Money on the markets

A maturing market amid the mayhem

from India Insight:

Wary of stocks, Indians cling to safe havens

Sometimes people suspect that the grass is greener in the next field ... but they're not always right.

Consider this. India's gross domestic product has grown about 7 percent on an average per year for the past nine years. Its industrial growth has been steadily rising since then. Buoyed by economic growth, the country’s capital markets also offered itself as an attractive and inflation beating investment option.

That means that someone who invested at the end of 2002 in the BSE’s benchmark index, Sensex, would have made a 418 percent return on his portfolio by July 11 (just a random date). It sounds like the Madoff plan, but it’s not. The Sensex’s value on Dec 31, 2002 was 3377.28 which rose manifold to 17489.14 on July 11, 2012. Our market had its fair share of ups and downs, but it remained focused and depicted the country’s growth story.

However, that "someone" who made the 418 percent return most likely was not one of us. The average Indian investor has been satisfied with, and probably still wants, investments with a fixed return that comes from safer havens. According to the National Council of Applied Economic Research, Indians were called "wise savers but poor investors". The statement found its base in the statistics that its Indian household Investor Survey revealed.

Are you happy with the direct tax code?


The much-awaited direct tax code bill, aimed at simplifying the country’s archaic direct tax laws, was passed by the cabinet on Thursday, with new income tax slabs being proposed for individuals.

Though these slabs will put some extra money in taxpayers’ pockets as compared to existing slabs, the original slabs proposed in the first draft of the direct tax code have been diluted.

Mutual fund investors rewarded for patience


A man speaks on a phone as he looks at a large screen displaying India's benchmark share index on the facade of the Bombay Stock Exchange (BSE) building in Mumbai May 18, 2009. REUTERS/Punit ParanjpeEquity fund investors had a lot to cheer about in the last seven months.

Stock market enthusiasts had almost given up hope after losing an average 52 percent in 2008, when the benchmark Sensex recorded its first annual fall after six years of gains. But a rally since the start of March has bought the smiles back.

By September 30, as many as 10 equity funds more than doubled their net asset values as fund managers bought into the global panic, data from global fund tracker Lipper, a Thomson Reuters company, showed. During the same period 145 Indian equity funds outperformed the 30-share Sensex, which returned 73 percent.