19 September 2013

Gold, silver surge on strong global cues


Bullion graphicThe prices of both the precious metals, gold and silver, jumped in the national capital on Thursday on frantic buying by stockists triggered by a rally in overseas markets.

While gold zoomed up by Rs 410 to Rs 30,810 per ten gram, silver jumped up by Rs 990 to Rs 51,200 per kg on increased offtake by stockists on the back of firm global trend. 

Sentiment turned bullish after gold jumped the most in 15 months in overseas markets after the Federal Reserve unexpectedly refrained from reducing the pace of monthly US bond purchases, increasing demand for the metal as a store of value, traders said.

Gold in New York, which normally set price trend on the domestic front, shot up by $55.30 to $1360.30 an ounce and silver by 5.64 per cent to $23.04 an ounce. 

Meanwhile, hike in import duty raised fears of restricted arrivals and further influenced the market sentiment, they said. 

On the domestic front, gold of 99.9 and 99.5 per cent purity zoomed up by Rs 410 to Rs 30,810 and Rs 30,610 per 10 gram, respectively. 

It had gained Rs 300 in the previous session. 

Sovereign followed suit and rose by Rs 100 to Rs 25,100 per piece of eight gram. 

In a similar fashion, silver ready rallied by Rs 990 to Rs 51,200 per kg and weekly-based delivery by Rs 1,140 to Rs 51,200 per kg. The white metal had gained Rs 680 on Tuesday's trade. 

Silver coins spurted by Rs 1,000 to Rs 85,000 for buying and Rs 86,000 for selling of 100 pieces.

Not yet time to buy rate-sensitive stocks :Chief Investment Officer, HSBC Asset Management: Business Line

Amidst hope that economic growth could come out of its slumber sooner than later, Tushar Pradhan, Chief Investment Officer, HSBC Asset Management, thinks there is a long way to go before a turnaround.
Be it cyclical stocks, rate sensitive ones or defensives, there is nothing much to be optimistic about for the next one year, he feels. Excerpts from an interview:
This week saw good news on macroeconomic front — a narrowing trade deficit and an upbeat industrial production. Are these green shoots sustainable ?
This is not a recovery. Economic growth is on its way down compared to last few years. There is no conducive climate for investments.
Delays in planned projects are leading to a lot of circumspection . If we look at what is going to drive GDP growth, then consumption seems to be the only one.
Given that the fiscal deficit target set in the budget remains, and knowing that we have some non-plan expenditure which is way beyond what was expected, it seems that the manoeuvring ability to spend now is limited. So in that sense, government expenditure is not going to help GDP growth at least till middle of next year.
That leaves us with private investment. This has been absent for almost a year. I don’t know how we can be out of the woods unless these issues are addressed.

Morgan stanley -Global Metals Playbook 3Q13

Morgan Stanley -Global Autos

Financial Planning- Sept 19th :: Business Line


   


Morgan Stanley -What If the Tide Goes Out :PDF link

Bharti AXA’s Secure Income plan-- Offers regular cash flows :: Business Line

Bharti AXA’s Secure Income plan is a traditional, non-participating endowment plan with a guaranteed monthly income. The premium payment term is 5/7/10 years for policy periods of 15/17/20 years. Sum assured is 11 times the annual premium for policy terms of 15/17 years, and 13 times the premium for a 20-year policy.
After the end of the premium payment term, the policyholder will receive a monthly income. This is guaranteed at 8 per cent of sum assured. Besides this, there is also a guaranteed addition to the policy annually, from the year after the premium payment term completes until the maturity of the policy. The annual guaranteed addition will be 7 per cent of sum assured for a 15-year policy, 8.5 per cent for 17-year term and 10 per cent for 20-year term.
On maturity, the policyholder gets the sum assured plus the guaranteed additions. In the case of death, the policyholder’s nominee gets higher on the sum assured plus guaranteed additions, or 105 per cent of premiums paid, or 11 times of the annual premium (13 times in case of a policy with a 20-year term).

LOW RETURNS

A guaranteed monthly income plus a guaranteed addition to the policy are the highlights of the plan. But, when we compare this to the premium one has to pay, the net returns under the plan come to 4 per cent — at par with other similar products in the market. A person who is 30 and takes a 20-year policy with Rs 50,000 as annual premium for 10 years, will receive an annual income of Rs 24,885 from the 11th year. Also, after maturity one might get Rs 6,22,122.

OUR OPINION

If you are in the age band of 30-35 now, note that the policy will end when you are around 50-55 years, and you would be without a life cover at a time when you will need it the most. For young investors, our recommendation is to take a plain term cover and put the balance savings in PPF or the National Pension System (NPS). With PPF too, one can get tax benefits — the principal, the interest and the maturity proceeds are tax exempt. For 2013-14, the PPF interest was 8.7 per cent— though this is subject to revision every year by the Government. In NPS, you can choose your investment vehicle with a maximum of 50 per cent in equity and split the rest between government securities and corporate debt instruments. Charges are very low, working out to just 0.6-0.8 per cent per annum. If you have a stomach for risk, you might also consider some balanced equity funds and start a systematic investment plan.

Morgan Stanley -Maritime Industries Overview :PDF link