The World This Week

Indian Equity Summary-Benchmark indices Sensex and Nifty closed in green for the second consecutive week in line with the global key equity indices. Nifty 50 andØ Sensex rose by 1.7% and 1.4% respectively . Sectorally, all the sectors indices barring Consumer durable and IT closed in green. BSE Metal , BSE Power and BSE Bankex were the top performers and rose by 6.65%, 4.99% and 3.41% respectively.  Investor sentiments were also lifted by the announcement of further relief package of TLTRO by RBI targeted towards small and medium-sizedØ financial institutions including NBFCs and MFIs . Reverse repo rate has been cut by another 25bps to 3.75% to incentivize the banks to lend.  India VIX continues to cool off and has dropped to ~42.59 on Friday. It has dropped by ~32% in 1 month.Ø  Going forward, the growth in number of COVID-19 cases among other factors such as the movement of rupees, crude oil prices, foreignØ currency inflows and outflows will continue to determine the forward-looking market pattern. We expect the trading range for Nifty between 8700 -9500 in the near term.

Indian Debt Market-  Government bond prices ended sharply higher .Yield of the 10 year benchmark 6.45% 2029 paper settled at 6.35% on April 17 as against 6.49 %Ø on April 9.  Bond prices lifted on account of the announcement of further monetary policy easing by the central bank along with additional liquidityØ boosting measures to ease the economy in stress.  Reverse repo was cut by RBI by 25 basis points (bps) to 3.75% with a view to encourage more lending by banks .Ø  RBI conducted its fourth targeted long-term repo auction on April 17 of three-year duration for a notified Rs 25,000 crore.Ø  We expect the 10 year benchmark yield to trade between 6.15-6.40% in near term.

Domestic News  Headline CPI in India fell to a four month low of 5.91% year on year in March 2020 from 6.68 in previous month.Ø  India’s inflation based on the Wholesale Price Index (WPI) eased to 1% in March from 2.26% in February on the back of a sharp fall in food pricesØ  The income-tax department has set its budgetary direct tax collection target for 2020-21 at Rs 13.19 lakh crore, 28% more than the actualØ collections in the year ended March 31.  IMF has downgraded the projections on India's growth rate from 5.8% to 1.9% for FY21 and has forecasted global recession due to COVID-19.Ø  India’s southwest monsoon this year is expected to be normal at 100% of the long period average ,according to the India MetrologicalØ Department.  RBI announced Rs 50000 crore targeted long term repo operation (TLTRO 2.0),with a view to boost small and medium-sized financialØ organizations including NBFCs and MFIs .

International News  China’s CPI rose 4.3% on-year in March, compared with 5.2% in February, while Producer Price Index fell 1.5% in March compared with a 0.4%Ø fall in February.  China's GDP fell to 6.8% in the first quarter from a year earlier , the worst performance since at least 1992.Ø  US benchmark index ,Nasdaq gained by 4.65% as the US Federal Reserve (Fed) announced a $2.3 trillion financial support package to boostØ local governments and small and mid-sized businesses in its latest move to keep the US economy intact.  US retail sales plummeted 8.7% in March after falling by a revised 0.4% in February.Ø  Capacity utilisation for the industrial sector in US decreased to 72.7% in March from 77% in February while US industrial production plungedØ 5.4% in March after rising by a downwardly revised 0.5% in February.

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Advice for the wise

FROM THE CEO’s DESK

Dear Investors,

“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.“ - Peter Lynch. At some periods, stock markets are volatile and the normal response for investors will be to reduce the exposure to stock or get away from equity; resisting the urge to panic during the unstable period and following a strategy during this period is crucial. There were very few better times to grow an equity portfolio than now, as the recent downturn in stock prices and favourable valuations would make a significant contribution to long-term wealth building efforts. There are several valuation indicators that suggest favourable entry points for long-term investors, such as market cap to GDP, price to book value and earnings ratio. This short-term volatility is less important if we take into account the longer investment horizon. In the last three decades, the stock markets have faced many adversities, and from all events the markets have emerged stronger than ever, and this time it will do so too. Given the "sudden pause" in global economic activity in 1Q2020, it is promising to see fiscal and monetary steps are being taken by various central banks and governments to limit the economic effects. The G-20 countries suggested that they would jointly invest more than 5 tn US dollars (i.e. 6 percent of global GDP).The US Government has proposed a ~2 trillion dollar stimulus package to support the US economy ravaged by the Covid-19 outbreak, while the European Central Bank (ECB) has pledged a huge € 870 billion injection. The Bank of England agreed to hold the interest rate at 0.1 per cent and offered a quantitative easing of 645 billion pounds during this time to help its economy. Owing to Covid-19 virus and potential slowdown in FY21 GDP numbers, the GOI and RBI had come out with a slew of reliefs. potential tailwinds for the Indian equities are low oil prices which would have a positive impact on the Indian economy. India's monthly trade deficit with China has been narrowed, due to import restrictions. Shift of manufacturing operations from China to other EMs is a huge opportunity and India could be one of the key beneficiaries. As the Covid-19 scenario plateaus, the FII / FPI's hopes of returning to emerging markets and India in particular are not unreasonable on the back of humongous global liquidity and low interest rate scenarios; while SIP flows will continue to support the market in the near future. Although we expect FY21 to see a growth recovery, difficulties may emerge in Q1/Q2 FY21 due to disruption of inventories. Reforms such as GST and corporate tax cuts, improvement in ease of doing business, and economy formalization will support the supply side We recommend being overweight on private banks, FMCG and the healthcare space while being neutral on IT. We suggest being overweight on equity keeping in mind the attractive valuations post the steep recent decrease in stock prices and advise investors to use any corrections, as a buying opportunity. Mid & small caps took a beating too in the recent correction. In the course of CY20 we expect mean reversal to happen which will allow mid & small caps to catch up on their last two years of underperformance vis-à-vis the Nifty-50 index. We encourage investors in mid-and small-cap space to look for companies with good earnings growth prospects and with fair valuations available at beaten-down prices. The attractive equity market valuations reinforce our view of equity overweight with a bias towards large-cap stocks and selective multi-cap mutual funds and PMS (Portfolio Management Services). We propose 65% for Large Cap, 25% for Midcap, 10% for Small Cap as part of the distribution among Equity-sub Asset Class. On the debt side, investors are suggested to purchase quality credit papers and stick to accrual funds,while maintaining 5%-7% as a volatility hedge allocated in gold.

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Real Estate Advisory Services

We provide our clients advice in not just acquiring property but also in investing and / lending to the real estate sector through structured transactions that offer with attractive returns.

DIRECT PROPERTY PURCHASE

At Karvy, we empower you to make the right decision in your property investments. We support you through selection of locality, finalizing the property and closing the deal. As part of the whole process, we help select and compare from various available options. We also assist in the financing the property through various financial intermediaries.

The advantage of directly investing in property is that it gives you greater control over your investment. Karvy can help you invest in to the following types of property.

RESIDENTIAL PROPERTY

Our networks of specialists are always at hand to provide expert knowledge on the current market trends and upcoming projects.

There are three kinds of investment opportunities available:

·        Pre-launches – Where the construction work has not yet begun

·        Under constructions – Construction work has already begun

·        Ready to move-in – Buildings which are ready with occupation certificate

These can be further divided into two types of markets. Primary Markets where we directly deal with developers for the property of your choice and Secondary Markets where property is sourced through our trusted retail partners.

Know more at  - http://www.karvywealth.com/real-estate-advisory-services

WEALTH MANAGEMENT SERVICES

It is not how exotic your portfolio is but how well it is structured to meet your objectives and give you regular returns whatever the economic environment.

Karvy, with over 25 years’ expertise in the financial markets, is offering comprehensive wealth management solutions for its customers through Karvy Private Wealth (KPW). Our wealth managers provide direction to a client’s financial decisions, enabling him achieve his financial and life goals. As a wealth manager, we collate the relevant financial information and life goals of the client, assess his risk tolerance level, examine his current financial status, and identify a strategy to fulfill his goals.

Wealth management  is an all-encompassing service, providing comprehensive research-based advisory along with convenient and personalized investment execution. KPW offers an unmatched product basket, ranging from debt, equity, mutual funds, insurance, derivatives, commodities, structured products, international funds, art funds and real estate. It is a unique service aimed at transforming clients’ dreams into reality

KPW was set up to cater to HNIs, keeping in mind that they require a different kind of financial planning and management. Our services include planning and protection of finances, planning of business and retirement needs, and a host of other services, which will help augment their existing as well as future finances and lifestyle. We combine a hard-nosed business approach with a soft touch of personalized attention and dedicated customer care.

Our research reports have been widely appreciated by the HNI segment. The delivery and support modules have been fine-tuned by giving our clients access to online portfolio information, constant updates on their portfolios as well as value-added advice on portfolio churning, sector switches, etc. Moreover, the investment recommendations given by our research team in the cash market have enjoyed a high success rate.

Read more at https://www.karvy.com/wealth-management

CURRENCY DERIVATIVES

Karvy Currency Derivatives Segment, a specialized group vertical within Karvy Stock Broking Limited, has been established in 2008 to cater to the growing needs of corporate houses to manage currency exchange rate risk. With the changing dynamics and increasing volatility of exchange rates across the globe, companies exposed to currency risk face the challenge of maintaining continued profit margins. Currency Derivatives would be one of the best options to manage any related exchange rate risk and be free from the worries of market uncertainties.

At Karvy Currency Derivatives Segment (CDS), we provide customized hedging strategies for importers, exporters and companies with foreign exchange exposure. We offer forex advisory and brokerage service for the Indian currency derivative market, and provide a robust and reliable online trading platform. Currency Derivatives Segment – Karvy Stock Broking Limited is an active member of the National Stock Exchange (NSE), Metropolitan Stock Exchange of India (MSEI) and Bombay Stock Exchange (BSE).

WHAT ARE CURRENCY DERIVATIVES?

These are options and futures contracts through which you can buy or sell specified quantities of pairs of currencies at a future date (which is predetermined). The price or exchange rate is decided on the date of purchase. The derivatives are similar to options and futures in the stock market, aside from the fact that currency pairs are the underlying assets.

Currencies are often traded in by banks and financial trading institutions. Individual investors can also trade in currency derivatives to take advantage of variations in currency exchange rates. The market for currency trading is one of the biggest and fastest growing in the world.

HOW DO CURRENCY DERIVATIVES WORK?

Trading in these derivatives gives you an option to trade in four foreign currencies which are pegged against the Indian rupee. You can trade through futures trading contracts for different foreign currencies through leading stock exchanges in India. However, foreign institutional investors and non-resident Indians cannot trade in this market.

Investors can hedge against foreign exchange risk and benefit from the rupee’s movement against major foreign currencies. There has been an increase in volumes of trading in currency futures over the years. The euro, Japanese yen, British pound and US dollar are the major currencies for which you can get currency derivatives paired with the rupee.

View  more at https://www.karvy.com/currency-derivatives

Mistakes women should avoid in order to achieve financial stability

Invest in regular health care program and for the long term to create wealth and lead a stress a free life

Today's women are juggling between high-pressure work environments, fast-paced social life and simultaneously managing the family, which can sometimes put money management on the back seat. A few money management mistakes if avoided in the earlier part of life can help women hand carve and secure a financial future. It is advisable that they start their financial planning journey with the help of an advisor, who will help in drafting a customized fiscal road map, ensure optimum asset allocation as per the risk profile and simultaneously help in the execution of the investments.

The seven mistakes that a woman should avoid being financially independent are

1.    Not having a contingency reserve of six months expenses

2.    Not investing regularly in a diversified portfolio with the right asset mix as per the risk profile

3.    Not creating a retirement corpus Not creating a sufficient corpus for children's education

4.    Not protecting against risks to health and life by buying sufficient health and life insurance

5.    Spending too much in impulsive purchases & not keeping avoidable debt under control and

6.    Being too dependent on the male members of the family like husband and father to manage finances and being oblivious of the process is a fundamental flaw which should be avoided

7.    Being financially literate is not a choice today but a necessity.

Have an emergency fund

The blunder of not having a six months contingency reserve in the bank account / liquid funds may have dire consequences in case of job loss or medical emergencies. Having a contingency reserve allows bouncing back in case of any eventualities.

Diversify your investments

We all know the importance of "Not keeping all our eggs in one basket" and so investments need to be diversified. While it is important to start investing early to take advantage of the power of compounding, it is more important to ensure the discipline of continuity of regular monthly investments. Systematic investment plans (SIPs) in mutual funds are a smart solution to this.

Health, wealth and happiness

Retiring from work is obvious, but many women fail to plan for post-retirement. Starting retirement savings in the early part of life leads to a larger retirement corpus, which eventually provides for better post-retirement security. Being frugal and cautious by nature, women prefer to keep money in a savings bank account or make investments earning a fixed rate of interest. A higher allocation to equity generally results in building a larger retirement corpus, though the right mix should be identified after speaking to your financial advisor.

The same is true the women who are mothers. Their biggest prized possession is their child and there the most important goal is the child's education. Higher education costs are growing every year and regularly investing in equity mutual funds through the Systematic Investment Planning (SIP) route and increasing this amount regularly as incomes grow, after discussing the exact amounts needed with the financial the planner is a good solution to achieve this goal.

Life is unpredictable, but managing finance well isn't. The importance of life insurance and health insurance is paramount. Empirically it is seen that women, in general, live longer than men, which increases the importance of health insurance.

Expenses from activities like frequent dining out and impulsive shopping, using credit card borrowings, may lead to a ballooning of debts and then into a debt trap and realization often comes late, when actually one starts checking the interest charged on the credit card statements. It is important to stick to a monthly budget, and as soon as one receives the monthly income, transfer 20 to 30 % to a separate bank account for investments. Also, many mobile apps are now available, which help in tracking monthly expenses and also show the trends in spending. Expense control is a critical step in wealth creation. It is rightly said, "A rupee saved is a rupee earned".

Inheriting money from father or sometimes after the unfortunate death of the spouse generally leads to the acquisition of a large chunk of money. The vulnerability at that moment is also high. It is advisable to protect and invest such corpus wisely, after taking advice from a legal counselor and a financial advisor or getting in touch with a wealth management firm, who provides a 360-degree service.

In a nutshell, every woman should keep this mantra of HWH (health, wealth and happiness) in their mind while participating in the race of life. Investing in a regular health care program, investing in the long term to create wealth and living a stress a free life should be the essence for today's modern women.

The writer is CEO of Karvy Private Wealth

Read at https://www.dnaindia.com/personal-finance/report-mistakes-women-should-avoid-in-order-to-achive-financial-stability-2733561

HNIs are looking at international diversification: Abhijit Bhave of Karvy

The wealthy, Bhave says, has evolved a lot in the past two-three years, especially in terms of making learned decisions and considering the costs involved in the investments

ABHIJIT BHAVE, chief executive officer of Karvy Private Wealth talks to Puneet Wadhwa on the key trends in the wealth management business in India and the road ahead for the industry. Edited excerpts:

Do you think the wealth management segment is getting overcrowded and the margins will get thinner going ahead?

India is on the growth trajectory where projections of a $10 trillion economy over eight years are being made. This leads to a lot of potentials for wealth management companies to grow and the sector will not get saturated anytime soon. In the short-term, there may seem to be some overcrowding in this space. That said, there is huge potential to grow over the long term.

The margins will definitely get thinner going ahead but an increase in the asset base in terms of volumes will bring profitability in the future rather than margins. One of the options that many wealth management companies would consider after regulatory clarity would be to go into the advisory model for long term sustainability of the business.

Can you elaborate on the likely industry growth rate for the next three-five years?

Considering projections of at least a $5 trillion economy over the next three-five years and the increase and inclusion of a larger investor base across the length and breadth of India, double-digit growth in the wealth management industry is very likely.

The wealth management business competes with banks as well. How do you maintain your leadership, profitability and growth strategy?

While a bank will provide comprehensive banking solutions where wealth management is a part of their services, we are specialists in only wealth management. We focus and position ourselves into offering the best in class investment products. By maintaining a diverse and all-inclusive category of products after strict due diligence and evaluation, we get a competitive edge in terms of investments.

How have the investing trends among the wealthy/high net worth individuals changed over the last two-three years? What is the road ahead?

The wealthy have evolved a lot in the past two-three years, especially in terms of making learned decisions and considering the costs involved in the investments. The requirements have also evolved over time, where they are actively looking at absolute return strategies, venture capital (VC), private equity (PE) and international diversification. The merits of advisory models, succession and estate planning are also visible and exercised. Going ahead, we foresee a much deeper relationship between ultra-high net worth (UHNI) clients and wealth managers in the advisory role, where both would have higher levels of awareness and knowledge levels.

Over the last few years, avenues such as art, wines, etc have emerged as investment options. Are the well-heeled in India looking that them?

Though these investment avenues sound glamorous and may seem attractive, we believe these avenues have yet not evolved in a structured way in India compared to the developed economies. The UHNI segment is definitely looking at these investment avenues, but not a lot of actual investments are happening. These investments are expensive to enter and the exits are uncertain. Though if the right one is picked up early, the returns can be astronomical.

Visit - https://www.business-standard.com/article/markets/hnis-are-looking-at-international-diversification-abhijit-bhave-of-karvy-119021100286_1.html