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On investing Q and As

On investing Q and As
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First Published: Sun, Jun 29 2008. 11 47 PM IST
Updated: Sun, Jun 29 2008. 11 47 PM IST
I want to invest Rs7,500 on a monthly basis for three years and another Rs5,000 for a long term (10 years). Which mutual fund or debt fund do you think will be suitable for me?
Kiran
This is a good time to start investing in equity-based mutual funds under systematic investment plans.
For your three-year target plan, you may choose to invest in DSP Merrill Lynch TIGER-Reg, BOB Growth, HSBC Equity and HDFC Top 200, splitting your investment among these schemes. While DSP-ML TIGER-Reg is more focused on energy, financial services, and metals and metal products, BOB Growth is focused on energy, technology, and consumer non-durables. HDFC Top 200 fund is focused on financial services, technology and health care, while HSBC Equity has a wide coverage. This way you will cover all promising sectors with a low-risk and high-return approach.
For your long-term portfolio (10 years), I would suggest you pick up good stocks and some mutual funds. Stocks such as Allahabad Bank Ltd, Canara Bank Ltd, Bank of Baroda Ltd, Bank of India Ltd, Punjab National Bank Ltd, Development Credit Bank Ltd, Axis Bank Ltd, Steel Authority of India Ltd, NTPC Ltd, GMR Infrastructure Ltd, Arvind Mills Ltd, Tata Teleservices Maharashtra Ltd, Oil and Natural Gas Corp. Ltd, Tata Steel Ltd, Maruti Suzuki India Ltd and a host of other stocks are very attractive at current levels. In addition to this, you should focus on mid-cap mutual funds such as BNP Paribas Select Midcap. Other good mutual funds such as Tata Infrastructure, SBI Magnum Contra, Baroda Global, Reliance Power diversified, Reliance Growth–Gr also may prove to be good investments. However, you would need to review your investment periodically to adjust your portfolio with the then prevailing economic scenario.
I am investing in stocks and mutual funds for the past two years. My portfolio is quite big—Rs16 lakh in shares and Rs3 lakh in mutual funds in my case and Rs6 lakh in shares and Rs4 lakh in mutual funds for my wife. At present, I have incurred a loss of 31% and my wife a loss of 9% on our investments. Can you suggest the best portfolio for us? Further, how does one identify the leading sectors and companies in the stock market. Prasad S.A.
Since you have not mentioned the details of your investment, it would be difficult for me to comment. However, I would recommend you to go through this column thoroughly for more insight on good, performing mutual funds. You may also read previous columns on www.livemint.com.
Regarding your losses, I think, this is not the right time to review your portfolio as the stocks are currently down and closer to their bottom. You may buy more mutual funds and stocks at every decline in small lots after considering your investment corpusand capacity.
If you need any specific advice on your portfolio on mutual funds or stocks, then I would request you to send your questions with the details pertaining to your portfolio.
How do the prices of stocks differ when the markets open compared with their closing prices the previous day since markets are closed between the two? Vishal
Stock market prices are not administered but are governed by demand, supply, market sentiments, fundamental and technical factors. If these parameters change, then the prices change accordingly. A lot may happen from the time the markets close to the time they open the next day and the influence of these may affect the opening prices. For example, if the US market slumps, this is bound to get reflected on Indian bourses the next morning due to a change in sentiments, though fundamentally or technically, there were no changes. (Because of the time difference, the Indian market will be closed when the US market is open for trading.) Every day is a new day in the stock market with little effect of the past and a major influence from things that might come.
I want to invest for a short term (three-five years) in mutual funds. Please tell me how to select the best fund. Sagar Kekare
For selecting best mutual funds, you need to divide your study into two parts. One, a SWOT (strength, weakness, opportunities and threats) analysis of your own investment parameters, and the second, the macro and microanalysis of the economy. Under the first part, you have to define your requirement from investment, your risk profile, your investment capacity and the time frame for investment. In the second part, under macro analysis, you need to study and evaluate the economic scenario for the time period you are considering for investment and under microanalysis you need to study and analyze specific schemes and funds, which are likely to outscore their benchmarks. You can pick your funds based on the results.
I own shares in Alok Industries Ltd, Bharat Seats Ltd, GMR Infrastructure Ltd, JK Lakshmi Cement Ltd, Jaiprakash Associates Ltd, Karuturi Global Ltd, Mundra Port, NTPC Ltd, Navneet Publications (India) Ltd, Noida Toll Bridge Co. Ltd, Power Grid Corp. of India Ltd, Punj Lloyd Ltd, Reliance Petroleum Ltd, Ruchi Soya Industries Ltd, Shree Renuka Sugars Ltd and Tube Investment of India Ltd. I want to hold them for a long term and I am willing to add more of these. Please advise me which stocks to concentrate on for my investment. Which shares should I add and which should I exit? Ashwin
First, if you have the investment capacity, then you should not exit at this point of time but rather pick up bargains currently. Depending on your time frame, the choice of stocks may vary. I have mentioned a good number of stocks above from a long-term perspective—three years and more. Out of your portfolio, you may prefer to add Alok Industries, GMR Infrastructure, JP Associates, Mundra Port, NTPC, Power Grid Corp., Punj Lloyd, Reliance Petroleum and Shree Renuka Sugar.
I am 24 years old and I save about Rs20,000 a month. Please help me in deciding what kind of investments and insurance cover should I look at. I have no dependants as of now. Piyush
First, you should segregate your investment and insurance needs and their priority and never mix up the two. Insurance products are good for only insurance purposes and are not good investment options. As far as insurance is concerned, you should take up a term plan. The term plans of all the insurance companies are identical. However, you may prefer term plans of Life Insurance Corp. of India, ICICI Prudential Life Insurance Co. Ltd or Birla Sunlife Insurance Co. Ltd. Since you are young, your premium will be less, and taking account of your future needs and your income tax scenario, you should try to take the maximum cover under the term plan. As far as investment is concerned, you should make it through systematic investment plans. I have mentioned some good schemes above and you may consider them for your investment. I hope with this mix of insurance and investment, you can have a decent portfolio.
My take-home salary is Rs14,000 a month and I want to start investing in mutual fund schemes. Please advise.Raju Sharma
Please refer to the solutions mentioned above on good schemes for investment and add some tax-saving schemes such as SBI Magnum Taxgain, HDFC Tax saver and Sundaram BNP Pribas Tax Saver to the list. You may start systematic investment plans in the schemes that match your risk profile, time frame and investment needs. Since you have not mentioned these facts in your mail, I am unable to zero down on specific schemes.
Answers are based on a technical analysis of the markets and individual stocks. The views expressed on this page are not the newspaper’s opinion and are provided for information purposes by Vipul Verma. Readers are requested to do their own research before participating in the stock markets. Neither the paper nor the information provider will be responsible for any outcome based on information provided here.
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First Published: Sun, Jun 29 2008. 11 47 PM IST