Financial Planning is a Must to deal with Recession

Most industries across the world are reeling under huge stress due to recession.

The Software and the Technology industry is the worst affected. Expect more Job Losses and Lay-Offs with advancement of Big Data Analytics and Artificial Intelligence.

It makes sense to get yourself Financially Prepared before any untoward incident hits you or your family.

The below picture speaks volumes of an employees life in all industries today.

 

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We had posted an article in 2016 related to this and that holds true even today. Many Software Engineers and employees of other industry approached us after reading the article and they are much more confident people today. Click Here to read the article. Tamil Version: Click Here

 

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It’s Darkest Before the Dawn

190816 – The previous article Don’t Press the Panic Button got me many responses from investors across (if you haven’t read that article, please do so before reading this one). Existing investors with spare money in hand, fully invested investors, and first-time investors. I’m going to try addressing most of the concerns which came across to me

The market today is in panic mode; no investor is ready to peddle into the market currently. Stocks are getting punished ruthlessly even though they are quoting below their actual worth. The valuations are far cheaper than even 2008 crash. I remember in Jan’2008 Sensex was quoting at around 21200, and the same crashed to 7500 by Oct’2008 which was the steepest cut which most of us present then, ever saw in our careers.

With all the earnest I can say that we have already seen a 2008 kind of correction in the market today. The difference then and today is that 2008 was fast and furious, and the current correction which started in Jan’2018 is continuing even today. It has been a slow and steady grind.

People relating the correction to bringing back of LTCG, Increase in Income Tax levels for the super-rich, Taxing the FPI’s, etc. are not fully correct. 100% I agree that these did the initial job of spoiling the sentiments, but the whole correction cannot be on this. Who in the world will stop earning just because he has to pay tax?

The real reason for the steep cut in the last few weeks and the pertinent slowdown we are witnessing in certain sectors, particularly automobile can be directly related to the NPA and Debt cleansing which government has seriously undertaken. I had explained this in the previous article.

This cleansing process is going to be good; as a result, we will have better balance sheets, better auditors too. Had the world economy been strong this process would have passed by without hurting us and our economy, but sadly, the whole world is under stress right now, and hence we are feeling so much pain.

The recent proof for my thought process is the stake sale by Reliance Industries to a Saudi Arabian company. Even the imagination of Reliance failing brings pains in the minds! RIL too has huge debts in the books, and there was a report which was also circulating on the WhatsApp warning the same. The stock too had fallen almost to 1200 levels.

The market is punishing any company which has debt, Mukesh Ambani knew this before the market could react in an ugly manner, the deal got struck, and he has promised to go debt-free in next 18-24 months! We should applaud him for his business acumen.

You cannot get a bank loan easily today, and that is hurting the automobile industry in particular. And when this sector slows down many others slow with it. For example, Maruti uses 70 litres of paint every minute, so if Maruti cuts production… you got the point already!

The slowdown in the Automobile is due to various other factors too like BS VI, EV and non-availability of finance. Other sectors too are facing the brunt. As per my info CTS alone has cut around 6000 jobs in last few weeks.

The saying goes It’s Darkest Before the Dawn! Don’t forget that the Indian Micros may be going through a rough patch right now but our Macros continue to be strong. The government has already taken note of the situation and expect some measures to boost confidence among investors.

What I sense now is that we are in the bottom part of a U. Check out the results; they are down not that companies across the board have started incurring losses. One thing which has made an investors life hell is the WhatsApp forwards.

Remember we are in the darkest phase of the downtrend right now and are bound to see the dawn.

Will write more later. Feel free to reach us on the below contact details in case of any non specific stock or investment queries.

When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down, you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Be Greedy!

Vivek Karwa

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Don’t Press the Panic Button

190728 – As mentioned in the previous writeups, the Sensex and the Nifty have been moving up and holding the levels based on 6-7 stocks popularly called as Hrithik stocks. It is next to impossible to find anyone, be it individuals or fund managers who would have bought only these stocks.

The market has been performing badly since Jan’2018 and till date, there are no signs of recovery. There was some expectation which was built up before the budget’2019. The budget has been a total damp squib from the market’s point of view. Not that the overall budget was bad, it was prepared keeping the only long term in mind and hence nothing materialised for the short term for the market.

Two things which market did not like were, firstly, Higher Taxation of HNI’s and FPI’s and secondly, with this brute majority, the market was expecting the government to go capitalistic but they seem to be adopting the socialist approach to which even I am opposed to.

With clear thumbs down from the market, I feel there would be course correction in the next budget, this being not a whole year budget.

There are other reasons also due to which the Indian market is going down. Budget is a smaller excuse. One reason being the slowdown which India is facing right now. The most common thing being talked about is slowing sales of the automobile sector. The sector was going thru a rapid growth and with so many factors changing and expectations of the changes are slowing it down. I am not ready to link it directly with the slowdown.

The biggest reason due to which the businesses are talking about slowdown is Cash Crunch in the system. Majority of the companies today don’t have access to cash by way of loans, overdrafts, etc, Only a few companies with no debt on the books are in a happy situation today. Let me explain the earlier situation and what changed now in detail below:

Earlier, assume company X goes to a bank and takes a loan of Rs.1000/- Crs, also assume the management has no intention of paying the amount immediately. Cannot be termed as a fraud, but had the intention to use the money for a long time, maybe called as overzealous.

When the due date arrives to repay this 1000 Crs, the company goes to another bank and asks for a loan. Gets the loan and repays the first bank. The first bank actually ends up rating the company in high regards since they paid on time. Factually the amount still remains with the company.

When the date arrives to pay the second back, the company goes to the first bank again and the bank this time is happy to lend them double the amount since it was repaid on time earlier. Such loans kept on building up during the period 2004-2014 under the economist PM, these loans today are popularly called as NPA’s.

Then the government brought the IBC Law. Where in the government has made it clear to all those having debt that, it’s there problem and can’t depend on the banks and taxpayers money anymore? It’s their problem, they took the loans and now pay them back or they may lose the control over the company and in certain cases if found that the money was being diverted may end up in jail.

The result: Most companies are repaying or reducing debt.

Few examples: Emami recently sold a stake to reduce debt, Apollo Hospitals sold their Health Insurance business to HDFC to reduce debt, Anil Ambani is selling everything he owns under the sun to repay debt, there are many such examples.

Even the Chartered Accountants are feeling the heat.

Above all the IL&FS and DHFL issues have aggravated the problems.

Hence the slowdown! But go to any hotel, any resort, any airport, any mall and you may end up asking what slowdown! Even a few car models are overbooked right now.

This too shall pass, don’t let the bad times pass by simply, use the opportunity. We are seeing a severe cleaning process right now. In the end, we will have cleaner companies and balance sheet. You get the point right? Call up your advisor and ask which segment and which sectors to invest in right now. Invest more now, you won’t regret few years down the line.

When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Happy Investing

Vivek Karwa

Modi 2.0

190526 – Before we start, we would like to congratulate Mr. #NarendraModi for getting the second term as the PM and that too with thumping majority. We also wish the people of India for having decided the next government with clarity.

Any government with dependence on regional parties would have been unstable. India is in a time where a majority government can take decisions much faster and there would be no vested interests to pull the government down.

It is first time probably in the history of India that a government has been voted back to power with larger vote share and seat share. It’s a world record, this is the first government which has been voted back to power after implementing GST. All other governments in the world which brought in GST were thrown out.

With 303 seats under its kitty, the new government will kick start on day one of taking the oath. In 2014 Modi was new to Delhi and it took him almost 6 months just to understand the 11 am a culture of Delhi. Also, the bureaucracy was more loyal to the earlier establishment.

The above problems are not present this time and the work would start from day one. The same will be taken very positively by the markets. Though we saw some movements, we did not see upper or lower circuits since the outcome was somewhat factored in already.

The year 2018 has been very bad for the markets particularly for the Mid and Small Cap segments. Due to various factors, the stock prices had corrected 50-70% and most Large Caps too corrected up to 30% resulting in losses across the board in both equity portfolios and mutual fund portfolios.

A lot of newcomers entered the markets in 2017 and 2018 and now are assuming that they made a mistake. They also feel that while the Sensex and Nifty are at all-time highs, why are their investments not moving up?

Fact is this: Firstly, literally only five heavyweight companies in Sensex and Nifty have moved up, other stocks have either moved down or remained flat. Hence, the index may be at high and the portfolios down, but that doesn’t mean you should call it quits. After the election results, there are all possibilities that Index may remain flat and the stocks move. Secondly, Please don’t judge the investments on 3-5 years basis. Equities can give you five-year returns in a single year and make you lose patience in the first four years. You need to invest for absolute long term.

The best thing is to do your Financial Planning and start investing. This can keep you disciplined during the ups and downs. Keep in mind, no one in this world has become rich by investing in Fixed Deposits alone. Even Real Estate will remain subdued for the next five years.

We believe that the markets will be buoyant now. Single-party majority government will take actions faster.

I expect these things in the first half of the term:

1. A 100 days plan will be announced.

2. The full budget may be presented with Bigger Tax breaks for people.

3. Draft of Direct Tax Code will be ready by July.

4. IBC will be strengthened.

5. More spending on Social Reforms.

6. Spending on Infrastructure may increase.

7. Govt and RBI will now push liquidity into the system.

8. Big projects like River Linking may be announced.

Also, since the clarity has now emerged, the corporates will start their investments in India. Many of the companies were just waiting for the results. For example, around 200 companies from China alone were waiting for results to shift base to India.

We at VRIDHI will start the process of making the changes required to suit the portfolios for the New India. We also have been under pressure in the last one year due to bad markets and are now hopeful and delighted that better days for India are in sight. Will now be working for best results. India’s time has come.

Global problems will continue to cloud the markets, but the local opportunities overweigh them. India’s relationship with global leaders is extremely favourable currently which will also help our country.

We will continue updating over the next few weeks as the structure of the new government gets clear. Stay connected with us and work for better tomorrow.

When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on phone then scroll to the bottom for the ‘follow’ button. Do stay connected with us. Click Here for all modes.

Happy Investing

Vivek Karwa

Essel Dent and Debt Mutual Fund Woes

Essel Group Debt payment delays have affected HDFC and Kotak Mutual Funds, should you panic?

190411 – We at VRIDHI, in the last few hours, have been receiving some frantic calls from the investors in Essel Mutual Fund, HDFC Mutual Fund and Kotak Mutual Fund regarding the news reports across business newspapers that due to the Essel Debt recast delay, Kotak Mutual Fund may delay the payments of their FMP’s pertaining to Essel Debt and HDFC Mutual Fund may roll over certain of their FMP’s until they receive the money back.

The most amusing thing is that even certain Advisors have called in to check on what may happen so that the same can be informed to their clients. Hence this article to clarify certain things which are spreading negative news unwarranted.

Firstly, Investors in Essel Mutual Fund:

– Please understand that Essel MF and each of the other Essel companies are independent entities. None of the articles in the newspapers mentions that there is any problem in Essel Mutual Fund.

– If you go through the factsheet of Essel Mutual Fund, you will find that they have ‘ZERO’ exposure to any of the Essel companies and hence the investors in their funds don’t have to bother about their money.

– The fund house is looking to sell itself and is close to a deal. Hence, investors need to not worry at all. The Fund House is Going Strong.

– Moreover, the problem is not related to any of the equity funds so please relax, and don’t go just by name and run over it. Recently a problem in a company in America crashed down shares of another similarly named company, go check that. It would be a fun read.

Secondly, Investors in HDFC and Kotak Mutual Funds:

– Please note that the problem is only in few of their FMP’s which have certain exposure to the Zee group. The debt recast steps are under process and may get resolved. The moment money comes in, the fund houses will repay. The worst case situation of no money received doesn’t affect the entire corpus, only to the extent of the exposure.

– The fund houses will take all efforts to get the money soon. Zee group is under talks with various companies to buy stakes in their group.

– Except for the investors in these few FMP’s, other investors have nothing to worry at all. The Equity Funds again have nothing to do with this delay, the shares of the Zee group companies have already fallen and hence the shareholding values will also get least affected.

– Hence both HDFC and Kotak Fund Houses are Going Strong and these are minor blips which will get sorted out soon.

NONE of the VRIDHI clients has any exposure to the above-affected Funds!

In case of more queries, you can WhatsApp us on +91 9551110505

Some Fundamental Discussion:

The above problems arise mainly due to both Clients and Advisors chasing returns and none of them analysing the kind of risks the funds are taking to achieve the Extra Returns.

It has happened to us also many times: Investors call us and say: Sir we invested in X Large, Mid or Small Cap fund but the peer Y Large, Mid or Small Cap fund is giving better returns!

By God’s grace, we have never succumbed to these arguments and shifted the funds of clients just because another fund has delivered better returns. Some times clients even withdraw money to chase better returns and guess what? They get stuck in situations like today and then praise us for our wisdom! Too Late!

We at VRIDHI have avoided this since we generally analyse the holdings of the funds and also have regular interactions with the fund management teams.

Recently SEBI has recategorized funds into Large, Mid and Small Cap funds with clear definitions.

Let me still guarantee you all… most of the Large Cap Funds will also hold Non-Large Cap Stocks, Most of the Mid Cap Funds will also hold Non-Mid Cap Stocks, and Most of the Small Cap Funds will also hold Non-Small Cap Stocks.

So each of the funds in the above categories will still have good variations.

Hence, don’t chase the returns alone, take advisors help. Saving small fees and losing capital is never a good idea. J

When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on phone then scroll to the bottom for the ‘follow’ button. Do stay connected with us. Click Here for all modes.

Happy Investing

Vivek Karwa

+91 9381024365

Roller Coaster Ride Continues

190217 – Firstly, We pray for all 44 souls of our Indian Army martyred in the Pulwama terror strike. May all the souls attain Shanti. Om Shanti.

Such a cowardice act on part of Pakistan backed terrorists. They feel they will get back Kashmir by doing all these. Fact is it’s getting tougher for them by the day.

Sensex went to highs of 37172 on 7-2-2018, the movement on the upside was as expected since I was sounding bullish on the Index in the previous two to three posts continuously. Post the highs, the market has corrected a bit more than expected and has closed at 35809 as on 15-2-2018, that’s almost 4% fall within a few days.

Sensex even at these levels looks quite decent. Sensex is actually giving a wrong picture to everyone. Fact is though Sensex is at its highs, most portfolios are in red. I should say 100% of the portfolios in the last one year has turned negative, including the Mutual Fund portfolios. Including ours, which we recommend. That’s the truth. The only difference between our portfolios and that of a naive investor will be seen during the recovery of Mid and Small cap companies.

Our portfolios will recover much faster than others. Even our MarketFastFood subscribers will see a faster recovery. In fact, we have added just one company in MFF past one month.

The broader market has been on a slide. Sensex and Nifty are up based on just a few stocks. They are today commonly called the HRITHIK stocks! No, not that Hrithik Roshan the actor owns them, just that a new word has been coined in the market. HRITHIK means:

HDFC, Reliance, Infosys, TCS, HUL, IndusInd Bank, Kotak Bank.

An investor can now ask why shouldn’t I buy only the Hrithik stocks and beat the market? Logically it’s a yes, you can, but will you take risk of investing only in 7 companies of which 3 are from one sector alone? If these stocks falter then life can become miserable. Hence, an advisor like me would never risk putting money in such stocks and few of them are steeply valued today!

The broader market is actually quite cheap now. Your portfolio may be in minus, still, this is the time to add more. Those who fear now will later regret missing the chance. This is not the first cycle in the market. It has happened many times in the past. Not that India is doing bad, not that Indian companies are going to close down tomorrow, not that we have bad government.

Yes, in the short term there will be heightened volatility due to elections coming up. Until then keep adding slowly. Don’t fear, this phase shall too pass.

We may get even better chances in the next few weeks/months. Pakistan has this time crossed its limits. The Indian government cannot simply let this pass. Action has already started. I don’t think there will be a full-fledged war, but things like surgical strikes, or strikes in the PoK area cannot be ruled out. Any panic situation should be used. Pakistan is bankrupt. They cannot face India. India has had huge diplomatic success in the last few years which has cornered Pakistan on all fronts.

India has already taken few steps over the weekend. These will make India emerge stronger. No country would dare to openly support Pakistan over India.

In case you need our support feel free to WhatsApp us on our office number. My desk number is 93810-24365. We at VRIDHI are always happy to hear from you. Feel free to get in touch with us.

When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on phone then scroll to the bottom for the ‘follow’ button. Do stay connected with us. Click Here for all modes.

Happy Investing

Vivek Karwa

Budget 2019

#Budget2019

Do watch the video: Also SUBSCRIBE the YouTube for regular updates.

https://www.youtube.com/watch?v=cXsUtQ5R1Vw

Update from another source: (source name not known):

HIGHLIGHTS OF BUDGET 2019

Tax
1.    Within 2 years, Tax assessment will be done electronically
2.    IT returns processing in just 24 hours
3.    Minimum 14% revenue of GST to states by Central Govt.
4.    Custom duty has abolished from 36 Capital Goods
5.    Recommendations to GST council for reducing GST rates for home buyers
6.    Full Tax rebate upto 5 lakh annual income after all deductions.
7.    Standard deduction has increase from 40000 to 50000
8.    Exempt on tax on second self-occupied house
9.    Ceiling Limit of TDS u/s 194A has increased from 10000 to 40000
10.    Ceiling Limit of TDS u/s 194I has increased from 180000 to 240000
11.    Capital tax Benefit u/s 54 has increased from investment in one residential house to two residential houses.
12.    Benefit u/s 80IB has increased to one more year i.e. 2020
13.    Benefit has given to unsold inventory has increased to one year to two years.


Other Areas

14.    State share has increased to 42%
15.    PCA restriction has abolished from 3 major banks
16.    2 lakhs seats will increase for the reservation of 10%
17.    60000 crores for manrega
18.    1.7 Lakh crore to ensure food for all
19.    22nd AIIMS has to be opened in Haryana
20.    Approval has to be given to PM Kisan Yojana
21.    Rs. 6000 per annum has to be given to every farmer having upto 2 hectare land. Applicable from Sept 2018. Amount will be transferred in 3 installments
22.    National kamdhenu ayog for cows. Rs. 750 crores for National Gokul Mission
23.    2% interest subvention for farmers pursuing animal husbandry and also create separate department for fisheries.
24.    2% interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
25.    Tax free Gratuity limit increase to 20 Lakhs from 10 Lakhs
26.    Bonus will be applicable for workers earning 21000 monthly
27.    The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of Rs. 3,000 with contribution of Rs. 100 per month for workers in unorganized sector after 60 years of age.
28.    Our government delivered 6 crores free LPG connections under Ujjawala scheme
29.    2% interest relief for MSME GST registered person
30.    26 weeks of Maternity Leaves to empower the women
31.    More than 3 Lakhs crores for defence
32.    One lakh digital villages in next 5 years
33.    Single window for approval of India film makers

Tax Saving ELSS

With Financial Year coming to an end, it is time you start planning for your Tax Saving immediately. You can save up to Rs. 45000/- in Tax alone based on the Tax Slab you are in. Keep in mind: Money Saved is Money Earned.

Equity Linked Savings Scheme (ELSS):

ELSS is a mutual fund scheme which provides deduction/tax benefit under Section 80C of the Income Tax Act, up to Rs.1,50,000 per annum. There is no upper limit to investing in ELSS.

ELSS invests in diversified equity funds. Returns from ELSS are market linked which aims at providing capital appreciation over 3 year period.

It is the best available scheme which offers higher returns combined with tax benefits for a lock-in period of just 3 years. It comes with least lock-in period when compared to Tax Saving Fixed Deposits or Public Provident Fund.

Both Individuals and HUFs can invest in ELSS.

Investment under the scheme can be continued even after 3 years.

Even though the risk involved in investing in ELSS is higher than Bank Fixed Deposit or Company Fixed Deposit or Public Provident Fund, the returns have always been much higher ranging from 12% to 18%

Investment can be made either in a lump sum or through a Systematic Investment Plan (SIP).

If the investment is made through SIP, each investment/instalment should complete 3 years before it can be redeemed.

ELSS is an ideal scheme for long term wealth creation.

Invest in ELSS with VRIDHI:

We at VRIDHI analyse all Mutual Fund schemes on a continuous basis to help our investors choose the right schemes. We also have regular intereactions with the Mutual Fund company officials and Fund Managers and express our opinions and concerns which may affect the investors.

When you invest with VRIDHI, you can leave the tracking job to us and focus on your own work.

Click Here to contact us.

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