10 March 2013

Index Outlook: Bulls back in business ::Business Line


Technicals-Amara Raja Batteries, Nelco, Neyveli Lignite, DCB, Hero Honda, Strides Arcolab ::Business Line


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Please share your technical view on Amara Raja Batteries bought at Rs 207.
Kaushalendra Pratap Singh
Amara Raja Batteries (Rs 284.3): Amara Raja Batteries ceased its upward charge in January this year when it reversed lower from the peak at Rs 327. This decline ended after the stock lost 23 per cent from this peak with the bottom at Rs 249.
The significant point to note here is that the stock retraced around 30 per cent of the rally from the February 2011 low, during this correction. The stock has significant long-term support in the zone between Rs 230 and Rs 250. Long-term investors can hold the stock as long as it trades above Rs 230.
Sideways movement in the zone between Rs 230 and Rs 330 is possible for a few more months but this is conducive for the stock’s long-term prospects. It will imply that the stock could move beyond Rs 350 over the long-term.
Long-term supports below Rs 230 are at Rs 200 and Rs 170.
Please advise on the medium- and long-term outlook of Nelco. Can these be bought at current levels?
Anil
Nelco (Rs 42.1): The medium as well as the long-term trend in Nelco are currently down. The stock is, however, halting above key long-term support around Rs 40. Investors with a greater penchant for risk can buy the stock at these levels with stop-loss at Rs 36. Fresh purchases should, however, be avoided on a breach of this level since the target on a breach of this support is quite some way off, at Rs 21.
Key medium-term resistance is placed at Rs 65. Investors can offload part of their holding if the stock is unable to move beyond this level. Medium-term view will turn positive only on a close above Rs 80.
Kindly give your view on Neyveli Lignite Corporation bought at Rs 108 and Development Credit Bank at Rs 52. I can hold the stocks for six months.
P.S.R. Murthy
Neyveli Lignite Corporation (Rs 74.8): The trends along all time-frames are down for Neyveli Lignite Corporation. Investors can, however, draw solace from the fact that the stock is now close to its key support zone around Rs 70. This level has cushioned the stock twice already since November 2011.
Investors can, therefore, hold the stock only as long as it trades above Rs 60.
If the stock breaches this level emphatically and closes below it on a weekly basis, it will imply that the stock is heading lower to the October 2008 trough at Rs 44.
Medium-term resistances are at Rs 90 and Rs 110. The trend along this time-frame will turn positive only on a close above Rs 110.
Failure to do so will imply that the stock will continue to be under pressure. Targets on move above Rs 110 are Rs 124 and Rs 136.

Technicals: Reliance Industries, SBI, Infosys, Tata Steel ::Business Line

 

Sizzling Stocks: MRF, Adani Power, ::Business Line


Dissecting the Rs 2,000 tax rebate ::Business Line


The Budget announcement of a Rs 2,000 tax rebate to individuals in the Rs 2-5 lakh income bracket has raised a few queries. Many understand this as a rise in the exemption limit from Rs 2 lakh to Rs 2.2 lakh. Some think that it is like Rs 2,000 refund from the I-T department after you file the return and pay the taxes. Let’s weed out these doubts.
In case of a normal assessee, it makes really no difference whether you raise the exemption limit or give a tax rebate, they say. If your total income is Rs 2,20,000 and you are liable to pay Rs 2,000 ( 10 per cent of Rs 20,000) as tax, you will get a full Rs 2,000 rebate. If your income is between Rs 2 lakh and Rs 2.2 lakh, then the rebate will come down proportionate to the total tax payable. In both cases, you will not have to pay any taxes for next year (FY 2013-14). If you earn more than Rs 2.2 lakh and up to Rs 5 lakh, you will spend Rs 2,000 less on taxes.
However, raising the limit and providing a rebate does make a difference to a senior citizen (between 60 and 80 years of age). Had Chidambaram done the former, senior citizens would not have gained, their exemption limit anyway being at a higher Rs 2.5 lakh. So, in a veiled way, senior citizens are the beneficiaries of the move to give a rebate, says Shuddhasattwa Ghosh, Director, Tax & Regulatory Services, PwC. This could come as a welcome relief to seniors grappling with rising prices on the one hand and predominantly no regular stream of income on the other.
Another tax practitioner we spoke to has an alternate view. By not raising the exemption limit, the Finance Minister is perhaps making sure those in the Rs 2-2.2 lakh income bracket don’t fall out of the return filing net, says Rajesh Srinivasan, Leader, Global Employer Services, Deloitte. A return filed will help serve as a reference point for any review in future.
How the rebate will reach into our pockets is something that is clear. It will not be like a refund reaching us months after filing the return. A new Section 87 A has been added to the Income Tax Act for this purpose. This means that there will be a provision to deduct the rebate from the tax payable when filing the I-T return itself.

Finance is indeed a woman’s cup of tea ::Business Line


When the Finance Minister announced in the Budget plans to start an all-woman bank, it drew some predictable jibes from the male Twitterati. “A new bank only for women in India? The moment Zara announces its sale, this bank will announce its bankruptcy,” said one.
These reactions underline the stereotyping of women and money. Women splurge on shopping. They don’t get finance because numbers make their pretty heads swim. They get easily conned by get-rich-quick schemes….
But we know that this is complete rubbish. (After all, more than half the team that writes Investment World is made up of women.)
So we cite various studies that prove with data, just how wrong these beliefs are.

“WHAT! YOU SPENT RS 1,000 ON A PAIR OF SHOES??! LOOK HOW I GOT MY COOL NEW I-PHONE 5 AT 10 PER CENT OFF”.
WE HAVE ALL HEARD INNUMERABLE JOKES ABOUT HOW WOMEN ARE ADDICTED TO SHOPPING. WOMEN MAY ENJOY SHOPPING, MAY TALK ABOUT IT, MAY SPEND MORE TIME IN THE SHOPS OR BROWSING ONLINE AND MAY EVEN MAKE FREQUENT SHOPPING TRIPS.

MEN SHOP FOR LUXURY

However, data from UK’s 2012 Baines and Ernst survey on spending habits showed that men spend more than women on online purchases and on average spend 15 per cent more on credit card purchases. The higher online spending by men was observed in countries such as US and Australia as well.
The study also showed that online and offline, men tend to spend on luxury items rather than necessities.
The top spend of men is for liquor and big-ticket items such as cars and gadgets. Women shop more often and their purchases include essentials – kids’ and household items.

WOMEN DO ‘GET’ FINANCE

“Leave those complicated insurance brochures to me, sweetie. Let me do it for you.”
In most societies, men tend to take most of the financial decisions. But that doesn’t mean that women don’t understand finance.
In the Worldwide Index of Financial Literacy measured in 2012, both men and women in India received the same score of 60 points.
The scores were given by assessing three aspects of financial literacy - basic money management skills, investment knowledge and financial planning.
While Indian women have been closing the gender gap, data from other Asia/Pacific regions showed that in 10 out of 14 countries, women showed better financial literacy scores than men.
Also, the survey has seen an increase in women’s scores over the three-year period since it was started.
Across a wide spectrum of women, especially in rural and semi-rural areas, women’s self help groups and micro-credit programs have played an important role in increasing the level of financial literacy and in advancing women’s economic empowerment.

WOMEN EARN HIGH RETURNS

“Forget those dull FDs. Give me that Rs 20,000 and I’ll double it for you in a month”. Women save more and even without a direct source of income, 60 per cent of women in India who are housewives are able to save a minimum of 5 to 10 per cent of their household income.
It is widely believed that women’s higher risk aversion deters them from achieving high returns.
But a study by consulting firm Rothstein Kass found that female hedge fund managers handsomely beat the global hedge fund index return of 2.7 per cent, by earning a 9 per cent through the third quarter of 2012.
Over a five year period, women led funds outperformed both the HFRX Global Hedge Fund Index and the S&P 500.
A risk adverse attitude that potentially helps escape market volatility was cited as the reason for the out performance.
In the US, a study over a 6-year period found that men trade 45 percent more than women and earn 1.4 per cent less annual net returns (risk-adjusted) than women. The lower return was attributed to the frequent trading by men, driven by over confidence.
Need we say more? These statistics show that, yes, women don’t invest for an adrenaline rush. But they sure can make a return if they set their mind to it.
So, beginning this week, let’s demolish those stereotypes and work on making smarter investment decisions.

Reliance Industries: Buy ::Business Line

 The 15 per cent tax break on investments of Rs 100 crore or more in plant and machinery over the next two years should help Reliance.

A crore isn’t enough to retire: ::Business Line