Higher Borrowing – RBI Move Awaited

May 12, 2020

The government on Friday evening steeply revised upwards its 2020-21 borrowing programme by 53.85% to Rs 12 lakh crore. It was earlier estimated to be Rs 7.8 lakh crore, indicating that the Centre is giving shape to an imminent and sizeable fiscal package to arrest the COVID-19 related slowdown.

The above revision in borrowings has been necessitated on account of the COVID-19 pandemic.

Here is our take on the revised borrowings and what RBI can do next…

Knowledge Series: The RSI Technical Indicator

May 11, 2020

Relative Strength Index or RSI is a price momentum oscillator used widely in Technical Analysis of stock prices. This series strives to explain practical application of RSI without going into nuance of mathematics in constructing RSI.

RSI should be applied in conjunction with the current state of stock as RSI behaves differently in trending stock and in range bound stock. Thus RSI behaviour can provide insight into Trending/Trendless state of Stocks and Indices.

Please read the complete report to understand the importance of this indicator with stock examples.

Impact of SEBI Circular – 30th April

May 1, 2020

SEBI released a circular dated 30th April 2020 defining the relaxations on compliance requirements for Mutual Funds. Official circular can be found here.

All these changes have an effect on the markets. Here is our impact analysis of the effects on the market when these regulations are implemented.

What Led to the Franklin India Crisis

April 26, 2020

The financial industry in India is seeing some unusual and even some unprecedented events due to COVID19. As everyone is trying to maintain some sanity, Franklin Templeton takes an unexpected step by closing six debt fund schemes. This has definitely shaken up the Indian Mutual Fund industry.

Here’s our take on what lead FT to take this step.

Knowledge Series: COVID-19 Crisis – India VIX and Market Returns

April 3, 2020

We have all been reading about India VIX in the news. But what is VIX and what does it really mean?

In a nutshell, India VIX is a volatility index based on the NIFTY Index Option prices. The index measure the expected market volatility over the next 30 calendar days.

Read our complete article to understand how COVID affected India VIX.

Knowledge Series: Earnings Yield, G-Sec Yield & Market Returns

March 25, 2020

A comparison of the yield between the two capital instruments, equity and debt, can be used to assess the risk-reward for investing. This tool has been a very important indicator to identify the bottom of the equity market. Whenever the earnings yield has crossed bond yields, healthy equity returns have followed.

In the last 20 years, this is the third instance where this has happened. Read on to know more…

Knowledge Series: Realtime Evidence of Fibonacci Retracement in NIFTY50

March 13, 2020

Nonetheless on Friday the 13th

In mathematics, the Fibonacci numbers form a sequence called the Fibonacci sequence, such that each number is the sum of the two preceding ones, starting from 0 and 1. The beginning of the sequence is thus 0, 1, 1, 2, 3, 5, 8, 13, 21 …

Fibonacci numbers appear in nature often enough to prove that they reflect some naturally occurring patterns. They appear in biological settings, such as branching in trees, arrangement of leaves on a stem, the fruitlets of a pineapple, the flowering of artichoke, an uncurling fern, the arrangement of a pine cone and the family tree of honeybees.

The numbers can also be applied in modelling financial markets by using retracement ratios derived from the sequence. Fibonacci Retracement highlights levels which help us identify potential reversal area thus identifying potential entry point after a pullback.

Today’s sharp pullback of Nifty50 from critical retracement level shows the efficacy of the Fibonacci phenomena in our financial markets.

Systematic Withdrawal Plan (SWP) vs Dividend Plan

March 9, 2020

Budget 2020 brought in many changes on tax regulations of investments. A huge impact of this change has occurred on the way dividends are taxed. Dividend Distribution Tax will be abolished with effect from 1st April 2020. Dividend will thereon be taxed as per the income tax slab. On a post-tax basis, it has now become more beneficial to select SWP under growth option if you want regular cash flows rather than dividend option.

What is an SWP?
A Systematic Withdrawal Plan allows investors to withdraw a pre-determined and fixed amount of money from their current investments at fixed intervals (daily, weekly, monthly and so on).

“The Finance Bill, 2020 proposed to remove Dividend Distribution Tax (DDT) at the level of Company/Mutual Fund and proposed to tax the same in the hands of share/unit holder. It was also proposed to levy TDS at the rate of 10% on the dividend/income paid by the Company/Mutual Fund to its share/unit holder if the amount of such dividend/income exceeds five thousand rupees in a financial year.”
Ministry of Finance

Mutual Fund Tax Reckoner for NRI Investors

March 6, 2020

Indian diaspora is one of the largest in the world. Your friend might be working abroad or your aunt lives abroad–we all are connected to NRIs one way or another.
Given the current changes in the Budget, NRIs need to be aware of the new tax regulations.
We have created a quick reference tax reckoner for all NRIs.

Mutual Fund Tax Reckoner for Individual Investors

February 27, 2020

Anyone invested in mutual funds?
Budget 2020 brought in many changes to the way MF investments are taxed. Check out our handy tax reckoner to provide you on general guidance for the upcoming changes.