17,000 holds a lot of meaning. But mathematically, the significance of every 1,000-point increase is diminishing because of the higher base effect.
For every successive 1,000-point rise in the Sensex, the percentage increase is less and less. For instance, 16,000 to 17,000 is a gain of just 6.3 per cent. To put it in context, when this bull run began, a 1,000 point increase in the Sensex — from 3,000 to 4,000 — was a percentage gain of 33.3 per cent. In other words, the latest 6.3 per cent rise being fawned over is one-fifth of what we started out with in 2003 (See table).
In the past, the Sensex has risen or fallen more than 6.3 per cent in a single day on several occasions, which says a lot about the quantum of this increase. Since July 25, 1990, when the Sensex closed above 1,000 for the first time, it has surged 6.3 per cent or more in a single day on 18 occasions; conversely, it has shed 6.3 per cent or more in a single day on 15 occasions.
The one impressive thing about this rise from 16,000 to 17,000 is the pace of increase. The latest 1,000-point gain has happened in five trading sessions. In absolute terms, that’s the quickest. However, this is a wrong way to assess speed, because it ignores the percentage variance of each crossing.
To factor in the percentage increase, we devised an indicator: sessions per 1 per cent gain. This shows how many sessions it took for each 1 per cent gain. At 0.8, the latest rise is the third-fastest 1,000-point increase in the history of the Sensex. Ahead of it are the Harshad Mehta-tainted increases from 2,000 to 3,000, and then to 4,000. But then, those were gains of 50 per cent and 33 per cent, respectively, and the latest one is 6.3 per cent. To iterate: forget the points, look at the percentage.
http://www.indianexpress.com/story/221586.html
Sandeep Singh
Posted online: Thursday, September 27, 2007
When the BSE Sensex, the bellwether for Indian stocks, briefly crossed another rubicon — 17,000 — today, the usual round of celebrations followed. From the perspective of sentiment and valuations, the rise from 16,000 to 17,000 holds a lot of meaning. But mathematically, the significance of every 1,000-point increase is diminishing because of the higher base effect.
For every successive 1,000-point rise in the Sensex, the percentage increase is less and less. For instance, 16,000 to 17,000 is a gain of just 6.3 per cent. To put it in context, when this bull run began, a 1,000 point increase in the Sensex — from 3,000 to 4,000 — was a percentage gain of 33.3 per cent. In other words, the latest 6.3 per cent rise being fawned over is one-fifth of what we started out with in 2003 (See table).
In the past, the Sensex has risen or fallen more than 6.3 per cent in a single day on several occasions, which says a lot about the quantum of this increase. Since July 25, 1990, when the Sensex closed above 1,000 for the first time, it has surged 6.3 per cent or more in a single day on 18 occasions; conversely, it has shed 6.3 per cent or more in a single day on 15 occasions.
The one impressive thing about this rise from 16,000 to 17,000 is the pace of increase. The latest 1,000-point gain has happened in five trading sessions. In absolute terms, that’s the quickest. However, this is a wrong way to assess speed, because it ignores the percentage variance of each crossing.
To factor in the percentage increase, we devised an indicator: sessions per 1 per cent gain. This shows how many sessions it took for each 1 per cent gain. At 0.8, the latest rise is the third-fastest 1,000-point increase in the history of the Sensex. Ahead of it are the Harshad Mehta-tainted increases from 2,000 to 3,000, and then to 4,000. But then, those were gains of 50 per cent and 33 per cent, respectively, and the latest one is 6.3 per cent. To iterate: forget the points, look at the percentage.
http://www.indianexpress.com/story/221586.html
Overseas Fund- Bouquet
THE BIG BIZ STORY
MF investors taste globalisation fruits
Sandeep Singh
Posted online: Sunday, September 16, 2007
Mutual funds have widened options for Indians with schemes that invest in world markets; they have also tried hard to differentiate their products
Overseas funds have been available to the Indian investor since 2004. But ever since the Reserve Bank of India (RBI) raised the limit for the Indian mutual fund (MF) industry’s international investments from $3 billion to $4 billion, and individual fund houses’ exposure limit from $150 million to $200 million, there has been a flurry of activity in this domain. A number of fund houses have launched schemes investing in foreign funds or foreign equity, while others are in the process of devising their products. While duplication of products is common in the MF industry, this time fund houses have tried to come out with products that are well differentiated from those of competitors.
The uniqueness of products is no doubt commendable, as it gives the investor more choices, but it also makes his task of investing harder. After all, he must choose from a wide buffet for a mere 10-15 per cent of equity allocation. “If all the products look the same, then the investor has no choice, whereas giving options provides the investor the choice to pick the scheme that is most appealing to him,” said SBI Mutual Fund chief investment officer Sanjay Sinha.
Fidelity’s bouquet of options: Fidelity’s World Range Fund, which is still awaiting Sebi’s nod, offers five options within one scheme. These include the Fidelity America Plan, Emerging Markets Plan, European Growth Plan, International Plan and Pacific Plan. The fund acts like a feeder fund. The investor can choose between the five plans and decide where he wants to put his money, based on his risk profile and investment pattern. For instance, an investor who wants to reduce his risk and is happy with moderate returns might want to invest in the developed economies. Another, looking for higher returns but higher risk, might opt for the Pacific plan.
Birla’s switching option: Birla Sun Life launched its International Equity Fund this week. The fund house has two new ideas to offer. One, it offers investors two options: you may either invest 100 per cent internationally, thus getting the benefit of higher diversification, or you may invest a minimum of 65 per cent in Indian equity and a maximum of 35 per cent overseas, thus getting the tax benefit on capital gains that is allowed on investment in Indian equity. The attractive feature is that you can switch between the two options any time during your investment period without being charged any entry or exit load.
Two, Birla Sun Life’s scheme will not act as a feeder fund for any international fund. Instead, it will invest directly in foreign equity. Investments will be made based on advice from Standard & Poor’s regarding which stocks to pick from the international market.
Tatas’ infrastructure fund: Tata Indo-Global Infrastructure Fund is the first thematic sectoral fund for the international market. We already have a bunch of infrastructure funds trying to capture the growth in the Indian infrastructure sector. This fund, along with capturing the growth in Indian infrastructure with at least 65 per cent investment in Indian equity, will invest up to 35 per cent in international companies benefiting from the growth in their domestic infrastructure.
So, it is suited for investors looking for high growth, and is not for those looking just for risk diversification.
Bullish on Asia: Two fund houses are offering two schemes, one of which is bullish on the Asian market, and the other specifically on China. ICICI Prudential Mutual Fund has come out with its Indo Asia Equity Fund, which will invest in Asian markets. “Asia fits in better with India. Growth in Asia is likely to be higher than in the rest of the world,” said ICICI Prudential Mutual Fund deputy managing director and CIO Nilesh Shah. “Globally, allocation will move to Asia because of its performance potential.”
Capturing the China-India growth story: ABN Amro AMC has launched the China-India Fund, which will invest predominantly in India (65-75 per cent) and China (25-35 per cent). This fund has been launched to capture the growth in the world’s two fastest growing economies — China and India.
While investing in overseas funds, investors need to answer one question: what proportion of their equity investments should be allocated to international equity? According to Delhi-based financial planner Surya Bhatia, international exposure should not exceed 10-15 per cent of your equity portfolio. “By investing this proportion in international equity, you get the benefit of diversification and international growth. You invest overseas with the purpose of diversifying country risk, and for this purpose 10-15 per cent is adequate,” he explained.
Finally, what investors must remember is that while some international exposure will do their portfolio a world of good, they must not go overboard. The bulk of their equity exposure should be to the domestic market.
After all, they have greater knowledge and familiarity with the Indian market and can, hence, monitor their domestic investments better. Most importantly, why venture abroad when your own economy is growing at above 9 per cent.
Delicious Buffet
• Investing in funds with global exposure diversifies country-specific risk
• Such investments mustn’t exceed 10-15% portfolio
• Each product offers a unique proposition
• One allows you to invest in a foreign economy you are bullish about
• Another allows you to gain from infrastructure growth in other countries
http://www.indianexpress.com/story/217290.html
MF investors taste globalisation fruits
Sandeep Singh
Posted online: Sunday, September 16, 2007
Mutual funds have widened options for Indians with schemes that invest in world markets; they have also tried hard to differentiate their products
Overseas funds have been available to the Indian investor since 2004. But ever since the Reserve Bank of India (RBI) raised the limit for the Indian mutual fund (MF) industry’s international investments from $3 billion to $4 billion, and individual fund houses’ exposure limit from $150 million to $200 million, there has been a flurry of activity in this domain. A number of fund houses have launched schemes investing in foreign funds or foreign equity, while others are in the process of devising their products. While duplication of products is common in the MF industry, this time fund houses have tried to come out with products that are well differentiated from those of competitors.
The uniqueness of products is no doubt commendable, as it gives the investor more choices, but it also makes his task of investing harder. After all, he must choose from a wide buffet for a mere 10-15 per cent of equity allocation. “If all the products look the same, then the investor has no choice, whereas giving options provides the investor the choice to pick the scheme that is most appealing to him,” said SBI Mutual Fund chief investment officer Sanjay Sinha.
Fidelity’s bouquet of options: Fidelity’s World Range Fund, which is still awaiting Sebi’s nod, offers five options within one scheme. These include the Fidelity America Plan, Emerging Markets Plan, European Growth Plan, International Plan and Pacific Plan. The fund acts like a feeder fund. The investor can choose between the five plans and decide where he wants to put his money, based on his risk profile and investment pattern. For instance, an investor who wants to reduce his risk and is happy with moderate returns might want to invest in the developed economies. Another, looking for higher returns but higher risk, might opt for the Pacific plan.
Birla’s switching option: Birla Sun Life launched its International Equity Fund this week. The fund house has two new ideas to offer. One, it offers investors two options: you may either invest 100 per cent internationally, thus getting the benefit of higher diversification, or you may invest a minimum of 65 per cent in Indian equity and a maximum of 35 per cent overseas, thus getting the tax benefit on capital gains that is allowed on investment in Indian equity. The attractive feature is that you can switch between the two options any time during your investment period without being charged any entry or exit load.
Two, Birla Sun Life’s scheme will not act as a feeder fund for any international fund. Instead, it will invest directly in foreign equity. Investments will be made based on advice from Standard & Poor’s regarding which stocks to pick from the international market.
Tatas’ infrastructure fund: Tata Indo-Global Infrastructure Fund is the first thematic sectoral fund for the international market. We already have a bunch of infrastructure funds trying to capture the growth in the Indian infrastructure sector. This fund, along with capturing the growth in Indian infrastructure with at least 65 per cent investment in Indian equity, will invest up to 35 per cent in international companies benefiting from the growth in their domestic infrastructure.
So, it is suited for investors looking for high growth, and is not for those looking just for risk diversification.
Bullish on Asia: Two fund houses are offering two schemes, one of which is bullish on the Asian market, and the other specifically on China. ICICI Prudential Mutual Fund has come out with its Indo Asia Equity Fund, which will invest in Asian markets. “Asia fits in better with India. Growth in Asia is likely to be higher than in the rest of the world,” said ICICI Prudential Mutual Fund deputy managing director and CIO Nilesh Shah. “Globally, allocation will move to Asia because of its performance potential.”
Capturing the China-India growth story: ABN Amro AMC has launched the China-India Fund, which will invest predominantly in India (65-75 per cent) and China (25-35 per cent). This fund has been launched to capture the growth in the world’s two fastest growing economies — China and India.
While investing in overseas funds, investors need to answer one question: what proportion of their equity investments should be allocated to international equity? According to Delhi-based financial planner Surya Bhatia, international exposure should not exceed 10-15 per cent of your equity portfolio. “By investing this proportion in international equity, you get the benefit of diversification and international growth. You invest overseas with the purpose of diversifying country risk, and for this purpose 10-15 per cent is adequate,” he explained.
Finally, what investors must remember is that while some international exposure will do their portfolio a world of good, they must not go overboard. The bulk of their equity exposure should be to the domestic market.
After all, they have greater knowledge and familiarity with the Indian market and can, hence, monitor their domestic investments better. Most importantly, why venture abroad when your own economy is growing at above 9 per cent.
Delicious Buffet
• Investing in funds with global exposure diversifies country-specific risk
• Such investments mustn’t exceed 10-15% portfolio
• Each product offers a unique proposition
• One allows you to invest in a foreign economy you are bullish about
• Another allows you to gain from infrastructure growth in other countries
http://www.indianexpress.com/story/217290.html
Fed Cut - Its Impact
THE BIG BIZ STORY
Fed rate cut: Brave act or desperate move?
Sandeep Singh
Posted online: Sunday, September 23, 2007
US Federal Reserve chairman Ben Bernanke said recently that he would cut interests only if there is a genuine problem in the economy. It seems nobody was listening
Ben Bernanke
Last Wednesday brought happy tidings on several fronts. The Sensex zoomed 653 points, up 4.2 per cent in a day, the adrenaline for the surge being provided by the US Federal Reserve Board’s decision to cut interest rates. Union agriculture minister Sharad Pawar’s announcement on the same day, proposing to offer financial incentives to the ailing sugar industry, brought more cheer. And finally, the mood in cricket-obsessed India turned ecstatic when, towards the end of the day, Yuvraj Singh hoisted six consecutive deliveries into the stands.
Ever since the subprime loan fiasco broke out in the US, increasing uncertainty and inducing volatility in stock exchanges around the world, market participants have been looking to Federal Reserve Board chairman Ben Bernanke to provide relief by cutting interest rates. He acted along these lines.
On September 17, he announced the first rate cut of his tenure — a 50 basis points (bps) cut in the Fed Funds Rate (the inter-bank borrowing rate), bringing it down from 5.25 to 4.75 per cent. This cut is expected to boost consumer spending, improve corporate bottomlines (by reducing interest costs), and boost the US — and world — economy. In addition, the Fed also reduced the Discount Rate (the rate at which it extends short-term loans to banks) by 50 bps, a move that will make cheaper funds available to banks.
Markets surge
Markets around the world celebrated Bernanke’s measures: the Nikkei rose 3.7 per cent, Hang Seng 4 per cent, FTSE 2.8 per cent, DAX 2.3 per cent and CAC-40 3.3 per cent. The Indian market, too, responded positively: the Sensex rose 4.2 per cent, in the process breaching the key psychologically mark of 16,000. (It has taken a mere 51 trading sessions for the Sensex to move up from 15,000 to 16,000.)
While the markets have taken the positives from Bernanke’s rate cuts, the negative implications of his decision don’t appear to have sunk in completely. Bernanke had earlier said that he would go for a rate cut only if there was a genuine problem in the US economy, and not just to bail out the banking system. Now, does the 50 basis points cut point to a larger problem in the economy?
Many experts believe that the US economy might be headed for a slowdown, which would lead to greater flight of capital into those high-growth economies that depend less on exports and are propelled more by domestic consumption. Says HDFC Bank chief economist Abheek Barua: “India, Indonesia and China are likely to hold up and are being seen as safe havens by investors.”
...And rupee follows suit
The higher influx of funds that followed the US rate cut led to further appreciation of the rupee, which on Thursday breached the Rs 40 to the dollar mark for the first time in nine years and closed at Rs 39.88.
How will the appreciation of the rupee impact our economy and the stock markets? One, by reducing the oil import bill, the stronger rupee will benefit oil companies. The BSE Oil & Gas index gained 11.4 per cent last week. Reliance Industries Ltd (RIL) gained 11.8 per cent, RPL 18.6 per cent,and ONGC 10.7 per cent. While the Oil & Gas sector has benefited from the rupee appreciation, the IT sector’s earnings are likely to be squeezed even further.
Not surprisingly, the BSE IT index was down 0.5 per cent over the previous week’s close. Satyam and Wipro were down by 2.75 and 2.3 per cent respectively. Infosys and TCS tried to hold their ground but they, too, lost 0.46 and 0.75 per cent respectively over the previous week’s closing.
Selective gains
What is noteworthy is that most of the movement on Wednesday was largely concentrated in the large-cap segment, which foreign institutional investors (FIIs) tend to prefer. The Sensex was up 4.2 per cent, the BSE 100 3.7 per cent, and the BSE 200 3.5 per cent. By contrast, mid-cap and the small-cap indices gained only 1.9 per cent and 1 per cent respectively.
“In future, activity is likely to take place in companies beyond the large cap companies,” says JP Morgan AMC chief executive officer (CEO) Krishnamurthy Vijayan. “The action in the leading stocks has been because of increasing movement of capital from developed economies to emerging markets.
India is likely to see an increase in investment in smaller companies moving beyond the top 50-100 stocks that most foreign investors and mutual funds are today pouring money into.” Over the past year, too, gains in the stock market have been selective. While the Capital Goods and Oil & Gas indices have gained by 78 and 59 per cent respectively, the Auto index has declined by 0.5 per cent.
The BSE IT and BSE Healthcare indices have grown by a mere 0.2 and 1.9 per cent respectively. So, it has not been an all-round gain, and interest rates and currency appreciation have had a major impact on the performance of sectoral indexes.
Gold: The safe haven
With the dollar losing ground, one asset class that has gained significantly is gold. Gold acts as the alternative reserve (to the dollar) for central banks around the world and as a hedge in times of uncertainty. Gold closed at Rs 9,550 per 10 grams on Friday, up 2.9 per cent during the week. With the dollar on the decline, gold appears to be emerging as the favoured asset class and is expected to remain fairly strong in future.
Long-term scenario
Once the stock market euphoria witnessed last week subsides, it remains to be seen whether the Fed’s actions actually stem the subprime crisis, or whether the markets in future have to deal with a recession in the US economy. If that were to happen, markets around the world would get impacted.
Says Barua: “The rate cut could be implying that things are much worse in the US than people expected. If the growth rate in the US economy gets revised downward, it will impact the G7 nations and all the other economies too.”
For India and a few other Asian economies, the positive comes from the fact that these economies, being driven more by domestic consumption, are likely to weather a US recession much better, and it is likely that more investments will flow into their economies and markets.
Bend it like Bernanke
• Fed rate cut expected to provide a fillip to subprime mess-plagued US economy
• Markets around the world responded euphorically to the cut
• Interest rate differential between US and India has widened
• With more funds flowing into India, rupee breached 40 per dollar mark
• Will the present cut protect the US — and world — economy from recession?
• If not, the feel-good induced by it may prove temporary
http://www.indianexpress.com/story/220007-2.html
Fed rate cut: Brave act or desperate move?
Sandeep Singh
Posted online: Sunday, September 23, 2007
US Federal Reserve chairman Ben Bernanke said recently that he would cut interests only if there is a genuine problem in the economy. It seems nobody was listening
Ben Bernanke
Last Wednesday brought happy tidings on several fronts. The Sensex zoomed 653 points, up 4.2 per cent in a day, the adrenaline for the surge being provided by the US Federal Reserve Board’s decision to cut interest rates. Union agriculture minister Sharad Pawar’s announcement on the same day, proposing to offer financial incentives to the ailing sugar industry, brought more cheer. And finally, the mood in cricket-obsessed India turned ecstatic when, towards the end of the day, Yuvraj Singh hoisted six consecutive deliveries into the stands.
Ever since the subprime loan fiasco broke out in the US, increasing uncertainty and inducing volatility in stock exchanges around the world, market participants have been looking to Federal Reserve Board chairman Ben Bernanke to provide relief by cutting interest rates. He acted along these lines.
On September 17, he announced the first rate cut of his tenure — a 50 basis points (bps) cut in the Fed Funds Rate (the inter-bank borrowing rate), bringing it down from 5.25 to 4.75 per cent. This cut is expected to boost consumer spending, improve corporate bottomlines (by reducing interest costs), and boost the US — and world — economy. In addition, the Fed also reduced the Discount Rate (the rate at which it extends short-term loans to banks) by 50 bps, a move that will make cheaper funds available to banks.
Markets surge
Markets around the world celebrated Bernanke’s measures: the Nikkei rose 3.7 per cent, Hang Seng 4 per cent, FTSE 2.8 per cent, DAX 2.3 per cent and CAC-40 3.3 per cent. The Indian market, too, responded positively: the Sensex rose 4.2 per cent, in the process breaching the key psychologically mark of 16,000. (It has taken a mere 51 trading sessions for the Sensex to move up from 15,000 to 16,000.)
While the markets have taken the positives from Bernanke’s rate cuts, the negative implications of his decision don’t appear to have sunk in completely. Bernanke had earlier said that he would go for a rate cut only if there was a genuine problem in the US economy, and not just to bail out the banking system. Now, does the 50 basis points cut point to a larger problem in the economy?
Many experts believe that the US economy might be headed for a slowdown, which would lead to greater flight of capital into those high-growth economies that depend less on exports and are propelled more by domestic consumption. Says HDFC Bank chief economist Abheek Barua: “India, Indonesia and China are likely to hold up and are being seen as safe havens by investors.”
...And rupee follows suit
The higher influx of funds that followed the US rate cut led to further appreciation of the rupee, which on Thursday breached the Rs 40 to the dollar mark for the first time in nine years and closed at Rs 39.88.
How will the appreciation of the rupee impact our economy and the stock markets? One, by reducing the oil import bill, the stronger rupee will benefit oil companies. The BSE Oil & Gas index gained 11.4 per cent last week. Reliance Industries Ltd (RIL) gained 11.8 per cent, RPL 18.6 per cent,and ONGC 10.7 per cent. While the Oil & Gas sector has benefited from the rupee appreciation, the IT sector’s earnings are likely to be squeezed even further.
Not surprisingly, the BSE IT index was down 0.5 per cent over the previous week’s close. Satyam and Wipro were down by 2.75 and 2.3 per cent respectively. Infosys and TCS tried to hold their ground but they, too, lost 0.46 and 0.75 per cent respectively over the previous week’s closing.
Selective gains
What is noteworthy is that most of the movement on Wednesday was largely concentrated in the large-cap segment, which foreign institutional investors (FIIs) tend to prefer. The Sensex was up 4.2 per cent, the BSE 100 3.7 per cent, and the BSE 200 3.5 per cent. By contrast, mid-cap and the small-cap indices gained only 1.9 per cent and 1 per cent respectively.
“In future, activity is likely to take place in companies beyond the large cap companies,” says JP Morgan AMC chief executive officer (CEO) Krishnamurthy Vijayan. “The action in the leading stocks has been because of increasing movement of capital from developed economies to emerging markets.
India is likely to see an increase in investment in smaller companies moving beyond the top 50-100 stocks that most foreign investors and mutual funds are today pouring money into.” Over the past year, too, gains in the stock market have been selective. While the Capital Goods and Oil & Gas indices have gained by 78 and 59 per cent respectively, the Auto index has declined by 0.5 per cent.
The BSE IT and BSE Healthcare indices have grown by a mere 0.2 and 1.9 per cent respectively. So, it has not been an all-round gain, and interest rates and currency appreciation have had a major impact on the performance of sectoral indexes.
Gold: The safe haven
With the dollar losing ground, one asset class that has gained significantly is gold. Gold acts as the alternative reserve (to the dollar) for central banks around the world and as a hedge in times of uncertainty. Gold closed at Rs 9,550 per 10 grams on Friday, up 2.9 per cent during the week. With the dollar on the decline, gold appears to be emerging as the favoured asset class and is expected to remain fairly strong in future.
Long-term scenario
Once the stock market euphoria witnessed last week subsides, it remains to be seen whether the Fed’s actions actually stem the subprime crisis, or whether the markets in future have to deal with a recession in the US economy. If that were to happen, markets around the world would get impacted.
Says Barua: “The rate cut could be implying that things are much worse in the US than people expected. If the growth rate in the US economy gets revised downward, it will impact the G7 nations and all the other economies too.”
For India and a few other Asian economies, the positive comes from the fact that these economies, being driven more by domestic consumption, are likely to weather a US recession much better, and it is likely that more investments will flow into their economies and markets.
Bend it like Bernanke
• Fed rate cut expected to provide a fillip to subprime mess-plagued US economy
• Markets around the world responded euphorically to the cut
• Interest rate differential between US and India has widened
• With more funds flowing into India, rupee breached 40 per dollar mark
• Will the present cut protect the US — and world — economy from recession?
• If not, the feel-good induced by it may prove temporary
http://www.indianexpress.com/story/220007-2.html
Realty Fund- IL&FS Milestone
Invest in realty with Rs 10 lakh
Sandeep Singh
Posted online: Monday , September 17, 2007
Real estate investment trusts (REITs), or real estate funds, are yet to make the transition from policy to product in India. But if you have Rs 10 lakh to invest, you can still invest in diverse pieces of real estate as a financial asset with IL&FS-Milestone Fund-I — a venture capital real estate fund that has slashed the entry limit in such funds from a few crore to Rs 10 lakh.
The productPromoted by IL&FS Investment Managers and Milestone Group, this is a closed-end fund with a tenure of four years, with option to extend by two years. The promoters are looking to collect Rs 1,000 crore for the fund. Investors have to pay only 30 per cent upfront. The remaining can be paid in two instalments between the third and twelfth month. Says Ved Prakash Arya, managing director, Milestone Capital: “We will make a call, with a 21-day notice for the two instalments.”
The fund will work like a pooled investment vehicle. It will collect the monies of investors, and buy properties that are completed and rented out, thus eliminating development risk. It will target offices, IT and ITES buildings, hospitals, warehouses and shopping malls that have long leases and can generate rental income of 12-15 per cent, net of property and service tax. The yield will be paid to investors on a quarterly basis. At the end of the tenure, the fund will sell those properties. Thus, investors get return from rentals through the term and capital gains, if any.
The fund has laid down some rules on investments. It won’t invest more than 25 per cent of its corpus in one project, not more than 40 per cent in a city. Similarly, office property and retail will have a cap of 30 per cent each, IT and ITES 20 per cent, warehouses 10 per cent.
Risks and rewardsThe fund is aiming for rental yields of 12-15 per cent and capital gains, but there are ‘ifs’ related to both. Firstly, the a 12 per cent rental yield drops reduces to 6.9 per cent after paying management fee of 1.5 per cent and tax of 33.99 per cent. Secondly, capital gains are dependent on how property prices move during this period. Thirdly, a 6.9 per cent return on 12 per cent rental is on 100 per cent occupancy. If it is unable to find tenants, or its properties see mild appreciation, worse depreciation, the returns reduce further (See table: The return scenarios). Having said that, the economic outlook is still good. If you have the surplus, invest in the fund.
http://www.expressmoney.in/news/Invest-in-realty-with-Rs-10-lakh-/92111.html
Sandeep Singh
Posted online: Monday , September 17, 2007
Real estate investment trusts (REITs), or real estate funds, are yet to make the transition from policy to product in India. But if you have Rs 10 lakh to invest, you can still invest in diverse pieces of real estate as a financial asset with IL&FS-Milestone Fund-I — a venture capital real estate fund that has slashed the entry limit in such funds from a few crore to Rs 10 lakh.
The productPromoted by IL&FS Investment Managers and Milestone Group, this is a closed-end fund with a tenure of four years, with option to extend by two years. The promoters are looking to collect Rs 1,000 crore for the fund. Investors have to pay only 30 per cent upfront. The remaining can be paid in two instalments between the third and twelfth month. Says Ved Prakash Arya, managing director, Milestone Capital: “We will make a call, with a 21-day notice for the two instalments.”
The fund will work like a pooled investment vehicle. It will collect the monies of investors, and buy properties that are completed and rented out, thus eliminating development risk. It will target offices, IT and ITES buildings, hospitals, warehouses and shopping malls that have long leases and can generate rental income of 12-15 per cent, net of property and service tax. The yield will be paid to investors on a quarterly basis. At the end of the tenure, the fund will sell those properties. Thus, investors get return from rentals through the term and capital gains, if any.
The fund has laid down some rules on investments. It won’t invest more than 25 per cent of its corpus in one project, not more than 40 per cent in a city. Similarly, office property and retail will have a cap of 30 per cent each, IT and ITES 20 per cent, warehouses 10 per cent.
Risks and rewardsThe fund is aiming for rental yields of 12-15 per cent and capital gains, but there are ‘ifs’ related to both. Firstly, the a 12 per cent rental yield drops reduces to 6.9 per cent after paying management fee of 1.5 per cent and tax of 33.99 per cent. Secondly, capital gains are dependent on how property prices move during this period. Thirdly, a 6.9 per cent return on 12 per cent rental is on 100 per cent occupancy. If it is unable to find tenants, or its properties see mild appreciation, worse depreciation, the returns reduce further (See table: The return scenarios). Having said that, the economic outlook is still good. If you have the surplus, invest in the fund.
http://www.expressmoney.in/news/Invest-in-realty-with-Rs-10-lakh-/92111.html
IPO Analysis- Koutons
PREMIUM valuations for a discount store
Sandeep Singh
Posted online: Monday , September 17, 2007
Organised retailing is here to stay, there’s no question about it. If there’s an investing question related to retailing, it’s this: which retailers will thrive, which ones will die or be swallowed? That’s essentially the call to make while considering buying the shares of Koutons Retail, which manufactures and sells apparels under the brand names Koutons and Charlie Outlaw. Will it thrive or will the arrival of the big retailer kill it?
The numbers show the company, which launched in 1994 but came into its own a decade on, has seen outstanding growth in sales of its shirts, T-shirts, trousers and suits. In the last three years, its sales have increased at a compounded annual rate of 133 per cent, net profit at 239 per cent, margins have improved. Koutons is issuing its shares at a PE of 32.9-36.9, which is stiff. To justify that pricing, it needn’t grow at historic levels, but it still needs to grow 40-50 per cent a year. While the big retailers are settling in, it’s possible. But once hypermarkets have a toehold, companies like Koutons could face the big squeeze.
The modelKoutons is an integrated apparel company. It has 18 manufacturing units, where it makes most of the garments it sells (a small percentage — 15 per cent in 2006-07 — are outsourced. These go to its finishing units, where they are groomed and packaged for sale. Till about five years ago, Koutons relied on distributors for sales. But when it found it had to share shelf space with other brands and it was distributors who called the shots, it shifted to a franchisee model, with the agreement to take back unsold merchandise. As of August 20, Koutons had 999 exclusive outlets — 566 for Koutons and 433 for Charlie Outlaw — in about 300 cities.
“High fashion value for money” is how the IPO prospectus describes the company’s brand positioning. Value for money, we don’t doubt; high fashion, we do. Koutons is a popular middle-end brand. The company sells most of its goods at discount sales — trousers for Rs 500, shirts for Rs 250. That is its strength today, but the same middle-of-the-road positioning could turn out to be its Achilles heel as the retail industry scales up and its dynamics change.
The designsAlthough the branded apparels segment is expanding, competition is heating up, and consolidation is imminent. Experts say the space could get demarcated into two: established brands (for instance, Levi’s and Pepe) and private labels (brands promoted by retailers themselves). Private labels trail established brands today, but that gap is expected to narrow as big retailers expand. Reliance, for instance, is working on its apparel brands, which will be much cheaper than the established brands.
The survivors will be established brands and private labels. Unlike, say, a Levi’s, Koutonsdoesn’t have enduring brand loyalty yet. Unless it manages to build that, it will lose out to big brands from the top and get hammered by the cheaper private labels from the bottom. The challenge before Koutons is to build a brand loyalty. It doesn’t have much time to do so, perhaps two to three years, as big retail is building up.
Koutons has plans, which is partly the reason for this IPO. On the one hand, the company plans to add 140 outlets over the next two years to increase visibility and reach. While men’s wear has been its focus, Koutons recently ventured into women’s wear (brand, Les Femme) and is now planning to get into kids wear (Koutons Jr).
On the other, it is expanding its manufacturing capacity further. The big push for Koutons came in the past two years, when it increased its manufacturing capacity from 600,000 pieces in March 2005 to 12.4 million pieces in March 2007, and its finishing capacity from 3 million to 22.9 million. Although it has unutilised capacity — for 2006-07, capacity utilisation was 22 per cent in manufacturing and 41 per cent in finishing — it’s setting up another manufacturing unit.
The finishIn other words, it has adequate, perhaps excess, manufacturing capabilities. What it needs is more sales, either through its outlets (as it has done so far) or through exports (unexplored). Organised retail has grown at 30 per cent in the last three years, and is expected to match that in the coming three to five years. Koutons should be able to match that rate for the next two to three years. Subsequently, the outlook can get dodgy and margins can come under pressure. That alignment might take longer in the case of Koutons, given its presence in smaller towns, where retailers will take longer to come up.
Koutons sells, but we doubt its ability to sell at a rate that justifies its tall pricing and its ability to keep its long-term competitive advantage. At the upper end of the price band, the stock is priced at a PE of 36.9. By comparison, Zodiac Clothing and Kewal Kiran (owner of brands like Killer, Lawman, easies, Integriti and K-Lounge) trade at 18.9 and 15.8, respectively. Granted, Koutons is bigger and has grown faster than those two, but it’s a stretch to think it can keep doing so to justify these valuations.
Two other things make us uncomfortable. One, the three promoters include chairman D.P.S. Kohli two brothers-in-laws, each of whom hold 22 per cent each. There are no rumblings yet, but family feuds in business make us a sceptic. Two, the promoters don’t seem to share the company’s wealth well with their employees. Koutons has 622 employees, but its three promoters account for 30 per cent of the wage bill, drawing an annual salary of Rs 75 lakh each. By comparison, the 55-year-old executive vice-president who is also in charge of business operations makes just Rs 8.6 lakh a year. That shows it’s a top-driven company, and might not be nimble enough to survive the upcoming big retail onslaught.
http://www.expressmoney.in/news/PREMIUM -valuations-for-a-discount-store-/92119.html
Sandeep Singh
Posted online: Monday , September 17, 2007
Organised retailing is here to stay, there’s no question about it. If there’s an investing question related to retailing, it’s this: which retailers will thrive, which ones will die or be swallowed? That’s essentially the call to make while considering buying the shares of Koutons Retail, which manufactures and sells apparels under the brand names Koutons and Charlie Outlaw. Will it thrive or will the arrival of the big retailer kill it?
The numbers show the company, which launched in 1994 but came into its own a decade on, has seen outstanding growth in sales of its shirts, T-shirts, trousers and suits. In the last three years, its sales have increased at a compounded annual rate of 133 per cent, net profit at 239 per cent, margins have improved. Koutons is issuing its shares at a PE of 32.9-36.9, which is stiff. To justify that pricing, it needn’t grow at historic levels, but it still needs to grow 40-50 per cent a year. While the big retailers are settling in, it’s possible. But once hypermarkets have a toehold, companies like Koutons could face the big squeeze.
The modelKoutons is an integrated apparel company. It has 18 manufacturing units, where it makes most of the garments it sells (a small percentage — 15 per cent in 2006-07 — are outsourced. These go to its finishing units, where they are groomed and packaged for sale. Till about five years ago, Koutons relied on distributors for sales. But when it found it had to share shelf space with other brands and it was distributors who called the shots, it shifted to a franchisee model, with the agreement to take back unsold merchandise. As of August 20, Koutons had 999 exclusive outlets — 566 for Koutons and 433 for Charlie Outlaw — in about 300 cities.
“High fashion value for money” is how the IPO prospectus describes the company’s brand positioning. Value for money, we don’t doubt; high fashion, we do. Koutons is a popular middle-end brand. The company sells most of its goods at discount sales — trousers for Rs 500, shirts for Rs 250. That is its strength today, but the same middle-of-the-road positioning could turn out to be its Achilles heel as the retail industry scales up and its dynamics change.
The designsAlthough the branded apparels segment is expanding, competition is heating up, and consolidation is imminent. Experts say the space could get demarcated into two: established brands (for instance, Levi’s and Pepe) and private labels (brands promoted by retailers themselves). Private labels trail established brands today, but that gap is expected to narrow as big retailers expand. Reliance, for instance, is working on its apparel brands, which will be much cheaper than the established brands.
The survivors will be established brands and private labels. Unlike, say, a Levi’s, Koutonsdoesn’t have enduring brand loyalty yet. Unless it manages to build that, it will lose out to big brands from the top and get hammered by the cheaper private labels from the bottom. The challenge before Koutons is to build a brand loyalty. It doesn’t have much time to do so, perhaps two to three years, as big retail is building up.
Koutons has plans, which is partly the reason for this IPO. On the one hand, the company plans to add 140 outlets over the next two years to increase visibility and reach. While men’s wear has been its focus, Koutons recently ventured into women’s wear (brand, Les Femme) and is now planning to get into kids wear (Koutons Jr).
On the other, it is expanding its manufacturing capacity further. The big push for Koutons came in the past two years, when it increased its manufacturing capacity from 600,000 pieces in March 2005 to 12.4 million pieces in March 2007, and its finishing capacity from 3 million to 22.9 million. Although it has unutilised capacity — for 2006-07, capacity utilisation was 22 per cent in manufacturing and 41 per cent in finishing — it’s setting up another manufacturing unit.
The finishIn other words, it has adequate, perhaps excess, manufacturing capabilities. What it needs is more sales, either through its outlets (as it has done so far) or through exports (unexplored). Organised retail has grown at 30 per cent in the last three years, and is expected to match that in the coming three to five years. Koutons should be able to match that rate for the next two to three years. Subsequently, the outlook can get dodgy and margins can come under pressure. That alignment might take longer in the case of Koutons, given its presence in smaller towns, where retailers will take longer to come up.
Koutons sells, but we doubt its ability to sell at a rate that justifies its tall pricing and its ability to keep its long-term competitive advantage. At the upper end of the price band, the stock is priced at a PE of 36.9. By comparison, Zodiac Clothing and Kewal Kiran (owner of brands like Killer, Lawman, easies, Integriti and K-Lounge) trade at 18.9 and 15.8, respectively. Granted, Koutons is bigger and has grown faster than those two, but it’s a stretch to think it can keep doing so to justify these valuations.
Two other things make us uncomfortable. One, the three promoters include chairman D.P.S. Kohli two brothers-in-laws, each of whom hold 22 per cent each. There are no rumblings yet, but family feuds in business make us a sceptic. Two, the promoters don’t seem to share the company’s wealth well with their employees. Koutons has 622 employees, but its three promoters account for 30 per cent of the wage bill, drawing an annual salary of Rs 75 lakh each. By comparison, the 55-year-old executive vice-president who is also in charge of business operations makes just Rs 8.6 lakh a year. That shows it’s a top-driven company, and might not be nimble enough to survive the upcoming big retail onslaught.
http://www.expressmoney.in/news/
Interview- Ashu Suyash
BIG TALK: ASHU SUYASH,
MANAGING DIRECTOR AND COUNTRY HEAD, FIDELITY FUND MANAGEMENT-->
‘NFOs should keep investor interests in mind’
Sandeep Singh Posted online: Monday , September 10, 2007
Last month, Fidelity relaunched its flagship equity scheme, Fidelity Equity Fund, with the objective of shifting focus from new fund offers (NFOs) to existing schemes. Now, it is following that up with the launch of Fidelity Growth Fund, an equity fund that targets fast-growing companies. Isn’t there a contradiction? Ashu Suyash, managing director and country head, Fidelity Fund Management, doesn’t think so. In an interview to our correspondent, Suyash defends the new fund launch and charges of product duplication, and outlines the product suite ahead.
One more equity fund. How is this different from your flagship equity fund?
It’s the first fund in our bouquet with a growth bias. Fidelity Equity Fund is a go-anywhere fund, without any preference for sectors or market cap. The Fidelity Special Situations Fund focuses on special situations. The tax-saver fund, which has a lock-in of three years, is closer to the Fidelity Equity Fund.So, given this range, it’s a different product. It takes a 360 degree view on the growth happening in the Indian economy. It considers drivers of growth — demographics, consumption, infrastructure and the corporate culture evolving in India — and captures their benefits. It seeks to pick companies whose return on investment is higher than their cost of capital, and which are in position to continuously compound their earnings.Besides companies listed in India, it will also invest in companies that get a majority of their earnings from India, but are listed outside. So, it takes a 360 degree view on growth and there is an element of differentiation.
You say the investment ideas are different, but the portfolios look so similar, as in the case of Fidelity Equity Fund and Fidelity Special Situations Fund.
There will be common stock ideas. But it’s not just ideas that shape portfolio returns. It’s also when one enters or exits a stock, and the size of the investment. The perspective of the two funds is different. Special situations are more likely to be found in large-cap companies, not in small- and mid-cap companies. Reliance Industries has been through a big restructuring recently. So, one will hold Reliance in a special situations fund, as well as in other schemes.One can have the same stocks, but different weightages, leading to a different outcome. Fidelity Growth Fund is likely to have fewer stocks — it has the option to invest 6-10 per cent of its assets in a stock — and will therefore be more risky.
Barely a month ago, you relaunched Fidelity Equity Fund, and termed the domination of NFOs in new investments as a “worrying development”. Now, you have gone ahead and launched your fourth equity fund.
In the equity investing space, there are basically nine investing styles and at least 14-15 unique products for a mainstream player. We would like to be in each segment, as each investor’s preference and buying behaviour is different.
When you launched in India, you said you won’t indulge in product duplication. Are you faithful to that philosophy?
Absolutely. Like I said, we still have to complete the standard 14-15, and so it’s a long way to go.
That’s a lot of NFOs. Do you see NFOs as penetration tool or a way to offer innovative, new products to investors?
For a nascent market like ours, NFOs are a good tool to get more investors into the fold. There is a certain consumer psychology built around NFOs, and that will remain. What’s important is all steps taken are aligned to investor interests. Our charge structure in an existing fund and a NFO is identical, and will remain so.
What’s with the relaunch of Fidelity Equity Fund? Even other fund houses do it with their schemes from time to time.
When we relaunched, there was PR activity, advertising activity, investing seminars and distributor training sessions. With our track record, we expected investors would come, but that didn’t happen. That told us that there was a need for vigorous communication like in an NFO.
What new, innovative products are you planning?
The feeder fund route is an exciting way of bringing unique products to India. Internationally, Fidelity has about 1,000 funds, which can generate umpteen ideas. We have filed a prospectus for a feeder fund. This is not a fund of funds, but five separate funds targeting major markets — US, Europe, emerging markets, Pacific region and a global option. Investors can pick and choose.
In order to make the industry more investor friendly, you welcomed Sebi’s proposal to waive the entry load for direct and Internet transactions.
It’s not zero load, but flexibility to distributors and fund houses to price load. Within this, one can have a no-load fund, but it’s not a diktat. Even when we get an investor directly, we incur some costs. So, it could be no load or a tiny load. Choice and flexibility leads to better engagement, which is the need of the hour along with better penetration.
But Internet penetration is low, as is branch reach. For instance, you have just 10 offices across the country.
Internet penetration has to increase, and it will over time. We started with five branches, but because of distributors, we are in several hundred cities. As in other industries, the manufacturer is less important than the dealer. That’s why giving distributors and manufacturers the flexibility will help. It is hard to think of a manufacturing company having branches like a bank.
What are the other aspects of the mutual funds business that can improve and benefit investors?
One area under discussion is advice: what is it, who can give it and who should regulate it. Then, development of the bond market. The equity markets have developed; the fixed-income markets haven’t. The bond market still lags in liquidity and transparency in price discovery. Today, we have selective issuance and selective trading. If transparency increases, so will issuance.
Lastly, how do you see the markets moving?
We haven’t seen the last of the sub-prime issue. The good thing is that the US Fed is monitoring the situation and will take action if necessary. That will influence share prices in India. Having said that, the long-term outlook for the economy and corporate India continues to be positive
http://www.expressmoney.in/news/NFOs-should-keep-investor-interests-in-mind/91996.html
MANAGING DIRECTOR AND COUNTRY HEAD, FIDELITY FUND MANAGEMENT-->
‘NFOs should keep investor interests in mind’
Sandeep Singh Posted online: Monday , September 10, 2007
Last month, Fidelity relaunched its flagship equity scheme, Fidelity Equity Fund, with the objective of shifting focus from new fund offers (NFOs) to existing schemes. Now, it is following that up with the launch of Fidelity Growth Fund, an equity fund that targets fast-growing companies. Isn’t there a contradiction? Ashu Suyash, managing director and country head, Fidelity Fund Management, doesn’t think so. In an interview to our correspondent, Suyash defends the new fund launch and charges of product duplication, and outlines the product suite ahead.
One more equity fund. How is this different from your flagship equity fund?
It’s the first fund in our bouquet with a growth bias. Fidelity Equity Fund is a go-anywhere fund, without any preference for sectors or market cap. The Fidelity Special Situations Fund focuses on special situations. The tax-saver fund, which has a lock-in of three years, is closer to the Fidelity Equity Fund.So, given this range, it’s a different product. It takes a 360 degree view on the growth happening in the Indian economy. It considers drivers of growth — demographics, consumption, infrastructure and the corporate culture evolving in India — and captures their benefits. It seeks to pick companies whose return on investment is higher than their cost of capital, and which are in position to continuously compound their earnings.Besides companies listed in India, it will also invest in companies that get a majority of their earnings from India, but are listed outside. So, it takes a 360 degree view on growth and there is an element of differentiation.
You say the investment ideas are different, but the portfolios look so similar, as in the case of Fidelity Equity Fund and Fidelity Special Situations Fund.
There will be common stock ideas. But it’s not just ideas that shape portfolio returns. It’s also when one enters or exits a stock, and the size of the investment. The perspective of the two funds is different. Special situations are more likely to be found in large-cap companies, not in small- and mid-cap companies. Reliance Industries has been through a big restructuring recently. So, one will hold Reliance in a special situations fund, as well as in other schemes.One can have the same stocks, but different weightages, leading to a different outcome. Fidelity Growth Fund is likely to have fewer stocks — it has the option to invest 6-10 per cent of its assets in a stock — and will therefore be more risky.
Barely a month ago, you relaunched Fidelity Equity Fund, and termed the domination of NFOs in new investments as a “worrying development”. Now, you have gone ahead and launched your fourth equity fund.
In the equity investing space, there are basically nine investing styles and at least 14-15 unique products for a mainstream player. We would like to be in each segment, as each investor’s preference and buying behaviour is different.
When you launched in India, you said you won’t indulge in product duplication. Are you faithful to that philosophy?
Absolutely. Like I said, we still have to complete the standard 14-15, and so it’s a long way to go.
That’s a lot of NFOs. Do you see NFOs as penetration tool or a way to offer innovative, new products to investors?
For a nascent market like ours, NFOs are a good tool to get more investors into the fold. There is a certain consumer psychology built around NFOs, and that will remain. What’s important is all steps taken are aligned to investor interests. Our charge structure in an existing fund and a NFO is identical, and will remain so.
What’s with the relaunch of Fidelity Equity Fund? Even other fund houses do it with their schemes from time to time.
When we relaunched, there was PR activity, advertising activity, investing seminars and distributor training sessions. With our track record, we expected investors would come, but that didn’t happen. That told us that there was a need for vigorous communication like in an NFO.
What new, innovative products are you planning?
The feeder fund route is an exciting way of bringing unique products to India. Internationally, Fidelity has about 1,000 funds, which can generate umpteen ideas. We have filed a prospectus for a feeder fund. This is not a fund of funds, but five separate funds targeting major markets — US, Europe, emerging markets, Pacific region and a global option. Investors can pick and choose.
In order to make the industry more investor friendly, you welcomed Sebi’s proposal to waive the entry load for direct and Internet transactions.
It’s not zero load, but flexibility to distributors and fund houses to price load. Within this, one can have a no-load fund, but it’s not a diktat. Even when we get an investor directly, we incur some costs. So, it could be no load or a tiny load. Choice and flexibility leads to better engagement, which is the need of the hour along with better penetration.
But Internet penetration is low, as is branch reach. For instance, you have just 10 offices across the country.
Internet penetration has to increase, and it will over time. We started with five branches, but because of distributors, we are in several hundred cities. As in other industries, the manufacturer is less important than the dealer. That’s why giving distributors and manufacturers the flexibility will help. It is hard to think of a manufacturing company having branches like a bank.
What are the other aspects of the mutual funds business that can improve and benefit investors?
One area under discussion is advice: what is it, who can give it and who should regulate it. Then, development of the bond market. The equity markets have developed; the fixed-income markets haven’t. The bond market still lags in liquidity and transparency in price discovery. Today, we have selective issuance and selective trading. If transparency increases, so will issuance.
Lastly, how do you see the markets moving?
We haven’t seen the last of the sub-prime issue. The good thing is that the US Fed is monitoring the situation and will take action if necessary. That will influence share prices in India. Having said that, the long-term outlook for the economy and corporate India continues to be positive
http://www.expressmoney.in/news/NFOs-should-keep-investor-interests-in-mind/91996.html
IPO Analysis- Power Grid
Tower POWER
Sandeep Singh
Posted online: Monday , September 10, 2007
Every summer, heat-ravaged Delhi falls short of its power needs. At the peak of the crisis, the chief minister announces arrangements to source additional power from plants in neighbouring states. As you bask in weather-tamed comfort, chew on this: that power is transmitted through a maze of towers, wires and sub-stations, and the company that enables most such inter-state and inter-regional transfers is Power Grid Corporation.
Growing demandWhile state electricity boards (SEBs) control power transmission in the states, Power Grid, a public sector undertaking, does so between states. Technically, Power Grid isn’t a monopoly in inter-state and inter-region transfer of power. This segment of the power business was opened to private players in 1998, but their presence is insignificant.
Meanwhile, the need for inter-region transmission has been increasing — and will only increase further. That’s partly due to the rising demand for power and the nature of the power plants coming up. The present capacity of the National Grid, which is Power Grid’s domain, is 14,100 mw. The government is looking to increase this to 37,150 mw by 2011-12 (2.6 times current capacity) and 65,000 mw by 2006-17 (4.6 times current capacity). Besides this, Power Grid also draws from state projects. Together, in 2006-07, it transmitted 45 per cent of all power generated in India.
In the 11th five-year plan (2007-12), the government has outlined an investment of Rs 1,40,000 crore in the transmission sector, of which, Rs 75,000 crore is for inter-state transmission. The nine ultra mega power projects (UMPP) the Centre is trying to fast-track to bridge the large - and increasing - gap between demand and supply in the country could provide a fillip to Power Grid’s numbers. The company has been asked by the ministry of power to prepare feasibility reports for construction of transmission systems for these UMPPs. The company itself plans to invest Rs 55,000 crore during this period. That’s almost twice the Rs 25,000 crore it has invested in completing 101 transmission projects since 1992.
Stable pricingEven as new capacity drives growth for Power Grid, its existing feeder lines should keep the revenues and profit counters ticking. Power Grid works with power generating companies to set up transmission systems. It transmits that power to SEBs at tariffs that are pre-decided by the Central Electricity Regulatory Commission (CERC).
The tariffs are a cost-plus calculation, which ensures a profit for Power Grid, and are reviewed every five years (the next review is in 2009). The tariff incorporates the project cost, interest on loans, operating and maintenance cost, depreciation and foreign exchange variation, and a 14 per cent return on the equity component of the project (generally, 30 per cent).
This could change, though. The new national tariff policy, notified in January 2006, advocates a shift to competitive bidding, beginning 2011 or when the CERC thinks so. Competitive bidding will reduce the price protection that Power Grid has and the high margins that it earns, so will the expected entry of private players. Those are risks Power Grid faces, but these can be managed, as there’s going to be ample demand for its transmission services.
Beyond powerPower Grid is the proverbial utility, with a captive business that assures a steady stream of sales and profits; with the new projects coming up, growth too. Increasingly, Power Grid is also looking at spin offs from its main transmission business, two in particular. The first is taking on transmission consultancy assignments. The second is leasing the fibre optic cable network it has set up alongside its transmission network, connecting over 60 cities. In 2006-07, the two businesses accounted for 8.4 per cent of Power Grid’s revenues. This could increase further. Till June 30, the company had orders for Rs 250 crore in the telecom business, up from Rs 77 crore for all of 2006-07.
In the last four years, Power Grid’s revenues have grown at a compounded annual growth rate (CAGR) of 12.7 per cent, net profit at 17.6 per cent. In spite of CERC cutting the return on equity in the tariff pricing from 16 per cent to 14 per cent from April 2004, the company has managed to improve margins. Operational expenses in running the towers are minimal. Setting them up is cost-heavy, because of which interest and depreciation become Power Grid’s main expenses.
The IPO is priced at Rs 44-52. based on its 2006-07 earnings and post-issue equity, that’s a PE of 13.7 and 16.2. That’s a fair price to buy this business for the long term. The power sector is finally seeing a lot of activity and Power Grid should be a major beneficiary. A change in rules has improved operating conditions for the good players, and SEBs can’t hold companies like Power Grid to ransom anymore. Indeed, there’s a lot of light.
http://www.expressmoney.in/news/Tower-POWER/92003.html
Sandeep Singh
Posted online: Monday , September 10, 2007
Every summer, heat-ravaged Delhi falls short of its power needs. At the peak of the crisis, the chief minister announces arrangements to source additional power from plants in neighbouring states. As you bask in weather-tamed comfort, chew on this: that power is transmitted through a maze of towers, wires and sub-stations, and the company that enables most such inter-state and inter-regional transfers is Power Grid Corporation.
Growing demandWhile state electricity boards (SEBs) control power transmission in the states, Power Grid, a public sector undertaking, does so between states. Technically, Power Grid isn’t a monopoly in inter-state and inter-region transfer of power. This segment of the power business was opened to private players in 1998, but their presence is insignificant.
Meanwhile, the need for inter-region transmission has been increasing — and will only increase further. That’s partly due to the rising demand for power and the nature of the power plants coming up. The present capacity of the National Grid, which is Power Grid’s domain, is 14,100 mw. The government is looking to increase this to 37,150 mw by 2011-12 (2.6 times current capacity) and 65,000 mw by 2006-17 (4.6 times current capacity). Besides this, Power Grid also draws from state projects. Together, in 2006-07, it transmitted 45 per cent of all power generated in India.
In the 11th five-year plan (2007-12), the government has outlined an investment of Rs 1,40,000 crore in the transmission sector, of which, Rs 75,000 crore is for inter-state transmission. The nine ultra mega power projects (UMPP) the Centre is trying to fast-track to bridge the large - and increasing - gap between demand and supply in the country could provide a fillip to Power Grid’s numbers. The company has been asked by the ministry of power to prepare feasibility reports for construction of transmission systems for these UMPPs. The company itself plans to invest Rs 55,000 crore during this period. That’s almost twice the Rs 25,000 crore it has invested in completing 101 transmission projects since 1992.
Stable pricingEven as new capacity drives growth for Power Grid, its existing feeder lines should keep the revenues and profit counters ticking. Power Grid works with power generating companies to set up transmission systems. It transmits that power to SEBs at tariffs that are pre-decided by the Central Electricity Regulatory Commission (CERC).
The tariffs are a cost-plus calculation, which ensures a profit for Power Grid, and are reviewed every five years (the next review is in 2009). The tariff incorporates the project cost, interest on loans, operating and maintenance cost, depreciation and foreign exchange variation, and a 14 per cent return on the equity component of the project (generally, 30 per cent).
This could change, though. The new national tariff policy, notified in January 2006, advocates a shift to competitive bidding, beginning 2011 or when the CERC thinks so. Competitive bidding will reduce the price protection that Power Grid has and the high margins that it earns, so will the expected entry of private players. Those are risks Power Grid faces, but these can be managed, as there’s going to be ample demand for its transmission services.
Beyond powerPower Grid is the proverbial utility, with a captive business that assures a steady stream of sales and profits; with the new projects coming up, growth too. Increasingly, Power Grid is also looking at spin offs from its main transmission business, two in particular. The first is taking on transmission consultancy assignments. The second is leasing the fibre optic cable network it has set up alongside its transmission network, connecting over 60 cities. In 2006-07, the two businesses accounted for 8.4 per cent of Power Grid’s revenues. This could increase further. Till June 30, the company had orders for Rs 250 crore in the telecom business, up from Rs 77 crore for all of 2006-07.
In the last four years, Power Grid’s revenues have grown at a compounded annual growth rate (CAGR) of 12.7 per cent, net profit at 17.6 per cent. In spite of CERC cutting the return on equity in the tariff pricing from 16 per cent to 14 per cent from April 2004, the company has managed to improve margins. Operational expenses in running the towers are minimal. Setting them up is cost-heavy, because of which interest and depreciation become Power Grid’s main expenses.
The IPO is priced at Rs 44-52. based on its 2006-07 earnings and post-issue equity, that’s a PE of 13.7 and 16.2. That’s a fair price to buy this business for the long term. The power sector is finally seeing a lot of activity and Power Grid should be a major beneficiary. A change in rules has improved operating conditions for the good players, and SEBs can’t hold companies like Power Grid to ransom anymore. Indeed, there’s a lot of light.
http://www.expressmoney.in/news/Tower-POWER/92003.html
Infrastructure Fund
On the FAST TRACK
Sandeep Singh Posted
online: Monday , September 10, 2007
If the Indian economy has to keep growing at 8-9 per cent a year, even try to scale up to 10 per cent, it has to get its infrastructure — roads, power, telecom, ports, airports and rail — in order quickly. If the government and companies are going to invest big money building that infrastructure, the companies that build these superstructures, and the companies that supply goods and services to the builders, are in for a period of heady growth. If the revenues and profits of such companies grow, so should their share prices.
That’s the central premise of infrastructure funds, which are steadily increasing in number — eight schemes are there, two more are in the new fund offer (NFO) stage. It’s a powerful investment idea, one whose time might have come.
The storySceptics, even rationalists, might cite history, and question the figures blown up in the last column that indicate the quantum of investments needed in six key infrastructure sectors. When it has come to making, or enabling, investments in places that matter, investments have fallen woefully short of needs. So, what’s changed?
For one, the economic need and logic is greater than ever before. There is greater realisation and intent among policymakers and entrepreneurs that infrastructure holds the key to the sustaining India’s economic boom. The government has outlined Rs 14,50,000 crore towards infrastructure in the eleventh five-year plan (2007-12) alone. Says Ved Prakash Chaturvedi, managing director, Tata Mutual Fund: “Infrastructure can’t be imported, it has to be built.”
Many more are coming forward to build it and fund it. Proof is the swelling order books of companies involved in this building. Proof is the ever-increasing prices of essential inputs like cement and steel. Proof is the nine ultra-mega power projects the government is trying to push through and the scores of Metro links coming up in major cities. Proof the rash of venture capital funds launched or announced by financial services companies. Says Sanjay Sinha, chief investment officer, SBI Mutual Fund: “Public-private partnership is increasing. There are many more companies participating in this area, which was earlier the preserve of the public sector.”
For businesses that are tied to this infrastructure story, wholly or partly, this is a golden period. Says Chaturvedi: “Overall earnings growth in the next year will be about 17 per cent. By comparison, infrastructure should grow at over 25 per cent.” Further, say analysts, that mark-up in earnings is likely to continue for the next five to 10 years at least. Says Chaturvedi: “Earnings growth for companies operating in the segment should continue for the next decade at least.”
The profiteersAs an investor, you should be looking to ride this surge in economic activity. While most diversified equity funds have a healthy holding of infrastructure-related companies, dedicated infrastructure funds also make for worthy investments. Although these are thematic funds, they are more broad-based than most of their peers. There are builders (for instance, construction, power companies and telecom companies) and there are suppliers (engineering, capital goods, cement, steel, banks). That broad domain brings them in the investment set of more investors.
At present, there are 10 infrastructure funds. Of this, only one scheme, Tata Infrastructure, has completed three years. Six others have completed a year, and their performance over this period is outstanding, beating the benchmark by 14-22 percentage points (See table: Your options in...).
The strategyIt mirrors the Building India story unfolding, and you should get a piece of it through these infrastructure funds. But only a piece. Such investment themes, even if they are broad-based should not be the core holding of your portfolio. Rather, only a portion of your portfolio should go there. Says Sinha: “One can invest 25-30 per cent of your equity allocation to infrastructure funds, given its attractiveness today and growth prospects.”
Pune-based financial planner Veer Sardesai advises a lower allocation and insists on a long-term horizon. “Invest about 20 per cent of your portfolio in infrastructure funds, for a minimum five years. That’s because most of the infrastructure story will play out in the next five to 10 years.”
Targets set by the government might still not be met, especially in sectors where the slow progress on policy changes is holding back investments. If telecom, where private players have the freedom to direct traffic, is a good example of how things should be, power and ports are crying for government attention on a priority basis.
Says financial planner Veer Sardesai: “The story is more of growth, than value. Faster growth will come from government investing in infrastructure and more private participation, with an increasing number of listed companies.”
In the months to come, you might have another
option in the form of dedicated infrastructure funds. These are closed-end funds that will invest in companies in the infrastructure space, both listed and unlisted, and also offer additional tax breaks (See box: Infrastructure funds: Act II). India is building, and you can build on it.
http://www.expressmoney.in/news/On-the-FAST-TRACK/92006.html
Sandeep Singh Posted
online: Monday , September 10, 2007
If the Indian economy has to keep growing at 8-9 per cent a year, even try to scale up to 10 per cent, it has to get its infrastructure — roads, power, telecom, ports, airports and rail — in order quickly. If the government and companies are going to invest big money building that infrastructure, the companies that build these superstructures, and the companies that supply goods and services to the builders, are in for a period of heady growth. If the revenues and profits of such companies grow, so should their share prices.
That’s the central premise of infrastructure funds, which are steadily increasing in number — eight schemes are there, two more are in the new fund offer (NFO) stage. It’s a powerful investment idea, one whose time might have come.
The storySceptics, even rationalists, might cite history, and question the figures blown up in the last column that indicate the quantum of investments needed in six key infrastructure sectors. When it has come to making, or enabling, investments in places that matter, investments have fallen woefully short of needs. So, what’s changed?
For one, the economic need and logic is greater than ever before. There is greater realisation and intent among policymakers and entrepreneurs that infrastructure holds the key to the sustaining India’s economic boom. The government has outlined Rs 14,50,000 crore towards infrastructure in the eleventh five-year plan (2007-12) alone. Says Ved Prakash Chaturvedi, managing director, Tata Mutual Fund: “Infrastructure can’t be imported, it has to be built.”
Many more are coming forward to build it and fund it. Proof is the swelling order books of companies involved in this building. Proof is the ever-increasing prices of essential inputs like cement and steel. Proof is the nine ultra-mega power projects the government is trying to push through and the scores of Metro links coming up in major cities. Proof the rash of venture capital funds launched or announced by financial services companies. Says Sanjay Sinha, chief investment officer, SBI Mutual Fund: “Public-private partnership is increasing. There are many more companies participating in this area, which was earlier the preserve of the public sector.”
For businesses that are tied to this infrastructure story, wholly or partly, this is a golden period. Says Chaturvedi: “Overall earnings growth in the next year will be about 17 per cent. By comparison, infrastructure should grow at over 25 per cent.” Further, say analysts, that mark-up in earnings is likely to continue for the next five to 10 years at least. Says Chaturvedi: “Earnings growth for companies operating in the segment should continue for the next decade at least.”
The profiteersAs an investor, you should be looking to ride this surge in economic activity. While most diversified equity funds have a healthy holding of infrastructure-related companies, dedicated infrastructure funds also make for worthy investments. Although these are thematic funds, they are more broad-based than most of their peers. There are builders (for instance, construction, power companies and telecom companies) and there are suppliers (engineering, capital goods, cement, steel, banks). That broad domain brings them in the investment set of more investors.
At present, there are 10 infrastructure funds. Of this, only one scheme, Tata Infrastructure, has completed three years. Six others have completed a year, and their performance over this period is outstanding, beating the benchmark by 14-22 percentage points (See table: Your options in...).
The strategyIt mirrors the Building India story unfolding, and you should get a piece of it through these infrastructure funds. But only a piece. Such investment themes, even if they are broad-based should not be the core holding of your portfolio. Rather, only a portion of your portfolio should go there. Says Sinha: “One can invest 25-30 per cent of your equity allocation to infrastructure funds, given its attractiveness today and growth prospects.”
Pune-based financial planner Veer Sardesai advises a lower allocation and insists on a long-term horizon. “Invest about 20 per cent of your portfolio in infrastructure funds, for a minimum five years. That’s because most of the infrastructure story will play out in the next five to 10 years.”
Targets set by the government might still not be met, especially in sectors where the slow progress on policy changes is holding back investments. If telecom, where private players have the freedom to direct traffic, is a good example of how things should be, power and ports are crying for government attention on a priority basis.
Says financial planner Veer Sardesai: “The story is more of growth, than value. Faster growth will come from government investing in infrastructure and more private participation, with an increasing number of listed companies.”
In the months to come, you might have another
option in the form of dedicated infrastructure funds. These are closed-end funds that will invest in companies in the infrastructure space, both listed and unlisted, and also offer additional tax breaks (See box: Infrastructure funds: Act II). India is building, and you can build on it.
http://www.expressmoney.in/news/On-the-FAST-TRACK/92006.html
Links To 22 OLD Articles
43% demat accounts suspended but no impact on trading volumes
As on December 31, 4.3 million demat accounts, almost 43 per cent of the total 9.9 million with the two depositories NSDL and CDSL... (Date: 15-Jan-2007)
http://www.indianexpress.com/story/20895.html
New companies, more NFOs to push MF assets in 2007
AUMs increased by 71% to Rs 340,629 cr in 2006 and it wasn’t just the trickle-down effect of a racing stock market (Date: 11-Jan-2007)
http://www.indianexpress.com/story/20607.html
Sundaram to launch two new funds
Sundaram BNP Paribas is launching two new funds in the equity segment - Equity Multiplier... (Date: 9-Jan-2007)
http://www.indianexpress.com/story/20426.html
Key word for the new year: selectivity
Although share prices have exceeded expectations for 2006 — the Sensex gained an impressive 46.8 per cent for the year — market players remain bullish for 2007. (Date: 7-Jan-2007)
http://www.indianexpress.com/story/20310.html
Regional stock exchanges sink as the ‘Big two’ rise
That effectively there are only two stock exchanges in the country — National Stock Exchange and Bombay Stock Exchange — is old news. Here’s how bad the state of regional stock exchanges is. (Date: 18-Dec-2006)
http://www.indianexpress.com/story/18791.html
Traffic on the IPO route increasing, but returns aren’t accelerating
The number of IPOs hitting the market has steadily increased from two a month between June and August to three a week... (Date: 11-Dec-2006)
http://www.indianexpress.com/story/18299.html
Next Bill Gates could be an Indian: Microsoft CEO
There is a special responsibility on India, the world is counting on the talent of this country to lead the next wave of innovation said Ballmer (Date: 9-Nov-2006)
http://www.indianexpress.com/story/16243.html
Multi-brand loyalty has a new catch-phrase: it pays
While plain vanilla cards offer reward points of 0.25 to 1%, multi-brand loyalty cards pay up to 6% for purchases at partner establishments (Date: 6-Nov-2006)
http://www.indianexpress.com/story/16069.html
Search results for sandeep singh
Selective, not broadbased
The big picture says share prices are up and running, but the fine print shows that not all segments, sectors or stocks have hit their highs (Date: 31-Oct-2006)
http://www.indianexpress.com/story/15693.html
India Inc’s growth story continues in first half of FY 07
The wheels are turning in corporate India. And if the financial results for the first-half of 2006-07 are anything to go by, they are turning real fast. (Date: 30-Oct-2006)
http://www.indianexpress.com/story/15635.html
Vijaya Bank plans acquisition in 2007
Vijaya Bank plans to acquire a smaller bank during the next financial year. Speaking at a press meet... (Date: 26-Sep-2006)
http://www.indianexpress.com/story/13418.html
When prices crash, hidden home loan clause may haunt
With property prices likely to follow the downward swing of the stock markets, an innocuous clause of the home loan agreement... (Date: 17-Jun-2006)
http://www.indianexpress.com/story/6614.html
Line and length
(Date: 5-Apr-2006)
http://www.indianexpress.com/story/1830.html
Sensex up; Friday the 13th may decide medium term direction
The market broke last week’s trend today. The Sensex rose 321 points or 2.5 per cent, closing at 13,177. (Date: 10-Apr-2007)
http://www.indianexpress.com/story/27946.html
Is it time to invest in banking stocks?
The Reserve Bank’s move to increase the repo rate by 25 basis points to 7.75 per cent and the Cash Reserve Ratio... (Date: 9-Apr-2007)
http://www.indianexpress.com/story/27829.html
Bearish trend likely to stay as RBI may not cut rates
What a welcome the investors had to financial year 2007-08. The market started on a bad note with the second largest fall in the history of BSE Sensex of 617 points. (Date: 3-Apr-2007)
http://www.indianexpress.com/story/27308.html
Demand for car loans may dip, sales feel the heat
Car loan rates are slated to go up further with Reserve Bank of India announcing an increase in cash reserve ratio by 50 basis points... (Date: 2-Apr-2007)
http://www.indianexpress.com/story/27221.html
With home loan floating rate at 11 per cent, banks have to increase not just your tenure but EMI too
Remember stories in books and films where a villager could never pay off his debts to the village Mahajan (moneylender) because of high interest that kept compounding? (Date: 20-Mar-2007)
http://www.indianexpress.com/story/26162.html
Why policymakers need to rethink: Hiking interest rate to control demand no help
Something’s not adding up. Interest rates of commercial banks are up but are out of sync with the rest of the world. (Date: 12-Mar-2007)
http://www.indianexpress.com/story/25437.html
As MIN deadline approaches MFs see fall in subscriptions
Call it the last minute scramble or regulatory short sightedness or even investor lethargy. (Date: 25-Jan-2007)
http://www.indianexpress.com/story/21677.html
Pension funds allowed 15% exposure to equities
Under the New Pension System 15 per cent of their pension wealth can get an equity exposure... (Date: 24-Jan-2007)
http://www.indianexpress.com/story/21603.html
As on December 31, 4.3 million demat accounts, almost 43 per cent of the total 9.9 million with the two depositories NSDL and CDSL... (Date: 15-Jan-2007)
http://www.indianexpress.com/story/20895.html
New companies, more NFOs to push MF assets in 2007
AUMs increased by 71% to Rs 340,629 cr in 2006 and it wasn’t just the trickle-down effect of a racing stock market (Date: 11-Jan-2007)
http://www.indianexpress.com/story/20607.html
Sundaram to launch two new funds
Sundaram BNP Paribas is launching two new funds in the equity segment - Equity Multiplier... (Date: 9-Jan-2007)
http://www.indianexpress.com/story/20426.html
Key word for the new year: selectivity
Although share prices have exceeded expectations for 2006 — the Sensex gained an impressive 46.8 per cent for the year — market players remain bullish for 2007. (Date: 7-Jan-2007)
http://www.indianexpress.com/story/20310.html
Regional stock exchanges sink as the ‘Big two’ rise
That effectively there are only two stock exchanges in the country — National Stock Exchange and Bombay Stock Exchange — is old news. Here’s how bad the state of regional stock exchanges is. (Date: 18-Dec-2006)
http://www.indianexpress.com/story/18791.html
Traffic on the IPO route increasing, but returns aren’t accelerating
The number of IPOs hitting the market has steadily increased from two a month between June and August to three a week... (Date: 11-Dec-2006)
http://www.indianexpress.com/story/18299.html
Next Bill Gates could be an Indian: Microsoft CEO
There is a special responsibility on India, the world is counting on the talent of this country to lead the next wave of innovation said Ballmer (Date: 9-Nov-2006)
http://www.indianexpress.com/story/16243.html
Multi-brand loyalty has a new catch-phrase: it pays
While plain vanilla cards offer reward points of 0.25 to 1%, multi-brand loyalty cards pay up to 6% for purchases at partner establishments (Date: 6-Nov-2006)
http://www.indianexpress.com/story/16069.html
Search results for sandeep singh
Selective, not broadbased
The big picture says share prices are up and running, but the fine print shows that not all segments, sectors or stocks have hit their highs (Date: 31-Oct-2006)
http://www.indianexpress.com/story/15693.html
India Inc’s growth story continues in first half of FY 07
The wheels are turning in corporate India. And if the financial results for the first-half of 2006-07 are anything to go by, they are turning real fast. (Date: 30-Oct-2006)
http://www.indianexpress.com/story/15635.html
Vijaya Bank plans acquisition in 2007
Vijaya Bank plans to acquire a smaller bank during the next financial year. Speaking at a press meet... (Date: 26-Sep-2006)
http://www.indianexpress.com/story/13418.html
When prices crash, hidden home loan clause may haunt
With property prices likely to follow the downward swing of the stock markets, an innocuous clause of the home loan agreement... (Date: 17-Jun-2006)
http://www.indianexpress.com/story/6614.html
Line and length
(Date: 5-Apr-2006)
http://www.indianexpress.com/story/1830.html
Sensex up; Friday the 13th may decide medium term direction
The market broke last week’s trend today. The Sensex rose 321 points or 2.5 per cent, closing at 13,177. (Date: 10-Apr-2007)
http://www.indianexpress.com/story/27946.html
Is it time to invest in banking stocks?
The Reserve Bank’s move to increase the repo rate by 25 basis points to 7.75 per cent and the Cash Reserve Ratio... (Date: 9-Apr-2007)
http://www.indianexpress.com/story/27829.html
Bearish trend likely to stay as RBI may not cut rates
What a welcome the investors had to financial year 2007-08. The market started on a bad note with the second largest fall in the history of BSE Sensex of 617 points. (Date: 3-Apr-2007)
http://www.indianexpress.com/story/27308.html
Demand for car loans may dip, sales feel the heat
Car loan rates are slated to go up further with Reserve Bank of India announcing an increase in cash reserve ratio by 50 basis points... (Date: 2-Apr-2007)
http://www.indianexpress.com/story/27221.html
With home loan floating rate at 11 per cent, banks have to increase not just your tenure but EMI too
Remember stories in books and films where a villager could never pay off his debts to the village Mahajan (moneylender) because of high interest that kept compounding? (Date: 20-Mar-2007)
http://www.indianexpress.com/story/26162.html
Why policymakers need to rethink: Hiking interest rate to control demand no help
Something’s not adding up. Interest rates of commercial banks are up but are out of sync with the rest of the world. (Date: 12-Mar-2007)
http://www.indianexpress.com/story/25437.html
As MIN deadline approaches MFs see fall in subscriptions
Call it the last minute scramble or regulatory short sightedness or even investor lethargy. (Date: 25-Jan-2007)
http://www.indianexpress.com/story/21677.html
Pension funds allowed 15% exposure to equities
Under the New Pension System 15 per cent of their pension wealth can get an equity exposure... (Date: 24-Jan-2007)
http://www.indianexpress.com/story/21603.html
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