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| December 24, 2015 |
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Impact 
Tax evasion is not just India’s problem; it’s a global headache. Governments across the world lose huge revenue to tax evasion. Investors are not restricted by any national boundary these days. Many of them create assets outside their homeland; earn returns on them and taking advantage of lack of common reporting standards and system integrations; they dodge their tax liabilities.
Tax evasion is not just India’s problem; it’s a global headache. Governments across the world lose huge revenue to tax evasion. Investors are not restricted by any national boundary these days. Many of them create assets outside their homeland; earn returns on them and taking advantage of lack of common reporting standards and system integrations; they dodge their tax liabilities.
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Impact
Year 2015 was a boring year indeed for investors. Indian equity markets remained range bound with negative bias. Major equity indices such as S&P BSE Sensex, S&P BSE Mid-Cap and S&P BSE Small-Cap are likely to end the year 2015 absolutely flat.
Midcaps were clear winners 
Data as on December 23, 2015
(Source: ACE MF, PersonalFN Research)
Investment of Rs 10,000 in S&P BSE Sensex made on January 01, 2015; would have reduced to Rs 9,398 as on December 23, 2015. In other words, S&P BSE Sensex has made a loss of 6.0% so far. On the other hand, between January 01, 2015 and December 23, 2015 investment of Rs 10,000 each in S&P BSE Mid-Cap Index and S&P BSE Small-Cap Index would have grown to Rs 10,594 and Rs 10,399 respectively. This suggests that, investors favoured midcaps over largecaps. Smallcaps were their second choice. Midcap index advanced by 5.2% and that tracking the movement of smallcaps went up 4.0% between January 01, 2015 and December 23, 2015.
Now let’s see how mutual funds have performed…
Considering the average returns generated by each category, mid and smallcap funds have done better. On the whole, they have not only outperformed funds belonging to largecap or flexicap categories but also have beaten S&P BSE Midcap Index and S&P BSE Small-Cap Index.
Mutual Fund Performance | Category # | Average Returns (absolute) | | Mid and Small Cap Funds | 6.8% | | Multi-Flexi-Opportunities Funds | 1.2% | | Largecap Funds | -1.3% | Data as on December 23, 2015
(Source: ACE MF, PersonalFN Research)
#49 largecap oriented funds, 36 mid and smallcap oriented funds and 61 multi-flexi and opportunities funds have been considered for calculating average returns in the above given table.
Similarly, largecap funds have managed to outperform, S&P BSE Sensex suggesting that active management has helped cut loses. As expected, rallies have remained largely stock specific. Companies that have managed to satisfy investors’ expectations have seen buying interest.
Markets started off year 2015 in style but then failed to maintain the movement as the year progressed.
The reasons are…
- Corporate earnings grew at slow pace
- Industrial growth continued to show a seesaw movement
- Inflation remained under check resulting in RBI cutting policy rates aggressively. Yet, credit growth failed to pick up and balance sheets of banks were exposed to a heightened threat of bad loans
- The Government couldn’t win the parliamentary approval to some key legislative reforms such as Goods and Services Tax, Land Acquisition Bill to name a few
- International factors such as anticipatory interest rate hike kept Foreign Institutional Investors (FIIs) on the edge.
What’s the way forward?
At present, market valuations are expensive, especially in the mid and small cap space. Therefore, the margin of safety is low in these spaces, unless you buy selectively. PersonalFN believes, you shouldn’t speculate on market direction as any unforeseen event may rattle the markets.
Those investing through mutual funds should carefully choose the funds. In case you are not sure about which funds to invest in, you may consider taking an expert’s help. PersonalFN provides unbiased mutual fund research services.
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Impact
At PersonalFN, we write extensively about all things that affect your personal finances. Right from a comprehensive analysis of the RBI’s monetary policies to an in-depth note on New Fund Offers (NFO), PersonalFN shares its perspective straight up. What matters most to PersonalFN is Ethical Advice. This is precisely why we have lambasted dishonest and unscrupulous advisors in instances where the client’s interest had been compromised. However, many a times in the past we haven’t reached out to advisors directly.
Lately, PersonalFN has realised that educating advisors is as important as spreading awareness among investors. Our vast experience in dealing with clients to resolve all their financial related grievances makes investors comfortable enough to speak their hearts out with PersonalFN financial advisors. And, we are listening, intently.
To know more about this and PersonalFN’s views over it, please click here.
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Impact
India is a land of contrasts. In ancient times, women in this sphere of the world enjoyed right to education, ownership, right to choose whom they marry, etc. But in the medieval ages, Indian society regressed and got trapped in a vicious circle of economic depression, illiteracy, and social-cultural injustices. Lack of social and economic reforms pushed India to its nadir.
Fiefdoms overpowered wisdom. Patriarchy controlled the social system. However, in this time, first world countries were reforming and advancing socially and economically. Little has changed even now.
In the international human rights arena, India is infamous for their gender bias. For example, even among educated people, female foeticide (stree Bhroon Hatya) was commonly practiced until recently. Now, it’s seen not only a serious crime, but also a blot on humanity. This happens out of an ‘18th century mindset’, and still haunts Indians today. Social upliftment and financial upliftment go hand in hand.
To read more about this and our views, please click here.
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Stamp duty and registration is an indispensable part of any property deal. When the realtors are finding it difficult to clear the huge pile of inventory, the Maharashtra Government was earlier planning to raise Ready Reckoner (RR) rates 15%-18%. However, due to fierce opposition from the own party fellows; BJP-led Maharashtra Government has been planning to raise RR rates by moderate 5%. RR rates decide the stamp duty and registration fees and are also responsible for rise or fall in the cost of construction.
PersonalFN believes it’s a sensible decision considering the ongoing lull in the real estate market.
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Tax Evasion: An illegal practice where a person, organization or corporation intentionally avoids paying his/her/its true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties.
(Source: Investopedia)
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Quote : "Those with the enterprise lack the money and those with the money lack the enterprise to buy stocks when they are cheap."
-Benjamin Graham
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