Best investment options for NRIs: Bank deposits, stocks and mutual funds ::ET

For the lakhs of Indians working abroad and their families back home in India, these are indeed good times. The sharp depreciation in the local currency means the money they send home fetches more rupees on conversion.

In fact, a World Bank report says that India's migrant workers are expected to rush back more dollars home this year to take advantage of the weak rupee. At an estimated $71 billion (Rs 4,40,200 crore), India will be the top recipient of official remittances this year. This is besides the huge sums of money sent back home through informal channels.

If you are among such NRIs, you would want to put the money to productive use by investing in high return generating instruments. Despite the ongoing slowdown, India continues to offer numerous investment opportunities for foreign investors, who do not enjoy such high rates in their country of work. The current volatility has created attractive entry points for NRIs across a range of asset classes. If you are looking to invest in India, what are the options you should consider? Before we delve into the choice of investments, let us consider the formalities and procedures that NRIs have to follow to be able to invest in India.

How to begin

If you wish to invest in India, the first step is to open a savings bank account. There are three basic types of bank accounts for NRIs.

Go for a non-resident external (NRE) rupee account if you are looking to remit overseas earnings to India and hold them in rupees, as also repatriate the proceeds of your investments back to your home country without any restrictions. An NRE account is completely tax-free and no tax is payable on the interest earned on the balance.

But you cannot put income from rent, salary and dividends in the NRE account. For that you need a non-resident ordinary (NRO) account. However, the interest earned on the NRO account is taxed at the marginal rate of 30% plus surcharge and cess. The balance in the account is also subject to wealth tax.

The advantage is that NRO accounts can be jointly opened with a resident Indian. If you do not wish to be exposed to exchange rate risk, you can instead open a foreign currency non resident ( FCNR) account with a local bank, where your funds are held in the foreign currency, and not converted to rupees.

In order to open an account, you can either visit the nearest branch of the Indian bank in your home country, if any, or send the completed application form (you can get it online) along with the documents to any of the branches in India (see box).

Public Issue of Tax Free Bonds-PFC Collection Figures at 5.00 p.m. as on 14th October 2013

POWER FINANCE CORPORATION LTD
	WITHOUT GREENSHOE OPTION			WITH GREENSHOE OPTION
							Unsubscribed
Category	Bonds Available	Response	Over	Bonds Available	Response	Over	Portion
	For Allocation	Recd	Subscription	For Allocation	Recd	Subscription	Rs In Crs
Category 1 (QIBs)	1125000	3200000	2.84	5813850	3200000	0.55	261.39
Category 2 (NIIs)	1500000	12026706	8.02	7751800	12026706	1.55	-427.49
Category 3 (HNIs)	1875000	6194500	3.30	9689750	6194500	0.64	349.53
Category 4 (RIIs)/NRIs	3000000	1898994	0.63	15503600	1898994	0.12	1360.46
	7500000	23320200	3.11	38759000	23320200	0.60	1543.88

STFC NON CONVERTIBLE DEBENTURES - SUBSCRIPTION FIGURES Issue Closed Today... (14 Oct)

STFC NON CONVERTIBLE DEBENTURES - SUBSCRIPTION FIGURES Issue Closed Today...
	WITHOUT GREENSHOE OPTION			WITH GREENSHOE OPTION
							Unsubscribed
Category	Bonds Available	Response	Over	Bonds Available	Response	Over	Portion
	For Allocation	Recd	Subscription	For Allocation	Recd	Subscription	Rs In Crs
Category 1 (QIBs)	150545	150545	0.60	500000	150545	0.30	34.95
Category 2 (NIIs)	22285	21955	0.09	500000	22285	0.04	47.77
Category 3 (HNIs)	2862504	2861004	3.82	1500000	2862504	1.91	-136.25
Category 4 (RIIs)	2747140	2676525	2.20	2500000	2747140	1.10	-24.71
	5782474	5710029	2.31	5000000	5782474	1.16	-78.25

IIFCL Tranche-1 TAX FREE BONDS - SUBSCRIPTION FIGURES (14 Oct)

IIFCL Tranche-1 TAX FREE BONDS - SUBSCRIPTION FIGURES
	WITHOUT GREENSHOE OPTION			WITH GREENSHOE OPTION
							Unsubscribed
Category	Bonds Available	Response	Over	Bonds Available	Response	Over	Portion
	For Allocation	Recd	Subscription	For Allocation	Recd	Subscription	Rs In Crs
Category 1 (QIBs)	750000	200000	0.27	3750000	200000	0.05	355.00
Category 2 (NIIs)	1000000	1212022	1.21	5000000	1212022	0.24	378.80
Category 3 (HNIs)	1250000	2603345	2.08	6250000	2603345	0.42	364.67
Category 4 (RIIs)	2000000	3814135	1.91	10000000	3814135	0.38	618.59
Total	5000000	7829502	1.57	25000000	7829502	0.31	1717.05

Kind Regards,

HUDCO TAX FREE BONDS - SUBSCRIPTION FIGURES Issue Closed Today....

HUDCO TAX FREE BONDS - SUBSCRIPTION FIGURES Issue Closed Today.....
	WITHOUT GREENSHOE OPTION			WITH GREENSHOE OPTION
							Unsubscribed
Category	Bonds Available	Response	Over	Bonds Available	Response	Over	Portion
	For Allocation	Recd	Subscription	For Allocation	Recd	Subscription	Rs In Crs
Category 1 (QIBs)	750000	1905025	2.54	4809200	1905025	0.40	290.42
Category 2 (NIIs)	1500000	3289328	2.19	9618400	3289328	0.34	632.91
Category 3 (HNIs)	2250000	5825265	2.59	14427600	5825265	0.40	860.23
Category 4 (RIIs/NRIs)	3000000	13040296	4.35	19236800	13040296	0.68	619.65
	7500000	24059914	3.21	48092000	24059914	0.50	2403.21

NHPC Ltd Tax Free Bonds ‘ 2013

Total Issue size
Rs.500 Crores with an option to retain oversubscription upto Rs.500 Crores for issuance of additional
bonds aggregating to a total of upto 1000 Crores.
Issue Type Tax Free Bond
Credit Rating “AAA” by ICRA , CARE & “IND AAA” by IRRPL
Minimum Subscription 5 Bonds (Rs. 5,000/-) across all Series of Bonds
Face value of 1 Bond Rs.1000 per Bond
Registrar To the Issue Karvy Computershare Private Limited
Coupon Rate Category IV :-
8.43% p. a. for 10 years (Series 1B) for Retail
8.79% p. a. for 15 years (Series 2B) for Retail
8.92% p. a. for 20 years (Series 3B) for Retail
Category I,II & III :-
8.18% p. a. for 10 years (Series 1A) for Non-Retail
8.54% p. a. for 15 years (Series 2A) for Non-Retail
8.67% p. a. for 20 years (Series 3A) for Non-Retail
Issue Schedule Issue Open Date : Friday, October 18,2013
Issue Close Date : Monday, November 11,2013

India's headline inflation at 7-month high, another rate hike seen

India's headline inflation unexpectedly hit a seven-month high in September, mainly driven by higher food prices, increasing the odds for yet another interest rate hike by the central bank at its policy review later this month.

The wholesale price index (WPI), India's main inflation measure, rose an annual 6.46 percent last month, the fastest pace since February 2013.

The reading compared with a 6 percent rise estimated by analysts in a Reuters poll. Wholesale prices had risen 6.1 percent in August.

The rise was mainly driven by higher prices of onions and vegetables. Onion prices were up an annual 322.94 percent in September, while prices of vegetables rose 89.37 percent year-on-year.

Worries over high inflation led new Reserve Bank of India (RBI) chief Raghuram Rajan to surprise markets in his policy review last month with an interest rate hike.

Economists are split over whether Rajan will hike rates again at the next review on October 29. However, Monday's WPI data has increased the odds for more tightening at that meeting.

"There was anyway a case for a rate hike based on the previous inflation prints, including the CPI (consumer price index). This number has reinforced the case for a 25 basis points repo rate hike by the RBI," said A. Prasanna, economist at ICICI Securities, Primary Dealership Ltd, in Mumbai.

Consumer inflation due later on Monday is expected to have quickened to 9.60 percent last month from 9.52 percent in August, according to a Reuters poll of economists.

Indian bonds slumped and the rupee weakened after the WPI data raised expectations for a rate hike.

India has characteristics that allow it to weather financial storms: José Viñals, IMF

A clear communication from the US Fed about its exit strategy from the monetary policy will ensure a smooth unwinding, says Jose Vinals, Financial Counsellor and Director, Monetary and Capital Markets Department of IMF. In an exclusive interview with ET, he says emerging markets need to prepare for the unwinding. Excerpts:

What kind of implications does the current US government shutdown and the debt ceiling standoff have for the world economy and the financial system?

We are dealing with two things here. At present, it is the government shutdown whose main impact is on the economy, and as long as this is not prolonged, its impact would be limited. Then there is the debt ceiling that is a more serious issue. If the ceiling were not to be lifted, there would be a very severe fiscal contraction which could jeopardise the economic recovery in the US.

In addition, there is a third scenario, which I think is a tail risk, and not something which has high probability, but will be very detrimental. If there were a default on the part of the US Treasury on servicing its debt as a consequence of not lifting the debt ceiling, it would create tremendous problems at the global level, given the key role that US debt has in international financial markets. That is a shock which the policymakers in the United States really must avoid.

What is your assessment about the timing of tapering's actual beginning and subsequent tightening?

In terms of tapering, the Fed has very clearly stated that it will only start when there are clear indications that the economic recovery in the US is sustainable. That is why it did not start in September. But, the tightening should start much later. Markets are thinking that is not likely to begin until the second half of 2015. The working assumption at the Fund is that this would more likely start only in 2016.

Do you foresee any change in Fed's stance with the changes at the top level?

The Fed now has a framework, for example, in terms of tapering and tightening no matter who is the chairman. It is very important to ensure continuity and clarity. Janet Yellen is now the vice-chairman and she is going to become the chairman. And, she has been party to all of the agreements that have been taken so far. So, I think, the framework is more important than the person.

How should emerging market economies deal with it?

I think emerging economies do have to prepare, because in the past they had benefitted very much from very favourable external conditions. If we now have to move towards an environment with tighter monetary conditions, it is likely to lead to capital outflows which will result in higher interest rates in emerging markets. This is a challenge at a time when the growth of these economies is slowing down.


It is very important that emerging economies have policy frameworks that are very credible to investors, are consistent with keeping inflation under control, preserving or regaining a more balanced picture for the fiscal account, and also putting in place adequate structural reforms for growth. All these are on the macro side.

On the financial side, it is essential that emerging economies look at the potential vulnerabilities in the corporate sector and the banking sector, to ensure that there are sufficient buffers to cope with any fragilities that may be there. If push comes to shove due to tensions in the markets, exchange rates should be allowed to depreciate to facilitate the adjustment. Central banks should stand ready to provide liquidity to markets so there are no dysfunctional markets which could cause disruptions.

India saw a very sharp depreciation of its currency recently and policy measures were taken that have helped the currency recover. Are policy measures or intervention a good idea or should the currency be allowed to depreciate?

I think what the authorities in emerging markets have to do is to facilitate the adjustment of exchange rate so that it moves in line with the fundamentals, while making sure that these adjustments in the exchange rate remain orderly. That is something that may call for some support on part of foreign exchange intervention. So having an adequate degree of flexibility of the exchange rate is very important and interventions should take place only when needed for orderly adjustment of foreign exchange markets.

How well placed is India to deal with such an event (QE taper)?

Policies that were introduced and some of the initiatives that Raghuram Rajan (the new RBI governor) has brought in are very important at this juncture. India has characteristics that allow it to weather storms, like the low level of external debt compared to other emerging markets, adequate foreign reserves and flexible exchange rate. India needs to be careful about corporate balance sheets, as some of them are stretched particularly in the context of lower growth. And, the fundamental thing is to move ahead with the necessary policy changes. Many of them are in the non- financial dimension that can ensure the credibility of the overall government policy. This will ensure stability for India even if international conditions become tight.

IMF has steeply cut growth forecast for India for FY14. Can the country return to 8%-plus growth range any time soon?

It is hard to predict because whatever forecast you make is conditional to policies made by the government. What can be said is that by keeping inflation under control, restoring health of public finances and undertaking structural reforms that enhance its potential growth, India would be closer to where everybody would like it to be, given the size of the economy and how important it is not just for Asia but also for the world economy.

MRPL: Buy :: Business Line

Five good funds you can consider for tax saving :: ET

It is well established that the stock markets have not delivered good returns over the past five years. Among the non-performers are the equity-linked saving schemes (ELSS), popularly known as tax saver funds.

These are equity-based funds, which allow a tax deduction under Section 80C. A lot of people will advise you against investing in ELSS funds in the current market. After all, the average return from this category has been a meagre -0.96% over the past year, -2.13% in the past three years, and 9.42% over the past five years.

The Public Provident Fund (PPF), with a return of 8.7%, would seem a better bet since you earn an assured return without having to weather the volatility that is part and parcel of investing in equities.

On the contrary, it would serve you well to invest in both the PPF and ELSS. Your exact contribution to each should depend on your asset allocation.

Also, remember that the returns in financial markets tend to revert to the mean. When an asset class has been faring badly for a while, it is usually the best time to invest in it. As Sanjay Sinha, founder, Citrus Advisors, a Mumbai-based wealth management firm says, "The point-to-point return for equity schemes is influenced by the state of the market at the time of comparison.

The equity markets have not done well in the past one, three or five years, if you review the performance now. However, the picture would have been dramatically different if you were looking at their returns when the Sensex was at 21,000. Besides, a healthy dose of equities through the ELSS route gives the investor the extra edge he needs to beat inflation."

So, despite the current apathy towards equities, it is advisable to invest in ELSS funds. To help you with the selection, we have analysed five funds that are sound from both the risk and return perspectives.

Canara Robeco Equity Tax Saver

AUM: Rs 560.34 crore

Expense ratio: 2.45%

Fund manager: Krishna Sanghavi


This large-cap growth fund was started in March 1993. It currently lags behind its benchmark over the one-year horizon, but is ahead in the three- and five-year periods.

It has also achieved the commendable feat of beating its benchmark in each of the past five calendar years. The fund has a diversified portfolio, and currently holds 54 stocks, which is higher than the median count of 42 for the ELSS category. The fund's concentration in the top 10 sectors and top 10 stocks is lower than the respective medians for the category.

Its expense ratio is lower than the category average of 2.52%. It has avoided too high an allocation to cash over the past year (average 5.05%).

The fund's level of risk—measured by standard deviation and beta over the past three years—is lower than the median for the ELSS category, while its risk-adjusted return—measured by Treynor and Sharpe ratios calculated over three years—is higher.

Three fund managers have run this fund over the past four years. The sound returns indicate that the fund house has strong systems and processes in place so that performance is not affected by the changes in personnel. Nonetheless, investors are likely to be happier with greater stability at the helm.

Franklin India Taxshield

AUM: Rs 900.05 crore

Expense ratio: 2.49%

Fund manager: Anand Radhakrishnan, Anil Prabhudas

This large-cap growth fund was started in April 1999. It is currently ahead of its benchmark on the basis of year-todate returns, and over the one-, threeand five-year horizons. It has beaten its benchmark in three of the past five calendar years.

The fund invests in a blend of growth and value stocks. Fund manager Anand Radhakrishnan adopts a bottom-up approach and chooses stocks based on fundamental research. He has a medium-to long-term perspective and avoids momentum stocks.

Both quantitative and qualitative parameters are used for stock selection, combined with an understanding of the quality of business and management. The fund manager likes to diversify his portfolio across sectors and market caps. Says Radhakrishnan: "The fund has not hesitated to pick mid- and small-cap ideas where it perceives favourable longterm potential.

The idea is to have an optimum mix of large-, mid- and smallcap stocks, which can help the fund deliver superior risk-adjusted returns across market cycles." The fund holds 49 stocks in its portfolio, which is marginally higher than the median for the category.

Its concentration in the top 10 sectors is slightly higher than the category median, while the concentration in top 10 stocks is a bit lower. Thus, the fund is neither too concentrated nor too diversified.

The fund manager tends to buy and hold stocks. Over the past year, the turnover ratio of this fund has averaged 40.68%. The fund's expense ratio is lower than the category median. In the one-year period till August 2013, cash allocation has been slightly on the higher side at an average of 7.08%.

The fund's level of risk is lower than the category median, while its risk-adjusted return is higher. Over the past five years, the fund has given a CAGR return of 13.49%, which is good in the current circumstances.

 

Are you going to be fired? Tips to navigate in tough job market :: ET

Steve Jobs was fired from Apple in 1985. It was one of the best things that happened to him—he built Pixar, which ultimately contributed more to his personal wealth than Apple did even after his return.

Rejection or a dip in career is not always a bad thing. In fact, it can set you on a growth curve that can prove more rewarding. For, tough times often bring out the best in an individual. The current job market has the potential to place you in such difficult scenarios or pose serious dilemmas. What if you lose your job? How will you survive emotionally and financially? Will you get a new job? How can you hold on to it and make a better career?

If you are grappling with such questions, read on to find the answers that will help your career stay on track.

Are you going to be fired?

If it's not about you: you are a good employee. However, you may still get the pink slip if the business is down and your employer takes the decision to right-size the firm. So, it's important to watch out for danger signs. One of the first things you need to notice is if the firm has stopped hiring. Initially, all growth hiring is put on hold, followed by zero replacement for the people who leave. Keep track of news about your company, both in media as well as on the office grapevine. A slowdown in the industry, huge company debt, massive drop in the stock price, even your client going through a rough patch are events that should worry you.

A drop in revenue or increased expenses lead to obvious red flags, such as no increments or bonuses, delayed payments to vendors, and finally, no salaries for employees. Your chances of getting laid off go up exponentially in such a scenario, especially if your position or your team does not contribute directly to the firm's profits in an easily measured fashion. Add a leadership change to the brew, and you get a new CEO who is eager to reverse the firm's fortunes by downsizing to cut costs. Recognise the signs and prepare accordingly.

Reader's view: Diwali Pick?

What is YOUR diwali pick for next 1 year?

Post comments below

1. AnonymousOctober 14, 2013 at 11:08 AM

   Buy Tata group companies:
   1. TCS
   2. Tata Motors
   3. Tata Steel
   4. Titan
   
   All great company. I Love Tata
2. 
   nileshgangwalOctober 15, 2013 at 5:45 PM

   reliance
   ranbaxy
   arvind
   jp associates
3. 
   AnonymousOctober 16, 2013 at 9:49 AM

   Indiabulls Securities
   Essel propack
   Biocon
   Aurobindo Pharma
4. 
   AnonymousOctober 16, 2013 at 9:50 AM

   India Infoline
   PVR
   Eros
   ITC
   TCS
5. 
   AnonymousOctober 16, 2013 at 9:51 AM

   Buys all Pvt sector banks
   HDFC
   Axis,
   ICICI
6. 
   VivekOctober 16, 2013 at 11:16 PM

   ITC and HUL and my Picks
7. 
   SugataOctober 16, 2013 at 11:16 PM

   BUY Reliance. That is best company

   ReplyDelete
8. 
   VinodOctober 20, 2013 at 7:45 PM

   Indiabulls securities will annoucing dividend ..and jump to 20+
9. 
   Technical AdvisoryOctober 22, 2013 at 1:45 PM

   As expected Nifty hold 6200 hold and finally closed at 6230 above. Over all trend is good and nay decline to buying opportunity.
   
   Bank Nifty consider support 10500 hold abovetarget 11000-11500 in near term.
   
   Aditya Birla, ACC, Hero Motor, Mahindra and Mahinra, Bajaj Auto, ICICI Bank, ITC, Axis Bank likely dark horse and today buy side.
   
   IN Commodity Market.
   
   gold - Silver near to fresh break out and buy side.
   
   Copper sell on rise.
   
   Happy tradin day.
   
   For long term investors.
   
   Market given break out above...6000
   so big rally in coming months not today and tomorrow....
   and stay invested in the market and buy on decline strategy
   in front line stocks.....
   
   May double or tripple in coming months/years.

Indiabulls Secuties- Top pick for Diwali - Target 20 (60% upside in 1 month)

Indiabulls Secuties- Top pick for Diwali - Target 20 (60% upside in 1 month)

Investment Focus - Shree Cement: Buy :: Business Line

Technicals -Titan, KEC International, PC Jeweller, Shree Ganesh Jewelry, Accelya Kale, R S Software, Idea Cellular :: Business Line

PFC tax-free bonds: Topping the rate chart :: Business Line

Consider a strategy with Tata Motors stock, DVR :: Business Line