CONTENTS
LETTER
ISSUE CONTENTS
29 December 2011
FROM THE
EDITOR
P
Debashis Basu MONEYLIFE | 29 December 2011 | 10
TRAVEL
No reforms and misgovernance is showing; Why can’t investigative agencies find Nirmal Kotecha? Price manipulation: Will the regulator at least make an attempt to know?
Pipe Dreams rivate equity investors are smart players. They are supposed to spot high-growth companies and deliver better-than-market returns. However, returns on investments made by them in listed companies over the past five years, when they entered in droves in India, have just about matched those of the Sensex. While our data is not comprehensive, there is enough anecdotal evidence to indicate that performance of private investment in public enterprises (PIPE) so far has been far from encouraging. That’s the topic of our Cover Story this time. So, the next time you see a stock run up because a big PE investor is buying, ignore the noise. Moneylife has been campaigning about the rapid spread of Ponzi schemes and it now appears that market regulator SEBI will regulate them. Will SEBI be effective? Read Sucheta Dalal’s views on it on page 22. Our columnist V Raghunathan speaks about the issues the real estate regulator needs to tackle to ensure that home-buyers are not taken for a ride on page 46. The Nifty has declined 21% from last November. On the other hand, most of the largecap equity diversified funds have outperformed their benchmark index. Our section on mutual funds (page 26) highlights the best performing funds in a bear market. Medical portability commenced in October 2011; however, the response has not been encouraging so far. Customers worry about getting their claims paid even after having a longstanding relationship with their existing insurer. Raj Pradhan tells you more about this and other trends in the insurance sector on page 48. Naveena Israni takes you on a trip to Paris in her first article for Moneylife on page 52. The City of Lights offers everything from world-class museums, art galleries, restaurants, cobblestone alleys, and much more. Paris lures you to visit it again for new surprises. Moneylife Foundation celebrates a century of events by the end of December. In the 100th workshop, Vimal Punmiya will discuss Wills and nomination. We have lined up a series of great events in Mumbai and Pune in December for which, as usual, we look forward to your wholehearted support.
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52
Paris: La Belle Ville Though Paris is a breathtakingly beautiful city, the place can be a stark revelation for first-time tourists. Enjoy its wonders with a sense of adventure, says Naveena Israni
DIFFERENT STROKES
28 Cover Story Big Boys, Small Returns
Wrong stocks and wrong timing have earned poor returns for supposedly smart private equity investors
13
22 Ponzis and PMSs?
STOCKGRADER 42
SEBI is thinking of acting at last but how long will it be before we get effective action?
Momentum
SMART MONEY
24 Choose Carefully Do you need a financial planner or an advisor? Probably both
Your Interest
KYC registration agencies; 10-year NSC; Credit card spends increase; SEBI to review high-frequency trading; BSE, Morningstar launch website for MFs; UTI MF’s investor accounts rise; Non-life insurance will continue to flourish; Saraswat Bank ups interest rate; PNB, Federal Bank, SBI revise FCNR deposits rates; HSBC’s fixed rate home loan; New Launches: HDFC Bank’s MobileBank Account; DoP’s moneygram service in Karnataka; CSE launches NSE trading platform; HDFC Bank’s Solitaire; SBI’s mobile banking facility in Shillong
18 Current Account Liquid Gold: Wine index has done well since 2004
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.
Medium Term
Munjal Auto jumped 5% and Petronet LNG rose 1%, while Idea Cellular declined 8%
Long Term
Sun Pharma rose 6% and ITC rose 4%, while Balkrishna Industries fell 2%
OPINION
Is the India growth story inclusive? Tax increases to fund healthcare? Helpline for passenger safety; SEBI’s Act to increase investors’ participation? Lokpal Bill: Twist & more twits; Defaulters owe Rs47,000 crore
14 Your Money
Federal Bank and TCS rose 10% each, Ambuja Cements rose 9%, while TVS Motor fell 8%
46 One-sided View FUNDS
26
Bear Market Winners
The large-cap equity funds have done very well in the past one year of bear market. A systematic investor would have hardly suffered, points out Jason Monteiro
STOCKS
36
Street Beat
Gruh Finance: Riding the rural demand; LG Balakrishnan & Brothers: The top player in chains
WHICH WAY
Real estate is supposed to get a regulator now. Here is what it must consider, in buyers’ interest
INSURANCE
48 Insurance Trends – Kotak Child Edu & Future: Two child plans – Bharti Axa Power Kid: Pay as you go – Mediclaim portability: Slow start – Fine Print: IRDA wants LIC to expedite claims settlement; Bancassurance boost for pure health insurers? IRDA mobile ULIP comparison
AUTO
& 39 Stocks Society
50 Scramble for Sales
Why growth rate in the US—and in India—is poor
Luxury car makers struggle to survive, finds Veeresh Malik
LEGALLY SPEAKING
55 Home Truths The proposed Bill will make builders accountable. No wonder, they are opposing it
ML FOUNDATION EVENTS
in the pre58 Participate legislation process Activists Aruna Roy and Nikhil Dey presented their views on Citizens Right to Grievance Redress Bill, 2011, at a Moneylife Foundation seminar
BEYOND MONEY
66 Helping to Help Milaap, a micro-lending platform, believes that a little help goes a long way, Shukti Sarma reports
DEPARTMENTS Letters............................. 4 Book Review.....................56 Living .............................62 Money Facts.....................63