Business Today

From the Managing Editor: June 9, 2013

Rising gold prices have knocked more than a few percentage points off India's financial savings but the mutual funds industry seems to have taken it on the chin and grown its assets by 19 per cent in 2012/13.
twitter-logo Josey Puliyenthuruthel        Print Edition: June 9, 2013

Global gold prices have acted very unusually in recent years. Since 2009, nominal and inflation-adjusted prices of gold have moved in tandem - something that has never happened in the 100 years we have data for. The prices have also risen sharply: nearly doubling from $870 an ounce in 2008 to $1,655 in 2012 (before dropping to the current $1,365 levels). What really happened? A bunch of uneasy central bankers, spooked by the September 2008 financial meltdown and worries over inflation, gave into their fears. Central banks, which were net sellers of the metal for 11 years until 2008, started buying like there was no tomorrow. India did not escape the paranoia and the gold ingots at the Reserve Bank of India increased by about half. RBI data from July 2011, the latest available, show it holds some 560 tonnes of the metal. But what a bad call to buy it was. Fears of hyper-inflation were just that: fears. Gold prices are tracking softening global inflation and a fiscally-stressed Cyprus is keeping the bullion markets jittery. But falling prices may not bring cheer to an India dealing with a severe current account deficit, as Senior Editor Sanjiv Shankaran explains in a pithy analysis of an economy caught in the vortex of high gold prices, flaccid exports and a weak rupee. Unless, gold prices fall faster - like in a repeat of the 1980-83 crash - than the metal's imports grow, Finance Minister P. Chidambaram will be selling the Indian promise to foreign investors.

Rising gold prices have knocked more than a few percentage points off India's financial savings but the mutual funds industry seems to have taken it on the chin and grown its assets by 19 per cent in 2012/13. In our annual listing of best mutual funds, we look at the fund managers who made that happen. This is the second time we are running this listing in partnership with Value Research, whose CEO Dhirendra Kumar captures how our study stands out. Investors should ask "Which fund should I invest in," he says, and focus on those that match their needs. Keeping to that, we classified the funds universe into categories based on risk appetite and came up with the winners. Their managers were profiled by Dipak Mondal and Tanvi Varma, associate editors at Money Today, a BT sister publication. Their domain expertise is reflected in their stories.

In the summer of 2000, I met K. Ram Shriram at a tech conference. In a crowded media room, Ram, a freshly-minted venture capitalist, grabbed a keyboard and banged six letters into a web browser window: Google. Like most people around, I used Yahoo! or AltaVista then. "What do you want to search," Ram asked, with his eyes beady and grin wide. "Handel's music," was the toughest I could come up with. By Internet speeds of the time, the results were instantaneous and just what I wanted: a bunch of baroque music sites, one which I used for at least five years after. Google, a company Ram backed and still sits on the board of, today is the definitive tech company. It doesn't call itself a media company but eclipses WPP, the world's biggest advertising company, three times by revenues. Google is transforming itself as we speak and redefining the search and the Internet ecosystem. It is pushing into new areas such as speech recognition, mobile ads, video search and music, even as it expands exponentially its core search function and its Android and Chrome operating systems. Read my take on a company so enterprising that its success could see it run into anti-trust regulators even if it plays by the book.

There are two other interesting reads this issue that you will be cross if I don't point you to them: how electricity tariffs are rising unusually close to election season and Nissan's out-of-sync ambitions in India. Enjoy.

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