tag:blogger.com,1999:blog-36750999652661915672024-03-14T09:44:43.058+05:30NSE 955 Now 9AMStart where you are,with what you have,make something of it.Never be satisfied.-George Washignton Carver
Give More.Expect Less.Live Simple.
Be Positive.
Don't Hate.Don't Worry.Don't Argue.Unknownnoreply@blogger.comBlogger200125tag:blogger.com,1999:blog-3675099965266191567.post-48511473570530282422010-12-20T22:53:00.003+05:302010-12-20T23:04:33.961+05:3020 facts you must know about India's growth1)The Indian economy is the eleventh largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP).<br /><br />2)India is poised to achieve 9 per cent economic growth in the current financial year itself, driven by robust performance by the agriculture and industry sectors.<br />The economy grew by 8.9 per cent in the second quarter of the current fiscal.<br /><br />3)India has emerged as one of the world's top ten countries in industrial production. The nation's industrial production grew at the fastest pace in three months at 10.8 per cent.<br />Manufacturing grew 11.3 percent in October after a 4.6 percent gain in September.<br /><br />4)India is one of the fastest growing automobile markets in the world, expanding at 35 per cent on average in the first four months of the current financial year.<br /><br />5)The Bombay Stock Exchange has been rated as the world's best performing stock market recently. With a 13 per cent gain, Sensex is among the world's 10 biggest markets, according to data collected by Bloomberg.<br /><br />6)Indian companies have become bigger and stronger in the last ten years with the average revenue of a company on the Fortune India 500 list standing at Rs 7,632.5 crore (Rs 76.32 billion).<br />The total revenue of the Fortune India 500 companies stands at Rs 38,16,239.40 crore.<br /><br />7)India is the world's largest recipient of overseas remittances. The remittances grew from $49.6 billion in 2009 to $55 billion in 2010.<br />It is also the country with the second largest number of emigrants after Mexico, according to the World Bank.<br /><br />8)India owns over 18,000 tonnes of above ground gold stocks worth approximately $800 billion and representing at least 11 per cent of global stock, according to estimates of World Gold Council.<br />India ranks 11th in the world with 557.7 tonnes of gold reserves.<br /><br />9)India is among the top 10 nations in terms of foreign exchange reserves.<br />The country's foreign exchange reserves breached the $300-billion mark for the first time since 2008 with an addition of $2.2 billion on the back of a healthy rise in foreign currency. The nation's forex reserves currently stand at $296.40 billion.<br /><br />10)India's services sector, backed by the IT revolution, remains the biggest contributor to the country's GDP, with a contribution of 58.4 per cent. <br /><br />The industry sector contributed 24.1 per cent and the agriculture sector contributed 17.5 per cent to the GDP.<br /><br />11)India's civil aviation sector will be among the top five in the world in the next five years.<br />Indian domestic air traffic is expected to reach 160-180 million passengers per year, while international traffic will exceed 80 million.<br /><br />12)India's exports during November jumped by 26.8 per cent to $18.9 billion year-on-year. India's exports during April-September aggregated to $103.65 billion registering a year-on-year growth of 28 per cent.<br /><br />13)India, China and Brazil are the top three target countries for foreign direct investment until the end of 2012 with the United States, for years number one, now in fourth place, according to the UN trade and development agency UNCTAD.<br /><br />14)The Indian telecommunications industry is the world's fastest growing telecommunications industry, 723.28 million telephone (landlines and mobile) subscribers and 687.71 million mobile phone connections as of September 30, 2010.<br /><br />15)The number of Internet users in India is estimated at 81 million. The Telecom Regulatory Authority of India pegs the number of broadband subscribers at 10.08 million in August 2010.<br /><br />16)The Indian IT-BPO industry is expected to exceed $70 billion in fiscal 2011.<br />The Indian IT-BPO exports are projected to grow by 13 per cent to 15 per cent while domestic IT-BPO will grow slightly more by 15 per cent to 17 per cent during fiscal 2010-11.<br /><br />17)India has the largest number of post offices in the world. The world's highest post office, Hikkim is located at 15,500 feet in the Lahaul Spiti district of Himachal Pradesh.<br /><br />18)The largest employer in India is the Indian Railways, employing over 1.6 million people. Indian Railways started operations on April 16, 1853.<br /><br />19)ndia ranks second in farm output globally. India is one of the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper.<br /><br />20)Tourism is the largest service industry in India, with a contribution of 6.23 per cent to the national GDP. The number of foreign tourists visiting the country during September this year is higher than that of the same month last year.<br /><br />Around 3.69 lakh (369,000) foreign tourists came to India in September this year as compared to 3.28 lakh (328,000) during the same month in 2009.<br /><br />Courtecy:www.rediff.comUnknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-81385035680246428922010-02-17T15:46:00.000+05:302010-02-17T15:48:23.853+05:30"Have Breakfast… or…Be Breakfast!"Who sells the largest number of cameras in India ?<br />Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones<br />Reason being cameras bundled with cell phones are outselling stand alone cameras. Now, what prevents the cell phone from replacing the camera outright? Nothing at all. One can only hope the Sony’s and Canons are taking note.<br />Try this. Who is the biggest in music business in India ? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).<br />Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India . That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther from truth.<br />Nokia confessed that they all but missed the smart phone bus. They admit that Apple's I phone and Google's Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?<br />The "Mahabharata" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question – "who is my competitor?"<br />Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."<br />In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?" The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.<br /><br />In 2008, who was the toughest competitor to British Airways in India ? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and tele presence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. ( India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton 's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India . PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then tele presence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!<br /><br />India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmy gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment). Cricket season might push films out of the market.<br />Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.<br /><br />One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cell phone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!<br /><br />On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley ). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast …or…. be breakfast"! That sums it up rather neatly.<br /><strong>—Dr. Y. L. R. Moorthi is a professor at the IIM,Bangalore</strong>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-89509984752518529302010-02-12T22:59:00.000+05:302010-02-12T23:02:49.471+05:30Why the coming Budget is very significantThe Budget to be presented on February 26, 2010 is one of the most important economic documents the United Progressive Alliance [ Images ] government will present in a long time. Over the past five years, though important, Budgets have not had the potential signalling impact that this upcoming event has acquired.<br /><br />First of all, this upcoming document has come to be seen as a litmus test by foreign investors on the seriousness of the new UPA government to move ahead on structural reform. <br /><br />There can be no more excuses; the finance minister got away last time by citing the limited time available to present Budget 2009. He deflected the need to present a credible game plan to bring the fiscal deficit under control, citing the pending (at that time, but since submitted) 13th Finance Commission report.<br /><br />The policy-makers talked of doing reform throughout the year, and not bunching it all up in one Budget document; well, that bluff has also now been called over the last nine months.<br /><br />Investors want to see intent on policy reform, willingness to bite the bullet and take some hard decisions as well as awareness that we have a serious fiscal problem. <br /><br />Nobody wants to see yet more committees set up, lip service to how this deficit is unsustainable, but no action.<br /><br />The minimum investors will want to see is a credible plan to cut the fiscal deficit, which actually leads to structural changes on both revenue and expenditure side. <br /><br />Can there be movement on things like the Parikh committee report, a nutrient-based subsidy framework for fertilisers, further targeting of food subsidies? On the revenue side, will we get a credible date and structure for the GST, where are we on the direct tax code? <br /><br />Attempts to bring the deficit down by recasting the GDP data, and assuming high growth rates will not cut it. Investors will, in my opinion, not react positively to a deficit-reduction plan which is in effect a simple and blind bet on high growth. <br /><br />This is seen as too risky, as any slippages in growth for whatever reason can have very serious fiscal and economic consequences.<br /><br />The importance of these structural issues is due to the need to cut the deficit and yet not harm growth. Structural reform like GST is so critical, as it will plug revenue leakages and thus boost growth, corporate profitability and economic efficiency simultaneously. Similarly, with the direct tax code, one has the chance to clean up exemptions, raise effective tax rates and improve productivity and efficiency.<br /><br />The fear with cutting the fiscal deficit in OECD countries is the huge economic cost, as already weak growth impulses will get further crushed. India has a unique opportunity of being able to streamline and improve its tax structure, which will generate strong revenues and boost growth. <br /><br />Cutting the fiscal deficit in India's case does not necessarily have the negative economic consequences of the OECD world. Our tax structure is warped enough, so that, if improved, it allow us the opportunity to fundamentally strengthen the economy.<br /><br />Investors have cut India a lot of slack on the deficit, partly due to global circumstances -- when the whole world is running double-digit deficits, why single out India -- not realising, of course, that our double-digit deficit has very little to do with the global financial crisis, and everything to do with our own structural problems. <br /><br />High growth and the admittedly-credible resilience of the Indian economy in 2008-2009, when the world was imploding, have also taken the focus off other structural issues like the fiscal. Investors are, however, a fickle lot, all you need is a surge in the oil complex, or a Greece-type situation to remind everyone of India's macro vulnerabilities. <br /><br />We have already gone through a bout of this in 2008-2009, when our current account position came into question with oil prices surging past $125. We are too dependent on external capital to let this happen again. Even though we fully fund our deficit internally, external capital is important to fund incremental growth.<br /><br />I already detect a lack of patience now building up, investors want to see action. There is nervousness among the investor base, given the events of the past few months. <br /><br />The 3G auctions seem to be delayed once again, with absolutely no visibility on timing, so that is Rs 30,000 crore gone. The GST implementation is also delayed and caught in procedural and state-level issues, with again limited visibility towards time frame. The government remains committed to new social sector programmes like the Right to Food Bill, thus expenditure pressures continue. <br /><br />The NTPC follow-on public offer was not particularly encouraging either, having been effectively bailed out by certain large public sector investment institutions. Not a particularly great start to an aggressive disinvestment programme. <br /><br />Retail investors remain conspicuously absent from new equity issuances. The life insurance companies have, in effect, become the investor of last resort. They are the only institutions with enough firepower to stand up to sustained FII selling, bail out the corporate sector as we saw in 2009, or even support the government borrowing programme. <br /><br />One can only hope that no legislative changes are made which seriously impact flows into these institutions.<br /><br />A strong and credible policy document delivered by the finance minister is the need of the hour, it will seriously enthuse the investor base and potentially trigger strong capital inflows.<br /><br />One can argue that India should not care about investors, especially foreign ones. The harsh reality, however, is that disinvestment seems to be (at the moment) the only credible plan the government has to bring down deficits, and without foreign investors, there will be no serious disinvestment. <br /><br />Foreign capital providers will also be critical to ease the inevitable crowding out issues faced by the Indian private sector, as we try to simultaneously fund huge deficits and strong credit growth.<br /><br />The world is searching for alternative growth engines, beyond the US and the OECD economies, and everyone wants to believe that India has a decade of 8-9 per cent GDP growth ahead of it. <br /><br />The time has come to seize the opportunity and convince the investors that India and the UPA mean business.<br /><br />Serious structural reform and a credible policy framework are needed to set the stage. Beyond the fiscal, one must also see policy movement on FDI and improvement in the capacity of the economy to absorb investment and accelerate supply-side response. <br /><br />The upcoming Budget is a unique opportunity, we must not let it slip.<br /><br /><a href="http://business.rediff.com/column/2010/feb/12/budget-2010-column-why-the-coming-budget-is-very-significant.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-14227192388423482532009-07-31T21:55:00.000+05:302009-07-31T21:55:01.111+05:30Investing logicThe road to financial prudence is straightforward: invest systematically and don’t get carried away by emotions. Unfortunately, like many well-known rules, this one too is observed more in the breach. In fact, so influenced are investors by emotion and sentiment—of the general market kind as well as those sparked by social interaction—that investment decisions are usually dependent on emotion hotspots. But as investors have often found, it is at their own expense.<br /><br />Now with the global financial crisis having dipped confidence levels to a new low, even a slew of stimuli has failed to lure edgy investors back to the stock markets in large numbers. In such circumstances, 50 Psychological Experiments for Investors reveals valuable insights into investor behaviour. A compilation of research exercises conducted across the world, the book deconstructs the effect of biases, interaction and emotion on investor activity. Using a question-answer format, author Mickäel Mangot draws conclusions from experiments conducted by researchers of behavioural finance. Even though the studies have been carried out mostly in western countries, the learnings are for everyone to pay heed to.<br /><br />Beginning with momentum investing, the book highlights a number of fallacies in human behaviour. For instance, investors turn optimistic when the markets are bullish and become pessimistic in bear markets. If a particular asset class generates positive returns for some time, investors increase their exposure to it. This, says Mangot, is due to momentum bias. “Increases of 15% in real estate or of 30% in the stock market are extreme phenomena that are much less probable than more modest changes confirming to historical averages. Betting on them is like betting on snow in Beijing in October,” he notes.<br /><br />He also points to a weekly survey conducted by the American Association of Individual Investors during 1987-1992 to understand how past performances determine investor expectations. The study found that investor expectations are more directly linked to the performance of the index in the week prior to the survey. Coming to an investment conclusion based on immediate past results, instead of more concrete historical data, can be less than fruitful.<br /><br />Another behavioural aspect that is more applicable to current times is the disposition effect. Investors tend to keep loss-making securities for a longer period than the winning ones. The popular tactic is to book profits in winning stocks and hold the loss-making ones, a strategy that has proved expensive for retail investors.<br /><br />A study of 6,380 investment accounts of individuals from 1987 to 1993 by Odean for the book Are Investors Reluctant to Realize their Losses? found that the investors tend to sell gaining stocks more than the losing ones. The study also found that the winning stocks which were sold, outperformed the market on an average by 2.3% in the following year, while the losing stocks which were retained, underperformed the market by 1.1%.<br /><br />“Thus, if the investors studied had kept the securities sold and sold the securities kept, they would have increased their annual performance by 3.4%,” points out Mangot. The author calls this a “sunk cost fallacy”. This fallacy induces the investors to go right till the end, that is to keep the stock until it reaches the break-even point.<br /><br />Another discovery is that psychologically, owning a home increases selfesteem and autonomy in investment decisions. Also, children of homeowners tend to be more successful than the children of renters.<br /><br />The studies also track the gender difference in financial behaviour: women are found to be fiscally more prudent than men because of higher risk aversion. They also prefer bonds to stocks and change their portfolios less often compared with men.<br /><br />Even the effect of the lunar cycle on human behaviour is dealt with, albeit in a realistic manner, by taking inferences from studies conducted during these periods.<br /><br />While most of the results and outcomes cited in the book make for an interesting perusal, readers could get bogged down by the number of references for each question. But for the sheer width of psychological insight into investment behaviour patterns, this book is probably unmatched. It’s a very useful tool to introspect one’s investing history— and to correct the way i n which one makes investment decisions in the future.<br /><br />BEHAVIOUR DECODED<br /><br />How we choose information on fallacious criteria<br /><br />Q. Why do you think you have to invest in the stock market when prices have skyrocketed?<br />A. Investors think that what’s occurred in the recent past can recur, but it is necessary to observe phenomena over a long period to get an accurate picture.<br /><br />Q. Why do you buy stocks when the market has gone up, and bonds, when it goes down?<br />A. The better the recent performance of stocks, the more they attract investors. When the market goes down, investors turn pessimistic and invest in bonds.<br /><br />How loss and regret aversions inhibit our behaviour<br /><br />Q. Which stocks do you sell quickly and which are the ones that you retain?<br />A. The stocks that are gaining are sold more easily by investors than those that are losing. Studies show that the stocks sold subsequently outperformed the market, while those that were held, underperformed.<br /><br />Q. Why do you reinvest in losing securities?<br />A. Investors put time, energy and money in investment decisions, so they try and average out the purchase price by buying more of a losing stock. All this increases the overall risk to the portfolio.<br /><br />How purchasing real estate affects financial performance<br /><br />Q. Do owners live more happily than renters?<br />A. Research shows that ownership of real estate produces satisfaction. Owners, therefore, enjoy better psychological health than renters.<br /><br />Q. Are children of homeowners more successful than those of renters?<br />A. Studies show a positive impact of ownership on the present and future behaviour of children through geographic stability and a better living environment. They also tend to be more successful in school.<br /><br /><a href="http://moneytoday.intoday.in/index.php?option=com_content&task=view&issueid=74&id=5568&Itemid=1§ionid=106">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-80475168153078561192009-07-31T09:55:00.000+05:302009-07-31T09:55:00.055+05:30How to profit from lossesThe Income Tax Department is more often than not seen as the cloud; seldom is it the silver lining. In a rare exception, it provides muchneeded succour to those ravaged by the stock markets. So, if you are among the thousands of investors who lost money in the market collapse last year, there’s some solace. Any short-term loss suffered in the last financial year can be adjusted against profits made in subsequent years. What’s more, this loss can be carried forward for up to eight financial years.<br /><br />Short-term losses are the ones you incur when you sell shares or equity funds within a year of buying them. But calculating these deficits is not an easy task. The sale of stocks and funds are on a first-in, first-out basis. This means the shares you bought first will be considered to be sold first. So, if you bought some more shares of a company that you already owned and subsequently sold some, the shares you bought first will be deemed to have been sold first.<br /><br />One needs to be cautious while making the calculation because what you assume to be a short-term loss could actually be a long-term one, which cannot be offset against any other gain or carried forward. Just as there is no tax on long-term capital gains from equities and equity-oriented mutual funds, there is also no provision to set them off against any other gain.<br /><br />You can carry forward losses (both short- and long-term) for other investments as well. But keep in mind that you can do so only if you file your return by the due date. If you file after 31 July, you will not be allowed to avail of this benefit.<br /><br />What can be carried forward <br />Short-term losses from equities and equity-based mutual funds. <br />Short- and long-term losses from debt-based funds and gold funds. <br />Short- and long-term losses from real estate, gold and silver. <br />Losses in business and selfemployment. <br /><br />When it comes to real estate, the losses resulting from a sale can be carried forward. However, there is another type of loss that does not come from selling property. The interest paid on a home loan is considered a loss. Taxpayers can adjust up to Rs 1.5 lakh a year on this count against any income, including salary and business income, if the house is selfoccupied. If a property has been given out on rent, the entire loss (interest paid) can be adjusted against the income. However, the interest paid on a home loan cannot be carried forward.<br /><br /><a href="http://moneytoday.intoday.in/index.php?option=com_content&task=view&issueid=48&id=5754&Itemid=1§ionid=106">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-57953369368664935862009-07-30T21:55:00.000+05:302009-07-30T21:55:00.201+05:3016 incomes that are not taxed in IndiaAlthough the taxman has been vested with the task of collecting taxes on the incomes of the citizens, he has deemed certain kinds of incomes as 'not included in total income'.<br /><br />Thus, if any earning that you receive falls under these incomes you don't have to treat it as income or pay tax on it!<br /><br />Now, let us take a look at the different incomes that are not taxable incomes. . .<br /><br />1. Agricultural income: Any income which you receive as income from any agricultural activity is deemed as not included in total income. If your father is into agriculture and he gives you a part of the income as a gift, then you don't need to pay tax on it, provided, your father files his tax returns. <br /><br />2. Income for being partner in a firm: If you receive any income for being a partner of a firm which has already been assessed separately, then the income need not be included in total income. Thus any share in the profits that you have in a firm according to the partnership deed is not taxable.<br /><br />3. Travel concession/assistance: Any monies that you receive from your company for the purpose of travel to any place in India along with your family for the purpose of leave. The claim can be made two times in a bucket of 4 years. <br /><br />Family includes wife and children and also parents, brothers or sisters if they are dependent on you. The only check being that you have to maintain original bills to prove travel if the income tax department asks for it.<br /><br />4. Rs 5,000: An amount of up to Rs 5,000 which you receive for any reason -- other than as prize money and is not a recurring amount -- can be excluded from your total income. It seems to be a very small amount, but sometimes this could be the difference between being in a higher slab and a lower slab.<br />5. Retirement/death gratuity: Any payment received under a pension or death-cum-retirement gratuity scheme by an individual or his widow, children or dependents. <br /><br />The gratuity should not be more than the number of years in service multiplied by half month's salary based on a ten-month average. For example, if the average salary for the previous ten months prior to receiving gratuity is 10,000 and years in service is 15, then 15x5,000=75,000 will be not included in total income.<br /><br />6. Leave salary: Any cash amount received as compensation for earned leave which is encashed at the time of retirement. (This applies only to employees of central/state government).<br /><br />For employees other than government employees, the leave salary can be encashed up to a limit of ten months worth of earned leave. It also specifies that the entitlement to earned leave should not exceed 30 days for each year of service.<br /><br />For example, if you have 76 days of earned leave and total years of service is two years, then, only the cash equivalent of 60 days of earned leave is not added to income. <br /><br />7. Retrenchment: Any compensation received by a workman due to the closure of his company or change in the management of the company if new terms are less favourable than what was previously applicable.<br /><br />8. Voluntary retirement: Any amount up to a maximum of Rs 500,000 paid at the time of voluntary retirement in accordance with and scheme of voluntary retirement of the company. But, the company paying the VRS should have a framework for VRS as prescribed by the government.<br /><br />9. Life insurance policy: Any amount received as benefit from a life insurance policy, including bonus payment, is not included in total income. The only exception is the amounts paid as part of keyman policies.<br /><br />10. Provident Fund: All payment which is received from a provident fund to which the PF Act applies or any PF fund of the government, is not included in total income.<br /><br />11. Superannuation: Any payment made from a superannuation fund on the death of the beneficiary or as a refund of contributions or if the employee becomes incapacitated before retirement.<br /><br />12. Payment of rent: Any allowance paid by an employer to an employee to meet expenditure actually incurred on the payment of rent for accommodation. But this is not allowed if the house is owned by the employee or he has not incurred the rental.<br /><br />13. Income from government securities: Any earnings from interest, premium on redemption or other payment on securities, bonds, annuity certificates, savings certificates and other instruments issued by the central government and also deposits taken by the central government. <br /><br />In case of Non-Residents, if the bond have come to you by virtue of being a nominee or survivor of the Non-Resident, or if the bonds have been gifted to you by an NRI -- who purchased the instrument in foreign exchange and if the principal and interest will not be taken out of India by the recipient of the gift, the amounts will not be added to income.<br /><br />14. Scholarships for education are not included in total income.<br /><br />15. Awards and rewards: All payments receive in cash or kind as an award given by the central or state governments or by a body recognised by the central government to give such awards, will not be included in the total income.<br /><br />16. Relief funds: Any amounts which are received by an individual as part of the Prime Minister's National Relief Fund or the promotion of folk art fund or students fund or foundation for communal harmony will be treated as not included in income. <br /><br />Thus we see that although the taxman is mostly portrayed as a villain, he has been liberal enough to give us the benefit of income tax free income from so many sources.<br /><br />The above learnings can be applied to our personal lives in two ways:<br /><br />Try to increase the income, if any, coming under any of the above heads; and<br />Invest in any of the tax-free avenues given above so that we may get the benefit of the investment as well as tax free income when it comes to our hands later on.Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-3675099965266191567.post-51200994082691099832009-07-30T20:53:00.001+05:302009-07-30T20:56:41.005+05:30RBI warns public against fictitious fund offersCautioning public against fictitious offers of large funds from unknown entities, the Reserve Bank of India on Thursday advised them again to not get carried away by such offers.<br /><br />"The Reserve Bank of India, has today once again clarified that remittance in any form towards participation in lottery schemes is prohibited under the Foreign Exchange Management Act, 1999," RBI said in a release.<br /><br />Further, the RBI said that restrictions are also applicable on remittances for participation in lottery-like schemes functioning under different names.<br /><br />The central bank clarified that it neither maintains any account in the name of individuals, companies or trusts in India to hold funds for disbursal nor does it allow individuals to open an account to deposit money with the Reserve Bank.<br /><br />"The Reserve Bank has advised the public not to remit or deposit money in such accounts in response to fictitious offers/ representations. The public may immediately bring the details of such offers to the notice of local police authorities for booking the culprits," the release added.<br /><br />The warning comes in the wake of many people falling prey to such tempting offers and losing money in the recent past. The central bank has also cautioned the public in the past asking them not to make any remittance towards participation in such schemes or offers from unknown entities.<br /><br />The Reserve Bank further said that in addition to making offers through letters, e-mails, mobile phones, the fraudsters have now resorted to issuing certificates, letters, circulars on letter head that looks like that of the RBI's.<br /><br />"The fraudsters also convince the victims by impersonating as senior officials of the Reserve Bank," it said.<br /><br />The central bank said that many fraudsters have even opened accounts with banks in India and advised public to deposit money in these accounts.<br /><br />"Once the money is deposited in their account, people mailing such offers withdraw the money and then vanish. The victim thus loses the money already paid," RBI said.<br /><a href="http://business.rediff.com/report/2009/jul/30/rbi-warns-public-against-fictitious-fund-offers.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-82051295126026086982009-07-26T17:11:00.000+05:302009-07-26T17:11:00.773+05:30Avoid these 2 mistakes and become rich!There are two big mistakes most investors make.<br /><br />The first is following the crowd and not trusting their own intuition. Doing what everybody else is doing is often okay in the short run but in the long run it's usually wrong. Take five steps back and look at the big picture.<br /><br />Is there a general market trend up or down? Has there been a shift in the trend? Are we really in a growth time frame or is this a time when companies are laying off people, having a difficult time increasing prices, holding off on capital investments, etc? What is your personal experience or experience of family and friends? What is your intuition telling you? You may believe that intuition has no value in investing, but how many of you knew the stock market was overvalued and yet in-vested because everyone else was making money and you felt left out of the game? Try to understand your motivation and create some belief of what the future is going to look like.<br /><br />The second common mistake is not looking enough at history and understanding history and market valuations. People may understand the past twenty years at most, but they don't really study and understand the last one hundred years. You can see patterns when you're looking at the whole twentieth century. You look at the last twenty years and the stock market has done extremely well, but you look at twenty years before that and stocks did very poorly. So you have very long periods of time where the markets don't do anything.<br /><br />History helps you see that. Markets tend to get greatly overvalued. You have extreme greed and extreme fear. What you see when you review long-term history is that when you have extreme greed, markets become very overvalued and bubbles occur, and, when you have extreme fear, markets become very undervalued - and, therefore, present a very valuable opportunity to buy.<br /><br />It's very useful to understand these big cycles up and these big cycles down - what some people call regime shift. Ben Graham said something that was extremely valuable in his classic book, The Intelligent Investor. There used to be a belief - because of our traditional market allocation models and modern portfolio series - that you should hang in there for the long haul. Ben Graham, who is one of the best value investors of all time, said that in a normal 50 / 50 portfolio, when markets are greatly overvalued, you go 25 per cent in stocks, and, when markets are very undervalued, you go 75 per cent stocks.<br /><br />You're really going against the crowd when you do that so it's very hard, but that keeps you from getting caught being greedy. You look at the markets and say, "Is the market overvalued or undervalued, and how much risk am I willing to take?"<br /><br />In 1999, for example, valuations were very high, so it was time to start lowering stock allocations even though the share prices were still going up, and everybody was euphoric about the market. In hindsight, it certainly proved to be the right rule, but it was a difficult thing to do at the time. You want to be heavily invested when things are cheap and very cautious when things are expensive. You have to avoid saying that it's different this time and that markets are going to keep going up because of technology or whatever.<br /><br />When you alter your strategy as valuations become very cheap or very expensive, do so gradually. In 2000, for example, the average investor in Japan had about 3 per cent in stocks, whereas the average recommendation in the United States had about 68 per cent in stocks, according to Barron's.<br /><br />In the late 1970s, the average recommendation was between 25 and 30 per cent in stocks, and that was the time just before the beginning of the bull market. It just shows that we tend to see the very short past and not look at valuations and the big picture.<br /><br />Major trends are very slow to change, so the investor doesn't have to do something every week. Once or twice a year is often enough to rebalance your asset allocation in order to reset it to your original allocation. Yes, it's very hard to take money off the table when things are going up, and it's very hard to add to equity portfolios when things are cheap, but this is exactly how you grow wealthy over the long-term.<br /><br />A golden rule to remember is that greed and fear control the market in the short run. If you can understand greed and fear as the central short-term components, you can see what's going on and realize the pattern. Investment valuations at the time of purchase determine long-term returns. When people are more fearful, great values are created; when people are greedy, bubbles are created.<br /><br />So, don't pay attention to short-term noise. It doesn't matter what the market does in the short run. You have to understand the basics - what's going on in the big picture - and not worry about missing some of the upside. In other words, let neither let greed nor fear hold you in their sway, indeed, it's in times of pervasive fear that great values are available.<br /><br /><a href="http://business.rediff.com/report/2009/jul/24/perfin-avoid-these-2-mistakes-and-become-rich.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-36032365106817086242009-07-26T13:43:00.002+05:302009-07-26T14:10:50.777+05:3010 countries with largest foreign reservesForeign exchange reserves, often taken as a yardstick to gauge a country's financial strength, are the foreign currency deposits and bonds held by central banks or monetary authorities (it is the Reserve Bank in the case of India).<br /><br />Forex reserves include a country's gold holdings and convertible foreign currencies held in its banks, including special drawing rights and exchange reserve balances, with the International Monetary Fund. Foreign exchange reserves are used to back a country's liabilities, e.g. the local currency issued and the various bank reserves deposited with the central bank, by the government or financial institutions.<br /><br />The quantity of foreign exchange reserves can change as and when a country's central bank implements the monetary policy. Large reserves of foreign currency allow a government to manipulate exchange rates -- to stabilise the foreign exchange rates to create a favourable economic environment.<br /><br />India ranks 5th in the world with a foreign exchange reserves of $262 billion as of June 2009. <br /><br />So let's find out which are the 10 nations with the largest foreign exchange reserves in 2009...<br /><br /><strong>Rank 1: People's Republic of China -- $2.132 trillion</strong><br /><br />People's Republic of China is the largest country in East Asia and the most populous in the world with over 1.3 billion people, approximately one-fifth of the world's population.<br /><br />China is the fastest growing major economy in the world. It now has the world's third largest nominal GDP -- 30 trillion yuan ($4.4 trillion). It is a member of the World Trade Organization and is the world's third largest trading power behind the US and Germany.<br /><br />Analysing China's record foreign exchange reserves growth, economists discovered that luxury home sales in China's big cities saw robust growth in the second quarter. According to analysts, it is mainly because of increased purchase by overseas buyers.<br /><br /><strong>Rank 2: Japan -- $1.019 trillion</strong><br /><br />Japan is the second largest economy in the world, after the United States, with about $5 trillion nominal GDP and third after the US and China in terms of purchasing power parity. <br /><br />It is home to some of the leading and most technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles and processed foods.<br /><br />Japan's main export markets are the US, European Union, China, South Korea, Taiwan and Hong Kong. Japan's main exports are transportation equipment, motor vehicles, electronics, electrical machinery and chemicals.<br /><br />The island country's service sector accounts for three quarters of the gross domestic product. Japan ranks 12th out of 178 countries in the Ease of Doing Business Index 2008.<br /><br /><strong>Rank 3: Russia -- $401 billion</strong><br /><br />Russia has the world's largest reserves of mineral and energy resources,and is considered an energy superpower. It has the world's largest forest reserves, too.<br /><br />It is the world's leading natural gas exporter and the second leading oil exporter.<br /><br />The economic crisis that struck all post-Soviet countries in the 1990s was almost twice as intense as the Great Depression that hit Western Europe and the US in the 1930s. Russia's GDP was half of what it had been in the early 1990s, even before the financial crisis of 1998 had set in. <br /><br />However, since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have bolstered economic growth in Russia. <br /><br />The country ended 2007 with its ninth straight year of growth, averaging 7 per cent annually since the financial crisis of 1998.<br /><br /><strong>Rank 4: Taiwan -- $305 billion</strong><br /><br />Taiwan's rapid economic growth post World War II has transformed it into an advanced economy. Taiwan's growth is fondly referred to as the 'Taiwan Miracle'. <br /><br />International Monetary Fund recognises Taiwan as an advanced economy while World Bank terms it high-income economy. Its technology industry has a major role to play in the global economy.<br /><br />Taiwanese companies manufacture a large proportion of the world's consumer electronics.<br /><br />Taiwan is one of the constituent of Four Asian Tigers alongside Singapore, South Korea and Hong Kong.<br /><br />Today Taiwan has a dynamic capitalist, export-driven economy with gradually decreasing state involvement in investment and foreign trade.<br /><br /><strong>Rank 5: India -- $262 billion</strong><br /><br /><br />India is the seventh-largest country by geographical area, second-most populous country and the most populous democracy in the world.<br /><br />India's economy is among the fastest growing in the world. It has the world's second largest labour force -- 516.3 million. In terms of output, the agricultural sector accounts for 28 per cent of GDP; the service and industrial sectors make up 54 per cent and 18 per cent respectively.<br /><br />The International Monetary Fund recently raised India's growth forecast to 5.4 per cent for 2009 and said that the Indian economy is beginning to pull out of a recession.<br /><br />The country is expected to witness a growth rate of 5.4 per cent in 2009.<br /><br />The Indian economy is projected to expand at a rate of 6.5 per cent in 2010 while the world GDP is anticipated to grow by 2.5 per cent.<br /><br />The country is well connected through maritime routes, although it lacks in airports and high-quality roads<br /><strong>Rank 6: South Korea -- $232 billion</strong><br /><br />South Korea, officially the Republic of Korea, is an East Asian country, located on the southern half of the Korean Peninsula.<br /><br />South Korea is a presidential republic consisting of 16 administrative divisions.<br /><br />South Korea is a developed country and a full democracy. It is a high-income Organisation for Economic Co-operation and Development member, having the fourth largest economy in Asia and the 15th largest in the world. <br /><br />South Korea is a leader in technologically advanced goods such as electronics, automobiles, ships, machinery, petrochemicals and robotics, headed by Samsung, LG and Hyundai-Kia.<br /><br />South Korea had the world's second-fastest growing economy from 1960 to 1990. However, from 2003 to 2008, South Korea's economic growth rate slowed to fall behind the global average.<br /><br />The economy slipped from the 11th largest in the world to the 15th largest.<br /><br />South Korea is classified as a high-income economy by the World Bank and an advanced economy by the International Monetary Fund.<br /><strong>Rank 7: Brazil -- $210 billion</strong><br /><br />The Federative Republic of Brazil is a country in South America. It is the fifth largest country by geographical area, occupying nearly half of South America.<br /><br />Brazil is the largest national economy in Latin America, the world's 10th largest economy at market exchange rates and the ninth largest in purchasing power parity, according to the International Monetary Fund and the World Bank.<br /><br />The country has been expanding its presence in international financial and commodities markets, and is regarded as one of the group of four emerging economies called BRIC (Brazil, Russia, Indian and China). <br /><br />The country is known for its booming agricultural, mining, manufacturing and service sectors, as well as a large labour pool.<br /><br />Brazilian exports are currently scaling new heights, its major export products being aircraft, coffee, automobiles, soybean, iron ore, orange juice, steel, ethanol, textiles, footwear, corned beef and electrical equipment.<br /><br /><strong>Rank 8: Hong Kong -- $186 billion</strong><br /><br />Hong Kong, a self-governing territory of the People's Republic of China, is a global metropolitan and international financial centre, and has a highly developed capitalist economy.<br /><br />Its highly capitalist economy has been ranked the freest in the world by the Index of Economic Freedom for 15 consecutive years.<br /><br />Hong Kong is one of the world's leading financial centres and is one of the Four Asian Tigers. The Hong Kong Stock Exchange is the sixth largest in the world.<br /><br />Hong Kong's economy was affected by the Asian financial crisis of 1997. The dangerous H5N1 avian influenza also surfaced that year.<br /><br />After a slow recovery, Hong Kong suffered a setback again because of an outbreak of SARS in 2003.<br /><br />However, today, Hong Kong continues to serve as an important global financial centre. The Hong Kong dollar has been pegged to the US dollar since 1983.<br /><br /><strong>Rank 9: Singapore -- $166 billion</strong><br /><br />The Republic of Singapore is an island city-state located at the southern tip of the Malay Peninsula.<br /><br />Since its independence on August 9, 1965, Singapore's standard of living has risen significantly. <br /><br />Singapore's is an export driven economy and is one of the Four Asian Tigers along with Hong Kong, South Korea and Taiwan.<br /><br />It happens to be the 5th wealthiest country in the world in terms of GDP per capita.<br /><br />Foreign direct investment and industrialisation have created a robust economy focused on industry, education and urban planning. <br /><br />In 2009, the Economist Intelligence Unit ranked Singapore the 10th most expensive city in the world and third in Asia, after Tokyo and Osaka.<br /><br />The current economic crisis, however, has affected the economy of this island nation to a great extent<br /><br /><strong>Rank 10: Germany -- $144 billion</strong><br /><br />The Federal Republic of Germany consists of 16 states. The capital and largest city is Berlin.<br /><br />Germany is a major economic power with the world's fourth largest economy by GDP and the fifth largest in purchasing power parity.<br /><br />Germany allocates the second biggest annual budget of development aid in the world.<br /><br />Germany is the world's top exporter and is the leading producer of wind turbines and solar power technology in the world. <br /><br />The largest annual international trade congresses are held in German cities of Hanover, Frankfurt, and Berlin.<br /><br />Of the world's 500 largest stock market listed companies measured by revenue, the Fortune Global 500, 37 companies are headquartered in Germany. Some of them are: Daimler, Volkswagen, Allianz, Siemens, Deutsche Bank etc.<br /><br />Germany is also home to well known global brands like Mercedes Benz, SAP, BMW, Adidas, Audi, Porsche, Volkswagen, and Nivea.<br /><br /><a href="http://business.rediff.com/slide-show/2009/jul/23/slide-show-1-10-countries-with-largest-foreign-reserves.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-69603219393491965572009-07-15T09:55:00.000+05:302009-07-15T09:55:00.464+05:30All you wanted to know about GSTOne of the biggest taxation reforms in India -- the Goods and Service Tax (GST) -- is all set to integrate State economies and boost overall growth. <br />GST will create a single, unified Indian market to make the economy stronger.<br />Finance Minister Pranab Mukherjee while presenting the Budget on July 6, 2009, said that GST would come into effect from April 2010.<br />The implementation of GST will lead to the abolition of other taxes such as octroi, Central Sales Tax, State-level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services, et cetera, thus avoiding multiple layers of taxation that currently exist in India.<br />Goods and Services Tax -- GST -- is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level.<br />Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain.<br />The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain.<br />Experts say that GST is likely to improve tax collections and boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate.<br />Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimising exemptions.<br />It is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points (from manufacturing to retail outlets).<br />Currently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold.<br /><br />How will it benefit the Centre and the States?<br /><br />It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services.<br /><br />What are the benefits of GST for individuals and companies?<br /><br />In the GST system, both Central and State taxes will be collected at the point of sale. Both components (the Central and State GST) will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.<br />India is planning to implement a dual GST system. Under dual GST, a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of a transaction.<br /><br />All goods and services, barring a few exceptions, will be brought into the GST base. There will be no distinction between goods and services.<br /><br />Which other nations have a similar tax structure?<br /><br />Almost 140 countries have already implemented the GST. Most of the countries have a unified GST system. Brazil and Canada follow a dual system where GST is levied by both the Union and the State governments. <br />France was the first country to introduce GST system in 1954.<br /><br />Will this be an extra tax? <br />It will not be an additional tax. CGST will include central excise duty (Cenvat), service tax, and additional duties of customs at the central level; and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the State level.<br /><br />What will be the rate of GST?<br /><br />The combined GST rate is being discussed by government. The rate is expected around 14-16 per cent. After the total GST rate is arrived at, the States and the Centre will decide on the CGST and SGST rates.<br /><br />Currently, services are taxed at 10 per cent and the combined charge indirect taxes on most goods is around 20 per cent.<br /><br />Will goods and services cost more after this tax comes into force?<br /><br />The prices are expected to fall in the long term as dealers might pass on the benefits of the reduced tax to consumers.<br /><br />Why are some States against GST; will they lose money? <br />The governments of Madhya Pradesh, Chhattisgarh and Tamil Nadu say that the information technology systems and the administrative infrastructure will not be ready by April 2010 to implement GST. States have sought assurances that their existing revenues will be protected.<br /><br />The central government has offered to compensate States in case of a loss in revenues.<br /><br />Some States fear that if the uniform tax rate is lower than their existing rates, it will hit their tax kitty. The government believes that dual GST will lead to better revenue collection for States.<br /><br />However, backward and less-developed States could see a fall in tax collections. GST could see better revenue collection for some States as the consumption of goods and services will rise.<br /><br />How will GST be implemented?<br /><br />The empowered committee is likely to finalise the details of GST by August. But States have to sort out several issues like agreement on GST rates, constitutional amendments and holding talks with industry associations. Experts feel the drafting of legislation and the implementation of law will take time.<br /><br />What are the items on which GST may not be applied?<br /><br />Alcohol, tobacco, petroleum products are likely to be out of the GST regime.<br /><br /><a href="http://business.rediff.com/slide-show/2009/jul/09/slide-show-6-all-about-gst.htm"><br />Source</a>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3675099965266191567.post-67416709563363540092009-07-14T22:10:00.007+05:302009-07-14T22:21:30.067+05:3010 reasons why India will not become a superpower'Will India become a superpower?' This is a question that nags every Indian. With the nature of problems that plague India, the chances of the country becoming a superpower are remote. <br /><br />"India needs to be, not a powerful or dominant country, but a country which is less discontented from within", says Ramachadra Guha writer, historian and biographer who spoke on the topic 'Ten Reasons Why India Will Not and Should Not Become a Superpower' in a meeting organised by Aspen Institute India in New Delhi.<br /><br />Guha pointed out that in 1948, there was a mood of despair and gloom about India's prospects, the government was seen as the only agent that could bring about change. <br />Today, however, there is a sense of optimism about India's prospects, although the government is seen as the major impediment in the country's progress. <br /><br />Tarun Das, president, Aspen Institute India, said India needed more debates such as this to provide a more balanced view of the country's growth and development.<br />Of the 10 reasons he listed, Guha suggested that environmental degradation is likely to remain the most pressing challenge facing India. Primary education also remains a significant challenge that needs to be overcome.<br />He went on to elucidate the ten points that he thought would objectively prevent India from becoming a superpower:<br /><br /><strong>1.Religious extremism:</strong> Long term trends indicate that liberals and moderates in every religious community in India are on the defensive.<br /><strong>2. Left wing extremism:</strong> Extremism in the form of the Naxalite movement, which is a result of geographical reasons and also social and political forces, owing to the continued dispossession and deprivation of tribal people in India. <br /><strong>3. Corruption:</strong> The corruption and corrosion of the power center in India, as a result of political parties functioning as family firms rather than open, transparent political systems.<br /><strong>4. Decline of public institutions:</strong> This includes universities, police, civil services, the judiciary (except for higher judiciary) etc.<br /><strong>5. Rich-poor divide:</strong> The increasing gap between the rich and the poor which is particularly manifested through farmer suicides in India, a phenomenon that has become pervasive only in the last 10-15 years, perhaps because there is now the expectation of a 'good life' that did not exist before.<br /><strong>6. Environmental degradation:</strong> The degradation at a local level, which is impacting people's lives in very real ways, whether in the form of massive depletion of underground aquifers, chemical contamination of soil, death of rivers, loss of species etc.<br /><strong>7. Apathy of the media:</strong> Apathy in covering issues of rising income inequality, environmental degradation.<br /><strong>8. Political chaos:</strong> The political fragmentation manifests as coalition governments at both the central and regional levels, which makes it very difficult to forge sustainable long term policies in the realm of health, education, etc.<br /><strong>9. Border disputes:</strong> India's unresolved border disputes, especially in Kashmir and the North East (Nagaland and Manipur) which indicates that there are parts of India that are not comfortable with being part of India.<br /><strong>10. Unstable neighbour:</strong> India's increasingly unstable neighbourhood is another serious impediment to our superpower ambitions.<br /><br /><a href="http://business.rediff.com/slide-show/2009/jul/14/slide-show-7-why-india-will-not-be-a-superpower.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-82793678765221992692009-07-09T16:14:00.000+05:302009-07-09T16:14:01.088+05:30Payment By Cheques: What The Law SaysEvery single reader of this article must be having at least one bank account with cheque book facility. We are so used to making and accepting payments by cheque that we do not even bother to give it a second thought, let alone consider the legal implications. <br /><br />How many of us are really aware as to what is considered the date of payment when a cheque is issued? Is it the date when the cheque is physically handed over? Or is it the date when the cheque is debited to drawer’s account and credited to payee’s account? In this article, I will deal with the law on the subject and its interpretation by the Supreme Court. <br /><br />Under the Negotiable Instruments Act, 1881 a cheque is an instrument which is negotiated by delivery. The drawer is discharged when payment is made in due course. In simple terms, this means that when cheque is tendered there is a presumption that payment would be realised in due course, and hence the date of payment is considered to be the date on which the cheque is delivered, regardless of when the cheque is actually presented for payment. <br /><br />This principle would not apply in the event of the cheque getting dishonoured. Thus the date of tendering the cheque is to be considered as the date of payment, just like a cash payment. <br /><br />Now let us consider the interpretation of the law by the Supreme Court. <br /><br />Case1 <br /><br />In the case of Commissioner of Income-Tax, Bombay South, Bombay v/s Ogale Glass Works Ltd, the Supreme Court took into consideration various English case-laws and commentaries. <br /><br />It observed that payment by negotiable instrument is a conditional payment, which means that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand (Stedman vs Gooch). <br /><br />In “Benjamin on Sale,” 8th Edition, it was stated that payment takes effect from the delivery of the bill, but might get defeated by the happening of the condition of non-payment at maturity. In “Byles on Bills,” 20th Edition, the position was summarised pithily as “A cheque, unless dishonoured, is payment.” <br /><br />In “Hart on Banking,” 4th Edition, Volume I, expressed the same view as Byles on Bills. In the case of Felix Hadley & Co v/s Hadley, Justice Byrne, expressed the same idea, ie, that payment by a cheque or a bill is a conditional payment of the debt,... <br />the condition being that the cheque or bill should be duly met or honoured at the proper date. <br /><br />Lord Maugham in Rhokana Corporation v/s Inland Revenue Commissioners, held that the common law rule is to the effect that the sending of a cheque in payment of a debt is subject to the condition subsequent that the cheque must be met on presentation, but the date of payment, if the cheque is duly met, is the date when the cheque was posted. <br /><br />The Supreme Court concluded that even if cheques are taken conditionally, when the cheques are not dishonoured but cashed, the payment relates back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques. <br /><br />Case 2 <br /><br />In the case of K Saraswathy alias K Kalpana (Dead) By Legal Heirs v/s PSS Somasundaram Chettiar, the Supreme Court observed that payment by cheque is an ordinary incident of present day life, whether commercial or private, and unless it is specifically mentioned that payment must be in cash there is no reason why payment by cheque should not be taken to be due payment if the cheque is subsequently encashed in the ordinary course. <br /><br />Relying on the judgement in the above case of Ogale Glass Works, the Supreme Court held that payment by cheque realised subsequently on the cheque being honoured and encashed, relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheque. <br /><br />Despite these judgements and the authoritative pronouncements of the Supreme Court, it is quite common to find even the Government authorities refusing to follow the well-established legal interpretation as laid down by the Supreme Court. <br /><br />In the next article, I will explain the relevance of these judgements which came in handy for deciding a matter in the consumer courts where complainants had been filed for negligence and deficiency in service. <br /><br /><a href="http://www.financialexpress.com/news/payment-by-cheques-what-the-law-says/111206/2">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-87450785618918377452009-07-06T09:55:00.000+05:302009-07-06T09:55:01.370+05:30If only economists could be like dentistsDiscussions about governance in India repeatedly turn into discussions about individuals. The Delhi Metro happened because of E Sreedharan; Sebi works well because of CB Bhave; education malfunctioned under UPA I owing to Arjun Singh. Why did urban governance in Surat or Nagpur work well? A few key individuals fixed the problems. If this is the core issue, it puts a huge burden on the appointments process. <br /><br />Economists are trained to be unsatisfied with explanations based on individuals, and look for deeper sources of dysfunction. The story that an economist would tell is one where India has bad elementary education because Sarva Shiksha Abhiyan has basic design mistakes. <br /><br />How would we make drinking water in Bombay work well? An emphasis on personalities would demand finding the right person to run it. How does this happen in advanced economies? The typical small town in an OECD country—and in many developing countries—has 24x7 supply of clean drinking water in the taps. This isn’t done by having a miraculously effective appointments process. There is a fairly humdrum process of recruiting fairly ordinary bureaucrats into water utilities, or contracting out to private utility companies, and the job gets done. In OECD countries, 24x7 clean drinking water in the taps is not exotic rocket science. It happens all the time, because the deeper institutions are structured correctly. <br /><br />This is clearly the scalable path. A few good successes in the appointments process might achieve 24x7 drinking water in a few towns. But the real story is clearly deeper. It is about getting to an institutional mechanism that can be rolled out all across the country, which will deliver 24x7 clean drinking water in 5,000 towns. <br /><br />Institutional change is hard, and all too often there is a temptation to paper over a dysfunctional institutional mechanism by demanding top quality leadership, which will produce good outcomes despite bad institutions. A good judge will overcome all problems in the legal system, work hard, process a large number of cases per month and deliver good judgments against the odds. A good doctor will rise above the terrible problems of a government hospital and heal patients all the same. These individuals are revered, and rightly so. <br /><br />Each good judge and each good doctor deserves the gratitude of society for being useful against all odds. But these are drops in the ocean. Good governments are not built out of good individuals. They are built out of good laws and good incentive structures. The men who will heal health policy are more important than the men who will heal patients. <br /><br />Keynes once wrote, “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.” Mervyn King of the Bank of England famously said the purpose of monetary policy reform is to make it boring. This is all about removing the ‘mystique’ from central banking, depersonalising it so the identity of the governor does not matter. Instead, central banking should be based on transparency, predictability, accountability. A good central bank is one that delivers the same correct reaction function across changes in staffing. <br /><br />An informal slogan at the ‘Water and Sanitation Program’ (WSP) was: “Don’t fix the pipes. Fix the institutions that fix the pipes.” What we need today is not a leader to properly run an organisation that repairs water pipes. What we need today is the leadership that will change laws and incentives so that we achieve good institutional arrangements on water supply. <br /><br />A useful analogy is TN Seshan’s role in building the election commission, which is now one of India’s great institutions. We respect Seshan today not because he ran one or two elections well, but because he was an important actor in institution building. An equally great contribution was made in recent years with the implementation of electronic voting machines. This field has been successfully depersonalised: the performance in conducting elections has held up despite occasional dubious staffing choices at the election commission. <br /><br />So do we hire great men or do we build great institutional arrangements? We hire the great men who will do institutional reform. As long as we are a third world country struggling to get ahead, we will remain vulnerable to the vicissitudes of the appointments process. But the recruiters should not look for the right person to man the system. His job should be to fix it. The interesting candidate is not someone who knows how to make decisions on raising or lowering interest rates. He is someone who knows how to set up a central bank that knows how to raise or lower interest rates. <br /><br /><a href="http://www.financialexpress.com/news/if-only-economists-could-be-like-dentists/483311/0">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-60854722380926111302009-07-05T16:26:00.000+05:302009-07-05T16:26:02.047+05:30Alternative social investmentsThis has been the worst year or so in history for the hedge-fund industry, with many funds suffering deep losses and record numbers of them going out of business. Yet some leading hedge-funders remain firmly committed to giving away a chunk of their fortunes. <br /><br />Frugal Busson and bill-killerAs The Economist went to press the Children’s Investment Fund Foundation, a charity based in London, was due to announce that it had received a whopping £495m ($812m) in the 2008 fiscal year from TCI, a hedge fund, under covenants built into the fund when it was founded by Christopher Cooper-Hohn in 2003. The gift took the value of the endowment to just over £1.5 billion, all of which Cooper-Hohn and his wife, Jamie, who oversees the day-to-day running of the foundation, will use to help children in the developing world. <br /><br />Yet the crisis has taken its toll on London’s hedge-fund philanthropists. In two instances, the Cooper-Hohns have filled (at least temporarily) a funding gap caused by partners suffering such deep losses that they could no longer fulfil their pledges to fund projects. On June 5th an annual gala and auction organised by Arpad Busson, a starry hedge-fund boss, for Absolute Return for Kids (ARK), another charity, raised £15.6m, well down from £25.5m in 2008. <br /><br />That made the annual transatlantic hedge-fund give-off between ARK and the organisation that inspired it even less of a contest than usual. At its gala auction in New York in May the Robin Hood Foundation, which tackles poverty in the city, raised a record $72.6m, up from $56.5m in 2008 and topping by just over $1m the previous high in boom-era 2007. The achievement owed much to George Soros, the original hedge-fund philanthropist, who pledged to give up to $50 million over two years if it was matched by a similar sum from Robin Hood’s board members. That created a pool of up to $100m to be used to match other pledges. <br /><br />In keeping with the times, both galas were lower-key affairs than usual. ARK cut the cost of the evening by two-thirds, and for entertainment attendees had to make do with a speech from Boris Johnson, the mayor of London. And Robin Hood’s traditional auction of items such as dinner with Mikhail Gorbachev or a day on the set of the next James Bond movie, which has been criticised as a platform for rich show-offs, was replaced with a fund-raising session using wireless technology that allowed donors to give anonymously. <br /><br /><a href="http://www.financialexpress.com/news/alternative-social-investments/484300/0">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-79369903373570159152009-07-05T09:55:00.000+05:302009-07-05T09:55:01.124+05:30Indian economy better placed than China’s, says RoachStephen S Roach, chairman of Morgan Stanley Asia, expressed his optimism on the prospects for the Indian economy over that of China, saying that India has made a lot of improvement in recent years on the macro developments, especially with an increase in foreign direct investments, higher savings and improvement in infrastructure in the share of India in GDP. <br /><br />“These improvements reinforce the long-standing accomplishments of India on the micro front—large collection of world-class competitive companies, well educated IT competent workforce, extraordinary entrepreneurs and innovators, well developed capital market, solid financial institutions, rule of law and democracy,” said Roach in a press conference, adding that what has been missing in this interplay between the micro and now the improved macro has been the political impetus to reforms, something it has hobbled your government in the last five years. <br /><br />“India is a more balanced economy than the rest of export-led Asia,” Roach told reporters in Mumbai on Wednesday. In fact, for the first time, Roach is now more optimistic about prospects for India than China. “China faces major challenges for the first time in 30 years,” Roach said. “It pushed its export-led model too far, leaving it too dependent on the external climate.” <br /><br />Roach noted that the recent election changes the prospects for reforms going forward and hopes that the new Congress-led government will be more effective in pushing the reforms forward on a number of fronts and will be much less hobbled by the politics of coalition management. <br /><br />Talking about the growth forecast for the Indian economy, Roach said the growth would remain between 5.5-6.5% for now. Incidentally, Morgan Stanley on May 28 raised India’s growth forecast to 5.8% in the fiscal year to March 31, 2010, from an earlier estimate of 4.4%. The economic growth in the $1.2 trillion economy may turn out to be the real surprise in Asia, Roach said. <br /><br />“The growth in the Indian economy cannot go beyond 8% in another 2-3 years time,” he said. Roach also noted that disinvestment is important for India to reduce its fiscal deficit.The fiscal deficit of India widened to a seven-year high of 6.2% in the fiscal to March 31 as government borrowed more to fund fiscal stimulus packages. <br /><a href="http://www.financialexpress.com/news/indian-economy-better-placed-than-chinas-says-roach/470770/">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-3620964891862441292009-07-04T19:26:00.000+05:302009-07-04T19:26:00.646+05:30The credit card protection plan (CPP) was introduced in India<strong>The credit card protection plan (CPP) was introduced in India recently. How long has it been available in the UK? How has the response been?</strong><br />The concept of plastic card protection has been around for 30 years or so. It originated in the US and then went to the UK. Since then it has moved around the world.<br /><br />CPP is an essential accessory for someone who carries any form of plastic—debit, credit, loyalty or membership card. We are there to support consumers if they lose their wallet or misplace their card.<br /><br />The response has been outstanding in the UK. You can look at 60 per cent of the UK market [including past and present users].<br /><br /><strong>Why was CPP launched in India?</strong><br /><br />Roughly, there are 150 million bankable customers in India and the number is growing. So, strategically, India is a very important market for us. The 150 million bankable customers in India are using around 125 million debit and credit cards. That, on an average, is under one card per person. In the UK, only 50 million bankable customers would be using around 140 million pieces of plastic [debit and credit cards].<br /><br /><strong>What’s the reason behind this?</strong><br /><br />The reason is the stage of development of the plastic market in the UK compared to India. Over the next 5-10 years, we see two things happening in India. First, the number of cards per bankable customer will increase from less than one to around three. Second, rise in the number of bankable customers with the growth in the Indian economy and the financial services sector that supports it.<br /><br />Due to the current financial turbulence, banks have tightened their credit appraisal process for issuing cards. This was not so, say, two to three years back. In this scenario, what do you have to say about the growth of plastic in India?<br /><br />Effectively, we are a service company; we are not a bank or a financial services company. What you are seeing now [as a result of the economic environment] is the increased level of caution on the part of banks with respect to consumer finance. The number of new cards issued at present is much lower than what it was one to two years ago. But, still many customers do not have CPP. The number of new cards issued over the next 12-24 months would be less than normal. But once the economy begins to move up, the growth of card issuance will resume to its former level.<br /><br /><strong>How has the response been in India?</strong><br /><br />The response has been excellent. We are around three months old in India. We are working with four leading banks now. We are in discussions with other banks, too.<br /><br /><strong>After the launch in India, how many enquiries did you get?</strong><br /><br />The operations in India are at a very nascent stage and it will not be right to share the numbers at the moment. In the UK, we currently have around 5 million customers. The UK market is a fraction of the size that the Indian market will become. Already, there are 150 million customers in India compared to the 50 million customers in the UK. We foresee the Indian market to become as big as the UK market.<br /><br />As of now, CPP India has tied up with Citibank, Standard Chartered Bank, Kotak Mahindra Bank and HSBC. Are you looking at more partnerships in the future?<br /><br />Primarily, we partner with debit and credit card issuers, but we are also open to store value card issuers, retail companies or insurance companies. In the years to come, we hope to be a product in every bank’s portfolio.<br /><br /><strong>CPP can be bought from one of the four partner banks or from CPP India directly. Which route is more advisable?</strong><br />We have a website for our India operations, so customers can come to us directly. We also have a contact centre in India. Instead of spending money on marketing and brand development directed towards the consumer, we pay our partners a commission so that they use their distribution channels to promote our product. You can buy the product directly from us, but it’s not our primary distribution method. Going through our partner banks is a better option.<br /><br /><strong>How do you plan to educate potential customers?</strong><br /><br />Our bank partners advertise the product through their channels. CPP is not a difficult product to describe. Everybody understands what can happen if they lose their card. Also, it’s an inexpensive assistance product. The communication will be a combination of background awareness, advertising by our partners and direct mailing. There will be specific communication via telephone as well.<br /><br /><strong>What other measures can a card-holder take to avoid misuse of the card?</strong><br /><br />First, do not let the card out of your possession. Make sure you’ve signed it. I am still amazed how often people write down their PIN number on a piece of paper and keep it in their wallet. Also, if you feel that your card could be misused at a particular merchant establishment, don’t use it there. If the issuing bank offers a specific security feature [like authorisation to process a transaction above a specific limit], opt for it. Research, however, shows that when people steal a card, they tend to use it for small purchases because it is easier to escape detection. As a result, you need to report the loss of a card as quickly as possible. Do not wait for a few hours, because that’s when the fraud occurs. There is plenty of research to show that fraud on the card happens in the first 3-5 hours of the loss of the card.<br /><br /><strong>CPP sets a pre-notification limit. In case misuse of a lost card results in a loss that is more than this limit, how much would CPP India refund? How long would it take to do so?</strong>We generally process claims within 14 days. We would only refund up to the limit. We use the limit to establish joint responsibility with the consumer. If there was no pre-notification limit, the consumer would not be in a hurry to report the loss thinking he is covered for an unlimited amount. This would not be reasonable to us.<br /><br /><strong>How To Take Card Protection?</strong><br /><br />Call 6000-4000 (prefix city code if calling from a mobile) <br />Choose your preferred plan <br />Register your cards <br />Membership annual <br />Fee for single ownership of a classic card is Rs 995 and a premium card is Rs 1,295 <br />Fee for joint holding of a classic card is Rs 1,495 and a premium card is Rs 1,945 <br /><br /><br /><a href="http://www.outlookmoney.com/article.aspx?240709">Source</a>Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-3675099965266191567.post-46304753978845535332009-07-04T17:30:00.000+05:302009-07-04T17:30:30.763+05:30Trading volume: What it reveals about the marketVolume is the number of shares of stock, bonds, options, or futures con tracts traded over a designated period (e.g., daily, weekly, monthly). Advancing volume is the total volume for all stocks increasing in price; declining volume is the total for all stocks decreasing in price. To remove variability elements, it may be advisable to smooth this measure with a moving average (e.g., 5 days).<br /><br />Volume reflects the intensity (strength) of a stock, commodity or index. Volume also provides an indication of the quality of a price trend and the liquidity of a security or commodity.<br /><br />What volume reveals about the market's strength<br /><br />High volume means greater reliance can be placed on the movement in price than if there was low volume, because heavy volume is the relative consensus of a large number of participants.<br />High volume indicates an active market; in an active market, the spread between bid and asked prices is usually narrower.<br />High volume is often characteristic of the initial stage in a new trend, such as a breakout in a trading range. Before a market bottom, investor nervousness leads to panic selling, a characteristic of which is high volume.<br />High volume is also attributable to a market top when strong buyer interest exists.<br />Low volume often exists during an unsettled period, such as at a market bottom. Low volume reflects a lack of confidence that is usually indicative of a consolidation period when prices are within a sideways trading range.<br />A sizable increase in volume may point to a breakout (start) or climax (culmination) of a move, which may be temporary or final. In a rare case, it may represent a shakeout.<br />Volume typically follows a trend, expanding on rallies and decreasing on reactions. Volume is useful in ascertaining how strong a change in expectations really is.<br />How volume and price moves reveal the market's trend<br /><br />It is important to look at the relationship between volume and price. A price move, up or down, that is on higher volume is more significant. Therefore, an analysis of price and volume allows the investor to better interpret the trends in price and any changes thereto. In other words, volume gives an indication of the strength (momentum) of a move in price.<br /><br />Current trading volume and average trading volume should be compared. Average trading volume typically decreases when a stock is in a downtrend, because investors view negatively a stock declining in price. An increasing price is typically coupled with increased volume, but the price can decrease without an increase in volume if investors lose interest in the issue. On the other hand, a declining stock price may be coupled with higher volume when, for example, negative news comes out about the company.<br /><br />The significance of a change in volume is related to the associated price trend or pattern. For example, a good time to buy stock is when there are simultaneous price and volume increases. <br />Volume Price Interpretation<br />Increasing Rising Bullish<br /> <br />Decreasing Falling Bullish<br /><br />Increasing Rising Bearish<br /><br />Decreasing Falling Bearish<br /><br /><br />Volume should be evaluated in appraising market strength or weakness. If volume is increasing, whether prices are going up or down, it is probable that prices will continue their current trend. However, if volume is decreasing, the current trend will probably not continue and a reversal may be imminent.<br /><br />A strong uptrend usually has more volume on the upward legs; similarly, a strong downtrend will have more volume on the downward legs. After the trend ends the corrective leg usually has lower volume. A downtrend may nevertheless be extended whether average trading volume increases, decreases, or is static.<br /><br />Volume is relative in that it usually is greater approaching the top of a bull market than near the bottom of a bear market. Further, trading volume typically increases and continues higher than average in an uptrend, but is below average during a downtrend.<br /><br />Trading volume typically goes up as the price breaks out to the upside of a pattern or formation. In this case, a significant increase in volume is a strong buy signal. However, volume is an indicator of a trend reversal if it goes in a direction contrary to a prevailing trend.<br /><br />Volume / price analysis, on balance volume, upside/downside volume ratio and line, volume up days / volume down days, cumulative volume index, trade volume index, positive volume index, and volume reversal are among the ways volume can be analysed.<br /><br /><strong>Summary</strong><br /><br />The following guidelines apply to the study of volume:<br /><br />The market is bullish if a new high occurs with heavy volume. A new high on light volume is deemed temporary.<br />A new low price with high volume is a bearish indicator. A new low on light volume is less significant.<br />A rally to a new price high on expanding volume but with less activity than the previous rally is questionable. It may point to a coming reversal in trend.<br />A rally on contracting volume is questionable. It warns of a possible price reversal.<br />If prices advance after a long decline and then go to a level at or above the previous trough, the indicator is bullish when volume on the secondary trough is less than the first.<br />If the market has been increasing for a while, an anemic price increase coupled with high volume is a bearish sign. After a decline, substantial volume with minor price changes points to accumulation, typically a bullish indicator.<br /><a href="http://business.rediff.com/special/2009/jul/03/trading-volume-what-it-reveals-about-the-market.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-72266259943426953282009-07-04T14:08:00.002+05:302009-07-04T14:29:01.152+05:30Portfolio management under Sebi scannerThe Securities and Exchange Board of India (Sebi), after tightening the norms for the mutual fund industry, is now looking at portfolio management services. The market regulator will soon be coming out stricter and comprehensive guidelines for PMS. <br />According to a senior banker with a leading foreign bank that offers wealth management and portfolio management services, Sebi has been in dialogue with several service providers to get their views on making the services more transparent and investor-friendly. "We have been deliberating with the regulator and it should be coming out with guidelines in the coming few weeks," the executive said on the condition of anonymity. <br />Earlier, a senior Sebi official has mentioned the watchdog is indeed looking at all areas for making things transparent and investor-friendly. According to industry sources, there are several aspects that the regulator is looking at and one important aspect is the PMS fees. <br />There are no restrictions now on fees charged by service providers. However, since the market is competitive, rates remain reasonable. "But there are instances of fee structures changing with the market trend. During the boom of 2007-08, some charged atrocious fees, and there were also some handsome profit sharing agreements," says a Mumbai-based broker. Hence, the regulator is expected to cap the fees charged by portfolio managers. <br />This, however, might not go down well with the 229-odd portfolio managers registered with Sebi. But rthe regulator isn't much worried about that. "In 1992, when we had asked brokers to disclose the fees they charge to clients, there was an uproar, and trading closed for four days, however, they had to comply and things are much better now," said the Sebi official. <br />Generally, portfolio managers have three schemes, one where a flat fee of around 2% of the portfolio amount is charged, and the service provided includes investment advice at regular intervals and managing the portfolio. The second scheme includes a fixed fee and a profit-sharing scheme, the latter usually kicks in when a return over the government bond (risk-free return) rate is crossed. Then, there is the totally variable scheme where the manager charges a total variable fee structure based on profit sharing. <br />The first two are said to be the more popular, and the third variety usually gains ground when the market is booming and is offered to high-ticket clients. <br />The norms are also expected to cover the 'wealth management' area. There are no specific norms now for this burgeoning industry that has several service providers like banks, brokers, financial service firms and individuals. Sebi has applied to the finance ministry to extend the definition of the term 'securities' in the Sebi Act to several instruments, especially alternative investments like those in art and several structured products that usually beat the definition and thereby the Sebi purview. Wealth managers are known to offer such products to their clients and there is usually an issue in the valuation of these instruments, noted a banker. They don't want a Madoff- like situation happening in India where exotic products are peddled to wealthy clients under Ponzi schemes, he adds. <br />The market size of PMS is estimated to around Rs 1 lakh crore. Sebi has been tightening the PMS norms over the years. In May 2008, Sebi had increased the networth requirement for portfolio managers from Rs 50 lakh to Rs 2 crore and also asked the portfolio managers not to pool accounts of clients. Pooling of clients would mean portfolio managers becoming quasi-mutual funds, not giving customised services. <br />On June 23, 2009, Sebi clarified that there should be a clear segregation of each client's fund through proper and clear maintenance of back-office records. It also mentioned that portfolio managers were not allowed to use funds of one client for another client. Portfolio managers will also have to maintain an accounting system containing separate client-wise data for their funds and provide statement to their clients for such accounts at least every month. Importantly, managers will have to reconcile client-wise funds with the funds in their bank account every day. <br /><br /><strong>Transparency drive </strong><br /><br />#Sebi likely to set limits on fee charged by PMS providers <br /><br />#Guidelines may cover 'wealth managers' as well <br /><br />#Alternate assets like art, structured products under lens <br /><br />#Emphasis on reporting asset position and charges likely <br /><br />#Has already ordered separate client accounts and statement<br /><br /><a href="http://in.biz.yahoo.com/090703/50/batu38.html">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-63960549259671494612009-07-04T13:58:00.000+05:302009-07-04T14:05:49.986+05:30Highlights of the Economic Survey 2008-09Finance Minister Pranab Mukherjee on Thursday tabled the Economic Survey for 2008-09 that prescribes doing away with cess, surcharges on taxes, including fringe benefit tax, and sweeping refroms in areas like petrol pricing and financial sector.<br /><br /><strong>Following are the highlights of the pre-Budget Economic Survey: 2008-09.</strong><br /><br />Unleash reforms - phase out cesses, surcharges and transaction taxes (such as commodities transaction tax, securities transaction tax and Fringe Benefit Tax).<br />Introduce new Income Tax Code that results in neutral corporate tax regime.<br />7-7.5% growth possible in 2009-10.<br />Allow 49% FDI in defence and insurance; permit FDI in multi-format retail starting with food.<br />Proposes another round of fiscal stimulus including tax cuts and increase in expenditure.<br />Decontrol petrol and diesel prices; end Govt monopoly in railways, coal and nuclear energy.<br />Lift all bans on future contracts to restore price discovery; decontrol sugar and fertiliser.<br />Revitalise disinvestment programme to generate Rs 25,000 crore annually, list all PSUs and auction those beyond revival.<br />Economic growth decelerated in 2008-09 to 6.7 per cent from 9 per cent in 2007-08.<br />Fiscal deficit in 2008-09 shot up to over 6 per cent from 2.7 per cent in 2007-08.<br />Survey indicates FRBM-II to get back to path of fiscal consolidation.<br />Complete the process of selling 5-10 per cent equity in identified profit-making non-'Navratna' PSUs.<br />List all unlisted PSUs and sell a minimum 10 per cent equity to public.<br />Auction all loss-making PSUs that cannot be revived.<br />In PSUs with zero net worth, allow negative bidding in the form of debt write-off.<br />Auction 3G spectrum.<br />The auctioned spectrum must be freely tradable, with capital gains on spectrum to be taxed under the Income Tax Act.<br />Rationalise Dividend Distribution Tax to ensure full single taxation of returns to capital in the hands of the receiver.<br />Reform petroleum (LPG, Kerosene), fertiliser and food subsidies to reduce leakages and ensure targeting.<br />Limit LPG subsidy to a maximum of 6-8 cylinders per annum per household.<br />Phase out kerosene supply-subsidy by ensuring that every rural household has a solar cooker and solar lantern.<br />Review customs duty exemptions and move to a uniform duty structure to eliminate inverted duties.<br />Implement GST from April 1, 2010.<br />Rapid operationalisation of UID Authority within 3 months.<br />Agriculture growth fell sharply to 1.6 per cent in 2008-09 from 4.9 per cent.<br />Exports grew at 3.4 per cent to $168 billion in 2008-09 from $163 billion in previous fiscal.<br />Imports grew at 14.3 per cent to $287.75 bn from $251.65 bn Trade balance deteriorated to $119.05 bn from $88.52 bn.<br /><a href="http://business.rediff.com/report/2009/jul/02/budget09-highlights-of-the-economic-survey-2008-09.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-87003972229045753062009-05-20T21:55:00.000+05:302009-05-20T21:55:00.980+05:30The key to India's economic boomIt seems that notwithstanding the global financial crises, India is set to become a high-growth state and more of a welfare state under the new government. <br />The so-called work programme of 2009-2014 has already been chalked out in the Congress party manifesto and there should be no political or other constraints in pushing it through. <br />There is a good chance then that by 2014, the economy would be comfortably chugging along towards a double digit GDP growth rate or may even have reached it. At the same time, the footprint of the state would be much larger in the welfare space. <br />Here are the key elements of that journey to 2014:<br /><strong>The GST boost</strong><br />While there may or may not be another stimulus package, the move to a "moderate" goods and services tax (GST) in about ten months would provide a big boost to the economy. <br />As much as $15 billion of additional output could annually be added to India's trillion dollar economy as a result of the tax which would subsume all other central and state level indirect taxes and lead to the all-India common market. <br />The productivity push<br />The plan to invest Rs 30,000 crore (Rs 300 billion) or a whopping $6 billion on a nation-wide skill development programme focused on the youth of the country should enhance national productivity, even if one assumes a low efficiency of the spend. <br />Similarly, the plan to connect each and every one of the 600,000 odd-villages of the country to a broadband network within three years would yield productivity gains even if one takes into account the fact that many of these villages continue to be denied the most basic facilities like electricity and water. <br />There is also the odd chance that broadband connectivity would expedite the provision of other basic support infrastructure. <br /><strong>A welfare state</strong><br />Having sensed that its aam aadmi thrust has yielded results, there is going to be no holding back the Congress government on its welfare agenda. There is a plan for enactment of a Right to Food law. There is a commitment to provide 25 kilograms of rice or wheat monthly at Rs 3 a kilogram for families below the poverty line. <br />Subsidised community kitchens are proposed to be set up in all cities for the homeless people and migrants. And of course, the rural employment guarantee programme is to be strengthened. <br />There is also a plan to extend rural health insurance to every family living below the poverty line in three years. Social security cover for urban homeless, elderly and backward communities is proposed. Educational loans or scholarships are to be extended to all students. <br />There is talk of more schools with better trained teachers. There are special incentives planned for survival of the girl child aimed at correcting the adverse sex ratio. <br />There are also plans to take forward the scheme of monetary incentives to female students on the completion of various levels of schooling. The spends on these initiatives are certain, even though the outcome may not be. <br /><strong>Welfare agriculture</strong><br />In the case of agriculture, what is proposed to be done to boost industralisation of agriculture is not so clear though the welfare aspects of the government's agricultural plan are clearly marked out. <br />All small and marginal farmers in the country will have access to soft loans. To check the moral hazard that arises from the massive loan waiver programme, there is a plan to extend interest relief to farmers who repay their loans on schedule. <br />Crop insurance, direct income support to farmers in ecologically vulnerable areas and procurement at the doorstep of farmers are some of the other measures that are proposed in this term.<br /><strong>Missing the SME beat</strong><br />The one sector which would boost employment and growth together would be the small scale industry, which contributes 40 per cent to the national manufacturing output and accounts for about a third of the country's exports.<br />The small scale units are among the worst hit by the financial crunch though they are yet to get a serious relief package. <br />The Congress party has however promised a "new deal" for the small units, as well as first generation entrepreneurs, which would include access to collateral-free credit and freedom from multiplicity of laws and inspectors. <br />There is also a plan for a cluster-based approach to growth of SMEs though one needs to see how quickly it would be put in place.<br /><strong>Plugging the Infra gap</strong><br />The new government needs to work out a focused plan for the infrastructure sector if it is to meet its overall objective of high growth. <br />It is not immediately clear how much of the targeted $500 billion investment planned in the current five year plan has been managed in the two years that have passed, though one can be sure that it is inadequate. <br />Investment in infrastructure needs to be enhanced and tracked, even though it is not part of the work programme. The only thing mentioned there is the aggressive target of adding 12,000-15,000 Mw of power generation capacity every year without any explanation of how it will be done. <br />What is nevertheless welcome though is the stated intent of creating a new model of urban administration with financially-viable self-government institutions.<br />Land @ market rates: Market rates for agricultural land required for industrial projects and an option for the farmers to become stakeholders in the industrial ventures on their land, which is part of the work programme, would finally set to rest the controversies on land acquisitions.<br /><a href="http://business.rediff.com/slide-show/2009/may/19/slide-show-7-the-key-to-indias-economic-boo.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-46779455230548324262009-05-09T14:20:00.001+05:302009-05-09T14:30:41.116+05:30All about the New Pension SchemeFrom May 1, Indians have access to another investment avenue to plan for retirement in the New Pension Scheme (NPS). <br />The scheme has been in the pipeline for at least five years but it finally took shape in 2007-08. Although the government was pushing for the scheme after a law providing statutory backing to the regulator was enacted, the Left parties, which were supporting the United Progressive Alliance government, did not allow the passage of the Bill. <br />So, last year, the government decided to go ahead by allowing the NPS Trust to enter management agreements with fund managers. What benefits does the NPS offer? Who is eligible? <br /><strong>Who can join the New Pension Scheme? </strong><br />Any Indian citizen between 18 and 55 years. At present, only tier-I of the scheme, involving a contribution to a non-withdrawable account, is open. <br />Subsequently tier-II accounts, which permit voluntary savings that can be withdrawn at any point of time, can be opened. But to be eligible to open a tier-II account, you need a tier-I account. <br /><strong>How do I enrol? </strong><br />You will need to visit a point of presence (PoP), fill up the prescribed form with the required documents. <br />Once you are registered, the Central Recordkeeping Agency (CRA) will send you a Permanent Retirement Account Number (PRAN), along with telephone and internet passwords. <br /><strong>How much can I invest? </strong><br />There is no investment ceiling. But the minimum investment limit has been fixed at Rs 500 a month or Rs 6,000 annually. Subscribers are required to contribute at least once a quarter but there is no ceiling on how many times you invest during the year. <br /><strong>What is the penalty for failure to make the minimum payment? </strong><br />You will have to bear a penalty of Rs 100 per year of default and will need to pay it with the minimum amount to reactivate the account. Also, dormant accounts will be closed when the account value falls to zero. <br /><strong>Are my investments guaranteed? </strong><br />No. There is no guarantee since NPS is a defined contribution scheme and the benefits depend on the amount contributed and the investment growth up to the time of exit. <br /><strong>How should I select my investment option? </strong><br />You can choose the investment mix between equity or E (high risk but high returns), mainly fixed income instruments or C (that come with medium risk and returns) and pure fixed investment products or G (which offer low returns but have very low risks associated with them). Equity investment is capped at 50 per cent. <br />At present, the equity investment consists of index funds that replicate the Sensex or Nifty portfolio. The C segment includes liquid funds, corporate debt instruments, fixed deposits and public sector, municipal and infrastructure bonds. The pure fixed investment instruments include state and central government securities. <br />There is a trade-off between risk and returns, with a younger investor placed better to take risks. <br />If you are unable to decide the investment mix, the default option will kick in. <br /><strong>What is the default option? </strong><br />The default option, called auto choice lifecycle fund, will see the investment mix change according to the age of the subscriber. At the lowest entry age of 18 years, auto choice entails an investment of 50 per cent in E, 30 per cent in C and 20 per cent in G. <br />The ratios will remain unchanged till the subscriber turns 36, when the ratio of investment in E and C will decrease annually, while the proportion of G rises. <br />By the time the subscriber is 55 years, G will account for 80 per cent of the corpus, while the share of E and C will fall to 10 per cent each<br /><strong>Who will decide the fund manager? </strong><br />At the moment, the Pension Fund Regulatory and Development Authority (PFRDA) has selected six fund managers -- State Bank of India, UTI, ICICI Prudential, Kotak Mahindra, IDFC and Reliance -- on the basis of a bidding and technical evaluation process. <br />You have to select one fund manager at the time of deciding your investment option; later, PFRDA may allow subscribers to choose more than one fund manager. <br />Can I change my investment mix and the fund manager? You can shift from one fund manager to another from May 2010. <br /><strong>What happens if I relocate to another city? </strong><br />The PRAN remains the same and you can access a toll-free number (1-800-222080). The details of your PRAN and the statement of transactions will be available on the CRA website (www.npscra.nsdl.co.in). <br /><strong>How can I exit the scheme? </strong><br />The normal retirement age has been fixed at 60 years. At 60, you will be required to use at least 40 per cent of your accumulated savings to buy a life annuity from an insurance company. A phased withdrawal is also allowed but the lump sum benefit has to be availed of before you turn 70 years. <br />For those looking to exit before turning 60, there is an option to withdraw 20 per cent of the accumulated savings but buy an annuity with the remaining 80 per cent. <br />If the subscriber dies before he or she turns 60, the nominee can receive the entire pension corpus. Alternatively, a subscriber can exit if the account value falls to zero or if the citizenship status changes. <br />The age of exit will be reviewed by PFRDA from time to time. There will also be the option to select an annuity that will pay a survivor pension to your spouse. <br /><strong>Are there tax benefits for NPS?</strong> <br />At present, the investment is covered under section 80CCD of the Income Tax Act and a tax will be levied if you withdraw the money. <br />You can avoid paying tax by transferring the entire corpus to the annuity service provider. PFRDA has, however, approached the government to treat investment in NPS on a par with instruments like Employees Provident Fund and Public Provident Fund, for which no tax is levied at the investment, accumulation or withdrawal stage. <br /><br /><a href="http://business.rediff.com/slide-show/2009/may/04/slide-show-9-all-about-the-new-pension-scheme.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-70388171406201928492009-05-01T13:05:00.003+05:302009-05-01T13:20:06.527+05:30World's top 10 buyers & producers of goldGold has held mankind enraptured since time immemorial. It has been prized for its beauty, easy workability, indestructibility, and value. <br />The average global demand for gold in the past 10 years has been mainly for jewellery at 76 per cent, followed by industrial applications of 14 per cent and 10 per cent for investors. The available gold supply is from new mining, reclaimed scrap, official or new bank sales and gold loans made from official reserves. <br />There are five international gold trading centres: New York, London, Zurich, Tokyo and Hong Kong. <br />But who are the world's largest buyers and producers of gold?<br /><strong>India, world's number one buyer of gold! </strong><br />The craze for the yellow metal in India is phenomenal. It has traditionally been the world's largest consumer of gold. India buys an average of 800 tonnes of gold every year and its total jewellery market is worth more than $20 billion. <br />However, in recent times the demand for gold in India has waned slightly, with the price of the precious metal zooming to record highs. Yet, the country remains the largest buyer of gold, at 770 tonnes in 2007. <br /><strong>China: 2nd largest buyer; number one producer</strong> <br />Beijing has gold holdings of 1,054 tons, up from 600 tons in 2002, and still wants to buy more gold. <br />China produced 280.5 tons of gold in 2007, making it the world's number one producer of the precious metal. <br />China is also the world's second largest buyer of gold. It bought 328 tons of gold in 2007. <br /><strong>USA: 3rd largest buyer; 4th largest producer </strong><br />The United States of America is the world's third highest buyer of gold. In 2007, it purchased 275 tons of the yellow metal. <br />However, the US is also the world's fourth largest producer of gold. In 2007, it produced 240 tons of gold. <br /><strong>Turkey: 4th largest buyer</strong> <br />Turkey is the world's fourth largest buyer of gold. In 2007, it bought 250 tons of the precious metal.<br /><strong>Saudi Arabia: 5th largest buyer</strong> <br />Saudi Arabia purchased tons of gold in 2007, making it the world's fifth largest buyer of gold. <br /><strong>UAE: 6th largest buyer</strong> <br />The United Arab Emirates is the sixth largest gold-buyer at 107.2 tons (figures pertain to 2007). <br /><strong>Russia: 7th largest buyer; 6th largest producer</strong> <br />The world's seventh largest buyer of gold is Russia. In 2007, Moscow procured 85.6 tons of gold. <br />Russia is also a big producer of gold. In fact, it is the world's sixth largest gold-producer. In 2007, it produced 169.2 tons of gold. <br /><strong>Vietnam: 8th largest buyer </strong><br />Vietnam bought 77.5 tons of gold in 2007, making it the world's eighth largest gold-buyer. <br /><strong>Egypt: 9th largest buyer</strong> <br />Egypt follows in the ninth position. In 2007, it procured 69 tons of gold making it one of the biggest gold-buyers in the world.<br /><strong>Italy: 10th largest buyer </strong><br />Italy is the tenth largest buyer of gold in the world. In 2007, it purchased 59.2 tons of the yellow metal. <br /><strong>South Africa: 2nd largest producer</strong> <br />South Africa is the world's second largest producer of gold after China. In 2007, it produced 270 tons of gold. <br /><strong>Australia: 3rd largest producer</strong> <br />Australia is the world's third largest producer of gold. In 2007, it produced 246.3 tons of gold. <br /><strong>Peru: 5th largest producer</strong> <br />Peru produced 170 tons of gold in 2007, making it the world's fifth largest producer of gold. The United States is the world's fourth largest gold-producer<br /><strong>Indonesia: 7th largest producer </strong><br />Having produced 146.7 tons of gold in 2007, Indonesia is the world's seventh largest producer of gold. Russia is the world's 6th largest producer of gold. <br /><strong>Canada: 8th largest producer</strong> <br />Canada follows Indonesia in gold production at 101.2 tons (figures pertain to 2007), making it the world's eighth largest producer of gold. <br /><strong>Uzbekistan: 9th largest producer</strong> <br />Uzbekistan is the ninth largest gold-producer in the world. In 2007, it produced 75.3 tons of gold. <br /><strong>Ghana: 10th largest producer </strong><br />At 75 tons of gold production in 2007, Ghana is marginally behind Uzbekistan. Ghana is the world's tenth largest producer of gold. <br /><br /><a href="http://specials.rediff.com/money/2009/apr/30slide13-biggest-buyers-and-producers-of-gold-in-the-world.htm">Source</a>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-3675099965266191567.post-37229019423570041842009-04-26T17:55:00.002+05:302009-04-27T09:27:32.541+05:30Indian Government expected to file affidavit on black money MondayWith its 48-hour deadline expiring on Friday, the union government is now expected to inform the Supreme Court Monday on its efforts towards retrieving over Rs.70 trillion ($1.4 trillion) in black money believed to be stashed away in foreign banks by Indians.<br />The government had made the commitment Wednesday before a bench of Chief Justice K.G.<br />Balakrishnan, while responding to a lawsuit accusing it of sitting idle on the question of retrieving the illicit wealth.<br />Asserting that the government is not sitting idle on the matter, Additional Solicitor General Gopal Subramaniam had offered to file an affidavit in the court within '48 hours', detailing the actions taken by it so far.<br />The government's self-set deadline of 48 hours began a little after 2 p.m. Wednesday and expired Friday.<br />Though the apex court had not issued any direction to the government to file the affidavit within '48 hours', the court, accepting the government's offer in good faith refrained from issuing any formal notice on the matter.<br />Without issuing any notice, the court adjourned the matter for next hearing to May 4.<br />The government is expected to file the affidavit on Monday, sources said.<br />Subramaniam had asserted Wednesday that the government had written to the German<br />government seeking details of the possible Indian citizens having secret accounts in foreign banks in that country within 24 hours. The move followed a report by a leading business daily in February 2008 that a former employee of the LGP bank in Liechtenstein had sold data on about 1,400 people who had money there to tax authorities across the world.<br />The German government, which too bought the data, had offered to provide it to any country that sought the information, the news report had said.<br />Subramaniam had said the New Delhi-based financial daily had carried the report on Feb 27, 2008, and the government had written to Germany seeking details of the possible Indian tax evaders on Feb 28, within 24 hours of the report being published.<br />He said the government had also received the German government's response, which he said could not be disclosed in the open court.<br />The union law ministry sources, however, attributed the government's failure in filing the affidavit within the 48 hours, to its 'displeasure at the highest level' with Subramaniam's 'over-enthusiasm' in self-imposing a deadline on filing the affidavit.<br />The sources said the government at its highest level is of the view that the law officer should not have made the commitment on his own, and that too such an early deadline.<br />The government is of the view that it would have preferred filing an affidavit only after issuance of notice on the lawsuit, said sources.<br />The officials said the government was however largely appreciative of Subramaniam's handling of the issue in the apex court, especially his arguments on the 'mystifying timing' of filing the lawsuit and the political motive behind it.<br />The lawsuit was filed Tuesday jointly by former law minister Ram Jethmalani, former Lok Sabha general secretary Subhash C. Kashyap and former Punjab Police chief K.P.S. Gill.<br />The lawsuit is based on a research article written by noted economist and Bangalore's Indian Institute of Management professor E. Vaidyanathan for the institute's in-house journal Eternal India.<br />Vaidyanathan has estimated that 'between 2002 to 2006, $1.4 billion, roughly equivalent to Rs.7,000 crore (Rs.70 billion), have been siphoned off from this country and stashed away in foreign banks'.<br />Return of the illegal wealth of Indians in foreign banks, particulary Swiss banks, has become a major poll planks of the Bharatiya Janata Party (BJP).<br /><a href="http://inwww.rediff.com/newshound/business.html?urlL=business-slice.html&urlR=http%3A//inwww.rediff.com/newshound/showbizsec.htm%3Frediffid%3Dhttp%3A//www.indiaenews.com/business/20090426/194085.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-49720366112077708322009-04-26T16:51:00.002+05:302009-04-26T16:58:21.672+05:3010 don'ts for smart stock market investingThis is a great check list of 10 habits, impulses and tendencies you steer clear of in order to keep your investments healthy.<br /><strong>1. Don't be arrogant</strong><br />The market teaches humility and that is how you must approach it. As soon as you believe you know why the market acts the way it does, you will be proven wrong. Arrogance can kill a portfolio. You must be able to admit defeat and preserve enough capital to fight again.<br />Following point and figure charts, which depict the battle between supply and demand, helps keep you out of the 'I know why' attitude of investing.<br /><strong>2. Don't wait until you feel comfortable to buy when a sector reverses up</strong><br />Falling into the waiting trap is a great way to ensure that you buy the stock at a higher price. When sectors reverse up from oversold levels, it is often when the news is the most dire.<br />Conventional wisdom would suggest this is the last place in the world you would want to invest. Buying at this time is gut wrenching, but to be successful you must act with complete confidence.<br />As the sector moves higher, the comfort level increases. If you use comfort level as your guidance, however, you will for sure leave a lot of money on the table, or worse, buy as the sector peaks.<br /><strong>3. Don't be afraid to buy strong stocks</strong><br />Don't avoid stocks just because they have gone up. Doing so will keep you out of the long-term winners. In the United States, for example, this mentality would have kept you out of General Electric, which was up 188 per cent between January 1995 and December 1997 only to see it rally another 96 per cent by the end of 2000. It also would have kept you out of Cisco, which was up 376 per cent between January 1995 and December 1997, and then it moved up another 312 per cent by the end of 2000. These are only two examples, but there are many others.<br />More important than how much the stock is up is its supply and demand relationship. By evaluating the point and figure chart, you can gain insight into this relationship and whether or not the stock is likely to move higher. Stocks that double can easily double again. Don't miss out on these great opportunities.<br /><strong>4. Don't sell a stock simply because it has gone up</strong><br />Doing this cuts profits short. Buying a stock right is only half the battle. You have to be able to sell it right to win the war. Just because a stock has rallied 30 per cent or 50 per cent, don't be tempted to take your trade off for that reason alone.<br />Consider trimming the position and leave part on the table to continue in the uptrend. Let profits run.<br /><strong>5. Don't buy stocks in extended sectors because 'it's different this time'</strong><br />On the surface, the stock market appears different all the time. The leadership changes: in come new stocks into the Nifty 50, and then out they go. Small-cap stocks outperform for a while, then it's back to the large caps.<br />However, the underlying forces that drive the stock market are always the same. They are true and time-tested and do not change. They are supply and demand. That's why buying sectors that are extended (overbought) will not be different this time.<br /><strong>6. Don't try to bottom fish a stock in a downtrend</strong><br />'The trend is your friend' is a true statement. So don't go against it without some inkling that the trend has changed.<br />Bottom fishing a stock in a downtrend is the opposite of being afraid to buy strong stocks. Do not buy a stock just because it fell sharply. You want to buy a stock that is likely to move higher, not one that is not likely to fall further.<br />At a minimum, wait for the stock to show a sign that demand is back in control and suggesting higher prices. That may be a simple buy signal on the chart or a reversal back to the upside after holding an area of support. Also remember why you initiated the position. Be careful not to let a trade turn into something else.<br /><strong>7. Don't buy a stock simply because it is a 'good value'</strong><br />These days, value is in the eyes of the holder, and therefore it is a subjective term at best. If a stock has become a good value, ask why. This is important, because a stock can stay a good value by not moving for the next decade, or worse, become a better value by dropping another 20 per cent.<br />The true value of a stock is determined by its capital appreciation potential, not numbers on a balance sheet. The basis for capital appreciation lies in the supply and demand relationship of the stock. Appreciation can occur only if demand grows stronger for the stock and buyers are willing to pay a higher price. Watch the point and figure charts to determine if a stock is likely to move higher in price and become a good value.<br /><strong>8. Don't hold on to losing stocks and hope they come back</strong><br />Hope is eternal, but your portfolio is not. Holding on to a losing stock is the best way to let your losses run. Combine this mistake with selling a stock that has gone up and you can create a portfolio of dogs.<br />When buying stocks, there will always be some losers: Count on it. However, how you manage that loss often determines the success or failure of the overall portfolio. Keep losses small so that you have the capital to play again. Hanging on to losing positions, hoping that they will come back, can be deadly.<br />A $50 stock that is stopped out at $40 is a 20 per cent loss. It's a bad trade, but it is manageable. In order to recoup that loss you would have to make 25 per cent on a $40 stock. What if you held on to that $50 stock, hoping that strong earnings would come in and turn it around, but instead it continued lower to $25?<br />Finally, you decide to exit, but now it takes a 100 per cent return from a $25 stock just to get back to even. Those results are hard to find, and if you are able to find one, you don't want to waste it on getting back to even <br />Learn to recognize your losing positions for what they are. If a stock cannot trade above its support line or is not outperforming the averages, find one that is and swap it.<br /><strong>9. Don't pursue perfection</strong><br />There are two types of mistakes to discuss here. The first is the constant belief that there is a better system out there, and you need to find it.<br />Using a new system to invest each week will not get you to your goal. You will become good at nothing and moderate to bad at everything. To be good requires that you stay focused, disciplined, and skilled at whatever methodology you choose.<br />You need to have the strength of conviction in your chosen discipline to learn from mistakes rather than to run away from them and find another methodology. There is no Holy Grail in investing.<br />The second mistake is to wait for the perfect trade. There is no such thing. If you only buy stocks that have all positive attributes you will maintain a portfolio of cash. Rarely, if ever, do you find a stock that has all the pluses on its side.<br />Look for the big ones like relative strength, trend, and signal. Also remember that 80 per cent of the cause of price movement in a stock is based on the market and sector. You are better off being approximately right than precisely wrong.<br /><strong>10. Don't do anything based on a magazine cover</strong><br />Following the hot news that appears on magazine covers is a shortcut to the poor-house. Why should you follow the advice of someone who has just moved from the society pages to the business section?<br /><br /><a href="http://business.rediff.com/report/2009/apr/23/perfin-10-donts-for-smart-stock-market-investing.htm">Source</a>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-3675099965266191567.post-58261056767566785062009-04-23T15:43:00.002+05:302009-04-23T15:48:22.616+05:30Minting political capitalAt first it seems like an idea from the 1970s. From the era of nationalisation. An idea whose time is past, that has become an alibi. Indeed, when L.K. Advani, PM-designate for the NDA, first spoke about it last Sunday, it seemed like a hard weave and dodge to duck the imbroglio involving Varun Gandhi.<br />By April 1 it was an SMS in demand. It seemed the time was just right for the idea of getting stashed loot back to the country. Suddenly the BJP itself woke up to an idea with all the makings of sound political capital.<br />The idea itself was born of a political imperative and economic circumstance. The political imperative stems from the need for a differentiator in an era when mandates are jigsaw puzzles and the economic circumstance calls for an idea that works both as rhetoric and a promise of a better life.<br />After all, the estimated $500 bn stashed abroad is enough stimulus to resurrect growth and alter the face of India's infrastructure. Sure, the first debate on Swiss numbered accounts featured in Parliament in December 1968 and after two decades of probe and litigation on the Bofors case nobody saw any of the bribe money. The circumstance, though, has changed.<br /><em>Rs 25 lakh crore belonging to Indians is estimated to be stashed away in Swiss Banks.We will do our utmost to bring this wealth back to India.</em>SMS from L.K.Advani to voters <br />Hope is embedded in the first-of-itskind action seen in the US. Last September the UBS of Switzerland revealed to the US that it held 47,000 secret accounts for Americans but refused to disclose their identity. Last month, however, after being caught soliciting business, UBS agreed to reveal 250-300 clients and paid $780 million in fines.<br />The plea bargain was driven by desperation to avoid closure and international sanction. Pressure is mounting globally. British Prime Minister Gordon Brown and German Chancellor Angela Merkel have both stated that there was no place for tax havens . The days of bullet-proof confidentiality are clearly over and Advani's promise is based on this premise.<br />So, what is the quantum of Indian money in the Swiss banks? What is the source of the declaration of between $500 bn and $1,400 bn stashed in Swiss accounts ? First a perspective: $500 bn is India's GDP for six months and $1,400 bn would be India's GDP for a year and three months or five quarters.<br /><strong>Quote unquote</strong><br />We raised the issue of money in Swiss banks in February and asked the Government to get it back.Advani has only followed it up. Prakash Karat, CPI(M) General Secretary What did they do for six years? Why was he silent as the leader of the Opposition for five years? It is a poll promise as they are short of issues. Kapil Sibal, Union Minister for Science and Technology A country-by-country breakdown of accounts in Die Banken in der Schweiz published by the Swiss National Bank (the Swiss central bank) in 2007 reveals assets belonging to Indian entities were worth only $2.5 bn or CHF2,923 million (Swiss Francs). <br />Swiss bankers also managed CHF1,383 mn ($1.2 bn) belonging to Indians in a fiduciary capacity. In fact, the total assets of all foreigners in Swiss banks is CHF2,070,437 million (or $1.8 trillion).<br />Contrast this with the range of $500 bn to $1.4 trillion of just Indian money stashed in Swiss banks as claimed by Team Advani.<br />Perhaps, money is hidden in custody accounts. By end-2008 the value of securities in these secret accounts of foreigners was CHF2,190 billion ($1.9 trillion). It is a moot point how much of this could be Indian money.<br />Quantum of money apart there is also the leverage factor. Does India have the kind of leverage US has? And mind you, the US government failed to get the UBS to spill out all the names.<br />As Kapil Sibal, a top lawyer and Union minister for science and technology, says, getting to the pot of money is a complex exercise as one has to first prove violations . Sibal also questions the timing of this idea. Why didn't they do anything when they were in power for six years? Why didn't Advani raise this issue in the past five years as the leader of the Opposition? If the issue is raised now after 11 years of silence, it is because they are short of poll issues.<br />There is, of course, no debate that Indians have stashed huge sums in overseas entities. The sources are unlimited from business to corruption to crime. Indians, without doubt, own a substantive stake in the $11-plus trillion stashed across the globe.<br />One route is overinvoicing of imports. India imported capital goods worth $45 billion last year, and officials believe, at least 10 per cent is siphoned and stashed abroad making India one of the top 10 countries with illicit outflows. This, though, is not the only route. The Satyam saga is validation of software exports being another route.<br />Over the years the adulterous politician-babu-corporate nexus has worked together to orchestrate the framing and changing of rules to suit end use.<br />The formula: to send money abroad inflate costs of goods or services sought abroad and to bring money back inflate income. Indeed, it is passe to stash in Swiss banks. Corporates now have legal ways and means to keep money outside India. FIIs, sub accounts and P-Notes are all part of the routing process and Cyprus, Singapore, Dubai, Mauritius are all new destinations.<br />None of these facts should detain Team Advani or the government of India from pursuing the idea. Hot pursuit of hot money is an idea whose time has come. India must take advantage (as it has indeed in the case of Liechtenstein's LGT Bank) of the emerging consensus across the globe against tax havens. But for rhetoric to translate into outcome it would also have to address issues at home. They would range from ending the abuse of double tax treaties to wiping out the P-Note and sub accounts culture. Very simply, the next political idea must be to dismantle the benami empires whether of dons, politicians<br /><em>Loot vault</em><br /> The amount of funds held offshore globally by individuals is about $11.5 trillion with a resulting annual loss of tax revenue of about $250 bn.<br /><em>Tax Justice Network</em><br /> Global proceeds from criminal activities, tax evasion and corruption is estimated at between $1 tn and $1.6 tn per year.<br />UN & amp; World Bank Report, 2007<br /> During 2002-'06, $10 bn to $100 bn have been stolen out of India every year.<br /><em>Global Financial Integrity Report, 2006</em><br /> At least $6.2 trillion of wealth is held offshore, depriving developing countries of annual tax receipts of $64-124 bn.<br /><em>Oxfam Study</em><br />India is estimated to have lost $5.2 bn just in taxes due to bilateral trade mispricing with the EU and US in 2005-'07.<br /><em>Christian Aid</em><br /><br /><a href="http://in.elections.yahoo.com/articles.html?feed=http://in.news.yahoo.com/248/20090422/1585/tnl-minting-political-capital_1.html">Source</a>Unknownnoreply@blogger.com0