What is better investment in India other than FD- Revision of my post 4 years ago Reliance Monthly Income

Dear Friends, after a gap of 4 years I have decided to again blog my little thoughts on some of the investment opportunities available in India for risk averse investors other than plain FD and I thought it will be a good idea to update the status of my recommendation that I wrote 4 years ago on Reliance monthly income fund. This fund has given an average 10% return over the last 4 years period year on year, which is not a bad performance. However, there are better performing avenues in the current scenario and I will discuss those in the next few days. This fund however is still good as a risk free regular monthly income for those opting to as alternative for FD.

What is better investment other than a FD in India

What is a good investment that is risk free and at the same time offers a return slightly better than a FD.This is a question that is being constantly asked by some of my NRI friends who have mostly invested in NRE FD or NRO FD accounts in India.
Return from a NRE FD is at around 3.5% and from an NRO FD is around 5% after adjusting for tax deductions at source.Now these are safe avenues and one can put the money with out the fear of losing capital.However, how safe is the principal considering the inflation effect which may eat into your returns over a period of time.

After going through some of the liquid funds and other debt funds options, I am in the process of shortlisting some of the alternative avenues and one such investment is the money market fund Reliance MIP scheme(Monthly dividend).

Now do not be mislead by the word monthly dividend, there is no guaranteed monthly dividend and the term could be misleading.However, having done some research on their returns based on facts from valueresearchonline.com, I can safely conclude that this is a better option than investing in FD, the fund has clocked a one year return of 26.25%(The net returns may be slightly lower considering the tax adjustments). This scheme was launched in December 2003 and the fund has given a return of 13.5% over a five years period of time and an impressive 11.86% from the launch date.

The equity exposure of this fund is around 15% as of 31,December 2009 and the rest of the portfolio comprise of 75% in debt related(NCD,Government securities) and 9%cash and cash convertibles.

Based on facts and strong track record I would advice my friends and other investors to invest in this scheme as an alternative to FD.
How to Invest
You can directly invest online if you have an online trading account with HDFC or ICICI or other brokers.Alternatively you can ask some one from India to send you the forms, so that you can fill up the form together with the cheque to authorized banking agents or distributors of the scheme.
This investment suggestion holds good not just for NRI's and resident Indians can also invest in this scheme.
Disclaimer
No investment is risk free and there is no certainty that past returns are repeated in future.
Views expressed here are personal and I am not connected with any fund house or broking house or any third party sources and nor a marketing agent for Reliance Capital or any other Asset Management companies.

VVS Laxman is spot on

VVS Laxman in his chat with Harsha Bhogle has expressed about the dearth in Spin bowling department in India. He is spot on and hit the bullet right at the centre like the way he times his wrist flicks.

Harbajan appears to look jaded with the overload and time is catching up with the offie.Amit Mishra and P.Ojha look good only in patches.Murali Karthick is more or less finished thanks to the selectors whimsical ways and Piyush Chwala once thought out to be the ideal replacement for the Great Anil Kumble did not do justice to his potentials.So as VVS expressed, this is a worrying aspect for Indian Cricket.Spin was our strength right from the Bedi,Chandra,Prasanna,venkat era till the Anil Kumble era and the so called home advantage that the team enjoyed seems to have been faded.
The only heartening thing is the quality of pacers spearheaded by Zaheer who have won matches of late.There is a danger with too much of cricket with IPL,ODI"s,CLT20,T20 etc is going to make life difficult for the pacers and one clear case in point is that of Ishant Sharma who showed lots of promise in 2008 against Australia and was looking threatening but over the last year or so appears to have been hit by the overkill and was even dropped recently.So BCCI neds to really think of doing some thing serious about the spin department rather than focusing on maing more money through hurriedly arranged tournaments be it T20 or ODI.

Will Bhadri get a chance to play in the playing XI

The Indian selectors are again playing hide and seek with a quality player like Bhadri Nath, he is selected often in the test squad and not played in the playing XI,gets dropped for no reasons and again gets included.Now that Rahul Dravid and Yuvraj Singh are injured one hopes that Bhadri should get a game. He has been a consistent performer at the domestic levels and is a very good fielder.

This is some of the misfourtunes hailing Indian cricket, where some players keep getting opportunity at every possible season and some like Bhadri are in and out with out being tested.

West Indies name squad for tri series in Malaysia

West Indies Cricket Board (WICB) bypassed its Players Association and named a 14-man squad for next month's triangular series against India and Australia.

Squad: Brian Lara (captain), Ramnaresh Sarwan, Chris Gayle, Shivnarine Chanderpaul, Runako Morton, Dwayne Bravo, Dwayne Smith, Carlton Baugh (wicketkeeper), Corey Collymore, Fidel Edwards, Ian Bradshaw, Jerome Taylor, Marlon Samuels, Wavell Hinds.

Tri-series in Malaysia: Good intentions but bad timing

Tri-series in Malaysia: Good intentions but bad timing

By Anand Philar |


The decision to play a tri-series in Kuala Lumpur, involving India, Australia and the West Indies in September, should provide a big boost to cricket in Malaysia, though the country is light years away from making an impact at the highest level of the sport.

Cricket is not alien to Malaysia where the sport was first played, as per historical records, in the 1880s, thanks in the main to the huge British influence at that time. The Royal Selangor Club was in the forefront of the game’s development, boasting as it was a huge ground that was developed into a cricket field over the years.

However, in terms of popularity, cricket is way off the radar of most Malaysians who follow football with the same fanatical zeal as we do cricket in India. Though the cricket World Cup was shown live on a pay-per-view basis since the 1999 edition following the successful conduct of the Commonwealth Games the previous year, the game enjoys patronage only from some select quarters.

In a country whose population is predominantly Chinese, cricket is yet to take strong roots despite the existence of age-group and junior tournaments besides a few international competitions like the junior Asia Cup and qualifying events for various major meets.



A visit to the official website of Malaysian Cricket Association would reveal that the country’s long-term cricketing goal is to attain Test status by the year 2020. That in itself reflects the state of the game in Malaysia where cricket is played mostly by Malays and Tamils. As such, the interest in cricket is very much there, but it would be a while before it takes wings and penetrates to the roots of the Malaysian peninsula.

During one of my recent visits to Kuala Lumpur earlier this summer, I had the occasion to meet up with cricket enthusiasts during a club dinner. “We want more exchange tours with Indian teams at the club and junior levels. That would be the best way not just to popularise the sport but also attract more youngsters to cricket,” was a constant refrain one heard.

The fact that Malaysia agreed to include cricket in the 1998 Commonwealth Games schedule reflected the keenness in that country to become part of the international cricketing fraternity. But Malaysia certainly cannot boast of top class facilities that could host major international cricket competition.

The hot and humid tropical weather with sudden thunderstorms right through the year, is not exactly conducive to playing cricket. In fact, even the far fitter hockey players usually find the conditions difficult despite playing under floodlights. The ongoing ACC trophy tournament in Malaysia is suffering from rain interruptions. Under circumstances, the timing of the tri-series can be questioned even if the intentions are honourable.

Though the series would generate interest among the locals who would be exposed to top-drawer cricket, the biggest gainers would be the three teams preparing as they are for the ICC Champions Trophy in India in October. Given the unpredictable weather conditions, it remains to be seen how many of the scheduled matches would be completed.

The scenario could be much like the one in Sri Lanka at the moment with rains playing havoc with the schedule of the ill-fated Unitech Cup (now cancelled). It is debatable then as to why the competition was scheduled at all in Sri Lanka where the going is usually wet at this time of the year.

Talking about the Unitech Club, one sympathises with the Sri Lankan Board that is utterly helpless in the wake of the bomb blasts and the subsequent pull-out of South Africa from the tri-series. The Sri Lankans suffered similar fate back in 1996 when a couple of teams refused to play in the island due to political violence that coincided with the World Cup.

Perhaps, the South Africans, like the Indian team, could have stayed on considering that the Sri Lankans were bending backwards to provide adequate security. The tendency of teams pulling out of tours in the sub-continent at the mere hint of political disturbances is questionable. It is not as if countries such as South Africa or England are free of similar incidents. Yet, these very nations do not think twice to cut short their professional commitment without any qualms or consideration to the enormous consequences.

It is time that the ICC got tough with teams that pack up and leave in the middle of a tour. If anything, the Boards of the teams should be held accountable and made to financially compensate the organisers. Unless there is definite evidence of the teams coming under direct threat, the schedule should be honoured on the pain of harsh penalty, including temporary suspension.

The only time that sportspersons were a direct victims of political violence was in 1972 during the Munich Olympics when several Israeli athletes were killed by terrorists. I doubt if cricketers or for that matter any sportsperson, will ever be under such threat. The show must go on.

ReF: This article taken from SIFY.com.

Tri Series in KL

Friends, it is now confirmed that the tri series between India, Australia and West Indies will be played in KL from Sept 12 to Sept 24.
India plays on Sept 14,20 with West indies and on September 16 and Sept 22 against Australia and Australia plays West indies on Sept 12 and Sept 20. The finals will be on Sept 24.

The matches will be held at Kinara Oval, Kl and I understand floodlits will be installed by BCCI.
All the ground activities are to be managed by Cricket Australia.For those who do not know KL is just 4-5 hours bus ride from Singapore and can be accessed by Flight also. However, it is advisable to take the bus from Singapore since flying to and fro the International airport in KL to the city can take upto 2 hours and with the hassles of immigration, boarding time etc it really makes no diffrence in terms of saving time.

There are luxury bus services available from Singapore to kl
www.aeroline.com.sg
www.transtar.com.sg

Now, no news on tickets details for the matches and I would post them as soon as I get some news on that.

Regards,
Dharma

Are retail investors earning enough

The Indian retail investor is getting poorer. This is not good news. But the evidence is irrefutable, notwithstanding the fact that we have perhaps the best regulatory system in the world, one of the most educated and enlightened finance ministers, a good equity cult and a booming economy.

The evidence is in the last RBI report. It says that only about 1.4% of retail assets are in equities or related instruments. The remaining 98.6% of assets is predominantly in fixed income instruments, life insurance, real estate, gold, etc.

Fixed income/life insurance yields a nominal return of 5-6% per annum, with returns from bank deposits being taxable. Returns in the case of gold, silver and real estate would not be significantly better if we ignore the recent run-up and look at a longer period of one or two decades.

The only asset class that has yielded 18-20% p.a. is equities. On a weighted average basis, our retail investor is not earning more than say 7-8% in nominal terms. Our economy has been growing in real terms at 7-8% and in nominal terms at 12-14% p.a.

Agriculture, with land as a limiting factor, cannot deliver more than 2-3% p.a. growth and therefore, industrial and services sector represented mostly on the bourses, can deliver nominal earnings growth of 20-25% p.a. I, therefore, would like to argue that our retail investor is getting poorer as his/her wealth is decaying in relative terms.

Let us analyse this a bit more. In the past 18 months, we have seen an unprecedented flow of funds into our stock markets. During the same period, the shareholding of typical retail investors has been falling almost continuously.

While there has been some supply of additional paper through IPOs, FIIs and mutual funds have been able to increase their shareholding in blue-chip companies only at the cost of small retail investors (classified as public in most shareholding pattern tables). In general, promoters have also maintained or increased their stakes.

Now that the market has run up over 50% in one year and 200% in the past three years, everybody can see that FIIs and funds have made a huge profit on their investments in India.

Why does the retail investor shun the capital market? Many retail investors burnt their fingers in the previous bull run and would have sworn never to return to the market. Today, I think, media and regulators, albeit working with good intentions, could be causing impediments to the growth in the equity cult.

From government to media to regulators, everybody talks about shielding retail investors from the ills of the equity markets. In effect, they have been successful in shielding him/her from the boons and bounties of the equity markets as well.

I have no doubt that Sebi has done a commendable job of creating a healthy environment in the market. Recently, Sebi has been able to nip in the bud quite a few scams, including price rigging of Z stocks and misuse of retail quota through fake DP accounts in the IPOs.

However, the problem arises because of the media hype created around such examples. If we highlight excesses of any system, people will tend to lose confidence in the system itself. On the whole, capital markets have been functioning fairly well. Although it is important to control such incidences, their relative importance should not be exaggerated.

Also, a number of media correspondents had started warning about possible scams and bubbles just because the sensex touched 6000 or 7000 and did their bit to scare away retail investors. Unfortunately, media revels in scare mongering. Many of them are actually not qualified or experienced enough to take a judgmental call, but they do write with authority.

In India, the retail ownership of equity assets is probably amongst the lowest in developed or developing countries. This should be a wake-up call for our government, as well as for all authorities and bodies associated with the capital market. Is it not that we have got the best regulatory system, but do we want the most effective regulatory system to work as the most effective disciplinary system?

Nirmal Jain, MD, India Infoline
Source: Economic Times

Dividend Stripping

This article deals with dividend and bonus stripping and the fact that if you aren’t careful, actions taken last year may come and bite in this one. However, we shall start at the beginning, when it all began.

Modified dividend stripping provisions
Stripping as a concept has generally always been frowned upon by the law. The Income Tax Act, also being a law, follows suit and takes a dim view of investors wantonly stripping securities of their income to get tax benefits.

It works this way. Say your mutual fund scheme is currently at an NAV of Rs. 35. It declares a 30% dividend. Now, dividend being on face value, this directly translates into Rs. 3 per unit. Post dividend, the NAV falls by Rs. 3 to Rs 32. Now, if you were one of those who strip securities for personal advantage, what you would do is to buy the scheme at Rs. 35, pocket the dividend of Rs. 3 and immediately sell the units post dividend at Rs. 32, thereby booking a notional loss of Rs. 3 per unit. Hold on….so far you haven’t really benefited financially. Now what you do is anytime during the financial year, earn short-term capital gains. It is at this time that the benefit kicks in. Marry the previously booked (notional) loss against this (very much real) gain and laugh all the way to the bank.

Authorities woke up to this tactic and didn’t like it one bit. Anti-stripping laws were passed with immediate effect and thus Sec. 94(7) was born. Budget 2004 gave this law sharper teeth. And now the way it stands is that whenever a person sells shares or units date and the following four conditions are simultaneously satisfied ---

1. The purchase has been within 3 months before the record date,

2. The sale has been within 3 months in the case of shares and 9 months in the case of units, after the record date

3. The dividend is tax-free and

4. The sale results in a loss (naturally, short-term).

the loss arising on the sale to the extent it does not exceed the exempt income has to be ignored.

For instance, take the following case ---

· Shares or units purchased on 4.4.05 at Rs. 500,
· Dividend distributed on 25.6.05 is Rs. 15 and
· Sale on 2.8.05 at Rs. 490, resulting in a loss of Rs. 10.
This loss shall be ignored for tax purposes and hence will be unavailable for set-off.

However, if the sale on 2.8.05 was at Rs. 480, resulting in a loss of Rs. 20, only Rs. 15 shall be ignored and Rs. 5 shall be allowed to be carried forward for set off against short-term gains or long-term gains in future for 8 successive years.

Similarly, if the sale on 2.8.05 was at Rs. 510 resulting in a profit of Rs. 10, the entire section is not applicable.

Bonus stripping provisions
Sec. 94(8) deals with bonus stripping. Interestingly, this section has been made applicable only for mutual fund units and not equities. I don’t have a clue why --- the reason is anybody's guess.

The stipulation for its applicability is identical with that of dividend stripping as propagated by the new Sec. 94(7), with only one primary difference:

· The loss, if any will also be ignored for the purposes of computing the income chargeable to tax. However, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of the bonus units.

For clarity, let us take the same instance as dealt with above, but in this case, it is not the dividend but bonus units issued by a MF.
Units (and not shares) purchased on 4.4.05 at Rs. 500,
Bonus in the ratio of 1:1 distributed on 25.6.05.
Sale of the old base units on 2.8.05 at Rs. 350, resulting in a loss of Rs. 150.
This loss shall be ignored but the cost of acquisition of the bonus units will be taken as Rs. 150. Ordinarily the bonus units would have been valued at nil cost.

Take care of Retrospective Effect
Secs. 94(7) and 94(8) are more insidious than they seem --- their effect is not limited to the current financial year but might fall into the previous year (FY 04-05) too! This happens on account of the fact that all the conditions taken together can spawn twelve months in all thereby making the actions taken last year having ramifications in the current year too!

Let us understand this issue clearly by means of examples.

Situation 1
Investment in a MF scheme (doesn’t matter whether it is an income scheme or an equity scheme) is made on 5th January, 2005 and dividend is received on 31st March 2005. (Note that both these dates fall in FY 04-05). The investment is sold on 2nd April 2005 (FY 04-05). Is the short term loss arising out of this investment allowable for set-off against long-term or short-term capital gains FY 2004-05?

Situation 2
Investment in a MF scheme is made on 5th January, 2005 and bonus is received on 31st March, 2005. The original units are sold on 2nd August, 2005. Is the short term loss arising out of the original investment available for set-off?

Situation 3

Investment in a MF scheme is made on 1st December, 2004 and dividend is received on 31st March 2005. The investment is sold on 2nd June 2005. Is the short term loss arising out of this investment allowable for set-off against long-term or short-term capital gains FY 2005-06?

Situation 4
Investment in an MF scheme is made on 1st December, 2004 and bonus is received on 31st December, 2004. The original units are sold on 2nd November, 2005. Is the short term loss arising out of the original investment available for set-off?

Solutions
Situation-1 : The units are purchased within 3 months of the record date. Also, the units are sold within 9 months of the record date. It doesn’t matter that the date of sale falls in the next year. Or another way of looking at it would be that it doesn’t matter that the date of purchase or the record date fall in the previous financial year. As long as all the conditions laid out by Sec. 94(7) are being satisfied, the section would be applicable and consequently, the loss (to the extent of the dividend received) wouldn't be allowed for set-off.

Situation-2 : This situation is similar to the one above, only it deals with bonus units. Like mentioned above, it is irrelevant which financial year the transactions fall in, as long as the conditions of Sec. 94(8) (in this case) are satisfied, the section is attracted.

Situation-3 : Here readers will notice that the first condition is not being satisfied, in as much as, the time period between purchase and the record date for dividend is more than 3 months. Consequently, Sec. 94(7) is rendered ineffective and inapplicable.

Situation-4 : In this case, the sale is taking place well after the elapsing of 9 months after the record date. Hence, like situation 3 above, Sec. 94(8) is rendered ineffective and inapplicable.

Bottomline
The above analysis has been provided for readers to get a good grip on the ramifications of the provisions of dividend and bonus stripping. Incidentally, a tip for those (corporate as well as individual investors) who have existing short-term loss. You can tweak the bonus stripping provisions this way --- sell the bonus units first! This way you render Sec. 94(8) impotent. Marry the short-term gain that you have earned this way against your short-term loss. And now when you sell the original units, the notional loss is available for the taking.

Source: Money control-Tax specialist

Top 20 Stocks for 2014

My top 10 stock picks for 2014 considering their growth potentials; 1. ITC 2. TCS 3. HDFC Bank 4. Sun Pharma 5. M&M 6. L&T 7. Apollo Hospitals 8. Sun TV 9. Havells 10. Axis Bank

Infosys-Creator of Wealth

Through the past 13 years Infosys has shown that it has the technology to make its shareholders smile. In fact, they are laughing all the way to the bank. It did, however, take a while to programme that performance.

It took 23 years for Infosys' revenues to reach a billion dollar. But after that it raced ahead. It will move from USD 1 billion to USD 2 billion in only two years. Growing at 50% a year, Infosys' revenues will reach USD 2 billion this financial year. But in the past 13 years Infosys has spread wealth thick and fast, bringing its shareholders many happy returns

Infosys' entry on the Indian bourses was hardly auspicious. It floated a Rs 13.1-crore IPO in February 1993 at Rs 95 per share. At the time underwriters had to rescue the issue, which almost devolved because of under-subscription.

Infosys entered the market with market cap of Rs 31.8 crore. Today it is about Rs 85,000 crore. On that journey it has created millionaire employees and millionaire shareholders.



A shareholder who bought 100 shares at the IPO would have invested Rs 9,500 in 1993. Infosys offered three 1:1 bonus issues before 2004. That means those 100 shares became 200 in 1994; and 400 in 1997; and 800 in 1999.



Then in 2000, Infosys' share price spiralled to more than Rs 13,000. At the time Infosys split its stock to a face value of Rs 5 from Rs 10. Now a shareholder who held 800 shares would have 1,600.



In 2004 when Infosys entered the billion-dollar club it offered a 3:1 bonus, giving the shareholder with 1,600 shares, 6,400 shares. Those shares are valued at about Rs 1.98 crore.

Source: Moneycontrol.com news article