Archives 2021

USD to INR Price and Forecast is expected to go up in times to come. This is very important for you to hedge accordingly irrespective of the nature of your profession.

Please find the current USD to INR Price and forecast

Forecast by 2030 is of 100+.

Here INR is the Indian rupee and our currency.

On the other hand, we have US dollar which is labelled as reserve currency of the world. Most of the trade in world happens in US$ and its price movement, majorly measured through Dollar Index decides the strength and weakness in major commodities like Nickel, Crude, Gold, Natural Gas, etc.

There are innumerable factors that influences the conversion rate of a currency like:

1. Macroeconomic factors

Higher rank in terms of strength and efficacy of a country’s institutions and policy makers leads to lower yields. Effectiveness of government and its policy, its accountability and strength of the legal system—are qualitative measures of the degree to which a respective sovereign borrower can be expected to implement policies and measures that are consistent with sound management of the economy in general and of its debt obligations.

Health of a currency is directly proportional to the macroeconomic factors of a country. In the case of India, the reforms which started in 1991 are supplemented by key reforms like GST, Demonetization, NCLT, RERA, Jan Dhan, etc. which will be long term beneficial for India’s growth.

2. Inflation

India had significantly higher inflation in the last decade compared to US. It was hovering around 4-7% where in it was around 1-2% in US. Even now and in times to come, it is expected that inflation differential in between India and US will be around 5%. USD to INR Price and Forecast is expected to go up it by at-least the differential amount.

3. Interest Rates

When interest rates are kept at zero by US Fed, RBI in India has cut down the repo rate by 25 basis points to 5.15% from 5.75% in Aug’21. In the same line, the reverse repo rate was also reduced to 4.9% from 5.5%. This huge difference in interest rates speaks for two economies and hints at depreciating rupee in long term.

Our higher interest rates as compared to western world puts pressure on our currency.

4. Public Debt

As of Marcg’21, India’s external debt was placed at US$ 570.0 billion, recording an increase of US$ 11.5 billion over its level at end-March’20. The external debt to GDP ratio increased to 21.1 per cent at end-March 2021 from 20.6 per cent at end-March 2020.

Valuation loss due to the depreciation of the US dollar against Indian rupee and major currencies such as euro and pound sterling was placed at US$ 6.8 billion. Excluding the valuation effect, the increase in external debt would have been US$ 4.7 billion instead of US$ 11.5 billion at end-March 2021 over end-March 2020.

With the plans of government for this decade, public debt is expected to rise and will exert pressure on INR valuations vs US dollar.

5. Demand and Supply

Indian money is in demand not only from the domestic market (for any transaction), but also from foreign money that needs to enter the country (exchanging dollars or other currencies into rupees). If there is remittance, it is also in demand (earnings outside India flowing back through people working there, or foreign operations of Indian companies, or exports).

On the other hand, supply happens from RBI printing the money and when currency is leaving the country and being exchanged for dollars. It is also supplied when we import things as the price has to be paid in US$.

Over a long period of time, this equation will lead to net flow of dollar outside India at least till 2030 and will lead to INR depreciation. One of the major factor here is the import of Crude which is expected to double from current capacity by 2030-35 and will lead to pressure on INR.

6. Economic Growth

India is expected to grow at 10% this financial year, 2021-22. With better economic growth, there are investment avenues generated in the country which attracts foreign capital. Also, higher GDP growth lead to lower yields. First, government tax revenue increases leading to lower deficit and debt levels and gives better financial resources to service debt. Second, as we attract more foreign capital investment, which increases our US Dollar reserves, it allows us to service our debt easily.

7. Current and Fiscal Account Deficit

In the case of India, both of these are negative. Currently, fiscal deficit is around 6%. India’s current account balance recorded a deficit of $8.1 billion (1% of GDP) in the quarter ended March 2021 (Q4FY21) on the back of a higher trade deficit and lower net invisible receipts. Higher fiscal  and current account deficit mean higher yields and pressure on currency.

8. Central Bank Intervention depending upon whether it’s a free market currency or fixed.

India’s currency exchange is free and market driven. However from time to time, there is intervention by central bank to absorb shocks but they don’t interfere with the free market dynamics and policies. Our currency has depreciated from 45 in 2011 to 75 in 2021, close to 67% in 10 years and the trend is expected to continue. 

With above factors in consideration and most importantly, with no current plan by Indian Government to position INR in international trade as a big reserve currency for other countries, which could have protected its down side in case of depreciation, our prediction for USD to INR is 100+ by 2030.

For more updates on Forex and Bonds, Please find the link below :

More updates

Our last article on Gold rate today and Gold’s price prediction was in April’21 and since then, it has been a volatile ride for Gold and its investors.

Gold rate today and Gold’s price prediction for near future are:

Gold today is most undervalued amongst all the financial asset classes and it may go up to its lifetime high by end of 2022.

Weakness in US dollar, no sign of increase in interest rates post-Jackson Hole symposium in Aug’21 and demand for physical gold due to fast approaching festival season in India are all positives for this precious metal.

 At the highly anticipated Jackson Hole symposium last month, Fed Chair has indicated that any withdrawal of stimulus will be gradual, which is bullish for gold. Though its price movement is not expected to be linear amid the risk-on sentiment in stock markets, we advocate accumulating it at current and lower levels.

The central banks like Russia, China, and other banks are also adding gold to their reserves, which will keep its demand high. ETF buyers are also adding to their gold holdings as an inflation hedge. Global equity markets too are at very high levels and any correction in them will create more demand for this safe-haven asset.

Please find few other key reasons for our above Gold’s price prediction:

1. Higher Government Debt across the world – Please find debt of few major countries in the world,

 As the size of Fed balance sheet keeps increasing because of debt monetization, it leads to an extended time and era of negative real interest rates which is very bullish for gold prices.

2. Higher Stimulus by central banks since March’20 – It dilutes the value of money and hence positive for asset prices like Gold.

3. Negative Real Yields – Real yields with high inflation and lower interest rates are here to stay and this will drive Gold to new highs. We expect this to continue and have a long term price target of gold closer to INR 250000(Per 10 gram) and $12500 (Per ounce) by 2030. Also US fed chairman, Jeremy Powell has finally admitted on 29 Sep’21 that inflation is not transitory and is expected to stay at elevated levels.

4. Geo Political Risk – This century from 2000 started with dot com bubble burst, 9/11 attacks, Global financial crisis, Covid 19 pandemic, etc. All these scenarios lead to investors and liquidity rush to Gold. The recent incidents of Taliban taking over Afghanistan and AUKUS alliance in between US, UK and Australia will only increase the tension in between world super powers.

Hence, we can conclude that this a good time to be accumulating gold. It has consolidated well enough after a stupendous rise in 2019 and 2020 and is posed to make money again for its investors.

Please click here to read more about our reviews on Gold :

Nifty 50 market cap has hit a record high of 137,865,624 million INR on Friday, 3 Sep’21 with Nifty 50 closing at an all-time high of 17323.

Please find Nifty 50 constituents  and their current market cap:

The current level of Nifty 50 is:

This is testimony to our last post on 23’rd Aug’21, wherein we gave the target of 17100-17300 for Nifty 50.

This rally was supported and backed by better than expected Indian economic numbers that came this week :

1. April-June quarter GDP expands 20.1% YoY
2. Nominal GDP growth at 31.7%
3. GVA expands 18.8% YoY
4. Construction sector growth at 68.3%
5. Manufacturing sector growth at 49.6%
6. Mining sector growth at 18.6%
7. April-July fiscal deficit nears Rs 3.21 trillion

India’s Gross Domestic Product (GDP) for the April-June quarter (Q1) of the ongoing financial year 2021-22 expanded 20.1% YoY, as per data released on 31 Aug’21. The sharp rise in Q1 GDP data can be attributed to a low base last year. In the April-June quarter of 2020, the economy contracted 24.4% due to the Covid-19 lockdowns. The economy grew by 1.6% for Q4 of FY21.

The reflection of above was clearly visible on nifty 50 move.

The final push on Friday was given by Reliance as its closer to its all time  high of 2400 with green energy speech and plans by Mr. Mukesh Ambani.

While India has picked up after covid 2’nd wave, there are still following challenges in rest of the world:

1. Crackdown on tech and private sector in China by authorities
2. Delta  and new variants of Covid posing a challenge in developed countries like US, Euro Zone, etc.
3. Global supply chain staying disrupted because of covid 19 bottlenecks.
4. Growth numbers receding in US. On Friday , 3 sep’21, non farm payroll data came in at 235k, much lower than the forecast of 750k. Non-farm Payrolls measures the change in the number of people employed during the prior month, excluding workers in the farming industry. Given that full employment is one of the Federal Reserves mandates, a weaker than forecast reading is generally negative (bearish) for the USD and signals that Fed support is going to continue without taper.

With above background, India has outperformed other benchmark indices across the world and we expect it to continue for remainder of this year.

In short term, Nifty has achieved its target of 17300 and can follow a consolidation.

Now, some pullback and correction can follow which can be in the range of 5-20%.

Our stance in short term is cautious with profit booking and a micro based approach through individual stocks rather than on Index.

Please find our short term calls:

1. Nifty 50- 16600-17600 range.
2. Bullish on RIL, Tech and FMCG.
3. Bullish on Banks and Insurance.
4. Bearish on Auto’s because of less than expected demand and semi-conductor issue.

For more equity updates, please find our link:

Equity Updates

There can be innumerable ways to invest but there are selected few if you want to invest for wealth.

More often, the focus while investing is on returns and not so much on capital invested. We should realize that higher the invested amount, higher will be the gains. Hence, base should always be considered. Also, investment is about protection of capital first and then gains. If we take high risk for high returns and end up losing our capital, then it’s virtually impossible to make up for it through gains from other investments.

For example,

Here, if an investor takes an extra risk for high return of 25% and ends up losing his capital, then his other investment with returns, will not make up for his original amount. He has to wait for few years now to just recover his original amount.

With this caution, lets explore few ways to invest for wealth:

1. Index Funds

Index funds are mutual funds associated with a particular index like,

Sensex

Nifty

Nifty IT

Bank Nifty

International Market, etc.

These funds buy securities in same proportion as they are in the above respective indexes, to create a mirror image of them.

If an investor thinks, that in coming time, NiftyBank will do better than Nifty, then they can go ahead and invest in that particular index rather than investing in entire sectors through Nifty.

Also, risk for the invested amount gets diversified as the amount goes into multiple securities of that index. This means that if one security falters in its earnings and returns, it is made up by others.

They have given close to 12-14% CAGR in the last 10-15 years.

2. Equity Mutual Funds

These collect money from investors and invest them in equity. Here a large pool is accumulated and invested in a basket of stocks to generate returns. There are close to 2000 mutual fund schemes in India which offer multiple options for investors to choose as per their risk appetite and aptitude. The advantage of this option is that returns are at par with equity with no effort by an investor of scanning multiple ideas to invest into. Here a professional expert will manage money by finding companies which offer growth and high returns.

They have given close to 8-12% CAGR in last 10-15 years.

3. Debt Mutual Funds

These are instruments which invest in Debt/ Bonds issued by companies, PSU’s, government to generate returns. They also offer multiple options to investors to choose from a plethora of options like:

• Dynamic Bond Fund
• Short term Bond Fund
• Liquid funds
• Floating rate funds, etc.

They offer consistent and steady returns with very less volatility.

They have given close to 4-10% CAGR in last 10-15 years.

4. Cryptocurrency

Bitcoin, also called a cryptocurrency, has gained and moved from almost no value in 2007 to a high of $60,500 in April’21.

These are the latest options to invest and are immensely popular right now for their ability to give parabolic returns and having highest beta amongst all investment classes.

There are platforms like WazirX, etc. through which an investment can be made into these.

Also, there are many cryptocurrencies to choose from like Bitcoin, Ethereum, Dogecoin, etc.

They have given close to 500-3000% CAGR in last 10-15 years. The returns can vary depending upon the currency chose.

5. Share / Stock Market

Invest in share market is a fancy and dream for virtually every investor and each one of us have taken the plunge at least once in our lives to do it.

Share market, like any other market place, is a common ground for buyers and sellers to meet and enter into a transaction. As long as the fundamentals of trade are followed like valuations, time horizon, limited risk, etc., there will be no challenge in an investment call.

Investment in share market, as the term investment suggests should be done as per the fundamentals and principles of investing.

However, if someone wants to trade and speculate, then it should be done with that strategy, skills and mental approach.

The choice has to be made by you and an apt action can be taken then.

This investment option asks for a lot of effort by an investor to go through various data points like balance sheets, earnings, debt, etc. of a company to decide to invest and stay invested. Hence this option should be made by investors who are ready to put it in this effort and also have time to do so.

They have given close to 0-1000% CAGR in last 10-15 years. The returns can vary depending upon the company chosen and the constructed portfolio.

6. New pension Scheme

This scheme was announced by the government of India in Dec’03. Under this scheme, an individual can choose to invest systematically for a number of years and then on retirement, 60% of the maturity amount can be withdrawn and remaining 40% has to be invested with a life insurance company for an annuity plan. Annuity means that the interest on capital is paid on a monthly, quarterly, half yearly or on a yearly basis. The return that will be given by an insurer depends on the product and macro conditions at the time of investment.

7. Pradhan Mantri Vaya Vandana Yojna

This scheme was announced by central government for senior citizens, above 60 years of age. This came into existence in 2017 and will be available till Mar’23. Under this scheme, an individual can invest a maximum of 15 lacs and minimum amount of approximately 1.5 lacs depending upon the mode of return (monthly, quarterly, half yearly or yearly). Currently, when the interest rates are low and hovering around 5% for most of the investment products, this scheme is still assuring a return of approximately 7.4%. The tenure in this scheme is 10 years. It is one of the great products available for individuals looking for a high monthly return and safety of the invested capital.

8. Bank Fixed Deposits / FDs

Many banks offer products where in you can either choose to invest for a certain period or invest a lump sum for a monthly income. Depending upon the requirement, returns can be immediate or after a certain duration. The frequency of returns can also be chosen out of monthly, quarterly, half yearly or annual options. The interest rates for this product is around 5.2% currently and can vary on a bank to bank basis.

9. Insurance Schemes

These primarily offer protection to an individual in case of an eventuality. Every earning executive should be insured so as to make sure that their family members and dependents don’t suffer a financial loss, in case of a sudden death.

This protection also comes with returns to give value to investors.

However, the primary purpose of these instruments should be to buy life cover.

They have given close to 2-12% CAGR in last 10-15 years.

10. Real Estate

This is very tricky option for investors as it requires a large sum of money compared to above options to invest into and the entry and exit cant be as swift and easy as in the case of other parallel options.

If there is an opportunity where in an investor thinks that returns can be decent as per their expectations, they may take a call in it.

This option also gives you a monthly income if the property is rented out and thus offers consistent rewards along with long term appreciation.

Various options available with-in this asset class are Flats, House, Commercial property, land, etc.

11. Gold

Since 1971, when it was freed from Currency backing by US, gold has given parabolic returns to investors. It’s not an asset class but a currency. It has retained its value from many centuries and is an international play. There are many factors that contribute to fundamentals of gold like inflation, geo political risk, growth, interest rates, real interest rates, etc. In the long run, it has the power to fight inflation and offers a high state of safety to investors in tough economic situations when every other asset class may suffer serious damage.

It has given close to 9-13% CAGR returns in last 10-15 years.

Our Recommendation

It is clear from above options that there are numerous ways to invest basis an investor’s appetite and time horizon.

The tax implications are also very different for various financial instruments and should be considered while choosing them.

We would say that it is still a very custom based approach depending upon an individual requirement.

The aim of this article is to give a fair idea to an investor to understand multiple avenues so that he is well informed before taking any action with his money.

Please read our other inputs on investment:

More about investment avenues

Sensex and nifty today rose by close to half a percentage points to close at :

Sensex – 55,555 up by 226.

Nifty – 16,496 up by 46.

Please find the current price of Nifty :

After the scare of last week and Friday, that US Fed will be going for tapering in 2021 itself, which will eventually tighten the liquidity in market, there was some welcome respite today.

We have a US Fed meeting this week on Thursday and it is expected to be a mix of dovish and hawkish stance.

The scenario currently is kind of goldilocks where in the key data points:

1. GDP growth.
2. Inflation.
3. Consumer sentiment Index.
4. Unemployment and Jobs Data.

all suggest that the best of growth and inflation is behind us.

Inflation getting moderated and not rising further will ensure that monetary and fiscal stance will be accommodative by Fed and RBI.

With tapering growth numbers, there will be a continuous support by central banks to make sure that policy stance is conducive for growth.

Our own markets, Nifty and Sensex, after making a high in Feb’21 went into the consolidation zone because of Covid 2’nd wave in India. With the gradual opening up of economy and number of Covid cases receding with time, they finally broke out in June’21. Now with vaccination at full pace with 58 crore vaccinations given as of today, the severity of 3’rd wave, even if it comes will be significantly less as compared to second wave.

Even Nomura India business resumption index ( NIBRI ) last week clearly highlighted that Indian business activity rebounded far strongly and quickly as compared to first wave.

With above background and breakout from 16000 levels for Nifty and 53000 levels for Sensex will ensure that we will be going for a target of:

Nifty – 17100-17300.

Sensex – 56500-57000.  

With positive stance and steps taken by government in last so many years and major ones like,

1. Corporate Tax cut in 2019.
2. PLI and make in India scheme in 2020
3. Budget session in 2021 indicating stake sale in PSU’s, big infrastructure and investment push, etc.

will drive and has the potential of making India return to its earlier growth percentage of 8-9%.

This will ensure that above targets for Sensex and Nifty are backed by fundamentals too and not just by liquidity.

Any correction will be a buying opportunity as of now and the stars of this rally will be:

1. Financials – Large banks like ICICI, HDFC, Kotak, etc.
2. Metals – Both ferrous and non-ferrous like Tata Steel, Hindalco, Hindustan Copper, etc.
3. PSU’s – We are bullish on the entire PSU basket including banks like SBI, Canara and others like ONGC, BPCL, etc.
4. Auto’s – We are bullish on OEM’s and Auto ancillaries companies like Motherson Sumi, M&M, Maruti, etc.

Do read our other inputs on Indian stock markets at :

Equity Updates

Since our last article on Indian equity markets on 10’th April’21 ,wherein we mentioned about the imminent second wave of Covid 19 and its impacts, it has been few tough weeks. After a tight consolidation in a very strict range, its time for resilience and rise of key Indian Indices.

We suggested that market will be in a range of 14250-15000 and let’s wait to see the direction taken by market amidst this health mayhem.

Well, as our title suggests, it rose and was resilient.

It not only took strong support at lower levels but also tested upper end of the range at 15000. It has been 3 weeks of consolidation and the direction of market now is clearly hinting an upside from current levels.

There was a correction on Friday from highs as we approached the weekend but that should now be seen as a correction of an uptrend.

If we look at the mother market and major US indices:

1. Dow Jones – In the month of April’21, it touched a high of 34k from 33k in March’21.
2. S&P 500 Index – In the same period, it touched a high of 4200 from 4000.
3. Nasdaq – It touched an all-time high of ~ 14200 from ~ 13400.

They all are making new highs even when US is at top of the list when it comes to number of people who have tested Covid 19 positive till date.

I am comparing our performance and mentioning US indices because our nation and Index companies are closely related to it.

Our Key sectors:

1. IT, Information technology – It drives a major revenue from US markets.
2. Pharma – A significant portion of their sales are from America and they also tend to gain in revenue from India amidst Covid.
3. Metals – They are a global play and touching a new high with every passing day. This is on the back of global economic recovery and supply constraints.
4. Financial Institutions – These are cyclicals and will benefit from huge liquidity gush from foreign countries and favorable credit cycle.

Hence the majority of Nifty 50 earnings are resilient and although there will be some earnings revision in short term but in the medium to long term, they will gain.

We are in a structural bull market as is sensed from key indicators like:

1. Accommodative stance by central banks across the world.
2. Low interest rates.
3. Inflationary environment, etc.

 Hence, the upward momentum will continue post this consolidation.

I would also like to highlight that there is a hit which is seen in the informal sector because of Covid and their incomes have been impacted.

If we look at the income of:

1. Small schools and retailers.
2. Restaurants.
3. Wedding and event industry.
4. Small vendors.
5. Consumer discretionary like Malls and cinemas, etc.

is affected but as we tend to grow as a nation and an economy, they will bounce back.

Here is India’s GDP growth in last few years ,

• India GDP growth rate for 2019 was 4.18%, a 1.94% decline from 2018.
• India GDP growth rate for 2018 was 6.12%, a 0.92% decline from 2017.
• India GDP growth rate for 2017 was 7.04%, a 1.21% decline from 2016.
• India GDP growth rate for 2016 was 8.26%, a 0.26% increase from 2015.

 It is declining and can be attributed to an extent to events like:

1. Demonetization in 2016.
2. Insolvency and bankruptcy code, 2016.
3. RERA implementation in 2017, etc.

However, with positive stance and steps taken by government in last so many years and major ones like,

1. Corporate Tax cut in 2019.
2. PLI and make in India scheme in 2020
3. Budget session in 2021 indicating stake sale in PSU’s, big infrastructure and investment push, etc.

will drive and has the potential of making India return to its earlier growth percentage of 8-9%.

This will be on the back of private capex and investment cycle.

Once that happens, we will see many of the professionals, citizens and everyone associated with our country gain a lot.

Markets are already sensing that and have started to price it in. It is reflected in the resilience of our market that inspite of such a health crisis in our country, we are just 4-5% shy from all-time highs.

Hence, we are very bullish in long term. In medium term, we suggest a target of closer to 16000-16500 on Nifty 50.

Invest for monthly income should be phrased as effective ways of generating monthly income from a certain amount of capital with minimum risk.

This is so because if a person is looking for a monthly income, most probably he is looking at it for an indefinite time and don’t want any erosion in his capital.

Investment by virtue of its nature will come with risk for the invested capital and the ones looking for monthly return don’t want to risk their invested corpus.

They would prefer low returns but the safety of principal is of paramount importance to them.

Investment for monthly income is usually associated with pension. However, with changing time, an individual can look to invest in a plan for monthly income at any time and can choose to pursue other interests in life once he has saved enough.

In corporate jobs, almost majority of them don’t have any clause for pension after retirement from a company. They usually leave it on an individual to plan for it.

In government jobs too, in most of the cases, employees are getting their PF and gratuity at the time of retirement and there is no provision of pension any more. NPS ( New pension Scheme) announced by the government of India in Dec’03, took over the traditional pension system which was followed for many years.

In this article, we would be suggesting few easy to understand ways for generating monthly income. Some of the prominent ones are:

1. National pension Scheme (NPS) – This scheme was announced by the government of India in Dec’03. Under this scheme, an individual can choose to invest systematically for a number of years and then on retirement, 60% of the maturity amount can be withdrawn and remaining 40% has to be invested with a life insurance company for an annuity plan. Annuity means that the interest on capital is paid on a monthly, quarterly, half yearly or on a yearly basis. The return that will be given by an insurer depends on the product and macro conditions at the time of investment. From 29’th Aug’21, the pension fund has revised the guidelines on entry and exit following an increase in the maximum age for joining the NPS from 65 years to 70 years of age. The entry age for NPS has been revised to 18-70 years from 18-65 years. In a set of new rules, PFRDA has also permitted to allocate up to 50% of the funds in equity, besides easing the exit norms.

• Pradhan Mantri Vaya Vandana Yojna – This scheme was announced by central government for senior citizens, above 60 years of age. This came into existence in 2017 and will be available till Mar’23. Under this scheme, an individual can invest a maximum of 15 lacs and minimum amount of approximately 1.5 lacs depending upon the mode of return (monthly, quarterly, half yearly or yearly). Currently, when the interest rates are low and hovering around 5% for most of the investment products, this scheme is still assuring a return of approximately 7.4%. The tenure in this scheme is 10 years. It is one of the great products available for individuals looking for a high monthly return and safety of the invested capital.

• Saving Schemes of Bank– Many banks offer products where in you can either choose to invest for a certain period or invest a lump sum for a monthly income. Depending upon the requirement, returns can be immediate or after a certain duration. The frequency of returns can also be chosen out of monthly, quarterly, half yearly or annual options. The interest rates for this product is around 5.2% currently and can vary on a bank to bank basis.

• Guaranteed plans by insurers – There are many life insurance companies like LIC, Bajaj Allianz, etc. which are giving guaranteed plans with fix details of the invested amount, tenure, mode of payment and life cycle of returns. Without going in nitty grit-ties of financial parlance and compound return cycle, these are one of the best options to invest for a fix monthly income for life. Even on death, the lumpsum amount is paid to the nominee. These are usually open for individuals above the age of 35 and they can start getting the benefit after 10 years. For example, if an individual who is 40 years of age invest approximately 5 lacs/ annum in this scheme for 10 years, then after 10 years, that person will start receiving an annual amount of approximately 4 lacs till he is alive. He also has the option of roping his wife in this plan. This means, after him, his wife will continue to receive the above stated amount. She will receive it till she is alive and after her, the nominee will receive a lump sum amount which will be approximately 51 lacs. Here is the sample illustration in a tabular format,

An example of this plan is Guaranteed Pension Goal by Bajaj Allianz life.

Hence, on the basis of one’s requirement and objective, a scheme can be opted for a monthly income through investment.

Invest in share market is a fancy and dream for virtually every investor and each one of us have taken the plunge at least once in our lives to do it.

If not, I am sure the event is not far away.

It’s exhilarating to see the sharp and volatile movements of price in both up and down direction. The returns which can be given by a stock in a day, week, month, year, multiyear forces us to compare it with parallel avenues of investment and its very common to feel pity on other alternatives which falls flat as compared to the extrapolation we end up doing in hindsight.

Well, this pity is just in theory and fades away with time.

There can’t be a better day to write this blog as Nifty 50 has completed its 25 years. It was constituted in India in 1996.

It has given a return of 13 times since inception, which means a compounded return of 11% over the years.

Now, it doesn’t sound so fancy as we think share market means at least 100% compounded return for as long as we invest.

This is the biggest myth and wrong expectation from share market which has made it earn a reputation of a gamblers paradise and hub of speculative activity.

Share market, like any other market place, is a common ground for buyers and sellers to meet and enter into a transaction. As long as the fundamentals of trade are followed like valuations, time horizon, limited risk, etc., there will be no challenge in an investment call.

This is exactly what is done and followed in other alternative investment classes like:

1. Bonds
2. Real Estate
3. Fixed Deposits
4. Currency
5. Precious metals like Gold and Silver
6. Energy, etc.

If we follow the basics of investing in share market too, there will be no challenge.

If you want to directly start investing in stocks, then you should be clear with few basic principles and ethos of it like:

1. Return on Equity
2. Return on Capital
3. Cash Flows
4. Volume
5. Valuation
6. Return on investment
7. Business cycle.
8. PESTEL analysis
9. Business Macros and Micros
10. Growth prospects
11. Earnings,etc.

The threat arises when we start speculating in the arena and start looking at share prices like numbers. If we bet on a number only, then the result of it will also be like an outcome of a lottery or a casino. If we get it right, exponential profit and if we get it wrong, loss of capital.

Investment in share market, as the term investment suggests should be done as per the fundamentals and principles of investing.

However, if someone wants to trade and speculate, then it should be done with that strategy, skills and mental approach.

We should not try to marry both the approaches, as that’s where the problem starts and leads to serious repercussions.

Hence, the choice has to be made by you and an apt action can be taken then.

If you want to go ahead and start investing in share market, one of the best options is to put it in Nifty 50 Index funds. Most of the professionals also find it tough to beat returns of an index in a long run. This way, you will get an exposure in share markets and you don’t have to go through the hassle and huge effort in doing research and analysis on your own.

If you want to go for trading, make sure that you pick up a course that makes you understand the basic concepts of short term approach like:

1. Technical Analysis on charts
2. Study of simple and exponential Moving Averages
3. Bollinger band
4. Macd
5. RSI, etc.

With proper skill set and understanding of what an individual is doing, he will be better prepared to manage and handle risk.

Thus, conclusion is that share market offers every opportunity to an individual to experiment with his money.

What matters is that we should be clear with our motive and approach.

With that, investment in share market and trading in it will offer its own respective rewards with its own due risk.

Investment, like exercise, is something, which should be started early so that an individual is better prepared and equipped to face the challenges of life, that do comes later. We will be suggesting various options that can be taken by individuals who are starting their investment journey and best options for investment for beginners.

We can start at any time to train and exercise on the basis of our objective, which can be:

• Immediate – An individual has to visit a shrine in a week where in he has to walk and trek a lot. Hence, wants to prepare for it.
• Short term – Someone has signed up for a half marathon in a couple of month’s time and wants to prepare for it.
• Long term – An individual wants to be healthy for life to live it with happiness.

However , if we start it early in life, the training regimen can always be altered to suit and meet any of the above three stated goals.

Similarly, if a person has a financial need to meet a :

• Immediate requirement – Like a medical emergency which comes up suddenly.
• Short term requirement – For a vacation, buying a car, etc.
• Long term requirement – Retirement, Kids education, Wedding, etc.

He/She should be in a habit of investment and start early. Only then, the above stated goals and requirements can be met.

Here, we will be discussing the options for investors who will be starting their investment journey and has not been through the roller coaster of financial investment.

Thus, let’s keep it simple for the first couple of years.

Let’s assume that there is INR 100 to invest, then looking at the current macro prospects, it can be distributed as:

• 30% in Ultra Short term debt Funds –  These are very liquid funds and are the best option to garner and get an annual 5.5-7% compounded return. These can be treated equivalent to cash and also offers a very high margin of safety to the invested capital. Few of the Ultra short term funds in India which can be considered are:
  • Kotak Savings Fund.
  • SBI Magnum ultra-short duration fund.
  • ICICI Prudential ultra-short duration fund.

• 20% in Gold – Gold as an asset class is a holy grail for any portfolio and has to be there. It will help an investor to beat inflation and is a wonderful escape from negative real yields which the world is seeing right now and are here to stay for the next few years too. Exposure can be taken through Sovereign bonds which are issued by the government of India or by ETF’s like:
  • Nippon India ETF GoldBees.
  • SBI ETF Gold.

• 50% in Nifty 50 Index Funds – If we look at the returns for few nifty 50 Index funds, it is roughly around 15% compounded for the last 5 years. It is roughly the same for any other best performing equity fund too barring few exceptions and anomalies. Hence, this half share of the original invested amount of 100 can be invested in this instrument. Few of the Nifty 50 index funds are:
  • IDFC Nifty Fund
  • HDFC Index Fund Nifty 50 Plan
  • SBI Nifty Index Fund

If an investor consistently follows the above investment strategy for a significant time, he will be able to meet all his designated financial goals without much change in asset allocation. He doesn’t have to time the market and doesn’t have to go through the stress of market cycles.

Above three segments of:

. Debt,

. Gold and

. Equity

will take care of returns over a period of time.

This is for investors who don’t have time to track and analyze the factors of different asset classes and then try to create alpha in returns.

Even the professionals, who do try to time the various financial instruments and go for diversification in the form of:

• Country
• Asset Classes
• Cycles
• New instruments like Cryptocurrency, NFT( Non Fungible Token), etc.

struggle to give more than 15-20% compounded return over a period of time.

Hence, the asset allocation provided above is a good investment solution for wealth and will meet various financial objectives of an investor.

Penny stocks in India are mostly the ones which trades in single digits on stock exchanges. A broader definition can be that if a price of a stock is below INR 10, then it’s a penny stock.

These stocks have got their names from the price at which they trade. As they trade at like INR 2, 3, etc. per share, hence the name.

Few of the key characteristics of such stocks are:

• Low volume – Many investors are not interested in these stocks and hence there are very low volumes in trade in these on exchanges.
• Low interest – These companies because of their wealth erosion history and virtually no earnings growth, don’t garner any significant attention from investors or traders.
• Very low market cap – These are very small companies with low valuations and low net worth. (Market cap is the total value of a company and is calculated by multiplying total number of shares and price per share of a company. Number of shares of a company should not be confused with free float. Free float is the number of shares of a company which is there in the secondary market to trade and are always a subset of total shares).
• Very volatile – These shares have a low float in the market and these are characterized by low price. Hence it’s easy to manipulate their share price. This makes them very volatile on both sides, rise and decline.
• Poor performance track record – They have become penny for a reason and the main reason is poor performance in earnings growth over a period of time.
• Low liquidity – Liquidity refers to the characteristic of a stock as to how quickly you can buy or sell a huge quantity without adversely affecting the stock price. In the case of penny stocks, a significant volume on any side can affect the share price adversely.
• Wide spread – Spread refers to the gap in a sell and buy price. For example, an investor wants to a buy a stock at 6 and another one wants to sell it at 9. This gap of 3 Re is the spread for this particular stock and it is usually very high for penny stocks.Thus, the transactions dont reflect the market price and usually happens at a discount or premium.

• Reasons for them to be penny – There are reasons for these stocks to be penny in terms of poor management, no earnings growth, consistent under performance, etc. Hence, an investor should not be lured into them without a proper research
• Bull market play – In a bull market in a country, there is a major economic recovery and growth. Amidst such an economic boom, every sector and company does well as the organic growth creates huge demand for virtually everything. Hence, earnings of poorly managed companies can also post a decent growth. However, these earnings fade away when the economic environment recedes and declines. Thus, the high seen in such stocks may never come back. This results in huge wealth erosion and can even make an investor permanently exit the stock markets.

Hence, we should be extremely wary before taking an investment and a trading bet on penny stocks. Most of the bullish calls in them will come out saying that the investment amount can grow in multiples and that the stock has bottomed out.

But as per me, investment is protection of capital first and then returns. And there is no point in making an investment in an instrument where in there is a serious threat to the invested capital.

Also, when these stocks start falling, there are no buyers and hence any investment done in them gets stuck and there is virtually no exit. And by the time, an exit opportunity comes, these stocks have lost so much of value that there isn’t anything left for the person holding them.

Hence, again as a point of reiteration, penny stocks are a big no-no from our side.