Looking for one central theme for Bill Clinton’s presidential campaign in 1992, political strategist James Carville had come up with a line that became a memorable slogan: ‘It’s the economy, Stupid”. For a few days after the announcement of January figures of Index of Industrial Production (IIP) this slogan reflected the mood and movements on the stock markets.
Worried that the IIP figures presage a coming slowdown in the Indian economy, a sudden sale of stocks started, pushing the Sensex to August 2007 levels. So far, the backbone of the volatile market has been the belief that Indian economic growth is on track, no matter the small bumps in the form of global economic downswing and the still-unravelling subprime crisis. But if the prospects of the economy are in question, investors need to review their call on how much, where and for how long to invest in stocks, mutual funds—or in any equity-based instrument.
|Down the pecking order|
|Year||NSSF collection(Rs Crore)||Growth(%) |
|2004-05||96,788 ||35 |
|2005-06||85,086 ||(-12) |
|2006-07 ||57,494||(-34) |
|2007-08 ||18,000 ||(-68)|
Ready to retire
“New highs are out of the question. The Sensex may test 14000 before slipping to 12000.”
— Marc Faber, investment guru
|“Ten-year track records [for equity funds] are meaningless since portfolio managers, processes, competitors and markets change.”|
— Rashmi Mehrotra, head, Mercer’s Retail Services (Asia Pacific)
|“The days of cheaper loans are over unless something changes very drastically.”|
— Aditya Puri, managing director, HDFC Bank
|“From a three-year perspective, equity mutual funds would be able to deliver at least 15% returns on a compounded basis.”|
— Pankaj Razdan, deputy CEO, financial services, Aditya Birla Group
|Source: Economic Times, Business|
Standard and Hindu Business Line
|Top 5 Gainers|
|Health||33,20,696||36,16,525 ||8.91||2,95,829 |
|IT ||10,21,301 ||10,95,994 ||7.31 ||74,693|
|ITeS ||7,80,601 ||8,36,822 ||7.20 ||56,221 |
|Hospitality ||61,69,211 ||65,95,879 ||6.92 ||4,26,668 |
|Real estate and construction ||7,72,059 ||8,19,460 ||6.14 ||47,401 |
|Top 5 Losers|
|SECTOR||DEC 2007||DEC 2008|
(added in 2008)
|Manufacture of furniture||1,73,027||1,54,618 ||-10.6||18,409|
|Manufacture of food products and beverages||14,18,482||13,38,423||-5.64||80,060|
|Mining and extraction||23,665||22,509||-4.91||1,163|
|Manufacture of minerals and mineral products||10,03,036||9,81,550||-2.14||21,486|
|Manufacture of paper, publishing and printing related activity ||1,77,355||1,74,669||-1.51||2,686|
Some figures that have immediate or long-term personal finance implications
86% of the world’s population resides in emerging markets. But this market accounts for only 9% of world equity market capitalisation.
Source: IMF, Citigroup,BP
10,000 is the number of branches owned by State Bank of India. This makes SBI the world’s second most branched bank after the Bank of China
9,210 crore rupees is the amount likely to be spent by online users in the country on buying and selling goods or services on the Internet in 2008. India has 38.5 million Internet users
Source: Internet and Mobile Associ ation of India and IMRB
2.8% is the depreciation in the value of the rupee vis-a-vis the dollar in 2008. In fact the rupee is fast aproaching a sixmonth low.This is bad news for all those planning a foreign holiday this summer
Do you know why you’ve invested and what you’re invested in? You can check your financial quotient here. More quizzes on our website
1You can use any ATM card at any other bank’s ATM any number of times without paying a fee
YES / NO
2If I own two houses, I can claim that both are self-occupied and don’t have to add the rental income to my total income
YES / NO
3The new Budget has changed the personal income tax rates only for women
YES / NO
4The deadline for filing your return of income as a salaried employee has been extended by six months
YES / NO
Give yourself 0 for every Yes and 1 for every No
0-1: Better luck next time (and do take the time to read this magazine. There’s plenty of information that could prove useful)
2-3: You’ll do—your grasp of your finances seems pretty good, though, of course, it could be better!
4: Obviously a know-it-all. Just make sure to keep reading and keeping your knowledge up-to-date
There’s a post office on almost every street, but no real reason for you to go there. However, if you’re a policyholder with Tata-AIG Life Insurance, there’s reason for you to step into a post office now. The insurance company has entered into an agreement with India Post so that policyholders can make renewal premium payments at post offices.
Under the agreement, there will be a dedicated, manned Tata-AIG counter at post offices. Renewal payments can be made here in cash, and the back-end logistics have been integrated with the company to ensure smooth and secure payments and efficient record updating. This will help the company spread its network of counters, as well as aid policyholders’ access to outlets. Currently available at select post office branches, the service will be made available across 5,000 post offices over the course of the year.
It’s Raining Pension Plans
Pension plans seem to be all the rage, if the flurry of new offerings is anything to go by. ING Vysya Life is the latest entrant, with its Golden Life, a unit-linked retirement solution. The policy allows you to choose the retirement age, offers flexible payment options and helps manage investments based on your risk preference.
Says Kshitij Jain, managing director and CEO, ING Vysya Life: “The life expectancy rate in the country is sharply increasing from 40 years in 1950 to 75 years at present. Pension plans offer a lot to retiring people who opt for managing their retirement fund according to their risk profile.” The unit-linked plan has both regular and single premium options with the scope for unlimited premium top-ups and loyalty units for regular premium payments.
The loyalty units get credited at the end of each policy year and in a way acts as a bonus and incentive to maintain the policy for a longer duration. At the end of the accumulation phase, the policy can be converted into an annuity. The company allows the policyholder to opt for an annuity plan from its stable at that stage or transfer it to any other company. The annual premium contributions offer tax breaks. At the end of the accumulation phase, one-third of the corpus is tax-free on withdrawal and the remaining is on an annuity which is treated as income.
Entry age (years) 18-60
Vesting period (years) 5-57
Premium payment Rs 20,000 a year for policy tenures of less than 10 years
Premium payment Rs 15,000 a year for policy tenures of over 10 years
Fund Options Three (debt, liquid and equity)
Switching option Four switches a year free