When equity mutual funds offer negative returns, here’s what you do

The need of the hour is to stay insulated from the panic in the market.

The domestic equity market has been volatile over for quite some time now, and there have been numerous reasons for this - trade wars, liquidity crisis, economic slowdown, global recession risk and the list goes on. Given the volatile movement in equities, portfolios of many mutual fund investors, especially those who ventured into the market recently, are in the red, reflecting negative returns.

But even in such an environment, we are witnessing a steady investing behaviour, as highlighted by monthly SIP inflows. Retail investors put Rs 8,324 crore into the mutual funds through in July 2019, clocking the highest monthly SIP inflows ever.

At the same time, a few investors have turned cautious, as they are not used to seeing their portfolios going into red.

Warren Buffet once said, “the stock market is a device for transferring money from the impatient to the patient.” Markets tend to reward those investors handsomely who show conviction and stay invested. Investors must realise this is not the first time markets are correcting. In fact, market corrections are crucial for healthy uptrends in the times ahead.

The equity market has seen much more hiccups in financial and economic markets, including but not limited to the Harshad Mehta scam, Satyam saga, Mumbai terror attacks, Kargil War and 2008 global recession, but the rebound has always been stronger.

No wonder, S&P BSE Sensex has generated around 16 per cent returns CAGR for investors since its inception 40 years back, absorbing all such financial shocks.

The need of the hour is to stay insulated from the panic in the market and continue to stay invested. If you decide to redeem your investment at currently prevailing lower valuations, you are giving away your potential returns to another investor.

The market is currently trading at relatively lower valuations compared with those seen some time back. While it is not a good feeling to see portfolio valuations trend south, investors should focus on grabbing this opportunity to increase their investment exposure at attractive valuations, instead of thinking about temporary loss in their portfolios.

Since similar investments will now help you get a more shares at lower prices, it will help average out the cost of investment and equip you with the potential of higher growth when the market rebounds.

Staying away from the market in volatile times can cause a permanent deferral of investing, as volatility comes naturally to equity investing. As such, it is always desirable to make friends with it, rather than fearing it.

Dynamic asset allocation funds can help you maintain an active asset allocation for your portfolio, suiting current valuations and market sentiment. Following the simple investing principle of “buy low, sell high”, regular profits can be booked on investments trading at higher valuations and where the money is invested in an asset class and security at relatively inexpensive valuations.

Even when you stay invested in mutual funds, valuation-based portfolio churning by fund managers can help generate better returns for investors. As such, staying dynamic with asset allocation through asset allocation funds can be a great idea to turn the volatility wave in your favour.

Opening a mutual fund SIP can be another way of eliminating emotional bias from your investing journey. Since investments continue to be made irrespective of the market direction, investors continue to move towards their financial goals effortlessly. While negative returns might not be a desirable feeling to have in your portfolio, the long-term outlook for the market continues to be positive. As such, it is just a matter of time before your portfolio turns from red into green.

These are the times when your confidence in the market gets tested. Don’t let short-term market movements deviate you from the route to achieve your financial goals.

36 stocks return over 100% in 2019, many more multibaggers in making

• Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful”. Most experts suggest this is the time to turn greedy

Given the dismal performance of the equity market, it may be ironical but experts feel that 2019 could be the golden year for investments. There are many stocks that are trading at attractive valuations and can turn out to be multi-baggers in years to come.

In recent years, the number of stocks that gave multi-bagger returns has come down. The number of stocks that rose more than 100 percent tanked from 611 in 2017 to 36 in 2019. The number of stocks that gave more than 500 percent return fell from 15 in 2017 to 1 in 2019. And, the number of stocks that rose more than 1,000 percent also reduced from 4 in 2017 to 1 in 2019.

Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” Most experts suggest this is the time to turn greedy. Market valuations, at an aggregate level, are still not cheap, however many stocks do look attractive.

Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.” Most experts suggest this is the time to turn greedy. Market valuations, at an aggregate level, are still not cheap, however many stocks do look attractive.

“After the trough in the last three corrections, equities were up 28 percent one year after the date of the trough. Midcaps have done better, up 39 percent during similar periods. Our opinion is that this would be a good time to buy stocks with an investment horizon of one year or longer,” he said.

The investor sentiment has turned sour in 2019 thanks to fears of a slowdown in the economy. Trade war tensions between the US and China is not helping either.

For the sentiment to improve, private capex has to pick up. The Reserve Bank of India reduced rates by 35 bps earlier in August to kick start the economy but the results are still some time away. Hence, investment should be made with a time horizon of 3-4 years.

“Given a three to five-year time horizon, stock nibbling won’t be such a bad idea, especially if done in a staggered manner,” Amar Ambani, President-Head of Research, YES Securities said.

India does not have a 10% GDP growth rate model right now: Rakesh jhunjhunwala.

Rakesh Jhunjhunwala is not bearish on the market at current levels and sees 10,750-11,000 levels on the Nifty to act as a bottom for market.

The big bull of D-Street, Rakesh Jhunjhunwala, in an exclusive interview with CNBC-TV18 expressed his concerns about the state of the market, and slowdown seen in the economy.

Rakesh Jhunjhunwala highlighted that NBFC crisis, elections as well as fiscal situations have led to a short-term slowdown in the economy.

"Every bank is shy to lend corporates. This reluctance can be overcome by capitalizing banks & flushing the system with liquidity," said Jhunjhunwala.

However, he is optimistic that the economy and the market will rebound, but can’t put a timeline on it.

“India is not in the ICU but we need a sense of urgency w.r.t dealing with NBFCs, and price being paid for correctness in business models is not too high,” said Jhunjhunwala.

“Constant restructuring of PSU entities has also led to pain in the economy. I don’t feel that India has a 10 percent GDP growth rate model as of now,” he added. And, it would be difficult to see double-digit growth in the next 2-3 years, added Jhunjhunwala.He is not bearish on the market at current levels and sees 10,750-11,000 levels on the Nifty to act as a bottom for markets.

If the Indian economy has to grow beyond the 6-7 percent mark, it would require stimulus from the government, and at the same time subsidy should be stopped to public sector enterprises.

“Govt needs to act fast on the economy. The economy needs govt stimulus to grow beyond 6.5 percent. Govt should stop subsidising Air India, BSNL & MTNL,” said Jhunjhunwala.

He further added that the Govt may not want to do things in a hurry, but has no doubt that this government will do whatever it takes to push the economy to a $5 trillion mark.

SEBI expresses concerns over 35% minimum shareholding plan

The SEBI panel is yet to take a final decision, the report said.
Majority members of a SEBI committee have expressed concerns over the government's plan to raise minimum public shareholding, according to a report in The Economic Times.

Finance Minister Nirmala Sitharaman in the Budget had proposed that the minimum public shareholding for listed companies be raised to 35 percent from 25 percent.

The 24-member committee, led by former Infosys CFO Mohandas Pai, is yet to take a final decision, the report said.
"There were numerous thoughts on the proposal. There have to be more discussions before forming any view," a source told the paper.Current market conditions, inability of state-owned companies to comply with the mandatory 25 percent minimum public shareholding, potential flight of capital and disadvantages for listed MNCs were some of the complaints raised, the report said.

The government's move intends to improve weightage of Indian companies on global indices. Currently, India's weight has been limited due to higher promoter holdings.

"If you want liquidity in the market, you must increase the free float of shares rather than just look at a broad increase in percentage," a source told the paper.
The source also questioned the rationale behind the plan, given that the limit is 25 percent in most countries.

Tata Consultancy Services, HDFC Life and Avenue Supermarts are some of the large companies where promoters will have to sell some of their shares in the market.

Lack of buyers force realty firms to target Rs 45 lakh category projects

Homes costing up to Rs 45 lakh have emergedas the sweet spot for builders and buyers alike,helping partially offset a tough real estate environment in India, with rising demand in this price category aided by benefits under the Goods & Services Tax (GST) and the government’s aim to provide Housing for All.

An increasing number of property developers are looking to tap the so-called affordable housing segment because of high demand and decent profit margins.

The government has, of course, sought to make it easier to buy homes, particularly for first-time buyers, through steps such as reducing the concessional GST rate to one percent from eight percent on under-construction affordable homes and offering interest rate deduction up to Rs 3.5 lakh, compared with Rs 2 lakh previously, for homes priced up to Rs 45 lakh and having a carpet area up to of 60 square metres.

“Homes in this price category have huge potential not only for the tax benefits, but also for the sheer demand and affordability,” said Pankaj Kapoor, CEO of Liases Foras Real Estate Rating and Research Pvt. “In the past year, 20-30 percent of homes sales came from this price segment and this will grow, with increase in new supply in both Tier I and II cities. Even in an expensive market like the Mumbai Metropolitan Region (MMR), 30,000 one BHKs were sold in the last financial year.”

Rohit Poddar, Managing Director of Poddar Housing and Development, which builds affordable housing projects in MMR and Pune, said the company’s strategy is to build Rs 20-45 lakh homes. In Badlapur, a distant suburb of Mumbai, Poddar Housing launched 300 residential units of 350 sq ft at around Rs 20 lakh each this year and sold all of them. It plans to start three-four projects in Pune and Mumbai in the months ahead.

“Demand is there if adequate infrastructure is present. The big challenge is to find the right cost structure because earning profits building Rs 20 lakh homes is tough,” said Poddar.

Many developers have burnt their fingers with luxury housing, and low-cost housing has been equally difficult, with high land costs, lack of infrastructure and execution challenges.

Despite the adversities, developers are pursuing a middle ground to bring back elusive homebuyers.

Ram Walase, Managing Director and CEO of VBHC Value Homes, said it is focusing on building homes costing Rs 20-45 lakh. At least 75 percent of its new project at New Panvel in Navi Mumbai is in this category.

Alok Mehta, Vice President of Product Strategy at Vatika, said that at the 225-acre Vatika India Next 2 township in Gurugram while the largest category of homes cost Rs 40-80 lakh, it has earmarked a couple of land parcels where it plans to build Rs 10-20 lakh homes.

In Bengaluru, that has been the best-performing market during the property slowdown, with developers trying to be practical and strategic about building.

Shriram Properties has decided to build sub-Rs 45 lakh projects in Chennai, Bengaluru and Kolkata. It has around nine launches planned this year, a few of which are in the Rs 30-40 lakh price bracket.

Ozone Group CEO Srinivasan Gopalan said all the company’s products in Bengaluru are priced at less than Rs 45 lakh each. Ozone, which is also present in Mumbai and Chennai, has a new launch of homes costing Rs 18-35 lakh in Bengaluru later this year, he added.

“Indexation of Rs 45 lakh homes will help affordable housing,” said Sriram Mahadevan, Managing Director of Joyville Shapoorji Housing Pvt. “While the benefits of Rs 45 lakh homes are good to bring down the cost for the buyer, even if we can build homes in the Rs 30-60 lakh range in the metros, it’s good to ensure end user-driven sales.”

Chennai-based Casagrand Builder Pvt, which has 35-36 ongoing projects, is aiming to clock Rs 2,500-2,700 crore in sales this year, with most of its home launches in the price range of Rs 40-80 lakh.

CG Satish, Director of the Bengaluru zone at Casagrand Builder, said the ‘sweet spot’ in pricing has moved down to Rs 3,000-6,000 per sq ft now from Rs 6,000-10,000 per sq ft earlier in Chennai, because the latter isn’t selling that well.

RIL rallied over 20% since last AGM: Investors eye GigaFiber, Jio Phone 3 launch

The stock rallied from Rs 964 recorded on 5th July 2018 when RIL held its 41st AGM, to Rs 1,162 registered on Friday, 9 August, which translates into a rally of over 20 percent.

India’s second-largest company by market capitalisation, Reliance Industries will hold its 42nd annual general meeting (AGM) on Monday, August 12 in Mumbai which would be eyed by both investors as well as analyst community

The stock rallied from Rs 964 recorded on 5th July 2018 when RIL held its 41st AGM, to Rs 1,162 registered on Friday, 9 August, which translates into a rally of over 20 percent.
Investors could see the launch of Jio Phone 3, commercial rollout and pricing of Jio’s broadband service GigaFiber, and the triple play plan for GigaFiber that bundles broadband, landline as well as television services, are also expected to be announced at the RIL AGM, CNBC-TV18 said quoting market sources.

Jio Phone 2 was launched at the last AGM and carried a price tag of Rs 2,999. Its next iteration, Jio Phone 3, is expected to be priced at Rs 4,500, the report added.

Jio Phone 2 was launched at the last AGM and carried a price tag of Rs 2,999. Its next iteration, Jio Phone 3, is expected to be priced at Rs 4,500, the report added

AK Prabhakar, Head of Research at IDBI Capital expects the launch of triple play plan for GigaFiber which bundles broadband with DTH as well as a telephone in one package. Pricing is something which will be watched by the D-Street.

The pricing for the broadband plans is expected to be in line with peers but RIL will sweeten the deal by making it a triple play —a combination of broadband-landline-TV OTT service. A base price of ranging between Rs 500-600 for GigaFiber is expected, according to CNBC-TV18 report.

Apart from Jio broadband rollout as well as the launch of Jio Phone 3, some analysts will also keep a close eye on the deleveraging plan, expansion on the retail front, as well as any important development on the refining front.
AK Prabhakar, Head of Research at IDBI Capital expects the launch of triple play plan for GigaFiber which bundles broadband with DTH as well as a telephone in one package. Pricing is something which will be watched by the D-Street.

The pricing for the broadband plans is expected to be in line with peers but RIL will sweeten the deal by making it a triple play —a combination of broadband-landline-TV OTT service. A base price of ranging between Rs 500-600 for GigaFiber is expected, according to CNBC-TV18 report.

"Focus will be more on its retail, telecom business expansion plan, and fund mobilisation. Also, towards its oil refining business front some important announcement is expected," Sanjeev Jain, VP Equity Research at Sunness Capital India Pvt Ltd, told Moneycontrol.

Last week, Credit Suisse said that the company is expected to remain free-cash-flow negative over FY20-21, just as it has been for the last six years. The report further added that liabilities have dramatically gone up to $65 billion in FY19 from $19 billion in FY15.

Reliance Industries, the country's second largest company by market capitalisation, reported a consolidated profit after tax of Rs 10,104 crore for the June quarter, up 6.8 percent from a year ago. The net profit also beat a poll of analysts which had pegged the profits at Rs 9,852 crore.

“Investors would watch out for some news from RIL on how it can substantially deleverage its balance sheet through either induction of a partner in the refinery business because there were some talks of a deal with Saudi Aramco,” Ajay Bodke CEO- PMS Prabhudas Lilladher told Moneycontrol.

The analyst would watch out for a medium-term plan for monetizing their stake in the refinery, retail, fiber, and tower business because the company has become net debt company from a net cash company amid expansion plans.

The second thing that investors would watch out for would be the return ratios, said Bodke. He further explained that with increased contribution of consumer-focused business like retail and telecom – investors would expect the return ratio of the company to move northwards to just premium valuations compared to pure-play refining and Petro companies.

It is official! Small & Midcaps are in a bear market

Small and midcap stocks are in a bear market, data suggests. To add to the worries, it shows S&P BSE Sensex is almost halfway there.

According to the data collated on August 7, the S&P BSE Smallcap index has fallen about 39 percent from its 52-week high, while the S&P BSE Midcap index is down a little over 20 percent from its peak.

The S&P BSE Sensex is approximately halfway there as in the same period, it is down about 9 percent from its 52-week high of 40,312.

Small and midcap stocks are in a bear market, data suggests. To add to the worries, it shows S&P BSE Sensex is almost halfway there.

According to the data collated on August 7, the S&P BSE Smallcap index has fallen about 39 percent from its 52-week high, while the S&P BSE Midcap index is down a little over 20 percent from its peak.The S&P BSE Sensex is approximately halfway there as in the same period, it is down about 9 percent from its 52-week high of 40,312.
The S&P BSE Sensex is approximately halfway there as in the same period, it is down about 9 percent from its 52-week high of 40,310
A bear market is a condition in which securities/stock prices fall 20 percent from their recent peak amid widespread pessimism or fear in the market. A situation analysts say we are already deeply entrenched in.

Smallcap & midcap stocks continued to be under pressure even when benchmark indices were hitting record highs two months ago. It was about time, benchmark indices would catch up to the broader market, largely weighed down by expensive valuations, budget proposals, selling by foreign investors, muted results, and trade war concerns.