A game changer?

Its lonely being an equity investor in India.

Consider the following facts:

1.The entire mutual fund industry in India had inflows of only 3099 Crores (around 620 M$) for its equity schemes (including ELSS) for the period Feb 2011- Feb 2012 (source AMFI). Is it any wonder that international mutual funds famed for their equity expertise are shutting shop and leaving this country ?

2.Number of demat accounts opened this year is around 10 Lakhs (1 Million).The total number of demat accounts in this country is around 1.98 Crores.That means only 1.6% of the country’s population has a demat account.Tomorrow, if the stock exchanges shut down, 98% of the country will shrug their shoulders and move on !!

3.Plummeting brokerage commissions , cumbersome compliance rules and lackluster equity markets have led to 6500 sub brokers shutting shop.The remaining brokers too seem to be an endangered species.

The Government has finally made an attempt to broad base the equity cult using the Rajiv Gandhi Equity Scheme.

If Indians love one thing, its a good tax break.

In this scheme, there is a 50 per cent tax deduction to first time retail investors with :

  • Annual income of less than Rs 10 lakh
  • Investment up to Rs 50,000 in a year
  • Investment in the top 100 listed entities in BSE and NSE
  • Lock-in period of three years (this may reduce to a year .)

Critics have complained that this scheme entails green investors doing direct investing instead of going thru the mutual fund route.

But if this scheme works, then it can change the face of the Indian equity markets.


Weekend Reads-April 05,2012

A long long weekend ahead on account of Mahavir Jayanti and Good Friday.

Here’s what I am reading over the weekend:

An eyeopener-Why Las Vegas is moving to Macau (New Yorker)

How investing turns nice people into psychopaths (Atlantic)

The Yangon spring (Economist)

Cars that can run over 200000 miles (Forbes)

Timeshare prices plummet to 1$ (Smart Money)

An extra ordinary story – The man who wore a sanitary napkin (Open)

One man Army-Gen V K Singh (Tehelka)

Profile of one of my favorite financial analysts Neeraj Monga of Vertias (Outlook )

Tata’s new range of defence vehicles (Team BHP)

The case against kids-Is having kids immoral ? (New Yorker)


Nifty in terms of Gold

If I were to ask you, how well did the Nifty do in this century, your answer would be quite well.

Nifty closed at 1528.45 on 31st March, 2000.On 30th March, 2012, it closed at 5295.55.This represents a gain of 246%. A nifty gain by the Nifty you would agree.

But this is only one side of the story.

The performance of the Nifty in terms of a hard currency like Gold takes a different hue all together.

In March, 2000, one Nifty could have bought 3.95 grams of gold.In March 2012, one Nifty can buy only 1.94 grams of gold.(see chart below)

So the gain by Nifty wasn’t so nifty after all !



Departing Robin indicates winter for Suzlon

In an earlier article, we  had mentioned that the CFO resigning is a good sign that bearish times are ahead for the company.

Now the CFO of Suzlon Energy Robin Banerjee has quit on 30th March, 2012. Since then, the stock has lost around 3.7%. In a recent article in ET, analysts have explained their apprehensions of the company defaulting on its FCCB debts-( $360 million in June 2012 and $209 million in October 2012).

Today the company announced that it was divesting its windfarm assets to the tune of 40 Million $. Despite this favorable news, the stock tanked by 1.76%.

When even favorable news can’t lift a battered stock price, it shows that the underlying technicals of the stock are quite weak indeed.

Arrival of Robins normally indicate signs of spring.Departure of this Robin probably indicates winter for the stock!


Hot Links: April 4, 2012

Some stuff I am reading this morning:

Ten Things to know about Home Insurance (Moneycontrol)

Hedge funds try new approach in India (WSJ)

The Japanese Professor who is teaching India Inc (ET)

Mutual Funds lose 36,000 Crores worth of assets (Financial Express)

Court frames charges against RIL officials, Mukesh Ambani let off (SuchetaDalal)

The BRICS summit-the Chinese ate all the mutton chops (Bloomberg)

A paradox-Avoid correlation by following all the trends (Allaboutalpha)

Warren Buffett:Hypocrite Extraordinaire? (DailyReckoning)

(Technorati Claim: WEKR4Y4RD7RW )