Calls: Positional

Buy these stocks at current levels or levarage on every dip with horizon of 2-6months for handsome returns

SBI–2450

ICICI Bank  –1025

HDFC  3030

HDFC Bank — 2240

Bank of Baroda  —705

Union Bank of India  –343

PFC– 333

REC — 332

IDFC  –181

Key Economic Indicators

Key Economic Indicators:

 There are certain economic indicators which are studied to assess the national economy as a whole.  Some, known as leading indicators, predict what is likely to happen to economy It Good examples of leading indicators are the unemployment position, rainfall and agricultural production, fixed capital investment, corporate profits, money supply, credit position and index of equity share prices.

 Then there are the coincidental indicators which highlight the existing economic position.  Some examples of coincidental indicators are gross national product , index of industrial production, money market rates, interest rates and reserve funds with commercial banks.

 Finally, there are lagging indicators which explain what has already taken place.  Some examples of lagging indicators are large-scale unemployment, pield-up inventories, outstanding debt, interest rates of commercial loans, etc.

 Fundamental indicators to watch

 Economic Indicators are anything but”Just numbers”- they are the keys to unlocking invaluable information about market behaviour.

 Investors need to carefully look for and watch some of the following key indicators which give a clue about the future direction of the economy in general and stock market behaviour in particular.

 Gross Domestic Product (GDP)

GDP is the market value of all final goods and services produced by labour and property located with in the country.  It is calculated by adding the total value of the country’s annual output of goods and services.  Real GDP is the market value of all final goods and services produced within the country as adjusted for inflation.  Real GDP is calculated by dividing nominal GDP by a price Index.

 Balance of Payments (BOP)

BOP measures the payments that flow between any individual country and all other countries. It is used to summarize all international economic transactions for that country during a specific time period, usually a year.  The BOP is determined by the country’s exports and imports of goods, services, and financial capital, as well as financial transfers.  It reflects all payments and liabilities to foreigners(debits) and all payments and obligations received from foreigners (credits).

 Current Account Deficit

The term current account usually refers to the current account of the BOP and contains the import and export items of goods and services as well as transfer payments including net investment income.  A current account surplus increases a country’s net foreign assets by the corresponding amount, and a current account deficit does the reverse. Both government and private payments are included in the calculation.

Inflation rate:

It is the rate at which the general level of prices for goods and services is rising and subsequently, purchasing power is falling.  Rising inflation rate is a cause of concern for investors.

 Monetary policy:

Monetary policy is a tool by which government can influence the economy by affecting interest rates.  In the case of India, The RBI may choose to increase interest rates thereby slowing the economy and dampening inflation, or decrease interest rates which may stimulate the economy by stimulating investment and consumption.

 Fiscal Deficit

When Government’s total expenditures exceed the revenue that it generates(excluding money from borrowings). Deficit differs from debt, which is an accumulation of yearly deficits.

Share Trading

Primary and Secondary Markets, How to do trading ?

Buy and Sell.Primary and Secondary Markets

Shares which are bought in IPO are called primary market shares. Once IPO is over and shares are listed in stock exchange and if you buy them, they are called secondary market shares.

Opening a Demat Account :

A person should open a demat account ( dematerialised account) with any of the brokers available so that trading can be started. ICICI direct, Reliance Money, Share khan, India Bulls, Geojit, 5 Paisa, HDFC securities are few of the brokers available with whom you can do online trading.

Pan Card is must for opening demat account. You should also have address proof and Id proof so that the demat account can be opened. It takes upto 15 days to open a new online trading account.

Your broker will create an online account for trading, demat account for your shares, bank account for your cash transactions. ICICI direct offers 3 in one account but brokerage is bit high.

Reliance Money has flat amount as brokerage which will be useful for those who trade in huge volumes.There are some brokers who open only a demat account but you cannot do online trading. You need to place orders through phone in this case.

How to do Trading? Buy and Sell.

Once you get your account, you can login to your account and the menu you see their should be easy to navigate. You can click on “Buy” option to buy shares. You will be required to enter stock code, the quantity you want to purchase and the price you want to pay.

You need to allocate money from your account to the trading account. Most of the brokers have some feature called modify allocation or allocate amount for trading purpose.

If you do not know stock code, you can search for the code by entering first few letters of the company.

There are two types of prices ie limit price and market price. Market price is the price that is prevailing when your order reaches the exchange and is executed.

Limit price is the maximum price you are willing to pay to buy a stock.

Example : Reliance is quoting at 2400 and you want to pay only 2390. If you put limit price as 2390, your order will be executed only if the price reaches 2390. If you put market price then the price prevailing at the time your order reaches will be taken. If the price moves to 2420 by the time your order reaches, you will get at 2420 or if the price moves down to 2380 you will get at 2380. Market orders are risky for high fluctuating stocks. Always put comfortable price limit price for executing orders.

You can check your limit available for trading after each transaction that you make.You can sell the stocks in the same way by selecting “Sell” option.

Once you buy a stock, the shares will be credited to your account in 3 days. They will be in your demat account. You can view them by selecting “demat account”. In case you are not able to see them , click on “demat allocation” and then allocate the shares.

Understanding World Indexes: Baltic Dry Index

The Baltic Dry Index/Dry Bulk Index (BDI) is an index covering dry bulk shipping rates and managed by the Baltic Exchange in London. The index provides an assessment of the price of moving the major raw materials by sea. It is a daily average of prices to ship raw materials. It represents the cost paid by an end user to have a shipping  company transport  raw  materials  across  sea  on  the  Baltic Exchange.  The  Baltic  Dry  Index  is a composite of three sub-indexes that measure different sizes of merchant ships – Capesize, Supramax and Panamax carrying a range of commodities including coal, iron ore and grain.

The Baltic exchange maintains prices on several routes for different cargoes and then publishes its own index, the BDI, as a summary of the entire dry bulk shipping market. Changes in the BDI can give investors insight into global supply and demand trends. To be more precise, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. However, since the demand for shipping varies with the amount of cargo that is being traded in the market and the supply of ships, the index indirectly measures  global supply and demand for the commodities.

As the dry bulk primarily consists of materials that function as raw material inputs to the production of finished goods, such as concrete, electricity, steel, and food, the index is also seen as a good economic indicator of future economic growth and production.

Investing in the Index

When an investor buys a shipping stock which has presence in dry bulk, they are effectively buying into the Baltic  Dry  Index.  But  the  quantum  of  exposure  depends  on  how  the  company  enters  into  shipping contracts. For  instance  if  the  company has  its ships  contracted on  a spot  basis  then  it  implies  that  the contracts are  directly corelated  to the daily  price  of the  BDI.  This means  that their revenues are  directly dependant on the movement of the index. For example if the BDI price shows an increase it would entail a profit for the shipper. Another way of contracting is the time charter contract which means the shipper has entered into a contract which is usually 2-5 years in duration. This contract follows a fixed daily rate which protects the shipping companies profits in case of a fall in the BDI price. This gives the company an opportunity to hedge their risk against the falling BDI rates.

What makes the BDI rates / freight rates fluctuate?

The freight  market is subject  to a wide  range  of external variables, but it is  fundamentally driven  by the following factors:

•      Commodity demand – This can be understood from the levels of industrial production and the demand for different commodities such as steel , coal , iron ore, other metals , crude oil across the globe. Also, the performance of the specific industry gives us an indication of the level of demand. If the commodity demand is  strong,  BDI  rates  will  increase  regardless  of  the  spot  price  of  those  commodities.  For example – China being a major producer of commodities, if coal is demanded by them, then the BDI rates would see an increase.

•      Supply of Fleet – This depends on the different types of vessels available and the number of vessels being delivered/scrapped.The average age of ships is 25 years. If the average age of a ship is closer to that number, supply would decrease in the short term. But on the other hand supply is also determined by the delivery of new vessels.

•    Seasonal pressures –The weather has a big impact on the shipping demand. For instance cold weather may increase the demand for coal and other energy creating raw materials which would push up the freight rates.

•      Bunker  prices -With bunker fuel  accounting  for  between  one  quarter  and  one  third of  the  cost  of running a vessel, oil price movements directly affect shipowner margins.

•      Market sentiment – Market opinion can greatly affect the freight exchange. The recent fall in the BDI can   be   attributed   to   many   companies   forecasting   lower   global   growth   and   cutting   their production/demand targets.

Index Interpretation for an Investor

The index is the purest leading indicators of economic activity, devoid of speculative players. It measures the demand to move raw materials to the point of production. It helps an investor understand the demand for raw material as per the growth in the infrastructure sector and economy as a whole.

The BDI is totally devoid of speculative players as the trading is limited only to the member companies. The parties, which are relevant to secure a contract, are those who have actual cargo to move and have the ships to move it. The  BDI  will  show  how  much a company  or country  is  willing  to pay  to import raw  materials immediately.

For example, if a Chinese company has contracted out coal prices for the next year from Rio Tinto (RTP), then the  spot  price  of coal  increasing  after a mine accident will not impact that  established  contract. However, when this company is willing to pay more (per ton) to ship the coal then an investor can see that the price growth would accelerate.

When the BDI rates shown an increase, the cost of raw materials also goes up as the producers and refiners pass the cost of procuring the raw material along the value chain. At the end, the consumer would pay a higher price for the goods they derive from the raw materials, which get shipped across with a higher dry bulk rate.

For example when the rates of BDI went up in 2007 the cost of importing coal also saw a jump. A country, which meets its energy requirements through importing coal witnesses the situation that the overhead costs for factories goes up with the increase in the price of coal. As the overhead cost increases, the end product price also goes up in order to maintain the margin.

So in a nutshell we can say that when BDI increases, it has a positive impact on the margins and revenues of shipping companies. On the other hand when BDI decreases, the producers in the value chain stand to gain as their procurement cost comes down.

The index has gone through a flat move in the recent period and has seen a gain of ~10% and ~41% since the beginning of January 2010 and December 2009 resp. Note: The index has shown a strong recovery as it had not seen gains when the BDI was performing. Therefore 41% is basically on a low base. Additionally, increased OPEC spot fixtures in December 2009 and expectation of increased petroleum trading activity has led to the spurt in the index.

Banking Reforms on toll

NBFCs and the private sector can now enter the banking business if they meet RBI’s criteria. This is a major move for the financial sector

Private players and non-banking finance companies (NBFCs) have reason to cheer the Budget speech as the finance minister announced that the RBI is open to giving them banking licences if they meet the apex bank’s criteria.

“The RBI is considering new bank licences to promoters in the private sector and also NBFCs, if they meet the eligibility criteria of the RBI,” Pranab Mukherjee said while presenting the annual Budget for 2010-11 in the Lok Sabha.

NBFCs like Indiabulls, Reliance Capital, Religare, IL&FS, IDFC and Aditya Birla Financial Services are likely to apply for bank licences after the RBI norms are in place.

“The Aditya Birla Financial Services Group is already a large non-bank player occupying a significant position across all its verticals. We wholeheartedly welcome this initiative and will definitely apply for a licence. The Aditya Birla Group is confident that we will meet any eligibility criteria that might be set,” said Ajay Srinivasan, chief executive (financial services), Aditya Birla Group.

“The finance minister has shared the government’s desire to open up the banking sector to NBFCs and the private sector. This is a significant step towards further strengthening and broadening the banking sector and bringing it closer to the aam aadmi,” adds Mr Srinivasan

No new banks have been set up in the past eight years. In fact, no new Indian bank has been set up since the first flush of liberalisation in 1993 when half-a-dozen banking licences were given. This announcement clearly demonstrates the government’s plans for liberalisation of the financial sector.

India has 96 scheduled commercial banks (SCBs)—27 public sector banks 31 private banks and 38 foreign banks—having a combined network of over 53,000 branches. According to a report by ICRA, public sector banks hold over 75% of the total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5%, respectively.

Unlike banks, all NBFCs cannot accept demand deposits. Only NBFCs which hold a valid certificate of registration with authorisation to accept public deposits can do so. NBFCs that were earlier allowed to be converted into banks were Kotak Mahindra Finance and 20th Century Finance. While Kotak has diversified into various financial services, 20th Century became Centurion Bank; it was taken over by a bunch of private equity investors and eventually merged with HDFC Bank. Two of the other new licensees in the early 1990s—HDFC Bank and UTI Bank (renamed Axis Bank)—have become very successful private banks.

The announcement also cheered the markets. The Sensex gained 175.35 points while the Nifty gained 62.55 points. Religare (an NBFC) inched up 3% to Rs371 from Rs361, Indiabulls shed 1% to close at Rs98.90, and Aditya Birla Nuvo gained 4% to end at Rs842

More Savings for Individual

Amidst all the debate about fiscal consolidation and roll-back of excise duty concessions, the finance minister has created quite a flutter in an unexpected area. The Union Budget for 2010-11 has provided individual taxpayers with some welcome revisions in tax slabs that would effectively put more money into their wallets. Consumers, who have been feeling the pinch of rising prices, now have something to cheer about.

The revised tax slabs will be as under:

Income upto Rs 1.6 lakh
Nil

Income above Rs 1.6 lakh and upto Rs. 5 lakh
10 per cent

Income above Rs. 5 lakh and upto Rs. 8 lakh
20 per cent

Income above Rs. 8 lakh
30 per cent

While the primary threshold (amount up to which no tax is payable) remains unchanged at Rs1.6 lakh, the income bracket falling under the 10% tax slab has been revised to Rs1.6 lakh-Rs5 lakh. Previously, this bracket was fixed between Rs1.6 lakh-Rs3 lakh. Similarly, the second slab of 20% tax has been fixed at Rs5 lakh-Rs8 lakh (from Rs3 lakh-Rs5 lakh earlier). The highest tax slab of 30% will now be charged on income in excess of Rs8 lakh, compared to Rs5 lakh earlier.

This dramatic shift in the direct tax policy means a savings bonanza for the inflation-hit consumer. Here is how your savings will shape up under the new tax system:
Suppose you earn an annual income of Rs4lakh, your tax incidence (excluding education cess) will now amount to Rs24,000, instead of Rs34,000 earlier—a saving of Rs10,000.

A person earning Rs6 lakh will shell out Rs54,000 in taxes. In this case, the savings compared to the earlier tax code will amount to a whopping Rs30,000.
Similarly, a person in the highest tax slab, earning say, Rs9 lakh, will be able to save a phenomenal Rs50,000 from the tax differential.

This is not the only carrot extended by the government, either. The existing tax-saving limit of Rs1 lakh has also been raised by an additional amount of Rs. 20,000 for investment in long-term infrastructure bonds.

Industry experts have welcomed the move. Ranjeet Mudholkar, principal advisor, Financial Planning Standards Board India, said, “The further slackening of income-tax slabs will benefit 60% of tax-payers. Apart from these, a tax payer can also avail deduction of Rs20,000 for investment in infrastructure bonds as notified by the Government, in addition to the limit of Rs1 lakh under Section 80C. Hence, from the perspective of financial planning, a tax-payer can channelize more funds towards their chosen financial goals despite earning the same income. Also, to optimise the use of excess disposable income, a tax-payer should employ strategic asset allocation towards better asset-creation in future.”

Nikhil Bhatia, executive director at PricewaterhouseCoopers believes this is an indication of how the slab rates will move from here onwards. “I think it is a step in the right direction. Under the direct tax code (DTC), the tax slab rates are expected to go up substantially. In that sense, it is not much of a surprise because an indication of this was coming through from the DTC itself, where the marginal tax rate has been proposed at Rs25 lakh. It is a populist move; one which will leave more money in the hands of the individual”, he said.

Dr Suresh Surana, founder, RSM Astute Consulting Group, agreed, “The finance minister has attempted to take the tax-payer on the road to the new Direct Tax Code (DTC) (proposed to become effective from 1 April 2011), by bringing the income-tax slab rates in sync with those proposed in the DTC.”

Contributions to the Central Government Health Scheme have also been allowed as deductions within the overall ceiling for tax rebate, besides contributions to health insurance schemes which are currently allowed as deductions under the Income Tax Act.

The proposals on direct taxes are estimated to result in a revenue loss of Rs26,000 crore for the government.

ECONOMIC SURVEY 2009-10

* Current fuel prices not fiscally sustainable

* expenditure control needed to control deficit

* Power, coal seeing a revival

* Infra capacity need to be accelerated

* Expect revenues of Rs 820 to 850 Crs in FY10

* Timely off-loading of food stocks need urgent attention

* Rationalise port service charges

* Lower peak custom duty to 7.5% from 10%

* Monetary measures must ensure credit growth

* Lower than budgeted non taxed revenue expected

* Medium term prospects of Indian economy really strong

* Major decline in consumption expenditure growth in FY10

* To give higher share to states despite fiscal strain

* States to get 1.5% more: Pranab

* To compensate states on revenue loss when GST rolled out

* Local bodies to also get share of central taxes

* Accepted major recommendations of 13th Financial Panel

* Food inflation is at present hovering close to 18%

* Moots direct food subsidy via food coupons to households

* Survey favours making available food in open market

* Survey favours monthly ration coupons usable anywhere for poor

* Fiscal deficit may be cut to 5.5%

* Gas output up 52.8 per cent to 50.2 billion cubic meters with RIL starting production

* Trade gap narrowed to USD 76.24 bn in April-December

* India 10th largest gold holding nation at 557.7 tonnes

* Large decline in customs, excise expected

* Tighten FRBM clauses for future relaxations

* Overall revenue transfers to state at 39.5%

* Services sector growth rate at 8.7%

* Virtually every second Indian has access to phone

* Fundamental policy changes needed for trade

* Wants credit available at reasonable rates on time for private sector to invest in agriculture

* Small shortfall in revenue recept in FY10

* Overall farm GDP decline of 0.2% in FY10

* Investment growth still below GDP growth rate

* India not immune to global prices

* Auction for 3G spectrum to provide existing and foreign players to bring in new technology and innovations

* India world’s 2nd largest wireless network with 525.1 million mobile users

* Slowdown in infrastructure that began in 2007, arrested

* Government initiates steps to boost private investment in agriculture

* Credit needed for private investment in agriculture

* Imports in April-December 2009 down 23.6 per cent

* Exports in April-December 2009 down 20.3 per cent

* Gross fiscal deficit pegged at 6.5 pc of GDP in 2009-10

* Favours making available food in open market

* Hype on Kharif crop failure helped hoarding

* Poor rainfall stopped prices falling

* Delay in releasing imported sugar pushed up prices

* Farm and allied sector production falls 0.2 per cent in 2009-10

* Rising food inflation a major concern

* Growth in private investments

* Growth has to quicken

* Watch and withdraw stimulus

* Risks of double dip recession seen

* Economy likely to grow up to 8.75%

* Inflation may spread, warns survey

* V-shaped recovery seen

* Economic recovery weak

* India’s GDP growth rate in 2009-10 was 7.2%

* India’s GDP to return to 9% in 2011-12

* High double digit food inflation in 2009-10

* Possible spurt in global commodity

* India can become world’s fastest growing economy in 4 years

* Hike in fuel prices will impact inflation

* Pranab tables economic survey in Parliament

* The fiscal deficit for the current fiscal year is expected to shoot up to 6.8% of GDP

* The economic survey is expected to project around 7.5% growth rate for the current fiscal year

ULIP

ULIP

ULIP stands for Unit Linked Insurance Plan. A United Linked Investment Plan (ULIP) is an instrument which combines the security provided by an insurance plan with the opportunities provided by an investment plan. It is a unique product which aims to integrate insurance as well as investment requirements. Its structure is similar to that of a mutual fund. This is how it works:

• You pay a periodic premium to the insurance company.
• A part of the premium is used to provide you with an insurance cover.
• The remaining amount goes to equity or debt market
• In the event of death, nominees are paid the sum assured
• In case of maturity of the policy total value of the fund will be paid to the policy holder.

Why People Buy Insurance?

1.    Tax Saving

2.    To save/invest

3.    Agent’s compulsion

4.    To plan for retirement

5.    To provide security for children’s education

6.    Bank’s demand for security

7.    Relatives’ recommendation to buy insurance

8.    Friends’ influence

9.    Parents’ influence

10. To cover life risk

5 steps to select right ULIP

We present a 5-step investment plans that will guide investors in the selection process and facilitate them to choose the right ULIP.

• Understand the concept of ULIPs
• Focus on your need and risk profile
• Compare ULIP products from various insurance companies
• Go for an experienced insurance advisor
• Does your ULIP offer a minimum guarantee?
• Read the fine print before investing in ULIP

Things to keep in mind while Selecting a ULIP

1.    Buy insurance for risk cover

2.    Do not consider insurance as an investment option

3.    Preferably buy only a term policy

4.    Do not prefer savings-linked insurance policies

5.    Remember not to be carried away by persuasive agents and publicity.

6.    Buy ULIP only if your horizon is long term.

7.    Not insure yourself if you are a lone bird.

8.    Do not insure if you are wealthy.

9.    Do not insure the child

10. Read the fine print carefully

1. Buy insurance for risk cover

The purpose of an insurance policy is to protect the family members of a person from any financial complexities in case of his/her premature death. Such unfortunate eventuality to a breadwinner in the family can put the other family members in serious financial problems. Insurance seeks to offer financial help in such times.

2. Do not consider insurance as an investment option

The primary aim of the insurance policy is to provide a risk cover. Therefore a part of the premium paid is first appropriated towards this purpose. The balance amount is invested in financial instruments, which are generally very safe ones. Also, the commissions and charges are substantially higher than other investment options.

3. Preferably buy only a term policy

Term policies are pure insurance products with no investment option. They are the cheapest and the simplest among the available plans. But cheapest does not mean they are inferior to other costlier insurance policies. As far as the basic purpose of risk cover is concerned, there is no difference. And usually for most of us this term policy must be more than sufficient.

4. Do not prefer savings-linked insurance policies

In contrast to the term policies, savings-linked insurance policies are such as money-back, endowment and whole-life provide the risk cover and also give back some returns to the insured at the end of the policy term, in case nothing happens to him/her in the interim. The premiums of such policies are much higher than the term policies. This assurance of getting some returns at the end of the policy term is why most people choose for such savings-linked policies in comparison with term policies. Therefore, a person may be wealthier if he were to buy the cheaper term policy and invest the balance amount, which would have otherwise gone towards high premiums of saving-linked policies, like MFs. In this way he would be risk-covered and also generate higher returns.

5. Remember not to be carried away by persuasive agents and publicity.

From their business viewpoint the insurance companies and the agents may be keener to sell saving-linked policies in comparison with the term policies, as the premiums and commissions are much higher. And hence the advertisements and promotions may speak more about such policies. Therefore, it is for the insured to keep his interests & needs in mind and not be carried away by influential agents and publicity.

6. Buy ULIP only if your horizon is long term.

Unit Linked Insurance Policies (ULIPs) offer an alternative to traditional policies where the returns will be market-linked. Further, one can also choose one’s own investment objective amongst equity, debt and balanced funds. However, the charges in the first years are quite high. Thus the actual benefit of ULIP starts accruing only if one has a long-term investment horizon.

7. Not insure yourself if you are a lone bird.

Insurance is for the benefit of the dependents. Thus, if you are single with no one being financially dependent on you, it is not necessary for you to buy an insurance policy.

8. Do not insure if you are wealthy.

If you are a person of plentiful means, you have lots of wealth – properties, bank balances, investments, etc. in your absence; this may be more than enough for your family and dependents to continue living comfortably. A few lakhs of rupees from an insurance company may not make any material difference to their future financial security.

9. Do not insure the child

Any unfortunate eventuality involving a child is no doubt emotionally very shocking. But it usually does not hurt the family financially. Whereas, insurance cover is for justifying the financial difficulty, that may arise with the death of the insured. Therefore, taking a policy for a child is meaningless. It is a needless expense.

10. Read the fine print carefully

As they say ‘the devil is in the details’. Therefore, understand the characteristics of the policy, the charges etc., before you buy an insurance policy. Further, most insurance companies offer a 15-day look-in period after you have taken the policy. Go through the terms and conditions in the policy very carefully. And if you feel that it does not meet your necessity, you can cancel the policy. You may have to pay some administrative charges, but this would be much better than investing on to a bad policy for years to come.

Insurance is a long-term contract generally spanning over decades. Also, these contracts have very little flexibility. A wrong insurance product can financially injure for a very long time, unlike many other financial products. Therefore, one should be extra careful and cautious when deciding on how much to insure, how long to insure, which policy to buy, etc.

Discontinuance within three years of commencement

If all the premiums have not been paid for at least three consecutive years from inception, the insurance cover shall cease immediately. Insurers may give an opportunity for renewal within the period allowed; if the policy is not renewed within that period, surrender value shall be paid at the end of third policy anniversary or at the end of the period allowed for revival, whichever is later.

Discontinuance after three years of commencement

In this case at the end of the period allowed for renewal, the contract shall be terminated by paying the surrender value. The insurer may offer to continue the insurance cover, if so opted for by the policy holder, levying appropriate charges until the fund value is not less than one full year’s premium. When the fund value reaches an amount equivalent to one full year’s premium, the contract shall be terminated by paying the fund value.

SEBI Guidelines to Investors

PR No.36/2010

Caution to investors

Securities and Exchange Board of India (SEBI) is a regulatory body established by an Act of Parliament to protect the interests of investors in the securities market, to promote the development of, to regulate the securities market and for matters connected therewith or incidental thereto. The following caution is issued by SEBI in the interest of investors. SEBI has observed a proliferation of websites that offer investment advice to investors. Many of these websites offer investment advice not backed by any reasonable basis and prima facie appear to be misguiding. Investors should realize that when they follow such advice they are exposing themselves to undue risk in using unconfirmed information available on such Websites/Blogs/astrology predictions or advice/Newspaper Advertisements/SMS’s/Emails/rumours/ advice rendered through television or print media and trading tips on an intra-day basis, short term basis or long term basis. The public in general is advised not to fall prey to or be lured by such sources of information promising quick gains and unrealistic high returns. It is advised that investors should take well informed investment decisions. The following may be borne in mind: · Deal only with/ through SEBI registered intermediaries. · Do not get carried away by advertisements promising unrealistic gains and windfall profits. · Do not invest based on market rumours or unconfirmed or unauthentic news. · Be aware that advice through television or print media does not mean that it is the opinion of the channel or publisher. · Be extra cautious while using information available from media sources such as Websites/ Blogs/ Newspaper Advertisements/ SMS’s Emails/rumours/ advice through television or print media for information and tips for intra-day, short term or long term investing. · Do not be guided by astrological predictions on share prices and market movements. · Do not make investment decisions on the basis of implicit/explicit promises made by anyone. · Do not be unduly influenced by indicative returns. · Do not be unduly influenced by Bull Runs/Bear Runs while making investment decisions.

Mumbai February 10, 2010

http://www.sebi.gov.in/press/2010/201036.html

Unethical poaching games by fund distributors

Following the implementation of the new trail commission rules, some fund distributors are getting cleints to sign a changeover without their explicit consent Following the Securities and Exchange Board of India (SEBI) direction to the Association of Mutual Funds in India (AMFI) to implement the new trail commission rules, a number of distributors are trying to snatch away clients from each other. However, this game is leaving the investor clients in a lurch. According to an independent financial advisor (IFA), investors are lured into signing a form for changing their sub-broker under different pretexts. “Following the core banking initiatives that require 11-digit account numbers, agents of a financial advisory firm asked investors to change their account numbers. They even offered to do it free of cost for the investors saying that unless they update their account number, their redemption amount or dividend may be transferred to someone else’s account. The investor clients are asked to sign a transaction form which prominently displays the bank account number but conceals the ‘change in sub-broker’ column that is placed at the bottom of the form,” the IFA revealed. According to unconfirmed reports, UTI and DSP BlackRock carried out a check on the forms received by them pertaining to change of broker. When these two asset management companies called their investor clients, what they found out was shocking. Out of every 10 customers, six were not even aware of any mandate like this (the change of sub-broker). This brings to light that most investors have not read the fine print before signing the dotted line and were literally duped into entering into a false contract. So be careful the next time, while signing any documents, especially one from a fund distributor or financial advisory firm.

Courtesy: Moneylife