Impact 
 As an investor, if you still haven’t received the fact sheet for September 2011, don’t be stunned. Some delay is likely, as the norms issued by the Securities and Exchange Board of India (SEBI), on advertising fund performance are keeping mutual fund houses busy with the new method of reporting its performance.
In its recent drive (vide circular dated August 22, 2011) to enhance disclosure quality and educate investors, the capital market regulator asked for schemes more than a year old to display one-year performances for as many unique one-year periods there are, going back from the calendar quarter preceding the date on which the performance is to be published
Thus, for instance if a fund house wishes to advertise its scheme’s performance as on 30th September (and which was launched on 1st January 2007), it will need to show its performance for four one-year time periods (1 October 2007 - 30 September 2011). The returns have to be given in percentage form and also in terms of how Rs 10,000 has grown during these one-year time periods. Previously, most equity funds used to show their past one-year, three-year and five-year returns.
The new rules also state that the equity schemes are meant to be benchmarked against Sensex or Nifty indices, a long-term debt fund must be benchmarked against 10-year Government Securities (G-Sec) and a short-term debt fund needs to be benchmarked against one-year treasury bill, a Government of India security.
We believe that the norms issued by the capital market regulator, would certainly enhance the quality of disclosure and thus enhance transparency. We recognise the fact expediting this matter is not an easy task, but fund houses should at least disclose their performance against the broader indices (cite above for each asset class and categories for products therein), and also exhibit the value of Rs 10,000 over respective time frames. This will enable investors to gather reasonable inference on the performance of respective funds and aid them to make a investment decision. | Multibagger Stock Ideas
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Impact 
 In order to give investors a chance to invest in foreign equities and earn higher returns, domestic mutual funds launch overseas equity oriented mutual fund. But in the current economic scenario such overseas mutual funds have completely failed to live up to the expectations of their investors.
Despite a favourable rupee movement, international funds have delivered poor returns as a result of declining global markets and softening commodity prices. The weakening of the rupee was not of much help to the overseas’ funds as the other currencies also weakened in tandem with the rupee.
In our opinion fund even though these funds aim to take opportunities in the international markets, they imbibe in them high risk, as they are exposed to country specific economic risk, currency risk and political risk, amongst others.
In our opinion given the gloomy clouds covering the global economy especially the developed nations, it would be wiser to avoid investing in these funds, as they are vulnerable to downbeat economic data being disseminated. We believe it would be prudent move to invest in domestic focus diversified equity funds, due to robust economic growth prospects offered by India, and prudent policy stance adopted. | | Impact
The Index of Industrial Production (IIP) for the month of August 2011 witnessed a marginal uptick as it grew at 4.1% as against 3.8% growth reported in July 2011. However when compared to the same period a year ago (i.e. August 2010), a marginal contraction is evident, as anti-inflationary monetary policy stance caused impediments in industrial activity. 
(Source :CSO, PersonalFN Research)
The month-on-month marginal uptick in the IIP was attributed to the following:
Upbeat in manufacturing sector: The manufacturing sector ascended marginally to 4.5% for the month of August 2011 from 3.1% in the previous month. However, a year-on-year comparison reveals that the manufacturing sector mellowed marginally to 4.4% as against 4.6% in the month of August 2010
Mixed sectoral growth: After posting a negative growth in July 2011 the capital goods sector grew by 3.9% in August 2011. However, on a year-on-year basis the capital goods experienced contraction as, as it descended to 3.9% from 4.7% reported in August 2010. Consumer goods mellowed down to 3.7% as against 7.7% in the previous month.
Core sector growth:The core sector (comprising of eight industries – crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel) which holds a weight of 37.9% in the overall IIP, crouched to 3.5% in the month of August 2011 thereby being the slowest growth reported in the last 11 months.
In our opinion even though the industrial activity has expanded on a month-on-month basis, it has been impeded by the anti-inflationary stance adopted by the RBI since the year-on-year data reveals a contraction. This stumpy IIP data in turn would also have a detrimental impact on the Q2FY12 (i.e. for the period July 2011 to September 2011) GDP data, and thus even upset market sentiments going forward. But, this IIP data would not refrain the central bank from increasing policy rates (by 25 basis points in the 2nd quarter review of monetary policy 2011-12), if inflation continues to remain sticky. We believe that with petrol prices being increased recently and depreciation of the Indian Rupee (thus bloating import cost) inflation is likely to remain sticky for the next couple of months.
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| Close | Change | %Change | | BSE Sensex* | 17,082.69 | 850.1 | 5.24% | | Re/US$ | 49.13 | 0.2 | 0.45% | Gold /10g | 26,630.00 | 715.0 | 2.76% | | Crude ($/barrel) | 110.18 | 7.0 | 6.82% | | FD Rates (1-Yr) | 7.25% - 9.40% | Weekly change as on October 13, 2011
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In an interview with the Financial Express, Mr. Prasanna Chandra - Director at Centre for Financial Management, shared his views on how the retail investor should tide over the current market volatility, what valuation parameters should be looked into before investing and asset allocation to be followed at various stages of life.
Mr. Chandra believes that the retail investors must stay on course irrespective of whether the markets are stable or volatile. Explaining in detail, Mr. Chandra said, “Suppose, the investment policy of an investor is to have a stock-bond mix of 50:50. If the stock component declines in the wake of a market fall, the investor must sell a portion of his bond portfolio and invest in stocks to restore the balance. This way, he can overcome the fear or panic, which normally grips the market when there is a crash. The reverse is true when the stock component rises in the wake of a market boom. This way, he can overcome the emotion of greed, which pervades the market when it’s booming. Fear and greed are powerful emotions that corrode investor performance. Unless the investor checks these tendencies, he is not likely to succeed. And the best way to do is to set an investment policy that is appropriate to his needs and circumstances and adhere to it religiously. Indeed, if you can discipline yourself in this manner, volatility becomes your friend not foe. You will be able to buy when the market falls and sell when it rises.”
According to Mr. Chandra, while investing, the investor should look into the following important valuation metrics like return on equity, price-to-earnings ratio, price-to-book ratio, compounded annual growth rate of revenues and profits over the past five years or so, and dividend yield.
Mr. Chandra is of the view that the strategic asset allocation decision is the most important decision for an investor. “Empirical evidence suggests that the principal determinant of the overall rate of return earned by investors is not the specific stocks or bonds they buy, but rather the weightages assigned by them to different asset classes”, said Mr. Chandra. He is of the opinion that though asset allocation decision has a critical role in determining investment results, investors generally fail to devote enough time and resources to it. “Preferably, put it down on paper as it will raise the ante and deepen your commitment. It will increase the likelihood that you will adhere to your asset mix decision and react less impulsively to the ups and downs of the markets”, he said.
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Asset Allocation: An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.
(Source: Investopedia) | | | QUOTE OF THE WEEK
"Planning is bringing the future into the present so that you can do something about it now."
- Alan Lakein | | |