Ask Mint | On Investment

Ask Mint | On Investment
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First Published: Sun, Mar 16 2008. 11 26 PM IST
Updated: Sun, Mar 16 2008. 11 26 PM IST
I earn Rs20,000 per month and I am planning to save around Rs12,000-15,000 of that. Kindly suggest me some good systematic investment plans (SIPs) which will prove to be good tax savers and will fetch me best returns, keeping in mind a perspective of two-three years. I have neither invested in any mutual fund nor taken any insurance policy yet. Is investing in NSE given any tax exemption?
-John Milton
For tax-saving schemes, you may take SIPs of Sundaram BNP Paribas Tax Saver and SBI Magnum Tax Gain and divide the money equally between the two. If market stabilizes, then these funds could offer you decent returns as well as serve your purpose of saving taxes. Investing in stocks does not qualify for any exemption under the Income-tax Act.
My goal is to make a lot of money in a short span of time. I wish to have my own house and car in the near future. I also want to have a regular flow of income. I am looking for good returns for all my investments. I want to invest in such a way that I would get maximum returns for all my investments and at the same time I can save maximum tax possible. Please advise.
-Pradeep Hosbet
Good to hear about your plans, but you forgot the basic ingredients for your financial planning, which are your annual savings and future need of returns, your age, your risk profile, your other investments, etc. In the absence of these information, it is impossible to do meaningful planning. However, I must suggest, you should never expect astronomical returns from your investments as it may lead to wrong decisions. Be rational in your approach for investment and returns.
I want to invest Rs20,000 in equity-linked savings schemes. Can you suggest me the best schemes to invest?
You may invest in SBI Magnum Tax Gain, HDFC Tax Saver and Sundaram BNP Paribas Tax Saver.
I hold shares in Tata Motors Ltd, Punjab National Bank, Jaiprakash Hydro-Power Ltd, Power Grid Corp. of India, Suzlon Energy Ltd, Larsen and Toubro Ltd, GMR Infrastructure Ltd, ITC Ltd, Jaiprakash Associates Ltd, Ambuja Cements Ltd, Reliance Power Ltd and Ispat Industries Ltd. If I hold them for one-two years, will they give good returns?
-Yag Datt Sharma
Since you have not mentioned your acquisition prices, it is difficult to take a call on likely returns. However, at the face of it, all your stocks qualify under the blue-chip category and once the market stabilizes, they are likely to move faster than the aggregate market. Generally speaking, in a period of one-two years, you can expect decent returns on your portfolio.
I own shares in Creative Eye (bought at Rs34 per share), GTL (at Rs305), Reliance Natural Resources (at Rs121), GTL Infrastructure (at Rs50) and Phoenix Mills. Could you tell me whether to hold or sell these stocks?
-Ramdas Suryawanshi
You have not mentioned the number of shares you hold in each company. It is important to know the quantity as well to answer your query. Because if some averaging needs to be done or book a partial profit or loss, it can only be suggested if I know your holding in numbers.
As far as your portfolio is concerned, Creative Eye Ltd has fallen sharply from your buying levels. You may plan to exit the stock at around Rs24-25 after checking its fundamentals at that time. You may continue to hold GTL as you may get your buy price in six months to one year. Reliance Natural Resources Ltd is a typical momentum stock and you may get your rate in around one-three months, you may remain invested in the stock for a period of one year. You may hold GTL Infra for around a year for decent returns, as your acquisition cost is very low. You can hold Phoenix Mills also for a year’s time. I think you should focus on growth stocks rather than momentum stocks. Your stocks may give you good returns, but that would not be maximized returns talking strictly in terms of your holding.
I took a home loan from ICICI Bank in 2005 at 7.5% interest and within a year, the bank has raised it to 11.5%. I had prepaid 40% of the total loan amount, enhanced the EMI amount and reduced the tenure. Can I impress upon the bank to reduce the interest rate in view of my good repayment track?
You must have opted for floating interest rates as the option for your home loan and these rates are governed by market situations or prevailing interest rates. You will not be able to impress upon the bank to lower the interest rate as the bank is governed by its rules. You have done the right thing by partially prepaying your loan as the interest rates are high. However, if you are dissatisfied or you are getting a better offer from another bank, you may get it refinanced by the other bank. Banks do refinancing without much fuss on the basis of your track record.
I hold 35 shares of Power Grid Corp. of India and 25 shares of Union Bank. Up to what period shall I hold these shares? Which are the good mutual funds under SIP for long-term investment?
-Mayuresh Deo
Power Grid Corp. of India Ltd and Union Bank are very good stocks, which have a lot of potential at current market prices. If you hold these stocks for a year from now, you may expect very good returns. However, since these stocks are blue-chip, you should not sell them unless you have better investment options. As far as mutual funds are concerned, you could take exposure in Reliance Growth Fund, SBI Magnum Contra, Tata Infrastructure Fund or DBS Chola Opportunities Fund.
I bought six shares of Larsen and Toubro Ltd (L&T) at an average price of Rs3,251. In the meantime, I heard from newspapers and other media that due to commodity hedging at the company, these shares will fall. I want to know about commodity hedging and future of L&T.
L&T is a rock solid blue-chip stock and if you are a long-term investor, you should not worry about its short-term price movement and factors affecting this stock, such as commodity hedging. In fact you may pick more of this stock if it falls further. It has a one-year target of Rs4,175. So there is still a lot of potential in this stock.
I would like to invest Rs5,000-10,000 in stocks for a short term, say about one-three months. What stocks would you advise? Also, I have 50 shares of Tata Teleservices. What is your advice regarding this scrip?
-Parameshwar Iyer
Since your time period of investment is very short, any call would come with a great amount of risk. However, if you understand the risk of investing for a short period, then you may consider investing in Bajaj Auto Finance Ltd. However, before taking any call you must do your own research and take a decision based on it as this is only for information purposes.
As far as Tata Teleservices Maharashtra is concerned, you can buy more of this stock around current levels with a one-year time frame.
What are the prospects of investing in gold at the moment? Are there any chances that gold prices will observe a steep decline in the near future?
I would not recommend investing in gold at current levels as stocks are now available at better valuations with more probabilities of gains in longer term. However, gold too is headed north with more gains likely during this year. I do not expect any sharp fall in gold in near future. Gold has a good support at $938 an ounce and resistance at $1038 in the short term in the international market.
I’m a beginner in stock investments. I would like to know about open-ended mutual funds having good track records. I also would like to know which shares to be bought at this stage.
-Shailesh Nilakhe
Please read the questions answered above for some good mutual fund schemes. All the schemes mentioned above could offer you decent returns in a longer period of time. As far as stocks are concerned, plan for long-term investment and invest in Union Bank, Punjab National Bank, Kotak Mahindra Bank, Bajaj Auto Finance Ltd, Tata Motors, Tata Steel, Steel Authority of India, etc.
I want to buy shares in Cipla, L&T, Bhel, Bharati Airtel, Wipro, ICICI Bank, HDFC and Godrej Consumer. Kindly advise.
As a good investment decision, you should never buy your stocks at one price unless it is a one-sided bullish market. You should buy stocks in small quantities spread over a price range and at present it is a good time to start buying. Though, the downward potential of the market can still not be ruled out, buying in small lots would help you pick bargains. All the stocks mentioned by you qualify as buying opportunities. However, you may wait in stocks such as Cipla Ltd, Wipro Ltd and Godrej Consumer as their results are due next month.
My portfolio comprises 50 shares of JP Associates bought at Rs308 a share, 500 shares each in JP Hydro-Power, Sunflag Iron and Steel and Ispat Industries bought at Rs78, Rs34.30 and Rs32, respectively. Also I have Reliance Power at Rs430 (16 shares in IPO), NTPC at Rs191.45 and Remi Metals at Rs16.88 (2,000 shares). I also hold Reliance Petroleum Ltd at Rs109.50 (500 shares) and Himachal Futuristic at Rs33 (1,000 shares). What should I do with these? I can hold them for long term if required.
You should exit Remi Metals Gujarat Ltd at around Rs22 if it comes in short term. You should sell Sunflag Iron and Steel at around Rs39 and invest the sum in stocks such as GMR Infra. For the rest of your stocks, since you have a capacity to hold, you should hold them for a longer period for better returns.
I invested Rs15,000 in SBI Magnum Tax Gain, Rs10,000 in HDFC Tax Saver in August and Rs1,000 monthly through SIP in JP Morgan Equity-Growth scheme from May 2007. The investment didn’t bring much profits. The total value of all the units is slightly lesser than my investments. What is the next step I need to take? Should I stop or go ahead with the JP Morgan SIP? Will investments in fixed deposit give a steady income compared with the volatile share market?
The choice of your schemes is good and if you are a long-term investor, there should not be any problem. You should remain invested as of now as at present the market is rather oversold and has the potential to bounce back in short term. As far as fixed deposits are concerned, I do not consider them to be a good investment option as the returns are very low. Instead, you may prefer to invest in balanced funds for a balanced view of risks and returns.
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, Mar 16 2008. 11 26 PM IST
More Topics: Investments | Stocks | Mutual Funds | SIPs | Tax Gain |