  | | March 28, 2014 | | | | | | | Weekly Facts | | | Close | Change | %Change | | BSE Sensex* | 22,339.97 | 586.97 | 2.70% | | Re/US$ | 60.32 | 1.01 | 1.65% | | Gold Rs/10g | 28,740.00 | -1230 | -4.10% | | Crude ($/barrel) | 106.62 | 0.85 | 0.80% | | FD Rates (1-Yr) | 8.00% - 9.00% | Weekly change as on March 27, 2014
*BSE Sensex as on March 28, 2014 | |
Impact 
You must be expecting candidates aspiring to contest Lok Sabha elections to have clear records. Election commission and income tax department are jointly working to curb the use of unaccounted money in luring voters. As per mandate, candidates are required to file affidavits providing information about their qualifications, assets, liabilities and criminal records. Election commission is expected to refer affidavits to income tax department and the department will verify the disclosures of assets and liabilities on priority basis. If a particular asset is reflected in the affidavit as well as in the income tax return, no action will be taken. But any asset that is disclosed in the affidavit but not disclosed to income tax would attract action from the income tax department.
PersonalFN believes that effectiveness of aforesaid mechanism depends on how efficiently the cases are referred to the income tax department and how quickly the action is taken. Mutual understanding and co-ordination would be crucial. It is unlikely that income tax department would achieve any major breakthrough by scrutinising data provided by the election commission. It is likely that candidates would cautiously disclose or window-dress accounts. In case, income tax manages to enforce law and recover tax dues, revenue collection would get a boost. Higher tax collection would lower the fiscal deficit. The finance ministry has fallen well short of its tax collection target for the year 2013-14. The Government had set an ambition target of 19% growth in the tax collection. But as per latest projections, the expected tax collection by March 31, 2014 would help achieve only 11.6% growth. In other words, there would be a shortfall of around Rs 77,000 crore.
PersonalFN believes that although joint operation of the election commission and the income tax department has a good intent, it is unlikely to nab tax evaders. As far as past records of candidates are concerned, one cannot accuse another unless the allegations are proved in the court of law. It is the responsibility of the political parties to give candidature to people with clear records.
Do you think the joint effort by election commission and income tax department can help bring in transparency in the system and punish the candidates who are tax evaders? Share your views here.
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Impact 
A survey conducted by Financial Intermediaries Association of India (FIAI) suggests that about 86% of the investor respondents were either satisfied or neutral about their investments in mutual funds. As per survey findings, around 62% of the respondents were satisfied with services of their brokers and advisors. However, thorough analysis of survey result gave a true picture of the investors' sentiment. Only about 44% the respondents were satisfied with their investment in mutual funds. In other words, this means, nearly 42% of people who took survey were neutral. People have little faith in Monthly Income Plans (MIPs) and sector funds. Nearly 40% of the people were dissatisfied with their investments in sector funds and those in MIPs. Interestingly there is not much difference in the satisfaction level of those who opted for and who didn't opt for services of distributors. Out of total number of people who were surveyed, approximately 59% were satisfied with the performance of their diversified mutual funds.
PersonalFN believes that rather than being under the impression that only 14% of the respondents were negative about their investments in mutual funds, one should consider the other aspect; as many as 42% of people surveyed were neutral. Furthermore, large redemption pressure experienced by the mutual fund industry for last few years and falling retail participation in equity markets may suggest that people who are neutral about their investments at present may not be looking positively to making further investments.
PersonalFN has always maintained unbiased approach in assessing mutual funds. Lacklustre performance of mutual funds and high mis-selling of products by intermediaries has negatively impacted the investors' sentiment. You must select a winning mutual fund after doing thorough assessment of its track record.
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Impact
Important management decisions have huge impact on share prices. Sometimes, promoters and large shareholders take decisions that disproportionately favour them. Unless minority shareholders collectively oppose such decisions using their voting rights, they can't have any voice in corporate decision making. More often, individual shareholders refrain from voting. Also, past record suggests that mutual funds and insurance companies too do not exercise their voting rights to the fullest, although there has been considerable improvement in their participation of late. Securities and Exchange Board of India (SEBI) has been encouraging mutual funds to actively exercise their voting rights and protect interest of minority shareholders. By investing in mutual funds, investors take indirect exposure to stocks that mutual funds invest in.
To make mutual funds more accountable, SEBI has asked them to release a summary of votes cast by them. SEBI has additionally asked them to explain rationale behind their decisions and give out break up of total votes in favour of and against the proposals put up by companies, on quarterly basis. They will also be required to disclose as to how many times they abstained from voting either in favour of or against the proposals. Furthermore, fund houses are directed to obtain certification of the auditor annually stating that they have satisfied the requirement of making aforesaid quarterly disclosures.
Apart from bringing in more accountability and transparency to mutual fund operations, SEBI wants to ensure that penetration of mutual funds increases. In the past, the regulator has given incentives to mutual fund industry by allowing charging additional expense ratio of 0.30% for assets collected from cities other than top 15 cities. In this regard, now mutual funds will have to disclose details pertaining to Assets under Management (AUM) on monthly basis. This includes...
To read more about this news and the view of PersonalFN over it, please click here.
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Impact
Influence of digital media on our daily lives is growing. Today we live in the 'app' world. From booking cinema tickets to finalising the holiday destination, everything can be done online these days. Growing penetration of internet and use of smartphones is really changing the behavior of consumers. Two decades ago ticket booking agents were in demand and it was a hot business. However, as online platforms got developed, that business became less lucrative. On similar lines it appears that, insurance agents may lose their business in next few years.
Here is why?
As reported by the Economic Times based on a survey done by The Boston Consulting Group, sale of insurance through online route may grow 20 times by 2020. At present, the total value of online business garnered in India is about Rs 700 crore, of which Rs 300 crore comes through life insurance. Furthermore, one estimate says that internet influenced sale may total to Rs 15,000 crore to Rs 20,000 crore. Internet influenced sale includes business garnered from people who actually buy online and also includes that garnered from people who use internet in at least one of last 10 pre-purchase and post purchase activities. Many of you might be using internet for comparing prices of insurance products offered by two different companies.
To read more about this news and the view of PersonalFN over it, please click here.
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- Retail inflation came in at 8.10% in February to register a 25-month low. It was found that, high retail inflation was making investors concerned over the returns generated on fixed income investments. It gave rise to huge buying in gold by individual investors. Higher gold imports had resulted in higher current account deficit as total value of India's imports was much higher than that of its exports. To cut down current account deficit, Indian Government imposed curb on gold imports and offered inflation indexed bonds to investors in order to provide them hedge against inflation.
It seems that investors are unimpressed with Consumer Price Index (CPI) linked inflation indexed bonds offered by RBI. The bonds were initially opened for subscription from December 23, 2013 to December 31, 2013. However, the closing date was extended to March 31, 2014. As a latest development, investment limit has also been doubled from Rs 5 lakh to Rs 10 lakh for retail investors.
PersonalFN had rightly pointed out shortcomings of the CPI-linked inflation bonds. PersonalFN is still of the view that, rather than inflation indexed bonds, tax free bonds may offer better yields to investors.
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Index-Linked Bond: A bond in which payment of income on the principal is related to a specific price index - often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond's cash flows are adjusted to ensure that the holder of the bond receives a known real rate of return.
(Source: Investopedia)
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Quote : "If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes" - Warren Buffett
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