CONTENTS
LETTER
ISSUE CONTENTS
FROM THE
8 September 2011
EDITOR
A
Debashis Basu MONEYLIFE | 8 September 2011 | 10
Collecting
Competition Commission of India shows the way; SEBI members have been issuing consent orders arbitrarily; Pressure mounts on SKS Microfinance boss
Bear with Them ll financial publications in India give social activism a wide berth. Only Moneylife has been constantly highlighting—right since inception—the work of some selfless individuals and groups in our Beyond Money section. This issue’s Beyond Money describes the efforts of one more individual to give a better life to deprived slum children. On the same note, Moneylife Foundation screened an excellent documentary, made by senior journalist Paranjoy Guha Thakurta, exposing India’s iron ore mining mafia that controls large parts of Karnataka and Andhra Pradesh. India has finally woken up to the power of its citizenry to shake the very foundations of the Establishment. And citizens’ empowerment is one of Moneylife Foundation’s cherished goals. We have lined up a number of events for you, including a comprehensive workshop on how to use the Right to Information Act effectively. Do make sure that you block your dates—all the details are inside. The Cover Story will help you weather the storm that is buffeting the stock markets. We have identified six companies based on three parameters that characterise good stocks— earnings growth, high return on net worth and strong price action. These stocks will, hopefully, do as well as some others that we have recommended earlier. Our Fund Pointer section carries another analysis, in our long list, that brings to light something that others won’t. Often, mid-cap funds are touted as an option to earn higher return. Don’t go by what you hear. Unless you buy them at the right time, your returns would not be great. Many mid-cap funds have done badly over the past five years, as the article explains. Had your fill of the monsoon? Join us on a trip to Garhwal and meander along the banks of the Ganges—you will soak in much more than fresh mountain air. You would have noticed that we have added lots of new sections over the past few months. Do write to us and tell us what you think about these and what else you would like us to add.
20 Different Strokes
22 Paralysed Regulators With wrong people at the helm, distrust and lack of integrity are the norm SMART MONEY
28 Cover Story
6 Stocks for a Bear Market
Even in a bear market, some stocks do well. Here is a selection of six such scrips by Moneylife Research Desk
13 Your Interest Will simpler IPO forms bring back investors? Maharashtra’s Lokayukta: A toothless body; NGOs & forest departments misuse eco funds; ID proof for only Rs5; Dangerously high caffeine
14
Your Money
Government allows foreign investment in MFs; Rs1,000 coins soon; More transparency on fixed maturity plans; IDBI Bank’s Magic Card; Internet connectivity to all post offices; Sharp decline in MF folios; Increased credit card transactions
16 Current Account – Massive job creation is needed to maintain current employment level – CSR: Most firms don’t have a strategy in place – Competition Commission of India on DLF: A good precedent – Damodaran committee: Two issues overlooked
19
LOOSE CHANGE
Moneylife Quiz; Soundbites Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.
STOCKGRADER 39 Momentum
M&M soared 9% and Power Grid Corporation ended flat, while Hindalco tumbled 15%
24 Hard Truth
Medium Term
Some companies in real estate and mining are mired in corruption. It is best not to invest in them—in the long run, truth has a way of coming out
Long Term
25
If you want to buy mid-cap funds, keep these points in mind STOCKS
35 Street Beat
AUTO
46 Small Is Big Smaller commercial vehicles are selling better than bigger ones, says Veeresh Malik
INSURANCE
56 Moneylife Foundation Events – – –
How national wealth is plundered? Wealth creation from mutual funds How doctors can invest safely
TRAVEL
Land 60 Garhwal: of the Ganges Spend a fortnight enjoying some grand mountain scenery along the curves of a river that defines India. You’ll capture the very soul of our country, says Jaideep Mukerji
WHICH WAY
But do look ahead and beyond
EVENTS
Asian Paints jumped 5% and ITC gained 4%, while Ranbaxy tumbled 9%
Wabco India: A near-monopoly in air brakes; Tide Water Oil: A low-priced stock that earns 24% return on equity
Gloom 38 The Spreads
Fan and memorabilia collector, Rajan Jayakar, will hold a musical and an exhibition on Shammi Kapoor’s life and films
3M India soared 7% and Dabur added 4%, whereas Linc Pens plunged 6%
FUNDS
Tough Choices
baar dekho… 53 Baar Revisit the Yahoo Icon
BEYOND MONEY Legally Speaking
48
Investors’ Gain
44 Insurance Trends
The market watchdog’s pro-investor measures
Worried about health cover? IndiaFirst Health ULIP’s innovative approach; IDBI Federal Dreambuilder carries high mortality charges; “Indians are ready for ‘Do-It-Yourself’ insurance” — Policybazaar.com Fine Print: Insurers cannot walk away; Pension annuity from the same insurer? Insurance for car drivers?
49 Earning Curve
Lives 66 Changing through Education
Shukti Sarma discovers an entity which helps poor children by informal training and creates awareness about their rights
saving and investing
– What do you expect from your investment? – Apple or BankAm stock? No, it’s not that easy
DEPARTMENTS Letters............................. 4 Book Review.....................50 Living .............................52 Money Facts.....................63