Mutual Funds load on ICICI Bank shares

Mutual funds have loaded up on ICICI Bank shares when the bank went through a slew of bad news with its CEO Chanda Kochar in the limelight on the Videocon loan default and kickbacks received by her husband Deepak Kochar in the form of loans which further got converted into Equity to his company Nu Power. Money got routed through Mauritius.

Funds have taken a technical bet, where there is an expectation of a bounce back from the bottom which will provide an opportunity for short term gains. In such a situation, there is not much that can come from ICICI Bank as there was an article in the ET stating that, ICICI Bank is one of the lowest performing banks among its private counterparts. Its NPA’s are seriously high, though not to the extent of their PSU counterparts.

Banking sector on the whole has gone into underperformance haunted by increasing NPA’s and managements which was so far the PSU’s, now even the private sector has shown poor governance. These developments have made the Banking Sector not a favourable investor’s choice. In such a scenario, taking exposure to a stock that is fundamentally weak is not a good sign. It feels to think that, even fund managers have begun to behave like immature investors.

There is a potential for short term gains as ICICI Bank’s asset quality is not so deteriorated like that of the PSU’s, which will help the stock to make a rebound. For those who take investments based on this development, need to be pretty clear on their exits. Once the stock begins to show weakness on its price, it is time to exit those funds.

Investing in a beaten down sector when it is about to turn around is a very good investment strategy, while that should be done in the right sector. For example in 2016 when metals turned around, those funds that had high exposure to metals sector were the biggest gainers in the 2016-17 rally. The next such opportunity is likely to come in the Pharma sector sometime in the near future. It is not going to be frontline Pharma companies that will lead the rally. At this time it is too early to spot the leaders, while when there is one, leaders will show up bright.

At that time take exposure to mutual fund schemes that have higher exposure to those strong leaders in Pharma and your investment will beat all the benchmarks and give your saving a bumper profit.

Is investing in Gold a Good Option for Akshaya Tritiya?

Akshaya Tritiya is almost here with the festival falling on 18th April this year. This festival is considered, a very auspicious one. The name itself suggests that it is the third lunar day (Tritiya) of the Hindu calendar, indicating unending prosperity (Akshaya). Tradition has it that this very auspicious day is for auspicious beginnings like marriages, housewarmings, and purchase of property or gold. In fact, the purchase of gold is what Akshaya Tritiya has become synonymous with over the last few years thanks to smart marketing by gold merchants and jewellery brands.

Indians, especially women, are traditionally attracted to gold and invest in it. It is actually not necessary to buy gold only on Akshaya Tritiya. You could choose to buy anything new as a good symbolic start. An interesting aspect though, is that while women seem to have the knack of putting money away when it comes to investment, they mostly, only think of picking up gold ornaments. This probably could be a mindset issue that has been handed down across generations.

Gold As An Investment
While investment in gold is seen as a good bet by many, it is not so. Unless the gold is purchased for occasions like marriage, it is an unproductive asset. The gold is for consumption and not investment. Yes, there is the possibility that in times of crisis, you could turn to your gold assets. But, this is true with Mutual Funds (MF) too, which many people do not know. The money invested in gold is unproductive as it does not really help in any economic growth, unlike equity shares or Mutual Fundss. The purpose of gold in the Indian context is as a safety measure, a social necessity and for personal use.

If you invest a certain amount in gold, the gold remains the same, even after many years. Yes, the gold value may appreciate quite a bit, but it does not multiply like money can; especially if you make some informed, wise investments. A real investment should be one that generates wealth and aids in economic activity and keeps creating more wealth. So, in effect, if people are willing to give it serious thought, there indeed are better options to invest in, than gold. No doubt, there are social occasions when you need to purchase gold, and those are exempted.

What Are Your Options
So, this Akshaya Tritiya, what are the options available to make an auspicious start that generates wealth for a few years to come? Look at investments in MFs, for one. It is quite possible to build a carefully chosen investment portfolio with the help of a trusted and reliable investment advisor. When people who have an in-depth understanding of the whole ecosystem use their insight to help you figure out which MFs to invest in, you can succeed in generating wealth.

It is not always necessary to start big in Mutual Fundss, you could always choose to go with small amounts per month, known as systematic investment plans (SIP). Across a period, you may find that you are getting good returns and there is no fear of lock-in. A few may even provide good short-term returns. Most mutual funds can also be liquidated quickly.

So, perhaps, this Akshaya Tritiya is the right time to ring in the change and think beyond gold!

Think Mutual Funds!

Which Investment Basket Is Right For You?

Investing money is not the same as saving it up. While savings help you build up cash reserves over time for various needs, investments help the money grow. Indeed, it is possible to make money grow at such a rate that it could become an alternative source of income!

In this article, we discuss the various investment options available, their pros and cons and in which scenario you need to be investing in each of them. Perhaps, you already have a Fixed Deposit or an insurance plan. What you need now is a way to judiciously invest money in order to make it grow. It is time to move from savings to investments.

Here are a few investment options available to you:

Liquid Assets

  1. Fixed Deposits: FDs, as they are better known, are used to store away large amounts of cash in a bank for extended time periods. They are a secure investment and offer guaranteed returns. However, the FRDI bill mandates that a bank’s liability on FDs is only up to INR 1 lakh. Any investments beyond this number could fall into trouble. Hence, it is important to do your research on the banks in which you wish to open an FD, especially in the current scenario of bank frauds and scams.
  2. Insurance: Insurance is a financial asset. Many people are tempted to opt for insurance policies that also have added benefits and assured returns. However, insurance has the lowest returns amongst all options. Hence, it is better to opt for term insurance and not go after policies that sound very lucrative.
  3. Corporate Bonds: When it comes to this investment category, research and prudence on the investor’s part is very important. Depending on your risk appetite, you may choose to go for bonds with a lower rating as they promise higher returns, but we recommend that you stay with AAA rated bonds as much as possible, as the potential risk of a lower rated corporate bond is much higher than the possible returns.
  4. Mutual Funds: MFs are very diverse as far as investments go. MFs can be debt, equity or tax-saving mutual funds. Both debt and tax-saving MFs give a nominal income that is 1-2 percentage points higher than an FD. An SIP can be compared to a recurring deposit, but unlike an RD, it gives on average 17% returns.

Illiquid Assets 

  1. Real Estate: Real estate is not yet an investment asset in India and is meant more for your consumption as a commodity. That said, land often appreciates in value over time so it may be prudent to include some land assets in your investments. Ideally, you need to ‘buy and forget’ for a few years until the land value appreciates. Also, be sure to have all documentation in place for ready reference if the need arises.
  2. Gold: Gold falls somewhere in between being a liquid asset and an illiquid one. For the purpose of this article, we have put it under the illiquid asset class. Gold is both an ornament and an investment. Women are traditionally in favour of gold investments. However, most jewelers do charge several fees over the base price of ornamental gold which in turn may depreciate its value as an investment. If you are investing in gold, know that it takes time to see good returns.

Other Investment Options

 Apart from these options, you can also invest in commodities, currency, futures markets, etc. if you are serious investor who follows the market on a very regular basis and understand when to invest, when to stay put and when to exit.

Cryptocurrency is another investment avenue that is gaining popularity due to the skyrocketing returns it seems to promise. However, the cryptocurrency market needs to be regularized, and it needs to stabilize, before it can go from speculation to an actual investment.

You can also consider being an angel investor. As an angel investor, you invest your money in a growing company for a fixed stake. As the company grows, so does your wealth. Most angel investors choose to invest in a domain they are proficient in, and some investors often involve themselves in the operations of the company the invest in.