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May 2, 2009
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| Weekly Facts |
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Close |
Change |
%Change |
| BSE Sensex |
11,403.3 |
268.3  |
2.4% |
| Re/US$ |
50.1 |
0.1 |
0.1% |
| Gold Rs/10g |
14,535.0 |
70.0 |
0.5% |
| Crude ($/barrel) |
49.1 |
0.5 |
1.1% |
Weekly change as on April 29, 2009
Impact
Under a special offer, State Bank of India (SBI) has recently reduced the interest rates on education loans. The rate cut is in the range of 0.25%-2.00% and will be available only to new borrowers. After the rate cut, the new interest rates will be in the range of 11.00%-11.50% (earlier they were 11.75%-13.25%). The offer is valid only on loans opted between May 2009 to September 2009. Those students, who wish to go for higher studies but do not have necessary resources to fund their education, will immensely benefit from this move.
Undoubtedly, it’s a welcome move. However, in our view, the benefit should be made available to both new as well as existing borrowers.
Impact
Recently UTI Mutual Fund announced the merger of UTI Mastergrowth and UTI Index Select. Taking the process a step further, UTI, which is India’s fourth largest asset management company, is planning to consolidate its 28 pure equity schemes into 10 schemes. Hence, funds having similar style and approach of investment would soon be merged into a single scheme. This is being done to ensure that the investors are not left confused and wondering which scheme to choose.
Over the years, the number of funds in UTI Mutual Fund’s kitty has increased many folds. Also there are funds with overlapping investment style and approach of investment. Though this is just one case pertaining to UTI Mutual Fund, such scenarios were quite frequent during the bull-run among many other fund houses as well. Consolidation of schemes will not only help investors in selecting the right fund but also help fund managers in managing them better.
Investors, who are invested in the schemes of UTI Mutual Fund, would do well to stay updated with the latest development in this regard.
Impact
Fund flows into India, which remained negative for first two months of this year, have started showing signs of recovery. FIIs who were net sellers in the month of January and February, were net buyer’s both in the month of March and April (till April 24, 2009). Is this the indication that the dry spell of foreign inflows in the Indian markets is over? In our view, it will be too early to conclude that.
During January 2009 to April 24, 2009, the BSE Sensex is up 16.69%, and foreign inflows do have a part to play in this. The scenario has lead many investor’s to conclude that the worst is over. Here is a word of caution - remember its election time, and the picture will be clear only once the election results are out.
While we believe that election will not have any impact on investors who invest for long-term, short-term investors should tread a line of caution.
Impact
There is more to the festivals than the festive mood, it’s also about offers and discounts. Last week there were advertisements all around enticing individuals to buy gold, at attractive prices, on the occasion of Akshaya Tritiya. The day is particularly considered auspicious for buying long-term assets like gold, silver, diamond and other precious stones; and the real estate. Besides the obvious use of gold (especially in the Indian context), it also proves to be a good investment to hold on for the long-term. And what is the better way of investing in gold than Gold ETFs. They offer an easy way of investing in gold and that too at low cost to investor. While festival seasons will be flooded with offers, investors would do well not to get enticed by them and instead contemplate all the options while making investment decisions.
Impact
Besides gold, real estate has also become a 'hot property' in the recent times. No one would have missed the ads for properties and the discounts being offered on them. In some places in Mumbai, the discounts offered were around 30%. There is a huge oversupply of residential properties as of now, which could lead to further decline in property prices. However, no one knows upto what extent the prices may fall. Besides, the fall in rates may not be uniform; it will most likely vary from place to place.
So if you were planning to buy a house, but have put your plan on hold because of the adverse conditions, now is the apt time to begin serious search for your dream property.
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