Will the Bull run Continue ?
- 1. I N F I R U P E E I N F O R M A T I V E & E D U C A T I V E N E W S L E T T E R O N I N V E S T M E N T S F E B R U A R Y 2 0 2 1 , Will the Bull run continue ? H O U S E V I E W S O F E Q U I T Y E X P E R T S Experts and elders always say this line : "If you are a long-term investor in the stock market, you can’t possibly lose” . Those watching the NIFTY’s dizzying rise since March 2020, will find it hard to disagree. From almost 7500 in April 2020, the NIFTY index has soared to around 14,000 in January, 2021. It has not been a smooth ride during COVID crisis, but if you had the stomach to hang on to the equities, you would have ended up with an annual return over 14% and around 80% from its bottom. Now with budget session already on from 1st February and union budget 2021 is over investors have one key question - Will this Bull run continue or is there any thing to smell negative in this budget ? Read our newsletter to get some better insight. I N F I N I T Y F I N S E R V P V T L T D . From the Editor's Desk :
- 2. Market after this Budget W I L L I T H E L P T O I M P R O V E C O R P O R A T E E A R N I N G S ? One thing is very clear that, this budget was very tough for our government. On one hand they have to manage the fiscal deficit and on the other hand they need to pump in confidence among business and citizens to improve GDP. Looking at the historic incidences in USA and other developed nations, we assume that government's step to increase the fiscal deficit gap, is not surprising ! In pst, USA had a growing fiscal deficit for around a decade because growth was their priority. So , an increased fiscal deficit clearly means, government is all set to invest in the economy and boos businesses. Equity market will surely cheer this up ! So the Key Question is - what will be the key area of spendings ? The answer is - Infrastructure ! Of course there will be other priorities also, as mentioned in the budget announcement,, but government seems to be quite liberal on the infrastructure side due to its key requirement of employment generation and absorption of infused stimulus packages into the economy. One should understand that all the stimulus packages and infused liquidity will turn into a high inflation scenario, if the funds are nit consumed properly, on high employment and high growth areas, like- Roads, Airports, Railways, Power, Energy etc We have collected multiple experts view and have consolidated multiple data points to help our readers in terms of getting a better market projections, post budget
- 3. So keep a watch on companies like - IRCTC, GAIL, NTPC, Power Finance .....and other premium PSUs etc On the other hand , the story of Electric Vehicle, Motor Components and engineering appears to be the hero of the lot. A layman investor should learn more about the story of EV and try to identify all the direct and in-direct beneficiaries in this segment - like- charging station companies, motor making companies, Auto manufacturing companies etc. Of course this is going to create a lot of buzz under auto sector . Do take advice from your broker /advisor to know more on this . We would like to highlight one key area, where we expect lot of action after the budget cycle - Agritech ! This is a most important discussion going round in the economic forums, because they believe this to be a major GDP catalyst of the year. There are hundreds of active companies which are gearing up to take on this special opportunity in the filed of agriculture. One should participate in such companies through selective Mutual Funds Moreover , by the time vaccination process will reach to its final stage by the end of this year, business sentiments will improve further. Some experts believe that almost all corporates have saved a lot on marketing as well as human expenses during this COVID crisis; rather they have learnt this new art of Digital Business communication ! They believe this savings to translate in the corporate earnings - mainly on the Mid and Small companies .This opens the case for Midcap Fund and Small cap funds under Equity investing. Summing up, investors should not run away from Equity, rather do a proper rebalancing in terms of Sectors, Size and fund type. Experts believe that one should boldly invest in equities ; however they also suggest that taking the mutual fund route will be less risky and more beneficial. Disclaimer : The points presented here are the consolidated version of various experts input . readers are advised to validate the points and figures on their own and do not take the examples as our suggestion. Mutual Funds are subject to market Risk and you are advised to follow the SEBI assigned Risko meter before investing in any schemes
- 4. Chapter 1 : Market Indicators - Page 5 Chapter 3 : BUDGET 2021 - Page 9 Chapter 3 : Investor's Centre - How to use OTM for seamless investing ? - Page 8 Chapter 5 : Case Story - How Amit Tripathi used SWP after his Retirement ? - Page 13 Chapter 6 : Questions & Answers - Investors Questions - Page 12 Whats Inside ?
- 5. MARKET INDICATOR E Q U I T Y A S O N 3 1 S T J A N U A R Y 2 0 2 1
- 7. MARKET INDICATOR D E B T A S O N 3 1 S T J A N U A R Y 2 0 2 1
- 9. K E Y H I G H L I G H T S Atma Nirbhar Bharat Abhiyaan Infrastructure and Urban Development Financial Reforms and more M A R K E T R E A C T E D P O S I T I V E L Y T O T H I S B U D G E T Presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman said that the Budget proposals for this financial year rest on six pillars — health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D, and 'Minimum Government, Maximum Governance'. Read more to get the key highlights of the budget 2021 UNION BUDGET 2021 BUDGET 2021 K E Y P O I N T E R S F O R R E T A I L I N V E S T O R S S O U R C E : M O F W E B S I T E U P D A T E S
- 10. V e h i c l e s c r a p p i n g p o l i c y t o p h a s e o u t o l d a n d u n f i t v e h i c l e s – a l l v e h i c l e s t o u n d e r g o f i t n e s s t e s t i n a u t o m a t e d f i t n e s s c e n t r e s e v e r y 2 0 y e a r s ( p e r s o n a l v e h i c l e s ) , e v e r y 1 5 y e a r s ( c o m m e r c i a l v e h i c l e s ) H i g h w a y a n d r o a d w o r k s a n n o u n c e d i n K e r a l a , T a m i l N a d u , W e s t B e n g a l a n d A s s a m N a t i o n a l A s s e t M o n e t i s i n g P i p e l i n e l a u n c h e d t o m o n i t o r a s s e t m o n e t i s a t i o n p r o c e s s N a t i o n a l R a i l P l a n c r e a t e d t o b r i n g a f u t u r e r e a d y R a i l w a y s y s t e m b y 2 0 3 0 1 0 0 % e l e c t r i f i c a t i o n o f R a i l w a y s t o b e c o m p l e t e d b y 2 0 2 3 M e t r o s e r v i c e s a n n o u n c e d i n 2 7 c i t i e s , p l u s a d d i t i o n a l a l l o c a t i o n s f o r K o c h i M e t r o , C h e n n a i M e t r o P h a s e 2 , B e n g a l u r u M e t r o P h a s e 2 A a n d B , N a s h i k a n d N a g p u r M e t r o s N a t i o n a l H y d r o g e n M i s s i o n t o b e l a u n c h e d t o g e n e r a t e h y d r o g e n f r o m g r e e n p o w e r s o u r c e s R e c y c l i n g c a p a c i t y o f p o r t s t o b e d o u b l e d b y 2 0 2 4 G a s p i p e l i n e p r o j e c t t o b e s e t u p i n J a m m u a n d K a s h m i r P r a d h a n M a n t r i U j j w a l a Y o j a n a ( L P G s c h e m e ) t o b e e x t e n d e d t o c o v e r 1 c r o r e m o r e b e n e f i c i a r i e s Infrastructure Key announcements in the speech, included some hikes in custom duties to benefit Make in India; disinvestment proposal for two more PSBs and a General insurance company; number of infrastructure spending budgets. Consequently, they believe that the Fiscal deficit, which stands at 9. 5% of the GDP, will become 6. 8% in 2021- 22. Personal Income tax slabs remains unchanged There is no change in the personal IT Slab. Best thing announced under this budget is - "No IT filing for people above 75 years who get pension and earn interest from deposits" . This will help a large mass of senior citizens and help them a lot. In order to provide relief to old pending cases, reopening window for IT assessment cases are now reduced from 6 to 3 years. However, in case of serious tax evasion cases (Rs. 50 lakh or more), it can go up to 10 years
- 11. F i s c a l d e f i c i t s t a n d s a t 9 . 5 % o f t h e G D P a n d i t i s e s t i m a t e d t o b e 6 . 8 % i n 2 0 2 1 - 2 2 P r o p o s a l t o a l l o w S t a t e s t o r a i s e b o r r o w i n g s u p t o 4 % o f G S D P t h i s y e a r A n U n i f i e d S e c u r i t i e s M a r k e t C o d e t o b e c r e a t e d , c o n s o l i d a t i n g p r o v i s i o n s o f t h e S e b i A c t , D e p o s i t o r i e s A c t , a n d t w o o t h e r l a w s P r o p o s a l t o i n c r e a s e F D I l i m i t f r o m 4 9 % t o 7 4 % i n I n s u r a n c e c o m p a n i e s A n a s s e t r e c o n s t r u c t i o n c o m p a n y w i l l b e s e t u p t o t a k e o v e r s t r e s s e d l o a n s D e p o s i t i n s u r a n c e i n c r e a s e d f r o m R s 1 l a k h t o R s 5 l a k h f o r b a n k d e p o s i t o r s P r o p o s a l t o d e c r i m i n a l i s e L i m i t e d L i a b i l i t y P a r t n e r s h i p A c t o f 2 0 0 8 T w o P S U b a n k a n d o n e g e n e r a l i n s u r a n c e f i r m t o b e d i s i n v e s t e d t h i s y e a r A n I P O o f L I C t o d e b u t t h i s f i s c a l S t r a t e g i c s a l e o f B P C L , I D B I B a n k , A i r I n d i a t o b e c o m p l e t e d E c o n o m y a n d F i n a n c e : Government added some focus on easing out employment process in India, like- portal to be launched to maintain information on gig workers and construction workers, like any placement platform. A Social security to be extended to gig and platform workers also. Margin capital required for loans via Stand-up India scheme reduced from 25% to 15% for SCs, STs and women There are multiple views on this budget announcement - some feel that this budget lacks on many areas like- Women, Defence etc ; some feel that this is the best budget under the given condition, when there is not much to spend We strongly recommend our investors and readers to keep a balanced Asset Allocation approach towards their investments. They must add SIPs under Infrastructure Fund and keep decent exposure to Dynamic Asset Allocation funds. Ask us for more clarification and details related to Budget 2021 ( See the contact details at the last page of this News letter)
- 12. O T M ( O N E T I M E M A N A D A T E ) It is simple to Set up an OTM It is easy to use It is 100% Safe & Secure O T M I S T H E B E S T W A Y T O I N V E S T O N L I N E For investing in a mutual fund, you need to set up a Mutual Fund trading account with your distributor. Such accounts are powered by NSE, BSE, CAMS etc, which provides the paperless transaction facility. While creating such accounts, you get an option to create an ACH Mandate , also known as OTM ( One time mandate with your bank. There is no limit for setting up such mandates - you can set up such mandate according to your investment size, like- if u intend to invest Rs 10 lacs at a go, then you should create the OTM of Rs 10 lacs limit. MUTUAL FUND INVESTING WHAT IS OTM ? U S E O T M F O R S E A M L E S S I N V E S T M E N T S S O U R C E : I N H O U S E
- 13. S Y S T E M A T I C W I T H D R A W A L P L A N It is the best investment option for retired people It provides Income plus appreciation It is highly liquid and can be redeemed anytime S W P P R O V E D T O B E A B O O N F O R A M I T T R I P A T H I A systematic withdrawal plan (SWP) is a facility which allows you to withdraw a fixed amount from your mutual fund at regular periodic intervals. The periodic intervals could be monthly, quarterly, half-yearly or annually, as per the investor’s requirement. With every withdrawal, the value of your investment in the fund is reduced by the market value of the units you have withdrawn as the withdrawal happens at that day’s NAV (Net Asset Value). Amit Trivedi , 74 Yrs , retired in 2005 from a private firm. It was the best day of his life when he met a mutual fund distributor, who motivated him to invest a portion of his retirement corpus into SWP ( Systematic Withdrawal Plan) POST RETIREMENT INVESTMENT STORY CASE STORY A M I T T R I P A T H I ' S I N V E S T M E N T S T O R Y S W P ( S Y S T E M A T I C W I T H D R A W A L P L A N )
- 14. For example, assume that Mr A has invested Rs 10 lakh in a mutual fund and this grows to Rs 11 lakh (10% growth). He withdraws Rs 1 lakh from his mutual fund at the end of each year. Only 10% of his withdrawal (Rs 10,000) is considered as income and the balance (Rs 90,000) is considered as capital withdrawal. On the other hand, if he had invested in a bank FD and got Rs 1 lakh interest on a principal of Rs 10 lakh, the entire Rs 1 lakh would be considered as income and would be taxable. A SWP can also prove to be more tax efficient because if it splits your income over several years. For example, both Mr. X’s and Mr. Y’s total taxable income for FY19 and FY20 is Rs. 4,50,000 without accounting for their mutual fund capital gains. For simplicity, let’s assume the debt mutual fund scheme in which both Mr. X and Mr. Y invested earned monthly gains of Rs. 10,000 throughout FY19 and FY20. While Mr. X chose to opt for a monthly SWP and withdrew the capital gain for 10 months starting October 2018, Mr. Y chose to withdraw Rs. 1,00,000 in July 2019. A SWP helps an investor get a fixed periodic amount which can help him/her get a steady income in his/her retirement years or managing his/her child’s educational expenses.Each withdrawal made through an SWP is considered to be a combination of capital and income. Tax is only payable on the income component and not the capital component. As you know, SWP automatically redeems some mutual fund units every month to meet your monthly expenses, regardless of market levels. It thus, protects you from withdrawing large amounts due to panic/fear during the times of market corrections. It also withdraws money even when markets are registering new highs and thus, protects you from the impulse to invest more money during boom periods
- 15. Anil Tripathi invested Rs 30 lacs in a Hybrid Fund of SBI Mutual Fund - SBI Debt & Equity Fund - Growth option in April 2005, and opted for a withdrawal of Rs 800 per lac per month. This means he was withdrawing Rs 24,000/- ( twenty four thousand only) per month from this fund. Given below is the actual investment summary of Mr Amit Tripathi, who is 74 now and is really proud of his investment decision which he took 15 years back. This SWP story of Amit Tripathi ji is very inspiring for all the retired persons there, who is looking for a regular withdrawal in the range of Rs 650 to Rs 800 per month and need some capital appreciation too . However the key task here is to identify a good Hybrid Fund and decide your monthly withdrawal amount. Mind it, SWP does not means any guarantee , it is just a systematic withdrawal of anticipated ROI. Experts suggest that SWP should not be selected in Equity funds, due to its high volatility. One should always chose the Hybrid , Asset Allocation or Multi Asset funds.
- 16. W H A T I S B H A R A T B O N D F U N D ? Bharat Bond ETF- aims to invest in bonds of PSUs like PFC, REC, Power Grid Corporation of India, National Housing Bank, IOC, National Bank for Agriculture & Rural Development, Hindustan Petroleum Corporation, NHPC, Export Import Bank of India, Indian Railway Finance Corporation, NTPC, Nuclear Power Corporation of India etc. Bharat Bond ETF will follow the taxation of debt funds. The returns will be taxed at 20% after indexation benefits. Indexation allows you to adjust the purchase price of your investment for inflation which in turn lowers the tax on your returns. Such Bonds are listed on Stock Exchange for liquidity MAHESH BHARTI, JAIPUR I S I T G O O D T I M E T O I N V E S T I N E Q U I T I E S ? Some great person has said that " Timing the market is not important but time is " . Most of the wealth is created in equity through long term stay, due to the very basic fact that business always takes time to mature and strengthen. So selling and buying a business/stock frequently is not investing but trading; you have to clearly chose your path - trader or investor ? So if you are an investor, go for a nice Equity Mutual fund through your distributor and hold it for a minimum of 3 -5 years; you will surely be on winning side PRAMOD JALAN, RANCHI H O W M U C H T E R M P O L I C Y S H O U L D I B U Y ? Before buying any Life Insurance Policy you need to estimate your actual Human Life Value ( HLV) . This can be calculated by a simple formulae - (Gross Monthly expense of your family) x 100 x 12 __________________________________________________ Risk Free Interest Rate ( 7, 8 etc) For e,g - if your family expense is RS 30000 per month then your HLV = Rs 45 lacs . So you can buy a policy with Sum Asured of around Rs 50 Lacs, in this case ANKIT JUNEJA, LUCKNOW Q & A Y O U R Q U E S T I O N S O U R A N S W E R S A L L A N S W E R S B Y O U R B U S I N E S S H E A D INFIRUPEEE Post your Queries at :
- 17. +91-9307218766 / +91-6392772494 Infinity Finserv Pvt Ltd. 212 Saran Chamber-2, 5 Park Road, Hazratganj, Lucknow-226016 UP, India help@infirupee.com https://infirupee.com Find us on Google Map Disclaimer : Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme.