Et_wealth_march_16-22_2020_reduced

THE ECONOMIC TIMES

Biggest Sensex falls in 20 years P14

www.etwealth.co | Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi, Pune | March 16-22, 2020 | 28 pages | `8

CORONAGE ON DALAL STREET The spread of Covid-19 has hit the equity markets. Find out what you should do. P2

This is not the right time to invest P6

Focus on what will not change in uncertain times P7

How to know if your bank is safe P8

W E HELP YOU CHOOSE THE BEST WORI(SX ,

1 I

I

1

Make yourself recession-proof in times of Corona P26

cover story 02

The Economic Times Wealth March 16-22, 2020

All markets down in past one month

CORONAGE

Since the deep cut happened so suddenly, its impact will last longer

ON DALAL STREET

USA DOW JONES

27.95 UK FTSE

29.72

ILLUSTRATION: ANIRBAN BORA

GERMANY DAX

33.37 The spread of Covid-19 has hit the equity markets. Find out what you should do. FRANCE CAC By Narendra Nathan

I

n just weeks, the Coronavirus pandemic has shaved off nearly a third of the global market cap. The Indian equity market bounced back valiantly on Friday, but the Sensex still closed 20% below the peak achieved two months ago. Investors can get some cold comfort that other markets have fallen more (see graphic). The spread of the virus has triggered panic across the world and shaken the

confidence of investors. Making things worse is the crude oil war between Saudi Arabia and Russia, which has injected volatility into other assets. “Earlier, only the equity and debt markets were impacted by the Covid-19 scare; now the commodities and currency market are in turmoil due to the crude oil war. After a crash of this magnitude, market confidence usually does not come back soon. So, it is better to wait for calm before taking big investment decisions,” says Anil Sarin, CIO

- Equities, Centrum Broking. Before considering what investors should do now, let us understand the reasons behind this turmoil.

Covid-19 now a pandemic As of 12 March, only 29% of the active cases were in China and the remaining 71% were in other parts of the world. Active cases mean the infected people who are still being treated and not yet recovered. While the situation is improving in China, Covid-19 is leading to lockdowns in countries like

Corona is no more a Chinese problem 14,783

26.85

17.74

12,839

7,470

6,370 4,422 2,871 2,803 2,714

Italy

JAPAN NIKKEI

INDIA SENSEX

The global economy will take a big hit as the number of active cases spirals across the world

China

33.63

S. Korea

Iran

Spain

France

Germany

1,644 USA

857

798

Switzerland Norway

*Only countries with 500 ‘active cases’ included in table; other countries added in Rest of the World

685 Sweden

673

607

Denmark Netherlands

562

554

UK

Japan

CRUDE BRENT

39.24

RoW*

Source: www.worldometers.info/coronavirus/; Data as on 12 March

Data as on 13 Mar for Sensex, Nikkei 12 Mar for others. Figures are onemonth change in %

MUTUAL

FUNDS f r . t.

SUNDARAA

t

Large & Mid Cap Fund .n-ended equity scheme investing in 'A.A.wasAanandonid cap stocks

.:

-

r.. a

4tL

-

s

ty

f

L

i

* ftk -

I

N

it

i

oil l

w

bi

0 1

r

a Bo o

Moderate Mod

y d Py

I 11h In"stors understandthat their pdncipal wibe at

Moderately High Risk

r

I

Ir

r

This product is suitable for investors who are seeking * Long term cap ital growth Investment in equity & equity related securities in large and mid cap companies 'Investors should consult their financial advisors if in doubt about whether the product is suitable for them.

Ir

r

r

l

r

I r

r

r

SUNDA RAM MU TUA L U N E A R T HIN G

Mutual fund investments are subject to market risks , read all scheme related documents carefully.

O P PO RT U N I T I E S

cover story 04

The Economic Times Wealth March 16-22, 2020

Sensex PE is below its 10-year average With the market back in the fair valuation zone, long-term investors can get in slowly. 30

28

26

23.42 24

22

19.78

10-year average

20.82 20 12 Mar 2018

12 Mar 2020

10-year Sensex CAGR is below inflation Sensex rarely gives negative real CAGR. It has given decent returns after incidents like this. 20%

15%

10% Avg real returns

6.11%

5%

9.47% 0%

-5%

-0.46%

-10%

-15% Mar 1996

Mar 2000

Mar 2004

Mar 2008

Mar 2012

Mar 2016

Mar 2020

Italy, South Korea and Iran. Due to spiralling numbers, the US and many countries in Europe are staring at a grim situation. German Chancellor Angela Merkel estimates that “up to 70% of the country’s population could contract the Coronavirus”. The impact of this on global economic growth is going to be huge. The Organisation for Economic Co-operation and Development (OECD) has halved the global GDP growth projection for 2020 due to Coronavirus. The disease will obviously impact the Indian economy as well. “The current restrictions will impact most economic activities like travelling, consumption, etc. Manufacturing will be impacted due to supply chain disruptions and this in turn will delay capacity additions and capex spending,” says Brinda Jagirdar, Economist, SBI.

negative impact of the pandemic on Indian economy will get cushioned by the fall in crude oil prices because it will help to bring down our current account deficit, fiscal deficit and inflation, etc.,” says Jagirdar.

Financial sector woes

The domestic consumption slowdown, triggered by the failure of large financial institutions such as IL&FS and DHFL, is still lingering. Now we have another situation in the form of the Yes Bank crisis. Though only time will tell how the Yes Bank fiasco will shape up, the revival package for the bank is a good shortterm step. “The Yes Bank crisis seems to be heading for a solution due to government and RBI actions. If that happens, at least one immediate worry will be out of the way,” says Sarin. While other commodities are down, Crude oil war gold has gone up beTo compound the globcause of the demand al economic uncertainfor a safe haven in ty, an ill-timed global uncertainty. The hope crude oil war has of rate cuts by global begun. The demand central bankers (the by Organisation of US Fed has already Petroleum Exporting cut rates by 50 basis Countries (OPEC) to points) is also keeping further restrict progold demand intact. ANIL SAREEN CIO, EQUITIES, CENTRUM BROKING duction from April “Our initial target was rejected by Russia, for gold was $1,700. resulting in the scrapHowever, it can go up to ping of existing restrictions. Increasing $1,800 if Covid-19 is not contained soon and production at a time when demand is low central bankers are forced to come out with due to the Covid-19 pandemic is bad for more rate cuts,” says Singh. The impact the crude oil market. “Though there will gold rally will be more for Indian investors be counter cyclical rallies during times because of the fall in rupee now. of central bankers’ actions like rate cuts, Gold exposure brings down portfolio the outlook is clearly bearish and in worst volatility and experts recommend 5-10% alcase, Brent oil can go down to $25 level,” location to gold in an individual’s portfolio. says Praveen Singh, AVP, Fundamental Investors underweight on gold should add Research – Commodities & Currencies, more now. The best way to invest in gold Sharekhan Comtrade. However, the is through gold ETFs or gold bonds, not crude oil war is a blessing in disguise for in physical gold. But don’t go overboard. oil importing economies like India. “The “Gold has already rallied and most of the

“After a crash this big, the market confidence does not come back soon. Wait for calm to return before making big decisions.”

Sensex at 2-year low, mid-caps are lower

5-year SIP returns of Sensex almost zero

Due to the deep correction, long-term investors can consider invetsing in mid-caps now.

Five-year SIP returns of Sensex falling to zero is rare. Future returns have been good.

125

50

120 40 115 30

110

Sensex

105

96.64

100

20

13.51%

10

95 90

0

1.66%

85

BSE Mid Cap

80

76.86 75 12 Mar 2018

12 Mar 2020

-10

-20 Mar 2000

Mar 2005

Mar 2010

Mar 2015

Mar 2020

cover story The Economic Times Wealth March 16-22, 2020

Gold becomes attractive in uncertainty Global gold prices are rising but the fall in the rupee will push it up further in India. 1,700 $ per ounce

1,576.15

1,600 1,500 1,400

1,323.10

1,300 1,200 1,100 12 Mar 2018

12 Mar 2020

10-year govt bond yield is at 10-year low Since further yield reduction is limited, it is better to be with short term papers. 8.25

7.63

8.00 7.75 7.50 7.25 7.00

6.24

6.75 6.50 6.25

10-year low

6.00

6.07 12 Mar 2018

12 Mar 2020

Long duration funds rally may be over Bond yields are at 10-year low and may not fall further. Short-term funds are better now. CATEGORY

1-YEAR

3-YEAR

5-YEAR

Long Duration

17.81

9.62

8.89

Gilt

13.37

8

8.06

Banking and PSU

9.67

7.81

7.98

Medium to Long Duration

8.71

6.31

6.71

Dynamic Bond

8.49

6.41

6.99

Source: Value Research; Data as on 12 March

Crude oil prices have crashed For oil importing countries like India, this fall may be a blessing in disguise. 90

Brent crude $ per barrel

80 70 60

64.95

50 40

10-year low

27.88

30

33.9

20 12 Mar 2018

11 Mar 2020

fall in quality large-caps will be limited. However, that can’t be said about mid- and small-caps,” says Arora. “It is not the time to get aggressive or adventurous. Instead of searching for small-caps, investors should restrict to quality large-caps that have corStick to short-term debt funds rected recently. Among mid-caps, restrict to companies that have low debt and the Another safe haven asset, government ones that generate free cash flows,” says securities, are also rallying. The 10-year Modi. US treasury yield is now at 0.75%. The 10Investors with a higher risk appetite can year government bond yield in India is also start nibbling at mid-caps, where the cut close to a 10-year low. Since the US Fed has has been more pronounced. Others can already cut the rates by 50 basis points, the consider getting into this segment through debt market is hoping for a smilar rate cut mutual funds. “Investors who want to by RBI to fight the weakness in the domesget into the mid-cap space now should do tic economy. it through mutual funds. Stagger your Bond yields and prices are inversely investments over the next 12-18 months,” correlated and long-duration funds have says Amit Jain, CEO & Co-Founder, Ashika rallied on these hopes (see table). However, Wealth Advisors. experts say the long-duration rally is over The market is going through a period of and future returns may not be as good. flux and investors need to shift between “The rate cut hopes are already priced in, sectors to make most of it. They need to so the 10-year yield may range between rebalance from overvalued sectors to 6% and 6.25% and not offer much further undervalued ones and from sectors with upside from long duration funds. However, bleak prospects to those looking bright. Short to medium segment, ie 1-5 year The pharma sector looks attractive now. papers, looks attractive now,” says Iyer. “Despite the recent Dwijendra Srivastava, outperformance, pharCIO (debt), Sundaram ma valuation is still Mutual Fund concurs reasonable. Defensive with this view. “The sectors will do well in duration risk increasthe coming 1-2 years es with low yield and and pharma is the best since the yield is not candidate,” says Jain. expected to go down Just like pharma significantly from 6%, will benefit from the there is no reason to Covid-19 spread, there take that risk. Better to are several other secstay with 2-3 year bucktors that will directly ets,” he says. benefit from the fall in crude oil. “Sectors Equity markets like paints, speciality in bear hug chemicals, hair oil, With more than 20% cement, pvc pipes, etc cut in benchmark indiwill benefit due to fall ces, the Indian equity in crude prices and market has entered the therefore, are worth bear market territory. betting on now,” Experts say investors JIMEET MODI says Arora. Though should be cautious and CEO, SAMCO SECURITIES aviation is expected to not jump in right now. benefit from crude oil “Despite the cut, our crash, same will be nullified following the broader market is still not in cheap valuafall in traffic due to the pandemic. tions zone. However, risk is low here due to The entire consumption pack is expected lesser leverage in India compared to other to do badly in the coming months. It is also markets,” says Sarin. very overvalued. “Despite the recent cut, But the fact that the Indian market is out FMCG stocks (other than ITC) are still of the overvaluation zone should provide overvalued now,” says Jain. Banking and comfort to long-term investors. The broadfinancial services is another sector inveser market valuation has gone below its 10tors can reduce exposure to now. Though year average while the 10-year real return Yes Bank may be saved for the time being, from the Sensex is in the negative. In other the crisis it created will linger for longer as words, this turmoil is an opportunity for PSU banks have to bail out weak entities. long-term investors. “If you are a longPrivate banks are also facing the music due term investor with a 5-7 year view, this is a to the Yes Bank incident, with depositors fantastic time to start investing. However, shifting money from small private sector the market could fall another 8-10% in banks to PSU banks. Also, the good private between,” says Jimeet Modi, CEO, Samco banks are quoting at very high valuations. Securities. Jaspreet Singh Arora, CIO, “We have marginally lowered our BFSI Equentis Wealth Advisory Servies concurs weight because of the increased risk there. with this view. “New investors should park Attractive valuation in other sectors is around 50% of their equity allocation in another reason for this reduction,” says the next two weeks and the balance slowly Arora. in a staggered manner,” he says. Experts are also advising investors to stick to large-caps. “Since large-caps Please send your feedback to have corrected more than 20% now, you [email protected] have margin of safety there. Further fear premium is already priced in. Since global gold ETFs are very liquid, there may be profit booking if the price continues to move up,” says Lakshmi Iyer, Head of Fixed Income and Product, Kotak Mutual Fund.

“This is not the time to be adventurous. Instead of searching for small-caps, go for quality large-caps that have corrected.”

05

financial planning The Economic Times Wealth March 16-22, 2020

This is not the time to invest This pandemic calls for action and behaviour we have not known before, says Uma Shashikant.

GETTY IMAGES

06

T UMA SHASHIK ANT IS CHAIRPER SON, CENTRE FOR INVES TMENT EDUC ATION AND LE ARNING

There is no smart timing decision to be made. We are literally in war zone, so survival is priority. Ensure enough cash to manage yourself and the household and medications, for a period of three months.

he markets are crashing. What should I be doing? Is this an opportunity? Is it time to buy already? These questions are irrelevant. We are so used to the narrow definitions of up and down and think that everything can be summarised into simple action points. The pandemic that the world faces is different. So different from what most of us alive now have seen before, and we are all still learning what to do. First, the only thing that matters is the amount of cash you have in hand. Understand that it is tough for money to be drawn from a falling market, or for money to be invested. Draw if you have no cash, even if it is at a loss. If you already have enough in the bank, stay put. This is not the time for any investment decision. Investing when the future is unknown is to venture into the unknown dark without a torch in hand—it is plain foolhardy. There is no smart timing decision to be made. We are literally in war zone, so survival is priority. Ensure enough cash to manage yourself and the household and medications, for a period of three months. Second, recognise that this is new territory. In the era of social media, there is too much information floating around. There are jokes to lighten the mood; and there are useless forwards. Hawkers of quackery should be ashamed of themselves. Train your eyes and ears on what has worked for countries that have suffered before yours got hit. Keenly hear what your government,

local authorities are saying. Social isolation is what seems to have worked in China and South Korea. Reduce social interaction; adopt isolation voluntarily; drop the bravado and focus on prevention and care for yourself and your community. Third, not all businesses can close down. Many have customer interaction, production deliveries and team tasks that require the workforce to turn up and be around to complete assigned tasks. There are emergency services that must work come what may. Businesses are taking a call about working from home, reducing team activity, and in extreme situations, these have also shut down temporarily in affected countries. A complete shutdown of all activity has been the measure that brought the spread of the disease and the number of newly afflicted down. As an investor, know that this is a step with serious economic implications. Markets are panicking since this is unprecedented. Unless you run a business, don’t make any economic decisions at this time. Don’t buy or sell assets or modify your investments. Stay put. Fourth, do not hoard as if you are faced with a famine. Shutdowns have been implemented by governments for periods of 15 days, extended by a week or more as needed. Normalcy cannot be claimed to have returned even in the most impacted areas, but the only positive is that new numbers of afflicted persons have begun to fall. If you prepare for say 3 months of being confined to your home, you don’t need half the super-

market in your pantry. Pull out those boxes of quinoa you did not consume; that ragi flour you never opened; those stone cut oats you did not cook. To think you must solve for life as usual for yourself when the world is scrambling for supplies is selfish. Buy responsibly. We aren’t running out of sun, air and water. Fifth, be grateful for the community and take charge. The need for a helping hand is high when normalcy is affected, especially for weaker sections. If there are elderly citizens in your neighborhood, reach out to them. Make corrections for not caring about who lived next door. Without caring and sharing, it would be tough to ride through a period of isolation. Unlike floods that many of us have faced, this pandemic does not allow us to stay together as a large group. Community solutions of cooking and staying together are unavailable to combat a disease that requires isolation. Put the social media tools to use to connect and help the community, by devising methods to reach out remotely and to manage situations as they arise, to offer help and solace. Responding without crowding up is new to most of us, but we have no choice but to learn it now. Sixth, do not obsess about the loss in value of your investments. Do not pontificate that you saw it coming. There is the important difference between wealth and income; stock and flow. The wealth you accumulated over a lifetime in investments has eroded in value as the markets have crashed. But what matters currently is the income, the flow. Do you have a job that offers salary even during the shutdown? Are you confident you will keep the job through and after this period? You are fortunate. Evaluate your income and prepare to hunker down and sacrifice it for a brief period and still survive. Wealth will return to its value after the crisis has blown over; if you have the privilege of not having to access it now, stay calm. Don’t keep looking at market numbers. Seventh, find the positivity in you to be the person the situation demands. If you have to volunteer to work for free at the nearby hospital, do it; if you have to be the one who creates an app in the neighborhood for eradicating food waste in households, create it; if you can run a bulletin board that provides information on how many are infected, do it; and be willing to see yourself as a soldier in the field, willing to work for a larger cause. If you can find innovative ways to keep your family engaged as you stay in, do it. Read, write, quilt, cook, garden, repair, deep clean—there is a lot to do indoors as a family. Do not make a buying list! Eighth, drop the denial. The problem around us is real, and the world has not yet found a solution. There is no need to fear and panic. But it is important to recognise that this is new, big, and completely unknown. A pandemic of this magnitude will call for action and behaviour we have not known before. Drop tactical thinking and prepare. Please send your feedback to [email protected]

guest column The Economic Times Wealth March 16-22, 2020

Focus on what will not change in uncertain times Despite the current upheaval, the underlying drivers of economic and business activity are not going to go away permanently, says Dhirendra Kumar.

money mysteries In bad times, fundamental qualities and strengths of businesses shine through. The result is that although every company does badly, the good ones do less badly and recover better while many of their competitors just die out.

O

GETTYIMAGES

DHIRENDR A KUMAR CEO, VALUE RESE ARCH

ne of the problems in living in an environment where there’s a new piece of supposedly breaking news every few hours is that when some actually important breaking news comes along, we sort of expect it to pass quickly. Unfortunately, we now have something that could be the breaking news for months, possibly years, something we are not used to. This is particularly true for investing in equities or equity-backed investments. The breathless stock market commentary that business channels anchors the world over specialise in will be a little difficult if it’s the same thing over and over again, week after week, month after month. Or maybe this is something that they already know how to do. In fact, the maniacal fluctuations in the equity markets indicate this mental gap. As I’m writing this piece, the Indian markets have had a downward circuit breaker early morning and are now up more than 5,000 points from that. Maybe an upper circuit is on the menu before the day ends, which will be a tale to tell to future generations. Why is this happening? My guess is that the problem is a psychological one. The punters want to come to a decision on how bad is this going to be RIGHT NOW because they live in the world of RIGHT NOW. Except that this story has barely begun. As the famous quote goes, this is just the end of the beginning. Let alone the eventual economic impact, even the direct medical impact is not yet known. So the equity markets, manic-depressive even at the best of times, have gone completely bananas. Stock prices are often said to encapsulate a prediction of the future that is derived from the actual actions of a large group of people who have skin in the game. As such, they are generally more trustable than mere words of experts because in spouting words, there is no cost to being wrong. So what are the markets telling us at this point? They’re saying that nothing can be said, which is fine by me. The correct conclusion to draw at this point is that no conclusion can be drawn. So as investors and savers, where does that leave us? The answer, as it always does, depends more on your own current financial situation than on what’s happening externally. If you are heavily and aggressively invested mostly in equitybacked investments at this point, then… then I have nothing to say to you because you either know what you are doing, or you are not going to listen to anyone so let’s just move on. If you are at the other extreme, in that you have almost all fixed income investments, then you’re out of it too. Most Indians are in the second category but that’s for the general public. I expect most

of those who are actually reading this page are somewhere between the two extremes. You have a variety of investments and some proportion of that is in equities. Over the last few days, the value of your investments has taken a nosedive. Now, faced with this kind of a destruction of value, you don’t know what to do. Should you cut your losses and run? There’s obviously no precise answer. However, there are a few general principles that should be paid attention to. The most basic is that despite the upheaval that has started, the underlying drivers of economic and business activity are not going away permanently. There will be huge changes and uncertainties but there have been many such phases over the last few decades. The contours of the upheaval will be different—mostly because the roots of this crisis are not economic. However, a lot else

will eventually resemble earlier crises. For example, we have always seen that in bad times, the fundamental qualities and strengths of businesses shine through. The result is that although every company does badly, the good ones do less badly and recover better while many of their competitors just die out. This means that eventually, the crises turns out to be good for companies that are much better run than their competitors. To give an example that may seem foolhardy today, I fully expect this to play out amongst airlines in India. Things appear to be particularly uncertain compared to other crisis that savers have faced, but it’s better to focus on what won’t change than what is unknown.

Please send your feedback to [email protected]

07

banking 08

The Economic Times Wealth March 16-22, 2020

Is your

bank safe?

ANIRBAN BORA

The collapse of Yes Bank has shattered the myth that banks can’t fail. Find out if your bank is safe and what to do if it fails.

By Sanket Dhanorkar

T

he collapse of Yes Bank has meant hardship for its customers. Facing a `50,000 withdrawal limit, they have been lining up at ATMs and bank branches. While indications are that Yes Bank depositors will likely make it out safely, more such episodes cannot be ruled out. Many banks are facing financial stress. “Yes Bank isn’t a first, it certainly would not be the last,” states a note by ASK Wealth Advisors. This is worrisome, though whenever a bank fails, the RBI steps in to protect customers. Typically, the RBI arranges for a stronger bank to take over the ailing bank. In 2004, Global Trust Bank was taken over by the Oriental Bank of Commerce. Similarly, United Western Bank merged with IDBI Bank in 2006 and ICICI Bank took over Bank of Rajasthan in 2010. In all cases, depositors got their money back. Yes Bank customers too will have a soft landing. The government has okayed a restructuring plan. Still, the whole episode should serve as a wake-up call for bank customers. Kalpesh Ashar, Founder, Full Circle Financial Planners and Advisors, says, “The premise that all banks offer a safe haven has been completely turned on its head.” In the following pages, we outline a safety blueprint by listing out the tell-tale signs of an impending crisis. We also tell you the steps to take if your bank account is suddenly frozen.

How to bank safely Let’s start with some precautionary measures that can help avoid a liquidity crunch or loss of savings if your bank fails. “Banking serves as the core of our financial activities. It is only prudent that we take a safety-first approach to this aspect,” contends Ashar. Don’t keep all sav-

ings tied up in one bank. Maintain savings accounts in at least 2-3 different banks and spread the money across these accounts. This should be regardless of whether the bank is public or private. This way, you have multiple options to fall back on in case one account gets frozen. “Ensure different family members bank with different banks. Even if one member’s savings get stuck, others can chip in to cover expenses,” says Adhil Shetty, CEO, Bank Bazaar. Further, consider spreading the ECS mandates for loans, SIPs and other bill payments across different accounts. Amol Joshi, Founder, PlanRupee Investment Services, recommends having one primary and a secondary bank account—letting ECS mandates run from the primary bank account while linking investments to a separate bank account. He even suggests using a liquid fund as an alternative to park your surplus savings instead of keeping large amounts lying idle in the bank. A customer’s deposits are insured up to `1 lakh per bank. This year’s budget has proposed hiking this to `5 lakh. This surely provides wider berth of safety for investors. Even so, it would make sense to spread your investments and savings across multiple banks to avoid a crisis situation. Further, how much of an investor’s deposits with the bank are insured depends on the ownership of the deposits. Make smart use of the available cover by using different combinations. If you put multiple fixed deposits in joint names with your spouse or children, you can get each covered separately if the first named holder in each is different. For instance, if you have one fixed deposit of `4 lakh in your name and another of `5 lakh in the same bank jointly with your spouse as first holder, both will be eligible for the cover separately. While this will help you get maximum coverage for your investments from the deposit

Gross non-performing assets (NPAs) What this is

What it means

NPAs indicate how much of a bank’s loans are in danger of not being repaid. If interest is not received for 3 months, a loan turns into NPA.

A very high gross NPA ratio means the bank’s asset quality is in very poor shape.

WORST FIVE

GROSS NPA (%)

BEST FIVE

GROSS NPA (%)

IDBI Bank

28.7

HDFC Bank

1.4

Lakshmi Vilas Bank

23.3

Bandhan Bank

1.9

Central Bank of India

20.0

DCB Bank

2.2

UCO Bank

19.5

IndusInd Bank

2.2

Allahabad Bank

18.9

Kotak Mahindra Bank

2.5

Net NPAs What this is

What it means

Banks provide for some loans going bad. The net NPA is that portion of bad loans which has not been provided for in the books.

Net NPA is a better indicator of the health of the bank.

WORST FIVE

NET NPA (%)

BEST FIVE

NET NPA (%)

Lakshmi Vilas Bank

9.8

HDFC Bank

0.5

Central Bank of India

9.3

Bandhan Bank

0.8

Punjab & Sind Bank

8.7

Kotak Mahindra Bank

0.9

United Bank of India

8.6

DCB Bank

1.0

Punjab National Bank

7.2

IndusInd Bank

1.1

Provisioning coverage ratio What this is

What it means

Banks usually set aside a portion of their profits as a provision against bad loans.

A high PCR ratio (ideally above 70%) means most asset quality issues have been taken care of and the bank is not vulnerable.

WORST FIVE

South Indian Bank

PCR (%)

BEST FIVE

PCR (%)

50.4

IDBI Bank

92.4

IDFC First Bank

51.0

Dhanlaxmi Bank

89.3

IndusInd Bank

53.0

Indian Overseas Bank

86.2

RBL Bank

58.1

ICICI Bank

85.7

Karnataka Bank

59.3

Corporation Bank

84.6

Compiled by ETIG Database

Source: Capitaline

banking The Economic Times Wealth March 16-22, 2020

Capital adequacy ratio What this is

What it means

It is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities.

This is a measure of a bank’s ability to meet its obligations. A high CAR means the bank can absorb losses without diluting capital.

WORST FIVE

CAR (%)

BEST FIVE

CAR (%)

Lakshmi Vilas Bank

3.5

Bandhan Bank

24.7

Indian Overseas Bank

5.5

CSB Bank

23.0

Allahabad Bank

HDFC Bank

18.5

UCO Bank

10.3

8.7

Kotak Mahindra Bank

18.2

J&K Bank

11.1

Axis Bank

18.2

CASA ratio What it means

It is the proportion of current account and savings account deposits in the total deposits of the bank.

A low CASA ratio means the bank relies heavily on costlier wholesale funding, which can hurt its margins.

CASA RATIO (%)

CASA RATIO (%)

BEST FIVE

DCB Bank

23.0

Kotak Mahindra Bank

53.7

City Union Bank

23.4

United Bank of India

51.4

IDFC First Bank

24.1

Bank of Maharashtra

48.1

South Indian Bank

25.2

IDBI Bank

47.7

Lakshmi Vilas Bank

25.9

Allahabad Bank

47.2

A moratorium places a complete freeze on most activities of the bank. Section 45 of the Banking Regulation Act, 1949, empowers the RBI to place such a moratorium for up to six months at a time—and can be extended until a more permanent fix for the problem is found. This is intended to prevent a further deterioration in the bank’s finances. During this period, the customer will only have limited access to the funds lying in his account, with some exemptions permitted in extreme cases like a medical emergency. Even a month or two of account freeze can put anyone in

AIM TO BALANCE YOUR PORTFOLIO WITH A

E Q

a spot of bother. Imagine not having access to your money for years. Customers of CKP Co-operative Bank have been waiting for relief for over five years. In such situations, those with ECS mandates from the frozen account will be in a fix. A bank’s suspension doesn’t change the terms of the loans taken by its customers. They have to continue paying EMIs. Even if you miss one EMI, it impacts your credit score negatively.

uir

2

Tablet, Mobile

Ransomware

Protection

92.72.70.70.50 98.22.88.25.66

MIRAEP cS E Mutual Fund

D E

B y r

T

SCAN HERE I

1

YBRI D FUND

TO KNOW MORE

Mirae Asset Hybrid Equity Fund

Aggressive Hybrid Fund - An open ended hybrid scheme investing predominantly in equity and equity related instruments PRODUCT LABELUNG Mirae Asset Hybrid Equity Fund is suitable for investors who are seeking: *

Riskmeter

Capital appreciation along with current income over long term

&1800-2090-777

Aggressive hybrid fund investing predominantly in equities & equity related instruments with balance exposure to debt & money market instruments *InvesbDrs should consult th& flnandal advism If OW are not dear about dw sutabillty of ft product.

Contact your financial WIN be at Noderatoly High RJA

Mutual fund investments are subject to market risks,read all scheme related documents carefully.

1

A vj

PC, Laptop

If your account is frozen

What this is

WORST FIVE

insurance, keep in mind that the insurance cover is triggered only when the bank undergoes liquidation. If it is merely put under suspension or moratorium, the deposit insurance will not come into play. Your money will remain locked until the suspension is lifted. Finally, don’t open a fixed deposit in smaller, unstable banks just to get that extra 1-2% return. Several banks are offering 7-8% on one-year deposits compared to the 6.25-6.75% offered by leading banks. Before opting for such fixed deposits, evaluate the risks carefully. “Don’t succumb to temptation of higher yield. Ask yourself why the bank is offering higher return. The bank’s pedigree matters a lot,” says Ashar.

09

banking 10

The Economic Times Wealth March 16-22, 2020

What if your bank fails and your account is frozen... Credit-deposit ratio What about

Q cheques I

have issued or deposited? All clearing activi-

A ties are typically

suspended during moratorium. Your cheques already issued will not be honoured till the clearing activities are restarted. Similarly, cheques you have deposited will not be presented in clearing till reinstatement of clearing activities.

Can I make Q payments towards credit card EMIs and loans? If the bank allows,

A customers can transfer funds into the bank from third party accounts. In case of Yes Bank, inward IMPS and NEFT services are enabled to ensure that customers can make payments towards credit card dues and loan obligations from other bank accounts.

If my bank is

Q merged with What Q happens to my loans if bank fails? The bank will A not be able to grant or renew any loan for the period it is placed under moratorium. Your ongoing loans will, however, have to continue to be serviced.

What hapQ pens to my bank debit/ credit card and forex card?

another, what happens to the deposit rates and loan conditions?

If my deposits Q are insured, should I worry? Your deposits up A to `5 lakh in each bank are insured by the Deposit Insurance and Credit Guarantee Corporation. However, this cover is triggered only when the bank is put under liquidation or its license is cancelled. It is not applicable if the bank is temporarily placed under moratorium or suspended. However, all deposits will continue to fetch interest as per prevailing interest rates.

Will I be

In case a bank is merged

Q allowed to

terms and conditions for deposits and loans in your name may change. Even when there is no merger or only a partial takeover, existing terms and conditions may be changed at the discretion of the management or as directed by the RBI. Any change in interest rates or terms won’t be liable for compensation.

operate or access locker facilities?

A with another, the existing

What this is

What it means

This shows how much a bank lends out of its deposits or how much of its core funds are used for lending.

A high credit-deposit ratio suggests an overstretched balance sheet, and may also hint at capital adequacy issues.

WORST FIVE

CDR

BEST FIVE

CDR

IDFC First Bank

1.45

UCO Bank

0.60

Bandhan Bank

1.19

Corporation Bank

0.60

IndusInd Bank

0.96

IDBI Bank Ltd

0.59

RBL Bank

0.95

United Bank of India

0.55

Axis Bank

0.93

Central Bank of India

0.54

Net interest margin What this is

What it means

This is the difference between interest earned by a bank on loans and the interest it pays on deposits.

NIM will be high for banks with higher low-cost deposits or high lending rates. Low NIM and high NPA is a bad combination.

WORST FIVE

to access your locker even if your bank is placed under moratorium.

BEST FIVE

NIM(%)

J&K Bank

0.00

Kotak Mahindra Bank

UCO Bank

0.00

RBL Bank

4.57

Punjab & Sind Bank

1.74

HDFC Bank

4.20

Indian Overseas Bank

1.94

IndusInd Bank

4.15

Lakshmi Vilas Bank

1.97

City Union Bank

3.99

4.69

Return on assets

Yes, you will

A be allowed

NIM (%)

What this is

What it means

it shows how profitable a bank’s assets are in generating revenue.

A lower RoA means that bank is not able to utilise assets efficiently. Negative RoA implies the bank’s assets are yielding negative return.

WORST FIVE

ROA (%)

BEST FIVE

ROA (%)

Indian Overseas Bank

-8.07

IndusInd Bank

1.80

A debit cards will permit withdrawals at ATMs up to the

IDBI Bank

-7.63

ICICI Bank

1.68

prescribed limit. However, debit and credit cards may not be usable at merchant outlets as Point of Sale terminals may be disabled temporarily. Forex cards may also remain unusable for an indefinite period of time.

Lakshmi Vilas Bank

-4.40

City Union Bank

1.57

IDFC First Bank

-4.02

DCB Bank

1.03

Allahabad Bank

-3.26

Bandhan Bank

0.89

As long as the bank’s electronic services remain online,

The first priority should be to change the mandates tied to the frozen account. “To prevent your credit score from getting impacted, add a different bank account from which payments can continue,” says Joshi. However, changing mandates can take some time. If you are unable to shift the bank mandate to another account, use your contingency funds to pay off upcoming EMI instalments or credit card dues for the time being, suggests Shetty. If the credit score takes a hit due to nonpayment, the onus is on the customer to get the credit history rectified later on. “If you are unable to make alternate arrangements to get your payments through, apprise the lender of your situation and ask for temporary relief if possible,” says Raj Khosla, Founder and Managing Director, MyMoneyMantra. On its part, within a few days of being placed under moratorium, Yes Bank enabled inward funds transfer through NEFT and IMPS—allowing customers to make credit card payments and clear loan EMIs.

Apart from loans, you may have debit mandates for SIPs and insurance premium payments. To ensure these go through without a hitch, change the mandate by linking with some other bank account. It is advisable to provide alternate bank account details to service providers to prevent any redemptions or dividends from being locked up in the frozen account. In the wake of the Yes Bank announcement, a few fund houses and brokerages reached out to customers for alternative bank account details. Zerodha said it will not deposit redemption requests if the trading account is linked to Yes Bank accounts, even if initiated recently. However, not all AMCs and brokerages will be as proactive so it is up to you to get the bank accounts changed.

Spot the warning signs There is no smoke without fire. Several signs can alert you when a bank is in trouble. “The writing was on the wall for Yes Bank for several months,” says Khosla. Customers who heeded the early warning

signs could have avoided a financial pickle. If the bank has delayed earnings releases or if the auditor has resigned or made an adverse comment, find out why. Yes Bank’s auditor sought a fresh audit last November after complaints were leveled by a whistleblower about irregularities in the bank. The bank has not yet declared its December quarter earnings even though the deadline has long passed. Watch out for exit of key managerial personnel as it may be a signal that trouble is brewing within the bank. Also monitor any rating downgrades by credit rating agencies. Two board members had stepped down from Yes Bank board as early as November 2018, prompting Moody’s to downgrade its ratings citing concerns over corporate governance. Beyond this, monitoring some basic operating metrics of a bank can give you a fair idea of its health, points out Shetty. All listed banks provide financial statements on their websites, giving a break up of various performance metrics. Asset quality is a key monitorable. If your bank’s net NPAs

exceed 5%, it shows bad lending practices. Ensure that your bank provisioning coverage ratio does not dip below 65-70%. The bank will struggle to remain solvent if its bad loans have to be written off. Ascertain if the bank is properly capitalised by checking its capital adequacy ratio. A low CAR suggests the bank’s net worth may be eroding. Keep an eye on the Current Account Savings Account (CASA) ratio. A lower CASA ratio indicates that the bank relies on costlier institutional borrowings to fund its operations. The credit-deposit ratio of a bank is another indicator you can track. A higher credit-deposit ratio suggests an overstretched balance sheet, and may also hint at capital adequacy issues. These are some parameters that bank customers should monitor regularly to avoid a shock later. As a start, see the tables of the best and worst banks on a slew of metrics.

Please send your feedback to [email protected]

UTI M ut u a l Fund

Mq, 4.6ek4-Ar zin.layi ka. >> pg 11

THE ECONOMIC TIMES WEALTH, MARCH 16-22, 2020

INVESTOR CONNECT INITIATIVE

RUSHING TO SAVE TAXES THIS FISCAL?

GURU SPEAK

‘ELSS IS THE BEST OPTION FOR LONG TERM INVESTORS’ OO Anurag Bansal

s the financial year comes to an end, it’s high time for the ones still waiting to invest for saving tax. With falling returns in traditional tax-saving instruments such as Public Provident Fund (PPF), tax-saving Fixed Deposits and National Savings Certificate (NSC), for most people, the investment that should make most sense is in an ELSS. In the plethora of investment products available under section 80C, Equity Linked Saving Schemes (ELSS) of mutual funds (MF) is the only product that offers equity exposure and potential for attractive long term returns with least lock-in-period of three years. One can either make a lumpsum investment or do a monthly SIP or do both in an ELSS, and can claim deduction upto Rs 1.5 lakh, although there is no upper limit for investment. Like in other MF schemes, ELSS funds also come with a growth and dividend option. There is no compulsion to redeem after expiry of lock-in period and an investor can continue in the scheme and benefit from longterm growth. ELSS category has the potential to offer superior post-tax returns than other options available under Section 80C. However, there’s no guarantee of any fixed returns. With introduction of tax of 10 per cent on long term capital gains of over Rs 1 lakh, ELSS funds also attract LTCG tax of 10 per cent on redemption. Considering the long term return potential of equities, ELSS will remain the best investment option for long term investors who are looking for decent risk-adjusted returns with tax-saving benefits.

ILLUSTRATION: SACHIN VARADKAR

A

ADVANTAGE ELSS

HERE ARE SOME LAST MINUTE TAX SAVING OPTIONS UNDER INCOME TAX LAWS ust two weeks are left for people who pay income tax to invest in some of the approved financial products to save up to Rs 1.5 lakh under section 80C of the Income Tax Act and some more under other laws. Ideally people should plan it at the start of the financial year, in April of every year, and space out the investments through the next 12 months to avoid any last minute rush. However, a large number of people don’t do that. So here are some of the popular financial instruments to invest to save some extra taxes.

J

An ELSS comes « with a three-year lock in, which is the

Scan this QR code to calculate the amount you need to invest to achieve all the milestones you have set for yourself

shortest among all the approved tax saving products. Also given this three-year lock-in for these schemes, the fund managers usually have a better leeway than regular equity schemes to stay invested in the stocks he selects. Historically most of these schemes have given slightly better return than comparable equity schemes.

ELSS Equity linked savings « schemes (ELSS) are those approved mutual fund products which invest at least 65% of the corpus in equities and the balance in other assets. A salaried person could invest the whole Rs 1.5 lakh in these schemes every year to save on taxes under section 80C.

Scan this QR code to know what an SIP can do for you.

BEYOND ELSS

STEPS TO DOWNLOAD AND SCAN A QR CODE

Other tax saving products are pension and retirement « funds by mutual fund houses, National Pension Scheme, public provident fund, tax saving bank fixed

ODownload QR code app on your phone ORun app and scan the QR code OYour smartphone will read the code & navigate to the destination

deposits, post office saving products, life insurance etc.

ADVANTAGES CAN MAKE ONE

t

GREAT DECISION.

I

I

f

f

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS , READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

— The writer is director, SMC Global Securities

_

To now about the KYC docu Cory requiremenn and proced ure fo r change of address , phone ,umber , bo^ k de m s , etc please visit hops//www urimf com/servicerequea/k yc. Please deal with only reg is*od MuNOI Funds , drals of wh ch can be ver6ied or no SERI websim under 'Intermediaries /Morket InfrmeuWre InsfMson a All campfaints regording UTI Mural fund ca n be directed towards serncWuti.co and /or vls lt ww r scores.gay n ISEBI SCORES pe rson This mowial is port of Investor Education and awareness initiative of Ull Mural Fund.

financial planning 12

financial planning

The Economic Times Wealth March 16-22, 2020

The Economic Times Wealth March 16-22, 2020

10 things to

Interest rates are likely to be cut due to fall in bond yields

T

he stress in the banking sector has made government schemes more attractive than ever. If you are looking to invest in fixed income options, the National Savings Certificates and Kisan Vikas Patras are your best bets. They are offering 7.9% and 7.6% respectively, but this may soon change. Interest rates of small savings schemes are linked to government bond yields. Bond yields have fallen by almost 40 basis points in the past three months, with the 10-year bond yield averaging 6.3% since 1 January. This suggests that the interest rates of small savings schemes may be cut by 15-20 basis points from 1 April. While investors in the PPF and the Sukanya Samriddhi Yojana will not be able to escape the rate cut, the change will not affect NSCs and KVPs purchased before 31 March.

do before 31 March T

axpayers had to file their tax returns for the financial year 2018-19 by 31 July 2019. If you missed that deadline, you can still file a belated tax return by 31 March. Since this will be a belated return, there could be a late filing penalty. The penalty is low at `1,000 if the taxpayer’s income is below `5 lakh. But if the income is above `5 lakh, it is `10,000. Don’t let that stop you from filing a belated return. The penalty for not filing the tax return is much stiffer. “If the unpaid tax is more than `10,000, the taxpayer may be prosecuted and fined, or both. However, before that the taxpayer will get a notice for non-filing,” says Archit Gupta, Founder and CEO of tax filing portal Cleartax.com. You won’t be allowed to file belated returns after 31 March.

F

Selling and buying back will reset the buying price

M

ILLUSTRATIONS: ANIRBAN BORA

You can’t file late returns after 31 March

Bought now, they are eligible for double indexation

Book profits in stocks, equity funds

Complete these tasks within the next two weeks before the financial year ends.

File belated tax return

Lock into long-term FMPs, funds

Invest in small savings schemes

Calculate your tax liability Advance tax can be paid using Challan 280

T

he tax on salary income is deducted by the employer. However, if you are a selfemployed professional or received income from other sources, you have to pay tax on this income yourself. If the tax payable on income is more than `10,000, the taxpayer is required to deposit advance tax. “Advance tax is payable on total income from all sources, including business, profession, capital gain, interest, rental income or prize money,” says Sudhir Kaushik, Co-founder of tax filing portal Taxspanner.com. You are already late because the last instalment of advance tax should have been paid by 15 March.

Check your income for the year No tax is payable if income is below the `5 lakh

A

lot of people don’t have a clear idea of exactly how much is their total income for the year. This is not a problem, unless they fall very close to the `5 lakh threshold. If your income is up to ` 5 lakh, there is no tax payable due to the relief available under Section 87A. But if the income exceeds this threshold by even a single rupee, the relief vanishes and pushes up the individual’s tax liability by `13,000. Calculate your total income from all sources (including interest on savings bank balance, bank deposits and capital gains). If it is above `5 lakh by a small amount, you still have time to bring it down. Donations to specified organisations, purchase of medical insurance for self, family and parents and contributions to the NPS are also eligible for tax deduction. These are over and above the ` 1.5 lakh tax savings under Section 80C.

Buy protection against Covid-19 Health insurance will cover medical expenses

T

he WHO has declared Covid-19 a pandemic. While there are several steps that individuals and companies should take to arrest the spread of this deadly infection, you can also take steps to tackle the worst case scenario. Buy health insurance for your family and parents right away. Under the tax rules, one can claim deduction for medical insurance premium of up to `25,000 for yourself and your family. There is an additional deduction of `25,000 if you buy health insurance for your parents. If even one of them is a senior citizen, the deduction is higher at `50,000. You can avail these deductions in the current financial year if you buy before 31 March.

Catch the PM Vaya Vandana Yojana

Link your PAN to Aadhaar

The last date has not been extended beyond 31 March

There is a `10,000 penalty if the two are not linked

T

our PAN may become inoperative if it is not linked to your Aadhaar by 31 March. Besides, a penalty of `10,000 can also be slapped on those who don’t link their PAN to the Aadhaar. Linking the two is not very difficult and can be done via SMS. The taxpayer has to SMS his 12-digitAadhaar number and his 10-digit PAN number to the department. It can also be done online by logging on to the income tax department website at incometaxindiafiling.gov.in.

he Pradhan Mantri Vaya Vandana Yojana (PMVVY) is available only till 31 March. Unlike other annuity schemes that offer pension for life, this scheme is for 10 years and gives assured returns to senior citizens. If the pensioner survives till the end of the policy term, the principal investment is returned to him. If he dies during the term, the amount is given to his nominee. Experts say the PMVVY is the second best option for senior citizens after the Senior Citizens’ Saving Scheme that offers higher returns of 8.6%. Senior citizens who have exhausted their `15 lakh limit in the SCSS should consider putting money in this annuity scheme. The scheme does not offer tax deduction under Section 80C and the pension received is also taxable. But it is exempted from the Goods and Services Tax (GST) applicable on amounts invested in annuities.

Y

arkets are down, but many investors are sitting on long-term capital gains. Though longterm capital gains above `1 lakh in a financial year are now taxable, you can reset the buying price by following a simple strategy. Just sell your stocks and funds before 31 March and then buy them back. You will make capital gains but the buying price of the shares will be reset. Some may call this timing the market and will also cost you 1% by way of brokerage paid on the sale and purchase transactions. But it’s a smart move that can reduce your future tax by harvesting the tax-free gains of up to `1 lakh in a year.

ixed maturity plans (FMPs) of mutual funds are closed-ended debt schemes with a fixed maturity date. Like in the case of debt funds, gains from FMPs held for more than three years are treated as long-term capital gains and taxed at a lower rate of 20% after indexation. The indexation benefit is enhanced if the holding period runs across more than three financial years. Several FMPs available right now will mature in 202324, so you will get four years’ indexation even though the holding period is only 37-38 months. However, many fund houses have incurred heavy losses on their debt funds recently due to defaults and degrades. Avoid buying schemes from such entities.

Buy term insurance cover Premiums may be revised due to hike in reinsurance rates

T

erm plans are the best form of life insurance because you get a high cover for a low price. Yet, a recent survey by Max Life Insurance shows that only 24% urban Indians have bought term insurance. If you have not yet bought a term plan, do so now. Premiums of term plans could rise by up to 20% from 1 April due to a revision in reinsurance rates. The publicsector Life Insurance Corporation of India might absorb the additional cost of reinsurance, but the private players are likely to pass them on to customers. Of course, term plans are quite cheap and absolutely essential. So even a 20% hike should not stop you from buying after 31 March.

13

learn & keep 14

The Economic Times Wealth March 16-22, 2020

Biggest Sensex falls in 20 years In a week that saw the Sensex drop nearly 5,700 points, Coronavirus fears shaved off 2,919 points on 12 March, the steepest single-day fall in market history. Riju Mehta and Sameer Bhardwaj look at some of the biggest crashes in the past two decades, the worst single-day falls and market reaction to some of the viral outbreaks. Peak 45,000

14 Jan 2020

41,953 Peak 29 Jan 2015

29,682

-22.7%

40,000

Peak 8 Jan 2008

20,873

-60.9%

Peak

35,000

14 Jan 2004

6,194

-27.3% 1,689 points

12,713 points

6,730 points

Recovery on

11 Feb 2016

Sensex at 20,894

22,952

The markets took a hit during the course of the viral, but managed to recover within six months.

32,778

SARS

-10.1% 5 Nov 2010

21,005

-27.8%

4,505

5,830 points

30 Oct 2013

Dec 2013Feb 2014

20 Dec 2011

Recovery on

-1.1%

15,175

-56.2% 3,333 points

Global outbreak of Coronavirus impacted the US and world markets. This triggered the crash in the Indian market, already troubled by the domestic economic slowdown.

Recovery on

2 Jan 2004

GLOBAL & LOCAL FACTORS

21 Sep 2001

2,600 FALLOUT OF 2008 CRASH

10,000

A year after one of the biggest falls triggered by the US banking crisis, Indian markets took another beating due to the slump in Asian, European & US markets and no hope of revival.

5,375 5,000

3 Jan 2000

Slow domestic growth, global uncertainties, fall in the rupee, high inflation and interest rates, all contributed to the year-long gloom in the Indian markets.

SCANDALS & TERRORISM

GOVT FALL, FII EXODUS

FII SELLING, SLOW GROWTH

ASIAN ROUT, INDIAN FALL

Controversy over political bribes and price-fixing scandal in the Mumbai stock market, along with terrorist attacks in the US and outside Indian Parliament led to an eight-year low.

The unexpected fall of NDA government and muscleflexing by Left parties; the fall in emerging markets, and selling pressure by FIIs led to the fall and intra-day crash of 852 points.

Heavy selling by FIIs and retail investors due to weak global markets and slow domestic growth led to the May-June crash, with an 826 point fall on 18 May.

Sensex closed 807 points down due to the massive sell-off in bank, power and realty stocks, grim quarterly results, Asian market rout and concerns over global economic slowdown.

3 Jan 2005

Nov 2015Feb 2016

Mar-Aug 2014

Mar-Aug 2016

-13.4%

28.3%

19.7%

3 Jan 2010

3 Jan 2015

Next six months

Source: Ace Equity

10 worst single-day falls

Sensex at 6,027

Fall

0

28.8%

Zika

Duration of epidemic

CORONAVIRUS PANDEMIC

Peak

15,000

-12.3%

44.5%

Sensex at 12,736

8,929

5,933

Sep 2004Feb 2005

13 Oct 2006

14 Jun 2006

11 Feb 2000

Jan-Aug 2004

Apr-Sep 2003

Ebola

Sensex at 21,034

Fall 20,000

Avian influenza

Recovery on

Fall

Peak

3,683 points

12 Mar 2020

Peak

8,160

Sensex at 6,234

-29.2%

Fall

Sensex at 29,910

How Sensex reacted to viral outbreaks

Jan-Mar 2003

17 May 2004

25,000

3 Apr 2017

9 Mar 2009

30 Nov 2004

12,612

Sensex at 29,910

9,174 points

Fall

Recovery on

10 May 2006

-21.9%

12 Mar 2020

Fall

4 Nov 2010

Fall

30,000

Recovery on

32,778

Recovery on

DATE

CHANGE FROM PREVIOUS CLOSING

SENSEX

17 May 2004

-11.1%

4,505

24 Oct 2008

-10.9%

8,701

12 Mar 2020

-8.2%

32,778

21 Jan 2008

-7.4%

17,605

7 Jan 2009

-7.2%

9,587

4 Apr 2000

-7.1%

4,691

10 Oct 2008

-7.1%

10,528

18 May 2006

-6.7%

11,391

11 Nov 2008

-6.6%

9,840

24 Jul 2000

-6.2%

4,188

12 Mar 2020

Market fall has been defined as a drop of 20% from its peak. Source: ACE Equity

financial planning The Economic Times Wealth March 16-22, 2020

Understand data trends to manage investments Choosing appropriate trend model is critical for understanding factors that affect your investment performance by Sameer Bhardwaj 1,800

India’s GDP per capita data shows exponential growth

1,600 1,400 1,200 1,000 800 600 400 200 1990

SCREENSHOT 1

T

he association between financial markets and the economy exerts considerable influence on the market value of investments. Instances of such associations include rising inflation that increases household expenditure and reduces the purchasing power of investments, a slowdown in industrial activity (IIP) that negatively affects the markets and equitylinked investments and rising bond yields that impact GDP growth,reducing the returns of long-term debt funds. A general understanding or approximation about the future movement of an economic variable can help investors to rebalance and optimise their investment portfolio. For example, if the economy is experiencing a slowdown and the central bank is expected to reduce rates, an increased allocation towards long-term gilt funds could prove effective due to the inverse relationship between bond yields and bond prices. Further, information about expected revenues or profits of companies could help equity investors in identifying good quality stocks. Experts use a variety of statistical tools for predictions. One such tool is trend forecasting, which involves studying the historical data of a variable with respect to the time. After plotting the variable on a chart with time variable on the x-axis, the concept of the ‘line of best fit’ is applied. A line is fitted on the chart which gives an idea of the future value. There are several types of statistical trends visible in the historical data and among them, linear and exponential trends are often analysed. The major distinction between the two arises due to the rate of growth of the variables. A trend is said to be linear when the historical data pattern resembles a sloping straight line. On the other hand, a trend is said to be exponential when the historical data pattern appears like a curved line. A basic example of the two can be seen from the two functions: y = 3x and y = 3^x , where the former is the linear function and the latter exponential. In the linear function, as x takes value from 1 to 5, the y equals [3, 6, 9, 12, and 15], whereas in case of exponential the y equals [3, 9, 27, 81, and 243]. Choosing the correct version of the trend is critical for improving the reliability. Applying a misfitting model to the variables could lead to biased and inconsistent estimates. One can either choose the model based on the visual examination of the historical chart or choose the one that has a high value of R-squared (or coefficient of determination). The method of visual examination is only relevant to this article.

2,000 India GDP per capita (Current US $)

SCREENSHOT 2

16

2018

Variables like economic growth, per capita income, corporate revenue, compound interest, economic growth, per capita income, business investments, inflation index and household expenditure, etc. do not generally follow linear growth. In other words, plotting such variables with respect to the time variable will not lead to straight line orientation. India’s GDP per capita data since 1990 in current USD terms (sourced from World Bank) forms a curve (see chart). Therefore, in such a case the exponential model appears more appropriate. However, the process of fitting a line to the exponential data involves applications of log-transformation and least-squares method, which is not easy to comprehend. However, all such calculations are taken care of by MS Excel’s ‘GROWTH’ function. The function requires four inputs: the “known_y” includes the historical time series of the dependent variable, which is per capita GDP. The second input “known x” is the series of the independent variable. As the per capita GDP is assumed to a function of time, therefore, “known_xs” are time (defined in years). The third input: “new_xs” is the time period for which we want to forecast the per capita GDP. The final input: ‘const’ can be left blank. To demonstrate and to improve the clarity of screenshots, only last 10 years’ historical data is used. Putting the data in the formula, one can get an estimate of 11th year as $2,112.39 (screenshot 1). There is a similar function available in Excel for capturing linear trends known as ‘TREND’ function. The function requires similar inputs and will forecast the values assuming the historical data is exhibiting linear trend. Using the function, one can see the forecast of the 11th year as $2,054 (screenshot 2). We see that the difference between outputs of the two functions is not very significant. The reason for such results is the restricted data usage of only 10 years for demonstration purposes. If the entire dataset from 1990 onwards is used, the GROWTH function will forecast value of $2,205 whereas the TREND function will deliver a value of $1,820, which is lower than the latest value of $2009.98. Clearly, the output of TREND function is unreliable as one can observe in chart 1 that the per capita GDP data since 1990 does not follow a straight line pattern. The readers can themselves check the same by extracting the free of cost data from the World Bank website.

Please send your feedback to [email protected]

financial planning The Economic Times Wealth March 16-22, 2020

Understanding debt funds When bond yields fall, the NAV of debt funds holding the existing bonds rise. Ashish, a young professional, is a conservative investor. He invests only in PPF, fixed deposits and some IRFC bonds. He thinks that debt funds are fixed income investments and would, therefore, yield fixed returns. However, a banker friend tells him that debt fund returns are not fixed and also tend to change on a daily basis. Just like equity funds, they are also subject to market risks. Ashish wonders why returns from bonds is considered fixed while that of a bond fund is not.

The Securities and Exchange Board of India (Sebi) has recently launched a application that helps investors lodge complaints and grievances using their mobile phones. The application is an extension of Sebi’s complaint redressal system known as Scores.

The mobile application is available on iOS as well as Android platforms with the name Sebi Scores.

GETTYIMAGES

Registration

D

rates, new bonds and other fixed income instruments carry lower rates. The prices of existing bonds then rise, reflecting the benefit of a higher interest rate. This causes a rise in the NAV of debt funds. The reverse happens on a rise in interest rates. Additionally, fund managers could also sell some of the bonds held in the portfolio to take advantage of price appreciation. The amount of profit booked will boost the NAV or the return of the fund. This valuing of instruments as per the market price for the purpose of NAV calculation is called ‘marking to market’. The extent to which the return will depend on market price changes varies with the type of securities held in the fund. Shorter duration instruments will see a lower impact of interest rate changes than longer duration ones. Hence, long

term debt funds such as income funds and gilt funds may be subject to higher level of fluctuation in market prices than short term funds. In fact, liquid funds by their very nature provide stable returns as they are exempt from ‘mark to market’ requirement. This is why these funds are positioned for capital protection and stable returns. Debt fund returns come from two sources–the interest rate component and the gain (or loss) on the value of the instrument. It is the interest rate component which yields stability. This is why debt funds are far less volatile than equity funds, even though their returns cannot be forecast or pre-specified or predicted. A debt fund invests in fixed-income instruments and it will not see the swift rises and steep falls that equity might.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

smart things to know

1

Application

Download application

ebt funds invest in fixed income securities such as bonds and deposits issued by the government, companies and institutions , which typically pay a fixed amount of interest at a prespecified rate and frequency. So why don’t such fixed pre-determined payments reflect in the mutual funds’ returns? The answer lies in the way debt funds are managed and the nature of their instruments. Debt funds’ returns are a function of the change in NAV. If the NAV rises, you make a positive return and vice versa. Ashish should realise that debt instruments held in a debt fund are also traded and hence, have a market value. The prices may move up or down in the market. Bond prices react to changes in interest rate. If the RBI reduces interest

Deposit insurance is a protection cover for deposit holders in a bank when the bank fails and does not have money to pay its depositors.

PAPER WORK :: Sebi Scores Mobile

2

This insurance is provided by Deposit Insurance and Credit Guarantee Corporation (DICGC) which is a wholly owned subsidiary of the RBI.

Deposit insurance

DICGC insures all bank deposits, such as savings, fixed, current and recurring deposit for up to the limit of `5 lakh per bank.

3

4

If the total of all the deposits held by an individual in a single bank exceeds `5 lakh, then he will be able to get only `5 lakh inclusive of principal and interest amount if the bank goes bankrupt.

DICGC covers depositors of all commercial banks and foreign banks operating in India, state, central and urban co-operative banks, local area banks and regional rural banks provided the bank has bought the cover from DICGC.

5

Once the app is downloaded, the user needs to register himself. The user has to fill up an online registration form by providing details such as name, email id, address for correspondence, city, pincode, PAN, phone number and mobile number (to be used for SMS notifications). Once the details are entered, a temporary login password is created and shared with the user on the registered email id.

Lodge complaint The user can login and proceed to lodge a complaint by clicking on the ‘Register Complaint’ tab. The user must choose the category of complaint. After this, the user needs to enter details relating to the complainant and the complaint such as contact details, PAN, Aadhaar, CKYC ID and bank details. Along with the files to support, the complaint in up to 1,000 characters can be uploaded. Once registered, a complaint registration number is generated and conveyed to the user.

Track complaint Once the complaint is registered on Scores, an intimation is given to the entity against whom the complaint is made. A response needs to be filed by the entity within the stipulated time period. Sebi closely monitors the satisfactory closure of the complaint. One can track status of the complaint using the complaint tracking tool available on the app.

:: Point to note  Login credentials can be used on

the mobile application as well as the Scores website.

17

family finance 18

The Economic Times Wealth March 16-22, 2020

On track to meet all goals

RAM PATIL, 34 YEARS, SOFTWARE ENGINEER, PUNE

How to invest for goals

Aggressive saving by Pune-based Patil means that he will be able to meet his primary goals with ease.

GOAL

FUTURE COST (`) / TIME TO ACHIEVE

RESOURCES USED

INVESTMENT NEEDED (`/MONTH)

Emergency fund

3.4 lakh / 1 yr*

Cash

-

Down payment for house

25 lakh / 2 yrs

Fixed deposit

-

1st child’s education

48 lakh / 13 yrs

Mutual funds

7,500

2nd child’s education

63 lakh / 17 yrs

Mutual funds

4,500

Retirement

4.5 crore / 26 yrs

EPF, PPF, stocks, mutual funds

6,000

by Riju Mehta

R

am Patil is a software engineer, who lives with his homemaker wife and two children, aged five and one, in a rented house, in Pune. He gets a monthly salary of `75,000 and his net worth is `57.07 lakh. His portfolio includes cash of `1 lakh, debt worth `35.8 lakh in the form of fixed deposits, PPF and EPF, and equity worth `20.2 lakh in the form of mutual funds and stocks. After considering household expenses, insurance premium and investment, he is left with a surplus of `1,833. His goals include building an emergency corpus, buying a house, saving for children’s education, buying a car, and retirement. Financial Planner Pankaaj Maalde suggests that Patil begin by building a contingency corpus of `3.4 lakh, which is equal to six months’ expenses. He can allocate his cash holding of `1 lakh for this goal and invest it in a liquid fund. For the remaining amount, he will have to save till the corpus is built. He should start his home loan EMI only after the emergency fund is ready. To buy a house worth `55 lakh in two years, he should make a down payment of `25 lakh by using his fixed deposit. For the remaining `30 lakh, he should take a home loan for 25 years, and at 8%, his EMI will be `23,350, which can be sourced from the surplus. To fund his older child’s education in 13 years, Patil has estimated a need `48 lakh. For this, he can allocate 25% of his mutual fund corpus and start an SIP of `7,500 in a diversified equity fund. For the younger child’s education in 17 years, Patil will need `63 lakh. For this, he can allocate another 25% of his mutual fund corpus and start an SIP of `4,500 in a diversified equity fund. For retirement, Patil will need `4.5 crore in 26 years. He will have to allocate his stocks, mutual funds, EPF and PPF to meet this goal. He should also continue investing `500 in the PPF and `6,000 in a diversified equity fund. Patil has a term life insurance of `80 lakh, for which he is paying a monthly premium of `917. He does not need any more life cover and Maalde suggests he continue with this. For health insurance, he has a `3 lakh plan provided by his employer and Maalde advises him to buy another `10 lakh family floater plan. This will cost him `1,167 a month in premium. He should also buy a `25 lakh accident disability plan for himself, which will cost him `333 a month in premium.

Portfolio CURRENT VALUE (`)

ASSET

Cash

1 lakh

Debt Fixed deposit

25 lakh

PPF

6 lakh

EPF

4.8 lakh

Investible surplus needed

18,000

* Save the surplus till the copus is built. Loan EMI will begin only after investment for this goal is complete. Annual return assumed to be 12% for equity, 8% for debt funds. Inflation assumed to be 7%.

Equity Mutual funds

18.7 lakh

Stocks

1.5 lakh

Total

Insurance portfolio

57.07 lakh CURRENT VALUE (`)

LIABILITIES

Loans

Nil

Total liability

Nil

Net worth

`57.07 lakh

EXISTING COVER (`)

EXISTING MONTHLY PREMIUM (`)

SUGGESTIONS

SUGGESTED MONTHLY PREMIUM (`)

Term plan

80 lakh

-

Continue

917

Traditional plan

-

-

-

-

Ulips

-

-

-

-

TOTAL

80 lakh

-

`80 lakh

917

Employer’s

3 lakh

-

Continue

-

Own

-

-

Buy `10 lakh

1,167

TOTAL

3 lakh

-

`13 lakh

1,167

Critical illness & accident disability

-

-

Buy `25 lakh accident disability plan

667

TOTAL

-

-

`25 lakh

667

Insurance cost

-

917

-

2,417

INSURANCE

Life insurance

Cash flow EXISTING (`)

Income

75,000

SUGGESTED (`)

75,000

Outflow Household expenses

20,000

21,000

House rent

10,000

-

Contribution to parents

10,000

10,000

Loan EMI

-

23,350

Insurance

917

2,417

Investment

32,250

18,000

Total outflow

73,167

74,767

1,833

233

Surplus

FINANCIAL PLAN BY

PANKAAJ MAALDE CERTIFIED FINANCIAL PLANNER

Health insurance

Premiums are indicative and could vary for different insurers.

Write to us for expert advice

Looking for a professional to analyse your investment portfolio? Write to us at [email protected] with ‘Family Finances’ as the subject. Our experts will study your portfolio and offer objective advice on where and how much you need to invest to reach your goals.

The Economic Times Wealth March 16-22, 2020

SMART STATS ET WEALTH TOP 50 STOCKS

In This Section MUTUAL FUNDS - P20 LOANS AND DEPOSITS - P22 ALTERNATE INVESTMENTS- P23

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result of this is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt. RANK

PRICE `

Current Previous Rank Rank

Stock Price

GROWTH%*

VA LUAT I O N R AT I O S

Revenue

Net Profit

PE

PB

Div Yield

RISK

PEG

Downside Risk

Bear Beta

R AT I N G No. of Consensus Analysts Rating

KEC International

1

1

280.5

28.58

60.73

14.11

2.82

1.96

0.30

1.37

0.79

33

4.70

JK Cement

2

4

1,144.7

28.52

111.64

32.64

3.44

1.36

0.29

1.19

0.57

29

4.62

HG Infra Engineering

3

3

192.2

38.33

69.88

10.09

1.94

0.23

0.14

1.89

0.63

15

5.00

Engineers India

4

2

61.5

37.33

35.84

10.59

1.67

6.40

0.26

1.65

0.75

15

4.27

Birla Corp

5

6

581.9

15.08

85.39

18.28

1.04

1.13

0.21

1.52

0.95

11

5.00

Larsen & Toubro

6

5

1,016.6

23.21

33.45

16.14

2.31

1.61

0.50

1.07

1.00

42

4.71

Aurobindo Pharma

7

11

374.5

37.28

29.81

9.52

1.62

0.67

0.31

2.22

1.18

35

4.43

Fast growing stocks

1

Top 5 stocks with the highest expected revenue % growth over the previous year 40

Gujarat Gas

UltraTech Cement

8

14

3,663.5

30.21

97.86

41.46

3.56

0.29

0.46

1.09

0.61

45

4.36

HG Infra 38 Engineering Prestige Estates 38 Projects

Emami

9

10

202.8

12.89

84.09

29.08

4.25

2.67

0.32

1.31

0.58

34

4.03

Engineers India

37

Power Grid Corp of India

10

7

166.1

12.74

19.37

7.04

1.50

4.59

0.36

1.03

0.67

27

4.44

Alkem Laboratories

11

9

2,386.5

26.70

75.13

37.41

5.23

1.17

0.50

0.97

0.25

20

4.40

Aurobindo Pharma

37

Reliance Industries

12

8

1,063.0

15.59

47.88

15.99

1.64

0.56

0.36

1.34

1.41

37

4.46

Century Plyboards India

13

13

136.8

15.40

59.42

19.70

3.00

0.68

0.33

1.52

0.52

20

4.60

NTPC

14

15

94.4

19.36

8.73

6.18

0.85

2.43

0.63

1.10

0.64

27

4.93

ITC

15

18

155.8

14.52

29.83

14.83

3.17

3.27

0.51

1.15

0.79

38

4.39

Redington India

16

16

101.1

23.24

18.10

8.02

1.02

6.95

0.46

2.05

0.36

10

4.70

Sobha

17

21

241.4

18.81

18.20

7.26

0.97

2.97

0.39

1.91

1.85

22

4.64

CCL Products India

18

28

195.8

23.91

30.44

16.82

3.10

4.10

0.52

1.25

0.69

10

4.80

Sun Pharmaceutical

19

24

354.8

22.49

47.26

31.68

2.04

1.49

0.69

1.33

0.74

41

3.78

Least expensive stocks

2

Top 5 stocks with the lowest price-earnings ratio NMDC

4.81

CESC

5.72

NTPC

6.18 7.04 7.26

Rallis India

20

19

199.6

30.67

51.87

25.03

3.02

1.18

0.49

1.29

0.75

20

3.95

Power Grid Corp of India

Adani Ports & SEZ

21

17

287.7

32.22

33.11

14.89

2.44

0.06

0.40

1.19

0.83

25

4.76

Sobha

Ramco Cements

22

30

655.1

27.03

59.43

28.40

3.40

0.79

0.48

1.00

0.45

31

3.39

Mphasis

23

22

735.0

26.09

16.20

13.11

2.61

3.47

0.69

1.13

0.79

33

4.30

Kalpataru Power Trans

24

12

266.7

13.35

24.40

8.53

1.28

1.02

0.35

1.58

1.21

21

5.00

HeidelbergCement

25

26

160.1

16.11

50.16

16.32

3.08

0.87

0.33

1.49

1.42

18

4.50

JSW Energy

26

20

46.2

6.86

40.62

11.00

0.65

2.07

0.26

1.60

1.49

17

4.18

Manappuram Finance

27

23

130.0

2.96

69.46

11.91

2.43

1.52

0.18

1.59

1.38

15

4.27

Ipca Laboratories

28

29

1,308.8

34.63

75.28

37.12

5.29

0.35

0.49

1.31

0.32

26

4.15

VRL Logistics

29

37

200.6

11.49

34.27

19.68

2.80

3.27

0.40

1.39

0.37

15

4.20

Gujarat Gas

30

27

261.0

39.75

140.92

43.17

8.19

0.36

0.29

1.44

0.77

30

4.17

Prestige Estates Projects

31

33

225.5

38.26

41.06

20.35

2.00

0.54

0.53

2.13

1.25

18

4.50

HCL Technologies

32

25

493.4

28.85

18.11

13.61

3.23

0.93

0.70

1.03

0.88

48

4.29

Jubilant Life Sciences

33

39

381.4

10.84

29.47

10.49

1.28

2.14

0.35

1.72

1.15

13

4.46

CESC

34

38

506.9

13.96

8.63

5.72

0.75

3.53

0.89

1.15

0.53

18

4.78

Apollo Hospitals

35

32

1,508.0

28.70

111.64

90.57

6.42

0.40

0.77

1.20

0.76

23

4.78

Transport Corp of India

36

35

175.0

15.88

28.94

9.70

1.58

0.53

0.34

1.32

1.05

10

4.90

Mahanagar Gas

37

31

910.3

5.39

46.56

16.59

3.78

2.05

0.35

1.24

1.01

29

3.86

Cipla/India

38

41

394.8

12.44

27.05

20.80

2.12

0.72

0.78

1.02

0.60

44

4.30

Ajanta Pharma

39

36

1,283.4

35.56

38.63

29.42

5.07

0.93

0.77

1.20

0.31

13

4.31

Motherson Sumi Systems

40

49

67.9

12.57

23.81

13.65

2.01

1.67

0.53

1.98

1.66

36

4.19

Crompton Greaves

41

34

246.3

18.63

45.17

39.23

14.34

0.79

0.90

1.17

0.38

38

4.63

NMDC

42

42

72.1

0.90

10.58

4.81

0.88

6.51

0.26

2.06

1.53

22

4.23

Indian Hotels Co

43

44

110.1

15.03

70.42

45.68

3.01

0.44

0.65

1.23

0.85

14

4.86

Thermax

44

40

832.7

10.92

58.41

28.86

3.30

0.82

0.53

1.15

0.33

32

2.91

Blue Star

45

43

742.0

26.22

46.99

37.48

8.19

1.30

0.81

1.22

0.65

27

4.04

Oberoi Realty

46

47

452.9

18.20

29.95

19.91

2.06

0.42

0.66

1.66

0.82

26

4.35

Amara Raja Batteries

47

48

558.2

20.76

33.30

19.81

2.87

1.84

0.86

1.22

0.66

22

3.77

Bajaj Auto

48

45

2,338.9

12.01

17.22

14.01

2.97

6.95

0.81

1.00

0.67

54

3.33

Coromandel International

49

46

576.6

7.79

51.26

23.48

5.04

0.56

0.46

1.00

0.50

17

4.35

Tata Consumer Products

50

--

303.5

31.60

83.45

47.30

2.63

0.76

1.02

1.25

0.77

10

4.00

*REVENUE AND NET PROFIT GROWTH IS BASED ON CONSENSUS ANALYSTS' EXPECTATIONS. NR: NOT IN THE RANKING. DATA AS ON 12 MARCH 2020.

SOURCE: BLOOMBERG

Best PEGs

3

Top 5 stocks with the least price-earnings to growth ratio Manappuram Finance

0.14

0.18

HG Infra Engineering

4

5

Engineers India

0.21

0.26

Birla Corp

0.26

JSW Energy

Income generators Top 5 stocks with the highest dividend yield (%) Redington India

6.95

Bajaj Auto

6.95

NMDC

6.51

Engineers India Power Grid Corp of India

6.40 4.59

Least risky Top 5 stocks with the lowest downside risk Ramco Cements/The

0.97

1.00

Alkem Laboratories

Coromandel International

1.00

Bajaj Auto

1.00

1.02

Cipla/India

SEE DOWNSIDE RISK AND BEAR BETA COLUMNS IN THE ADJACENT TABLE.

smart stats 20

The Economic Times Wealth March 16-22, 2020

LAGGARDS & LEADERS

ETW FUNDS 100

Taking a long-term view of fund returns, here is a list of 10 funds in each category—five leaders (worth investing) and five laggards (that may be a drag on your portfolio).

BEST FUNDS TO BUILD YOUR PORTFOLIO

LAGGARDS

ET Wealth collaborates with Value Research to identify the top-performing funds across categories. Equity funds and equity-oriented hybrid funds are ranked on 3-year returns while debt-oriented hybrid and income funds are ranked on 1-year returns.

Equity: Large-cap 5-year returns 0.72 Principal Nifty 100 Equal Weight

1.04 Taurus Largecap Equity

Value Research Fund Rating

Net Assets (` Cr) 3-Month

RETURNS (%) 6-Month

1-Year

3-Year

5-Year

JM Large Cap

2.6

Axis Bluechip Fund



11,823.95

-3.55

5.04

11.54

15.02

8.96

1.73

Canara Robeco Bluechip Equity Fund



352.87

-5.31

4.8

6.03

9.91

6.84

2.47 2.36

Sundaram Select Focus Fund



1,046.48

-8.53

-0.43

1.6

9.31

5.89

HDFC Index Fund



803.31

-11.72

-4.28

-3.06

8.01

5.5

0.3

Tata Index Sensex Fund



14.89

-11.49

-4.13

-2.87

7.9

5.03

0.46

Edelweiss Large Cap Fund

2.47

Expense Ratio (%)

EQUITY: LARGE CAP



174.32

-8.08

-1.6

-0.41

7.4

5.19

2.02

Mirae Asset Large Cap Fund



16,733.83

-10.53

-3.8

-4.03

7.28

7.47

1.66

Motilal Oswal Focused 25 Fund



1,236.79

-6.52

3.4

5.09

7.07

5.83

2.2

JM Core 11 Fund



53.94

-5.88

0.44

-3.71

6.92

7.67

—

UTI Nifty Index Fund



1,855.78

-12.11

-5.01

-5.37

6.45

4.74

0.17

ICICI Prudential Bluechip Fund



23,608.74

-11.66

-5.42

-6.79

4.71

4.9

1.73

SBI Bluechip Fund



22,043.89

-10.05

-4.15

-3.49

4.1

4.94

1.66

15%

Franklin India Bluechip

2.71

THE 3-YEAR RETURN OF AXIS BLUECHIP IS THE HIGHEST IN ITS CATEGORY.

Baroda Large Cap

Mirae Asset Emerging Bluechip Fund Invesco India Growth Opportunities Fund LIC MF Large & Mid Cap Fund



9,613.59

-7.04

0.47

0.96

8.97

11.62

1.78



2,498.42

-7.49

-0.12

-1.11

8.59

6.55

2.05 2.56



0.31 Taurus Starshare

1.47 ICICI Pru Focused Equity LIC MF Multicap

8.9% THE 3-YEAR RETURN OF MIRAE ASSET EMERGING BLUECHIP FUND IS THE HIGHEST IN ITS CATEGORY.

1.73 HDFC Focused 30

656.93

-5.01

3.97

4.96

8.16

8.47

Canara Robeco Emerging Equities Fund



5,597.35

-1.79

7.44

1.58

7.99

9.62

1.97

Sundaram Large and Mid Cap Fund



1,167.45

-7.29

2.19

-0.3

7.88

7.79

2.23

Kotak Equity Opportunities Fund



3,167.85

-6.06

2.58

0.6

6.29

6.78

2.12

Principal Emerging Bluechip Fund



2,116.72

-3.43

5.22

0.16

6.26

8.19

1.91

DSP Equity Opportunities Fund



5,279.30

-7

0.77

-0.55

5.23

7.38

1.93

Axis Focused 25 Fund



9,764.08

-2.56

6.69

10.76

13.06

9.89

1.85

SBI Focused Equity Fund



8,263.77

-2.74

6.36

8.24

12.34

9.51

1.88

IIFL Focused Equity Fund



756.12

-1.06

8.73

14.81

10.44

9.35

2.36

-0.58



1,771.87

-3.36

5.86

3.27

10.36

6.27

2.3

Aditya Birla Sun Life Mid Cap



2,794.86

-4.36

-0.09

1.68

9.02

8.72

2.01

544.52

-6.58

-0.02

-2.5

8.08

6.34

2.42 2.42

EQUITY: MULTI CAP

Canara Robeco Equity Diversified Fund Parag Parikh Long Term Equity Fund Edelweiss Multi Cap Fund



1.83 Nippon India Retirement

-1.32 Motilal Oswal Midcap 100 ET

-0.56 SBI Magnum Midcap



742.53

-7.79

1.47

0.18

7.72

7.63

Kotak Standard Multicap Fund



29,459.53

-9.38

-2.49

-2.72

6.15

7.22

1.65

-0.43

SBI Magnum Multicap Fund



8,491.77

-7.13

-2.89

-1.86

5.9

7.26

1.89

IDBI Midcap

Quant Active Fund



9.78

-9.33

-3.02

-6.7

5.78

5.79

2.48

Motilal Oswal Multicap 35 Fund



12,371.55

-6.62

-2.02

-2.87

4.9

7.58

1.8



EQUITY: MID CAP Invesco India Mid Cap Fund DSP Midcap Fund Kotak Emerging Equity Fund L&T Midcap Fund

5,192.94

-1.22

8.97

8.3

13.92

8.81

1.96



805.39

2.01

9.52

3.04

8.38

7.27

2.45



7,458.11

-0.27

8.34

3.95

6.41

8.78

1.93



6,850.82

-2.08

5.65

1.48

5.25

8.13

1.87



6,212.86

-2.47

3.5

-4.52

4.14

7.51

1.93

EQUITY: SMALL CAP

0.41 ICICI Prudential Midcap

13.9%

-7.31 Quant Small Cap Fund

-4.69 ABSL Small Cap



2,506.67

3.12

9.91

17.1

12.51

10.45

1.98

SBI Small Cap Fund



3,475.83

-0.23

4.77

2.25

10.1

11.83

2.2

Nippon India Small Cap Fund



8,566.82

-2.35

-0.41

-9.25

3.53

7.99

2.14

HDFC Small Cap Fund



9,154.08

-6.51

-7.97

-19.92

3.33

6.19

2.08

-3.79

L&T Emerging Businesses Fund



5,606.21

-7.8

-6.41

-17.29

1.05

6.92

1.95

HSBC Small Cap Equity

2.45

Franklin India Smaller Companies



866.17

-8.75

-2.22

-3.54

7.92

6.07

4,668.45

-6.11

-0.55

-4.34

7.52

7.18

2

Tata Equity PE Fund



4,567.21

-12.47

-6.61

-9.99

2.19

5.48

1.9

L&T India Value Fund



7,040.66

-8.86

-3.68

-7.77

1.46

5.72

1.86



21,658.58

-0.8

7.12

10.7

12.83

8.5

1.62



1,036.37

-1.97

6.52

3.95

10.08

6.45

2.3

Mirae Asset Tax Saver Fund



3,281.58

-9.94

-2.54

-2.23

9.01

—

1.93

JM Tax Gain Fund



37.72

-4.48

2.7

4.79

8.77

7.46

—

Invesco India Tax Plan



1,028.18

-5.44

3.23

0.79

7.76

6.51

2.32

Motilal Oswal Long Term Equity Fund



1,685.97

-4.74

5.47

4.04

7.75

10.1

2.1



10,072.72

-4.76

2.49

-2.19

7.39

6.54

2



2,060.38

-9.85

-2.44

-2.73

6.54

7.1

2.09

Kotak Tax Saver



1,135.45

-7.01

1.08

0.04

5.77

5.83

2.47

DSP Tax Saver Fund



6,096.28

-8.87

-2.07

-1.05

5.39

7.18

1.95

Quant Tax Plan



9.54

-9.63

-4.52

-8.42

2.84

7.18

2.48

Aditya Birla Sun Life Tax Relief 96 Tata India Tax Savings Fund

9.89 Axis Focused 25

9.51 SBI Focused Equity

9.35 IIFL Focused Equity

8.72 Parag Parikh Long Term Equity

7.63 Tata Retirement Savings

13.92 Axis Midcap

8.38 Invesco India Mid Cap

6.41 DSP Midcap Fund

6.12 Nippon India Growth

5.94 Edelweiss Mid Cap

12.51 Axis Small Cap

10.1 SBI Small Cap

3.53 Nippon India Small Cap

3.33 HDFC Small Cap

2.71 Kotak Small Cap

Hybrid: Aggressive 5-year returns

EQUITY: ELSS Canara Robeco Equity Tax Saver Fund

5.97 SBI ETF Sensex

-2.14 

Axis Long Term Equity Fund

6.84 Canara Robeco Bluechip Equity

-4.18 Sundaram Small Cap Fund

EQUITY: VALUE ORIENTED Invesco India Contra Fund

7.47 Mirae Asset Large Cap

Equity: Small-cap 3-year returns

THE 3-YEAR RETURN OF AXIS MIDCAP FUND IS THE HIGHEST IN ITS CATEGORY.

Axis Small Cap Fund

Kotak India EQ Contra Fund

7.67 JM Core 11

Equity: Mid-cap 3-year returns

Tata Retirement Savings Fund

Axis Midcap Fund

8.96 Axis Bluechip

Equity: Multi-cap 5-year returns

1.63 EQUITY: LARGE & MIDCAP

LEADERS

12.8% THE 3-YEAR RETURN OF AXIS LONG TERM EQUITY FUND IS THE HIGHEST IN ITS CATEGORY.

0.43 JM Equity Hybrid

1.29 Nippon India Equity Hybrid

2.04 PGIM India Hybrid Equity

2.66 LIC MF Equity Hybrid

2.81 Tata Hybrid Equity

8.1 DSP Equity & Bond

7.6 SBI Equity Hybrid

7.59 Canara Robeco Equity Hybrid

7.06 Tata Retirement Savings

6.96 Principal Hybrid Equity

ANNUALISED RETURNS IN % AS ON 11 MARCH 2020.

smart stats The Economic Times Wealth March 16-22, 2020

ETW FUNDS 100 Value Research Fund Rating

Net Assets (` Cr) 3-Month

RETURNS (%) 6-Month

1-Year

3-Year

5-Year

Expense Ratio

1

HYBRID: EQUITY SAVINGS 

792.93

-1.95

1.87

4.05

7.27

—

2.32

Edelweiss Equity Savings Fund



114.70

-0.46

2.47

4.78

6.86

6.12

1.74

Kotak Equity Savings Fund



1,712.30

-3.16

0.93

2.4

6.2

6.24

2.11

Axis Equity Saver Fund



ICICI Prudential Equity Savings Fund

1,473.63

-3.11

0.36

3.54

5.6

6.51

18.80

16.97 

32,469.68

-3.15

2.81

5.73

9.13

7.6

1.62



3,071.18

-1.66

5.73

5.69

8.77

7.59

2.01

DSP Equity & Bond Fund



6,464.64

-0.79

6.05

8.4

7.92

8.1

1.93

Mirae Asset Hybrid Equity Fund



3,423.88

-7.77

-2.33

-1.46

6.72

—

1.91

Tata Retirement Savings Fund



1,141.67

-6.07

2.19

-0.51

6.63

7.06

2.22

HDFC Retirement Savings Fund



387.69

-4.57

-0.94

-1.81

6.16

—

2.73

HDFC Children's Gift Fund



3,082.53

-6.06

-1.83

-3.09

6.11

6.26

2.11

Principal Hybrid Equity Fund



1,265.62

-5.74

-1.43

-6.29

5.97

6.96

1.91

ICICI Prudential Equity & Debt Fund



20,611.45

-9.87

-5.22

-6.2

3.15

5.64

1.73



1.95

9.1%

Axis Long Term Equity

THE 3-YEAR RETURN OF SBI EQUITY HYBRID FUND IS THE HIGHEST IN ITS CATEGORY.

15.85 Principal Emerging Bluechip 14.69 Invesco India Mid Cap 14.47 SIP: SYSTEMATIC INVESTMENT PLAN

HYBRID: CONSERVATIVE (DEBT-ORIENTED) 1,746.10

0.55

3.93

6.97

8.24

8.16

Tata Retirement Savings Fund



136.63

0.28

3.57

5.89

6.34

6.98

2.22

Indiabulls Savings Income Fund



26.30

-0.8

1.96

4.41

8.45

—

2.22



64.47

-1.19

0.11

-1.44

6.45

8.77

2.26

SBI Magnum Children's Benefit Fund

Top 5 equity schemes based on 10-year SIP returns

Canara Robeco Emerging Equities

1.36

Canara Robeco Equity Hybrid Fund

ICICI Prudential Regular Savings Fund

Top 5 SIPs

SBI Small Cap

HYBRID: AGGRESSIVE (EQUITY-ORIENTED) SBI Equity Hybrid Fund

21

2

DEBT: MEDIUM- TO LONG-TERM Nippon India Income Fund



299.46

5.23

5.57

14.81

8.69

8.09

1.62

SBI Magnum Income Fund



1,301.28

5.5

6.81

13.93

8.52

8.47

1.47

IDFC Bond Fund Income Plan



683.35

5.67

5.13

13.89

7.98

7.99

1.9

ICICI Prudential Bond Fund



3,437.89

3.51

5.21

12.23

8.05

8.09

1.08

SBI Magnum Medium Duration Fund



3,099.90

3.88

5.82

12.44

8.83

9

1.14

IDFC Bond Fund Medium Term Plan

14.8%

Top 5 MIPs Top 5 MIP schemes based on 3-year SWP returns Indiabulls Savings Income

THE 1-YEAR RETURN OF NIPPON INDIA INCOME FUND IS THE HIGHEST IN ITS CATEGORY.

DEBT: MEDIUM-TERM

% ANNUALISED RETURNS AS ON 11 MARCH 2020

8.02 Baroda Conservative Hybrid 7.48 ICICI Prudential Regular Savings



3,065.60

3.6

4.27

10.66

7.56

7.85

1.44

HDFC Medium Term Debt Fund



1,416.65

3.52

5.09

10.54

7.62

8

1.29

Indiabulls Income Fund



30.90

3.42

3.84

8.71

8.31

7.73

0.76

Canara Robeco Conservative Hybrid

12,216.31

2.72

4.67

10.28

8.08

8.3

0.39

BNP Paribas Conservative Hybrid 5.80

7.43

6.27

DEBT: SHORT-TERM 

HDFC Short Term Debt Fund



5,398.22

2.3

4.2

9.96

7.71

7.96

0.95

IDFC Bond Fund Short Term Plan



12,340.94

2.07

3.93

9.52

7.65

7.81

0.79

L&T Short Term Bond Fund



5,189.52

2.33

4.07

9.5

7.62

7.76

0.73

Axis Short Term Fund

SWP: SYSTEMATIC WITHDRAWAL PLAN

DEBT: DYNAMIC BOND 

1,308.83

5.02

6.01

16.01

8.64

8.8

1.67

IDFC Dynamic Bond Fund



2,077.51

6.17

5.73

14.67

8.41

8.34

1.79

Axis Dynamic Bond Fund



420.49

5.78

6.62

14.29

8.69

8.52

0.6

PGIM India Dynamic Bond Fund



46.89

4.45

5.02

13.43

8.91

8.59

1.72

Quantum Dynamic Bond Fund



60.30

6.11

5.79

13.17

8.44

—

0.7

ICICI Prudential All Seasons Bond Fund



3,188.69

4.79

6.07

12.7

8.94

8.9

1.32

SBI Dynamic Bond Fund

Edelweiss Dynamic Bond Fund



43.30

3.63

3.56

12.01

8.1

7.53

1.04

Kotak Dynamic Bond Fund



1,204.89

3.5

4.8

11.99

9.01

9.13

1.08

0.52

% ANNUALISED RETURNS AS ON 11 MARCH 2020

16% THE 1-YEAR RETURN OF SBI DYNAMIC BOND FUND IS THE HIGHEST IN ITS CATEGORY.

3

Mid & Small Cap exposure of Multi Cap funds 58.61

55.60

55.48

52.19 45.91

DEBT: CORPORATE BOND UTI Corporate Bond Fund



1,009.24

3.35

5.97

12.58

—

—

HDFC Corporate Bond Fund



13,389.16

3.19

4.41

10.97

8.38

8.62

0.5

Franklin India Corporate Debt Fund



1,512.27

3.31

4.94

10.4

8.6

8.45

0.85



17,605.87

2.56

4.32

10.14

8.2

8.5

0.39



13,243.33

2.43

4.25

10.06

7.86

8.26

0.56



4,839.91

2.05

3.94

9.53

8.11

8.27

0.6

932.53

2.63

3.85

8.16

7.41

7.91

0.71

Aditya Birla Sun Life Corporate Bond Fund ICICI Prudential Corporate Bond Fund Kotak Corporate Bond Fund



Nippon India Prime Debt Fund

All equity funds ranked on 3-year returns. Debt funds ranked on 1-year returns.

Invesco India Multicap

Expense as on 31 January 2020 Returns as on 11 March 2020 Assets as on 29 February 2020 Rating as on 29 February 2020

Did not find your fund here? Methodology

EQUITIES (figures over the past one year)

The Top 100 includes only those funds that have a 5- or 4-star rating from Value Research. The rating is determined by subtracting a fund’s risk score from its return score. The result is assigned stars according to the following distribution:

Large-cap: Mostly invested in large-cap companies.

  Top 10%

Small-cap: Mostly invested in small-cap companies.

 Next 22.5%



 Middle 35%



 Next 22.5%



Quant Active

% OF ASSETS AS ON 29 FEBRUARY 2020

Log on to www.wealth.economictimes.com for an exhaustive list.



ABSL Bal Aditya Birla HDFC ReBhavishya Sun Life Re- tirement Yojna tirement Savings

Multi-cap: Mostly invested in large- and mid-cap companies. Mid-cap: Mostly invested in mid-cap companies.

4 FUND RAISER

Debt: Liquid 0.15

0.16

0.16

0.17

0.13

Tax planning: Offer tax rebate under Section 80C. (Not covered in ETW Funds 100 listing)

 Bottom 10%

Fixed-income funds less than 18 months old and equity funds less than three years old have been excluded. This ensures that all the funds have existed long enough to be tracked for consistency of performance. Given the focus on long-term investing, liquid funds, short-term funds and FMPs are not part of the list. For the same reason, we have considered only the growth option of funds that reinvest returns instead of offering dividends that increase the NAV of funds. Despite these rigorous filters, the list includes 2/3 funds of each category to maximise choice from the best funds. The fund categories are:

International: More than 65% of assets invested abroad. Income: Average maturity varies according to objective. Gilt: Medium- and long-term; invest in gilt securities. Equity-oriented: Average equity exposure more than 60%. Debt-oriented aggressive: Average equity exposure between 25-60%. Debt-oriented conservative: Average equity exposure less than 25%. Arbitrage: Seek arbitrage opportunities between equity and derivatives. Asset allocation: Invest fully in equity or debt as per market conditions.

`1.83 lakh cr was the cash holding of the mutual fund industry in February 2020. This was an increase of 38.2% year-on-year.

Canara Robeco Liquid

L&T Liquid

Axis Liquid

IDFC Cash

Principal Cash Management

% AS ON 31 JAN 2019 % EXPENSE RATIO IS CHARGED ANNUALLY. METHODOLOGY OF TOP 100 FUNDS ON WWW.WEALTH.ECONOMICTIMES.COM

loans and deposits 22

The Economic Times Wealth March 16-22, 2020

LOANS & DEPOSITS ET WEALTH collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator.

HOME LOAN RATES

Top five bank FDs Interest rate (%) compounded qtrly

What `10,000 will grow to

8.00

10,824

Lakshmi Vilas Bank

7.50

10,771

IDFC First Bank

7.25

10,745

RBL Bank

7.20

10,740

AU Small Finance Bank

7.00

10,719

TENURE: 1 YEAR Ujjivan Small Finance Bank

With effect from 1 October, all banks have made the transition to external benchmarks for pricing new home loans. Most banks have picked the RBI repo rate as the external benchmark.

REPO RATE: 5.15% BANK

TENURE: 2 YEARS 8.00

11,717

Lakshmi Vilas Bank

7.50

11,602

AU Small Finance Bank

7.50

11,602

DCB Bank

7.30

11,557

IDFC First Bank

7.25

11,545

AU Small Finance Bank

7.77

12,597

DCB Bank

7.60

12,534

Lakshmi Vilas Bank

7.50

12,497

Ujjivan Small Finance Bank

7.50

12,497

IDFC First Bank

7.25

12,405

DCB Bank

7.50

14,499

AU Small Finance Bank

7.50

14,499

Lakshmi Vilas Bank

7.25

14,323

IDFC First Bank

7.25

14,323

RBL Bank

7.15

14,252

Ujjivan Small Finance Bank

Punjab National Bank SBI Term Loan United Bank of India Syndicate Bank Oriental Bank of Commerce Bank of Baroda Bank of India Central Bank of India Union Bank of India Canara Bank UCO Bank Punjab & Sind Bank Corporation Bank Andhra Bank SBI Max Gain Indian Bank Karur Vysya Bank Indian Overseas Bank Bank of Maharashtra Allahabad Bank ICICI Bank IDBI Bank Axis Bank Federal Bank Kotak Mahindra Bank

TENURE: 3 YEARS

TENURE: 5 YEARS

Top five senior citizen bank FDs TENURE: 1 YEAR Ujjivan Small Finance Bank

Interest rate (%) compounded qtrly

What `10,000 will grow to

8.50

10,877

Lakshmi Vilas Bank

8.10

10,835

RBL Bank

7.90

10,814

IDFC First Bank

7.75

10,798

DCB Bank

7.55

10,777

Ujjivan Small Finance Bank

8.50

11,832

Lakshmi Vilas Bank

8.10

11,740

AU Small Finance Bank

8.00

11,717

RBL Bank

7.95

11,705

@ 10%

DCB Bank

7.80

11,671

@ 12%

AU Small Finance Bank

8.27

12,784

DCB Bank

8.10

12,720

Lakshmi Vilas Bank

8.10

12,720

Ujjivan Small Finance Bank

8.00

12,682

IDFC First Bank

7.75

12,589

TENURE: 2 YEARS

TENURE: 3 YEARS

DCB Bank

8.00

14,859

AU Small Finance Bank

8.00

14,859

Lakshmi Vilas Bank

7.85

14,751

RBL Bank

7.85

14,751

IDFC First Bank

7.75

14,678

Top five tax-saving bank FDs Interest rate (%)

What `10,000 will grow to

7.50

14,499

7.50

14,499

Lakshmi Vilas Bank

7.25

14,323

IDFC First Bank

7.25

14,323

RBL Bank

7.15

14,252

TENURE: 5 YEARS AND ABOVE DCB Bank AU Small Finance Bank

ALL DATA SOURCED FROM ECONOMIC TIMES INTELLIGENCE GROUP ([email protected])

7.80 7.80 7.70 7.85 7.95 8.00 8.00 8.00 8.00 8.05 8.05 8.05 7.90 8.10 7.80 7.95 7.95 8.00 8.20 8.25 8.25 8.25 8.55 8.55 8.60

FOR SALARIED FROM (%) TO (%)

7.90 7.95 8.00 8.00 8.00 8.00 8.00 8.00 8.05 8.05 8.05 8.05 8.10 8.15 8.20 8.20 8.20 8.20 8.20 8.25 8.25 8.25 8.55 8.55 8.60

8.70 8.30 8.15 8.60 8.35 9.15 8.30 8.10 8.35 10.05 8.15 8.40 8.35 9.30 8.55 9.50 10.05 8.45 9.00 8.85 9.25 8.60 9.20 8.65 9.30

FOR SELF EMPLOYED (%) FROM (%) TO (%)

7.90 8.05 8.00 8.05 8.00 8.00 8.00 8.00 8.05 8.05 8.05 8.05 8.10 8.15 7.95 8.25 8.20 8.20 8.45 8.25 8.50 8.45 8.65 8.60 8.65

8.70 8.45 8.15 8.70 8.35 9.15 8.90 8.10 8.35 10.05 8.15 8.40 8.35 9.30 8.55 9.55 10.05 8.45 9.35 8.85 9.35 9.00 9.40 8.70 9.30

WEF

5 Oct 2019 1 Jan 2020 1 Nov 2019 1 Nov 2019 5 Oct 2019 1 Mar 2020 10 Feb 2020 10 Oct 2019 11 Oct 2019 7 Jan 2020 5 Oct 2019 20 Feb 2020 15 Nov 2019 1 Nov 2019 1 Jan 2020 27 Feb 2019 3 Feb 2020 7 Feb 2020 12 Feb 2020 4 Oct 2019 16 Jan 2020 2 Nov 2019 16 Dec 2019 16 Jan 2020

Your EMI for a loan of `1 lakh TENURE @ 8%

@ 15%

TENURE: 5 YEARS

RLLR (%)

5 YEARS

10 YEARS

15 YEARS

20 YEARS

25 YEARS

2,028

1,213

956

836

772

2,125

1,322

1,075

965

909

2,224

1,435

1,200

1,101

1,053

2,379

1,613

1,400

1,317

1,281

FIGURES ARE IN `. USE THIS CALCULATOR TO CHECK YOUR LOAN AFFORDABILITY. FOR EXAMPLE, A `5 LAKH LOAN AT 12% FOR 10 YEARS WILL TRANSLATE INTO AN EMI OF `1,435 X 5 = `7,175

Post office deposits

Interest (%)

Minimum investment (`)

Maximum investment (`)

Features

Tax benefits

15 lakh

5-year tenure, minimum age 60 yrs

80C

One account per girl child

80C

15-year tenure, tax-free returns

80C

Senior Citizens' Savings Scheme

8.60

1,000

Sukanya Samriddhi Yojana

8.40

250

1.50 lakh

Public Provident Fund

7.90

500

1.50 lakh p.a.

5-year NSC VIII Issue

7.90

100

No limit

No TDS

80C

6.90-7.70

200

No limit

Available in 1, 2, 3, 5 year tenures

80C#

Post Office Monthly Income Scheme

7.60

1,500

Kisan Vikas Patra

7.60

Recurring deposits Savings account

Time deposit

Data as on 12 March 2020

Single 4.5 lakh

5-year tenure, monthly returns

Nil

Joint 9 lakh

5-year tenure, monthly returns

Nil

1,000

No limit

Can be encashed after 2.5 years

Nil

7.20

10

No limit

5-year tenure

Nil

4.00

20

No limit

`10,000 interest tax free

Nil

# Benefit available only for 5-year deposit

market watch The Economic Times Wealth March 16-22, 2020

23

HOW YOUR INVESTMENTS PERFORMED THIS WEEK This weekly tracker keeps you updated on the benchmark stock index, gold prices, bond yields and USD-INR rate. It also tracks the changes in the past one year to give investors an idea how their investments performed over a longer period.

Sensex 37,536

32,778

12 MAR 2019

10-yr yield (%)

Gold price (`) 12 MAR 2020

32,033

43,140

12 MAR 2019

12 MAR 2020

7.36

USD-INR 6.20

12 MAR 2019

12 MAR 2020

69.71

74.21

12 MAR 2019

12 MAR 2020

PRICE OF 10 GM GOLD ` PER DOLL AR

CHANGE X

1 WEEK

-14.80%

1 WEEK

-0.36%

1 WEEK

-3.4 (bps)

LATEST

1.22%

X

1 YEAR

-13.18%

1 YEAR

33.87%

1 YEAR

-116.10 (bps)

1-YEAR AVG

6.72%

Markets crashed after WHO declared coronavirus a pandemic and Saudi-Russia oil price war spiked the concerns of a global economic recession.

Bond yields declined as the falling international oil prices eased concerns of inflation and fiscal deficit.

Gold prices witnessed increased volatility after investors sold the safe haven asset to offset losses in equities and other risky assets.

Rupee depreciated due to the coronavirus-led global financial meltdown and increased FPI selling in both equity and debt markets.

PENNY STOCKS UPDATE Penny stocks as a recommended non-traditional investment? Not exactly. ET WEALTH neither has the expertise nor does it recommend investing in such stocks. But since the relatively ‘low’ cost of investment attracts some investors to penny stocks, we provide a weekly snapshot of this most volatile and uncertain type of stock investing.

Top price gainers STOCK

MARKET PRICE (`)

Top volume gainers 1-WEEK (%) CHANGE

1-MTH (%) CHANGE

1-MONTH AVG VOL (LAKH)

1-MONTH AVG VOL CHG (%)

MKT CAP (`CR)

9.09 -5.19 -2.82

102.82 43.02 42.27

0.28 1.79 0.11

-19.63 80.66 30.16

11.42 54.40 22.51

3.00

7.91

28.76

0.06

133.82

50.51

4.72 0.86 6.30 7.99 4.20 4.75

-8.53 8.86 7.14 -16.34 16.67 0.00

22.60 17.81 16.67 15.97 13.51 12.29

0.11 25.83 0.11 0.49 0.20 0.16

193.47 60.79 944.69 -14.53 510.84 -33.57

21.77 237.84 15.28 46.76 10.51 11.86

DQ Entertainment Toyam Industries SVC Industries

1.44 2.56 1.38

Suncare Traders Spel Semiconductor Reliance Comm. NRB Industrial Bearings Sical Logistics Titan Securities Stellar Capital Services

Top price losers Alok Industries Jaiprakash Power Ven. Siti Networks Dish TV (I) Allahabad Bank Tata Teleservices CG Power and Industrial Vikas Ecotech Hindustan Construction HFCL

7.53 0.81 0.64 5.68 8.12 2.25 4.93 1.49 5.91 9.86

STOCK

MARKET PRICE (`)

1-WEEK (%) CHANGE

1-MTH (%) CHANGE

1-MTH AVG VOL (LAKH)

1-MONTH AVG VOL CHG (%)

MKT CAP (`CR)

Ravi Kumar Distilleries

5.55

-10.05

5.71

0.27

4,660.16

13.32

Ansal Properties & Infr. Swarnasarita Gems NRB Industrial Bearings Vama Industries Bil Energy Systems The Mandhana Retail

4.57 7.22 6.30 6.28 0.53 6.35

-12.79 -9.75 7.14 3.12 -11.67 -16.67

-10.04 -19.42 16.67 -15.02 -27.40 -31.79

0.85 0.10 0.11 0.88 4.33 0.13

1,776.45 1,114.89 944.69 876.48 859.49 710.66

71.93 15.08 15.28 33.00 11.20 14.02

Compucom Software

3.38

-11.98

-51.09

0.24

543.80

26.75

Titan Securities Noida Toll Bridge Co.

4.20 3.11

16.67 -9.86

13.51 -14.79

0.20 0.50

510.84 491.73

10.51 57.91

-26.68 -17.16 -23.24 -15.95 -17.50 0.00 -11.96 -17.56 1.92 -16.82

-58.28 2.78 -52.94 -27.51 -35.18 0.00 -37.67 -44.67 6.43 -18.35

1.84 4.96 7.97 76.59 5.54 1.83 1.64 1.07 1.00 7.63

Top volume losers -26.68 -12.90 -8.57 -23.24 -37.35 -12.45 -17.56 -12.35 -26.58 -22.42

-58.28 -54.75 -53.28 -52.94 -50.34 -44.99 -44.67 -44.40 -42.17 -41.66

1.84 61.78 2.93 7.97 1.72 4.82 1.07 1.01 2.61 9.48

-89.70 144.29 138.18 -75.87 167.34 -0.84 -45.27 71.91 -11.46 154.60

1,037.11 554.08 55.81 1,045.86 3,022.04 439.86 308.99 45.53 894.18 1,266.42

Alok Industries Reliance Home Finance Dish TV (I) Reliance Power Reliance Capital Uttam Value Steels MTNL CG Power and Industrial Arnold Holding Jaypee Infratech

7.53 1.11 5.68 1.37 4.81 0.19 6.70 4.93 7.45 0.89

THE STOCKS HAVE BEEN SELECTED USING THE FOLLOWING FILTERS: PRICE LESS THAN `10, ONE-MONTH AVERAGE VOLUME GREATER THAN OR EQUAL TO 1 LAKH AND MARKET CAPITALISATION GREATER THAN OR EQUAL TO `10 CRORE. DATA AS ON 12 MAR 2020. SOURCE: ETIG DATABASE AND BLOOMBERG.

-89.70 -82.28 -75.87 -56.00 -54.85 -47.02 -45.65 -45.27 -43.59 -39.88

1,037.11 53.84 1,045.86 384.30 121.55 125.55 422.10 308.99 112.05 123.61

pick of the week 24

The Economic Times Wealth March 16-22, 2020

TTK Prestige: Stagger your buys Strong players like TTK Prestige should be able bounce back once the current turmoil is over.

T

modern retail chains. TK Prestige reported weak numbers during It is also launching innovative products to gain market the third quarter of 2019-20. For instance, its share in the coming years. For example, it has launched revenues fell 1% y-o-y due to higher base in the a new product branded as ‘Svachh’. Due to its innovative last year (was up by 21%). Overall economic design, this product claims to address the problem of froth slowdown and rural demand weakness also spilling in traditional cookers. Once this new technolimpacted its third quarter sales. Things were not rosy at ogy is patented, the company plans to incorporate it in all the bottom line level either. Its profit before tax fell by 7% pressure cookers. Since TTK Prestige has substantial free while the after tax profit was 7% owing to the fall in tax cash flows, it is also looking at rates. Like other segments, market share gains through kitchen appliance sales will inorganic routes. also plummet during Corona Due to significant underscare days and therefore, be 3 performance in the recent ready for weak sales during 7 Sell past, its valuation has reached the fourth quarter of 2019Buy reasonable levels. However, 20 and the first quarter of it is better you stagger your 2020-21. buys. Since the market turHowever, analysts say that moil is still continuing, you the negative impact is expectmust be able to buy this couned to be short term. Since TTK ter at still lower levels. Prestige is an all India op1 erator with a well diversified Hold Select ion Methodolog y: product basket and sufficient We pick up the stock that has capacity, it should be able to Despite weak third quarter sales, TTK Prestige should be able shown maximum increase in bounce back soon. to bounce back soon, as it is an all India operator with well “consensus analyst rating” Analysts are also getting diversified product basket and sufficient capacity. Also the during the last one month. bullish on this counter beaggressive steps taken to increase the company sales and market share has made it a favourite of analysts. Consensus rating is arrived at cause of the aggressive steps by averaging all analyst rectaken to increase its sales ommendations after attributing weights to each of them and market share. The ongoing reorientation in its ru(ie 5 for strong buy, 4 for buy, 3 for hold, 2 for sell and 1 for ral and distribution strategy is one of them. To increase its reach in rural areas, the company plans to add many strong sell) and any improvement in consensus analyst more SKUs (stock-keeping units) in rural areas. As of rating indicates that the analysts are getting more bullish now, it has only around 10 SKUs in rural areas as comon the stock. To make sure that we pick only companies pared to around 700 in urban areas. TTK Prestige’s focus with decent analyst coverage, this search will be restricton non-traditional distribution channels has also started ed to stocks with at least 10 analysts covering it. You can yielding fruit. For example, around 15% of its sales now see similar consensus analyst rating changes during the comes from e-commerce platforms. The company is also last one week in ETW 50 table. broad basing its client portfolio to increase sales from —Narendra Nathan

Analysts’ views

Fundamentals CONSENSUS ESTIMATE

ACTUAL 2017-18

Revenue (` cr)

2018-19

2019-20

2020-21

1,871.35

2,106.91

2,183.19

2,425.48

Ebitda (` cr)

247.44

292.02

303.64

344.50

Net profit (` cr)

263.49

192.35

221.47

250.39

EPS (`)

158.03

115.63

160.17

181.25

Valuations

PBV

PE

DIVIDEND YIELD (%)

TTK Prestige

6.44

33.75

0.46

Hawkins Cooker

20.45

31.66

1.74

Whirlpool of India

11.87

51.66

0.25

Voltas

4.98

41.12

0.65

Symphony

11.30

51.55

0.42

Latest brokerage calls ADVICE

TARGET PRICE (`)

RECO DATE

RESEARCH HOUSE

19 Feb ’20

Cholamandalam Sec.

Buy

3 Feb ’20

Anand Rathi Securities

Buy

7,002

31 Jan ’20

ICICIdirect.com

Buy

6,670

30 Jan ’20

JM Financial Inst. Sec.

Buy

7,000

9 Jan ’20

ICICI Securities

Buy

7,027

Relative performance

6,917

97.39

100 MARKET PRICE: `5,406.95

SENSEX 87.33

71.12 12 MAR 2019

TTK PRESTIGE

ET CONSUMER DURABLE

12 MAR 2020

TTK Prestige compared with ET Consumer Durable and Sensex. Stock price and index values normalised to a base of 100. Source: ETIG and Bloomberg.

WHAT EXPERTS ADVISE BUY

*STOCK PRICES AS ON 12 MAR

STOCK

RESEARCH HOUSE

ADVICE

SBI

Centrum

Buy

Sobha

Edelweiss

BPCL ABB HCL Tech Torrent Power Relaxo Footwears

STOCK PRICE* (`)

1-YEAR TARGET PRICE (`)

POTENTIAL UPSIDE (%)

213

473

122

Buy

241

428

78

Since the niggling cash flow issues are cyclical and not structural, recent stock correction is excessive, particularly considering the imminent improvement in the company’s operating performance.

Emkay

Buy

345

570

65

Its disinvestment process is in motion with no CPSE participation risk. With a favourable prevailing oil price scenario, BPCL should attract active interest from investors.

Motilal Oswal

Buy

1,038

1,410

36

ABB has announced the sale of its solar inverter business and this sale is slightly positive for the margin and return profile of the remaining businesses.

Axis Sec

Buy

493

633

28

HCL Tech reported better than expected third quarter numbers on both margin and revenue front. Robust deal pipeline should help HCL Tech to attain sustainable long term growth.

J M Financial

Buy

290

360

24

Initiate 'buy' because low gas prices mean lower gas-based power tariffs and thereby increased viability for them. In addition to driving long term PPAs, this should help their merchant power sales too.

ICICI Direct

Buy

657

775

18

Relaxo has a capital efficient business model, generating healthy asset returns of three times and Ebitda margins of 15%. It is expected to sustain healthy earnings momentum and post 28% CAGR between 2018-19 and 2021-22.

COMMENT

Though saving Yes Bank is negative in short to medium term for SBI shareholders, this can create value over the long term as the stress book of Yes Bank is resolved and market confidence is restored.

QA &

My sister-in-law acquired her parent’s property upon their demise in 2010. Her parents had bought the flat in 1967 for `70,000. It is now worth `1.4 crore. She wishes to sell the property but does not want to buy another. She wants to put the money in FDs or bonds to earn a regular income. Could you please suggest suitable investment options to minimise her tax liability? She is a senior citizen with no source of income.

Your sister-inlaw will be liable to pay LTCG tax of 20% on the gains earned from the sale of the property, after adjusting for indexation. This would reduce her tax burden. Take the assistance of a tax consultant to know the LTCG tax that needs to be paid. For regular income, the money can be invested in three ways. First, invest a part of the surplus in arbitrage and debt funds under a monthly dividend payout option. Another part can be invested as a lump sum in non-cumulative FDs for regular income through interest payouts. I would also suggest investing some amount in tax-free bonds as interest earned on these is tax exempted.

Naveen Kukreja

CEO and Co-Founder, Paisabazaar.com

I am 28. In 2017, I bought LIC’s Jeevan Arogya plan as health insurance at an annual premium of `7,800. Recently, I came to know that this is a beneficiary policy, not a pure health policy. Should I discontinue this policy and buy some other health insurance policy?

A health insurance policy with adequate cover provides you with much-needed financial backup during medical emergencies. Moreover, insurers are now moving beyond hospitalisation cover to more comprehensive policies that cover outof-pocket expenses and incentivise wellness and preventive care. Look for plans like NCB Super Premium by Religare Health Insurance, Health Pulse Enhanced by Max Bupa Health Insurance, Medi Classic by Star Health or Optima Restore by HDFC Ergo Health to name a few.

Yashish Dahiya Co-founder and CEO, Policybazaar.com

Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away.

QUESTION OF THE WEEK I am a 38-year-old government teacher. I want to accumulate `1 crore over the next 12 years. At present I am investing `1,000 a month in Axis Blue Chip, `2,500 in Axis Long Term Equity, `2,500 in Axis Focused and `1,000 in Axis Multicap Fund. Please advise. Assuming a CAGR of 11% over the next 12 years, your current investment of `7,000 a month will be able to generate only a fifth of the target sum. To get to the targeted amount in the same time horizon, you need to increase the SIP amount to `33,500 a month. If you can’t commit this amount on a monthly basis, add a few more years to your investment time frame or reduce your target sum. You can build the same corpus if you increase your monthly SIP to `22,000 and extend your investment horizon to 15 years. You are also investing only in one fund house. Allocation to just one fund house exposes you to concentration risk. Ideally, a portfolio should be spread across three to four fund houses. Overall, one large-cap or index fund, one mid-cap and one multi-cap should suffice your purpose. If you are not investing in PPF, consider adding that to your investment basket as well. This way, your portfolio would benefit from linear as well as non-linear compounding over the long term.

Prableen Bajpai I am 37 and want to retire by 50. My target is to create a retirement corpus of about `1.2 crore through mutual fund investments over the next 12 years. I will increase the investment amount with increase in earnings. How should I go about building my portfolio?

Founder, Managing Partner, FinFix Research & Analytics

Assuming a return of 10%, you have to save about `40,000 a month. If you have the risk appetite go for a 75% equity exposure (else 60-70%) with funds such as Parag Parikh LT Equity (25%), Kotak Standard Multicap (20%), UTI Nifty Next 50 (15%) and DSP Midcap (15%). You can either consider your EPF and PPF as the debt portion or add debt funds such as HDFC Short Term Debt and Aditya Birla Sun Life Floating Rate to cover the remaining 25%. Start reducing equity exposure when you are 2-3 years away from your goal.

Vidya Bala, Co-Founder, PrimeInvestor.in

your queries The Economic Times Wealth March 16-22, 2020

I am investing `5,000 a month in Axis Long Term Equity, `3,000 in SBI Magnum Multi Cap, `3,000 in L&T Midcap and `3,000 in Franklin Smaller Company. My mutual fund portfolio is worth `72 lakh. I can invest up to `25,000 a month and my risk appetite is high. Should I consider Axis Bluechip, Parag Parikh Multi Cap, Kotak Standard Multi Cap, Mirae Assest Emerging Bluechip and SBI Focused Equity Fund?

Your ongoing SIPs are in a good mix of diversified funds. Having too many funds can impact focus and result in below average performance. As your risk appetite is high, continue SIPs in existing funds. For the additional `11,000, invest `4,000 each in Kotak Standard Multi Cap and Mirae Asset Emerging Bluechip and increase SIPs in L&T Mid Cap by `2,000 and by `1,000 in Franklin India Smaller Companies. Review and rebalance your portfolio annually.

Raj Khosla

Founder and Managing Director, MyMoneyMantra.com

I am 16 and have saved `20,000 from my pocket money. How can I make this money grow over the next 10 years?

First, you need to have a bank account. Your parents or guardian can open this account for you and you can operate it yourself. However, the rate of interest would be very low, around 3-4%. While it is essential you have a bank account to park your funds, it is not an investment alternative. Your most obvious investment instrument is a fixed deposit. Even in this case, you need to be represented by your parent or guardian. The interest rates in this case would be around 6-7%. You will have to reinvest this amount once you turn 18. Your best alternative, however, is to invest in mutual funds, preferably as SIPs over the next few months. You can keep topping up your investment every time you have funds to spare. You can start an SIP with you as the sole account holder represented by your parent or guardian. Once you turn 18, the account status must be changed from minor to major. Hybrid funds such as SBI Equity Hybrid or Canara Robeco Equity Hybrid would be good choices.

Adhil Shetty

CEO, BankBazaar

Ask our experts Have a question for the experts? [email protected]

25

career strategy The Economic Times Wealth March 16-22, 2020

Jobs in the time of Corona

RECESSION PROOFING YOUR LIFE

Make M ake b battle attle p plans lans ffor or y your our jjob ob search tto search o ssurvive urvive a Corona-driven rrecession, Corona-driven ecession, ssays ays Devashish CChakravarty Devashish hakravarty

W

hile the Coronavirus is the most trending topic on news and your family Whatsapp group, it is next going to impact your financial status and job. Notice the business headlines and market crashes from Tokyo to New York. The impact of the virus and actions taken by governments is affecting businesses worldwide and some like the travel industry are experiencing one of their worst crises. Cities and countries that go through a long shutdown will force many small businesses to shut shop for good and others to lay off employees. If the economy tanks into a recession, you and everyone else are at risk of losing his job. Finding a new job in a recession will be a massive challenge and hence you need a battle plan.

Less is more Job search strategy during a recession is about applying to fewer job openings and not more. This may appear counter-intuitive at first. In good times, you apply to all relevant job openings in the market. In bad times, narrow down to companies that you want to work for and then find a reasonable opening in that firm. Thus, you direct your energies towards a few quality job applications that stand out from the hundreds of mediocre job applications from seekers who have spread themselves thin applying everywhere in the market.

Selecting the firm You are in a recession where your previous firm or industry was not doing well and hence your employer had to lay you off. When jobs are scarce, look at industries that are growing, hiring rapidly or are recession proof. Within those industries look at firms that have robust financials or obvious growth plans. For instance, in startups, education technology players continue

to hire and show growth currently.

Outside comfort zone Tough times are all about survival and less about choice. To survive and find your next job in a difficult market, be prepared to step out of your comfort zone. Apart from switching industries, look at switching geographies. Go to cities where the jobs are and where business is brisk. Similarly, you may be specialised at handling customer complaints on telephone. Now, create more opportunities for yourself by trying other roles including inside sales even though you may not have done it earlier.

Multi-channel approach To find and reach out to the best opportunities possible, do not rely on job boards alone. Explore job fairs, reach out to and work with recruiters, tap into your college and school alumni networks for openings in their companies and leverage your LinkedIn profile to set up meetings with your first and second degree connections. Invest the rest of your time in cold calls and reaching out to decision makers who are not part of your network.

Different strokes Once you have identified the firms and the roles, do not use the same resume for each job application. Each vacancy has a job description (JD) which gives you an idea of the skills, achievements and person they are looking for. Once you have narrowed down on a vacancy in the company of your choice, understand the requirements from the JD and from employees in the company. Restructure and re-word your resume to highlight points relevant for the role.

Flexibility and fit When the job market is down, there are fewer jobs and more applicants. Since there is more supply than demand, the

1

BE IRREPLACEABLE

2

RENEW AND GROW

3

WHO KNOWS YOU?

4

WINNERS TAKE ALL

5

SHOW UP

Make it impossible for your company to do without you or replace you. Seek projects critical to the company’s business. Wear multiple hats to fill existing gaps in the organisation. Volunteer for cross training across other functions and tasks. Think from your firm’s perspective—how do you bring in measurable value far beyond your price?

GETTYIMAGES

26

salary offered is lower too. To adapt to this environment, you need to be flexible in expectations from role and salary. Similarly, to beat the competition you need to demonstrate a better aptitude and fit for the role and convince the employer about how you will deliver better and faster results than anyone else. To do so, prepare hard and put your best foot forward in the selection process. Do multiple rounds of mock interviews with experienced friends to sharpen your interviewing skills.

Seek income not job When jobs are tough to find, change your definition of a job to an income earning opportunity. Thus, in a recession, imagine everything that can put cash in your pocket. Freelance assignments, contract work, time-bound project work, internships, pure commission-based sales, online tuitions or any other activity that either leverages your skills or time. With money in your pocket, you are less desperate at job interviews and thus get selected faster.

Relationship time The best time to invest in relationships is when you do not need their help. In times of need, you can tap into this support system. Even though this is a tough time, take out time to build stronger relationships. While you are looking out for jobs, make sure you connect opportunities with people in your network who might need those openings. Your network will pay you back in kind. When you join a new job, keep relationships and open opportunities warm for at least 3 months until you are confirmed as a permanent employee and have settled down.

THE WRITER IS FOUNDER AND CEO AT QUEZX.COM AND HEADHONCHOS.COM.

Tough times are ideal for investing in yourself and growing rapidly as a professional. You have the motivation to survive and your employer will be glad if you can deliver more value. Seek out learning opportunities to expand your talent stack. Learning new skills can come from doing work or learning through formal/ informal/ online training programs.

Opportunities are intangible and access to them lies through people. Thus, your personal connections, professional reputation and overall acceptance is what will open doors to new roles that are not available in the market. Do you relate to people beyond work? Do they like being around you? Can they trust you? Do you look after their interests?

Interviewers and employers recognise and avoid desperate job seekers. Everyone likes to work with a winner. Thus, it pays for you to act and behave like one. Stop whining and train yourself to be confident, optimistic and curious. When your presence brightens up a team, everyone wants you around.

Showing up is 80% of life, said Woody Allen. Show up for events and gatherings—both professional and after-office get-togethers. Show up for presentations and meetings. Show up when your boss or colleague needs help with a project or when the company asks for volunteers. By doing so, you build a network, a reputation and multiple chance opportunities.

mutual funds The Economic Times Wealth March 16-22, 2020

Early start, high savings make it easy to reach goals

PORTFOLIO DOCTOR

GOALS

ARINDAM

Chirag Dutta is saving for his children’s goals and his retirement. Here’s what the doctor advised: 1

2

3

4

5

FIRST CHILD’S HIGHER EDUCATION: 20 years

SECOND CHILD’S HIGHER EDUCATION: 22 years

FIRST CHILD’S MARRIAGE: 28 years

SECOND CHILD’S MARRIAGE: 30 years

RETIREMENT: 20 years

PRESENT COST: `15 lakh

PRESENT COST: `15 lakh

PRESENT COST: `10 lakh

PRESENT COST: `10 lakh

CURRENT NEED: `3 crore (`1 lakh per month)

FUTURE COST: `1 crore

FUTURE COST: `1.22 crore

FUTURE COST: `66.5 lakh

FUTURE COST: `76 lakh

CORPUS REQUIRED: `12 cr

RECOMMENDED ACTION

NEW SIP (`)

PORTFOLIO CHECK-UP

INVESTOR’S EXISTING PORTFOLIO AMOUNT INVESTED (`)

FUND NAME

EXISTING SIP (`)

Investing in a mix of small-, mid- and largecap equity funds for the past 3-4 years.

1

Axis Long Term Equity

1,23,847

6,000 amount by 5% every year.

Early start means even small 5% hike in SIPs can help achieve all goals.

2

ICICI Pru Bluechip

1,14,378

6,000 amount by 5% every year.

3

Aditya Birla SL Tax Relief 96

1,09,733

6,000 funds. Reduce SIPs to `2,000.

4

SBI Bluechip

1,16,999

6,000 to hike SIP amount.

Mirae Asset Emerging Bluechip

1,05,534

6,000 cap fund. Hike amount by 5% every year.

Kotak Standard Multicap

1,21,003

6,000 amount by 5% every year.

DSP Midcap

1,23,865

6,000 Hike amount by 5% every year.

Sundaram Midcap

1,13,558

6,000 Sundaram Large & Midcap. Hike SIP by 5% every year.

Portfolio has small and mid-cap bias so be ready for volatility. Avoid fixed deposits and go for debt funds for tax efficiency.

Note from the doctor Don’t buy insurance as investment. Ulips offer low returns due to high charges. Review investments and rebalance at least once in a year. Reduce risk when goal is near so that you don’t miss the target.

5

HDFC Smallcap

96,768

L&T Emerging Businesses

31,892

6,000

Fund is good but no need to invest so much in ELSS

2,000

Continue SIPs in this stable large-cap fund. No need Continue SIPs in this outperforming large and midContinue SIPs in this stable multicap fund. Hike Continue SIPs in this outperforming mid-cap fund. Fund hit by mid-cap rout. Consider shifting to

Fund has underperformed. Shift corpus and SIPs to Start SIPs of `6,000 in this promising small-cap fund.

0 Hike by 5% every year.

Increase SIPs to `10,000 in this value based equity

Ulip

2,00,000

4,000 investments. Buy a term plan with a cover of `2 crore.

NPS

2,00,000

TOTAL

AMOUNT INVESTED (`)

FUND NAME

Continue investing in NPS and hike amount by 5%

15,000 every year. Opt for maximum 75% in equity funds. Continue contibuting to PF and do not withdraw

EXISTING SIP (`)

1 UNDEFINED: 22 years PRESENT COST: `90 lakh FUTURE COST: `4 crore

RECOMMENDED ACTION

5,000

Continue SIPs in this outstanding large-cap fund and hike by 5% every year.

15,732

2,000

Continue investing in this outperfroming small-cap fund and hike by 5% every year.

Axis Focused 25

7,617

0

Axis Multicap

9,644

0

Mirae Asset Emerging Bluechip

9,428

0

Axis Midcap

7,673

4,000

This mid-cap fund has outperformed. Continue SIPs and hike by 5% every year.

11,010

4,000

This foreign fund has given good returns. Continue SIPs and hike by 5% every year.

2,28,000

4,166

Continue contributons and hike SIPs by 5% every year.

`3,16,717

`19,166

Axis Bluechip

27,613

Axis Smallcap

Franklin India Feeder US Oppn NPS

TOTAL

These two multi-cap funds have done well but duplicate each other in portfolio. Consider moving to Axis Multicap. Start SIPs of `3,000 in this outstanding large and mid-cap fund and hike by 5% every year.

6,000 10,000 4,000 15,000

35,000 before retirement. Avoid tax inefficient fixed deposits. The goals can be reached using the mutual funds marked in the same colour.

0

Assumptions used in the calculations INFLATION

Continue paying premium but avoid Ulips as

`40,66,432 `1,14,000

Rohitash Mahajan is targeting a corpus of `4 crore in 22 years. Here’s what the doctor has advised:

6,000

6,000 L&T Emerging Businesses.

6,000 fund. Hike amount by 5% every year.

25,00,000

6,000

6,000

1,08,855

PF, PPF & fixed deposits

6,000

6,000

Tata Equity PE

Take inflation into account when setting future target

1

6,000

Continue SIPs in this steady large-cap fund. Hike

GOAL

Plans to retire early at 51, so `10 crore won’t be enough. Corpus must last 30-35 years.

Continue SIPs in this outperforming ELSS fund. Hike

Not many investors know whether they have invested in the right funds and if their fund portfolio is on track. The Portfolio Doctor assesses the health of the fund portfolio, examines the schemes and their suitability with regard to the goals and, if required, recommends corrective measures. The advice given is based on the performance of the funds, the risk profile of the investor as well as his financial goals.

35,000

`1,14,000

Education expenses

For all other goals

10%

7%

RETURNS Equity funds

Debt options

12%

8%

PORTFOLIO CHECK-UP

PORTFOLIOS ANALYSED BY

Started investing in equity funds last year.

RAJ KHOSLA, Managing Director and Founder, MyMoneyMantra

Holds a good mix of funds but mostly from same fund house. Target of `4 crore seems big but inflation will erode purchasing power. Assuming 7% inflation, corpus will be worth only `90 lakh after 22 years. Will yield monthly income equal to `30,000 for 25 years. Review investments and rebalance at least once in a year.

WRITE TO US FOR HELP If you want your portfolio examined, write to [email protected] with “Portfolio Doctor” as the subject. Mention the following information:  Names of the funds you hold.  Current value of the investment.  If you have SIPs running in any

of them.  The financial goals for which you

invested.  How much you need for each

financial goal.  How far away is each goal.

27

your feedback & more... 28

The Economic Times Wealth March 16-22, 2020

Readers’ response, online and in print, to ET Wealth stories has been enlightening. We pick some that add information and perspective to our articles from previous issues. This refers to the cover story, ‘Education loans: What every parent must know’. Parents should not only start saving early, but also keep the money in relatively safe instruments. While it is true that equity can create a sizeable corpus given the long investment horizon, one must not overlook the possibility of sudden turmoil like the one we are witnessing right now. Should something like this happen, it can put the child’s future in peril. So my advice is, save by all means, but keep your money safe. B.B. Das

neither earning nor has any dependants. The lure of so-called high returns is too hard for most to resist. If they only did their math right would they know how they are being taken for a ride.

Keep your retirement safe The cover story, ‘Education loans: What every parent must know’, was packed with useful information. Most parents make the mistake of dipping into their retirement corpus to fund the child’s higher education. This is foolish. One must not jeopardise one’s future when an option like an education loan is available.

Manav Dubey

Sarath K.

Anyone opting for higher studies should either work a few years to save the money required or take an education loan. Depending on parents for funds should not be an option at all. As the cover story rightly points out, the parents will not be able to take a loan to fund their retirement. More importantly, an education loan is a good way of introducing financial discipline in young people.

This is in response to the article, ‘Bet on disruptive tech, but don’t shun traditional businesses’. Since existing US dedicated funds already have exposure to the best tech firms, what is the need to invest separately in disruptive tech? This is still uncharted territory. It is best to stick to funds with a proven track record.

Barnali M.

Ayush Mirchandani

REALTY

HOT SPOT

This refers to the article, ‘Why some agents get paid more’. The kind of commissions the insurance agents pocket is truly disturbing. I have seen insurance agents become millionaires in front of my eyes. The kind of mis-selling they indulge in is to be seen to be believed. One particular agent I know of has sold not one but three life insurance policies to a special needs person who is

The column, ‘Can you afford the indulgence?’ was very well written. Nine years after becoming a doctor, I became interested in making myself financially literate. That is when I started reading ET Wealth. I enjoy Uma Shashikant’s column the most. It’s her writing that I look forward to every Monday morning when the newspaper guy delivers the paper to my doorstep. Keep writing, guiding and inspiring. Archit Ghangurde

I am a regular reader of the column written by Uma Shashikant. All the articles that I have gone through till date were very insightful. Thanks for the great work you are doing. S.M.

Established micro market in Pune Good road connectivity and well developed social infrastructure work in Baner’s favour.

LOCALITY SNAPSHOT

SUPPLY BY BHK

BANER, PUNE

1 BHK

5%

2 BHK

54%

3 BHK

35%

4 BHK

6%

Established micro-market dominated by multistorey apartments and boasts sound road connectivity Hosts several IT companies in the vicinity and also shares proximity with Rajiv Gandhi Infotech Park Key social infra include VIBGYOR High School, DAV Public School, Jupiter Hospital, Shashwat Hospital Well-connected with popular malls namely Westend Mall, Pune Central Mall, Xion Mall, SGS Mall Good road network comprising Mumbai Highway (NH-48), Baner Road and Pashan-Sus Road Balewadi

VALUES

PRICE RANGE `5,300-9,200 Per sq ft

Balewadi Stadium

LOCALITY

Price

Rental

(`/sqft)

(`/month)

Consumer preference by budget segment (`)

9% Baner

6,000-9,200 21,400-33,000

Baner

Baner Road

1 BHK

2 BHK

3 BHK

4 BHK

1,090 sq ft

1,580 sq ft

2,870 sq ft

`43 lakh (avg)

`77 lakh (avg)

`Crore 1.21 (avg)

`crore 2.31 (avg)

Schools 16+

Hospitals 15+

Restaurants 12+

75 lakh-1 crore

28%

1-1.25 crore 1.25-1.5 crore

Baner Road

Above 1.5 crore

5,800-8,600 19,000-30,000

Consumer preference by covered area (sq ft) Balewadi

Banks 18+

50-75 lakh

32%

NH-48: 4 km

620 sq ft

Below 50 lakh

9%

14%

Airport: 18 km Pune Junction: 12 km

8%

5,700-8,300 19,000-28,500 10%

10% 10%

Below 750 750-1,000 1,000-1,250

19%

Balewadi Stadium 5,300-7,400 17,100-25,700

Grocery Stores 14+

Petrol Pumps 12+

37% 14% 27%

1,250-1,500 1,500-1,750 Above 1,750

In dia’s No. 1 P ropert y Sit e

The Economic Times Wealth is available at an invitation price of `8/issue. To book your copy, contact your newspaper vendor or call 022-39898090; Email: [email protected]; SMS ETWS to 58888 The Economic Times Wealth, published by Bennett, Coleman & Co. Ltd. exercises due care and caution in collecting the data before publication. In spite of this, if any omission, inaccuracy or printing errors occur with regard to the data contained in this newspaper, The Economic Times Wealth will not be held responsible or liable. The content hereof does not constitute any form of advice, recommendation or arrangement by the newspaper. The Economic Times Wealth will not be liable for any direct or indirect losses caused because of readers’ reliance on the same in making any specific or other decisions. Readers are recommended to make appropriate enquiries and seek appropriate advice before making any specific or other decisions.

PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co Ltd by R.Krishnamurthy at The Times of India Building, Dr. D.N. Road, Mumbai 400001. Tel. No.: (022) 6635 3535, 2273 3535. Fax: (022) 2273 2544 and printed by him at (1) The Times of India Suburban Press, Akurli Road, Western Express Highway, Kandivli (E), Mumbai-400101 . Tel. No.: (022) 28872324, 28872931, Fax: (022) 28874231. (2) The Times of India Print City, Plot No.4, T.T.C. Industrial Area, Thane Belapur Road, Airoli, Navi Mumbai-400708. Tel No.: (022) 2760 9999, Fax: (022) 2760 5275. EDITOR: Babar Zaidi (Responsible for selection of news under PRB Act). © Reproduction in whole or in part without written permission of the publisher is prohibited. All rights reserved. RNI No.: MAHENG/2014/57046. VOLUME 07 NO. 11