Personal Finance Blog- India

3rd Blog Anniversary

Easycrafts blog and Personal Finance blog celebrates its 3rd blog anniversary today. With a little less than 250 craft projects and about 265 articles on managing your finances, we thank you for your continued support extended towards these two blogs...

Here is a small cupcake in crochet to celebrate the occassion-

Telecom- the fall of tariff and stock prices

Reliance's "50 paisa for all calls" announcement and TRAI's per second tariff suggestion have brought down all the telecom stocks . The leader Bharti is down almost 23% in 3 days and idea is trading below it's issue price. So, is it an end of all situation for the telecom world?.

Telecom has the widest reach of customers and no one can beat them in reach ( bottom of pyramid). There is a lot of rural penetration left . 3G, Net usage over phone are in their intial years. Banking opportunities are also foreseen for the telecom operators in rural areas ( may be in urban India too).

Tariff war, reduction in ARPU and more competition waiting to jump in are definitely negative factors. But some how I see a great future for telecom.

With reduction in tariff over the years, my bill has never come down and Internet usage over telephone network is going up. So, I see a huge opportunity in these big falls of telecom stocks.

In the long run these companies ought to bounce back strongly. Let's keep our fingers crossed till then . Such chaos mostly provide great opportunities.

should I buy bhart, rcom, idea, MTNL, BSNL at this level? is it a good buy. what returns will telecom give

Active vs Index (Passive) Investing

Index Investing is a passive way of investing . Having a bunch of stocks in portfolio exactly mirroring a stock in an index is a passive way of investing. This can be done by purchasing stocks mirroring an index and tracking the weight and readjusting the portfolio whenever the constituents or weightage in the index changes. Better is to buy an Index fund. This ensures that you get returns close to index.

Example if you bought an index fund of sensex when sensex was at 10,000 , it would have appreciated 70% when sensex is around 17,000. ( Returns would be exactly similar to the index minus tracking error , of a fund or an investor).

If someone believes that actively choosing stocks from the wide range of stocks available, invests in them then it is active investing.

In India most equity funds are actively managed funds. The index funds generally involves a lesser cost. Actively managed funds have managed to beat indices (on an avg.) many a times, excepting 2005-07 period.

Investing in either of the type of funds should be made by an investor after understanding the nature of products clearly.It's also not a bad idea to diversify your investments between active and passive funds.

Looking back! Investing is so simple.

When we look back at the last six months , the markets have moved from strength to strength. Experts have started predicting the upward trend for Sensex and Nifty. The same guys were extremely pessimistic six months back is another story.

Those who have been left out have started cribbing and are planning to join the band wagon now!!

On a personal note, I saw many of my friends stop investing last year and many even stopped their SIPs. This period of volatility has practically emphasised two things.

1. Do not try to time the market.

2. Be a regular investor .( what better than SIP in equity funds for regular investment).

By following this you may not get great returns but at least you can ensure that you get around 15-20% p.a ..and that too tax free ( as of now).

When investing in SIP its important to spread across the installments for a good period and stay invested for a longer period ( min 5 years), so that you can achieve this.

This is as easy as filling up a form ( Mutual fund SIP investment form -Equity fund) and do nothing for years.No need to track your stocks day by day, watch the business news channel or read a economic daily for stock tips.

This way you get to own a piece of corporate India and make all those corporates work for you!!!!

Sounds very simple isn't it? But we are used to complicating things in life more than necessary.!!

Retail Participation in Equity IPO

OIL IPO closed today with QIB portion oversubscribed 53.83 times, NII 10.477 times, Retail 1.7642 and Employee reservation 0.267 times.
Despite a great response from QIBs, retail participation is very minimal. When we were at the peak of bull run, any IPO was getting over subscribed heavily by retail investors too. In fact, lot of demat accounts got opened before the Reliance Power issue.
This shows that Retail investors just put in their money in IPOs only based on sentiments and mostly for short term benefits.
Can we infer that retail investors are just behaving as traders based on sentiments and are yet to mature as investors?

oil allotment ratio grey market premium listing price listing date subscription