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December 30, 2011
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NRIs: How Your Investments Fared in 2011 By Deepa Venkatraghavan MUMBAI (TOI): 2011 has been a tumultuous year for assets around the world. If you are an NRI with significant Indian holdings, here’s how your investments fared in the year gone by. We also profile some of the major global indices. But up first, the impact of the falling rupee on your investments. Rupee: The rupee fell approximately 18% in the last one year (December 16 2010 to December 15 2011). As an NRI, you stand to gain or lose, depending on what you are planning to do with your dollars. If you had sent your dollars to India on December 16 2010 with a plan to remit the money back to the US by the end of 2011, your returns will be lower by 18% simply on account of rupee depreciation. For instance, if on December 16 2010, you had invested USD 10,000 in an NRO bank deposit in India that gave a 7% interest, you would have remitted Rs 4,53,000 (rupee was Rs 45.3 on December 16 2010) Now, at the end of one year, your deposit would have grown to Rs 4,84,710. But if you remit this money back to the US, at the exchange rate of Rs 53.7 (as of 15 December 2011), you would be remitting just USD 9026. So your gain of 7% from interest on your deposit would have got wiped out by the depreciation of the rupee. On the other hand, if you are planning to send money to India now, you will get more rupees for every dollar. BSE Sensex: The BSE Sensex tanked 22% in the last one year. And if we get down to sector indices, there is only one winner - FMCG. The BSE FMCG index ended the year in positive territory up 12%. Financial Domain Trainer
PV Subramanyam explains this phenomenon, “In an uncertain atmosphere, cash gets more respect as compared with ‘potential’ cash. So companies like Colgate, Gillette and HUL who have more cash are more respected as compared with an infrastructure company that has ‘future’ cash.” Should you worry about the market fall? If you are a long term
investor with a time horizon of more than 5 years, experts continue to believe that equity as an asset class is the best bet to wealth creation. Investment Returns (%) Sensex 22 BSE FMCG 12; BSE Realty -47; BSE Auto -18; BSE Bankex -27; BSE Capital goods -45; BSE IT -13; BSE Healthcare -11; BSE Oil and Gas -28; Returns for the one year period ending December 16, 2011 Equity Mutual Funds - India Equity mutual funds pretty much mirrored the performance of the Sensex. Large cap funds posted negative returns with even the top performers posting returns in the range of -15%. Not surprisingly, FMCG sector funds posted positive returns; in fact, the top performer across all equity funds was the ICICI Prudential FMCG fund Investment - Returns (%) 1. ICICI Prudential FMCG >> 18.00. 2. Magnum FMCG >> 11.77. 3. ING Global Real Estate
Retail >> 11.31. 4. Birla Sun Life International Equity Plan A >> 6.60. 5. DSPBR World Energy Reg >> 3.50. Returns for the one year period ending December 16, 2011 Debt Mutual Funds - India Thanks to rising interest rates, the debt category has been a good performer in 2011. The top 5 debt mutual funds gave a return of around 12-15%. But remember that inflation was also high in 2011 - the WPI going up 7.5% from January 2011 to November. Investment Returns (%) 1. Sahara S h o r t Te r m Bond >> 13.89. 2. Tata Fixed Income Portfolio Scheme C. 3. Reg >>12.80.3. Peerless Short Term >> 12.79. 4. Sundaram SD Short-term >> 12.52. 5. Escorts Income >> 12.23 NRO fixed deposits: If you had invested in an NRO bank deposit in January 2011, you would have earned a return of 7.5-8% for a term of one year. However, your deposit would have been locked-in and you probably lost out on gaining from the rising interest rate scenario. By December 2011, banks had increased the interest rate on NRO fixed deposits to over 9%. Should you withdraw old deposits and invest in newer ones? “You should always withdraw old deposits and make fresh ones. But please worry about tax laws, TDS and withdrawal penalties before you make your decision,” Subramanyam advices. Gold: The Gold story has continued to be a fascinating one. And the quantum of gains from gold investments by NRIs purely Continued on page 28
“B” for Bollywood Billions
MUMBAI (HT): Bollywood struck gold in 2011, revving up lacklustre Box Offices in India with help from its leading men who wooed audiences back to cinemas after a dismal 2010. Domestic revenues hit 19.25 billion rupees ($363.2 million) this year, up from 14.5 billion rupees in 2010, and an unprecedented four films crossed the billion rupee milestone. Two of those blockbusters starred actor Salman Khan. The solid performance contrasted sharply to the previous year when there were hardly any hits. “Audiences and filmmakers have gone back and discovered stories that are close to our Indian roots,” said Sanjeev Lamba, Chief executive of Reliance Entertainment, which produced two of the year’s biggest blockbusters -- Bodyguard and Singham. Bodyguard, in which Khan plays a personal security guard to a rich man’s daughter and ends up falling in love with her, was the most successful Bollywood film, raking in more than 1.5 billion rupees ($28 million) at domestic box offices. Singham told the story of a rightminded police officer who stands up to a corrupt politician and was accompanied by romance, drama and high-octane action. Both Bodyguard and Singham were panned by critics but loved by audiences. And both featured strong central characters, harkening
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back to the 1980s and early ‘90s in Bollywood when films were centred on the hero and his defeat of a villain in a battle of good versus evil.
“Audiences have always loved the dilemmas of the hero, a little bit of action, some drama and some romance,” Lamba said. “We had a lot of that this year.” Other themes were successful, too. Offbeat films like The Dirty Picture, based on the life of a softcore porn star, proved to be sleeper hits and took industry analysts by surprise. Together with the likes of Singham and Bodyguard, these smaller films proved audiences have an appetite for both mass market and niche-oriented work. “It is not that more people are watching movies, but that the same audience is watching more movies,” said Shailesh Kapoor of Ormax Media, a firm that specialises in film market research. But widely-hyped movies like Continued on page 28