Retail investor to PE investor in just Rs 5 lakhs Apr 24, 2009

Retail investor to PE investor in just Rs 5 lakhs

April 24,, 2009

Weekly Facts
	Close	Change	%Change
BSE Sensex	11,135.0	187.6	1.7%
Re/US$	50.0	0.3	0.5%
Gold Rs/10g	14,465.0	135.0	0.9%
Crude ($/barrel)	49.6	2.0	3.8%

Weekly change as on April 23,, 2009

RBI slashes key rates - Your opportunity to borrow cheap

Impact

RBI slashed its lending and borrowing rates by 25 bps to 4.75% and 3.25% respectively. Banks have been parking their surplus money with RBI to earn interest of 3.50%, instead of lending it. Now with the borrowing rate of RBI slashed, banks will be forced to lend money rather than keeping it with RBI. While ICICI and HDFC bank have already responded by lowering their interest rates, other banks may soon follow suit.

This comes as an opportunity if you are considering taking a home loan or an auto loan, since the rates on these loans is likely to come down.

No more free lunch for banks - Earn more from your savings account

Impact

Savings bank account customers have a reason to cheer. As per the Monetary Policy 2009-10, the payment of interest on savings bank accounts by scheduled commercial banks (SCBs) would be calculated on a daily product basis with effect from April 1, 2010. At present, interest on savings bank accounts is calculated on the minimum balances held in the accounts from the 10th day to the last day of each calendar month. As a result, the interest earned by depositor on his savings account turned out to be much lower than the prescribed 3.50% per annum.

With the change in the calculation of interest, depositors will benefit, as they will earn higher interest from their savings account.

Yet another good monsoon predicted - Good times ahead

Impact

Meteorological Department has predicted normal monsoon this year. This will boost the agricultural sector largely, which in turn contributes about 17% of India’s GDP.

This will lead to increase in agricultural productivity which in turn would result in increase in demand from the rural areas and decline in food prices, which continue to be high.

Retail investor to PE investor in just Rs 5 lakhs

Impact

Newspaper reports suggest that the ticket size has been reduced for investments in a PE (Private Equity) fund from Rs 10 crore to Rs 5 lakhs. PE funds mainly invest in start-ups, which require early stage funding. The gestation period for these investments is also longer. However, if the invested companies do well then the returns could be high. This characteristic makes the investment into a high risk, high return kind of investment.

While the low-ticket size will allow many retail investors to participate in PE funds, investors must bear in mind that PE funds are a very high risk-high return product.

UTI merges its two equity schemes - Should you hold or redeem?

Impact

UTI Mutual Fund has announced a merger of its two schemes - UTI Mastergrowth Unit scheme and UTI Index Select Fund will be merged and renamed as UTI Top 100 Fund. The new scheme will invest at least 65% of its corpus in top 100 stocks by market capitalization and remaining in debt instruments.

UTI Mastergrowth is mandated to invest up to half of its assets in stocks of public sector units (PSUs), whereas UTI Index Select invests in select stocks of BSE Sensex and S&P CNX Nifty. Investors, who are not comfortable with the proposed merger, can redeem their investments in these two schemes from April 21, 2009 to May 20, 2009 without paying exit load.

Those investors who are comfortable with the proposed investment proposition can continue their investments, while others would do well to redeem.

IN THIS ISSUE

RBI slashes key rates - Your opportunity to borrow cheap
No more free lunch for banks - Earn more from your savings account
Yet another good monsoon predicted - Good times ahead
Retail investor to PE investor in just Rs 5 lakhs
UTI merges its two equity schemes - Should you hold or redeem?

FORWARD TO A FRIEND

Think you know someone that will enjoy this email? Why not send it to a friend?

QUOTE OF THE WEEK

Quote: "It is not how much you make that counts but how much money you keep"

– Robert Kiyosaki

ATTENTION WOMEN!

************

We bring you something invaluable, interesting, exclusive...and FREE!

Click here to know more...

Disclaimer:

This newsletter is for Private Circulation only and not for sale, is only for information purposes and Quantum Information Services Limited (PersonalFN) is not providing any professional/investment advice through it and, does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. PersonalFN disclaims warranty of any kind, whether express or implied, as to any matter/content contained in this newsletter, including without limitation the implied warranties of merchantability and fitness for a particular purpose. PersonalFN and its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors will not be responsible for any direct/indirect loss or liability incurred by the user as a consequence of his or any other person on his behalf taking any investment decisions based on the contents of this newsletter. Use of this newsletter is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. PersonalFN does not warrant completeness or accuracy of any information published in this newsletter. All intellectual property rights emerging from this newsletter are and shall remain with PersonalFN. This newsletter is for your personal use and you shall not resell, copy, or redistribute this newsletter, or use it for any commercial purpose.