The Finapolis April 2016 by The Finapolis

Robbery at a Central Bank

Answer Back to The Finapolis

Insurance Policies for Diabetics

Financial Lessons from Priyanka Chopra

Finapolis The

www.thefinapolis.com

Clean Start

Financial planning viewed afresh

1st April 2016 `60

Your Personal Finance Advisor

The Finapolis l APRIL 2016

EDITOR’S DIARY

The

Your Personal Finance Advisor

Volume 10

Issue 01

April 2016

Editor Mandar M Bakre editor@thefinapolis.com

Happy New Year to you!

Editorial Board Phani Sekhar Amit Saxena KP Jeewan Jagannadham T

Design & Production Guru Prasath R Vijayendra Kumar Ch

your finances, to lay out a financial plan for the coming financial year and decide

o, not the annual one, the financial one. :-) March 31 is over, and the tax planning season has concluded. We hope your season was a success, and that you have made the best of your finances in

the year gone by. April welcomes the new financial year, and it is time once again to take stock of how to implement the same. In many ways, April is the ideal time to get cracking on this: Most companies issue their increments from April, which means your

Advertising & Circulation Shabna R Iyer Anamika Mitra Vijayendra Kumar Ch

For Ad Sales Queries subscriptions@thefinapolis.com

appraisal would have concluded and you would have a fair idea of the salary increase you can expect. That means more money is coming your way. What should you do with it? At Finapolis, your personal finance advisor, we thought the best way to kickstart the new financial year would be to serve a refresher on financial plan-

Printed & Published by Mubashir Ansari on behalf of Karvy Consultants Limited. Karvy House, 46 Avenue 4, Street 1, Banjara Hills Hyderabad - 500 034. AP.

ning itself, both what it is, and what it isn’t. There is also an introduction to different financial products available in the marketplace, and an analysis of their suitability, which should help you identify the product best suited to your needs. Additionally, we have created a pullout that you can tear away

Printed at

from the magazine and keep throughout the year.

Kala Jyothi Process Pvt. Ltd Regd.Office: 1-1-60/5 RTC Cross Roads, Musheerabad, Hyderabad - 500 020. AP.

There are the seven common mistakes of investors,

SVPCL Limited Regd.Office: 206/A, Concorse 7-1-58, Greenlands, Ameerpet Hyderabad - 500 016. AP.

and parables that explain how patience, belief and steadfastness can help you bag great returns. This set should serve as an excellent introduction to first-time investors, while reinforcing the knowledge of regular investors. And there’s always more packed into your Finapolis: Insurance policies for diabetics

Published for the month of April 2016 Printed on April 1, 2016 Total No. of pages 68

All charts and tables are sourced from Bloomberg, unless otherwise indicated.

patients, a look at new real estate opportunities, and an interview with Mahesh Patil of Birla Sun Life AMC. We dissect the Budget from the micro and macro viewpoints to identify 1) its impact on the salaried class, and 2) whether the math behind the projections is genuine. This issue also marks the introduction of Bookmark, our book review page. We will predominantly cover business and financial books, but books that broaden our understanding of India will also be featured. Readers interested in contributing a

For Editorial Queries

review can write to editor@thefinapolis.com. Happy reading!

Please contact The Finapolis Karvy Centre, 8-2-609/K, Avenue 4, Street No.1, Banjara Hills, Hyderabad-500 034 Tel: +91 40 66072560 Copyright The Finapolis. All rights reserved throughout the world. Reproduction in any manner is prohibited. The Finapolis does not accept responsibility for returning unsolicited manuscripts and photographs. All unsolicited material should be accompanied by self addressed envelopes and sufficient postage.

Mandar M Bakre

The Finapolis l APRIL 2016

CONTENTS r Covey Stor

onwards

Your Money

The Basics of Financial Planning

Your Money

Review of Different Financial Products

Your Money

Beware these 7 Common Mistakes

Your Money

Be Patient, Believe, and Hold Steady

Face To Face

Mahesh Patil Fund Manager, Birla Sun Life AMC

18 Budget

The Math Behind Jaitleyâ&#x20AC;&#x2122;s Forecasts

20 Budget

COLUMNS

Impact on the Salaried Class

Adhil Shetty Are Digital Wallets just Glorified Credit Cards?

Deepak Yohannan Insurance Policies for Diabetics

Alok Jha and Santhosh Kumar Pimpri-Chinchwad Could Soon Boom; Will Small Cities Become IT Hubs?

APRIL 2016 l The Finapolis

WE ARE DIGITAL 22

Technical Analysis

Short-Term Stock Picks

Career Scope

Everybody Wants to Become a Manager

With the proliferation of smartphones and tablet devices, reading habits are slowly but surely changing. We understand the importance of giving readers a cross-platform choice to access the magazine. The Finapolis is now available in a digital avatar as well via a global publishing platform such as Magzter and Indiamags. Besides allowing you to read on the go, the digital version offers an enhanced reading experience. It also eliminates delivery delays. You can download the digital magazine on the first day of every month. Go to www.magzter.com, Indiamags.com or Rockstand mobile app, search for ‘The Finapolis’, sample some pages of the digital magazine, and buy a subscription through your netbanking or credit card account. A one-year subscription for The Finapolis digital costs only Rs 540. You need to have a device that runs on Apple’s iOs, Android or Windows 8 operating system. Do let us know what you think of the digital experience by writing in to feedback@thefinapolis.com

16 Paradise Lost

The Plight of India’s Poor Urban Children

Buy on

ETCETERA

62 Things We Can Learn from Priyanka Chopra

twitter.com/KarvyFinapolis facebook.com/TheFinapolis linkedin.com/company/karvy

The Finapolis l APRIL 2016

inbox Nice news Considering the poor image in

ic Forum, the greatest ‘power jaunt’

which most of our urban country-

for most of our business executives

men seem to hold our country, it

should add to our stature. Now if

was a pleasant surprise to see India

only they started behaving like we

ranked 22nd among all nations for

are 22nd in the world rankings, that

image in the survey. That such a list

would be a good thing. — H R Swaminathan, Chennai

was released at the World Econom-

India is shining Kiran Nanda is rightly pointing out that our economic growth rate has nothing negative to it and that it is actually a good thing for our country, because we Disclaimer: The technical studies / analysis discussed here

are now the fastest growing big country in the whole world. Low oil price has

can be at odds with our fundamental views / analysis. The

helped this. Government should take note and reduce prices of petrol and

information and views presented in this report are prepared

diesel accordingly for common man.

by Karvy Consultants Limited. The information contained

— Pratap Singh, Noida

herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accura-

How nice that India’s economic growth rate is now the fastest in the world.

cy or the completeness thereof. This material is for personal

For so many years it was our dream to grow faster than China, but we could

information and we are not responsible for any loss incurred

not achieve it. We are now doing just that. It is India’s turn to shine.

based upon it. The investments discussed or recommended

— Jatin S, Vadodara

in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions

Beware the I-banks! Investment banks don’t always get their forecast correct and most times they are actually looking at making money from unsuspecting investors. Although we can give time to read their forecast, we should not believe that these forecasts will come true. America, Europe and China have not completely come out of the economic mess that they have made. — Rajesh Chauhan, Bhopal

in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been dis-

Everybody remembers the slogan, few remember Shastri Your headline Jaitley says ‘Jai Jawan’… prompted me to remember the person who originally coined the slogan. ‘Jai Jawan, Jai Kisan’ was stated by Lal Ba-

played or has been forwarded to clients of Karvy. All em-

hadur Shastri, who became prime minister after Jawaharlal Nehru, and died in

ployees are further restricted to place orders only through

mysterious circumstances in Tashkent, USSR, after signing peace with Pakistan

Karvy Consultants Ltd. This report is intended for a restrict-

after the 1965 war. Today, we talk about the slogan but forget about the man.

ed audience and we are not soliciting any action based on

— Harish Gupte, Sangli

it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Send your feedback and views on The Finapolis to feedback@thefinapolis.com

APRIL 2016 l The Finapolis

 BRAZEN BANK ROBBERY IN BANGLADESH Heist on central bank; hackers make away with $101 mn

ackers tried to steal $951 mn from the central bank of Bangladesh, it emerged in March. The hackers supposedly broke the PC frameworks of Bangladesh Bank, and then stole its installments exchange secret word and accreditations. They succeeded in making off with $101 million. The crime occurred on the night of February 4, when the hackers used their stolen data to send 35 requests for transfer of funds to the Federal Reserve Bank in New York, where Bangladesh’s central bank maintains an account for its international settlements. According to the Dhaka Tribune, the crime had been timed well in advanced: “The fraudulent transfer orders were timed for February 4 this year, a Thursday, so that the next day Bangladesh Bank would be closed for the weekend. “Saturday is a common weekend for Bangladesh and the Philippines, Sunday is a weekend there and Monday, February 8, fell on Chinese New Year, a nonworking holiday in the Philippines,” the paper noted. The alarm was raised when the hackers incorrectly spelled the name of a Sri Lankan non-government organization, calling the foundation a ‘fandation’. The incorrect spelling set off checks on the $20 million transfer order that uncovered the hack. Other transfer requests from the NY Fed account (the hackers tried to take away an additional $850 million) were subsequently blocked by the NY Fed. The crime is now under investigation. According to news reports, initial

recovered the $20 million that was destined for Sri Lankan accounts. Mirza Abdullahel Baqui, a senior Bangladesh police official, said after meeting with the FBI that criminals in six countries were apparently involved in the heist. “This is the biggest transnational organized crime ever seen in Bangladesh and so we sought both technical and human assistance (from the FBI),” he said. This is not the first time such a crime has been attempted. In a round of robberies disclosed last year, a group dubbed the Carbanak gang hacked into a number of banks around the world, seized control of computers that access Swift, then ordered fraudulent transfers.

secretary took over as head of the central bank after the governor resigned amid complaints over the delay in reporting the crime. Although the crime occurred in February, it came light only last week, and Bangladesh’s finance minister AMA Muhith told reporters he only learnt of the heist through the media. “Bangladesh Bank had the audacity not to inform me… I am certainly going to take action against it,” Muhith told reporters. When asked if he believed the central bank officials had any hand in the theft, Muhith said, “Of course, it (heist) would have never been possible unless some of the local people (Bangladesh Bank officials) were involved...the order for the transaction

investigations aim to locate the origin of a transfer order for $81 million that was delivered to casinos in the Philippines. About $30 million of the $81 million was delivered in cash to an ethnic Chinese casino junket operator in Manila, while the rest was transferred onwards to two casinos in the country. Bangladesh has

“The genius of the attacker in the Carbanak case is taking the time to learn directly from the victim and thus bypass fraud prevention measures through sheer mimicry,” Juan Guerrero, a researcher with Kaspersky Lab which studied the campaign, told reporters. In Bangladesh, a former finance

has to be complied with only after biometrics of six people are confirmed.” In a further twist, a cyber crime expert who met police and told the media he knew three user IDs used for the heist, was reportedly abducted. His wife told reporters he had disappeared after being abducted from a motor rickshaw.

Bangladesh finance minister AMA Muhith

The Finapolis l APRIL 2016

 POSITIVE FOR INVESTORS Mutual fund schemes set to become more transparent The Securities and Exchange Board of India (SEBI) has asked mutual fund houses to reveal how much commission is paid to distributors to sell a particular scheme we well as salary details of top executives, in a bid to increase transparency in oper-

Brokers ask Sebi to make theirs a better club A group of brokers approached the Securities and Exchange Board of India (Sebi) in March, seeking an increase in the minimum net worth for brokers to at least Rs 10 crore. At present, the minimum net worth requirement varies between Rs 25 lakh and Rs 3 crore, depending upon the exchange. “Increasing the net worth will ensure only serious players enter the business. Since brokers handle a large amount of client money, a higher net worth will help protect their interests,” B Gopkumar, chief executive officer of Reliance Securities, told reporters. The issue of brokers’ net worth has come into focus after recent instances of brokers going bust and misusing client money. Net worth is calculated as the amount by

which a person or entity’s assets exceed their liabilities. Such an increase could force many brokers to shut shop. The number of brokers is expected to have halved to about 3,000 from 6,100 at the end of March 2015, due to competition and margin pressure. Some experts believe that discount brokers, which traditionally operate on thin margins, are particularly susceptible to diverting client money. Experts say overheads for a basic discount broking set-up can total Rs 30-50 lakh a month and brokers need to generate revenue of Rs 8-10 crore a year to survive. In 2014, Sebi had raised the minimum net worth rule for asset management companies to Rs 50 crore from Rs 10 crore earlier, and gave them three years to comply.

ations on mutual fund schemes. The fund houses have also been asked to disclose on their website the total remuneration of their senior executives and senior fund managers, as well as any employee paid in excess of Rs 60 lakh a year. The capital markets regulator has asked fund houses to out salary details up on their respective websites from April 1, while the commissions will have to be disclosed twice a year, in October and March, starting from October this year. For the purpose of transparency, SEBI has defined commission as not just the monetary payments made to agents, but also gifts/ rewards, trips, and event sponsorships.

“Ariana Huffington is unattractive, both inside and out. I fully understand why her former husband left her for a man – he made a good decision” — Donald Trump, front runner to become the Republican candidate in this year’s US presidential election, makes one of his many tasteless, offensive remarks

Quote of the month

APRIL 2016 l The Finapolis

 RATE CUT, BUT NOT FROM RBI

SAFER HOMES

Govt cuts interest rates on PPF, others

Rajya Sabha passes Real Estate Bill to protect home buyers

The interest rate on Post Office savings, meanwhile, has been retained at 4%, while the same for term deposits of one to five years has been cut. Senior citizen savings scheme would earn 8.6% interest compared with 9.3%. The girl-child saving Sukanya Samriddhi Account will receive interest rate of 8.6% as against 9.2%.

SBI suggests linking PPF interest rate to investor’s age The government has cut the interest rate payable under the Public Provident Fund (PPF) scheme to 8.1% for the period April 1 to June 30, from 8.7% at present. The move is part of the government’s plan to revise interest rates on small savings every quarter, in a bid to align them with prevailing market rates. Besides PPF, the interest rate payable on and Kisan Vikas Patra (KVP) to has been reduced, to 7.8% from 8.7%. National Savings Certificates will earn an interest rate of 8.1% from April 1, as against 8.5% at present. A five-year Monthly Income Account will fetch 7.8% as against 8.4% interest at present.

A research report by SBI has come up with a novel suggestion on PPF rates: linking the rate according to the depositor’s age. People above the age of 45 should get a higher than market rate, while rates for those under 45, should linked to long-term bank deposit rates, the report suggested. In its ‘Ecowrap’ research report, the bank said an age-wise interest rate structure would ensure a lower lending rate structure in the economy, while still offering adequate returns to senior citizens and lowering interest expenditure and run for at least 15 years. The bank also mooted removing the current 15-year lock-in period for PPF deposits, since the interest rate will be reset every quarter.

FINDINGS CCI probe finds five tyremakers guilty of cartelisation The Competition Commission of India (CCI) has found Apollo Tyres, MRF, CEAT, JK Tyres and Birla Tyres guilty of cartelisation, news reports revealed. "These five companies under the aegis of the Association of Tyres Manufacturers

Association (ATMA) have from 2011-12 to 2013-14 indirectly determined the price of tyres in the market," the report of the director-general's office of the CCI's investigation wing says. "Despite a significant decline in input costs, particularly in 201213 and 2013-14, prices were kept higher, which could not have been possible without an agreement among these companies. The presence of conducive conditions in the market facilitated a cartel among the companies," the report further states.

The Rajya Sabha passed a landmark Real Estate Bill that sought to secure the interests of homebuyers and developers in equal measure and weed out corruption and inefficiency from the sector. The bill received cross-party approval from legislators after the NDA government incorporated 20 amendments to the first draft, which had been rejected last year. Once the bill becomes a law, a Real Estate Regulatory Authority will be set up in each state. Both commercial and residential segments of the sector will come under the regulator’s purview. According to the bill, developers will have to deposit 70% of the sale proceeds including the land cost in a separate escrow account. They would also need consent of two-third buyers for changing project plans. Also, promoters and buyers will pay an equal rate of interest in case of default or delays. Developers have often framed biased agreements where they pay only 2-3% interest in case of default, whereas a buyer has to pay 16-18% interest for a default. Over the last few years, several developers have gone back on their delivery commitment because of reasons ranging from economic slowdown to delay in project approvals. So far, homebuyers had no forum to approach except consumer courts as the sector was devoid of regulation. The bill provides for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for any violation of orders of Appellate Tribunals or monetary penalties or both. In case of structural defects, promoters could face imprisonment up to five years. Real estate contributes 9% to India’s GDP and the bill’s passage was seen as crucial to ensuring better regulatory oversight and orderly growth in the industry.

The Finapolis l APRIL 2016

 BRIEFLY

CLOSING LOOPHOLE

Car sales tank in Feb; CV and two-wheeler sales grow

Panel moots tax on B2B e-commerce

Domestic passenger car sales declined 4.21% y-o-y to 164,469 units in February 2016 from 171,703 units in the same month last year, according to data released by the Society of Indian Automobile Manufacturers (Siam). Sales of two-wheelers, however, rose 12.76% y-o-y to 1.36 mn units from 1.2 mn a year ago. Within two-wheelers, motorcycle sales rose 11.05% to 859,624 units from 774,122 a year earlier. Commercial vehicles sales increased 19.93% y-o-y to 62,359 units from 51,998 in the year-earlier month, the data from Siam showed.

Pepsi bottler may hit markets in Rs 1,000 crore IPO Delhi-based Ravi Jaipuria may list his company Varun Beverages, and has started preparations for an initial public offering (IPO), news reports said. The IPO could raise at least Rs 1,000 crore, and is expected to hit the market in early 2017. Varun Beverages is the second largest bottler for PepsiCo in the world. Varun Beverages distributes PepsiCo products in north and east India and is the US-based company’s largest bottler in South Asia, with operations in India, Nepal and Sri Lanka.

Govt savings from LPG subsidy total Rs 4,166 crore A year after Prime Minister Narendra Modi called on the better-off to surrender their cooking gas subsidy, the campaign had saved the government Rs 4,166 crore. A total of 8.22 million consumers responded to the “Giveitup” campaign, each of which surrendered an annual LPG subsidy worth Rs 5,000. For the government, the savings totalled around Rs 4,166 crore, or about 10% of the allocation made to the Mahatma Gandhi National Rural Employment Guarantee Scheme.

An eight-member committee set up by the Central Board of Direct Taxes, which included representatives of e-commerce majors such as Flipkart and Amazon, has recommended a tax of 6-8% on 13 services in a bid to prevent tax avoidance by multinationals. The recommendation is in addition to the Budget proposal to impose an equalisation levy of 6% on online advertisement, provision for digital advertising space or any other facility or service for online advertisements. However, the tax will only be applicable on B2B services, and consumer

usage would not attract the tax. In the Budget, Finance Minister Arun Jaitley had proposed that an entity making payment to a non-resident entity exceeding Rs 1 lakh a year for online advertisement would have to withhold tax 6% of the gross amount paid as ‘equalisa-

tion levy’. The finance minister’s proposal is expected to affect not just Google and Facebook, but also many Indian startups that rely heavily on digital advertising. The CBDT committee’s recommendations, however, cover a wider ambit and include radio and TV advertising, designing, hosting of websites, email, blogs, and facilities for collecting online payments. Furthermore, the committee has also recommended the levy for downloading music, movies, games and software through the Internet.

FOREIGN TREMORS In China, bills payments slow down China’s companies require about 83 days to collect cash for completed sales from their customers, almost twice as long as other emerging markets, data show. Accounts receivable at the country’s public firms have swelled by 23% over the past two years to about $590 billion, even as payment delays spread from the industrial sector to technology and consumer companies. China’s businesses and consumers are being squeezed by the deepest economic slowdown since 1990, and industrial overcapacity has fuelled a steady decline in producer prices. Furthermore, corporate debt is at record levels, which has left many firms struggling to meet their liabilities.

To add to the pain, corporate bankruptcies in China forecast to climb 20% this year, which could put businesses in an additional dilemma: they could either keep extending credit to potentially insolvent customers, or cut off the taps and watch their sales sink. “There is a knock-on effect through the economy,” Fraser Howie, who has followed China’s markets for more than two decades, told reporters. “Part of the end game is default and closure.” Corporate insolvencies in China jumped 25% in 2015, according to Euler Hermes, the world’s largest trade credit insurance company. The company forecasts a 20% increase this year, the biggest among all major markets.

APRIL 2016 l The Finapolis

 news scan

MARKET FRIENDLY HELP takes over from NELP as new exploration policy The government announced sweeping market-friendly reforms in the oil and gas sector, as the Cabinet Committee on Economic Affairs approved the new Hydrocarbon Exploration Licensing Policy (HELP) to replace the New Exploration Licensing Policy (NELP). The new policy gives companies complete pricing freedom over their hydrocarbon assets, and allows them to extract any discovery they make, instead of having separate licences for oil & gas, shale and coal-bed methane. The decision will make idle reserves worth Rs 1.8 lakh crore in challenging terrain, such as the deep sea, commercially viable and boost the country’s gas output by nearly 40%, according to news reports. HELP will also provide for revenue

sharing instead of profit sharing. At present, the government is obliged to closely monitor expenditure for oilfield development to ensure that its profits are not crimped by over-reporting of costs. “It’s a golden day for the industry. So

many important decisions have been taken. Now it is for the industry to respond. I am sure the industry will respond. The industry and ONGC will make more investments,” ONGC chairman DK Sarraf told reporters.

weet up “@IMTGhaziabad: @udaykotak quotes to the parents “Your kids are the greatest teachers for they are more in touch with the changing world.” –@udaykotak

Really appreciate RSS’ comments on decriminalising homosexuality. Monumental moment. Let’s appreciate when an organisation changes. –@chetan_bhagat

The Indian cricket team will not have Hrithik play tomorrow. Scared he may get Ranaut for zero. –@hvgoenka

Lessons of Life : The answer exists in the question. The solution provokes the problem. Like a dance between two lovers. –@shekharkapur

The Finapolis l APRIL 2016

 newsmaker VIJAY MALLYA

The story of Vijay Mallya’s problems could be summed up in two birthdays. He launched Kingfisher Airlines (KFA) on his son’s 18th. The airline bled him dry and cost him his empire of alcohol. By the time KFA crashed and burned, Mallya owned money to everyone — banks, employees and the government — but seemed to have slowed down their recovery process. Then came his own birthday, his 60th. Mallya flew down Enrique Iglesias for a private performance. Such profligacy by a man in poverty didn’t sit well with the RBI governor. Raghuram Rajan made his displeasure public, and the figurative noose began to tighten. Mallya left India, and from seclusion, tweeted his ire: “I am an international businessman. I travel to and from India frequently. I did not flee from India and neither am I an absconder. Rubbish.” In India, however, the situation was snowballing. The Serious Fraud Investigation Office began probing the Rs 4,100 crore brand valuation for KFA when banks valued it at Rs 170 crore, and the Enforcement Directorate and RBI begun a joint investigation into a Rs 4,000 crore transfer by USL to a tax haven in 2007, when Mallya was in control.

Vijay Mallya at an exhibition match in Bengaluru — AFP

APRIL 2016 l The Finapolis

VARIETY ANSWER BACK # 2 It’s only a few questions long, but the Finapolis quiz will still test the mettle of the best: we ask anything on everything. This month, we ask you about IIMs. 1. An alumnus of IIM Ahmedabad, this man now heads Diego, the world’s largest spirits company

2. An IIM Calcutta student, this executive has worked at Johnson & Johnson, Booz Hamilton and ABB, among others.

A) Ivan Manuel Menezes B) S S Jain C) Sunny Warrior D) Shivsundar Pancham

A) Indra Nooyi C) Rohan Murthy

4. The newest IIM is coming up at?

5. The first IIM to come up (1961) was?

A) Mangalore C) Jammu

A) IIM Ahmedabad C) IIM Calcutta

B) Kolhapur D) Bikaner

B) Sasha Johar D) Rajendra Shukla

B) IIM Banglore D) IIM Indore

---------------------------------------------------------------------------------------------------------------------------------------------------Send your answers to feedback@thefinapolis.com latest by April 30, 2016. Winners will be acknowledged in the quiz section of the subsequent month’s issue.

KNOW YOUR COUNTRY

3. Which IIM do a famous cricket commentator and a danseuse, also the daughter of a danseuse, have in common? A) Ahmedabad C) Calcutta

B) Bangalore D) Lucknow

Answers to Answer Back #1 1- A; 2- A; 3-B; 4-B Winners: Surendra Singh, Sudha Thota, Jairam S

SEE AND SMILE

Sanchi

QUOTABLE

anchi is famous world over for its Buddhist art and architecture, including stupas, monolithic Asokan pillar, temples, monasteries and sculptural wealth. The Great Stupa at Sanchi is the oldest stone structure in India. It was commissioned by Emperor Ashoka after the redistribution of mortal remains of Lord Buddha for erecting several stupas all over the country in order to spread Buddhism. Probably, the emperor laid the foundations of a religious centre at Sanchi fascinated by the location of the hill or because of his Queen Devi, who was the daughter of a merchant of Vidisha. The city was known variously as Kakanaya, Kakanava, Kakanadabota and Bota-Sriparvata in ancient times, and had remained deserted and uncared for since the 14th century, till 1818 when British General Mark Taylor rediscovered the site. Raveesh Vyas

I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. You won’t get there by reading ‘Now is the time to buy’ — Peter Lynch, Fund Manager

The Finapolis l APRIL 2016

company update

We take a look at some companies’ performance to figure out what impact they will have on the share prices UltraTech Cements UltraTech has signed an MoU with Jaypee for 22.4 mt cement capacity at an enterprise value of Rs 169.7 bn which translates into EV/ton of

$111/t. The deal is expected to be consummated in 12-15 months post all the corporate and regulatory approvals. The company has not specified any corporate structure for the deal as they are waiting for the amendment bill of new MMDRA act (which is currently in Parliament for discussion). As the management specifies that the comfortable level of debt/EBITDA at 3.5x, the deal will be funded mostly through debt (we estimate debt/EBITDA of ~3x post consolidation). The management also said that the deal would be EPS dilutive for atleast 3 years. We believe that the CCI may grant approval to the deal (considering the market shares post the consolidation). The 22.4 mt capacity of Jaypee consist of 11.4 mt in Satna region (MP), 4.8 mt in HP region and 6.2 mt in South region. Thus, North+Central region makes up ~72% of the total capacity (to be acquired). Of this 22.4 mt,

Current Market Price Rs 2767 Target Price Rs 3352 Potential Upside 21%

the operational capacity is 18.4 mt (running at ~60% capacity utilisation) and 4 mt is under commissioning (expected to be completed by June 2017). The 18.4 mt operational capacity made an EBITDA of ~Rs 6 bn in FY15 which translates into EBITDA/ ton of ~Rs 543/t. Currently, UltraTech is present in all the regions except Central region. With this 11.4 mt capacity in MP, UltraTech will be able to sell in Central region too. As the North & South are relatively fragmented regions, UltraTech’s increasing capacity share (post the deal) should not be a concern for CCI and it may grant approval for the deal. We maintain our estimates as we have not factored in the consolidation which requires corporate and regulatory approvals first. We currently estimate ~9% volume CAGR during FY15-18E (higher than the industry) led by the recent expansions & acquisitions. EBITDA/tonne is expected to improve to Rs1138/t by FY18E from Rs850/t in FY15 (led by improvement in realisation, moderation in costs and operating leverage benefits) with EBITDA CAGR of 20% over FY15-17E. We believe that UltraTech would continue to outperform operationally its large-cap peers on the back of strong volume growth and improvement in margins. Acquisition of Jaypee’s 22.4 mt capacity would augur well for UltraTech in terms of gaining market shares in its selling

markets, growing faster than industry and saving capital cost (acquired capacities at $111/t vs. replacement cost of $140/t with saving time as commissioning of new plants takes 4-5 years of time). Though balance sheet is expected to get stretched post the consolidation (FY18E debt/EBITDA would increase to 2.9x from 1.0x at present), we believe that RoCE would improve over a period of time. Valuation at 13.7x/10.6x FY17E/18E EV/ EBITDA (post the recent stock correction) looks attractive considering the growth potential going ahead. Assuming debt addition of Rs 169.7bn for this acquisition, EV/EBITDA (post the consolidation) arrives at 11.2x on FY18E which also looks attractive considering the size of the company at ~90 mt. We Maintain BUY with target price of Rs 3,352 (based on 13x FY18E EV/EBITDA).

Dalmia Bharat

Dalmia Bharat Ltd’s (DBL’s) cement volume has increased by ~11% CAGR during FY11-15 primarily on account of acquisitions of Adhunik, Calcom and Jaypee Bokaro (DBL’s market share in East +North East increased to ~14% in FY16 from negligible in FY10). Going ahead, we expect the volume growth of ~32% CAGR during FY15-18E led by full consolidation of OCL India (stake increased to 74.7%) and pickup in cement demand in South, East and North East regions. Increase in usage of pet-coke & alternative fuels coupled with cutback in power consump-

tion has helped the company to reduce its energy cost. The recent commissioning of clinker unit at Calcom (in North-East) would also benefit in saving clinker purchase cost. Better pricing in South & East region coupled with moderation in the variable cost in the last one year has lead to significant margin improvement. We expect the margin improvement to continue over FY16-18E led by realisation improvement and cost moderation. Blended EBITDA/ton is expected to improve further to Rs 1269/ton in FY18E from Rs 648/ton in FY15. Improvement in utilisation rates and reduction in debt leaves a high potential for operating & financial leverage benefits going ahead for DBL. With no major capex over the next 2 years, EBITDA expected to grow at 65% CAGR during FY15-18E (led by strong volume growth & margin improvement). We expect DBL’s net debt/equity to come down to 1x in FY18E from 1.6x in FY16E. The stock trades at 7.2x/5.9x EV/EBITDA on FY17E/18E and $74/t on FY18E capacity (~50% discount to replacement cost). We initiate coverage on DBL with Buy rating and target price of Rs 924 (based on 6.5x FY18E EV/EBITDA).

Current Market Price Rs 796 Target Price Rs 924 Potential Upside 16%

APRIL 2016 l The Finapolis

company update of its clients now on digital. Among the industry segments, digital contribution from Media is 24% followed by Retail 19%, Hi-tech 16%, Travel 16%, Life sciences & Healthcare 15% and BFSI 12%. The company has trained 111k+ associates, has created 305k+ competencies and has delivered 65+ new digital. It is having 400+ digital tools and platforms. On the delivery

front, it has made investments in agile delivery and collaborative spaces, visual radiators and smart boards to support agile methods. Management remains positive on the growth prospects of the company driven by the increasing adoption of digital services, increasing key deal wins, pick-up in traditional IT business and robust order book. On the Diligenta front, management expects one more quarter of pain while Japan will take time to recover.

Currently, TCS is trading at 17.4xFY17E and 15.5xFY18E earnings. We maintain our estimates and “Buy” rating on the stock with Target Price of Rs 2,734 at 18xFY18E earnings.

Ipca Labs

HCQS supplies to its partner

USD 400 mn due to a 50%

has started and ramp up of

price reduction coupled with

year in domestic formula-

products is likely in Q1 FY17

a 10 % reduction in quantity.

We also revise our margins and earnings downward for FY16E /FY17E/ FY18E and our price target. Due to price correction we maintain our HOLD rating on the stock. Prima facie, we see the health ministry’s ban on close to 350 Fixed Dose Combinations (FDCs) over safety concerns to impact Ipca Labs’ earnings by Rs 1.8.

TCS held an analyst meet in March to demonstrate its capabilities in the newer technologies of Digital and Cloud. TCS recognizes Digital as a combination of Big Data & Analytics, Mobility & Pervasive Computing, Social Media, Cloud and Artificial Intelligence & Robotics. For CY15, digital contributed 13% of the total revenue with 52%

Ipca Labs has had a rough tions as one of the

post sufficient inventory with the partner. We

key segments anti

The fund orders which are postponed are expected to be

believe the ramp

awarded now. Due to regula-

contributes 21 %

up post market

tory compliance issues, this

of revenues was

share gains, the

business which was impacted

a complete wash

company could

will recover to a large extent

out. Restructuring

garner revenues to

in FY 17E. We have factored

malarial which

the tune of USD 31 mn

in the anti-bacterial front has also added to the

for FY17E and USD 59 mn

USD 38 mn and USD 48 mn respectively for FY 17E and FY

woes. Revenue growth has

in FY18E in the US market.

18E respectively. Despite price

picked up in the last quarter.

With increasing market share

reduction in key raw materials,

With better emphasis on pro-

and backward integration, we

margins are expected to be

ductivity and low base impact,

believe the company’s profit-

maintained for this business.

we believe Ipca Labs should

ability will be on an improving

Due to adverse currency and

be able to clock a 15 % growth

trend.

regulatory headwinds we re-

in domestic formulations busi-

The Global fund anti-malarial

duce our revenues for US, Insti-

ness for FY17E and FY18E.

opportunity has reduced from

tutional and Branded business.

Hero MotoCorp

growth in FY17. We estimate higher volume CAGR of 9% over FY16-FY18E. We expect EBIDTA margins of 15.2%/14% in FY17E/ FY18E, assuming higher competition and diminishing benefit from lower commodity prices (expect recovery in commodity price by FY18E). Thus scope for further margin expansion is limited. Moreover, new capacity, lower

utilization, reducing tax benefit from Haridwar, higher initial marketing expenses in export and domestic competition may put further pressure on company’s margins. We maintain our volume, revenue and EPS estimates for FY17E/FY18E and we maintain our target price of Rs 2700, valuing the stock at 16x FY18E EPS. Even assuming EBIDTA margin of 15% in FY18E, valuation translates into TP of Rs 2900, leaving hardly any upside from current level.

Hero MotoCorp (HMCL) delivered strong volume performance (up 13.7% YoY) in Feb’16, primarily due to relief from urban sales and marriage season. However, HMCL’s management cited flat industry volume in H1FY17 and single digit growth in H2FY17 during its recent analyst concall. This translates into 0-5% YoY

Current Market Price Rs 2352 Target Price Rs 2734 Potential Upside 16%

Current Market Price Rs 563 Target Price Rs 630 Potential Upside 12% Post recent price run up, the stock appears pricey and the risk reward is unfavourable. We expect HMCL to Underperform and downgrade to “SELL”.

Current Market Price Rs 2807 Target Price Rs 2700 Potential Upside 4%

Prices as on date of report

TCS

The Finapolis l APRIL 2016

the chartist

Paradise Lost: The world of Indiaâ&#x20AC;&#x2122;s poor urban children Around 41.2 mn Indian children in the age group of 0 to 6 live in urban areas. But an eighth of those live in slums and theirs is the life not worth living. Many of them are labourers, not students. Around half of them are malnourished. A high percentage struggles with addiction. It happens in our cities. Under our very noses.

Homeless and Hungry

Addicted and Exploited

More than

There are

urban children (one of every eight) live in slums

child labourers in urban India (Census 2001 data)

8.1 mn Around

47%

of the children of the urban poor are malnourished The share of the urban poor in the total number of poor in India is growing and is now close to

27%

13,21,424 street children are 68% ofilliterate

40%

and work in the unorganised sector

Indiaâ&#x20AC;&#x2122;s street children are 35% ofdealing with substance abuse

APRIL 2016 l The Finapolis

The Chartist

Still shackled In urban areas, out of

1,000 girls, only 14 reach Class 12 urban areas are victims to child marriages 29% ofandgirlsthisintrend is increasing In urban areas of India, only

half of the girls between 15 and 17 years of age attend school There was a decline in birth of nearly

3 mn girls as opposed to 2 mn boys during 2001-11

The states of Uttar Pradesh and Delhi together accounted for

the cases of kidnapping and abduction of 47.6% ofchildren reported in the country

Source: PwC report 2015

Stolen children

The Finapolis l APRIL 2016

BUDGET FINE PRINT

Analysing Jaitleyâ&#x20AC;&#x2122;s Math Optimistic revenue projections and understated expenditure help the finance minister achieve his targets, says Kiran Nanda

ndiaâ&#x20AC;&#x2122;s macro cues are positively biased, but Arun Jaitleyâ&#x20AC;&#x2122;s aim to target both 3.5% fiscal deficit and growth at 7.6% during 2016-17 seems a tall order. The Budget math is based on optimistic revenue projections and understated expenditures. Jaitley had no alternative, given the exorbitantly high expecta-

tions; in case he had slipped, the credit rating and credibility of the nation would have suffered. Though Budgets are ultimately only statements of intent, this Budget seems different. It constitutes a package of significant, well-studied sustainable measures. Whether or not these turn out to be

transformative depends on how effectively these get translated into fruitful results on the ground. The decision to stick to 3.5% fiscal deficit in FY17 as a vital component of fiscal consolidation path sends out a clear message that the government is keen to accelerate growth under conditions of macro-

APRIL 2016 l The Finapolis

BUDGET economic stability. However, some apprehensions have also emerged that the fiscal math that ranges from rich tax revenues assumed, to asset sale projections that seem impossible to attain, to Pay Commission which is opaquely under-budgeted to planned higher off-balance sheet spending. The Budget, being directional in nature, will be in order if instead of getting into micro-level hair splitting, a broader viewpoint is adopted, especially when the nation is facing persistently global volatility not only on the global front (wither oil prices?, secular slowdown, bubbles building up?) but also in the domestic arena (handling complex and colossal NPAs and risks of unhedged foreign currency exposures due to high interest rates). To recap, the Budget lists total expenditure at Rs 19.78 trillion — 10.8% higher than the revised estimate for the current year. Other non-budgetary expenditures by government organizations would get funded by other sources like LIC. Total gross tax revenue (including states share) is at Rs 16.3 trillion, or 11.7% more than current year. Due to the fall in corporate profitability, the rise in revenue from corporate tax (about 30% of total tax revenue) works out to only 9%. Taxes on personal income are expected to rise the most of the 15% additional tax on incomes above Rs 1 crore. Revenue from indirect taxes is projected to rise over 12% due to changes in some rates particularly in case of excise. Non-tax revenues — mainly dividends, PSU profits and interest receipts on loans by central government — would contribute 23% to total revenue. The Budget also proposed borrowings of Rs 4.2 trillion, about Rs 200 billion less than the current year. Borrowings seem to be manageable. However, the revenue estimates seem overestimated, mainly because of as-

Rs 99,000 crore. Total Plan expenditure is pegged at Rs 5.5 trillion and non-plan at Rs 14.2 trillion. About 25% of the total expenditure, or 37% of nonplan revenue expenditure, is on account of interest payments. The government is expected to shell out Rs 4.9 trillion in interest payments and Rs 2.5 trillion in subsidies. Of the proposed expenditure, Rs 2.47 trillion i.e. 12.5% of capital expenditure proposed would be crucial for India’s growth. Subsidies are projected marginally lower than the previous year, Adhaar Bill, that is given legal sanctity, will make possible implementation of direct benefit transfer (DBT) scheme, ushering in a market mechanism for distribution of subsidies. There are also concerns that food subsidies could easily

sumptions that gross tax revenue would grow by 11.7% against nominal GDP growth of 11%. Divestment receipts for FY17 have been pegged at Rs 56,500 crore, vis-à-vis actual collection of Rs 25,300 crore in FY16. Projected receipts from the spectrum auction are also higher for FY17 than what was realized in FY16, at

pected overestimation of revenues, apprehensions have risen over the underestimation of expenditures. It is not clear to what extent the burden of the Seventh Pay Commission has been taken into account. As and when the government takes the final decision, the total expenditure would rise. F

The route Jaitley took was the only way in which he could simultaneously meet both objectives – political and economic overshoot the budgeted levels and state finances could become a growing concern. The Budgetary proposals might not be easy to execute. The route Jaitley took was the only way in which he could simultaneously meet both objectives – political and economic. The revenue projections from the sale of spectrum seem to be a shot in the dark and over-optimistic. Apart from sus-

20 The Finapolis l APRIL 2016 NAVEEN KUKREJA

by invite

What the Budget Means for the Salaried Class and Small Tax Payers

inance Minister Arun Jaitley’s third Budget was predominantly tilted towards India’s economically weaker sections, infrastructure, agricultural, and social sectors. While the previous Budget had a lot to offer to the middle class, the conservative fiscal approach of this year’s Budget meant that it had little to offer to middle and upper classes in the form of changing tax slabs and providing tax exemptions. In fact, this year’s Budget increased the surcharge on income tax (for people having taxable income of more than Rs 1 crore) from 12% to 15%. Toeing the overall pro-poor theme of this year’s Budget, the government’s proposal to increase the tax rebate, waive-off service tax on homes and increase deductions on rent paid etc. are clearly meant to benefit economically weaker segments of our society.

The Budget did well by increasing tax rebates, increasing tax deduction on rent paid, waiving off service tax on small homes and increasing tax deduction for home loan interest. These steps fit well with the overall objective of providing relief to lower-income groups and housing for all Let’s look at some of the important implications of this year’s Budget on salaried class and small tax payers:

Bringing tax parity among pension schemes The government provided a huge relief to the salaried people by withdrawing the original Budget proposal to partially tax EPF withdrawals. It will continue to be an attractive investment avenue, exempting tax in all three stages (contribution, interest and withdrawal). However, if an unemployed person wishes to withdraw money from his EPF account, he can only withdraw his own contribution and interest earned on it. The employer’s contribution can only be withdrawn once this person reaches 58 years. The proposal to exempt 40% of the NPS corpus remains in place. The original proposal was to tax 60% on the interest earned on contributions made after April 1, 2016, during the withdrawal of EPF corpus. Apart from bringing in parity in the taxation of EPF and

APRIL 2016 l The Finapolis

BY INVITE NPS schemes, the stated objective of the original proposal was to encourage people to buy more annuities and thereby, make India a more pensioned society. However, with the withdrawal of EPF tax proposal, the government’s objective to bring in parity among pension schemes will remain unaccomplished. A portion of NPS withdrawals will continue to be taxed while competing products like PPF and EPF will remain tax free. Instead of just stopping at withdrawing the tax on EPF withdrawals, the government should have also made the entire NPS withdrawals tax free. This would have brought the NPS at par with other pension schemes like EPF and PPF. Another factor that stops the NPS from gaining popularity is the 50% cap on equity investments. As NPS is a long-term retirement product, this cap will act as a drag on its returns over the long-term and make it an underperformer in regard to mutual funds. Instead, the government should have come out with an option for risk-taking NPS subscribers to allow them to invest 100% of their corpus in equities. To bring in competition in the pension space and increase pension coverage in India, the Budget should have also brought in pension plans from mutual funds and life insurance companies under the ambit of Section 80CCD (1B). As India does not have a social security system for its aged citizens, the Budget should have encouraged retirement planning by providing more tax incentives for retirement products.

Another good proposal by the government was to increase the tax deduction (under Section 80GG) on house rent from Rs 24,000 to Rs 60,000. This will benefit self-employed people and those employees who do not receive HRA as part of their salary component. This section was untouched for many years and it needed urgent review as the limit under it (Rs 2,000 per month) was grossly inadequate for even people living in Tier III cities and small towns.

Encouraging housing construction for poor and lower middle income groups

Another welcome move in this year’s Budget is the proposal to provide an additional deduction of Rs 50,000 for interest paid on home loans, over and above the Rs 2 lakh deduction available under Section 24 B. This additional deduction will only be available to first time home buyers availing home loans of Rs 35 lakh or less and for homes valuing Rs 50 lakh or less. This will

Providing some relief to small tax payers By increasing the tax rebate under Section 87 A from Rs 2,000 to Rs 5,000, Jaitley may have brought in some amount of cheers to low-income tax payers (people having annual income of less than Rs 5 lakh). According to the government, this increased rebate is expected to benefit more than 2 crore tax payers.

encourage middle classes to buy homes and provide much-needed boost to housing construction activity. However, the proposed deduction may not benefit people residing in metro cities, such as Delhi and Mumbai, given their high property prices.

The author is Managing Director, Paisabazaar.com

Keeping in mind the interest of lower-middle class segments and economically weaker sections, this year’s Budget has also waived off the service tax payable on purchasing homes measuring less than 60 square feet. This proposal is aimed at providing relief to consumers of affordable housing segment. Another good move for the housing sector is the extension of the time period allowed to complete the construction or take the possession of your property in order to avail the entire Rs 2 lakh deduction available under Section 24 B. Earlier, a borrower had to take the possession within three years of taking the home loan, failing which the borrower could only claim a deduction of just Rs 30,000. As a result, most of the home buyers failed to avail the entire limit as the developers mostly failed to deliver within the threeyears time period. This year’s proposal to increase the time period from three years to five years will enable more people to avail the entire deduction. However, the government could have done it better by waiving off the time cap in entirety for cases where the delay took place at the developer’s end. To sum it up, the Budget did well by increasing tax rebates, increasing tax deduction on rent paid, waiving off service tax on small homes and increasing tax deduction for home loan interest. These steps fit well with the overall objective of providing relief to lower-income groups and housing for all. The government should have exempted all types of pension schemes from taxes and increased competition in the pension sector by extending Section 80 CCD (1B) benefits to pension plans from mutual funds and life insurance companies. These reforms would have helped the government more to achieve its objective of a pensioned society. F

The Finapolis l APRIL 2016

EQUITY NUMBER GAME

Technical Analysis Our team of analysts pore through technical charts to offer some smart trading tips for the next couple of months By Team Finapolis

orren

Current Market Price

PHARMA

ORNTPHARM has given a significant return in the last one year as the stock rallied from the levels of 1132 towards 1718, gaining more than 52%. Profit booking was witnessed in the stock at the higher levels which dragged the stock towards 1200 levels, correcting almost 30% from its highs. The stock has been trading in a broad range of 1230-1350 levels since 1- 2 months. It seems that the stock has bottomed out and is ready to move higher. The stock is currently trading above the upper band of the said trad1600 1500 1400 1300 1200 1100 1000 Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Rs 1418.10

Stop Loss

Rs 1230

Target Price 1

Rs 1680

Target Price 2

Rs 1700

ing range and has already given a breakout on the higher side. Any decline in the stock towards 1300 levels can be used as a buying opportunity to accumulate the stock for the targets of 1680-1700 levels in the short to medium term. Points of Observation XXOn the daily as well as weekly charts, the stock is trading above most of its major moving averages namely 21/50/100/200 â&#x20AC;&#x201C;DEMA, indicating the inherent strength in the counter and is likely to head northward towards 1680-1700 levels in the short to medium term. XXThe stock has seen accumulation at the

lower levels and it has been moving higher with high volumes from the last 3-4 trading sessions indicating rise in price backed with surging volumes. The stock has a strong support at around 1230 levels and is likely to head towards 1680-1700 levels. XXAmong oscillators, the 14-day RSI line is pointing northwards, indicating strength in the counter. XXThe price of the stock is trading above the Parabolic-SAR indicator indicating that the upward trend is likely to continue in the counter.

APRIL 2016 l The Finapolis

EQUITY Current Market Price

AJAJFINSV is a financial services company which is engaged in life insurance, general insurance, consumer finance and other financial products. Apart from financial services, the company is also active in wind energy generation. It has been one of our preferred pick in the Non Banking Financial Companies space. Points of Observation XX BAJAJFINSERV has been making repeated cycles of higher highs and higher lows on the weekly charts. The counter has zoomed over 360% in the small time frame of only two years clocking an all time highs of 2160 levels in the month of August 2015 from the closing lows of 590.10 levels. XXThereafter the counter witnessed a round of profit booking which dragged the stock towards lower levels of 15501600 levels which is 61.8% retracement

lue Star is Indiaâ&#x20AC;&#x2122;s leading air conditioning and commercial refrigeration company. It has an integrated business model of a manufacturer; contractor and after-sales service provider enables it to offer an end-to-end solution to its customers, which can be seen as a differentiator from its peers. The Company also offers expertise in allied contracting activities such as electrical, plumbing, fire-fighting and industrial projects, in order to offer turnkey solutions, apart from execution of specialized industrial projects which adds to its diversification. Blue Star has business alliances with

Current Market Price

Rs 370

Stop Loss

Rs 300

Target Price 1

Rs 435

Target Price 2

Rs 490

Rs 1664.55

Stop Loss

Rs 1480

Target Price 1

Rs 1950

Target Price 2

Rs 2000

level (Golden Ratio) drawn between swing low of 1258.55 and all time high of 2160 levels. It also coincides with same levels from where the counter gave a breakout on the daily charts in the month of July 2015. XX The stock managed to form base around the said support levels for past 4-5 weeks and is expected to break on the higher side in the coming trading weeks. Analyzing the volume price action on the weekly charts, the volumes have been gradually increasing in the recent consolidation on the weekly charts indicating strong hands have started accumulating the stock at lower levels. XXAt current levels, the stock is expected to re-gain its bullish momentum and move towards the levels of 1950-2000 lev-

395 375 355 335 315 295 275

2060 1925 1790 1655 1520 1385 1250 Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

els in medium term perspective. We recommend medium to long term investors to buy the stocks at current levels and accumulate more on any dips towards 1550 levels with stop loss placed below 1480 levels.

world-renowned technology leaders in most of the countries to offer superior products and solutions to customers. The stock price has seen a stellar rally from the levels of 130 in the month of February 2014 to the levels of 385 in the month of November 2014 in a span of around 11 months giving a whopping move of nearly 200%. After clocking the said highs, the stock has been consolidating in a band of

Points of Observation XXDuring the current consolidation phase, the stock on weekly chart has been respecting its medium term moving averages and bouncing back with decent volume activity, indicating strong hands are playing in the counter. Even the trading and deliverable volumes on the down move are on the lesser side compared to the up moves in the current consolidation phase, indicating the probability of breaking the trading range on the higher side is high. XXAmong oscillators on weekly charts, the 14-period RSI line is trading at a reading of 55, indicating the stock has more upside and any dip can be used for fresh

285-400 over last one year, indicating a pause in the ongoing long term bull trend, and shall resume its next up move on breach of the current trading range. Going forward, until the stock is holding above 280-300 levels, it has the potential to rally towards its all time highs of 520-550 zones in the coming months.

accumulation. XXWe therefore recommend participants with a time frame of 5 to 8 months to buy the stock in the range of 360-370, and average on dips towards 330-335 for the mentioned target levels with a strict stop loss placed below the level of 300.

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

24 The Finapolis l APRIL 2016

EQUITY

EL an acronym for Bharat Electronics Limited is an Indian PSU which was established at Bangalore, India, by the Government of India under the Ministry of Defence in 1954 to meet the specialized electronic needs of the Indian Armed Forces. The company has been given the stature of Navratna. At present the Indian government controlled Defence PSU has 9 factories and few regional offices in India. Points of Observation XXThe stock has witnessed a stellar rally from the lows of 308.04 levels to the highs 1400 1325 1250 1175 1100 1025 950 Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Current Market Price

Rs 1182

Stop Loss

Rs 1060

Target Price 1

Rs 1300

Target Price 2

Rs 1380

of 1416.85 levels giving a whooping return of around 360% in the last 2 years XXThe stock is currently trading above all of its major moving averages which suggest that the stock has strength to start a fresh journey which might lead to make the stock make new highs. XXOn the daily charts the stock witnessed a fall of approximately 25% from the all the time highs of 1416.85 levels made on 04th January, 2016 to the lows of 1008 levels, which it made on 01st March, 2016. There is an increase in the volumes on the charts while the stock heads upwards. XXThe stock is currently consolidating in the range of 1032-1334, a range which spans across 202 points, any break out

Current Market Price

POLLOTYRE was in downtrend from many months and the stock has recently changed its trend and is now a great buying opportunity. The stock has made a life high of 249.80 and from that point it has come till 127 levels giving a correction of almost 50% from its high. On daily charts the stock has started trading above its 200DEMA which is placed at around 167 levels. The stock has major support in the range of 160-165.

Rs 175.20

Stop Loss

Rs 160

Target Price

Rs 205

Points of Observation XX On the daily charts, the stock has broken its cycle of lower lows and lower highs and has started to make higher high and higher lows clearly indicating that the stock in upward momentum. The stock is also trading above its short term and long term exponential moving averages clearly indicating the stock is in uptrend in both long and short term time frames. The 200, 50, 21 days exponential moving averages are placed at around 167,160 and 168 levels respectively. XXAmong oscillators, the 14-perioud RSI on daily charts has been sustaining above 70 levels clearly indicates that the stock is in very strong momentum and the directional movement is likely to continue in coming days.

from the upper said levels might help the stock scaling new highs. XXThe stock has a very strong support around 1032 levels which is also acting as a strong support zone from a long term perspective, until and unless the stock breaches the said levels the stock would remain in the bullish zone. XX We recommend medium-to-long term investors to buy the stocks at current levels and accumulate the stock on dips by holding the stock with a stop loss placed around 1060 levels.

X X

220 205 190 175 160 145 130 Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

On weekly charts the stock has given a closing above its 50 period exponential moving average indicating change of trend in weekly charts as well. The stock has also witnessed rise in trading volumes in previous weeks clearly indicating strong buying taking place and we can expect the uptrend to continue in coming weeks as well. XX The stock has also given a breakout above its downward sloping trend-line which can be drawn by joining highs of 2nd Dec 2015 and 4th Jan 2016 and post breakout the stock has taken support of the extension of same trend line on 29th Feb also supporting the change of trend. F

APRIL 2016 l The Finapolis

by invite

ADHIL SHETTY

Are Digital Wallets just Glorified Versions of Credit Cards?

ith Internet penetration enveloping India in wave after wave of innovation, and with the rise of e-commerce, the next big trend in online payment is mobile wallets. The use of this e-payment channel is now giving tough competition to traditional payment modes like debit and credit cards. So, are wallets here to stay or are they just a glorified Internet-enabled version of credit cards? Are you better off using one over the other? The answers require a comparative study of the two modes of payment.  Security aspects: Credit cards use a two-point verification process to authenticate your payments to rule out any possible fraud. Digital wallets use only a single verification process, but with all data encrypted at high levels, the chances of data leakage are minimal. Both cards and wallets are equally safe. One benefit with wallets is that they are pre-loaded with a limited amount of money, so that if in case of a security breach, the loss is limited. A debit or credit card hacker can drain a huge amount in a single swipe. Unlike card payments, while using a wallet, your information is not shared with multiple websites at the time of purchase.  Interest on funds: When your money is parked in your bank account and you are using your debit card for payments, your money will continue to earn interest as long as it is lying in the bank. For mobile wallets you do not get any such facility, as funds are parked in an escrow account of your chosen digital wallet. Your money is parked in the escrow account from where it is used for online payments and you get no interest component on your money. So, parking large amounts of money in wallets is not ideal. Usage of funds on your credit card, on the other hand, attracts an interest charge of around 2436% beyond the free credit period.  Eligibility criteria: Getting a credit

Adhil Shetty is the CEO of BankBazaar.com

Wallets have their pluses, but choosing between them and cards depends much on your usage, spending patterns and goals card entails meeting certain minimum eligibility criteria as per the norms of banks. Digital wallets, on the other hand, do not have any eligibility criteria and anyone with a bank account and an Internet-enabled Smartphone can download and use it for making online payments.  Advantages and rewards: Both cards and wallets offer you reward points for users. The difference is that, cash-back reward points are usually available only with credit cards, while with a wallet, cash back offers are limited to certain merchants or to be availed while making the next payment through the wallet only. This is to attract more wallet usage, but wallet customers sometimes lose the flexibility of having cash backs at the time of purchase.  Acceptability by retailers and merchants: Cards are a more traditional way of facilitating payments and are used by majority of retail and online merchants. Digital wallets, being relatively new entrants on the payments front, are not accepted by all retailers and online merchants as of now. While most merchants accept all kinds of credit cards irrespective of the issuing bank, only retailers in tie-ups with digital wallet companies

accept wallet payments. So, even if a merchant accepts digital wallet payments, it is not necessary that your particular digital wallet may be accepted. Also, digital wallets are not accepted globally, unlike most credit cards.  Ease of Usage: Wallets get the better of cards when it comes to ease of usage, as you do not have to physically carry your credit or debit card every time you go out. Your mobile wallet sits in your Smartphone, so you just need to transact with your phone to facilitate a payment.  The Verdict: The verdict is not overwhelmingly in favour of any one payment mode. While cards have their appeal of global acceptability and international usage, wallets have their own plus points but may not overshadow cards in the near future. Choosing between the two depends much on your usage, spending patterns, and goals.  Who should go for cards?: If you make a lot of online and offline purchases, you are better off using credit and debit cards, since not all merchants offer digital wallet services. Also, if you are a frequent overseas traveller, credit cards are your best friend to shop internationally. It is good to use wallets for selected bill payments or purchases too, which could bring in more rewards for those particular payments. As an avid online shopper, you can save money by opting for a digital wallet. Every time you make a purchase, you will not have to login to your bank account or punch in your card details. Just link your account with your mobile wallet once and you are good to go. You also get ample cash back offers at selected payments, which can make shopping more pocket-friendly. Both digital wallets and credit cards have their place in the financial system and using one over the latter may depend on where you make your purchase and what you purchase. F

26 The Finapolis l APRIL 2016

by invite DEEPAK YOHANNAN

Insurance Policies for Diabetics

iabetes is fast attaining the status of a global epidemic termed by World Health Organisation (WHO) as an “emerging global epidemic” that mostly occurs due to obesity, physical inactivity and poor lifestyle and food choices. The International Diabetes Federation (IDF) says India had 61.3 million diabetic patients in 2011 and this figure is projected to reach 101.2 million by 2030. So, if you’re reading this, you want to know what you can do to be prepared. I am not a doctor or a health coach, but I will advice you how to plan financially to limit your costs, if and when, this disease strikes you. Diabetes health insur-

From a financial planning perspective, even if you’ve got a diabetes health policy, you should still maintain a dedicated medical fund to tide over things like claim delay, rejections and cost of nonmedical expenses ance plans can be your saviour here.  Things you should know before buying Diabetes cover: All diabetes plans are health plans and are therefore gov-

erned by the rules of the game which include waiting periods, co-pay and the like. Waiting period is the bigger issue here. Insurance by definition is covering unforeseen risks and therefore, anything that is known beforehand poses complications for underwriters. In a health plan, if you already have been diagnosed with a condition (diabetes in this case) you have to wait for a certain period after buying the insurance plan, in order to be able to file a claim when you incur expenses in related medical procedures. This qualifies as ‘pre-existing condition’ and will be subject to a specified waiting period (usually a few years) as per the policy terms and conditions. In

APRIL 2016 l The Finapolis

BY INVITE the worst case, the insurer can deny the policy to you. Diabetes and particularly Type 2 of the disease affects eyes, liver, heart and causes foot ulcer in the long-term and the treatment for the same make up a major chunk of diabetes-related treatment expenses. It is important to know what your plan excludes from coverage. This will help you asses if the premium paid by you is justified vis-a-vis the benefits received.  Popular plans that cover diabetes and how good they are: ICICI Pru Diabetes Care, which is now discontinued, was one of the first diabetes-specific plans to be launched by ICICI Prudential Life. ‘Star Diabetes Safe’ by Star Health Insurance followed and Apollo’s diabetes-centric plan called ‘Energy’ was launched a couple of years back. Even family floater plans such as National Insurance’s ‘Parivar’ also offer a preferential treatment to diabetes and hypertension patients. Apollo Munich Energy, Star Diabetes Care and National Parivar are some of the popular plans that cover diabetes. All three plans cover diabetes from Day 1, which is a huge positive. For illnesses other than diabetes, Apollo has a lesser waiting period of three years, which is a plus. In case of National Insurance, a small additional premium is payable. Apollo has the least sub-limits and capping and stands out completely from the other two in terms of clarity in the policy wordings on what is covered and not covered. Only Star is offering a restoration feature in a diabetes policy. Though this is a plus, it cannot be the sole determinant. This means that once a claim is disbursed, the policy does not lapse but can be restored through additional premium or otherwise. Apollo offers the highest sum assured of Rs 10 lakh and also explicitly mentions

their brochure. This is against the 2013 IRDA Health Insurance Regulations and can be disputed by the policyholder. From an overall perspective, Apollo Munich Energy emerges out the best option to be considered.  What are your options?: The options in terms of dedicated diabetes health insurance plans are quite limited. If you select these plans, then though you get Day 1 cover, you stand to miss out on other features like higher sum assured, features like restore and multiplier, coverage for treatments of select illnesses outside India etc, which are not provided unlike major other

agnosed with the illnesses, a Day 1 diabetes cover might not be a must-have. Instead, you can consider a regular health insurance plans with a lesser waiting period. For example, Religare Care Freedom has a waiting period of only two years. Similarly, in case of senior citizens, while they check for diabetes specific plans, it also makes sense to compare senior citizen plans which either cover diabetes and hypertension from Day 1 (for example, National Varistha Mediclaim) or other plain vanilla ones, which are low on premium and high on features like

the sum assured enhancement condition in its policy wordings. Entry age in Apollo’s Energy is just 18 years, which is a positive for younger patients and pre-diabetes cases. On the point of renewability, Star and National’s policies cap renewal age as per

health plans. Also, apart from National Insurance, both the other plans are individual plans and hence, you cannot cover all family members in one policy and get the benefit of lower premium. Hence, if you are young (i.e. below 35 years of age) and have been recently di-

Apollo Munich Optima Senior. From a financial planning perspective, even though you’ve got a health policy, you should still maintain a dedicated medical fund to tide over things like claim delay, rejections and cost of non-medical expenses. F

Apollo Munich Energy, Star Diabetes Care and National Parivar are some of the popular plans that cover diabetes from Day 1, but you could miss out on other features which are not provided. Hence, if you are below 35 years of age and have only been diagnosed with the illnesses recently, you could opt for other policies with smaller waiting periods before coverage kicks in

The author is the CEO of MyInsuranceClub, an insurance price and features comparison site in India

28 The Finapolis l APRIL 2016

COVER STORY INTRODUCTION

Basics of Financial Planning Financial planning is the process of understanding your present monetary situation and then pursuing a strategy to maximise your finances for the future, all while ensuring you are protected from unforeseen risks, finds Mandar Bakre

t its core, financial planning is an inherently simple process. The logic is straightforward: Spend less than you earn, then deploy your savings in a way that will generate the best returns in line with your risk-taking capability. And the most important equation is this: Greater the returns, greater the risk usually involved. The complications in financial planning arise because of human wants. Human wants are unlimited, and the real reason the financial planning process gets a bad rap is because it fails to meet people’s fantasy: invest Rs 1,000 today, reap Rs 1 lakh next year. Such returns are out of the ordinary are rarely achievable. Therefore, we talked to financial experts to draw up a clear idea of the financial planning process.

What is financial planning? Tarun Birani, founder of TBNG Capital Advisors, a Sebi-registered investment advisory firm based in Mumbai, says “Financial planning is the process of identifying all your measurable goals and accordingly ensuring planning, execution and review.” Gajendra Kothari, Managing Director and CEO of Mumbai-based Etica Wealth Management, says “Financial planning is your roadmap to manage your overall personal finances so that you can achieve financial freedom.” Thus, what financial planning does is institutionalise your saving process and give you a way to channel your savings. It allows you to reach realistic goals in

Imagine you are at a Situation A (1BHK; two-wheeler). How far can you go with your current savings? Financial planning will be able to tell you (Say, 2BHK and small car). Suppose you want to go further than where you can reach (4BHK, one big car and one small car), how much more must you save? Financial planning can tell you. Thus, the process gives you a clear picture of your future line with your savings or financial resources. To put it another way, imagine you are at a Situation A (1BHK; two-wheeler). How far can you go from here with your current savings? Financial planning will be able to tell you (Say, 2BHK and small car). Suppose you want to go further than where you can reach (4BHK, one big car and one small car), how much more do

you need to save? Financial planning can tell you. Thus, the financial planning process can give you a clear picture of your future. Kothari is clear about the benefits of financial planning. “Today, most people do not have financial freedom, which is very important,” he says. “We all have to work hard to achieve our goals, by doing proper financial planning, we can develop

APRIL 2016 l The Finapolis

COVER STORY a roadmap that allows us to achieve our goals and also achieve financial peace. That is why each one of us should do financial planning.” Financial planning is also something that you can start/ begin at anytime. Whether you are a college student looking to invest some of your pocket money in a monthly SIP or a young executive looking for a comprehensive plan or even a retiree looking to deploy his savings properly, you can undertake the financial planning process to chart the proper course for you.

and risk-taking ability differ, as will your tax dues and insurance requirements. Therefore, a financial plan drawn up for you will be customised to your requirement, and will not necessarily match somebody else’s financial plan.  Financial planning is a specialised field: Like politics, cricket and other things of national interest, financial planning has fallen prey to generalities where everyone is a self-proclaimed expert. But this is dangerous. Generalities like “real estate” is the safest investment and stock

Kothari says the sooner you start financial planning, the better. “Just like in any other part of our lives, time plays a very important role. The more delay you do, the more problems you will have later on. Planning early also allows you to start with a smaller amount, which is more comfortable on the pocket.” But that doesn’t mean older people should avoid it: “Even if you are a retiree, for example, you still have 15-20 years of retirement ahead of you. Financial planning can tell you how you can lead your retired life comfortably, or warn you if your savings are insufficient.” To clear up misconceptions, here are some attributes of financial planning:  Financial planning is proactive: The financial planning process makes sure you save some money out of your income, and then invest it in a way best suited to you. What this does is, it makes you plan ahead, by forcing you to define your goals, identify your expenditures and weigh their importance. Then you are required to allocate funds for them, etc. Essentially, the process smoothens the financial bumps in your road. This very nature of financial planning makes it a proactive process. You must look ahead, set goals, plan for expenses and prepare for all possible contingencies. “The planning, exe-

watch their investments grow. There is a sense here of watching a sapling turn into a tree. It takes some years. Similar is the case with people who invest their money for the long term. They understand that it takes time for the magic of compounding to take effect and therefore, are willing to wait out.  Financial planning is about having discipline: Most of us have a money cycle – we are paid a salary every month, and from this, we pay certain bills, etc to our grocers / mobile company / cable TV / etc. We commit to our savings or investments only after deducting these bill amounts. i.e. we make our investments only from our savings, not from our salary. But because this amount becomes regular, financial planning now forces you to behave with your money. Suddenly, it is not a good idea to fill up your car and go on a long drive one day before your SIP investment is going to be deducted, because you know you cannot afford to

market is too volatile and risky become the norm although they may not necessarily be the truth. Because everyone’s goals are different, and their risk-taking ability differs, the products that are suited to one person will not be suited to others. Hence, a visit to a Certified Financial Planner or a financial planned is recommended. Not only can financial planners understand your requirements, but with their experience, they will even be able to guide you for your goals. For example, a financial planner may be able to point out to a young executive setting a corpus for a home loan for marriage that he also start to purchase gold in small quantities, something the executive might have forgotten. Also, because an experienced financial planner has worked with a number of clients, he will have a good idea of your requirements that your might have forgotten about. Also, the financial planner, because it happens to be his full-time job, is always tracking the financial industry and therefore clued-in to financial news. Birani, of TBNG Capital Advisors, equates a good financial planner with a coach. “Without a coach, it is not possible to maintain discipline. A financial advisor acts like a coach who verifies your goals, and checks whether your invest-

cution and review — these are the most important aspects of the financial planning process,” says Birani.  Financial planning is a long-term process: Because of its nature, people with financial goals understand that returns will not be delivered in a week or month or a year even, and are willing to

have your payment bounce. You start to plan your finances and as you do that, you start to plan your future.  Each financial plan is unique: The purpose of financial planning is to maximise a person’s finances. This is the aim for every person seeking financial planning. However, everyone’s income, expenses

ment and cash flows are aligned accordingly,” he says. In sum, financial planning is the process of understanding your present monetary situation and then pursuing a strategy to maximise your finances for the future, all while ensuring you are protected from unforeseen risks. F

Each person’s financial plan is unique

30 The Finapolis l APRIL 2016

COVER STORY INVESTMENT AVENUES

Where Should You Place Your Money? When it comes to financial products, one size does not fit all, says Balwant Jain. Instead, it is each investor’s time horizon and risk capability that decide a product’s suitability for investment.

he India consumer today faces an array of choices in every field, be it fashion, automobiles, entertainment avenues or even for venting one’s ire (through social media). This is equally evident in the financial market place, where there is a variety of pure financial products available for investors. In fact, the financial consumer is now confused with the problem of plenty and sometimes gets trapped by mis-selling of products by distributors. The first principle of financial planning is that all your investments should be mapped to specific goals so as to ascertain their suitability. One product cannot meet the demands of all investors, as the risk appetite and time horizon of each investment of each person, as well as each goal for the same person, is different. So, it is best to know the risks involved in investing in each asset class. In this article, we look at various products available under equity and debt categories of investment, while addressing their pros and cons, as well as their suitability.

Equities Equity as an investment avenue is the most important of the all the pure financial products available. Historically, as judged from the Sensex’s base of 100 for the year 1978-1979, equities, have given ~16% annualised return over the last 37 years. This is the only asset class which helps you beat inflation and notch positive returns in the long run. And there is icing on this cake: profit realised on the sale of equity shares as well as equity-oriented mutual schemes is either fully exempt or attracts concessional tax rates (The tax

Equity is the only asset class which helps you beat inflation and notch positive returns in the long run. However, it is the most volatile asset class in the short term — you might even see your capital get eroded rate is 15% for investment held for 12 months or less, while if the holding period exceeds one year, the profit is fully exempt provided certain conditions are satisfied).

Although equity as an asset class gives better returns in the long run, it is the most volatile asset class in the short term – you might even see your capital get erod-

APRIL 2016 l The Finapolis

COVER STORY ed. Therefore, equity as an asset class for investment is suitable only for people whose goal is long-term and thus have a long investment horizon. Based on historical data, an investor would not have suffered loss on an investment in equity for a minimum period of seven years. In equities, the probability of losing money goes down substantially as the investment tenure becomes longer. So equities are suitable for goals like retirement, wealth building or even for a child’s education

Let us start with investment in shares. Experience suggests investing directly in equity is a full-time job and requires time and thorough knowledge of the economy, local as well as global (because in the days of globalisation, all economies are interlinked). It also requires constant monitoring of events which affect the industry as well as the company you have invested in. Furthermore, direct equity investment require a certain sense of timing — right time of both entry and exit —

You can invest in mutual funds either through agents or, if you can select finds on your own using the information available online as well as in the print media, through the mutual fund house’s ‘direct plans’, which offer higher returns than regular plans

and marriage in case the investment is planned when the child is small and you have sufficient number of years to accu-

which is generally not possible for an average investor. You can claim tax benefits up to

ter proposed in this year’s budget to levy 10% tax on dividend income in excess of Rs 10 lakh a year. If your dividend income is below Rs 10 lakh, you will not have to pay tax on your dividends. The second option is investing through mutual funds. Since fund managers are equipped with the necessary knowledge and skills for investment, and as investing is their full-time job, mutual funds are the right course of action for an average investor. Of late, retail investors have started realising the folly of investing directly in equity. This is evident from inflows into the equity schemes of the various mutual funds schemes: Mutual funds saw an inflow of Rs 92,000 crore during 2015, which is highest in the last 10 years. You can invest in mutual funds either through agents called mutual fund distributors, or directly with the mutual fund house under its ‘direct plans’ in case you are able to select funds on your own, for which sufficient information is available online as well as in the print media. As almost all fund houses allow you to buy/ sell mutual fund units online; it is recommended you invest in direct plans of the mutual funds if you are sufficient-

mulate the required corpus. So what is the best way to invest in equity? You can invest in equity through two modes. One is directly buying shares from the stock exchanges through brokers, and the other is through the indirect mode of investing in equity schemes of mutual funds.

Rs 25,000 under Section 80 CCG in case you are a first time investor, in case you buy shares of specified companies and satisfy other conditions. There is no other tax benefit available under the income -tax laws for investments in shares. The dividend received on shares is presently fully exempt, although the finance minis-

ly informed. Direct plans offer higher returns than regular plans. This is because fund houses are not allowed to debit their distribution expenses such as distributors’ commission and other distribution expenses from the direct plan, which they debit from regular plans. Thus, direct plans end

STOCKS EQUITY MUTUAL FUNDS DEBT MUTUAL FUNDS FIXED DEPOSITS PUBLIC PROVIDENT FUND NATIONAL SAVINGS CERTIFICATES

The Finapolis l APRIL 2016

COVER STORY

up generating higher returns as compared to regular plans. Investments in equity-linked saving schemes (ELSS) of mutual funds are eligible for deduction under Section 80 C within the overall limit of Rs 1.50 lakh. Likewise, investments made in qualified mutual funds schemes are also eligible for deduction of Rs 25,000 for first-time investors under Section 80 CCG, provided certain conditions are satisfied. Thus, investment in equity, whether direct or indirect, is suitable for investors who have a longer-time horizon (as least seven years, as explained above) and have some ability to take risk. All these factors make equity best suited to people who are in the active phase of their career.

Debt There are various instruments available for investing in debt. Investment in debt as an asset class comes with lower volatility, but is accompanied with lower returns as well.  Bank Fixed Deposits: Bank fixed de-

posits traditionally have been the most popular form of investments for Indians in the past. There are pros and cons of this investment avenue as well. First the pros. The investment has a predefined and

Interest on all types of fixed deposits is taxable in your hands and tax is deducted in case the interest on fixed deposits exceeds the threshold limits. However, you have the option to offer this for tax either on receipt basis of on accrual basis. In order to ensure even distribution of income, it is advisable that you offer the interest on accrual basis. Fixed deposits are suitable for people who want assured returns and cannot take any risk with their capital.  Mutual Funds: Just like for equity investments, mutual fund houses also offer various products in the debt category. The products differ from liquid funds to debt funds, with each catering to a different category of investors based on the time horizon for investment and the ability to take risk. At the bottom of the bouquet are liquid funds, whose returns almost mirror the interest on bank fixed deposits. Liquid funds are the least risky among debt mutual funds, with the advantage of offering liquidity and being tax friendly. As the duration of the goal becomes longer, one can invest in other varieties of debt funds like ultra-short-term fund, bonds funds and monthly income funds, where a very small portion of the money is invested in stocks to give it a flavour of equity and some higher return. In case of units of debt fund schemes, no tax is deducted on the profits made, but the same is treated as short-term capital gains and taxed at the slab rate applicable to you if your holding period is 36 months or less. In case your holding period for investments in debt funds is more than 36 months, profits are considered as longterm gains and the same are taxed at 20% after indexation benefit. Please note that there is no tax benefit available for making investments in debt mutual funds under the income tax laws.

assured rate of return, unlike investments in equity. The interest on fixed deposits is taxed at the slab rates applicable to you. There is a category of bank fixed deposits which entitles you to tax benefits up to Rs 1.5 lakh under Section 80 C. These fixed deposits have to be made for a period of five years.

 National Saving Certificates: In the year of purchase of NSC, you are entitled to claim tax benefits under Section 80 C up to Rs 1.50 lakh along with other eligible items. NSCs have a tenure of five years and the interest on it is taxable, although no tax is deducted on the same. This is an ideal product for the people who want to

Debt as an asset class offers lower volatility vis-à-vis equity, but this is accompanied with lower returns. Debt products are also more likely to be accepted as collateral by lending institutions

APRIL 2016 l The Finapolis

COVER STORY

save the money for a time horizon of around five years and want to save tax as well. The rate of interest for the whole tenure is fixed at the time of purchase. In case of an emergency, you can avail loans against the security of your NSC holdings. ď ľ Public Provident Fund: As against NSC, the Public Provident Fund (PPF) offers better returns from a taxation point of view. The interest earned on your PPF amount is fully exempt from income tax. Moreover, any contribution you make to a PPF account belonging to yourself, your spouse, or your children is eligible for deduction under Section 80 C. The rate of interest is fixed every year and which is applicable on whole of the accumulated balance in the account. A PPF has a maturity period of 15 years and offers facility for partial withdrawal during its tenure. Once a PPF account has matured, you can renew it in blocks of five-year periods under the same norms. For people who do not want to take any risk, a PPF is an excellent avenue for accumulation of your retirement corpus or even for long-term goals like education or marriage of your child because of two aspects, 1) the con-

Insurance and investment are oxymorons. One should never mix insurance needs and investment needs. In case you mix both the needs, you will neither get ade-

cheaper than any other insurance product, as they only cover the risk and do not have any element of investment in it. They are an ideal product to safeguard your life risk to ensure replacement of income in case of any eventuality. Online term plans are even cheaper, as no agent is involved and thus, the insurance company is able to save on distribution costs. For investment needs, you can invest in debt funds or ELSS, tax-saving FDs, PPF, NSC etc depending on the time horizon of your goal and your ability to take risk. From taxation point of view, you can continue to avail the same tax benefits by buying pure term plans and making investing in the above debt products, as both these qualify for deduction under Section 80 C. From the above, it becomes clear that we currently possess products for each of

quate insurance cover nor reasonable returns on your investments to insulate you against inflation. For insurance needs, it is best to purchase pure term plans, even online term if the same is available in your city. Term plans are

our needs, depending on our ability to take risk as well as the time horizon for investment. Plan your investments based on your goal and your ability to take risk, and see your efforts bear fruits in the years ahead. Happy investing! F

Insurance and investment are opposites. Never mix your insurance and investment needs. If you do, you will neither get adequate insurance cover nor reasonable returns on your investments tribution to PPF is tax free under Section 80 C and interest on it is also tax free, and 2) the longer tenure of 15 years and option to extend it by five years at a time.

Insurance

The author is a CA, CS and CFP. Presently working as Company Secretary of Bombay Oxygen Corporation Limited. Write to him at jainbalwant@gmail.com

34 The Finapolis l APRIL 2016

Finapolis Guide for The

Your investments should be mapped to specific goals so as to ascertain their risk appetite, time horizon and goals of each investor differs. For those starting

Equity Gives better returns in the long run, but most volatile asset class in the short term. Suitable for long-term goals such as retirement, wealth building or even for a childâ&#x20AC;&#x2122;s education and marriage.

Debt Debt as an asset class offers lower volatility vis-Ă -vis equity, but with lower returns. Debt products are also more likely to be accepted as collateral by lending institutions.

Bank Fixed Deposits: Traditionally the Direct Equity: Full-time job, requires time and thorough knowledge of the economy. Also requires you to constantly monitor events which affect your holdings as well as their industry. Requires a certain sense of timing for entry and exit, which is generally not possible for an average investor.

Tax angle: Tax benefits up to Rs 25,000 under Section 80 CCG in case you are a first time investor, in case you buy shares of specified companies and satisfy other conditions. Dividend from shares is exempt from tax, although dividend income in excess of Rs 10 lakh a year could be taxed at 10% as per Budget proposal.

Equity MF: Right course of action for an average investor, since fund managers are equipped with the knowledge and skills. You can invest either through agents or directly. If you are sufficiently informed, it is recommended to invest in direct plans of mutual funds as these offer higher returns than regular plans.

Tax angle: Investments in ELSS are eligible for deduction under Section 80 C. Investments in qualified schemes are also eligible for deduction of Rs 25,000 for first-time investors under Section 80 CCG, provided certain conditions are satisfied.

most popular form of investment, it offers a predefined and assured rate of return. Interest gained is taxed at the slab rates applicable to you. Five-year deposits entitle you to tax benefit up to Rs 1.5 lakh under Section 80 C. Suitable for those who want assured returns and cannot take risk their capital.

Tax angle: Interest on all types of FDs is taxable; tax is deducted at source if interest exceeds threshold. It is advisable to opt for accrual basis of deduction.

Insurance WARNING! This is not an investment. Never mix your insurance needs with investment needs, else you will end up with neither. Best to purchase pure term insurance plans, do so online if the same is available in your city.

APRIL 2016 l The Finapolis

First Time Investors suitability. No one product can meet the demands of all investors, as the out, we bring you a cheat sheet developed along with Balwant Jain.

Public Provident Fund: Excellent avenue for accumulation of your retirement corpus or even for long-term goals like education or marriage of your child. PPF has a maturity period of 15 years and offers facility for partial withdrawal during its tenure.

Tax angle: Contribution to an account belonging to yourself, your spouse, or your children receives deduction under Section 80 C. Interest earned is fully exempt from income tax.

National Saving Certificates: Ideal for people who want to save money over five years and want to save tax as well. The rate of interest for the whole tenure is fixed at the time of purchase. In case of an emergency, you can avail loans against the security of your NSC holdings.

Debt Mutual Funds Liquid Funds: Liquid fundsâ&#x20AC;&#x2122; returns almost mirror the interest on bank fixed deposits. They are the least risky among debt mutual funds, with the advantage of offering liquidity and being tax friendly.

Other debt funds: These Tax angle: Tax benefit under Section 80 C up to Rs 1.50 lakh. NSCs have a tenure of five years and the interest on it is taxable, although no tax is deducted on the same.

Tax angle: You can continue to avail the same tax benefits by buying pure term plans and making investing in the above debt products, as both these qualify for deduction under Section 80 C, ensuring higher insurance cover as well as better returns on the money invested.

include ultra-short-term fund, bonds funds and monthly income funds, where a very small portion of the money is invested in stocks to give it a flavour of equity and some higher return. Suitable for slightly longer-duration goals when liquidity can be sacrificed.

Tax angle: Profits treated as short-term capital gains and taxed at the slab rate applicable to you if your holding period is 36 months or less, else considered as long-term gains and taxed at 20% after indexation benefit. Please note that there is no tax benefit available for making investments in debt mutual funds under the income tax laws.

36 The Finapolis l APRIL 2016

COVER STORY SEVEN SINS

Steer Clear of these Mistakes

Experts tell us on how to dodge seven sticky financial planning issues and come up trumps By Team Finapolis

hat would happen if the pilot of the aircraft you have boarded were to fly the aircraft using the ‘trial and error’ method? What if he were to take a chance in pressing the buttons in the cockpit? What if he were not 100 % sure that the green button needs to be pressed while landing? The very thought can make one’s stomach churn. It is indeed an irony that when it comes to an aircraft, all of us agree that the pilot should be well-trained, but when it comes to managing one’s personal wealth, surprisingly, we don’t think likewise. Should we think right only when there is a perceived immediate threat to life? Otherwise is it okay to remain naïve? Bad financial management too is a threat, to the future, of not a single person but an entire generation. “The reason we care less is only because a bad aircraft pilot will kill us immediately whereas a bad financial pilot will kill us bit by bit, second by second. But that does not give us the right to self medicate ourselves in personal finance. It may seem to be easy and the danger may not appear to stare us in our face but that is far from true. By trying to manage one’s personal finance without a proper advisor and without proper knowledge is like sitting in an aircraft whose pilot is flying and trying to figure out the right button to press. Like in the aircraft crash, a personal finance error can also cause an immediate crash. The only difference is that the pain is felt many years later,” says Dharmendra Satapathy, founder director of Next Level Education, about the outcome of common mistakes investors make in financial decisions. Gaurav Mashruwala, founder of A Cut-

ting Edge, a firm based in Mumbai, adds, “Investors are virtually clueless when it comes to defining the goals. Most investors he communicates with during initial meetings don’t have any goals written down with specific time frame to achieve it.” The Finapolis approached some financial advisors to understand common mistakes investors make. Their experiences are explained below:

Mistake 1: Investment decisions not aligned with goals There are two types of investors, one investor who invests money at will and other as per their goals. Jaya Nagarmat, Managing Director, Investor Shoppe Consultancy based in Mumbai explains, “Most of the money invested at will is usually due to a push within relationships, either from someone in family, friends or bank representative to achieve the sales target of financial and insurance

products they are selling. So invariably, if you ask a new client (investor) for his existing investments, he/she doesn’t have an appropriate asset allocation or a well chalked out goal/objective plan.”

Mistake 2: Too many goals to achieve “Some investors treat financial advisors as Genies for their family. Before consulting an advisor they never think of setting goals and aligning investments for achieving them. They randomly add many goals such as foreign vacation and fancy cars overnight,” says Suresh Sadagopan, founder, of Ladder7, a financial advisory in Mumbai.

Mistake 3: Vague goals in monetary terms Each goal should be valued in measurable, monetary terms. A random number will not benefit the investor or get him closer towards the goal. Sapna Tiwari, financial advisor from Bangalore says, “It’s a hurdle every financial planner faces – to make

APRIL 2016 l The Finapolis

COVER STORY the client understand how critical it is to measure the financial goals in monetary terms. Most investors just quote a tentative figure, rather than taking it seriously. Taking incorrect values for goals will make the financial plan void.” Financial data is most important element along with discussion on goals and time frame to achieve while preparing a financial plan. If the data received from an investor is inaccurate then all the assumptions and calculations will make the financial plan weak.

Case 2: Bank representative promised assistance in surrendering the policy, but wanted him to invest in another policy which is not discussed in the financial plan. Case 3: Sales representative suggested a few investment products that could offer over 20% returns against policy to be surrendered. He has rightly said, “Investing in products without understanding one’s own requirements is at the heart of blunders which most investors commonly commit.”

underestimate the expenses and don’t take into consideration how soon the corpus can run out. They also ignore effect of inflation on future expenses and their longevity which could increase the medical costs”, adds Sadagopan.

How to avoid mistakes while developing a financial planning:

 Be realistic while chalking out your financial plan  Set goals which will not stretch you to such an extent that there is no slack in case of other eventualities Every individual’s financial life keeps  Stick to the amount you have changing. It gets affected with changes allocated for expenses The most common mistake of  The suggestions and recomon all fronts, economy or personal. investors is to assume that the mendations need to be carried Hence a fresh financial plan is financial plan prepared today out diligently to ensure that the will be relevant for an indefinite plan works as anticipated and necessary every year period. The fact is that it requires produces results at least half yearly portfolio review as well  Have enough life risk cover by purchasas annual review of all goals, investments ing term insurance plan, health cover, and insurance policies to be able to reap home insurance etc to safeguard against benefits. Tiwari explains, “Every individThere are instances wherein investors unforeseen circumstances ual’s financial life keeps changing. It gets suddenly deviate from their financial  Define your goals, risk profile, asset affected with changes on all fronts, econoplans post partial execution. Nagarmat allocation and stick to it until there is any my or personal. Hence a fresh financial shares an experience about one of her change in the financial situation plan is necessary every year.” clients, “A young couple partially execut Invest regularly with whatever is dised the financial plan almost after three posable income after expenses detailed meetings. They were pretty serious about the financial plan and wanted Sadagopan explains, “Some clients are to follow it through to its logical concluInvestors need to synchronise their inkeen to execute the plan themselves, but sion. However, suddenly some real estate come, expenses, assets and liabilities due to lack of time, they never get to imopportunity came their way. So, they dewhile executing a financial plan. They plement it. What’s worse is that they apviated from the execution of completing need to articulate goals, involve spouses proach a bank representative or distributhe financial plan. Such young couples in financial planning process, start pretor to execute the plan who suggests inwho could easily put aside a lakh of ruparing monthly budget and follow it. Also, vestment/insurance products based on pees in SIP tend to invest only up to they must be keen to learn on personal his line of business and without knowing Rs 50,000 to Rs 60,000 into the recommendfinance in day-to-day life. Tiwari adds, “An the client’s goals. In such cases, the finaned investments and rest goes towards EMI investor has to understand that financial cial plans goes for a toss.” He continues of real estate.” planning is not a one-time affair but needs to share instances of his clients and acconstant updating. If finances are not in tions taken by them wherein they were place there will be hiccups in future. Parrecommended to surrender insurance ents no longer depend on children post

Mistake 4: Not updating financial plan periodically

Mistake 6: Deviating from the financial plan after execution

Mistake 5: Approaching non-experts to execute the financial plan

Conclusion

Mistake 7: Being optimistic with retirement corpus built for retirement

policies due to under performance. Such mistakes occur when investors take the advice of a bank representative or distributor for execution. He elaborates with a few case studies: Case 1: Bank representative convinced client to take a policy. So, he continues to hold and pay the premium.

“Many senior citizens get into a financial mess due to lack of understanding on retirement planning. The current assets are not aligned with any goals. Looking at their financial health it seems they are not prepared for retirement yet due to inadequate retirement corpus”, says Mashruwala. “Retired investors tend to

retirement. So everyone needs to plan for future along with the present. Hence it is critical that you give your financial plan the topmost priority. Also, once the plan is prepared make sure it is executed as suggested by the financial planning exper t and followed up regularly.” F

38 The Finapolis l APRIL 2016

INVESTMENT ADVICE PARABLES

In Investing, It Helps to Forget the Journey and Focus on the Destination Patience, faith and steadfastness will bring returns, says Dharmendra Sathpathy, with a story to explain each of the three attributes.

e are witnessing temporary disturbance, please fasten your seatbelts. This announcement is often heard during air travel. The air hostess, in this case reminds me of an independent financial advisor (IFA). The moment there is volatility in the air, she instructs (not requests) us to fasten our seat belt. Imagine what would happen if we were to exit the aircraft!! Fortunately for the air hostess, the plane doors are sealed, or in our language, there isn’t any liquidity to escape. However, even if there was liquidity in the form of parachutes would it be wise to jump out of the plane? Certainly not.

Because volatility is temporary. It comes, stays and passes away. As an IFA, you must remember this message when markets turn choppy because like the aeroplane, when volatile weather strikes the market, the right thing to do is to fasten one’s seat belt as tightly as possible and remain seated. As an advisor one must ensure that things continue as they were. If the investor has an SIP, it should simply continue as if nothing has happened. All activities should be simply sustained. The availability of liquidity should not be used as an escape route just like availability of parachute is not used as an escape route from turbulent weather. It becomes the advisor’s job to counsel

the investor against using his or her parachute (liquidity in the market) to escape volatile markets because while his or her parachute may get him or her out of the volatile market, nobody can predict where he or she will land. In all likelihood, it could be enemy territory; that is from the frying pan into fire. So the next time we experience volatile markets remember to say, “We are witnessing temporary disturbance, please fasten your seatbelts.”



long time ago, there was a severe drought in certain parts of India. One village in particular was caught up right in the middle of this drought belt. The extreme heat of the sun had dried up the rivers and the lakes. The people were really desperate for water. The villagers approached the village pundit (priest) and asked him to organise a prayer-for- rain meeting in the temple. The whole village turned out at this prayer meeting. One villager stood amongst the others as he was carrying an umbrella. To the villagers, it was strange because there was not one rain cloud in the sky. The prayer meeting commenced and at the end of all the rituals and ceremonies, when people were about to leave the temple, they could not hold back their curiosity about the man and his umbrella. ‘Why was he carrying the umbrella?’

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INVESTMENT ADVICE and their investors instead of sitting in front of the idiot box, invest their money in the market because of their faith in the economy of India. These are like the ‘man with the umbrella’ and hence can also be called as the ‘men with the cheques’. If your are a long ter m investor, it is imperative that you have faith in the Indian economy.

the people asked. Upon being questioned, the man with the umbrella replied: The Lord will surely answer our prayers for rain and I will need the umbrella for the rains”. The villagers laughed him off. Not one of the villagers could appreciate the absolute and sincere faith of the man with the umbrella. The scorching heat of the sun outside the temple was still fresh in their minds. And then… Behold, a miracle took place. As the people were streaming out of the temple door and putting on their shoes, rain clouds appeared in the sky, the gentle breeze gave way to gusting winds, the pallor of the sky darkened and thunder and lightning heralded the coming of the rains. And a sudden downpour opened the eyes of the villagers. Their ridicule of the man with the umbrella changed to amazement, disbelief, and they now understood the intense faith of this man. Similarly, when markets crash and we turn to news channels to listen to the various pundits for solace and hope, even in these depressed times a few advisors



was recently travelling by train. It was early in the day and the train started chugging along. Soon a very pleasant man came and sat next to us. We got chatting and time just flew effortlessly. The man was extremely well mannered, had a very interesting personality, a good sense of humour and last but not the least amazingly knowledgeable. Soon our dear fellow passenger reached his destination and got down and he in his place came a rude grumpy looking sloth. Not only did he mess up the place by his filthy eating habits but created an equal ruckus by his boisterous behaviour. He got into small fights with his copassengers and effortlessly used abusive language. In a very short time he contaminated the environment and all of us started to feel very sick. This unruly, rude and mannerless fellow literally extracted the last drop of joy out of the journey. However, God heard our prayers and luckily, he soon alighted and nobody replaced his empty seat. Moods once again changed and the train chugged along to our destination. I started to think that the train was the same, the journey was the same but different kinds of fellow passengers

Dharmendra Satapathy is the Founder Director, Next Level Education

decided the mood of our journey. A rail journey thus gets interesting or boring depending upon the environment created by fellow passengers about whom we neither can predict or control. Now see how the stock market is so very s i m i l a r. T h e I n d i a n e c o n o my i s fundamentally sound with a very potent consumption capacity and lots and lots of stamina for the long run. We have good companies, stable governments, stable institutions like the judiciary etc. All this is like having good quality trains and travel infrastructure. But what we cannot control is who will come and sit with us in this journey and for how long. If ‘inflation’ comes and sits with us, it can cause pain whereas if ‘growth’ comes along with us the journey feels nice and pleasant. If a ‘terrorist’ comes and sits besides us the markets may suffer a heart attack and life support systems have to be called for. If a ‘Make in India’ evangelist foreigner sits besides us the markets begin to rev up and race as though they are on steroids. If a collapsing China takes the seat next to us, markets tremble whereas if a healthy American replaces him the markets begin to breathe freely. Thus in the long investment journey that we embark upon, what is most crucial is that “we should not leave our seat come what may and never ever alight in between because of the influence of our copassengers. Many kinds of passengers will come and go. Some will give us joy and some will cause tension and worry. Still we must not alight because sooner or later they will leave as we will journey ahead and reach our destination / goal. F

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FACE TO FACE ‘2016 should be Good for Stocks… We Expect 15% Returns’ As co-chief investment officer at Birla Sun Life Asset Management, Mahesh Patil spearheads equity investments of the AMC’s mutual fund schemes. He currently manages large-cap funds like Birla Sun Life Frontline Equity, Birla Sun Life Top 100 and the Birla Sun Life 95 Fund. Patil has over 23 years of experience in fund and investment management, and has been with Birla Sun Life AMC since 2005, where he started as a fund manager. He is an engineer from VJTI, Mumbai, and has an MBA in Finance from Jamnalal Bajaj Institute, Mumbai. He is also a charter holder from ICFAI, Hyderabad. How do you think Equity as an asset class will perform in 2016? This year (2016) started on global concerns such as the Federal Reserve’s decision to hike the interest rates and China’s unfavourable macro data, which led to a sharp correction in the emerging markets. Globally, central banks have announced further monetary easing at a time of slowdown (Bank of Japan and European Central Bank) and commodity prices have stabilised compared to the last year. Indian markets on the other hand have seen a few bad quarters, but with earnings recovery expected from next fiscal along with a better monsoon, infrastructure investment and expected rate cuts (25-50 bps), 2016 should be good for the equity markets and is expected to deliver 15% returns. Which sectors would you focus on in the coming 2-3 years? One of the main themes that we are focussing on is consumption lead by discretionary spending. The Seventh Pay Commission, urban demand and government’s spending on rural economy should drive the consumption pattern. We remain positive on private banks and NBFCs due to good growth outlook, profitability and capital ratios. Another sector which will see traction is the cement industry, owing to higher government expenditure towards infrastructure development.

Birla Sun Life Frontline Equity has been an exceptional performer since inception in the large cap segment. To what do you attribute the success of the fund to? The fund’s consistent superior outperformance in the market compared to the index should be attributed to the disciplined investment strategy it follows. Identification of key trends prevailing in the market and the investment approach (a blend of top-down and bottom-up approach) has helped the fund beat its bench-

Markets have been cautious due to poor corporate results since last few quarters. We have followed a bottomup strategy and monitored the market to adjust our portfolio. As a result, we have done fairly well in this bearish market

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FACE TO FACE mark by 5% (annualised basis) over a 10year period across business cycles. The superior stock selection process that the fund follows should also be credited for its consistent performance. You have been managing two large-cap funds, Birla Sun Life Top 100 and Birla Sun Life Frontline Equity, which have common stocks in between them. How do you differentiate between these two funds? Both our funds, Top 100 and Frontline Equity, are large-cap focussed funds. Both follow a blend of top-down and bottom-up approach to investing. However, the Frontline Equity fund follows a disciplined approach, thus making it conservative in nature, while Top 100 fund is more aggressive. The Top 100 Fund maintains a more concentrated portfolio of only the Top 100 companies, while Frontline Equity is a more diversified fund with allocation to sectors in tight range with its benchmark. The market has been extremely bearish for the last 6 months. Were you prepared for this kind of a scenario? Markets have been cautious due to poor corporate results since last few quarters. However, we have followed a bottom-up stock picking strategy and have continuously monitored the market to make necessary adjustments to the portfolio. As a result, we have done fairly well in this bearish market. What is your stock selection strategy and how is it different compared to the peers? The fund follows a bottom-up approach to stock selection and looks at factors such as quality of management, growth potential, reasonable valuations, sectoral dynamics, etc while deciding on the stocks that would enter the scheme. Similarly, when the stock fundamentals change adversely or when the target levels are

achieved or when any other reasonable investment opportunities are identified, then a decision is made on exiting a particular stock or stocks. Our fund follows a long-term investment strategy for the portfolio. How do you see the NPAs in the banking sector affecting the performance of the funds managed by you, especially since you are holding few banks as part of top holdings? We have remained focussed on private banks and NBFCs (retail oriented) which have grown the size of their loan book by 20% and have lower NPAs compared to other financial institutions. We have been selective in terms of public sector banks, focussing on higher CAR, management team, etc which contribute to the better functioning of these banks. Do you think there is further upside from here or will the markets make a U-turn? In our view, markets might consolidate going further or correct from the current levels in the near term. However, an uptick in the domestic economy, coupled with the earnings recovery expected to come on stream from the next fiscal should help in beating the global slowdown. We could see an upside from the current market levels from a mediumto long-term perspective. What is your advice to investors in the current scenario with respect to investing in equity-related instruments? The current market levels offer a good opportunity for investors to invest in quality stocks which are available at reasonable valuations. Investors should enter the market using the SIP route in anticipation of long-term wealth creation. They should continue to remain invested, avoiding the near-term volatility, since markets are expected to witness an upside once the earnings recovery starts from next fiscal. F

We remain positive on private banks and NBFCs due to good growth outlook, profitability and capital ratios. Another sector which will see traction is the cement industry, owing to higher government expenditure towards infrastructure development

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realty check

ALOK JHA

Pimpri-Chinchwad: Pune’s Satellite City Coming Of Age

he Pimpri-Chinchwad Municipal Corporation or PCMC, a twin city to Pune and one of India’s most prominent industrial hubs, is strengthening its economic prowess by adding sophisticated manufacturing and information services along its periphery, in Chakan and Hinjewadi, respectively. As any city matures, land and property prices go up. With the increasing price of real estate, the cost of living also goes up – and with the city corporation ending tax subsidies, not all industries can sustain growth. Industries need to move up the value chain to prosper, while others have to modernise or even relocate. Such a trend is being observed in the Pimpri-Chinchwad area. Various companies have unlocked their land to invest money back into their core business, which has provided an opportunity for real estate development – a few examples being Mahindra and Mahindra, Elpro, Premier, Crompton Greaves and Indian Card Clothing Co Ltd.

Real estate scenario The Pimpri-Chinchwad area has become one of the most vibrant real estate destinations in the past few years. It has come

There is still a strong perception that PimpriChinchwad remains unsuitable for premium housing. This perception is slowly changing, with high-end residential property poised to grow the fastest

closer to Pune in terms of being accepted as a residential destination instead of merely being a decent suburb, and it is on its way to becoming a self-sustaining satellite city. Developers are coming up with some large, quality residential projects in this area which are proving to be very attractive for the citizens of Pune. In addition, the number of colleges this market is home to has prompted demand for rental housing, and hence this area has been on the radar of investors too. Also, the presence of a number of retail developments/ malls and commercial projects is

APRIL 2016 l The Finapolis beneficial for the area. Prominent retail projects in the area are City One Mall, Plaza Centre and Megamart. Visionary infrastructure projects are a big pull factor for real estate in the Pimpri-Chinchwad area, and one of the major demand drivers for real estate. Ongoing infrastructure developments such as the Bus Rapid Transit System and the proposed international convention centre have given a boost to real estate development in the region. Hinjewadi, which is one of India’s premier IT clusters, is located in close proximity to Pimpri-Chinchwad. Nearby areas such as Wakad, Pimple Nilakh, Ravet and Pimple Saudagar, have benefited immensely from the demand generated by employees working in the Hinjewadi IT cluster. Pimpri-Chinchwad will continue to benefit from further development in Hinjewadi. Pimpri-Chinchwad is a fairly large market with the lowest average capital values versus its competitor cities, after Chennai. The city is already passing on the benefits of visionary urban planning to its residents. However, to sustain growth and attain maturity, this anticipated growth needs to be fuelled by local, central and state level government policies envisioning the city’s prospects and then implementing the proposals and interventions swiftly. The city also needs to tackle issues of irregular structures, and there needs to be more stringent execution of laws for not allowing illegal structures to be built again. In addition, there is still a strong perception of the area being suitable for lower and mid-segment housing, but not premium housing. This perception could have something to do with the industrial zones nearby. However, this perception is slowly changing, with many manufacturing firms relocating to other industrial areas and a few quality residential and commercial projects being developed. All in all, it is likely that the residential market in Pimpri-Chinchwad will attain a multifaceted character offering properties across different price points. High-end residential property, which was missing here for long, is now poised to grow the fastest – and reasonable land costs will allow developers to experiment with the built form. F

Alok Jha is Manager – Research, JLL India

SANTHOSH KUMAR

Will the IT Bug Hit Tier-III Towns?

he information technology (IT) sector, which has dominated office space occupancy in India for almost a decade, is now finding it difficult to expand bases in metro cities or even to consolidate offices in prime locations, owing to the decline in vacancy levels and quality supply. Moreover, rents have also gone up due to diminishing vacancy levels. This may make established IT companies – planning to expand or consolidate operations in the same city – uncomfortable. On top of that, the global scenario is exerting greater pressure on these firms to maintain a tighter control on occupancy costs and cost-competitiveness. This may prompt these firms to scout for alternate destinations that also have an abundance of skilled manpower.

Chandigarh, Jaipur, Visakhapatnam, Mysore, Vijayawada, Coimbatore, Ahmedabad, Gandhinagar, Bhubaneswar and Kochi offer lower rents today than Mumbai, Delhi-NCR, Bangalore and even Pune and Hyderabad

their attractive quotient for the IT companies and tech start-ups. Cities like Chandigarh, Visakhapatnam, Vijayawada, Mysore, Kochi, Coimbatore, Tiruchi, Bhubaneswar, Ahmedabad, Gandhinagar and Jaipur offer lower rents today compared to Mumbai, Delhi-NCR, Bangalore and even Pune, Hyderabad.

Emulating the ‘Bangalore model’

Would this result into the emergence of new cities as latest office hubs? Too early to say, as it would really depend on how many policies – that are very IT-friendly – these urban centres manage to implement, apart from attracting quality talent. It is no longer about a city’s lower rents alone. Infrastructure is another important

Bangalore is the latest entrant in the tier-I club comprising Delhi-NCR and Mumbai. The city enjoys this status as a result of years of introducing and implementing pro-IT policies. When it first came on the IT players’ radar, it had some inherent qualities like low property prices/ rentals, a good number of technical education centres, vast availability of space to accommodate campus-style offices, and pleasant weather – all of which led to a big IT footprint developing here. A proof of its fame came in 2015 when Bangalore made a debut in JLL’s ‘top-20 technology-rich cities globally’ and the ‘Asia-Pacific city investment intensity index’ (the index measures the volume of direct real estate investment in a city relative to its current economic size over a three-year period). The city’s growth has

factor for these firms. Though infrastructure improvement (another major factor) is underway in many tier-III cities – and it is helping them get good connectivity to major metros – there is still much ground left for these cities to cover before they rank high on

attracted many expats as well as start-ups. Given that the economic outlook for India looks good and poised for strong growth in the years to come, it boils down to which city can manage to become more attractive for IT/ ITeS and start-ups than Bangalore, Pune and Hyderabad. F

Santhosh Kumar is CEO – Operations & International Director, JLL India

44 The Finapolis l APRIL 2016

foreign eye

PETER SCHIFF

There will be No Rate Hike in the US This Year

he Federal Reserve’s years-long campaign to sheepishly back away from its own policy forecasts continued in earnest last week when it officially reduced the four expected 2016 quarter point hikes, suggested back in December, to just two. Given the deteriorating economic outlook, I believe there can be little doubt that the Fed will soon complete the capitulation process and remove all expectations for additional hikes this year. Even before that happens, savvy observers should have already concluded that the Federal Reserve is stuck in the monetary mud just as firmly now as it has been since the dawn of the financial crisis back in 2008. Rather than actively voicing its retreat in either its March policy statement or in Chairwoman Janet Yellen’s press conference, the market-moving policy shift was buried in the minutia of the Fed’s “dot plot” information array, in which each voting committee member signals their assumptions of where interest rates will be in various points in the future. Those tea leaves needed to be read to reach the conclusion that policy just got significantly more dovish. But despite the Fed’s soft peddling, the policy shift made an immediate impact on markets, with the dollar getting hit by a variety of rival currencies and gold (and more significantly gold miners) climbing to multimonth highs. But perhaps the greatest casualty of the announcement was the Fed’s own credibility, which is now being stretched to the limit. At Yellen’s press conference on March 16, CNBC reporter Steve Liesman, who has perhaps been one of the most reliable supporters of the Fed’s policies, seemed to indicate that even he had grown weary of the Fed’s prevarications, saying to Chairman Yellen: “Does the Fed have a credibility problem in the sense that it says it will do one thing under certain conditions, but doesn’t end up doing it? And... if the current conditions are not

US asset prices, which have become the bedrock of any remaining economic confidence, are extremely vulnerable to an interest rate increase. As a result, we should expect continued inaction from the Fed. All it can do is pray that the economy heats up so that it can finally do what it has long promised sufficient for the Fed to raise rates,... what would those conditions ever look like?” Yellen’s response was measured and lengthy, but what it really boiled down to was, “Steve, why have you taken our prior forecasts at face value? We never actually offered firm commitments on anything. Nor did we specifically endorse the things that we seemed to have said. And just so you know, you should expect that the things we are saying now will ‘fully evolve’ over time as well.” Or in plain English: “Steve, don’t you know by now that we have no idea what we are talking about, that our forecasts are just guesses, and since we normally guess wrong, why should you expect greater accuracy now? If anything, it should be

obvious that our guesses are biased in favour of stronger growth, as the intention is for those rosy forecasts to positively influence sentiment, thereby helping to obscure the problems that, for political reasons, we are hesitant to acknowledge”. Talk is cheap, and the Fed buys it by the bushel. But when it comes time to actually do something, it is nowhere in sight. In voicing his frustration, Liesman pointed out that core inflation has gone up the past two months (in fact, it has already breached the Fed’s 2% target), that the jobs report was strong (in fact, the economy is creating 200,000 plus jobs per month), and that the GDP tracking forecast has returned to two percent. And while I have explained on many occasions

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FOREIGN EYE why those data points are all misleading to the upside, Yellen has made no such qualifications. The growing chasm between what the Fed says it is going to do and what it is actually doing is getting increasingly hard for the mainstream to swallow. When it stops going down at all, a market shift of considerable proportions could begin in earnest. One of the data points that Yellen likes to cling to most fiercely are the reports that show consumers are confident that the economy has improved and that it will continue to do so. But those reports, which I have always believed are poorly constructed, are completely at odds with what voters (who are also consumers) are actually saying at the polls. Presidential primary exit polls in state after state indicate that the economy has been the top issue on the minds of voters. Generally speaking, this should indicate that people are not overly optimistic about the economy. If they were, other issues, such as immigration, national security, the environment, and health care, would be cited as their top concern. The big surprise this primary season has been the rise of Donald Trump among Republicans and Bernie Sanders among Democrats. Voters aren’t choosing Trump because they like his hair or Sanders because they like his glasses. Both are considered insurgents in their respective parties. They represent change and their popularity should be seen as a sign of deeply-seated economic uncertainty in voters rather than confidence. If confidence were high, candidates more closely aligned with the status quo should be on top. According to both the Fed and its economic lapdogs on Wall Street, one of the few other bright spots in the economy is the fact that inflation is finally starting to

will soon lead to rising wages. Yes, consumers are paying more for rent, insurance, food and healthcare, but the longsought wage increases have yet to materialise. For obvious reasons, consumers tend to avoid celebration if their bills go up and their pay does not. Higher prices may be the leading reason why consumers are not spending at the expected pace. Last month, economists cheered when January retail sales came in at up 0.2% for the month (up if you ex-

cluded autos and gasoline), according to date of the US Commerce Department. In fact, the Atlanta Fed cited these numbers when boosting its annualised first quarter GDP forecast to 2.7% (since revised back down to 1.9%). But, last week we were told that the January retail sales number was

revisions were so large, the February numbers could be viewed as positive even though they were way below the pre-revision January numbers. The slowing sales, in turn, are leading to a dangerous increase in business inventories as unsold goods accumulate on shelves. The inventory-to-sales ratio now stands at 1.4, the highest it has been since May 2009, when the nation was in the midst of the Great Recession. In fact, it has never been this high at times when the economy was not in recession. Similarly, data revisions released last week also indicate that we may ultimately post a full year 2015 current account deficit of $481 billion, the biggest number since the recession year of 2008. If interest rates go up, that deficit could grow significantly worse. The industrial production numbers are also on a downward spiral. Recent data show declines for four straight months, the first time since 1952 that this has occurred without the US being in recession. But if we are already in recession, which I expect we are, then at least that statement will no longer be true. All this adds up to a nearly inescapable trap for the Fed. The economy is weakening while inflation is strengthening. In the meantime, asset prices, which have become the bedrock of any remaining economic confidence, are extremely vulnerable to an interest rate increase. As a result, we should expect continued jawboning and inaction from the Fed. All it can do is pray that the economy heats up so it can finally do what it has long promised. But if we keep scraping along the bottom like we have, or go further into the danger zone, look for the Fed to take away those remaining two promised hikes just as easily as it did the first two. The last thing the Fed can bear is for a recession that may be bubbling just under the

ramp up noticeably. Last week it was revealed that the core Consumer Price Index (CPI) had risen 2.3% from the year earlier (US Bureau of Labor Statistics), thereby eclipsing the Fed’s long-sought 2% target. The economists argue that rising prices

revised way down to negative 0.4% from the positive 0.2%. Excluding autos and gasoline, the numbers went down from up 0.4% to down 0.1% in February. I don’t recall ever seeing larger retail sales revisions to the downside. But because the

surface to boil over into full view in the months heading into the election. If that occurs, we all may be seeing a great many press conferences from Mar-a-Lago. That is a development that I’m sure Janet Yellen wants to avoid at all costs. F

The rise of Donald Trump among Republicans and Bernie Sanders among Democrats is a sign of deeply-seated economic uncertainty in voters

Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital. His podcasts are available on The Peter Schiff Channel on Youtube.

46 The Finapolis l APRIL 2016

CAREER SCOPE FIRST STEPS

Are Good Managers Born or Made? For many, no matter how good they are in their jobs, no matter how much recognition they receive, happiness lies in becoming a manager

APRIL 2016 l The Finapolis

or many an ambitious worker, the measure of success lies just ahead in a path toward management. Career arcs in a wide variety of sectors are simply built that way, and sooner or later the serious-minded employee finds him or herself champing at the bit to be a leader. “For those who are front-line employees thinking about a longterm future, the question of whether to go into management, whether it is good for you and for others, and figuring out whether you have the temperament to master it, is a career issue that many people are trying to answer,” says Michael Useem, Wharton management professor and director of Wharton’s Center for Leadership and Change Management And yet, not everyone is cut out for a role that requires setting aside doing the work of the firm in favor of empowering others to do the work. But can anyone, with enough desire and proper training, become a manager? In other words, are good managers born or made? “This is a question as old as management, and we have lost a lot of wisdom about it in practice along the way because cost-cutting trumped all other concerns,” says Peter Cappelli, Wharton management professor and director of Wharton’s Center for Human Resources. The easiest approach, and some might say the most meritocratic, Cappelli notes, is to give the management role to the best performer in the role below — a management theory popularly known as the Peter Principle. “The problem is that … the competitiveness to win that often makes [an individual] the best performer is directly at odds with the requirements of managing other people and trying to get them to succeed,” he points out. “As in sports, where a lot of our lessons for business seem to come from, the

CAREER SCOPE best individual performers don’t necessarily make the best coaches.” Unfortunately, even in the modern business world, becoming the office equivalent of a coach is what many workers are conditioned to aspire to, even if it’s not the best fit for them — or their would-be underlings. “We still have a pretty conventional view of the organisation today, even though we have thought a lot about flatter organisations and more employee engagement,” says Virginia J. Vanderslice, founding partner and president of Praxis Consulting Group in Philadelphia and an adjunct faculty member at the University of Pennsylvania’s Organizational Dynamics programme. “In this

Not everyone is cut out for a role that requires setting aside doing work in favour of empowering others to do the work. But can anyone, with enough desire and proper training, become a manager? Most can, but don’t appreciate how difficult it is country, we’re pretty traditional in our view of what success looks like, and I don’t mean that as just inside the firm. As individuals, we think success looks like a bigger title and more money, and even in school we need to start shifting how we think about these things.”

You’re So Vain Narcissism is often cited as the major personality hurdle standing between the desire to be a good manager and actually being one, and several studies show that the trait is on the rise. One US-wide meta-analysis and an examina-

tion of data within one campus demonstrated significant increases in American college students’ narcissistic traits over the generations, according to Jean M. Twenge and Joshua D. Foster in “Birth Cohort Increases in Narcissistic Personality Traits Among American College Students, 1982– 2009,” published in Social Psychological & Personality Science. “The larger cultural changes in parenting, education, family life, and the media toward greater individualism have apparently affected the personality traits of individuals,” they write. The meta-analysis shows that the increases are a little more than one third of a standard deviation over one generation. These results were, rather strikingly, consistent with a large epidemiological study on narcissistic personality disorder, the more severe, clinical form of the trait, the study notes. Narcissism can cut both ways in an organisation. Sometimes, and for some employees, a narcissistic leader comes across as inspirational. Several studies, however, show that such leaders are more likely to commit transgressions of integrity, and to leave unhappy employees and destructive workplaces in their wake. “The difference between having healthy levels of self-confidence and self-esteem, which are appealing and useful qualities for leaders, and being narcissistic is that narcissists have an elevated sense of self-worth such that they value themselves as inherently better than others,” write Charles A. O’Reilly III, Bernadette Doerr, David F. Caldwell and Jennifer A. Chatman in “Narcissistic CEOs and Executive Compensation,” published in The Leadership Quarterly. “That said, the difference between those who are self-confident and those who are narcissistic is often difficult to detect.”

48 The Finapolis l APRIL 2016

CAREER SCOPE A ‘Deep Sense’ of Personal Security Tests such as the Hogan Personality Assessments can be helpful in identifying employees with the kinds of qualities that might predict a good leader. Leadership can be learned, Vanderslice notes. “But my conclusion after 40 years of working with leaders is that there are a few core qualities that a person comes with that are the harder things to strengthen,” she says. “Not impossible, but really challenging. And the big one for me is a personal, deep level of self confidence. And by that I don’t mean, ‘Hey, I can beat my chest because I’m so good.’ I mean real self confidence — a deep sense of personal security. If someone doesn’t have that, they are not going to be invested in others because they are too worried about themselves.” So can any worker learn to become a manager if he or she wants it enough? “In principle, yes,” says Useem. “Most people in my experience can master what it takes to manage people. But I think we don’t appreciate how difficult that mastery is. Learning to manage others requires a very significant commitment, just like learning to play the piano or becoming a technical expert.” One way to think about how the average group breaks down in terms of being management timber: “A significant fraction is temperamentally ready to try out a managerial role if offered, another segment is likely to be indifferent, and a third sub-group would have no interest whatsoever,” says Useem. “It is certainly possible for people to learn how to be good managers, but those who are not disposed to work with and through others are never going to be as good at it,” adds Cappelli. “If we don’t do training, and business is much less inclined to do so these days, and we appoint the best individual performers, we are bound to have problems.” Part of the equation, Useem notes, is figuring out why someone wants to be a manager. Useem recalls hearing former Mexican President Felipe Calderón speak about why he decided to make the journey from community organiser to national leader. “As an organiser early in his career, he was working with people in a

neighborhood to demand better services, but after a while he said, ‘I’m helping to improve the lives of hundreds, but if I am willing to play a national role, I could affect millions.’” Among other capabilities needed to make a good manager, Useem lists “a willingness to work with ambiguity, uncertainty and unpredictability. If you want everything to be at right angles, that’s probably not the mindset you want if you plan to work through others.” Managers must learn to appreciate how distinctive each individual is in what they want from work and what animates them to work well, Useem notes. “As a company

Getting Pushed Up — and Out

manager, for instance, you may learn that one employee wants to be home by 5 p.m. for family time with no after-hours obligations, while another is ready to shoulder far greater responsibility,” he says. “Coming to appreciate — and then manage — the great diversity in human motivation and purpose is essential for anybody going into management, and that requires becoming a lifelong student of human nature.”

For many, no matter how good they are in their jobs, no matter how much recognition they receive, happiness lies in becoming a manager. The bank teller eyes becoming branch manager, the associate plots of rising to partner, the section violinist dreams of one day leading the orchestra. But the criteria firms use for deciding who gets plucked for a management role often have more to do with how well that employee is doing in the work itself, and less to do with how they might manage others. “A lot of us become very good at doing something — software engineer, investment banker, sales person — and we really build expertise in a subject and get very good at doing it, and then get pushed into a role where less and less of our time is spent doing whatever it is we were good at doing and more time is spent managing people,” says Wharton management professor Matthew Bidwell. “For a lot of us, we value expertise, so the big challenge in some areas is that we respect people based on coming up with brilliant solutions, and that’s not what a manger is supposed to do — and if they are trying to do that, they end up micromanaging.” Thus, Bidwell adds, people struggle to make the shift to manager, meaning they spend a lot of time trying to do the work and not enough time coaching, supporting and helping to develop employees, or running interference between them. “And that is really a central issue for people — letting go of the old role and embracing the value of the new one.” Many companies allowed management training to fall by the wayside during the recession. Corporate spending on training dropped by 11% in 2008, and then another 11% in 2009, according to a Bersin by Deloitte survey. After a modest increase in 2010, spending experienced double-digit

Some firms are particularly good at cultivating management talent. Useem cites Johnson & Johnson as one. “They are very methodical at identifying frontline employees who can not only make pharmaceuticals and consumer products, but can also manage others to help them get their jobs done.”

growth each year through 2013. The number-one area of spending was in management and leadership training, the survey says. Even so, in any economy, training is not what it should be. “Firms don’t train very much, full stop,” says Bidwell. But many firms contribute to the problem by rewarding employees with man-

The easiest approach, and some might say the most meritocratic, is to give the management role to the best performer in the role below — a management theory popularly known as the Peter Principle. But learning to manage others requires a very significant commitment, just like learning to play the piano or becoming a technical expert

APRIL 2016 l The Finapolis

CAREER SCOPE If Not Management, Then What?

agement positions because of skills that have nothing to do with management. In one study in progress, data on salespeople at hundreds of firms were examined through a company that provides sales administration software through the cloud. Researchers tracked employees promoted to management and their resulting performance. The study, “When Good Tournaments Make Bad Matches: Evi-

mote the best salespeople, who did not generally make great managers. “Our study suggests that the greatest potential managers may not ever make it into management because firms pass them over by promoting their best salespeople,” says Alan Benson, a professor at the Carlson School of Management at the University of Minnesota-Twin Cities, who co-authored the study with Danielle Li

Some won’t ever make it in management. And in those cases, firms are often not always adept at recognising when that is happening and coming up with solutions. “What do we do with good individual contributors who don’t make it as managers?” asks Cappelli. “The challenge is that working through others in most roles has a much bigger impact than one can have as an individual. That’s why a good executive running an operation is just more valuable than an equally good engineer working [in the same operation] could likely be. Many organisations have created ‘dual tracks’ to recognise and acknowledge those in individual roles, and those are a good idea. But those people just aren’t as valuable as leaders are.” As an alternative to traditional management, Vanderslice suggests a master technician track, “where someone really good at the job is encouraged to further develop technical or professional skills and then be recognised for being the most accomplished. If they are the right person, they could take on an education or mentoring role with younger folks in the aspect of what they’re doing.” People who are masters of their profession — for example lawyers, architects or engineers — may not be the most interested in or best equipped to do well managing people, Vanderslice points out. “You don’t want to lose those people entirely or lose them into management if they are, for instance, a great architect. But they might be great teachers. The other thing for them and the firm is to think about how they can broaden what they know, as well as doing it well. What’s the newest thing in their field, and can you develop that?” But not every firm makes these kinds of accommodations. Managerial aspirants beware. Says Useem: “For those considering a management opportunity,

dence of the Peter Principle in Sales,” found that the best promoted managers had displayed evidence of teamwork and cooperation before they were promoted. But organisations instead tended to pro-

and Kelly Shue. “The same might be said of engineers, architects, lawyers, academics, or lots of others who can be promoted because they’re great at one thing that’s not necessarily related to management.”

make certain you are ready for it and capable of mastering it. The costs and risks are high if you fail to do either. But the rewards and impacts are also high if you can do both.” F

Narcissism can cut both ways: Sometimes, and for some employees, a narcissistic leader comes across as inspirational. But several studies show that such leaders are more likely to commit transgressions of integrity, and to leave unhappy employees and destructive workplaces in their wake

Republished with permission from Knowledge@Wharton (http://knowledge.wharton.upenn.edu), the online research and business analysis journal of the Wharton School of the University of Pennsylvania.

50 The Finapolis l APRIL 2016

BOOKMARK

The measure of a life R Gopalakrishnan lists six lenses through which to view life. Mandar Bakre finds it lucid and worth a read

authenticity about being true to what you are, Courage about doing what your have to do, trust about holding on to your virtues, luck about… what else? And fulfilment about achieving inner peace. Each of these lenses gets a separate chapter, and Gopalakrishnan explains these concepts through the life of three ‘ordinary people’ or People Like Us (PLUs) as he calls them. All three are connected to the author — two of them are colleagues, and the third is his wife — but Gopalakrishnan is clear about how he conducted almost six hours of interviews with them to ascertain the reality through their lenses. (“I got to know my wife better,” he told the audience with a twinkle in his eye.) Jokes apart, the book makes for good reading. With a simple, lucid style, Gopalakrishnan manages to explain concepts in language so easy that everybody is bound to understand what he is saying. “There are no answers,

Indian publishing industry in recent years is further evidence of the power of such storytelling, of the value of conversing with the heart rather than only with the head.” And stories are what we get (The book’s subtitle is ‘Vignettes of Success, Career and Relationships). B.K. Nehru, a cousin of India’s first prime minister, was conversing with his professor Harold Laski some 15 years after graduation, and told Laski his teachings had proved of little use during his career in the Indian Civil Service. “That is okay,” responded Laski. “I was not trying to tech you lessons in economics; I was merely teaching you how to think. And I seem to have done very well, from what you say.” Or the one where Mother Teressa is called to open a mosque in post-communist Albania. Her superiors objected, but the answer she gave to the pope was splendid. The chapter on courage includes the story of General Roy Boucher, then chief of the Indian Army, who opposed Sardar Patel’s plan for the integration of Hyderabad, because, as a professional soldier, he believed the army was already stretched in Kashmir and other areas of the country. The chapter on authenticity, in particular, makes for extraordinary reading to young executives charging all over the place in these competitive times. Also nice to read is the piece on fulfilment. Gopalakrishnan defines “success” as when we achieve the goals

same reality! just stories”, Gopalakrishnan To understand how we view says in the chapter explaining life, Gopalakrishnan puts why he wrote the book. forward six ‘lenses’ — purpose, “Stories have proved durable authenticity, courage, trust, and effective for centuries luck and fulfilment. in civilizations all over Six Lenses Purpose is about Author: R Gopalakrishnan the world. The revival of Price: Rs 395 knowing your true aim, mythological themes in the

that others (society) set for us, like money, homes, cars, etc. Fulfilment, on the other hand, occurs when we achieve the goals we set for ourselves. For example, there is no doubt that Mahatma Gandhi was a successful individual. But was he a fulfilled father? Unlikely, says Gopalakrishnan. F

ith almost a half-century of work experience — 31 years in Hindustan Lever and 17 in Tata Sons — the sheer longevity’s of R Gopalakrishnan’s career is enough to arouse interest in what he has to say. Since 2007, with the publication of The Case of the Bonsai Manager, he has been putting to paper his views on careers and management, as part of his self-described “scattering” phase (when you spread your knowledge, as opposed to the “gathering” phase, where you are out building the career of your dreams.) Six Lenses, his fifth book, is about how we interpret life. Reality, says Gopalakrishnan, is misleading — what we believe to be reality is actually only partly the truth, the other part is our personal bias. How is this personal bias formed? It comes from our DNA (which can be considered our hardware), and from our viewpoints, which develop subconsciously from our experiences and are unique to us (our software). As he told an audience in Hyderabad, even a husband and wife often do not see the

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The Finapolis l APRIL 2016

STAT DOSSIER All figures as on March 21, 2016

Indian Indices: Performance Close March 21, 2016

Close Feb 29, 2016

Return (%)

Return 6 M (%)

Return 12 M (%)

PE Ratio

25285.37

23002.00

9.93

-1.25

-10.37

19.49

Nifty

7704.25

6987.05

10.26

-1.24

-9.99

20.78

BSE 500

10108.15

9206.02

9.80

-1.78

-9.06

21.91

BSE Auto

17541.40

15851.55

10.66

2.51

-7.64

21.99

BSE Bankex

18155.36

15814.82

14.80

-6.91

-14.96

15.46

BSE Capital Goods

12724.57

11239.38

13.21

-15.06

-24.53

35.87

BSE Consumer Durables

11476.26

11054.04

3.82

15.18

12.03

30.17

9135.76

8214.24

11.22

6.34

-2.73

10.35

BSE Metal

7455.40

6759.24

10.30

7.71

-21.94

BSE Realty

1201.56

1051.08

14.32

-5.58

-26.47

33.63

6098.35

5525.87

10.36

-8.43

-20.52

11.80

BSE Power

1726.83

1582.48

9.12

-3.65

-18.29

18.85

BSE Teck

6027.59

5513.60

9.32

-1.36

-5.22

20.89

Sensex

BSE Oil & Gas

BSE PSU

Global Indices: Performance Close March 21, 2016

Close Feb 29, 2016

Return (%)

Return 6 M (%)

Return 12 M (%)

PE Ratio

1643.68

1547.17

6.24

2.68

-7.38

19.70

414.77

374.72

10.69

2.78

-14.50

13.37

20684.15

19111.93

8.23

-5.18

-15.21

9.77

2880.69

2666.51

8.03

0.42

-15.58

12.00

S. Korea

1989.76

1916.66

3.81

0.74

-1.98

15.43

Nikkei 225

16724.81

16026.76

4.36

-5.65

-12.84

18.81

17623.87

16516.50

6.70

7.92

-2.78

16.05

S&P 500

2051.60

1932.23

6.18

5.60

-2.68

18.60

NASDAQ

4808.87

4557.95

5.51

1.10

-4.33

29.33

51171.55

42793.86

19.58

10.61

-1.53

6184.58

6097.09

1.43

3.81

-12.26

34.16

DAX 30

9948.64

9495.40

4.77

3.95

-17.36

21.28

CAC 40

4427.80

4353.55

1.71

-0.32

-13.23

21.15

MSCI World Index MSCI Asia Pacific Ex Japan ASIA Hang Seng Singapore Straits Times (STI)

AMERICA Dow Jones

Brazil Bovespa EUROPE FTSE-100

APRIL 2016 l The Finapolis

STAT DOSSIER All figures as on March 21, 2016

March International Commodity Futures Price Trends Close March 21, 2016

Close Feb 29, 2016

% Change

52 Week High

% Change from 52 Week High

52 Week Low

% Change from 52 Week Low

LME Lead 3 Month ($/t)

1829.00

1753.00

4.34%

2162.50

-15.42%

1551.50

17.89%

LME Zinc 3 Month ($/t)

1875.00

1764.00

6.29%

2404.50

-22.02%

1444.50

29.80%

8770.00

8520.00

2.93%

14585.00

-39.87%

7550.00

16.16%

15.85

14.92

6.23%

17.78

-10.85%

13.62

16.35%

5064.00

4695.00

7.86%

6481.00

-21.86%

4318.00

17.28%

39.91

33.75

18.25%

62.58

-36.23%

26.05

53.21%

1512.00

1573.00

-3.88%

1978.25

-23.57%

1432.50

5.55%

16.29

14.36

13.44%

16.32

-0.18%

10.13

60.81%

1244.20

1234.40

0.79%

1287.80

-3.39%

1045.40

19.02%

CBOT Soy Oil (cents/lb)

33.58

30.87

8.78%

35.29

-4.85%

25.70

30.66%

ICE Coffee (cents/lb)

131.55

115.05

14.34%

147.35

-10.72%

111.05

18.46%

ICE Cotton (cents/lb)

58.17

56.50

2.96%

68.13

-14.62%

54.53

6.68%

457.60

406.90

12.46%

458.60

-0.22%

329.00

39.09%

1.83

1.71

6.84%

3.11

-41.13%

1.61

13.47%

CBOT Soybean (cents/bushel)

902.00

861.00

4.76%

1045.00

-13.68%

844.25

6.84%

CBOT Corn (cents/bushel)

369.50

357.00

3.50%

454.25

-18.66%

348.25

6.10%

CBOT CORN

369.50

357.00

3.50%

454.25

-18.66%

348.25

6.10%

CBOT Soy Meal ($/t)

268.80

262.50

2.40%

357.70

-24.85%

258.90

3.82%

CBOT Wheat (cents/bushel)

466.50

453.25

2.92%

618.00

-24.51%

442.25

5.48%

LME Nickel 3 Month ($/t) Comex Silver (S.oz) LME Copper 3 Month ($/t) Nymex Crude Oil (S/bbl) LME Aluminium 3 Month ($/t) ICE Sugar (cents/lb) Comex Gold (S/oz)

LIFFE Sugar (S/t) Nymex Natural Gas ($/mmbtu)

Commodities: March Gainers and Losers (%) MCX Crude Oil 19.5%

NCDEX Soybean 7.2%

Cardamom 16.8% Silver, 4.9%

Copper 4.4%

Soy Oil 2.4%

Natural Gas 4.3%

Turmeric 2.3%

Zinc, 3.0% Lead, 1.2 %

RM Seed 2.1%

Cotton, 0.4% Nickel, -0.3% Gold, -1.9% Mentha OIl, -8.6% Aluminium, -7.7%

Wheat 1.1% Barley 0.3%

54 The Finapolis l APRIL 2016

STAT DOSSIER All figures as on March 21, 2016

NIFTY TOP

Company

March 21, 2016

Feb 29, 2016

Vedanta

94.00

70.60

33.14

Cairn India

156.95

117.95

33.06

Hindalco Industries

86.00

68.75

25.09

Tata Motors

374.70

299.70

25.03

State Bank of India

196.80

158.75

23.97

Company

March 21, 2016

Lupin

Feb 29, 2016

(%) Change

1535.20

1754.55

-12.50

102.05

104.30

-2.16

Sun Pharma Industries

836.45

853.90

-2.04

Mahindra & Mahindra

1227.95

1228.10

-0.01

HCL Tech

822.55

813.25

1.14

Idea Cellular

NIFTY MOVEMENT

Sep-15

Dec-15

Mar-16

BSE BANKEX

Jun-15

Sep-15

Dec-15

Mar-16

Gain in NYMEX Crude Oil. Crude oil prices rallied on improved demand for petrol

18650 17375 16100 14825 13550 12275 11000 Jun-15

Sep-15

Dec-15

Mar-16

DOW JONES

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Jun-15

Sep-15

Dec-15

Mar-16

HANG SENG

18280 17850 17420 16990 16560 16130 15700 Mar-15

Mar-15

BSE CAPITAL GOODS

22700 21500 20300 19100 17900 16700 15500 Mar-15

28500 26750 25000 23250 21500 19750 18000 Jun-15

18.3%

14150 13700 13250 12800 12350 11900 11450 Jun-15

NIFTY BOTTOM

CNX-MIDCAP MOVEMENT

9000 8650 8300 7950 7600 7250 6900 Mar-15

(%) Change

Sep-15

Dec-15

Mar-16

Mar-15

APRIL 2016 l The Finapolis

STAT DOSSIER CURRENCY

ENERGY

Rupee Movement

Brent Crude (US$/bbl)

68.7 67.5 66.3 65.1 63.9 62.7 61.5

73.0 65.5 58.0 50.5 43.0 35.5 28.0

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

16.8%

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

METALS Gold (US$/OZ)

Gain in MCX Cardamom.

Silver (US$/OZ) 17.8

1275 1235 1195 1155 1115 1075 1035

Cardamom gained on account of short covering

17.1 16.4 15.7 15.0 14.3 13.6

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

Mar-15

Jun-15

Sep-15

Dec-15

Mar-16

ECONOMY

Real GDP Growth 6.1

7.0

7.4

7.3

14500

10500 8000 5500 3000 500 -2000 -4500 -7000

6500 -1500 PriorFII(%)

DIIâ&#x20AC;Ś

Repo -17500

10-year bond yield (%)

RBI Monetary Data

8.010 7.925 7.840 7.755 7.670 7.585 7.500

Prior (%)

7.25 6.75

Jun-15

Sep-15

Dec-15

Latest (%) 6.75 5.75 4.00 21.50

Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

7.25 6.25 4.00 21.50

Reverse Repo Cash Reserve Ratio SLR

Gain in NCDEX Soybean. Soybean prices surged on decline in supplies across major markets

FII vs. MF (Rs cr)

-9500

Mar-15

Jan-16

Dec-15

Oct-15

Nov-15

Sep-15

Jul-15

Aug-15

Jun-15

Apr-15

-5.0

May-15

-3.5

Mar-15

Jan-15

-2.0

10 8 6 4 2 0 -2 -4 Feb-15

Feb-16

Jan-16

Nov-15

Dec-15

Sep-15

-0.5

7.5

7.2%

IIP (%) Oct-15

Aug-15

Jun-15

Jul-15

Apr-15

May-15

Feb-15

Mar-15

Inflation (%)

Mar-16

Repo

Latest (%)

6.25 5.75

21.50 21.50

4.00 4.00

Reverse Repo Cash Reserve Ratio

SLR

All figures as on March 21, 2016

56 The Finapolis l APRIL 2016

STAT DOSSIER Performance of Mutual Funds Equity Diversified Mutual Fund Scheme

ELSS NAV

1 yr 2 yr 3 yr

Mutual Fund Scheme

DSP-BR Micro Cap Fund - Direct (G)

41.04

5.4 44.4 40.9

DSP-BR Micro Cap Fund - RP (G)

40.16

4.6 43.4 39.9

Reliance Small Cap - Direct (G)

24.40

1.7

37.2 38.2

NAV

1 yr 2 yr 3 yr

Axis Long Term Equity - Direct (G)

30.20

-6.3 25.9 29.0

Axis Long Term Equity Fund (G)

29.05

-7.3 24.3 27.5

Reliance Tax Saver(ELSS)-Dir (G)

43.06 -11.8 25.2 26.3

Reliance Tax Saver (ELSS) (G)

42.13 -12.3 24.3 25.5

Birla SL Tax Relief 96-Direct (G)

21.00 -4.6 24.7 24.5

Birla Sun Life Tax Plan-Direct (G)

26.66

-4.8 24.0 23.7

2.0 35.0 34.4

Birla SL Tax Relief 96 (G)

20.48

-5.3 23.8 23.5

37.65

-1.5 34.3 34.1

Religare Invesco Tax Plan - DP (G)

34.78

-5.9 23.9 23.3

SBI Midcap Fund - Direct (G)

58.76

2.6

31.4 34.0

ICICI Pru RIGHT Fund (G)

27.35 -10.8 20.4

UTI Mid Cap (G)

74.52

-4.1

31.6 33.9

Escorts Tax Plan - Direct (G)

59.39

1.8 28.2 22.7

57.18

-2.6

37.2 33.1

Birla Sun Life Tax Plan (G)

25.89

-5.6 22.8 22.7

Franklin (I) Tax Shield -Direct (G)

419.13

-2.8 24.0 22.6

SBI Tax Advantage Sr-2 (G)

20.68 -10.5 20.4 22.6

Escorts Tax Plan (G)

58.85

Reliance Small Cap Fund (G)

23.81

Franklin (I) Smaller Co -Direct (G)

38.91

UTI Mid Cap - Direct (G)

76.24

-3.2 32.7 34.9

Mirae Emerging Bluechip -Direct (G)

30.65

Franklin (I) Smaller Cos (G)

Can Robeco Emer-Equities-Direct (G)

0.9 36.0 37.2 --

36.1 35.5

Mirae Emerging Bluechip Fund (G)

29.67

1.0 33.7 33.0

SBI Magnum Midcap Fund (G)

57.28

1.4 30.2 32.9

ICICI Pru Exp&Other Services-DP (G)

44.61

-1.4 25.0 32.3

Can Robeco Emerg-Equities (G)

55.67

-3.4

Birla SL Pure Value - Direct (G)

38.24

1.3 34.4 31.8

Sundaram SMILE Fund -Direct (G)

63.38

-9.1 39.2 31.6

ICICI Pru Exp&Other Services-RP (G)

43.69

-2.2 24.2 31.4

L&T Midcap Fund -Direct (G)

84.03

-3.1 32.6

31.1

18.61

-5.7 34.3

31.1

JPMorgan (I) Mid & Small Cap-DP (G)

36.1 31.9

DSP-BRTax Saver Fund -Direct (G)

31.31

ICICI Pru L Term Eq-Tax Svng-DP-G

261.18

SBI Tax Advantage Sr-1 (G)

1.6 27.5 22.5 -2.8 22.3

21.9

-5.2

19.4

21.9

20.72 -10.6

22.1

21.9

409.00

-3.6 23.0

21.7

BNP Paribas Long Term Eq-DP (G)

28.10

-6.7 22.3

21.7

Religare Invesco Tax Plan (G)

33.31

-7.5

21.9

21.6

NAV

1 yr 2 yr

3 yr 17.9

Franklin India Tax Shield (G)

Equity (Banking)

Sundaram SMILE Fund (G)

62.42

-9.4 38.4 31.0

Birla SL Opportunities -Direct (G)

113.47

3.1 26.9 30.9

37.31

0.4 33.3 30.8

ICICI Pru Bkg&Fin Serv -Direct (G)

33.54 -10.3 20.8

28.08

-5.1 34.7 30.6

ICICI Pru Bkg & Fin Serv-RP(G)

32.60

Birla SL Pure Value Fund (G) Franklin Build India - Direct (G)

Mutual Fund Scheme

Tata Mid Cap Growth - Direct (G)

95.16

Birla SL (I) Opportunities (G)

111.24

L&T Midcap Fund (G)

81.97

-3.9

31.5 30.1

Reliance Banking Fund (G)

ICICI Pru MidCap Fund - Direct (G)

66.77

-5.4

31.0 30.1

Religare Invesco Banking - RP (G)

662.60

-2.5

31.9 29.8

Franklin (I) Prima - Direct (G) JPMorgan (I) Mid and Small Cap (G)

17.98

-8.3

23.1

-11.3 19.6 16.9

32.1 30.3

Religare Invesco Banking - Dir(G) 32.49

-9.8

18.1

15.3

2.2 26.0 30.1

Reliance Banking Fund - Direct (G) 158.87

-11.9

18.6

14.7

156.30 -12.5

17.7

14.1

-11.5

16.1

13.7

UTI Banking Sector - Direct (G)

59.64 -12.7

13.5

11.6

Sahara Bkg & Fin. Serv. -Direct (G)

40.16

12.2

10.7

-6.5 32.8 29.7

31.10

-13.1

Source: moneycontrol.com; Note: All returns are annualized and expressed in percentage; all NAVs as on March 21, 2016

APRIL 2016 l The Finapolis

STAT DOSSIER Performance of Mutual Funds Equity (FMCG) Mutual Fund Scheme

Equity (Tech) NAV

1 yr 2 yr 3 yr

Mutual Fund Scheme

NAV

ICICI Pru Technology - Direct (G)

42.19

1.1

16.7

ICICI Pru Tech. Fund (G)

41.18

15.8 25.2

SBI FMCG Fund - Direct (G)

76.09

4.7

ICICI Pru FMCG Fund - Direct (G)

157.81

-0.3

SBI FMCG Fund (G)

73.65

3.5 14.0 14.4

Birla SL New Millennium-Dir (G)

36.36

154.54

-1.1 12.0 14.3

SBI IT Fund - Direct (G)

47.94 -3.9 16.3 21.9

Birla SL New Millennium (G)

35.53

0.7 15.4 21.4

DSP-BR Technology.Com -Dir (G)

56.70

6.0 18.3

SBI IT Fund (G)

46.35 -5.0 15.2 20.8

DSP-BR Technology.Com -RP (G)

55.72

ICICI Pru FMCG Fund (G)

15.0

15.4

1 yr 2 yr 3 yr

12.7 15.0

Equity (Pharma) Mutual Fund Scheme SBI Pharma Fund - Direct (G) SBI Pharma Fund (G)

NAV 139.58

1 yr 2 yr 3 yr 1.2

31.2 33.8

135.17 -0.2 29.7 32.4

Reliance Pharma Fund - Direct (G)

136.83

-1.0 24.8 28.4

Reliance Pharma Fund (G)

133.48

-1.9 23.8 27.4

UTI Pharma & Health - Direct (G)

90.01

-9.2

21.8 25.5

UTI Pharma & Health (G)

87.61 -10.0 20.7 24.4

Balanced Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr

L&T India Prudence Fund -Dir (G)

19.67

0.2 22.5 22.3

Escorts Balanced Fund - Direct (G)

99.77

-1.8

21.3

21.9

Escorts Balanced Fund (G)

99.36

-1.8

21.0

21.8

HDFC Balanced Fund - Direct (G)

107.88

-1.0

21.4

L&T India Prudence Fund (G)

19.08 -0.9

21.3

21.1

L&T India Eq & Gold Fund -Dir (G)

19.76 -4.5

21.2 20.9

Tata Balanced Fund - Direct (G)

164.76 -5.0 22.2 20.9

26.1

1.1 16.3 22.3

5.4

21.1

17.7 20.5

Miscellaneous Mutual Fund Scheme

NAV

1 yr

2 yr

UTI Transport&Logistics -Dir (G)

84.39

-2.0

36.1 43.2

UTI Transport & Logistics (G)

82.00

-3.1

Birla SL Buy India -Direct (G)

92.57

1.7

36.5 24.8

Birla Sun Life Buy India (G)

90.93

1.0

35.7 24.0

JM Basic Fund -Direct (G)

20.01

-7.4

20.0

18.0

JM Basic Fund (G)

19.39

-9.0

18.5

16.8

52.40

14.4

13.5

51.15

-0.8

13.6

12.7

13.24

-3.1

19.3

12.5

Reliance Media & Enter. -Dir (G) Reliance Media & Entertain (G) Religare Invesco PSU Eq-DP (G)

34.8

3 yr

41.9

MIP Mutual Fund Scheme

NAV

1 yr 2 yr 3 yr

SBI Balanced Fund - Direct (G)

95.95

0.5

21.0 20.8

Tata MIP Plus Fund - Direct (G)

25.38

14.7

17.3

Franklin India Bal Fund-DP (G)

92.13

0.8

21.9 20.6

Tata MIP Plus Fund (G)

24.80

13.8

16.2

12.1

ICICI Prudential Reg Income-Dir (G)

15.28

10.3

12.8 10.0

HDFC Balanced Fund (G)

105.34 -2.0 20.4 20.5

Tata Balanced Fund - Regular (G)

161.93 -5.4

21.7 20.3

Franklin (I) Low Dura. -Direct (G)

16.84

9.3

9.8

9.9

SBI Magnum Balanced Fund (G)

93.55 -0.8

19.9

ICICI Prudential Regular Income (G)

14.92

8.9

11.9

9.2

HDFC Childrens Gift - Direct (Inv)

82.87

17.2

19.7

Franklin (I) Low Duration (G)

16.68

9.0

9.5

9.6

-5.6 20.0

19.7

Sundaram MIP-Conservative-Dir-G

14.50

8.9 10.4

7.1

89.76 -0.4 20.7

19.6

Sundaram MIP-Conservative (G)

14.26

8.4

L&T India Eq and Gold Fund (G) Franklin India Balanced Fund (G)

19.18

-2.3

Source: moneycontrol.com; Note: All returns are annualized and expressed in percentage; all NAVs as on March 21, 2016

9.7

6.6

58 The Finapolis l APRIL 2016

FUND REPORT CARD Canara Rob Emerg Eq Fund-Reg (G) Fund Objective/Mission To generate capital appreciation by primarily investing in diversified mid-cap stocks. However, there can be no assurance that the investment objective of the scheme will be realised.

Period

Returns

B'mark

Rank

3 Months

-11.38

-5.86

31/(277)

6 Months

-6.70

-2.76 188/(269)

-7.61

-6.41 106/(248)

1 Year

Fund House Details AMC Name: Website:

Scheme Performance as on March 18, 2016

Canara Robeco www.canararobeco.com

3 Years

29.40

17.21

12/(163)

5 Years

21.11

10.31

10/(151)

16.67

12.85

Since Inception

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (February 29, 2016) NAV As On (March 18, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){August 05, 2015} NAV (52WeekLow){February 29, 2016}

804.38 54.75 5000 1000 64.96 50.52

Total Invest (`)

1 Year

Investment Information

Scheme (`)

60,000

53,874

55,447

3 Years

1,80,000

2,52,930

2,16,573

5 Years

3,00,000

5,30,882

4,07,959

10 Years

6,00,000

15,71,512

10,48,230

Fund Structure

Scheme

Open ended scheme

Launch Date

March 11, 2005

Fund Manager

Ravi Gopalakrishnan

Bench Mark

NIFTY MIDCAP 100

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Bench mark

Total Stocks

Total Sectors

P/E Ratio

25.63

P/B Ratio

4.43

Avg. Market Cap Rs. on (Feb-2016)

Top 10 Companies

12134.43

Volatility Measures Fama

-0.02

Beta

0.99

Std Dev Sharpe

1.26 -0.03

Top 10 Sector Wise Holding

Name

(%)

Industry Name

(%)

CBLO

5.0

IndusInd Bank

3.5



Bank - Private

9.0





Pharmaceuticals & Drugs

7.4



Indian Oil Corporation

3.0



Cement & Construction Materials

5.9



Divis Laboratories

2.6



Chemicals

5.4



Ashoka Buildcon

2.3



Engineering - Construction

5.2



The Ramco Cements

2.2



Other

4.1



Britannia Industries

2.2



Engineering

3.8



Tata Communications

2.1



Bearings

3.4



Atul

2.1



Construction - Real Estate

3.2



2.0



Refineries

3.0



FAG Bearings India

5 Years History Financial Year NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March)

2015-16

2014-15

2013-14

2012-13

2011-12

54.75

58.51

31.44

24.52

23.22

804

403

Returns(%)

-7.80

87.47

27.18

4.79

4.59

CNX NIFTY Returns(%)

-11.44

26.33

17.53

6.86

-9.11

100/(289)

8/(274)

31/(217)

103/(204)

Category Rank Latest As on 18 March, 16

*Absolute Returns

14/(207) Source: ACEMF

APRIL 2016 l The Finapolis

FUND REPORT CARD Religare Invesco Business Leaders Fund (G)

Scheme Performance as on March 18, 2016 Period

Fund Objective/Mission To generate long-term capital appreciation by investing in equity and equity related instruments including equity derivatives of companies which in our opinion are leaders in their respective industry or industry segment.

Fund House Details AMC Name: Website:

Religare Invesco www.religaremf.com

Returns

B'mark

Rank

3 Months

-2.97

-2.03

73/(277)

6 Months

-4.30

-4.73

93/(269)

1 Year

-9.10

-12.45

137/(248)

3 Years

15.03

9.22

110/(163)

5 Years

10.85

7.18

101/(151)

Since Inception

10.75

8.20

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (February 29, 2016) NAV As On (March 18, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){April 13, 2015} NAV (52WeekLow){February 29, 2016}

269.47 19.58 5000 100 22.04 18.18

Total Invest (`)

1 Year

60,000

55,248

54,069

1,80,000

2,03,777

1,82,791

5 Years

3,00,000

3,96,404

3,45,913

Fund Structure

Scheme

Open ended scheme

Launch Date

August 21, 2009

Fund Manager

Vetri Subramaniam

Bench Mark

NIFTY 50

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Bench mark

3 Years

10 Years

Investment Information

Scheme (`)

Total Stocks

Total Sectors

P/E Ratio

22.25

P/B Ratio

4.21

Avg. Market Cap Rs. on (Feb-2016)

Top 10 Companies

152383.29

Volatility Measures Fama

-0.01

Beta

0.89

Std Dev

0.99

Sharpe

-0.06

Top 10 Sector Wise Holding

Name

(%)

Industry Name

(%)

Infosys

9.6

HDFC Bank

9.5



Bank - Private

20.5



IT - Software

18.2



Housing Development Finance Corporation

8.2



Finance - Housing

8.2



Kotak Mahindra Bank

6.9



Automobile Two & Three Wheelers

6.4



Hero MotoCorp

6.4



Automobiles - Passenger Cars

5.1



Tata Consultancy Services

6.2



Pharmaceuticals & Drugs

5.0



Maruti Suzuki India

5.1



Refineries

4.8



Power Grid Corporation Of India

4.6



Power Generation/Distribution

4.6



ITC

4.4



Cigarettes/Tobacco

4.4



Axis Bank

4.0



Automobiles-Trucks/Lcv

3.3



5 Years History Financial Year NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March) Returns(%) CNX NIFTY Returns(%) Category Rank Latest As on 18 March, 16

2015-16

2014-15

2013-14

2012-13

2011-12

19.58

21.37

14.89

12.66

11.64

269

-9.14

43.52

17.24

8.48

-7.47

-11.44

26.33

17.53

6.86

-9.11

130/(289)

116/(274)

127/(217)

48/(204)

142/(207)

*Absolute Returns

Source: ACEMF

60 The Finapolis l APRIL 2016

FUND REPORT CARD Birla SL Equity Fund (G)

Scheme Performance as on March 18, 2016 Period

Fund Objective/Mission An open-end growth scheme with the objective of long-term growth of capital, through a portfolio with a target allocation of 90% equity and 10% debt and money market securities.

Fund House Details AMC Name: Website:

Birla Sunlife www.birlasunlife.com

Returns

B'mark

Rank

3 Months

-2.56

-3.35

67/(277)

6 Months

-4.84

-4.87

117/(269)

-8.53

-11.82 126/(248)

1 Year 3 Years

20.00

10.65

54/(163)

5 Years

13.44

7.63

61/(151)

Since Inception

24.24

14.18

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (February 29, 2016) NAV As On (March 18, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){August 06, 2015} NAV (52WeekLow){February 25, 2016}

2095.31 453.34 5000 1000 510.16 411.84

Total Invest (`)

1 Year

Investment Information

Scheme (`)

60,000

54,531

54,132

3 Years

1,80,000

2,13,492

1,88,666

5 Years

3,00,000

4,27,707

3,57,199

10 Years

6,00,000

10,98,233

8,86,558

Fund Structure

Scheme

Open ended scheme

Launch Date

August 27, 1998

Fund Manager

Anil Shah

Bench Mark

S&P BSE 200

Max.Entry Load(%)

Max.Exit Load(%)

1.00

Total Stocks

Total Sectors

P/E Ratio

22.56

P/B Ratio

5.19

Avg. Market Cap Rs. on (Feb-2016)

Top 10 Companies Name

Bench mark

79203.42

Volatility Measures Fama

Beta

0.95

Std Dev

1.09

Sharpe

-0.05

Top 10 Sector Wise Holding (%)

Industry Name

(%)

HDFC Bank

6.3



Bank - Private

18.1



Sun Pharmaceutical Industries

4.8



Pharmaceuticals & Drugs

15.1



ITC

4.5



IT - Software

10.1



Maruti Suzuki India

4.4



Cigarettes/Tobacco

4.5



Tata Chemicals

3.7



Automobiles - Passenger Cars

4.4



IndusInd Bank

3.7



Automobiles-Trucks/Lcv

3.9



HCL Technologies

3.5



Finance - NBFC

3.8



Clearing Corporation Of India

3.2



Fertilizers

3.7



Tech Mahindra

3.2



Finance - Investment

3.2



Dr. Reddys Laboratories

3.0



Refineries

3.2



5 Years History Financial Year NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March) Returns(%) CNX NIFTY Returns(%) Category Rank Latest As on 18 March, 16

2015-16

2014-15

2013-14

2012-13

2011-12

453.34

487.03

319.89

252.69

236.56

2095

2020

686

652

750

-7.73

51.90

25.59

6.39

-9.26

-11.44

26.33

17.53

6.86

-9.11

99/(289)

79/(274)

39/(217)

81/(204)

168/(207)

*Absolute Returns

Source: ACEMF

APRIL 2016 l The Finapolis

FUND REPORT CARD ICICI Pru Dynamic Plan (G)

Scheme Performance as on March 18, 2016 Period

Fund Objective/Mission To generate capital appreciation by actively investing in equity and equity related securities and for defensive consideration in debt / money market instruments and derivatives.

B'mark

Rank

3 Months

-3.03

-2.03

76/(277)

6 Months

-2.92

-4.73

66/(269)

1 Year

Fund House Details AMC Name: Website:

Returns

ICICI Prudential www.icicipruamc.com

-10.20

-12.45 163/(248)

3 Years

14.75

9.22

113/(163)

5 Years

10.91

7.18

98/(151)

Since Inception

23.71

16.79

SIP Details: Invested Rs 5000 Every Month

Financial Details

Period

AUM As On (February 29, 2016) NAV As On (March 18, 2016) Min Investment (in Rs.) Lumpsum SIP NAV (52WeekHigh){April 13, 2015} NAV (52WeekLow){February 29, 2016}

4752.08 172.64 5000 1000 195.92 158.74

Total Invest (`)

1 Year

Investment Information

Scheme (`)

60,000

54,791

54,069

3 Years

1,80,000

1,95,284

1,82,791

5 Years

3,00,000

3,84,616

3,45,913

10 Years

6,00,000

10,95,400

8,60,905

Fund Structure

Scheme

Open ended scheme

Launch Date

October 31, 2002

Fund Manager

Sankaran Naren

Bench Mark

NIFTY 50

Max.Entry Load(%)

Max.Exit Load(%)

Bench mark

Total Stocks

Total Sectors

P/E Ratio

15.97

P/B Ratio

2.63

Avg. Market Cap Rs. on (Feb-2016)

Top 10 Companies

86884.97

Volatility Measures Fama

-0.02

Beta

0.87

Std Dev

0.99

Sharpe

-0.06

Top 10 Sector Wise Holding

Name

(%)

Industry Name

(%)

Power Grid Corporation Of India

10.1

HDFC Bank

6.9



Bank - Private

14.7



IT - Software

11.1



Tata Motors

5.1



Power Generation/Distribution

11.0



ICICI Bank

4.3



Oil Exploration

6.6



Wipro

4.3



Pharmaceuticals & Drugs

6.3



Oil & Natural Gas Corporation

3.6



Automobiles-Trucks/Lcv

5.1



CBLO

3.6



Refineries

3.9



Hindustan Zinc

3.5



Mining & Minerals

3.6



3.1



Metal - Non Ferrous

3.5



3.0



Other

3.3



Cipla ITC

5 Years History Financial Year NAV in ` (as on 31st March) Net Assets (` Crores.) (as on 31st March)

2015-16

2014-15

2013-14

2012-13

2011-12

172

188.80

143.57

110.55

106.13

4752

5813

3898

3653

4119

Returns(%)

-9.30

31.04

28.51

3.85

-2.77

CNX NIFTY Returns(%)

-11.44

26.33

17.53

6.86

-9.11

137/(289)

185/(274)

21/(217)

120/(204)

68/(207)

Category Rank Latest As on 18 March, 16

*Absolute Returns

Source: ACEMF

62 The Finapolis l APRIL 2016

ETCETERA

Play it like Priyanka

Superstar Priyanka Chopra’s career makes for a great case study on how to make your moves in the investment market. Team Finapolis studies PeeCee’s career of 16 years to decode the seven lessons we can learn from her and apply the same to the money markets. Lesson 1: Build a base

Priyanka was crowned Miss World in the Millennium year. Anyone else would have expected her to plunge into movies, sign up a few dozen movies and ads and fall flat with reviews that typically would label her ‘wooden’. But she took her time – almost two years – just testing the waters (with a ramp walk here, an endorsement there and a sign on the dotted line in between), akin to studying the market. Not many know that PeeCee debuted with a Tamil film Tamizhan in 2002, taking almost 24 months before she made her big leap. Now, testing waters is what every good investor needs to do. People who go swimming usually test the water before they jump into it by dipping their toes or hands into the water to find out how cold/ warm/ steep/ shallow/ slippery it is before they jump in. It gives them the knowledge to decide on whether to walk through or dive right in.

Lesson to learn: The best things in life take time. Spend a few months just watching the money market. Once you get the hang of it, decide on what to do next.

Lesson 2: Play it safe in the beginning Pee Cee’s contemporaries and beauty queens from the same pageant, Lara Dutta and Dia Mirza, who also made their movie debuts the same year, decided to experiment while our girl stuck to the safe path. She chose the regular glamour doll roles without feeling unapologetic. Out of sight is out of mind in the movie industry and for Priyanka, it was important to be seen and heard around before

she decided to experiment. As a result, in less than five years of her career, she was counted among the top five actresses with a high recall value. Today, neither Lara nor Dia have much work they would be proud of, for they played it choosy.

Lesson to learn: Let the first few days of your investment be all about playing it safe. So is you have a spare lakh and you don’t have any savings to boast of, it makes sense to put it in a fixed deposit. It might not give you the best interest rate, but it will ensure liquidity in times of need. Playing it safe is a virtue every investor must mandatorily have.

Lesson 3: Expand your horizon Only after she was among the top ones did Priyanka decide to push her boundaries, bit by bit. Even as she has her regular commercial fare going on, she signed up Aitraaz to play the badass. Most actresses would flinch to be pitted against the-then reigning queen Kareena Kapoor, but PeeCee decided to take her first tentative ste ps. And of course, her path-breaking role in Fashion in 2008. After all, she has her usual movies going on should her badass move go wrong. No sweat, you see.

Lesson to learn: Keep your game plan ready and after building a solid base, make a calculated move. In investment, one must remember that the more the risk, higher the returns. However, one must factor in the fact that things could boomerang and hence, make the big move only after playing it safe.

Lesson 4: Don’t put all your eggs in one basket Even as her filmi career was going great, Priyanka decided to ‘diversify’. From being in front of the camera, she got behind the microphone and crooned the ‘In My City’ single in 2012. Then she turned into a model for Guess. Somewhere in between, she dubbed for a Disney princess character and before you could utter her name, she landed a plum role in Quantico, an ABC Television show. So many things going on in her life that should one not fetch her much, the others are bound to compensate.

Lesson to learn: She has applied the timetest logic of not putting all her eggs in one basket. So, check out multiple options so that should the market crash, all your eggs are not broken. Some are safe elsewhere hatching cute chicks.

Lesson 5: Have a Plan B What if she suddenly fell sick and has to take a big break during which time her contemporaries and fresh talent moved ahead of her? Well she can’t control that but she can certainly stay in the movie game as a backroom girl – as a producer, playing a mentor and giving newcomers an opportunity to break into the industry. The best thing about turning into a producer, albeit fraught with risk, is that PeeCee can call the shots. If she feels a certain trend is fetching, she can produce a movie to ride on the wave. Priyanka has turned into a producer with a web series (a small project) and movies in local lan-

APRIL 2016 l The Finapolis

ETCETERA guages. That’s the Plan B, she told the media folks on her move to produce. She also confessed that taking up projects such as Quantico or Baywatch have never made her nervous because she knew she had her standby plans in place. ‘The pressure was off and I was enjoying myself. I think that was translated into success for me,” she said in the Today live show.

Lesson to learn: Without doubt, every person should have a backup plan as just the presence of a safety net to take care of you when things go wrong can take the pressure off and help you perform to the best of your abilities.

Lesson 6: Use technology In today’s world of communication and technology, success is all about using it right. Just as having live updates of your stocks keeps you in the loop, PeeCee uses social networks to stay on top and connect with her fans – the most important part in her career wheel. With 20 lakh followers on Facebook and 4 million on Twitter and so many more on Instagram and Facetime, she is constantly in touch with her critical mass. A movie’s success largely depends on its promotions and how many people turn up at the theatres. Despite living in Canada for over a year now, no one missed PC during her latest movie Jai Gangajal, because she was using her networks to spread the good word.

Lesson to learn: Being aware of the markets, the way the stocks are reacting, keeping yourself abreast of the Sensex news is bound to keep in good stead. Whether you are in India or USA, using smartphone technology and apps to monitor your money assures you great results. Be smart like PeeCee. Connect with the right points.

Lesson 7: Take the leap of faith While her co-stars would have cringed at the idea of a TV series instead of a big, bang Hollywood debut, Priyanka felt the need to take the leap of faith here. “Ultimately, it was a leap of faith to sign up for such a big deal. I think I spent a lot of time before I chose and once I got it all covered, it was time to just jump. ‘Leap and the net shall appear’ seems to have dictated her thoughts here.

Lesson to learn: After following the protocols – of building a solid base, saving up for rainy days, studying the market, seeking knowledge to make your next movie, ultimately one has to take the plunge. That is what is going to pay you huge dividends. Like it has for PeeCee. F

64 The Finapolis l APRIL 2016

PERSONAL FINANCE

advisor Every month an expert on personal finance will answer all your queries related to the world of investments, taxation and financial management. The personal finance advisor will diagnose the health of your portfolio and offer better advice. In current edition, your questions have been answered by Col. Sanjeev Govila (retd), CEO, Hum Fauji Initiatives. He is Certified Financial Planner and SEBI Registered Investment Advisor. Write in to feedback@thefinapolis.com Home loan I had taken a home loan of Rs 50 lakh about 10 years back to buy a 2BHK apartment in Mumbai suburb. I continue to pay the EMIs for this home loan. This property is on my name. I am getting a good deal to buy second flat with 3BHK apartment in same area and I am interested to book this property with second home loan of Rs 30 lakh on my spouse name. She is working as a partner in my business. Please tell me what are the tax advantages we are eligible for if book another property. – Madan Vellanki, Mumbai There is no limit on the number of residential properties you can have on which tax advantage can be taken by you. For tax purpose, you and your wife are separate entities and the tax limits given later are individually available to each one of you for your actual contributions made to the EMI amount of the loan. The tax advantages come to you primarily from the principal and interest part of the home loan that you take. And these advantages only accrue once the house possession has been taken.

The principal part of home loan qualifies for deduction under Section 80C, where all your other common deductions like life insurance, PPF, ELSS, tuition fee etc are also available, and is subject to a maximum of Rs 1.5 lakh as of now. The interest part is governed by Section 24. If the house is your self-occupied house, the deduction available is limited to Rs 2 lakh a year to each one of you. Please remember that only one of the houses can be a self-occupied house and this is allowed to be changed from one financial year to the other too. If the house is not self-occupied, its rent (or notional rent as per fair rental value) is added to your income while there is no limit on the interest amount on which the tax rebate can be taken. Retirement plan I will retire from private company after 10 years from now. My concern is how do I estimate my pension needs to maintain current standard of living after retirement? – Rajesh Nath, Ahmedabad It is a simple calculation that needs to be done by you, preferably using Excel sheet, if you’re conversant with the same. Alternately, your financial advisor can do the same for you. You can also go to one of the numerous financial websites where such online calculators are readily available. Essentially, you have to estimate the amount of money you would require with you in bulk when you retire so that the same can be used to give you a monthly pension. The first step is to assess how much are you spending today and what part of it would not be there after you’ve retired, like children expenses, most of the EMIs of loans, reduced car expenses etc. Generally, 80% of your current monthly expenses could be a good estimate

APRIL 2016 l The Finapolis

PERSONAL FINANCE ADVISOR if you’re not able to estimate it otherwise. Assume that your expenses would rise at an inflation rate of about 8% per annum throughout your life and you may take the life expectancy to be 85 years. Taking these figures, you can estimate how much money would you require for living comfortably for 25 years if you were to retire at 60 years of age. As an example, taking the above parameters, your current monthly expenses to be Rs 60,000, return on your investments after retirement to be 8% on the conservative side and that you have saved nothing for the purpose as on date, you would require approximately Rs 2.95 crore in your hand at the time of retirement to maintain the same standard of living. Loan documents Just a few months back, I completely paid off my home loan. However, despite paying off all the dues the bank hasn’t returned the original papers of the property as it says the documents have gone missing. Please tell me what I should do?– – Gururaj, Kerala It is a very unfortunate event when such an incident takes place. However, please be absolutely sure in your mind that it is the bank which has to do all the running around and bear all the expenses involved with it. In a similar case in November 2012, New Delhi District Consumer Forum directed IDBI Bank to pay Rs 3.50 lakh as compensation to a home loan borrower for losing the title deeds of his flat. The forum also ordered IDBI Bank to issue a certificate stating that it had received various documents pertaining to the borrower’s flat but had lost the same later. Further, it directed IDBI Bank to get the lost documents reissued, duly certified by the DDA and the cooperative group housing society, and to take all necessary steps to safeguard the borrower’s interests. Exact steps in brief that should be taken by you are as follows. Register a written complaint with the bank regarding lost documents and take its acknowledgement from the bank official with bank seal. Then register a police FIR against the bank where you should clearly state that the

bank has lost your original documents which you submitted with the bank in original against home loan from bank. A copy of this FIR be submitted with the bank and its acknowledgement taken from them. If the property involved is a flat in a cooperative society, you should submit a court affidavit to Registrar of Co-operative Societies mentioning that your original property documents have been lost by the bank. This step is required to avoid any fraud. The bank should now put a public notice in two newspapers (One English newspaper and other in vernacular language of the state) mentioning that the original property documents have been lost by the bank with your property details in the no-

process is completed, request for the latest encumbrance certificate from registrar’s office to ensure that everything is fine. In case the bank refuses to do any of these or unnecessarily delays it, you may file a complaint in the consumer forum and claim compensation from the bank for service deficiency. You can demand compensation equivalent to double the value of your property, depending on the nature of the loss. In such cases, decision is always in favour of the customer. Besides compensation, bank is also liable to pay a penalty of Rs 100 per day if there is delay in providing documents beyond 15 days from date of loan closure. This is over and above the compensation for deficiency in service.

tice. The bank will issue indemnity bond attested and notarised by a government notary to you on stamp paper stating that original documents have been lost by the bank. Request for duplicate share certificate from society by submitting police FIR copy. Now the bank will obtain certified/ duplicate copies from the registrar’s office. The bank will then submit police FIR, duplicate share certificate from housing society, the newspaper advertisements and the undertaking at the deputy registrar’s office. The bank will pay the required charges. The registrar will then issue the duplicate copy of the sale deed. Once this

National Pension Scheme I want to invest in National Pension Scheme (NPS). It’s in limelight after the Union Budget 2015-16 announced additional benefit of Rs 50,000 beyond Section 80/C for tax saving purpose. Please advice is it prudent to invest in NPS? – Aruna Iyer, Hyderabad NPS is one of the best retirement savings instrument. If you’ve been attracted by the additional Rs 50,000 beyond 80C tax saving, it will be good to know that there are two more tax savings available in NPS. Rs 1.5 Lakh under Income Tax Section 80C is one. Secondly, a further deduction is available under Sec 80CCD(2), ie, if your employer puts up to 10% of your basic salary in the NPS, that amount will be eligible for tax deduction to you. There are many factors which compel you to go for NPS. It is a product specifically made for retirement saving, which is closely regulated and monitored by a government agency, PFRDA. There are eight fund managers (ICICI, HDFC, LIC, Kotak, Birla, Reliance, UTI and SBI) who are competing for your money, thus ensuring good returns since you have the flexibility to shift between fund managers based on performance. Fund management charges are very low. There are in-built checks to ensure you cannot take out money easily at your whims and fancies, thus ensuring you get the power of compounding. F

66 The Finapolis l APRIL 2016

LEARNING CURVE We all come across issues and ideas related to the world of finance that sound Greek and Latin. Worry not. We are here to guide you through the maze

Market Capitalisation

ou must know this term whether you are looking to invest in stocks or in mutual funds. Market Capitalisation (often shorted to ‘market cap’ or ‘M-Cap’) is defined as the number of shares outstanding multiplied by the current market price (CMP) of a share. If a company has issued 1 crore shares and has a current market price of Rs 100, the market cap of the company will be Rs 100 crore. This is the base for defining various categories of stocks or mutual funds. In terms of market cap, there are broadly four types of mutual funds:

1) Large Cap Large-cap funds are those which invest in stocks with market capitalisation of over Rs 15,000 crore. These are typically the largest stocks in an exchange, i.e., the top 50 stocks in the Nifty or the top 30 stocks in the Sensex.

Risk level Returns

Low Moderate

2) Mid Cap Mid-cap funds are those which invest in stocks with market capitalisation between Rs 5,000 crore and Rs 15,000 crore. They are the potential large caps for the future and listed beyond BSE 30 or Nifty 50.

Risk level Returns

High Moderate to High

3) Small Cap Small-cap funds are those which invest in stocks with market capitalisation below

ICICI Value Discovery Fund’s holdings by market cap

Rs 5,000 crore. They are the potential midcaps of the future. However, they also hold the risk of fading out any time soon.

Risk level Returns

90.8%

Highest High

60 40 9.08%

4) Multi Cap

Multi-cap funds are those which invest in stocks of varied market capitalisation, i.e., in a mix of large-cap, mid-cap and small-cap stocks. They are the most flexible among all categories of mutual funds.

Risk level Returns

MCAP%

Low to Moderate Moderately High

Large

Mid

0.13%

Small

Investment in the above said categories or any other mutual fund should only be done considering risk appetite, investment tenure and other financial goals of the investor. Choosing a fund by considering only the recent performance and ignoring the above said factors could prove to be disastrous. F

Top performing mutual funds in the above categories Scheme Name