THE ECONOMIC TIMES Slay these 10

demons

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THE
BEST
NEW
HOME
LOANS Your home loans are now pegged to
external benchmarks. Find out how to
select the right lender. P2

Don’t buy stocks How to help Use Goal Seek Best gadgets to
just because they parents with to manage your gift on a
are cheap medical needs financial goals budget
P8 P11 P13 P26
 cover story
02 The Economic Times Wealth October 7-13, 2019
THE BEST
NEW HOME
LOANS
Your home loans are now
pegged to external
benchmarks. Find out how
to select the right lender
and optimise benefits
PHOTOS: GETTY IMAGES
under the new regime.
By Preeti Kulkarni
O
n 1 October, all banks shifted
to the Reserve Bank of India-
mandated external bench-
marks for pricing their new
home loans. While banks
have chosen to keep it a low-key affair, for
retail borrowers, a shift to loans linked
to an external benchmark holds more
potential than any other benchmarking
mechanism implemented so far. Read on
to understand how you can get the best
out of the new regime.
The rationale
For long, a major grouse of home loan
borrowers was their lenders’ tendency to
increase lending rates in line with RBI’s
policy rate hike but drag their feet when
it came to passing on rate cut benefits.
Existing borrowers also frequently came
across banks offering lower rates to at-
tract new borrowers.
Several benchmarking regimes in-
troduced by the banking regulator over
the years in a bid to change the situation
have met with limited success. These
include Prime Lending Rate (PLR),
Benchmark Prime Lending Rate (BPLR), The case for an external benchmark
Base Rate and Marginal Cost of Funds-
Based Lending Rate (MCLR). “For more Internal benchmarks did not keep pace with RBI’s repo rate.
than 20 years after the RBI deregulated 12
lending rates of banks, the absence of
smooth transmission remained a matter
SBI Base Rate / MCLR
of concern,” the apex bank noted in an 10 8.15
addendum to the report of its Internal
Study Group. The group observed that 7.50
internal benchmarks such as the Base Repo rate
8
Rate and MCLR have not delivered effec-
tive transmission of monetary policy. It
recommended a switchover to an external 5.15
benchmark to plug this gap. 6
Banks have often cited higher internal
cost of funds as a key reason for not being
able to ensure complete policy transmis- 4 5.75
sion. RBI reduced policy rates cumula-
tively by 110 bps between February and
August 2019. Banks, however, reduced
2
interest rates on new loans by just 29 bps
during the period. This was noted by
RBI in its monetary policy review on 4
October. It said monetary transmission 0
“remained staggered and incomplete.” In 4 Sep 2010 4 Sep 2013 4 Sep 2016 4 Sep 2019
fact, lending rates on outstanding loans
Note: Note: Base Rates were in effect till the introduction of MCLR.Source: ETIG
increased by 7 bps during the same pe-
 cover story
The Economic Times Wealth October 7-13, 2019 03

The effective interest rate will include the spread decided by individual banks
Borrowers will benefit if they opt for loans that come with a narrower spread and transparent credit assessment.

TOTAL CREDIT RISK

BANK EFFECTIVE RATES FOR NEW `50 LAKH HOME LOANS RATES FOR EXISTING `50 LAKH HOME LOANS (MCLR-BASED)
SPREAD* (%) DETERMINANT

SALARIED SELF-EMPLOYED SALARIED SELF-EMPLOYED

LOWEST# (%) HIGHEST# (%) LOWEST # (%) HIGHEST# (%) LOWEST# (%) HIGHEST# (%) LOWEST # (%) HIGHEST# (%)

SBI 3.05-3.3 Internal assessment 8.45 8.55 8.60 8.70 8.50 8.75 8.65 8.95

BoB 2.95-3.95 CIBIL score 8.35 9.35 8.35 9.35 8.40 9.40 8.40 9.40

Union Bank of India 3.05-3.15 CIBIL score 8.45 8.55 8.45 8.55 8.50 9.00 8.50 9.00

ICICI Bank 3.9-4.2 Credit score 9.30 9.45 9.45 9.60 8.70 9.05 9.20 9.20

Axis Bank 3.45-4.1 Internal assessment 8.85 9.30 8.90 9.50 9.00 9.00 9.05 9.05

Note: Most banks, except Citibank, have chosen RBI’s repo rate (5.4%) as their external benchmark, Citi’s benchmark is 3-month T-bill rate (5.32% on 1
October); all rates as on 1 October.
RBI reduced its repo rate by 25 bps on 4 October; banks will have to follow suit. Source: Bank websites,
*Over external benchmark rate; in addition, some banks offer 5 bps concession to women borrowers. Paisabazaar and
Rates will also be influenced by borrower’s credit assessment by the bank. MortgageWorld

riod. This prompted RBI to initially nudge
banks to move to an external benchmark
to price their loans and finally mandate a
switchover for all new retail floating-rate
loans from 1 October. Earlier, the shift, pro-
posed to be effective from 1 April, was de-
layed due to concerns expressed by banks.
The new system will not be applicable to
housing finance companies regulated by
the National Housing Bank (NHB).
The central bank has now allowed
banks to choose between the repo rate,
3 or 6-month treasury bills or any other
benchmark market interest rate published
by the FBIL. However, most banks have
picked the repo rate as their external
benchmark. “As the repo rate is stable and
does not change frequently, most banks are
benchmarking their floating rate loans to
it,” says Soumya Kanti Ghosh, Group Chief
Economic Adviser, SBI. The T-Bill-linked
rates could be more volatile (see graphic),
say experts. “Moreover, they will be mar-
ket-driven, while repo rate will be driven
by the regulator. Repo rate also scores over
T-bill rate in terms of awareness amongst
lay individuals. This is a plus from the
transparency standpoint,” says Vipul
Patel, Founder, MortgageWorld.
External benefits
Your effective interest rate will be repo
rate plus a spread as decided by banks.
“The new effective rate would be repo rate
+ (negative carry on CRR + operating cost)
+ credit risk premium,” explains Ghosh.
Banks will have to reset the rates every
three months. “Other components of the
spread including operating cost can be al-
tered once in three years. However, credit
risk premium may undergo change only
when the borrower’s credit assessment
undergoes a substantial change, as agreed
upon in the loan contract,” the RBI circular
mandating the move says.
For example, the State Bank of India
charges a spread of 265 points over the
repo rate (5.4%) for a loan of up to `30 lakh.
In addition, a 15 bps credit risk premium
comes into play for borrowers with the best
internal risk grades (RG 1, 2, 3). Depending
on source of income (salaried or non-
salaried), the loan amount and internal
risk grading, the credit risk spread can be
as wide as 75 bps. Women borrowers are of-
fered a 5 bps concession on interest rates.
The initial experience of SBI’s repo-
rate lending rate loan scheme introduced
voluntarily in July was encouraging. A 35
bps repo rate cut in August resulted in an
equivalent reduction in the product—now
withdrawn and replaced with a revised
scheme—rate.
On the flipside, as banks have pointed

An unkind cut for borrowers

Banks were slow in passing on RBI policy rate cuts except after demonetisation.

OUTSTANDING FRESH RUPEE

AVERAGE AVERAGE
PERIOD REPO RATE RUPEE LOANS# LOANS#
BASE RATE MCLR (WALR^) (WALR^)

Rate cuts before demonetisation

January 2015 to
October 2016
-1.75 -0.61 * -0.75 -0.97

April 2016 to
October 2016
-0.5 -0.01 -0.15 -0.11 0.01

Rate cuts after demonetisation

November 2016 to
December 2017
-0.25 -0.19 -1 -0.83 -1.07

Note: #Existing loans and new loans | ^WALR: Weighted Average Lending Rate for banks | MCLR: Marginal Cost of Funds
based Lending Rate. | *: MCLR system was put in place on 1 April 2016.
Source: Reserve Bank of India.
 cover story
04 The Economic Times Wealth October 7-13, 2019
out, borrowers run the risk of frequent
increases in their interest outgo or EMIs
Why repo rate scores over T-bill when the rate cycle turns and RBI starts
Treasury bill-linked home loan rates could be more volatile. raising rates. However, floating-rate
borrowers sign up for revision in loan
rates depending on interest rates in the
7 REPO RATE system. Therefore, as long as borrowers
The repo rate is more stable as it changes once in two months. are aware of this fact at the time of loan
approval, the rate movement should not
6.00 result in shocks.
6 Devil in the details
Now that most banks have a uniform
5.15 benchmark, will choosing a lender
become easier? Not quite. For one, the
spreads charged by banks vary, making
it a key determinant in selecting a lender.
5
“It is best to go with a bank that charges
the narrowest spread over the repo rate.
The interest rate will then be most reflec-
tive of the external benchmark rate,”
says Ratan Chaudhury, Head, Home
4 Loans, Paisabazaar.com.
23 Aug 2017 4 Oct 2019 This apart, the credit risk component
holds the key to this system’s success – it
can make or mar the newest effort to get
8 3-MONTH T-BILL banks to transmit monetary policy fully.
The treasury-bill yield changes on a daily basis, making it more volatile. “Transparency in risk scoring and bor-
rowers’ ability to understand and verify
the same will be critical,” says Patel.
7
Do note that not all banks have
6.11 disclosed the credit-risk-premium
component of the spread separately.
While banks like SBI, Union Bank and
6
5.23 Syndicate Bank have specified the credit
risk premium, over and above the base
spread, some like ICICI Bank, Axis Bank
and Citibank have not. Axis Bank’s web-
5 site states that the total spread over repo
rate is between 3.45-3.9% for salaried
borrowers. ICICI Bank mentions a total
spread between 3.9-4.05% for the cat-
4 egory. Moreover, while Union Bank and
23 Aug 2017 4 Oct 2019 Syndicate Bank have decided to adopt
the CIBIL score to determine risk, ICICI
If the EMI is reduced…
Switch ORIGINAL REVISED
to Save Rate of interest 8.85% 8.50%
One can switch banks to Tenor 25 years 25 years
avail of new rates. By pay- Loan amount 50,00,000 50,00,000
ing the same EMI even after Monthly EMI 41,447 40,261
the switch, one can save
substantially on interest. Interest payable 74,34,229 70,78,406
Interest saved* 3,55,822
*Minimum savings assuming EMI is reduced
If the EMI is maintained…
ORIGINAL REVISED
Rate of interest 8.85% 8.50%
Tenor 25 years 22 years, 9 mths
Loan amount 50,00,000 50,00,000
Monthly EMI 41,447 41,447
Interest payable 74,34,229 63,19,022
EMIs saved* 27
Interest saved* 11,15,206
*Minimum savings assuming EMI as per 8.85% (higher rate) is maintained.
Note: A processing charge of `10,000 (maximum fee charged by SBI) will make a negligible dent on
potential savings over total tenure; however, banks tend to waive this fee during festive seasons.
Source: MortageWorld
Bank mentions that rates will vary based
on “bureau score.” “Clarity is yet to emerge
on the credit risk component for all banks.
Borrowers will have to enquire before sign-
ing loan contracts or wait till the picture is
clearer,” says Patel.
Then, you need to look at how the risk
scoring is being arrived at. “Banks may play
on credit risk premium, as internal assess-
ments are confidential,” says V.N. Kulkarni,
retired banker and financial counsellor.
“The concern is that banks could use this
tool to avoid passing on an RBI rate cut, citing
change in borrower’s risk score,” he adds.
Hence, it would be wise to enquire with your
bank and ensure that factors that will consti-
tute ‘substantial’ change in risk scoring are
mentioned in the loan contract.
Better still, look for banks where the
interest rates are transparently linked to
easily-verifiable credit score. For example,
Union Bank charges 8.45% if the borrower’s
credit score is over 750. If it’s below this
floor, borrower will have to shell out 10 bps
more. “Since the purpose of this switchover
is improvement in transparency, a similar
exercise in disclosing risk scoring param-
eters will help. Borrowers have a right to
know. Banks will have to justify the reasons
for any change in credit assessment,” says
Kulkarni. At the moment, clarity is yet to
emerge on how all how banks can decide an
improvement or deterioration in risk scores.
Maintaining a clean credit history and high
credit score will become increasingly impor-
tant in coming days. Banks view those with
CIBIL credit scores over 750 favourably.
Make the switch in time
Most industry-watchers are clear that bor-
rowers will be better off under an external
benchmarking regime. As experience with
SBI’s RLLR scheme shows, there is a high
chance of rate revisions being passed on to
borrowers, teething issues notwithstanding.
Existing borrowers who are servicing MCLR
or Base Rate-linked loans can switch over to
the external benchmark-linked loans after
paying administrative or legal charges. The
final rate and other terms and conditions
will be similar to those for new borrowers
in the same category. In its previous avatar,
SBI’s RLLR scheme allowed MCLR bor-
rowers to switch after paying 0.25% of the
outstanding loan amount as conversion fee.
Banks are yet to release detailed schedule of
charges for repo-linked home loans.
If you opt for home loan refinancing,
charges include fees to be paid for lawyers,
valuers, besides insurance premium and
stamp duty on loan agreement. Processing
charges, too, need to be factored in though
most banks, particularly during the festive
season, reduce or waive processing fees.
Opting for conversion or switching to your
existing bank’s repo-linked scheme will be
simpler. Do carry out a cost-benefit analysis.
You could wait till banks come out with de-
tails on credit risk premium and reset claus-
es. To determine whether you should shift to
your existing lender’s external benchmark-
linked loan or to a new bank, evaluate the
difference between the two rates. “Make the
switch if the gap is at least 35 bps,” says Patel.
Please send your feedback to
etwealth@timesgroup.com

Why asset allocation is critical Cut tax to boost
growth: Godrej
ome investors spend a lot of time
S selecting the best mutual fund
T
scheme while many others wait
endlessly for the right time to invest.
“These attempts to micro manage invest-
ments are futile. Most of the time, your
returns are defined by the asset alloca-
tion of your portfolio,” said Prableen
Bajpai, Founder & Managing Partner,
Finfix Research & Analytics. Bajpai was
addressing the ET Wealth Investment
Workshop in Lucknow, where she helped
participants understand the importance
of asset allocation.
How asset allocation works
Asset allocation simply means dividing
your money into different asset classes,
including equity, fixed income, real es-
tate and gold. All these assets have their
own advantages. “One asset class can
mitigate the risk of the other in a differ-
ent market cycle. Over a period of time,
these assets together can shoulder the
common responsibility to take you to-
wards your goals,” Bajpai explained.
A portfolio concentrated with one
asset class will not be very stable. “Just
like it is difficult to ride a unicycle than
GETTY IMAGES
to ride a four-wheeler, a concentrated
portfolio invested in one asset class is
riskier than having multiple assets in
your portfolio. A car with four wheels
makes the journey less jerky and more
comfortable,” said Bajpai. A diversified
portfolio reduces the overall risk. Also,
the chances of reaching your destination
in time are higher.
What is the ideal allocation?
There is no ideal asset mix which will
financial planning
suit all investors. “The allocation de-
pends on several factors, such as the stage
of life you are in, how far are your goals,
geopolitical risks and your risk profile,”
Bajpai said.
For instance, if your goal is a year away,
you will keep money in fixed income in-
struments. On the other hand, if you are
saving for your child’s higher education
that is 15 years away, the equity compo-
nent has to be high in your portfolio.
– Avneet Kaur
The Economic Times Wealth October 7-13, 2019 05
he cut in corporate tax rate has trig-
gered a clamour for a similar cut in
personal income tax rates. Godrej
Group chairman Adi Godrej says the gov-
ernment should bring down the personal
tax rates to boost the economy. “The gov-
ernment should provide more stimulus,”
Godrej said at a function last week.
Asked if the reduction in the corporate
tax would help in the revival of the indus-
try, the Godrej group patriarch said : “It
would, but more needs to be done. Personal
tax rate should be also be cut down”.
“The current growth rate of economy is
slow and we need to stimulate it. We need
to have the growth rate up and even if it
means that the fiscal deficit goes up, I do
not think it matters. It must do,” he said.
On 20 September, Finance Minister
Nirmala Sitharaman announced a reduc-
tion in the base corporate tax rate to 22%
from 30% as part of the stimulus measures
to revive the slowing economic growth.
Moreover, the Goods and Services Tax
(GST) collections dropped sharply to a
19-month low of `91,916 crore in September,
mirroring a widening slowdown in
economy. – PTI
 review preview
06 The Economic Times Wealth October 7-13, 2019
Why repo rate cut failed to cheer
While the repo rate cut of 25 bps was in line with consensus estimates, it was below bond market’s expectations
by Narendra Nathan
I
t will be difficult to satisfy the nev-
er ending demands of the markets.
The negative reactions coming
from both equity and debt markets af-
ter the latest rate cut by RBI reinforce
this truth. RBI on 4 October reduced
repo rate by 25 basis points (100 basis
points constitute 1 percentage point).
Bond prices fell after the announce-
ment and 10-year yield moved up
by 80 basis points (bond prices and
yields move in opposite directions).
Similarly, benchmark equity indices
Sensex and Nifty fell by 1.14% and
1.23% respectively.
The stock market’s negative reac-
tion to the sudden 80 bps reduction
in growth estimates was on expected
lines. For example, RBI has reduced
the projected 2019-20 growth rate from
6.9% in August to 6.1% in October.
With global growth threatened, ex-
perts have started doubting if this
6.1% is achievable. “Based on recent
signs of local and global slowdown,
even this revised expectation of 6.1%
may be disappointed,” says Suyash
Choudhary, Head – Fixed Income,
IDFC AMC.
Faltering growth and inflation
under control should have been good
news for the debt market, but why did
89.3%
is the decline in the
Yes Bank share price
from its peak of
`394 achieved in
August 2018. The
private bank slid
sharply to a
10-year low of `29
on 1 October after a
forced sale of 10 crore
pledged shares.
No change in small savings rates
Despite a general downtrend in interest
rates, the rates of small savings schemes
have been kept unchanged for the
October-December 2019 quarter. All small
savings schemes, including PPF, NSC and
Sukanya Samriddhi Yojana will continue
to fetch the same interest rates as before.
(See page 22 for prevailing rates).
How to choose the best debt fund
Funds holding long-term bonds are more sensitive to interest rate changes.
any investors are worried af-
M ter debt funds have been hit by
downgrades and defaults. Pankaj
Pathak, Fund Manager- Fixed Income,
Quantum Mutual Fund, has a few tips
to choose the right debt scheme. “Before
you invest in a debt fund, check the kind
of risk you are taking and ask yourself if
you are comfortable with it,” Pathak told
participants of the ET Wealth Investment
Workshop held at Lucknow.
He explained that debt funds carry
two kinds of risks: interest rate risk and
credit risk. “When interest rates move
up, the prices of bonds fall and vice versa.
Investors must also know that the longer
the duration or maturity, higher is the in-
terest rate risk,” said Pathak.
Long duration funds carry higher inter-
est rate risk because they are more sensi-
tive to rate changes than short-term or
money market funds. “The NAVs of liquid
funds, which cannot invest in securities
of more than 91 days, mostly move in a
straight line. But in case of long duration
or dynamic bond funds, there is a lot of
fluctuation due to higher interest rate
In the previous quarter, rates of these
schemes had been cut by 10 basis points
(100 basis points equal 1 percentage
point). It was expected that since govern-
ment bond yields had declined almost 40
basis points during the quarter, the rates
of these schemes will also be cut by 30-40
basis points.
risk,” said Pathak.
The other risk is credit risk. Pathak be-
lieves this risk is more dangerous as a de-
fault can cause permanent loss of capital.
In the past one year, we have seen a lot of
credit events in the NBFC space and many
debt mutual funds were hit by defaults and
downgrades. “Credit risk funds, which
invest in weaker companies with credit
rating below AA, take higher risk and try
to earn higher returns by better managing
the credit. Default can cause permanent
it react negatively? The overall tone of the
the policy was also dovish indicating an
increased probability of further rate cuts in
future policy meets, if growth estimates fall
further.
First, the 25 bps cut was below expecta-
tion for some market participants. “While
the repo rate cut of 25 bps was in line with
consensus estimates, it was below the ex-
pectation of the bond market bulls,” says
Mihir Vora, CIO, Max Life Insurance. Debt
market participants were expecting a bigger
cut because of visible global slowdown (ie
Purchase Manager Index data in developed
market has gone below 50, which indicates
economic contraction in those countries).
The 10-year yield and repo rates moving
in different directions is not a new thing.
For example, the RBI reduced repo rates by
60 bps during the last two months, but the 10-
year yield went up 30 bps during same time.
Debt market’s concern with fiscal slip-
page which is due to the massive corporate
tax reduction announced by the Finance
Minister, is the main reason for this.
Another worry pertains to states’ financ-
ing and consequently increased supply of
the state development loans (SDLs). “We
are expecting gross SDL supply to touch
close to `600,000 crore in the current finan-
cial year, almost 30% higher than previous
year and as a result, we would expect the
yield curve to start to steepen overtime,”
says Choudhary.
loss of capital,” said
Pathak. “Banking
and PSU funds carry
lower credit risk
than corporate debt
funds,” he added.
Pathak also ad-
vised participants
to choose schemes
with an average
maturity closer or
little less than their
investment horizon.
The strategy, he said,
will help them avoid
volatility. You can check the average matu-
rity of the holdings of a debt scheme in its
monthly factsheet.
Pathak said looking at past returns
was futile. “The performance can change
significantly in a short time,” he said. “In
September 2018, one-year return of gilt
funds was close to 1% and closer to 10% for
credit risk funds. Today, the returns are
at around 14% for gilt funds and 0.83% for
credit risk funds,” he explained.
– Avneet Kaur
 review preview
The Economic Times Wealth October 7-13, 2019 07

Can’t reject claim if cover for 8 yrs IN BRIEF

New guidelines for health plans favour policyholders but premiums could rise Tejas passengers to get
ealth insurance companies will not
compensation for delay

H be able to reject your claims if you

have continuously been covered for
at least eight years. This provision, along
Passengers of the Delhi-Lucknow
Tejas Express will be compensated
in case of delays. They will get `100
in case the delay is for over an hour
with a host of others, form part of IRDAI’s
and `250 for delays of over two
standardisation of exclusions guidelines hours, the IRCTC announced last
released recently. These norms will be ap- week. This latest offer is in addition
plicable to products filed after 1 October to the `25-lakh free insurance that
2019. For existing health contracts, the will be given to passengers of the
new rules will come into effect from train. This includes a coverage of
1 October 2020. “The health policy would `1 lakh against household theft and
be incontestable except for proven fraud robbery during the travel period of

or any permanent exclusions. This would
reduce grievances among policyholders,”
says Shreeraj Deshpande, Chief Operating
Officer, Future Generali India Insurance.
Insurers will also not be able to deny
coverage outright to those suffering from
critical illnesses or conditions like can-
cers, heart-related ailments, Alzheimer’s,
Parkinson’s, HIV/AIDS and so on. The list
covers 16 such ailment categories. Until
now, those with these conditions were not
considered eligible for health policies.
“For instance, people who suffered from
say epilepsy could not get health cover
earlier even for non-related conditions.
They will now be able to, with permanent
exclusions for the existing diseases,” says
Mahavir Chopra, Director, Life, Health
and Strategic Alliances, Coverfox.com.
Similar was the case with cancer survi-
vors who contracted the illness long ago.
The change will bring more individuals
in the ambit of coverage. “The guidelines
bring in a lot of clarity. Once the insurer
decides to bring policyholders into the
portfolio after excluding say chronic kid-
ney diseases, all claims not pertaining to
this condition will be covered,” explains
Sanjay Datta, Chief, Underwriting, Claims
and Reinsurance, ICICI Lombard.
Pre-existing diseases (PED) will be
defined as the ones that were diagnosed by
a physician within 48 months before the
policy issuance.
In addition, the specified modern treat-
ment procedures like deep brain stimula-
GETTY IMAGES
the passengers.
Firms opting for low tax
won’t get MAT credit
tion, oral chemotherapy, immunotherapy Companies looking to switch to
etc will have to be covered by insurers. the just-lowered 22% corporate tax
“By mandating inclusion of modern pro- rate without exemptions, will not
cedures, the guidelines have made polices be able use accumulated credit of
more inclusive,” says Shanai Ghosh, CEO- minimum alternate tax. In a detailed
Designate, Edelweiss General Insurance. circular issued last week, the Central
However, these changes could also push Board of Direct Taxes (CBDT) said
up the premiums. “Most changes are wel- that though MAT credit will not be
come from a policyholder’s perspective. available, companies will have the
However, providing coverage to modern option to go for the new regime
treatment procedures entails a cost. And after completely utilising their
accumulated MAT credit.
this could get reflected in premiums
once the new framework is in place,” says New investment norms
Amit Bhandari, Chief Technical Officer,
Magma HDI General Insurance.
for debt mutual funds
Sebi has issued new investment
– Preeti Kulkarni
rules for debt mutual funds. Fund
may not invest in unlisted securities
including unlisted commercial paper.
However, there are some exceptions

From Dec, you can for government securities and

use NEFT facility Don’t fall intsruments that don’t normally have
a credit rating. Funds can invest
in unlisted NCDs provided they

24 hours a day for this How the

have a simple structure. Existing
exposure to such NCDs needs to be
brought down to 10% of the scheme’s
The RBI has announced that the National
Electronic Funds Transfer (NEFT) facil-
ity will be available 24 hours a day from
KYC scam scam works
You get a call that
portfolio by 30 June 2020.

PMC Bank withdrawal

December. The facility is used for fund
transfers of up to `2 lakh from one bank
account to another. Currently, the NEFT
facility available is available from 8 am
to 7 pm on all working days with the ex-
ception of second and fourth Saturdays
of a month.
In its Payment System Vision 2021
document, the RBI said that it will make
available the NEFT system on a 24x7
basis from December 2019. “In order to
facilitate smooth settlement of these
transactions in the accounts of the banks
maintained with RBI, it has been decided
to extend the collateralised liquidity sup-
port, which is currently available till 7.45
pm on NEFT working days, round the
clock,” the RBI said in a statement.
Earlier in the June policy, the RBI had
done away with charges on fund trans-
fers through RTGS and NEFT routes
to boost digital transactions and asked
banks to pass on the benefits to custom-
ers. The Real-Time Gross Settlement
System (RTGS) is meant for large-value
instantaneous fund transfers of `2 lakh
or above.
A new scam has proliferated
across the country in the
past few months. Scamsters
posing as bank officials have
duped people by gaining
remote access to their mobile
phone screens through an
app. They call up the victim
and tell him his KYC needs
He asks you to transfer
to be validated, offer to help
a small token amount
him complete the procedure
online and then hack into
his bank account. In July,
Sandeep Choubey of Indore
got a call from a man who
identified himself as a cus-
tomer care executive from
an online food-ordering com-
pany. He lost `2.28 lakh to the
fraud. Last month, Mumbai-
based Dhananjay Joshi lost
`1.6 lakh after a fraudster
got him to download an app
to complete his KYC details.
Police are looking into the
case.
your wallet or bank 1 limit raised to `25,000
KYC is invalid. Caller says it can be The RBI has enhanced the
validated online so withdrawal limit for depositors of
You are asked to
2 that your account is the troubled Punjab and Maharashtra
active again. Co-operative Bank to `25,000 from
download an app to
`10,000. The central bank promised
facilitate step-by-step 3 to keep an eye on the position of
guidance.
When you use the the co-operative bank and take
4 app, caller can see
your phone screen.
necessary steps in the interest of
PMC Bank depositors. “The RBI
again reviewed the bank’s liquidity
to your wallet.
5 position and, with a view to reducing
When you do so, he the hardship of the depositors, has
He uses them to 6 can see your password
and other details.
decided to enhance the limit for
simultaneously trans- withdrawal to `25,000,” RBI said in
statement last week.
fer larger amounts
from your bank.
7
Victim gets OTPs for all
transfer requests but Airtel Bank ties up with
In a matter of
8 these can be seen by ICICI Prudential Life
minutes, the scamster via the app. Customers of Airtel Payments
scamster cleans out 9 Bank now have easy access to life
the bank account. insurance and savings plans of
the ICICI Prudential Life Insurance
Company. They can buy the ICICI
Pru iProtect Smart term plan
and the ICICI Pru Anmol Bachat
microinsurance.
 stocks
08 The Economic Times Wealth October 7-13, 2019
Should you bet on stocks
that are at 10-year lows?
Before rushing to buy, investors should find out why the stocks are quoting at low prices.
by Narendra Nathan
T
here is extreme volatility in the
stock market at present. Some
stocks are trading at all-time
highs and others at decade lows.
Economic logic suggests a prod-
uct is an attractive buy if it is available at
a discount. There are a number of stocks
going dirt cheap right now. For example,
Yes Bank is quoting at `32, compared to its
all-time high of `404 around a year back. If
you widen your search to include mid- and
small-cap counters, you will find a large
number of stocks going for 90% less than
their peak prices. Should you buy stocks
quoting at significant discounts to all-time
highs? Experts advise caution. You could
well be trying to catch a falling knife.
Several companies have lost value due
to valid reasons. Investors should find out
why they are quoting at low prices. Stocks
usually crash for three reasons—general
economic weakness, sectoral or segmental
weakness and company-specific issues.
Had it been general economic weakness,
the crash would have been across the board
and not restricted to a few segments.
Once we went through the list of compa-
nies quoting close to 10-year lows, we could
spot sectoral and segmental pockets. For
instance, a large number of these stocks
are public sector enterprises (PSEs). Slow
ernment may once again use the CPSE
route,” says Suhas Harinarayanan, Head
of Research, JM Financial. However,
PSEs always offer trading opportunities,
especially when valuations are cheap.
“PSEs become trading opportunities
when valuations are at a 40% discount
to the historical matrix and when
the price is close to book value,” says
Harinarayanan.
Several stocks from specific sectors are
also available at low prices. Should one
approach these sectoral packs? Experts
say there is no need to avoid these stocks.
Even if an industry is going through a bad
patch, there is little chance of it closing
down. “Some banks can fail, but the bank-
ing industry will come out of the current
troubles,” explains Arun Gopalan, Senior
VP (Investment Advisory), Systematix
Shares & Stocks. Adds Jasani, “Consider
investing only when sectoral problems
are transitory and towards the fag end of
the bearish sectoral cycle.”
Investors need to be careful with com-
GETTYIMAGES
pany-specific issues. It makes sense to
avoid companies with governance issues.
Similarly, it is better to stick with large
caps while following this strategy. “The
chance of value traps is more among mid-
growth due to continued government to wait for concrete action, especially on and small-caps, so investors need to be ex-
interference is one problem faced by this the mode, style and conditions of divest- tra careful,” says Gopalan. We searched
segment. These counters are also getting ment,” says Deepak Jasani, Head of Retail large-cap stocks that are part of BSE
battered because of piecemeal divestment Research, HDFC Securities. Even if the 200. We shortlisted stocks that are close
by the government using CPSE ETFs. Now government shows will, six months of this to 10-year lows. We restricted ourselves
that the government has started talking financial year is already gone and there- to stocks that are expected to give good
strategic sales, will the sentiments change? fore, a small time period is going to be the upside potential as per consensus analyst
Experts are not sure. “Since privatising next issue. “Strategic divestments may not estimates. Given below is the list of stocks
a PSE is a political hot potato, we prefer happen in the next six months. The gov- that investors can consider now.
Bharat Heavy Electricals 10-YR HIGH 10-YR LOW 10-YR FALL FROM
CMP (`) PRICE (`) PRICE (`) RANGE 10-YR HIGH
Bharat Heavy Electricals (BHEL) is a classic case of value
46.85 359.33 46.05 0% 87%
destruction. `100 invested in 2009 has become `15 now! You
250
would have got `224 if you had invested the same money
SENSEX
in the Sensex. Power sector woes hit the company hard. The 200 223.56
power sector index fell 40% over the past 10 years. Due to a
slowdown in new power generation projects, the order inflow 150 ET CAPITAL
for BHEL is also waning. However, the power surplus situation GOODS
100
is transitory and will turn deficit once the current transmission 150.95
problems are sorted out in 2-3 years. Being a leading capital 50
goods player catering to the power sector, this eventual upturn BHEL
in the power capex cycle will be a positive for BHEL. Despite 0 14.95
short-term worries, experts are also bullish on its throwaway 1 Oct 2009 1 Oct 2019
VALUATIONS ANALYST VIEWS
valuations. “BHEL’s net cash position of `5,500 crore as of
March 2019 and receivable book of `38,000 crore provide DIV. TARGET EX
PE PB YIELD BUY HOLD SELL PRICE GAIN
valuation support given that its total market capitalisation is
less than 0.5 times its receivables,” says a Emkay report. 20.66 0.56 4 9 16 9 63.07 35%
The 10-year range calculates whether a company’s CMP is close to its 10-year low (value will be close to zero) or to
its 10-year high (value will be close to 100). Values are normalised to a base of 100.
 stocks
The Economic Times Wealth October 7-13, 2019 09

Glenmark ONGC
Glenmark’s US business is still facing
10-YR HIGH 10-YR LOW 10-YR FALL FROM challenges and therefore, there is
CMP (`) PRICE (`) PRICE (`) RANGE 10-YR HIGH
little expectation of revenue growth
319.3 1,261.95 210.00 10% 75% from there in 2019-20. However,
Glenmark continues to report strong
600 growth in the domestic market and is
ET
500 PHARMA one the fastest-growing among large
290.35 peers. Glenmark’s plan to unlock
400
value by listing its subsidiary and
300 SENSEX also to reduce debt by divesting non
200
223.56 core assets will be positives in the
long term. “The de-merger may lead
100 GLENMARK to an improvement in profitability for
0 135.33 the ex-novel business and a healthier
1 Oct 2009 1 Oct 2019 balance sheet. The recent share price
fall reflects impatience on the part of
VALUATIONS ANALYST VIEWS
Glenmark’s investors with respect to 10-YR HIGH 10-YR LOW 10-YR FALL FROM
DIV. TARGET EX
PE PB YIELD BUY HOLD SELL PRICE GAIN management’s delivery vs promises.” CMP (`) PRICE (`) PRICE (`) RANGE 10-YR HIGH
says Deepak Jasani, Head of Retail 128.25 314.67 115.55 6% 59%
11.74 1.68 0.6 14 15 3 463.54 45% Research, HDFC Securities.
250
SENSEX
200 223.56
NMDC ET OIL &
150 GAS
NMDC has been on the receiving 177.46
end ever since Karnataka decided 100
to withdraw its letter of lease ONGC
renewal for the Donimalai mining 50 65.11
block. However, investors can have 1 Oct 2009 1 Oct 2019
a sigh of relief now because the VALUATIONS ANALYST VIEWS
government of India has amended DIV. TARGET EX
PE PB YIELD BUY HOLD SELL PRICE GAIN
the Mineral Rules 2015 and this
makes sure the state government 6.24 0.76 5.33 28 5 2 193.50 51%
renews the mining lease of a 10-YR HIGH 10-YR LOW 10-YR FALL FROM
CMP (`) PRICE (`) PRICE (`) RANGE 10-YR HIGH
government company. In addition
Oil and Natural Gas Corporation (ONGC), with its PSE tag and continued
to the resumption of production 96.4 571.80 74.80 4% 83%
share supply through CPSEs, like other upstream oil companies runs the
from Donimalai mine (EPS may 250 risk of the government asking it to bear the subsidy burden in future if
go up by around 15% because of SENSEX oil prices rise to much higher levels. This risk had become more real in
this resumption), this amendment 200 223.56 the recent past because of the flare-up in crude oil prices, triggered by
also removes the ambiguity about
150 the drone attack on Aramco refinery in Saudi Arabia. However, global
other lease renewals that are ET METAL crude prices have started easing because the Aramco refinery restarted
coming up. “The NMDC stock has 100 86.81 operations without much delay and this price fall should reduce the
underperformed global iron ore
subsidy sharing fears. Lack of volume growth (no new big oil fields
players by 34% over the past 12 50 NMDC are getting operational) is another factor pulling these counters down.
months, mainly due to uncertainty 27.12 However, experts feel that the current low valuations capture all these
0
on Donimalai and its consequential
1 Oct 2009 1 Oct 2019 negatives. “Though the government ownership means that it may not
impact on other mines coming up
VALUATIONS ANALYST VIEWS always operate in favour of minority interests, considering its good
for renewal. This new development
DIV. TARGET EX dividend yield and other low valuation multiples, ONGC may seem
removes headwinds to stock PE PB YIELD BUY HOLD SELL PRICE GAIN attractive to value investors,” says Jasani of HDFC Securities.
performance,” says a recent
Edelweiss report. 5.78 1.08 6.04 9 6 4 114.39 19%

Tata Power CMP (`)

10-YR HIGH
PRICE (`)
10-YR LOW
PRICE (`)
10-YR
RANGE
FALL FROM
10-YR HIGH

Despite being the strongest power generation player from 59.4 146.55 50.40 9% 59%
the private sector, Tata Power lost 52% of its value over the
past 10 years, compared to a loss of 40% by the power index. 250
This under performance is because of problems specific to its 200
SENSEX
Mundra project. Though tariff revision talks are on with five 223.56
state governments and some positive outcome is expected, it 150
will be time consuming. There is resolution in sight in Gujarat ET POWER
and Punjab and positive action is expected from Maharashtra 100 60.48
and Haryana after the Assembly polls. The management is also 50
trying to address the concern of high debt—around `49,000 TATA
POWER
crore—through divestment of non-core assets and improving 0
47.70
collections from discoms. The positive trigger will come in the 1 Oct 2009 1 Oct 2019
form of revival in domestic power sector, expected in the next VALUATIONS ANALYST VIEWS
2-3 years. Since its valuation has come back to reasonable DIV. TARGET EX
levels, it provides a good investment opportunity. “Tata Power PE PB YIELD BUY HOLD SELL PRICE GAIN
is now trading close to 10–years’ average EV/EBITDA band and 25.04 0.92 2.1 11 5 2 79.54 34%
is nearing the floor price,” says a recent Edelweiss report.
 guest column
10 The Economic Times Wealth October 7-13, 2019

Stick to basics through

good times and bad
If you stick to the basic tenets of saving, you can sail through any crisis in the market.
This advice held true a decade ago and holds true today, says Dhirendra Kumar.

I
often say that if investment advice
has an expiry date, then it’s already
dead. Only if it stays relevant for
DHIRENDR A KUMAR
CEO, VALUE RESE ARCH years is it of any use. Sometimes,
readers write back and quibble about
this and ask for examples, so here they are.
money The following are excerpts from some-

mysteries thing I wrote a decade ago, as the recovery

All one needed to
do was to make sure
that firstly, money
required in the
short-term was in
bank deposits and
other safe assets.
Secondly, long-term
money that was in
equity-backed funds
had been invested
gradually over a long
period.
from the huge crisis of 2008-09 started. As
we struggle with a crisis of sorts today, it’s
fascinating to note how arguments I made
in October 2009 hold true today.
The last couple of years have seen savers
getting worried about the kind of things
that only investors used to bother about ear-
lier, and with good reason too. By savers I
mean people who put away money in banks,
insurance, mutual funds and other such
assets. Investors, on the other hand, are
people who trade in investments. Typically,
savers just salt away money and dip into it
only when they need it, but investors buy
and sell based on their expectation of how
the markets are doing.
At this point of time, the mood in markets
around the world has settled into one of
optimism. The fact that it has settled is im-
portant, because it tells us about the quality
of the mood, and carries more information
than bare numbers. Till a quarter or so ago,
there was an underlying tentativeness in
investors’ behaviour. They knew the story,
they could see the direction and they could
understand the logic, but they hadn’t forgot-
ten the horrors of 2008. Like survivors of a
great disaster, they couldn’t believe it was
over. Is this shift in perception justified?
Perhaps it is, but there are some pretty
GETTYIMAGES

strong opposing arguments also. Let’s see

what the arguments on both sides are.
The optimistic view: It’s true that the
crisis was a severe one, but a great deal was
done to resolve it and all of it succeeded.
Economic growth is back across the world.
Moreover, India and other emerging mar-
kets have proven to be resilient to the worst
impact. From an investors’ perspective, the
downturn wasn’t all bad news. As the eco-
nomic outlook deteriorated, equity prices
plunged. However, the bad news was over-
discounted. Corporate growth and profit
numbers were never as bad everyone feared
they would be. Moreover, they’ve recovered
quite sharply. The global economic decline
was nowhere near as bottomless as the
doomsayers would have had us believe.
Perhaps the most important factors were
the strong actions that governments took
to arrest the crisis. As much as the actual
actions, the most important discovery of
2008 was that governments are capable of
quick and decisive action. When situations
threaten to spiral out of control, there’s
someone to bring it back under control.
The dark side, those who think the worst
may still be ahead: The root cause of the cri-
sis was a huge liquidity glut which encour-
aged ignoring of risk and inflation of asset
prices. Not only has this not been solved,
huge chunks of ‘stimulus’ may have made
it worse. What we see in the stock markets,
commodities and in real estate is the same
asset price inflation that is driven by excess
liquidity without regard for fundamentals.
Those are two sides to the debate and the
logic in both is impeccable. Which one will
appeal to you more depends on what sort of
a mood you are in and that depends more on
what kind of personality you are. Let’s ap-
preciate that either view may be right.
But isn’t that a problem for the ordinary
saver? Not really, as long as he realises that
none of this has much bearing on how he
should save. Through the panic of 2008 and
the surge of 2009, one thing became clear.
This may have been the worst economic
crisis the world had seen for a long time,
but those who stuck to the basic tenets of
savings could well have slept through it.
All one needed to do was to make sure that
firstly, money required in the short-term
was in bank deposits and other safe assets.
Secondly, long-term money that was in eq-
uity-backed funds had been invested gradu-
ally over a long period. Those whose invest-
ments conformed to these principles came
out fine through 2008-09, and will come out
fine again regardless of which of the above
two scenarios is closer to the truth.
Please send your feedback to
etwealth@timesgroup.com
 financial planning
The Economic Times Wealth October 7-13, 2019 11

WEALTH
WHINES
Helping parents with
Money &
Relationships
their medical needs
Here’s how to financially prepare yourself and your parents for medical problems
and emergencies that they may face after retirement, says Riju Mehta.
to access medical corpus, when needed. cause such plans are heavily subsidised

I
f your parents are set to retire in a few
years or are on the verge of quitting
work, it is crucial to ensure that they
are financially prepared for their
medical needs. Given the increasing
health-care costs, rising medical inflation
of 15-20% annually, and the likelihood of
worsening health problems in old age, it is
imperative that they secure their finances
when it comes to medical preparedness.
Talk with parents: Have a discussion
with your parents about their existing
medical conditions, the size of health in-
surance that they have, if any, and if they
are maintaining a medical buffer or emer-
gency corpus. Find out the expenditure
they are likely to incur after retirement
and the cover or corpus they should have
ANIRBAN BORA
Buy health insurance: If the parents’
financial condition does not allow them to
secure their medical needs, buy a health
cover for them. There are several plans for
senior citizens in the market, which cover
pre-existing diseases and specific ail-
ments after the waiting period, and do not
require medical check-ups. Take a plan of
at least `5 lakh, if possible. However, these
can come with high premiums and if these
seem too formidable, opt for a small cover
of, say, `3 lakh and a bigger top-up plan
of, say, `10-15 lakh, which will be cheaper.
You can also claim tax benefit of `50,000
under Section 80D for the premium you
pay for them if they are above 60 years.
Employer’s cover: If your employer pro-
and you could retain these for your par-
ents. For yourself, buy an independent
family floater plan, which will be much
cheaper given your younger age.
Medical buffer: If, for some reason,
you and your parents are unable to
buy an insurance plan, make sure
you maintain a sufficient buffer for
eventualities. If their financial condi-
tion doesn’t allow them to build such a
corpus, you should keep a bigger emer-
gency corpus, which includes a medical
buffer, before you start investing for
your goals. This will ensure you don’t
have to dip into your corpus for other
goals, and they don’t have to depend on
relatives or friends for emergencies.

handy. If they have prepared well for their vides a group health plan that has a provi-
retirement, and have sufficient insurance sion of covering parents and in-laws, avail
and accessible cash, find out the details of of the maximum limit available, even if
the TPA, insurance documents, and ways there is a co-payment clause. This is be-
IF YOU HAVE A WEALTH WHINE, WRITE TO US... Disclaimer: The advice in this column is not from
a licensed healthcare professional and should
All of us have been in a financial dilemma when it comes to relationships. How do you say no to a friend not be construed as psychological counselling,
who wants you to invest in his new business venture? Should you take a loan from your married brother? therapy or medical advice. ET Wealth and the
Are you concerned about your wife’s impulse buying? If you have any such concerns that are hard to writer will not be responsible for the outcome of
resolve, write in to us at etwealth@timesgroup.com with ‘Wealth Whines’ as the subject. the suggestions made in the column.
Be prepared for emergencies: Be-
sides financial readiness, you need to
have a plan in place for emergencies.
Your parents should have the mobile
numbers of ambulances, regular doc-
tors and hospitals on their speed dial,
besides your number. The insurance
and medical documents or cash should
be kept in a pre-determined location
to be accessed easily. You should also
have their neighbours’ numbers handy.

Only 18% elders have health insurance

Nearly 26% of them are helped by their adult children, reveals a recent survey by Aditya Birla Health Insurance.
Who helps you with finances in case of medical emergencies? Have you made financial plans for medical emergencies for parents?

47% Yes, I have made provisions. 17% Do not feel the need.
Parents are financially stable.
32% 10% 14% 26% 18% 24% Not yet, but I will
I am in full control When needed, My relatives My children I have make provisions soon.
of my finances. I I seek help and friends take care health 12% They have taken
keep money handy from my help out of such insurance care by purchasing
for an emergency. neighbours. many times. situations. cover. Insurance themselves.

What would be your Source: Indian Parental Care

anxiety if you have Survey 2019. The survey was
to reach out to your conducted among 998 senior

children financially? OFFSPRINGS citizens in the 60-70 age group,

and 1,002 offsprings in the
30-45 age group in 10 cities.
66% 6%
No I know they
anxiety. cannot afford PARENTS GETTYIMAGES
Do you know if your parents
I expect to pay for our have medical insurance?
them to medical bills,
support
us.
especially if
it is large.
29% 15%
Should all employer plans They are They can’t
cover employees’ parents? covered afford
for medical to buy

How concerned are you about your 5% needs by

company/
insurance. I
have to buy
Not a good idea.
financial matters? government- insurance
10% provided for them.
Not at all. I Sometimes I do not think it is necessary. Each insurance.
17% 37% am financially 42% I feel individual should take care of it.
I do not 11% secured. insecure.
34% 39%
need any Not sure if
It will surely be of great help.
I am sure they 17%
support from they have have taken Not sure they
my children. I am money to 12% 9% All the time. It 50% health insurance are insured
not sure if they care. spare. Frequently is my main worry. Strongly agree; need of the hour. on their own. medically.
 investing
12 The Economic Times Wealth October 7-13, 2019
‘We have to build stress tests in
our credit evaluation models’
IL&FS fiasco has shown what kind of regulatory regime is needed to monitor large institutions and
prevent recurrence of anything similar in future, Amandeep Chopra tells Sanket Dhanorkar.
Amandeep It has been a year since the IL&FS fiasco.
What learnings have debt funds drawn
from these credit events?
Chopra One of the key learnings has been around
the credit opinion built relying on external
Group President agencies. Clearly the extent of reliance and
sanctity of those opinions have been brought
& Head of Fixed under scanner. This is a lesson not just for
Income, debt funds, but the broader financial mar-
kets and the regulatory regime. There is a
UTI AMC Ltd fair amount of review of current processes,
be it regarding the working of rating agen-
cies or the auditors—which lenders and
investors have relied upon. It has also shown
what kind of prudent regulatory regime is
needed to monitor such large institutions
and prevent its recurrence.
What is your assessment of the evolving
credit scenario?
The credit situation has to be viewed in two
parts. The first is clearly driven by the col-
lapse in IL&FS, which was once a AAA rated
entity and suddenly fell to a D-rating. This
was very unusual and had never happened
before. At the first stage, such a significant
default not only shook the confidence of the
market, but it brought a substantial con-
tagion across many other entities—those
which had a larger percentage of wholesale
lending on the assets and some degree of
asset liability mismatch. This was the first
stage of the crisis, which is more or less iden-
tified now and contained within the finan-
cial sector companies.
The second part of the crisis is driven
by the macros. A large number of entities
which had easy access to credit are now
facing a challenge because the lenders them-
selves are shrinking the balance sheet. This
is where the events are unfolding. If the eco-
nomic growth continues to be soft and access
to credit continues to be strained, then the
second round of impact could be felt on small
to medium enterprises and non-financial
sector companies.
How are you dealing with
“Conservative
NBFC debt, given the bad investors should
shape these are in?
A large number of entities
stick to corporate
are not getting any funding bond fund or
from the market. Everyone
is keen to focus largely on
Banking &PSU
well-known, highly rated funds carrying
groups or government enti-
ties. Our sense is that as
high quality AAA
resolution happens in some rated portfolios”
of these cases, the liquid-
ity situation will begin to
normalise. Earlier large part of the credit
modelling revolved around financial results
as signed off by auditors. These elements
need to be strengthened, so that there is fair
amount of credibility and reliability. We will
also have to build certain stress tests into
our credit evaluation models.
The regulator has introduced norms to
tackle the ongoing problems. Are these
enough to restore trust in debt funds?
This is not a one-time exercise. Actions
are being taken by the regulator to tighten
the rating standards. The Institute of
Chartered Accountants of India (ICAI)
which supervises the auditors also needs to
lay down stricter responsibilities on audi-
tors to ensure that information related to in-
ter-party transactions are fairly disclosed.
Regulator also needs to have adequate
supervision on the balance sheet sizes. Inter
creditor agreement (ICA) was not in exist-
ence earlier but Sebi has come out with clear
guidelines about how MFs will participate
in this process. These are still work in pro-
gress. They will adapt and issue necessary
guidelines. Given what has already been
implemented and further changes likely,
debt funds will surely emerge stronger from
this phase.
Bond yields have hardened substantially
over the past few weeks. Will these yields
harden further?
A large part of the hardening is due to the
unexpected tax break for corporates. This
fiscal stimulus has led to some concern for
the bond market. Our view remains that it
was partially a knee-jerk reaction. We feel
that the government has sufficient tools to
mitigate the impact of revenue loss from the
tax cut. Secondly, markets are still ascer-
taining the supply calendar of new govern-
ment paper in the second half of the finan-
cial year. Also the market is waiting for
developments on the sovereign bond issu-
ance. While the yields have hardened, these
three factors could possibly lead to some
degree of normalcy. We still have a fairly
dovish central bank which is
expected to cut rates further.
We believe they have reasons
to do so. That will also allow
yields to soften a bit. With in-
flation under control and low
trajectory of GDP, yields are
unlikely to remain elevated.
How are you positioning
your debt funds now?
Which funds should inves-
tors opt for in the prevailing
situation?
With 110 bps rate cut behind
us, we are not looking at significant rate
cut from RBI. Incrementally, we could see a
40-50 bps rate cut going ahead. In this sort of
market, one should be positioned in the dy-
namic category as the yields are likely to be
somewhat range-bound.
Given the overhand that still remains
on credit markets, conservative investors
should stick to corporate bond fund or
Banking &PSU funds carrying high quality
AAA rated portfolios. Those with a slightly
higher risk appetite should definitely look at
credit risk funds. Most of the bonds are being
priced cheap and provide a degree of upside
when the market settles down.
We also strongly urge investors to consid-
er SIP in debt funds as well. It will help them
tackle volatility better and not get swayed
by 3-6 months of interest rate fluctuations or
credit events. Given the bouts of volatility, it
makes sense to invest through SIP.
Please send your feedback to
etwealth@timesgroup.com
 financial planning
The Economic Times Wealth October 7-13, 2019 13

Use MS Excel’s Goal Seek to

manage your financial goals
Goal Seek is an easy tool that helps investors modify calculations according to their requirements.

by Sameer Bhardwaj

Goal Seek helps to do reverse calculations

P
ersonal finance management
focuses on five core areas—in-
come, spending, saving, invest- The utility tool has a simple interface and requires only three inputs from users.
ing and protection. Financial
planning experts evaluate the
risk and rewards associated with different
investment options and guides individuals
towards their desired goals, both short-and
long-term. Short-term goals may include
travel, home improvement and repayment
of credit card debts, while long-term objec-
tives include planning for children’s educa- Screenshot 1
tion, marriage and retirement.
Managing personal finances involves a
thorough understanding of the statistical
and mathematical concepts that help assess When you
click on Goal
the performance of various investment op- Seek, a small
tions. Calculations and number crunching dialog box will
are an integral part of the planning exer- appear.
cise. Planners have to take into account the
varying income-expenditure patterns, age
profiles and risk profiles of individual in-
vestors while devising investment plans.
MS Excel provides a number of functions
that have major applications in personal
finance. Some core concepts that can be
worked out using Excel include the time
value of money, compounding and dis-
counting. Excel functions come in handy
when calculations involve an one-time
investment or when the investments are
spread over a period of time.
The compound interest formula is FV=P Screenshot 2
×(1+r)^n. There are four components in the
equation. FV is the future value, P is princi-
pal amount, r is the interest rate and n is the
tenure (in years). Using the above equation, After execution
of Goal Seek, n
`10,000 (P) invested for 5 years (n) at a 7% will change to
interest rate (r), which is compounded an- 10.24 and FV
nually will return an FV value of `14,026. will change to
However, standard calculations do not 20,000.
always work. Certain adjustments are
required to bring numbers in agreement
with individual goals. Excel provides a use-
ful tool—Goal Seek— which helps to make
such modifications. It provides a simple
user interface and needs only three inputs.
Goal Seek helps to do a reverse calcula- years. Goal Seek is located in the data tab which will enable one to reach the goal. an annualised rate of 14.9%.
tion on the basis of a predefined objective and is available under the what-if analysis. In this example, the response variable is Users can try out the amount needed to
and it can only be used on inbuilt or a direct A small dialog box will appear, as the user the number of years, which exists in B4 accumulate `1 lakh at 7% rate in 5 years.
formula. It helps to do a ‘What If’ analysis clicks on Goal Seek (see screenshot1). cell. After the execution of Goal Seek, the The ‘To value’ will take the value of 100,000,
and works on a trial and error basis for In screenshot1, Goal Seek is employed n will change to 10.24 and FV will change the ‘By changing cell’ will be B2 and no
back-solving the problem until it arrives relative to a given formula (FV). One can to 20,000, (see screenshot2). Therefore, it change is needed in the ‘Set cell’. Execute
at the answer. For the above example, Goal either arrive at the value of 14,026 using the will take 10.2 years to double the invest- the function to get the value of 71,299.
Seek can determine the number of years in inbuilt ‘FV’ formula or use the compound ment amount, if invested at 7% interest The ‘set cell’ value needs to be derived
which `10,000 will turn into `20,000 at the interest formula in the Excel cell. rate compounding annually. Instead of either using the inbuilt Excel formula or a
given 7% interest rate. Or how much money There are three inputs. Set cell is the number of years, if one wants to look at the directly placed formula. The By changing
should be invested today to accumulate `1 formula cell that a user needs to modify, in interest rate that will double the amount cell should be an input in the formula. Else,
lakh after 5 years at 7% interest rate. our example, it is FV value, which exists in the original tenure of 5 years, then the the Goal Seek will not respond.
Let us demonstrate the usage of Goal in B7 cell. The second input To value is ‘By changing cell’ will be B3 in the Goal
Seek using the compound interest example. the desired goal, which is `20,000, double Seek dialog box. Executing such query will
We will try to find out the interest rate at the principal amount. The third input ‘By return the output as 14.9%, that is, `10,000 Please send your feedback to
etwealth@timesgroup.com
which `10,000 will turn into `20,000 in 5 changing cell’ is the response variable will grow to `20,000 in 5 years, if invested at
 learn & keep
14 The Economic Times Wealth October 7-13, 2019

SLAY THESE 10 DEMONS
PROFLIGACY
Wasteful spending is a big problem, especially for
millennials. The proliferation of online shopping has
fuelled the malaise. Young people want to buy the latest
gadgets and new apparel, unmindful of the impact these
expenses can have on their finances.
How to slay it
Spending is not a sin if done within limits. To make
sure you don’t overspend, set a budget and stick to it.
Budgeting apps help by sending out alerts if you spend
beyond a limit on any head.
GREED
Everyone wants to earn high
returns, but not everyone
understands the risks involved.
Investing in stocks is risky but can
be very rewarding if done carefully
and in a disciplined manner. But
dabbling in futures and options
is usually ruinous for the small
investor.
How to slay it
Small investors should buy equities
through mutual funds, Ulips and
pension products. One can invest
in direct stocks if one has done
enough research. But one should
never venture into futures and
options.
FEAR
Just as greed makes investors
overlook the risks involved,
fear makes people blind to the
opportunities. Fear of losing money
makes investors shun the potential
of equities and pushes them to buy
low-yield instruments that give poor
but assured returns.
How to slay it
Establish your asset allocation and
stick to it. Research has shown that
periodic rebalancing of the portfolio
can yield better returns than trying to
find the best performing investment.
These 10 financial habits are eroding your wealth. Get rid of them this Dussehra. Illustration by Anirban Bora
LAZINESS PRIDE IMPAT
Investors hold on to poor Impat IENCE
Procrastination may seem harmless, but ient in
investments and losing stocks s uccess v estors
delaying your investments can cost you a lot.
because they fear that selling invest ful. Whethe are rarely FORGETFULNESS
in r
If your money idles in a savings bank account,
an investmnt at a loss would option g in fixed i you are
it loses value. In five years, even a modest 6% s or e ncome The implications of missing
impat quity
make them appear stupid. They ie ma
inflation will reduce the value of `1 lakh to less from nce preven rkets, financial deadlines range from
than `74,000. somehow want to prove that earnin ts you minor charges of `100-200 to
Early g
they were right in picking that withd high return serious penalties running into
How to slay it Provid raw s.
investment and are willing to ent Fu als from t thousands of rupees. If you
powe nd sto h e
Open a recurring deposit in your bank or hold it till it recoups its losses. ro p
Sellin f compoun s the miss an EMI or a credit card bill,
start SIPs in mutual funds through a financial go d
How to slay it fund t ff a stock ing. you will be slapped with late
app. Automating your savings will ensure oo soo or equ payment charges. But if you
It is silly to let your ego define profit n will ity
that the amount gets invested every month. sb h
your financial choices. Never fall the lo ut preven elp book miss the tax filing deadline or an
ng-ter t
in love with your investments. m adv you from insurance premium, you could be
How t antag
e. in serious trouble.
If a stock has no future, dump o slay
Don't it
it and cut your losses. If you book How to slay it
when pr
continue holding it, the losses your i ofits in a h
will only grow bigger.
up. As
se
nvest
me
for se ss the real nts move
urry Just as automating SIPs and
recurring deposits ensures
lli r
redee ng before y easons that you don’t miss investment
m you ou
r fund targets, putting your bills on
s.
autopayment mode means you
don’t miss payment deadlines.
Put alerts for important dates
like insurance premiums and
other deadlines.
ENVY
It’s easy to get
enamoured when friends
and acquaintances talk about
their investments and the high
returns they earned. Following in
their footsteps may not always
BLIND FAITH
deliver the desired results. Past Last but not the least is the
performance of an investment tendency to blindly believe
option is not an assurance of whatever a salesperson tells
future returns. you. Relationship managers
from banks are the worst
How to slay it offenders when it comes to
Investments should be misselling. They find easy
customised to the needs and risk targets in customers who
appetite of an individual. What
worked for someone in a certain
LUST don’t ask too many questions
and readily sign on the
situation may not work for Fraudsters cheat people by promising them a huge share in their dotted line.
everyone. inheritance or bargain offers on their credit cards. The temptation to make
easy money can make even level-headed people part with money or credit How to slay it
card details. You spend hours researching
How to slay it a smartphone. Spend the
same amount of time when
Never believe fraudsters who promise you money for doing nothing. There you buy a financial product.
are no free lunches in this world and if someone wants to give you a share Compare its features, read
of his fortune, he is probably a con artist. up the terms and assess its
utility in your portfolio.
 financial planning
16 The Economic Times Wealth October 7-13, 2019

Let children build themselves

Teach the young to fend for themselves. You should only provide the safety net, says Uma Shashikant.
and extends the time to graduate beyond
four years, or worse decides to drop off and
return, take a break and then pursue some-
thing else. You as the parent should know
if your finances can afford it. Or, if you are
willing to fund these excesses even if you
can afford them. Your child must know the
bounds within which they can exercise their
choices. We are not talking about pressuris-
ing the child, but adult behaviour where ac-
tions and consequences are understood.
Fourth, make sure your budgeting
includes all incidental expenses and you
have drawn an upper limit for these items.
Not everyone can handle freedom from
parental supervision with responsibility.
But knowing that there is a limited amount
in the bank, and that an email with $$$ on
the subject line won’t replenish it, will help
them manage finances well. Opportunity
cost is working knowledge everyone dealing
with money has to learn. If money is spent
on food, there is less left over for clothes.
Your child has to learn this. Do not try to
win a popularity contest, or be needy about
approval. Make it a family decision about al-
location of money. Get a buy in at the start.

GETTY IMAGES
Fifth, ensure your child works and in-
terns while studying. It is easy to dismiss
these efforts as time consuming and not
paying well enough, or not resulting in firm
placements. But your child must know that

UMA SHASHIK ANT
IS CHAIRPER SON, CENTRE
FOR INVES TMENT
EDUC ATION AND LE ARNING
Many parents
are able to afford
everything their
child seeks and set
them up on a path
of privilege. That
position should
not hamper the
ability of the child
to be accountable, to
themselves, to the
family and to society
at large.
T
he email was blank. No content.
The subject line said $$$. The son
studying abroad needed money.
The parent smiled. It was still the
freshman year. Would the smile
last in the senior year, if the child asked for
more time to graduate and did not know if
there was a job at the end of the program?
In many upper middle class households, it
is a firm financial goal of parents to ensure
the child goes abroad for higher education.
Not only can children side-step the rigours of
entrance exams in India, but are also exposed
to a different quality of education, lifestyle,
social interaction and development. Parents
and children, both aspire for that experience.
However, not everyone can afford the ex-
perience in its entirety. The world of higher
education involves too many choices that
parents and children are ill equipped to
make. The child will seek social networks to
find cohorts, seniors and alumni to chat with
and figure how courses and credits span out;
parents will seek counselors, other parents
with experience of sending children abroad,
possibilities for scholarships and loans, and
prospects for employment after graduating.
Not easy, but most plod on optimistically.
The reality check mostly happens with the
money decisions. How does one navigate the
burden of higher education expenses without
ruining relationships and the financial posi-
tion of the household? Let us propose some
rules and talk about it.
First, be upfront with the child about the
costs and how much of a dent it will make
on the finances of the family, and what is
being foregone and by whom. If the family’s
wealth will be depleted by `1 crore to fund the
education of the child, place it on the table for
discussion. How big is this amount compared
to the wealth of the family? How secure is
the future income of the parents to be able to
afford this expense? Does this spend impact
the budgets for other children in the family?
Does it endanger the retirement goals of the
parents? Instead of taking a benevolent view
that assures the child that whatever they
desire, the parents will happily fund, let it be
known how big this decision is for the family.
It is also better to state it at the start, than la-
ment in future. Take a loan, if need be.
Second, outline the responsibilities that
the child will have to bear. Whether it is in
the form of grades they have to get, activities
and internships they have to pursue, disci-
pline and diligence they have to exercise, or
frequency of communication and informa-
tion sharing with parents, set the rules. Do
not beat around the bush and tell yourself
that your child will be upset, or feel moni-
tored, or might dislike your supervision.
As long as you are the provider, you have
authority you must exercise. Not to the point
of straining the relationship, but based on
agreed principles. Set them out at the start.
Third, agree on what you will do when
things do not pan out as expected. For ex-
ample, if your child changes his major, and
needs to earn more credits, let it be known
that you will provide for the additional
fees only if they deliver on their work and
results. Do not keep it open-ended where
the child moves from one major to another,
they are on their own when it comes to find-
ing a job and ensuring they earn money. Do
not send your children out to fancy degrees
that don’t offer much scope for employment,
unless you do not care for it much, or you
have enough money to keep funding more
courses. Children must know they have to
find their feet, and mostly do it on their own.
Financial responsibility for young adults
who are 18-25 years old is primarily about in-
dependence. They have set out to build them-
selves—knowledge, skill and attitude—so
they can live a life they choose. There is not
much for parents to do in this process. This
discovery is personal and the victories and
failures are the children’s own, to savour
and endure. Parents do not know much
about the world the child will live in, except
being enablers that fund that journey. Keep
that equation pleasant and firm.
We live in times of indulgent parenting.
Many parents are able to afford everything
their child seeks and set them up on a path of
privilege. That position should not hamper
the ability of the child to be accountable,
to themselves, to the family and to society
at large. Adulthood is about dealing with
the world on your own, and protective
parenting should not create artificial
bubbles and smokescreens. Let them build
themselves with their own hands; you have
provided the safety net anyway.
Please send your feedback to
etwealth@timesgroup.com
 financial planning
The Economic Times Wealth October 7-13, 2019 17

Save with a target in mind PAPER WORK

:: Folio consolidation
While making fresh investments in an
Earning more doesn’t guarantee wealth creation, saving towards a financial goal does. existing mutual fund, if the existing
folio number is not mentioned as a
reference, a fresh folio is created for
the same holder(s). It is possible to
Sudeep is a young investment merge all folios into one folio to be
banker who plans to buy a house able to get a consolidated view of
in the next four years. He has al- the investments. Consolidation of
ready shortlisted a few properties folios can be carried out only if the
following conditions are met:
and now wants to prepare himself  Names of holders and holding
financially. The problem is that pattern of investments is identical
despite getting paid better than across all folios.
 Mode of holding is same across
the others of his age, he is unable folios (joint/either or survivor.)
to save much. The type of house  Tax status of all investment is
that he is looking for will cost him identical (NRE/Resident Indian/
Corporate).
around `4 crore in four years.  Signature, address, PAN and social
However, with what he is able to status of investors is same.
save at present, he will only be
able to accumulate `2 crore.
Request for consolidation

S
udeep is confident that over the
next four years, his income will in- Investors who wish to
crease enough for him to be able to consolidate their mutual
fund investments into
afford the house of his choice, with-
a single folio need to submit a
out taking a loan. However, does
written application to the AMC/
earning more guarantee wealth creation?
Investor service centre or to his/her
Sudeep associates wealth with his income
investment adviser or agent to carry
level. If this was true, only individuals with out consolidation. A standard format
low incomes would be opting for car loans, for application can also be obtained
home loans, loan for vacations, credit card on the mutual fund website.
spending, etc. The fact is, there are takers for
loans at all income levels; only the quantum
changes. Needs change, and types of loans Information needed
change accordingly.
All folios held in the fund should
Many people like Sudeep can barely get by
be mentioned in the application.
every month, irrespective of how much they
The target folio into which all
earn. Expenditure tends to increase with
other folios need to be consolidated
income. Therefore, Sudeep must analyse should also be mentioned.
his expenses and curtail the unnecessary
ones, to set aside some savings. He must start
by setting a financial goal. By saving with
Signature
a number in mind, he is more likely to do it
diligently, so that he ultimately meets his The request needs to be
signed by all unit holders,
target. He must invest for the long-term in a
if the units are held jointly.
growth-oriented investment like equity.
However, in case the mode of holding
Further, he must consider topping up his
is anyone or survivor, the application
investment amount every year as his income
can be signed by any of the holders.
increases. This should be easy to achieve
GETTY IMAGES

with a higher income. Sudeep should focus

on paying off his debts at the earliest, so that
he is relieved of unnecessary financial bur-
Processing of request
dens. Making more money instead of saving The duly filled up form can
right is like hoping for a miracle. He should be submitted to the AMC
Content on this page is courtesy Centre for Investment Education and Learning (CIEL). or investor service centre.
start with a plan, well in time. Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta. On receipt of form, a stamped
acknowledgment is issued to the
investor for reference. Once all details
are verified with AMC records, the
request is approved and source folios
smart things to know Equity Valuation are merged into the target folio.

There

1
2 4
Equity
Valuation
are two
types of
:: Points to note
 Folio consolidation can be done
is a valuation only at a mutual fund level. Folios
method methods Relative valuation is held across different mutual fund
of For the stock –absolute Absolute valuation method when one compares the

5
houses cannot be merged.

3
deriving market, value valuation attempts to find the ‘true’ company in question to  If the folio being merged is under
the fair is the price model value of a stock based other similar companies lien or pledge, prior consent of
value of that someone and only on fundamentals such and typically involves the financier is required to be
a firm or is willing to relative things as dividends, cash calculating and enclosed with the application.
its equity pay for owning valuation flow and growth rate of comparing multiples or
stock. the company. model. the company. ratios such as the PE.
 family finance
18 The Economic Times Wealth October 7-13, 2019

High surplus to SANDIP GOYAL, 37 YEARS, SALARIED, KOLKATA

How to invest for goals

ease journey GOAL
FUTURE COST (`) /
TIME TO ACHIEVE
RESOURCES
USED
INVESTMENT
NEEDED
(`/MONTH)

Kolkata-based Sandip Goyal should link his Emergency fund 8.1 lakh Fixed deposit -
investment to goals and increase his insurance. Down payment Real estate, cash,
75 lakh / 1 yr -
for house silver, FD
by Riju Mehta
Child’s education 84 lakh / 11 yrs Stocks 21,000
Portfolio

S
andip Goyal, 37, works with an
MNC and stays with his home- Child’s wedding 1 crore / 18 yrs Gold, silver 10,000*
CURRENT VALUE
ASSET
maker wife, seven-year-old child (`)
and father in his own house, in Real estate 25 lakh Retirement 8.2 crore / 18 yrs EPF, mutual funds 24,000
Kolkata. He has saved and in-
vested aggressively and has a net worth
Cash 15 lakh
Investible surplus
of `1.69 crore. He has no liabilities and 45,000
Gold/silver 23.5 lakh needed
his portfolio comprises a house worth `25
lakh, cash of `15 lakh, debt in the form of Debt * Due to lack of surplus, investment for this goal will begin after a rise in income.
Annual return assumed to be 12% for equity, 8% for debt funds. Inflation assumed to be 7%.
EPF (`20 lakh) and fixed deposit (`27 lakh),
and equity in the form of mutual funds Fixed deposit 27 lakh
(`50.6 lakh) and stocks (`8.03 lakh). His
goals include building an emergency cor-
EPF 20 lakh
Insurance portfolio
pus, buying a house, saving for the child’s Equity
EXISTING SUGGESTED
education and wedding, and retirement. EXISTING
Mutual funds 50.6 lakh MONTHLY MONTHLY
Financial Planner Pankaaj Maalde sug- INSURANCE COVER SUGGESTIONS
PREMIUM PREMIUM
gests Goyal build the emergency corpus (`)
Stocks 8.03 lakh (`) (`)
of `8.1 lakh, which is equal to six months’
expenses. He can do so by allocating a Total 1.69 crore Life insurance
portion of his fixed deposit and investing
it in an ultra-short duration fund. He also 1,167 +
LIABILITIES CURRENT VALUE (`) Term plans (2) 1 crore 1,000 Buy `1 crore plan 1,000
wants to buy a house worth `1 crore at the
earliest, for which he can make a down (existing)
Loans Nil
payment of `75 lakh by allocating his Traditional
house, silver, cash and remaining fixed Total liability Nil 2.05 lakh 1,000 - 1,000
plans (2)
deposit. For the remaining amount, he can
take a loan and at 8.5% for 20 years, and his
Ulips - - - -
EMI will come to `21,300. This can be eas- Net worth `1.69 crore
ily sourced from the surplus.
For the child’s higher education in 11 TOTAL 1.02 crore 2,000 `2.02 crore 3,167
years, Goyal has estimated a need of `84
lakh. He can allocate his stocks to this goal Health insurance
and will also have to start an SIP of `21,000 Cash flow
in a diversified equity fund. For the wed- Employer’s 8 lakh - - -
ding of the child in 18 years, he wants to EXISTING SUGGESTED
(`) (`)
save `1 crore. For this, he can allocate his 667 +
gold and remaining silver, and will also Buy `15 lakh
Income 1.8 lakh 1.8 lakh Own 10 lakh 1,000 1,000
have to start an SIP of `10,000 in a diversi- top-up plan
(existing)
fied equity fund. However, since he doesn’t Outflow
have the required surplus, he can do so TOTAL 18 lakh 1,000 `33 lakh 1,667
Household 88,333 88,333
after a rise in his income. expenses
Finally, for an early retirement in 18 Critical illness Buy `50 lakh
years, at 55 years of age, Goyal will need to Child’s 20,000 20,000
education & accident - - accident disability 500
build a retirement kitty of `8.2 crore. For disability plan
this goal, he can allocate his mutual fund Insurance 3,000 5,334
corpus and EPF. In addition to this, he will premium
TOTAL - - `50 lakh 500
have to start an SIP of `24,000 in a diversi- Home loan
EMI - 21,300
fied equity fund for the specified term.
Insurance cost - 3,000 - 5,334
For life insurance, Goyal has two term
Investment - 45,000
plans worth `1 crore and two traditional
Premiums are indicative and could vary for different insurers.
plans worth `2.05 lakh. Maalde suggests
Total outflow 1.11 lakh 1.79 lakh
he retain all the plans and buy an addition-
al term plan of `1 crore at `1,167 a month.
Surplus 68,667 33
For health insurance, he has a family
floater plan of `10 lakh and another `8 lakh
cover provided by his employer. He is ad-
vised to buy a top-up plan of `15 lakh with
FINANCIAL PLAN BY
Write to us Looking for a professional to analyse your investment
portfolio? Write to us at etwealth@timesgroup.com with
a deductible of `5 lakh, at `667 a month. He
should also pick a `50 lakh accident dis-
PANKAAJ MAALDE for expert ‘Family Finances’ as the subject. Our experts will study
your portfolio and offer objective advice on where and
ability plan for `500 a month.
CERTIFIED FINANCIAL PLANNER
advice how much you need to invest to reach your goals.
SMART STATS
The Economic Times Wealth
October 7-13, 2019

In This Section
MUTUAL FUNDS - P20
LOANS AND DEPOSITS - P22
ALTERNATE INVESTMENTS- P23

ET WEALTH TOP 50 STOCKS

Every week we put about 3,000 stocks through four key filters and rate them on a mix of factors. The end result
of this is the listing of the top 50 stocks based on the composite rating to help ease your fortune hunt.
RANK PRICE ` GROWTH%* VA LUAT I O N R AT I O S RISK R AT I N G
Current Previous Stock Net Div Downside Bear No. of Consensus
Rank Rank Price Revenue Profit PE PB Yield PEG Risk Beta Analysts Rating

Apar Industries 1 1 550.35 18.95 52.23 15.51 1.75 1.72 0.30 1.09 0.88 10 4.90
1 Fast growing stocks
KEC International 2 2 270.95 23.79 30.20 14.28 2.85 1.00 0.49 1.49 0.87 31 4.84
Top 5 stocks with the highest
JK Cement 3 3 1020.00 21.23 67.34 28.20 2.97 0.96 0.31 1.12 0.94 22 4.50 expected revenue % growth
Gujarat Gas 4 5 169.20 35.61 91.64 27.95 5.31 0.58 0.37 1.34 1.07 28 4.61 over the previous year
HG Infra Engineering 5 4 208.60 33.49 39.52 10.28 1.98 0.25 0.25 1.99 0.92 13 5.00 Sterlite
41
Technologies
Aurobindo Pharma 6 6 579.65 31.05 25.86 14.39 2.45 0.43 0.52 1.37 1.00 36 4.61
Gujarat Gas 36
Engineers India 7 8 112.20 27.40 36.21 19.03 3.00 3.49 0.75 1.65 0.78 17 4.47
HG Infra
Zensar Technologies 8 7 210.60 20.78 25.05 3.05 2.46 1.30 0.13 1.61 1.12 16 4.63 Engineering 33

Ipca Laboratories 9 9 904.95 22.31 43.71 25.31 3.61 0.34 0.59 1.14 0.63 26 4.42 Aurobindo 31
DB Corp 10 10 139.65 5.39 29.64 9.04 1.33 7.13 0.26 1.27 1.18 15 4.13 Pharma
Info Edge India 30
Ahluwalia Contracts 11 11 280.05 22.37 33.30 16.00 2.55 0.11 0.48 1.53 0.94 16 4.81
Sun Pharmaceutical 12 14 388.15 20.65 46.24 35.18 2.26 0.71 0.78 1.69 0.90 43 3.54
Oberoi Realty 13 12 489.85 22.01 42.09 21.48 2.22 0.41 0.44 1.74 1.32 25 4.04
2 Least expensive stocks
Bharat Heavy Electrical 14 16 47.20 9.68 37.95 16.92 0.53 4.27 0.49 1.80 1.40 34 3.06 Top 5 stocks with the lowest
price-earnings ratio
Parag Milk Foods 15 15 154.90 22.16 24.46 10.73 1.57 0.64 0.46 1.74 0.94 15 4.40
Zensar
UltraTech Cement 16 19 4146.80 26.28 79.86 46.86 4.02 0.27 0.61 1.29 1.32 40 4.13 Technologies 3.05
Sobha 17 23 459.05 16.67 20.84 14.70 1.96 1.47 0.59 1.62 1.08 23 4.57 Jagran
Prakashan 7.22
Allcargo Logistics 18 18 108.20 15.64 16.77 10.58 1.28 3.38 0.49 1.34 1.02 11 4.73
NTPC 7.61
Power Grid Corp 19 13 199.10 10.61 12.02 8.24 1.75 4.24 0.61 0.95 0.48 28 4.32
Power Grid
Corp 8.24
Alkem Laboratories 20 20 1898.30 18.31 38.89 30.06 4.20 0.82 0.79 0.83 -0.18 18 4.56
Redington
Emami 21 31 317.00 14.28 86.28 46.46 6.79 1.27 0.53 1.40 1.03 34 4.26 India 8.75

Rallis India 22 21 169.00 18.40 29.20 20.78 2.51 1.47 0.72 1.11 0.59 19 3.89
HeidelbergCement 23 28 185.20 12.96 39.76 18.94 3.57 2.16 0.47 1.61 1.71 15 4.33
3 Best PEGs
Century Plyboards 24 17 161.25 15.78 43.56 23.88 3.63 0.64 0.55 1.76 1.09 19 4.68
Top 5 stocks with the least
Lupin 25 30 701.20 15.70 70.17 52.39 2.31 0.71 0.73 1.18 0.84 47 2.91
price-earnings to growth ratio
CCL Products India 26 22 235.00 25.13 26.51 20.19 3.73 0.74 0.74 0.94 0.38 10 4.70 HG Infra Apar Industries
Engineering
NBCC India 27 36 34.35 25.48 37.25 16.51 4.10 3.49 0.50 2.35 2.50 13 4.00
NTPC 28 25 116.75 13.98 6.59 7.61 1.05 4.68 0.93 1.11 0.89 26 4.85
0.13 0.25 0.26 0.30 0.31
Larsen & Toubro 29 32 1458.05 20.53 21.02 22.93 3.28 1.23 1.09 1.03 1.02 39 4.64
Jagran Prakashan 30 29 62.30 5.51 20.02 7.22 0.99 5.54 0.36 1.61 0.90 14 4.36
Zensar DB Corp JK Cement
Narayana Hrudayalaya 31 27 235.80 21.23 135.67 82.02 4.49 0.43 0.59 1.36 0.38 11 5.00 Technologies
Redington India 32 26 108.45 15.67 16.29 8.75 1.12 2.90 0.55 1.82 0.85 10 4.70
4 Income generators
JSW Energy 33 34 61.30 5.04 37.36 14.43 0.85 1.59 0.37 1.32 1.13 16 3.19
Reliance Industries 34 33 1311.05 11.52 30.03 19.59 2.00 0.50 0.70 1.28 1.09 36 4.28 Top 5 stocks with the highest
dividend yield (%)
Grasim Industries 35 24 679.65 17.34 37.49 25.08 0.80 1.01 0.84 1.55 1.39 13 4.54
DB Corp 7.13
Sterlite Technologies 36 38 149.30 40.77 21.62 10.50 3.49 2.31 0.53 2.47 1.66 12 4.42
Jagran 5.54
Info Edge India 37 37 2122.00 30.33 66.53 41.98 9.98 0.25 0.34 1.71 0.25 29 3.52 Prakashan
Ashok Leyland 4.70
Hexaware Techno 38 35 368.65 25.01 22.15 18.76 4.33 2.39 1.01 1.34 0.55 28 3.79
NTPC 4.68
Zee Entertainment 39 43 251.55 19.07 23.36 15.04 2.64 1.50 0.61 2.78 1.59 34 3.94 Bharat Heavy
Electrical 4.27
Ashok Leyland 40 42 67.60 18.03 11.31 9.50 2.26 4.70 0.84 1.83 1.24 49 3.35
Mphasis 41 41 937.00 18.86 12.43 16.74 3.33 2.88 1.12 1.24 1.04 33 4.30
5 Least risky
Jubilant Life Sciences 42 45 492.85 8.22 23.46 13.46 1.64 0.89 0.54 1.67 1.25 13 4.77 Top 5 stocks with the lowest
ITC 43 40 261.65 15.03 22.34 25.18 5.38 2.25 1.11 0.93 1.00 37 4.70 downside risk
CG Consumer Elect 44 44 244.00 21.36 25.87 37.66 13.77 0.81 1.19 1.26 0.50 36 4.53 ITC Power Grid Corp

Torrent Pharmaceuticals 45 50 1598.85 13.21 49.21 61.71 5.70 1.05 1.26 1.03 0.52 33 4.21
Mahanagar Gas 46 49 891.35 7.62 16.75 16.16 3.68 2.22 0.89 1.10 0.65 27 4.48
0.83 0.93 0.94 0.95 1.03
Cipla/India 47 39 418.10 10.89 24.93 22.05 2.24 0.73 0.88 1.11 0.65 42 3.62
Dr Reddy's Laboratories 48 -- 2677.15 16.56 22.90 23.61 3.16 0.74 1.02 1.15 0.33 45 3.44
Alkem CCL Products Larsen &
HCL Technologies 49 46 1076.80 22.16 8.45 14.75 3.50 0.76 1.52 1.21 0.53 48 4.10 Laboratories India Toubro
SEE DOWNSIDE RISK AND BEAR BETA COLUMNS
IN THE ADJACENT TABLE.
*REVENUE AND NET PROFIT GROWTH IS BASED ON CONSENSUS ANALYSTS' EXPECTATIONS. NR: NOT IN THE RANKING. DATA AS ON 26 SEPT 2019. SOURCE: BLOOMBERG
 smart stats
20 The Economic Times Wealth October 7-13, 2019

ETW FUNDS 100

BEST FUNDS TO BUILD YOUR PORTFOLIO
LAGGARDS & LEADERS
Taking a long-term view of fund returns, here is a list of 10
funds in each category—five leaders (worth investing) and
five laggards (that may be a drag on your portfolio).

LAGGARDS LEADERS

ET Wealth collaborates with Value Research to identify the top-performing Equity: Large-cap 5-year returns
funds across categories. Equity funds and equity-oriented hybrid funds are
4.4 11.94
ranked on 3-year returns while debt-oriented hybrid and income funds are Principal Nifty 100 Equal Weight Fund JM Core 11 Fund
ranked on 1-year returns. 5.76 11.78
Taurus Largecap Equity Fund Axis Bluechip Fund

Value Research Net Assets

RETURNS (%)
Expense 5.78 11.66
Fund Rating (` Cr) 3-Month 6-Month 1-Year 3-Year 5-Year Ratio (%) JM Large Cap Fund Mirae Asset Large Cap Fund
6.59 11.57
EQUITY: LARGE-CAP 15% Baroda Large Cap Fund Quant Focused Fund
Axis Bluechip Fund  7005.1 2.69 8.95 16.67 15 11.78 2 THE 3-YEAR 6.75 10.7
HDFC Index Fund  467.63 -3.15 -0.85 5.68 12.04 8.6 0.3 RETURN
OF AXIS IDFC Large Cap Fund Motilal Oswal Focused 25 Fund
Sundaram Select Focus Fund  972.51 -3.12 0.67 6.01 12.04 8.61 2.38
BLUECHIP IS
Mirae Asset Large Cap Fund  13946.19 -4.08 -2.06 5.32 11.29 11.66 1.75 THE HIGHEST
Canara Robeco Bluechip Equity Fund  220.65 -0.74 2.58 8.58 10.46 9.61 2.65 IN ITS
Motilal Oswal Focused 25 Fund  1059.55 2.14 7.05 11.71 9.95 10.7 2.23 CATEGORY. Equity: Multi-cap 5-year returns
ICICI Prudential Bluechip Fund  21672.64 -3.43 -1.11 2.79 9.54 9.36 1.78
JM Core 11 Fund  49.56 0.13 -2.52 12.87 9.54 11.94 — 4.85 14.17
Edelweiss Large Cap Fund  155.04 -2.41 0.25 4.36 9.39 9.15 1.99 LIC MF Multicap Fund Motilal Oswal Multicap 35 Fund
Nippon India Large Cap Fund  11819.31 -7.79 -7 1.55 9.12 9.53 1.86 4.94 13.59
SBI Bluechip Fund  21483.76 -2.87 0.56 7.5 7.18 9.99 1.89 Taurus Starshare Fund Axis Focused 25 Fund

11.9% 5.54 12.47

EQUITY: LARGE- & MID-CAP
ICICI Prudential Focused Equity Tata Retirement Savings Fund
Sundaram Large and Mid Cap Fund  720.99 -1.37 0.32 7.58 11.94 11.8 2.6 THE 3-YEAR
Mirae Asset Emerging Bluechip Fund  7759.44 -3.26 -1.68 9.62 11.83 16.14 1.88 RETURN OF 5.58 12.21
Invesco India Growth Opportunities Fund  1658.8 -0.52 -0.61 5.98 11.17 10.78 2.07
SUNDARAM Union Multi Cap Fund SBI Magnum Multicap Fund
LARGE AND
LIC MF Large & Mid Cap Fund  509.41 0.71 2.95 8.98 9.29 — 2.77
MID CAP 6.15 12.2
Canara Robeco Emerging Equities Fund  4668.59 -5.12 -4.89 1.69 8.49 13.08 2.07 FUND IS THE HDFC Focused 30 Fund Kotak Standard Multicap Fund
DSP Equity Opportunities Fund  5166.21 -0.34 -0.85 6.71 8.19 11.18 1.95 HIGHEST
Kotak Equity Opportunities Fund  2487.55 -2.85 -2.45 6.79 7.97 10.65 2.17 IN ITS

CATEGORY.
Principal Emerging Bluechip Fund 2057.33 -3.34 -3.49 -0.04 7.15 12.37 2.09
Equity: Mid-cap 3-year returns
EQUITY: MULTI-CAP
Axis Focused 25 Fund  7841.41 1.7 7.5 10.09 13.87 13.59 2.03 -1.31 11.69
Parag Parikh Long Term Equity Fund  2066.68 -0.2 1.64 4.09 11.42 11.43 2.08 SBI Magnum Midcap Fund Axis Midcap Fund
SBI Focused Equity Fund  5127.07 -1.22 1.76 13.37 11.32 11.91 2.09
-0.31 6.72
Tata Retirement Savings Fund  632.32 -0.3 1.3 10.21 10.96 12.47 2.45
PGIM India Midcap Opportunities Fund Invesco India Mid Cap Fund
Edelweiss Multi Cap Fund  417.73 -3.85 -2.19 3.81 10.3 — 2.48
Kotak Standard Multicap Fund  25381.36 -3.35 -0.98 7.25 10.06 12.2 1.75 0.71 6.64
SBI Magnum Multicap Fund  7549.36 -1.82 1.13 9.03 9.57 12.21 2.07 Motilal Oswal Midcap 100 Exchange Traded Fund L&T Midcap Fund
Motilal Oswal Multicap 35 Fund  12693.11 -1.84 1.03 6.08 8.93 14.17 1.75 0.78 6.58
Quant Active Fund  6.27 -4.96 -4.25 0.17 8.43 10.09 2.48
Aditya Birla Sun Life Mid Cap Fund DSP Midcap Fund
Franklin India Focused Equity Fund  7981.32 -8.45 -5.83 4.59 7.22 9.56 1.85
Aditya Birla Sun Life Equity Fund  10652.87 -3.56 -3.85 2.86 6.55 10.69 1.96
1.13 6.58
ICICI Prudential Multicap Fund  3990.54 -6.88 -6.15 -1.82 6.11 9.15 2.08 UTI Mid Cap Fund Tata Midcap Growth Fund

EQUITY: MID-CAP 11.7%

Axis Midcap Fund
L&T Midcap Fund


2819.12
4905.48
1.35
-5.26
2.63
-7.8
9.16
-3.24
11.69
6.64
11.3
11.39
2.17
2
THE 3-YEAR
RETURN OF
Equity: Small-cap 3-year returns
DSP Midcap Fund  5920.68 -2.48 -2.57 6.66 6.58 11.87 1.95
AXIS MID-
Kotak Emerging Equity Scheme  4469.53 -3.92 -3.48 5.99 6.1 12.1 2.04
CAP FUND IS -6.6 11.63
THE HIGH- Quant Small Cap Fund SBI Small Cap Fund
Franklin India Prima Fund  6694.33 -4.67 -5.93 2.13 5.25 10.77 1.88 EST IN ITS
HDFC Mid-Cap Opportunities Fund  20943.79 -7.11 -10.19 -2.68 3.68 9.64 1.85 CATEGORY. -2.26 10.58
Sundaram Small Cap Fund Axis Small Cap Fund
EQUITY: SMALL-CAP
-1.14 7.92
SBI Small Cap Fund  2413.24 0.33 -1.52 4 11.63 16.7 2.31
Axis Small Cap Fund  885.44 2.56 7.67 17.67 10.58 12.33 2.48
Aditya Birla Sun Life Small Cap Fund HDFC Small Cap Fund
HDFC Small Cap Fund  8208.77 -9.73 -14.15 -8.25 7.92 10.63 2.1 -0.68 7.54
Nippon India Small Cap Fund  7491.46 -6.84 -9.07 -6.3 7.54 10.96 2.19 DSP Small Cap Fund Nippon India Small Cap Fund
L&T Emerging Businesses Fund  5638.54 -6.39 -11.34 -7.75 6.76 11.78 2.02 -0.46 6.76
EQUITY: VALUE-ORIENTED HSBC Small Cap Equity Fund L&T Emerging Businesses Fund
Kotak India EQ Contra Fund  818.74 -2.22 -1.08 3.69 11.32 10.31 2.58
Invesco India Contra Fund  3991.92 -4.43 -5.38 -0.37 9.91 11.05 1.9
Tata Equity PE Fund  5208.24 -2.93 -3.08 0.94 8.36 11.31 1.9 Hybrid: Aggressive 5-year returns
L&T India Value Fund  7633.41 -6.93 -6.74 -2.44 5.68 10.81 1.88

1.63 11.69
EQUITY: TAX-SAVING 13.3% JM Equity Hybrid Fund Tata Retirement Savings Fund
Mirae Asset Tax Saver Fund  2305.59 -3.77 -1.27 6.95 13.3 — 2.02
THE 3-YEAR
Axis Long Term Equity Fund  19236.11 0.96 6.2 12.26 12.17 12.52 1.76 RETURN OF 5.63 10.68
JM Tax Gain Fund  30.64 1.32 5.25 14.4 11.46 11.47 — MIRAE ASSET LIC MF Equity Hybrid Fund SBI Equity Hybrid Fund
Motilal Oswal Long Term Equity Fund  1389.39 1.09 2.76 6.12 10.26 — 2.11 TAX SAVER
FUND IS THE
5.66 9.87
Invesco India Tax Plan  859.03 -2.53 -2.11 2.46 9.12 10.13 2.35
HIGHEST IN PGIM India Hybrid Equity Fund Canara Robeco Equity Hybrid Fund
Tata India Tax Savings Fund  1814.81 -4.26 -0.83 10.65 8.99 12.1 2.12
ITS CATEGORY. 5.86 9.58
DSP Tax Saver Fund  5482.26 -0.54 1 10.76 8.73 11.34 1.88
Kotak Tax Saver  895.56 -4.8 -0.56 7.56 8.38 10.83 2.4 Baroda Hybrid Equity Fund HDFC Hybrid Equity Fund
IDFC Tax Advantage (ELSS) Fund  1876.67 -8.39 -8.44 -2.57 8.01 9.09 2.15 6.08 9.45
Aditya Birla Sun Life Tax Relief 96  8561.62 -3.1 -5.46 -1.88 7.64 11.12 2.07 UTI Hybrid Equity Fund HDFC Children's Gift Fund
Quant Tax Plan  9.36 -5.13 -4.27 -1.42 6.92 12.6 2.48
ANNUALISED RETURNS IN % AS ON 1 OCTOBER 2019.
 smart stats
The Economic Times Wealth October 7-13, 2019 21

ETW FUNDS 100 Top 5 SIPs

Value Research
Fund Rating
Net Assets
(` Cr) 3-Month 6-Month
RETURNS (%)
1-Year 3-Year 5-Year
Expense
Ratio
1 Top 5 equity schemes based
HYBRID: EQUITY SAVINGS 7.2% on 10-year SIP returns
Kotak Equity Savings Fund  1949.79 0.23 1.52 5.39 7.23 — 2.16 THE 3-YEAR SBI Small Cap Fund
Edelweiss Equity Savings Fund  118.82 -0.04 1.69 5.67 6.94 — 1.74 RETURN OF
ICICI Prudential Equity Savings Fund  1530.42 -0.14 2.32 7.8 6.84 — 1.34 KOTAK EQ- 19.84
HDFC Equity Savings Fund  4909.64 -2.32 -0.83 3.43 6.79 7.79 1.93 UITY SAVINGS Canara Robeco Emerging Equities Fund
FUND IS THE
HYBRID: AGGRESSIVE (EQUITY-ORIENTED) HIGHEST IN 17.76
SBI Equity Hybrid Fund  29353.7 0.46 3.03 11.59 9.73 10.68 1.65
ITS CATEGORY.
Principal Emerging Bluechip Fund
Mirae Asset Hybrid Equity Fund  2429.15 -3.68 -1.52 5.98 9.62 — 2.01
15.60
Tata Retirement Savings Fund  1048.75 -0.23 -0.46 7.66 9.34 11.69 2.26
HDFC Retirement Savings Fund  312.73 -3.18 -2.28 5.89 9.07 — 2.64 SBI Focused Equity Fund
Canara Robeco Equity Hybrid Fund  2341.39 -1.74 0.34 7.33 8.49 9.87 2.15 15.48
HDFC Children's Gift Fund  2780.12 -2.81 -2.39 4.79 8.49 9.45 2.13
Kotak Emerging Equity Scheme
Principal Hybrid Equity Fund  1558.56 -4.13 -6.07 -2.38 8.17 9.42 2.11
HDFC Hybrid Equity Fund  20695.95 -3.68 -2.63 5.45 7.67 9.58 1.77 14.99
ICICI Prudential Equity & Debt Fund  23288.42 -5.45 -4.05 0.94 7.27 9.2 1.73
SIP: SYSTEMATIC % ANNUALISED RETURNS
HYBRID: CONSERVATIVE (DEBT-ORIENTED) INVESTMENT PLAN AS ON 1 OCTOBER 2019

ICICI Prudential Regular Savings Fund  1639.51 1.27 2.93 9.26 8 9.59 1.94 9.3%
Tata Retirement Savings Fund  130.42 1 2.86 9.04 6.65 8.44 2.23 THE 1-YEAR
Top 5 MIPs
Indiabulls Savings Income Fund
Aditya Birla Sun Life Regular Savings Fund


18.86
2003.6
-0.91
-0.21
1.82
1.7
6.35
5.51
8.16
4.57
—
8.64
2.22
1.86
RETURN OF
ICICI PRU REG-
2 Top 5 MIP schemes based on
UTI Regular Savings Fund  2379.01 0.25 -1.95 2.31 5.28 7.44 1.79
ULAR SAVINGS
SBI Magnum Children's Benefit Fund  62.31 -0.72 -2.9 1.63 8.23 10.43 2.26
FUND IS THE 3-year SWP returns
HIGHEST IN ITS
CATEGORY. Indiabulls Savings Income Fund
DEBT: MEDIUM- TO LONG-TERM
IDFC Bond Fund Income Plan  673.28 3.28 6.84 14.26 7.36 9.05 1.89 8.50
ICICI Prudential Bond Fund  3318.48 3.1 5.35 11.4 6.68 8.65 1.08 ICICI Prudential Regular Savings Fund
SBI Magnum Income Fund  1204.3 3.14 5.6 11.35 7.31 8.76 1.47
7.92
DEBT: MEDIUM-TERM
Baroda Conservative Hybrid Fund
SBI Magnum Medium Duration Fund  1841.93 3.09 5.48 11.21 8.51 9.37 1.09
Indiabulls Income Fund  21.87 2.09 4.26 9.89 7.43 8.56 0.76 6.84
Franklin India Income Opportunities Fund  3587.02 1.44 2 7.56 7.76 8.41 1.71 Canara Robeco Conservative Hybrid Fund
Axis Strategic Bond Fund  1185.13 2.6 2.04 7.33 6.89 8.67 1.05
6.02
DEBT: SHORT-TERM
Axis Short Term Fund  2153.68 2.88 4.76 10.11 7.34 8.1 0.9
10.1% BNP Paribas Conservative Hybrid Fund
THE 1-YEAR 5.91
HDFC Short Term Debt Fund  8487.64 2.72 4.72 9.96 7.63 8.32 0.4
RETURN OF
Baroda Short Term Bond Fund  297.92 2.33 4.54 9.29 7.81 8.39 1.3 AXIS SHORT SWP: SYSTEMATIC % ANNUALISED RETURNS
Franklin India Short Term Income Plan  13155.95 1.38 1.88 7.91 8.01 8.5 1.49 TERM FUND WITHDRAWAL PLAN AS ON 1 OCTOBER 2019
Indiabulls Short Term Fund  67.78 0.44 2.39 7.29 6.62 7.73 1.48 IS THE HIGH-
EST IN ITS
DEBT: DYNAMIC BOND CATEGORY.
Value Oriented:
Edelweiss Dynamic Bond Fund
SBI Dynamic Bond Fund
PGIM India Dynamic Bond Fund



54.25
1126.07
41.37
2.83
3.33
2.57
6.53
7.7
6.47
16.12
14.06
13.56
7.22
7.8
8.24
8.14
9.4
9.53
1.02
1.66
1.28
3 Cash holdings
Kotak Dynamic Bond Fund  790.76 2.7 5.85 13.06 8.09 9.22 1.08 17.63
ICICI Prudential All Seasons Bond Fund  2779.93 2.37 4.97 10.22 7.43 9.71 1.32
Franklin India Dynamic Accrual Fund  3981.43 1.68 2.66 8.82 8.13 9.32 1.68 13.41
DEBT: CORPORATE BOND 10.14
HDFC Corporate Bond Fund  12910.11 2.79 5.16 11.37 7.8 8.7 0.45 8.57
7.85
Aditya Birla Sun Life Corporate Bond Fund  16274.98 2.53 4.84 10.61 7.78 8.68 0.39
Franklin India Corporate Debt Fund  1033.42 1.59 3.61 10.3 8.06 8.68 0.87
Kotak Corporate Bond Fund  2447.6 2.79 4.83 10.08 8.01 9.25 0.59
Expense as on 31 August 2019
ICICI Prudential Corporate Bond Fund  9002.07 2.65 4.72 9.98 7.46 8.28 0.56
Returns as on 1 October 2019
Nippon India Prime Debt Fund  1139.9 2.37 3.3 8.2 7.09 7.9 0.71
Assets as on 31 August 2019 SBI Quantum Indiabulls Templeton ICICI
All equity funds ranked on 3-year returns. Debt funds ranked on 1-year returns. Rating as on 30 September 2019 Contra Long Term Value India Value Prudential
Fund Equity Fund Fund Value
Did not find your fund here? Value Discovery
Log on to www.wealth.economictimes.com for an exhaustive list. Fund Fund
% AS ON 31 AUGUST 2019

Methodology EQUITIES (figures over the past one year)

The Top 100 includes only those funds that have a 5- or
4-star rating from Value Research. The rating is determined
Large-cap: Mostly invested in large-cap companies.
Multi-cap: Mostly invested in large- and mid-cap
4 Debt: Dynamic Bond
by subtracting a fund’s risk score from its return score.
The result is assigned stars according to the following companies. FUND
distribution:

  Top 10%

Mid-cap: Mostly invested in mid-cap companies.
Small-cap: Mostly invested in small-cap companies.
RAISER 0.82
1.02

  Next 22.5% Tax planning: Offer tax rebate under Section 80C. 0.71 0.74

60%
(Not covered
  Middle 35% in ETW Funds International: More than 65% of assets invested abroad.
  Next 22.5% 100 listing) Income: Average maturity varies according to objective.
  Bottom 10% Gilt: Medium- and long-term; invest in gilt securities.
Fixed-income funds less than 18 months old and equity funds Equity-oriented: Average equity exposure more
of the equity diversified 0.21
less than three years old have been excluded. This ensures than 60%. small-cap funds have
that all the funds have existed long enough to be tracked for Debt-oriented aggressive: Average equity exposure delivered negative SIP
consistency of performance. Given the focus on long-term Quant Quantum Indiabulls ABSL Ac- Edelweiss
investing, liquid funds, short-term funds and FMPs are not
between 25-60%. returns in the past one year*
Dynamic Dynamic Dynamic tive Debt Dynamic
part of the list. For the same reason, we have considered only Debt-oriented conservative: Average equity exposure Bond Bond Bond Multi- Bond
*Between September 2018 and
the growth option of funds that reinvest returns instead of less than 25%. Fund Fund Fund Manager Fund
September 2019.
offering dividends that increase the NAV of funds. Arbitrage: Seek arbitrage opportunities between equity FoF
Despite these rigorous filters, the list includes 2/3 funds of and derivatives. % AS ON 31 AUG 2019
% EXPENSE RATIO IS CHARGED ANNUALLY.
each category to maximise choice from the best funds. Asset allocation: Invest fully in equity or debt as per
METHODOLOGY OF TOP 100 FUNDS ON
The fund categories are: market conditions. WWW.WEALTH.ECONOMICTIMES.COM
 loans and deposits
22 The Economic Times Wealth October 7-13, 2019

LOANS & DEPOSITS

ET WEALTH collaborates with ETIG to provide a comprehensive ready reckoner of loans and fixed-income
instruments. Don’t miss the information on investments for senior citizens and a simplified EMI calculator.

Top five bank FDs

TENURE: 1 YEAR
Interest rate (%)
compounded qtrly
What `10,000
will grow to
HOME LOAN RATES
IDFC First Bank 8.00 10,824 With effect from 1 October, all banks have made the transition to
RBL Bank 7.60 10,782 external benchmarks for pricing new home loans. Most banks have
Indusind Bank 7.50 10,771
picked the RBI repo rate as the external benchmark.
Lakshmi Vilas Bank 7.50 10,771
Yes Bank 7.25 10,745

TENURE: 2 YEARS REPO RATE: 5.40% *

IDFC First Bank 8.00 11,717 BANK FOR SALARIED (%) FOR SELF EMPLOYED (%) WEF
RBL Bank 7.65 11,636
DCB Bank 7.50 11,602 Axis Bank 8.85 to 9.30 8.90 TO 9.50 1 October 2019
Lakshmi Vilas Bank 7.50 11,602
AU Small Finance Bank 7.50 11,602
Bank of India 8.35 to 8.65 8.35 TO 9.25 1 October 2019

TENURE: 3 YEARS Central Bank of India 8.25 to 8.55 8.25 to 8.55 1 October 2019
DCB Bank 8.00 12,682
AU Small Finance Bank 7.77 12,597 Federal Bank 8.80 to 8.90 8.85 to 9.00 1 October 2019
Lakshmi Vilas Bank 7.50 12,497
IDFC First Bank 7.50 12,497 ICICI Bank 8.90 to 9.50 9.05 TO 9.65 1 October 2019
Indusind Bank 7.35 12,442
IDBI Bank 8.50 to 8.85 8.60 to 9.05 1 October 2019
TENURE: 5 YEARS
DCB Bank 7.75 14,678 Oriental Bank of Commerce 8.35 to 8.80 8.35 to 8.80 1 October 2019
IDFC First Bank 7.50 14,499
RBL Bank 7.50 14,499 SBI Max Gain 8.45 to 8.80 8.60 to 8.95 1 October 2019
AU Small Finance Bank 7.50 14,499
SBI Term Loan 8.20 to 8.55 8.35 to 8.70 1 October 2019
Indusind Bank 7.35 14,393

Syndicate Bank 8.25 to 8.45 8.30 to 8.50 1 October 2019

Top five senior citizen bank FDs United Bank of India-EBLR 8.25 to 8.40 8.25 to 8.40 1 October 2019
Interest rate (%) What `10,000
TENURE: 1 YEAR compounded qtrly will grow to United Bank of India-RLLR 8.15 to 8.30 8.15 to 8.30 1 October 2019
IDFC First Bank 8.50 10,877
* Since RBI cut repo rate by 25 bps on 4 October, these rates are expected to go down by 0.25% in the near future.
Lakshmi Vilas Bank 8.10 10,835
RBL Bank 8.10 10,835
Indusind Bank 8.00 10,824
Bandhan Bank 8.00 10,824 Your EMI for a loan of `1 lakh
TENURE: 2 YEARS
TENURE 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS
IDFC First Bank 8.50 11,832
@ 8%
RBL Bank 8.15 11,751 2,028 1,213 956 836 772
Bandhan Bank 8.15 11,751 @ 10%
Lakshmi Vilas Bank 8.10 11,740 2,125 1,322 1,075 965 909
@ 12%
DCB Bank 8.00 11,717
@ 15% 2,224 1,435 1,200 1,101 1,053
TENURE: 3 YEARS
DCB Bank 8.50 12,870 2,379 1,613 1,400 1,317 1,281
AU Small Finance Bank 8.27 12,784
FIGURES ARE IN `. USE THIS CALCULATOR TO CHECK YOUR LOAN AFFORDABILITY.
Lakshmi Vilas Bank 8.10 12,720 FOR EXAMPLE, A `5 LAKH LOAN AT 12% FOR 10 YEARS WILL TRANSLATE INTO AN EMI OF `1,435 X 5 = `7,175
Bandhan Bank 8.10 12,720
IDFC First Bank 8.00 12,682

TENURE: 5 YEARS
Post office deposits Interest (%)
Minimum
invt. (`)
Maximum investment (`) Features
Tax
benefits

DCB Bank 8.25 15,043

Senior Citizens' Savings Scheme 8.60 1,000 15 lakh 5-year tenure, minimum age 60 yrs 80C
IDFC First Bank 8.00 14,859
RBL Bank 8.00 14,859 Sukanya Samriddhi Yojana 8.40 250 1.50 lakh One account per girl child 80C
AU Small Finance Bank 8.00 14,859
Public Provident Fund 7.90 500 1.50 lakh p.a. 15-year tenure, tax-free returns 80C
Bandhan Bank 8.00 14,859

5-year NSC VIII Issue 7.90 100 No limit No TDS 80C

Top five tax-saving bank FDs Time deposit 6.90-7.70 200 No limit Available in 1, 2, 3, 5 years 80C#
Interest What `10,000
TENURE: 5 YEARS AND ABOVE rate (%) will grow to Single 4.5 lakh 5-year tenure, monthly returns Nil
Post Office Monthly Income
DCB Bank 7.75 14,678 7.60 1,500
Scheme
Joint 9 lakh 5-year tenure, monthly returns Nil
IDFC First Bank 7.75 14,678
Indusind Bank 7.50 14,499 Kisan Vikas Patra 7.60 1,000 No limit Can be encashed after 2.5 years Nil
RBL Bank 7.50 14,499
Recurring deposits 7.20 10 No limit 5-year tenure Nil
AU Small Finance Bank 7.50 14,499
Savings account 4.00 20 No limit `10,000 interest tax free Nil
ALL DATA SOURCED FROM ECONOMIC TIMES INTELLIGENCE GROUP
(ETIGDATABASE@TIMESGROUP.COM) Data as on 19 Sept 2019 # Benefit available only for 5-year deposit
 non-traditional investments
The Economic Times Wealth October 7-13, 2019 23

ALTERNATIVE INVESTMENT
RETURNS MONITOR
The scope and attractiveness of alternative investments is increasing. Here’s a weekly tracker of returns from such investments. But don’t
compare these with returns from traditional investments since the proportion and purpose of alternative investments is vastly different.

Diamond Index Precious Metals Index Wine Index Coin Index

121.33 115.69 1,570.94 1,955.56 359.84 348.87 17,400 24,300
2 OCT 2018 2 OCT 2019 2 OCT 2018 2 OCT 2019 2 OCT 2018 2 OCT 2019 2 OCT 2019
2 OCT 2018

CHANGE
X I WEEK -0.02% I WEEK -0.47% I WEEK 0.35% I WEEK 7.95%
X I YEAR -4.65% I YEAR 24.48% I YEAR -3.05% I YEAR 39.66%
Overall Diamond Index is based on The S&P GSCI Precious Metals Index The Liv-ex Fine Wine 50 Index tracks The Krugerrand Coin index represents
actual transactions from 20 different comprises gold (91.33%) & silver (8.67%) daily price movement of the most the denomination of a 22 carat gold
market players and reflects price & provides a benchmark for investment heavily traded commodities in the wine bullion coin weighing one troy ounce
movements in the global diamond performance in the precious metals market. It includes only the 10 most that is listed for trading on the
market. The index is updated daily. commodity markets. It is updated daily. recent vintages and is updated daily. Johannesburg Stock Exchange.

PENNY STOCKS UPDATE

Penny stocks as a recommended non-traditional investment? Not exactly. ET WEALTH
neither has the expertise nor does it recommend investing in such stocks. But since the
relatively ‘low’ cost of investment attracts some investors to penny stocks, we provide
a weekly snapshot of this most volatile and uncertain type of stock investing.

Top price gainers Top volume gainers

MARKET 1-WEEK (%) 1-MTH (%) 1-MONTH AVG 1-MONTH AVG MKT CAP MARKET 1-WEEK (%) 1-MTH (%) 1-MTH AVG 1-MONTH AVG MKT CAP
STOCK PRICE (`) CHANGE CHANGE VOL (LAKH) VOL CHG (%) (`CR) STOCK PRICE (`) CHANGE CHANGE VOL (LAKH) VOL CHG (%) (`CR)

IL&FS Tran. Networks 3.14 25.60 100.00 0.46 329.68 103.29 BT Syndicate 9.75 2.63 -0.41 1.25 11,33,027.9 100.13
Frontier Informatics 4.45 27.14 80.16 0.06 2,934.31 22.70 Gold Line Inter. Finvest 1.32 -17.50 -36.54 0.03 5,734.66 68.77
Setubandhan Infra. 1.89 6.18 60.17 0.30 -14.68 23.76 Frontier Informatics 4.45 27.14 80.16 0.06 2,934.31 22.70
Shree Global Tradefin 2.81 20.60 59.66 0.01 18.56 320.20 Digicontent 5.74 -7.12 -4.33 0.28 2,023.32 33.41
Reliance Naval & Engg 1.40 25.00 59.09 11.32 40.07 103.26 Mercator 1.05 -21.05 -17.97 13.18 1,248.73 31.76
SAL Steel 3.10 3.33 49.04 0.16 204.35 26.34 MSR India 8.35 7.05 11.33 0.20 1,221.78 52.50
Genus Paper & Boards 6.81 -0.15 48.37 0.39 373.84 175.09 Sulabha Enggineers 1.26 -4.55 -13.10 0.04 1,216.16 12.66
Vikas Multicorp 3.99 9.62 40.99 1.07 57.28 264.74 Bombay R Fashions 4.88 -16.44 -4.31 0.25 1,131.36 154.93
Starlite Components 10.00 9.05 40.85 0.02 -66.92 17.10 Hexa Tradex 6.35 4.44 -41.20 0.12 1,048.24 35.08
Satkar Finlease 2.31 10.00 40.85 0.00 -98.58 50.91 Global Offshore Services 6.08 -11.11 3.93 0.71 861.34 15.04

Top price losers Top volume losers

Manpasand Beverages 7.13 -21.65 -52.62 1.39 146.15 81.61 Toyam Industries 2.01 -21.79 -15.19 3.74 -71.61 42.71
Alok Industries 1.50 -13.79 -41.18 32.05 134.15 206.60 Reliance Communications 0.74 -3.90 -10.84 30.57 -58.43 204.65
Suzlon Energy 2.20 -25.93 -39.23 44.20 127.65 1,170.35 GTL Infrastructure 0.55 -12.70 3.77 3.13 -56.28 677.55
Kwality 1.38 -15.85 -38.67 3.44 242.22 33.31 Ram Minerals and Chem. 0.66 -1.49 -17.50 6.18 -42.99 13.58
Housing Dev & Infra 3.68 -22.20 -38.36 4.41 1.00 174.43 Sintex Plastics Techn. 3.42 -21.56 -8.06 2.03 -37.40 215.80
Reliance Home Finance 3.64 -21.38 -36.25 1.27 19.79 176.56 Sintex Industries 1.74 -18.31 -19.82 2.03 -35.85 103.37
BAG Films & Media 1.57 -7.65 -33.19 2.13 168.97 31.07 Vodafone Idea 5.38 -3.58 5.08 162.22 -33.76 15,459.64
Sanwaria Consumer 2.06 -12.34 -29.21 10.20 0.28 151.64 Karuturi Global 0.30 -14.29 -14.29 1.73 -28.23 44.93
Reliance Power 2.54 -8.63 -27.84 45.32 52.74 712.50 Ballarpur Industries 0.51 -8.93 -27.14 6.22 -26.30 65.97
Ballarpur Industries 0.51 -8.93 -27.14 6.22 -26.30 65.97 Shiva Cement 8.99 -15.75 -10.28 1.79 -21.45 175.31

THE STOCKS HAVE BEEN SELECTED USING THE FOLLOWING FILTERS: PRICE LESS THAN `10, ONE-MONTH AVERAGE VOLUME GREATER THAN OR EQUAL TO 1 LAKH AND MARKET
CAPITALISATION GREATER THAN OR EQUAL TO `10 CRORE. DATA AS ON 25 SEPTEMBER 2019. SOURCE: ETIG DATABASE AND BLOOMBERG.
 pick of the week
24 The Economic Times Wealth October 7-13, 2019

Shriram City Union: Emerging stronger

The recent reduction in corporate taxes offers a good entry opportunity into this counter for investors.

S
hriram City Union Finance (SCUF), the retail fi- to return to high growth trajectory once the system liquidity
nance arm of the Shriram Group, corrected signifi- situation improves because it has a high capital adequacy
Fundamentals
cantly in the recent past. For example, it fell 27% in ratio of 22.6%. CONSENSUS
ACTUAL
ESTIMATE
the last six months, compared to just 2% fall each The liquidity crisis has increased cost of funds and this
2017-18 2018-19 2019-20 2020-21
in Sensex and ET NBFC index. This underper- may continue to put short-term pressure on its net interest
Revenue (` cr) 3,447.23 3,720.80 3,984.55 4,324.55
formance reflects the market’s recent behaviour towards margin (NIMs) in coming quarters. However, this short
the mid cap non-banking finance companies (NBFCs). term pain is transitory. More importantly, recent price cor- Ebitda (` cr) 1,087.10 1,518.49 2,400.77 2,664.22
Weak numbers for the first quarter of 2019-20 was another rection factors in most of the above mentioned negatives. Net profit (` cr) 710.94 988.88 1,073.13 1,206.16
reason for this underperformance. Analysts are getting bullish on this EPS (`) 107.80 149.88 161.57 178.70
For example, its loan growth during counter now because of the fall in
the first quarter was weak because Analysts’ views valuations. The situation is stable at Valuations PBV PE
DIVIDEND
YIELD (%)
of the weakness in the auto segment the asset quality front and analysts Shriram City Union Finance 1.30 8.46 1.69
(disbursement down by 25% y-o-y)
1 are expecting gradual decline in its
Sell 11 Bajaj Finance 11.66 52.74 0.15
and MSME segment (disburse- credit cost and write offs in com-
Buy Chola Investment and Finance Co. 3.65 23.24 0.45
ment down by 19% y-o-y). Since the ing quarters. The recent reduction
Shriram Transport Finance Co. 1.47 22.77 1.16
weakness in the auto sector got ag- in corporate tax is also good news
M&M Financial Services 1.79 19.68 1.98
gravated in the second quarter, be for SCUF and its EPS for 2019-20
ready for another quarter of weak and 2020-21 are expected to go up by
numbers by SCUF. However, vehi-
5
around 12% each. Latest brokerage calls TARGET
cle demand is expected to pick up in RECO DATE RESEARCH HOUSE ADVICE PRICE (`)
Hold
the second half of 2019-20 because of S ele c t ion Met ho dolog y: We 23 Sep ’19 ICICI Securities Buy 1,750
better than average monsoon this pick up the stock that has shown
23 Sep ’19 Axis Capital Limited Buy 1,700
year. This is expected to result in maximum increase in “consen-
20 Sep ’19 Kotak Securities Buy 1,900
better farming in the kharif season sus analyst rating” in the past
28 Aug ’19 Motilal Oswal Sec. Buy 1,900
and increase in rural income which The recent reduction in corporate tax is good news for month. Consensus rating is ar-
might give a push to vehicle sales. Shriram City Union Finance. Its EPS for 2019-20 and rived at by averaging all analyst 30 Jul ’19 Phillip Securities Buy 1,650
2020-21 are expected to go up by around 12%. Also,
Though other segments like gold recommendations after attribut- SENSEX
loans and personal loans are ex-
the correction in price and valuation during the last six
months has made the company a favourite of analysts. ing weights to each of them (5 for Relative performance 105.92
111.62
pected to remain firm in coming strong buy, 4 for buy, 3 for hold,
1
100 MARKET PRICE: `1298.15
quarters, overall loan growth is expected to remain muted 2 for sell and 1 for strong sell) and any improvement in
for 2019-20 because SCUF is also impacted by the ongoing consensus analyst rating indicates that the analysts are
system wide liquidity tightness. This is despite the fact that getting more bullish on the stock. To make sure that we
SCUF enjoys strong group reputation especially in South pick only companies with decent analyst coverage, this
India and its high credit rating (AA from several rating agen- search will be restricted to stocks with at least 10 ana-
cies). As normalization of liquidity is taking longer than the lysts covering it. You can see similar consensus analyst 78.98
expected, management has also reduced its AUM growth out- rating changes during the last one week in ETW 50 table. 3 OCT 2018 SCUF ET NBFC 3 OCT 2019
look for 2019-20 from 18% to 15%. However, SCUF will be able —Narendra Nathan SCUF compared with ET NBFC and Sensex. Stock price and index values normalised to a
base of 100. Source: ETIG and Bloomberg.

WHAT EXPERTS ADVISE

BUY *STOCK PRICES AS ON 3 OCTOBER

RESEARCH STOCK 1-YEAR TARGET POTENTIAL

STOCK ADVICE COMMENT
HOUSE PRICE* (`) PRICE (`) UPSIDE (%)

Corporate banks have seen steady earnings normalisation over 2018-19. Of these banks, Axis
Axis Bank HDFC Sec Buy 668 986 48 Bank is the top pick due to the DNA change happening at the bank.

While near term volume growth could be at risk, Coal India is attractively valued with a 10%
Coal India IIFL Buy 187 270 45 dividend yield offering downside protection.

Amber is one of the few contract manufacturers of air-conditioners in India that would benefit
Amber Enterprises Anand Rathi Buy 875 1,248 43 from robust demand as India is set to remain the fastest-growing market in the world till 2030.

IOC will be a key beneficiary if government sells controlling stake in BPCL to a third party. As it
IOC J P Morgan Overweight 152 205 35 would remove the overhang of IOC purchasing the BPCL stake and sharply increasing debt.

Retain positive view on the infrastructure & defence industries. Reiterate 'buy' on BEML, because
BEML Elara Capital Buy 956 1,180 23 of its high order book and huge opportunity in metros and defence segments.

Though there is not much merit in M&M's acquisition of 51% stake in most of Ford's India operation,
Mahindra & Mahindra Jefferies Buy 563 690 23 it may help M&M to cement its strategic alliance with Ford in the long run.

SELL RESEARCH STOCK 1-YEAR TARGET POTENTIAL

STOCK ADVICE COMMENT
HOUSE PRICE* (`) PRICE (`) DOWNSIDE (%)

While the sales volume has grown in the recent past, concerns about the weak operational cash
Sobha Nirmal Bang Sell 459 405 -12 flow after tax and interest cost remain same.
 QA
I am 40. I want to build a retirement
corpus of `1 crore. Where and how
much should I invest to achieve this
goal? Also, will `1 crore be enough
for retirement?
A corpus
of `1
crore at an annual inflation rate of 6% after 20
years will have the same purchasing power as
`32 lakh today. Calculate if this amount would
be sufficient as a retirement corpus based on
current expenses and inflation. Your corpus
should be sufficient for you to draw on for 20
years. Now, you have 20 years to build the
corpus. Assuming 10% CAGR, you will have to
invest `15,000 per month for the next 20 years.
High quality equity investments options such
as Aditya Birla SL Frontline Equity, ICICI
Prudential Bluechip Fund or SBI Bluechip Fund
can help you reach this milestone. Diversify
your holdings across asset classes by investing
in both debt and equity. If you need a higher
corpus, invest a higher amount every month. It
is advisable to increase your
monthly investment
instead of opting for
riskier avenues.
Adhil Shetty
CEO, BankBazaar
I am a PSU employee with an annual
salary of `9.5 lakh. I don’t have
insurance nor any investment in
mutual funds. Please suggest where
and how to invest so that I can save
taxes and create a corpus to build a First get
house on a plot that I own in the a term
next five years. cover of
about
`1-1.5
crore. The premium would be tax exempt
under Sec 80C. Premiums for health covers can
be claimed for tax deduction under Sec 80D.
School or college fees for up to two kids is also
tax exempt under 80C. For more exemptions
under 80C, there are options, but all come with
multi-year lock-ins. The shortest lock-in of
three years is offered by ELSS. Though not
usually recommended, you can invest in a good
Ulip for your specific case as you will
get the tax benefit and be able to
withdraw the entire sum on the
expiry of its 5 year term.
Ankur Choudhary
Co-Founder and CIO, Goalwise
I am senior citizen. My taxable
income is a little over `5 lakh. Does
the EPFO pension qualify for standard
deduction? Does the rebate of
`12,500 make senior citizens’ taxable
income tax-free up to `5,12,500?
As per Section 87A of the I-T Act, you can claim tax rebate of `12,500,
if you are a resident individual and your total income does not
exceed `5 lakh. If the total income exceeds `5 lakh, one is not eligible to claim this rebate.
Further, the pension received from EPFO is taxable under the head salary and it will
qualify for standard deduction. However, the maximum standard deduction would be
`50,000 or the amount of pension, whichever is less.
Amit Maheshwari, Partner, Ashok Maheshwary and Associates
& I have `19 lakh each in SBI Bluechip, Axis
Long Term Equity, Mirae Asset Large Cap
Emerging Bluechip. I have SIPs of `5,000
education in six years, her marriage in 14
years and my retirement in seven years.
My monthly expenses are `50,000. How I
Our panel of experts will
answer questions related to
any aspect of personal
finance. If you have a query,
mail it to us right away.
QUESTION OF THE WEEK
I bought a flat for `70 lakh in
2006 and sold it recently for `2
crore. What is my capital gain
on which I will have to pay LTCG
tax? If I decide to deposit the
amount in a CGAS scheme, do I
have to deposit the entire sale
proceeds or only the amount
after indexation?
To calculate the gains from the sale, the
purchase cost or acquisition cost will be
indexed by applying the cost inflation
index (CII). It is done to adjust the rate of
inflation over the years of holding the
capital asset. The capital gains will be
calculated by multiplying the cost of
acquisition with the CII of the year of
sale and dividing it by the CII of the year
of purchase. The resulting indexed cost
of acquisition will be subtracted from
the sale value. The net figure is the
amount of taxable capital gains. You can
deposit the capital gains of `34,18,033
in the CGAS scheme and claim the
amount as an exemption from the
capital gains and no tax is required to be
paid. The amount has to be deposited
before the date of filing income tax
return for 2019-20. However, if the
amount is not invested within the
stipulated time, the deposit will
be taxed as capital gains
of the year in which the
specified period
lapses and taxed
accordingly.
Archit Gupta
CEO, ClearTax
your queries
The Economic Times Wealth October 7-13, 2019 25
Equity and Franklin India Low Duration
Fund. I have `3 lakh in Mirae Asset
running in all funds except in Franklin. The funds
My goals are my daughter’s higher are all
quality
funds. Note
that Franklin
can use the funds to achieve my goals? India Low
Duration is a
debt fund
with higher risks. We assume the values you
mentioned are current values and not cost of capital.
If `19 lakh invested thus far grows at the rate of 10-
11% over the next 6 years, you will have `34-36
lakh. Depending on the nature of higher education,
this may or may not suffice. Similarly, the `15,000
SIPs may fetch you around `42 lakh in 12 years if it
earns 10% per annum. Now these sums look low
both for your daughter’s wedding and your
retirement. Consider gradually increasing SIPs to
`30,000 and then `50,000 per month as
your salary increases and invest in an
asset allocated manner.
Vidya Bala,
Co-Founder, Redwood Research
I earn `28,000 per month. My mother,
a government employee, has `20 lakh
saved in FDs. She is repaying my car
loan EMI of `14,500 per month. I pay
rent of `15,000 and after contributing
`10,000 towards household expenses, You have
I have nothing to save. How I can not
manage my financial concerns? mentioned
your age,
years before
your mother’s retirement, or if there is any ancestral
property you or your mother would inherit, among
other things. Currently, your rent and expenses are
eating away the bulk of your income. Household and
other expenses will only rise and I recommend you
start investing `2,000 each month. Invest `1,000 in
the public provident fund (PPF) each month and the
other `1,000 into a mutual fund scheme via SIPs.
Ensure this sum is not redeemed for a medium-term
goal. This will help you create a retirement corpus; a
small sum of `2,000 can build a corpus of `44.8 lakh in
the next 30 years considering 10% CAGR. Top-up your
investments with every increment in salary. You are
paying a huge car loan which should have been
avoided at this stage. Your mother has decent savings;
keep the same parked in fixed deposits of reputed
banks. Together with your mother, cater to three
essentials: a term insurance plan for yourself, a health
cover for the family and a corpus equivalent to six
months’ of expenses (includes EMI) for meeting any
emergencies so that the FD amount is not consumed
for any medical emergency or other
short-term requirements.
Prableen Bajpai
Founder, Managing Partner,
FinFix Research & Analytics
Ask our experts
Have a question for the experts?
etwealth@timesgroup.com
 technology check
26 The Economic Times Wealth October 7-13, 2019

The best gadgets to

gift on any special occasion
Be it a birthday, anniversary or a festival, gadgets are amongst the top gifting options. Spoilt for
choice, you may find it difficult to decide. ET Wealth lists options to help you decide.

HEADPHONES
way to improve the sound quality
without worrying about wires and
SOUNDBAR ruining the look of a TV is to use a
soundbar. Most people don't invest

While the LED TVs get slimmer for

in one because they believe that
soundbars are expensive. Thankfully
SMART SPEAKER
added style, the internal speakers of with brands like Mi, boat and
the TV suffer in output—they are not Blaupunkt you can easily get a good
A smart speaker is the first step
able to deliver audio quality that can looking and great sounding soundbar
to creating a connected home.
match the picture quality. The easiest to give as a gift in the `4,000 to
You can choose the Amazon Echo
`6,000 price range.
Dot or the Google Home Mini
as the perfect gift and they are
Everyone loves a good pair of available for less than `3,000.
headphones. There are multiple Not only does the smart speaker
choices available ranging from let you control other smart
large over the ear headphones devices (lights, plugs etc) but also
to wireless earbuds that you can works great as a virtual assistant
choose from. Earlier there were and for streaming music from
only a few known brands such the web. We would recommend
as Sennheiser, Bose, Sony that giving this as a gift over a
delivered great sound but now standard bluetooth speaker.
you get excellent performance
even for less than `3,000 from
brands like Boat, JBL, Zebronics,
Noise etc. We would recommend
the truly wireless earbud ones FITNESS BAND
for gifting.

Fitness bands make a wonderful

WIFI CAMERA
Why would one gift a
WiFi camera? You will not
understand the benefits of a
WiFi camera, till you own one.
You can use the camera to
keep a watch on house staff,
your pet and your children
when you are away or even at
home but in a different room.
Some wireless cameras also
have two-way communication
option making them great to
use as a baby monitor. You
can get one between `1,500-
`5,000, depending upon your
requirements from brands like
Yi, Mi and TP-Link. Installing
the camera is easy and you
can do it on your own.
OPTIONS
gift as most people today
want to stay fit. With a fitness
band, you can track your steps,
calories, sleep and some even
have the option of heart rate
tracking. All this data is synced
to a companion app to make it
easy for you to understand. You
can set a daily goal and can also
compete with friends to keep
yourself motivated. There are
some excellent options from Mi,
Honor and Goqii if you are budget
AIR PURIFIER
conscious, else you can opt for one
from Fitbit or Samsung.
`3,999
ONWARDS
SMARTWATCH
POWERBANK
OTHER
`2,999
`700 ONWARDS
ONWARDS
 mutual funds
The Economic Times Wealth October 7-13, 2019 27

Can reach goals easily, but PORTFOLIO

DOCTOR
needs to reduce clutter Not many

ARINDAM
Pranav Mathur saves for his child’s goals and retirement. Here’s what the doctor has advised him: investors
know
1 2 3 4
whether
EMERGENCY FUND: DAUGHTER’S HIGHER EDUCATION: DAUGHTER’S MARRIAGE: RETIREMENT: 24 years
GOALS

they have
Immediate 24 years 26 years CURRENT NEED:
CURRENT NEED: `10 lakh CURRENT NEED: `25 lakh CURRENT NEED: `25 lakh `2.4 crore (`1lakh a month) invested in
FUTURE COST: `10 lakh FUTURE COST: `2.46 crore FUTURE COST: `1.46 crore FUTURE COST: `12.68 crore the right
funds and if their
PORTFOLIO INVESTOR’S EXISTING PORTFOLIO fund portfolio is on
CHECK-UP FUND NAME AMOUNT EXISTING RECOMMENDED ACTION NEW SIP track. The Portfolio
Initially invested in INVESTED (`) SIP (`) (`)
ELSS funds. Started Start SIPs of `20,000 for 15 months in this stable Doctor assesses the
ICICI Pru Ultra Short Term 2,31,126 0 short-term debt fund. 20,000
SIPs in equity schemes
1 health of the fund
3-4 years ago. Fund has underperformed. Stop SIPs and switch to
Nippon India Credit Risk 2,59,259 10,000 Nippon India Gilt Securities. Stop after 15 months. 10,000 portfolio, examines the
Invests a sizeable
`76,000 in equity ABSL Equity Hybrid '95 1,19,226 5,000 These hybrid funds have underperformed. Stop SIPs 0 schemes and their
and shift corpus to dynamic asset allocation fund
funds every month. Aditya Birla SL Equity Savings 61,895 2,500 Aditya Birla SL Balanced Advantage. 0 suitability with regard to
Early start and Start SIPs of `5,000 in this stable dynamic asset the goals and, if
Aditya Birla SL Balanced Adv 0 0 allocation fund. Hike by 5% every year. 5,000
aggressive savings required, recommends
2
have helped Nippon India Tax Saver 73,397 3,500 These ELSS funds have done poorly. Stop SIPs and 0
accumulate big corpus. shift the corpus to Aditya Birla SL Balance Advantage corrective measures. The
Aditya Birla SL Tax Relief '96 58,650 0 after lock-in period ends to consolidate portfolio. 0 advice given is based on
Holds too many funds,
Continue SIPs in this stable large-cap fund. Hike
many of which are Aditya Birla SL Focused Equity 1,16,233 5,000 amount by 5% every year.
5,000 the performance of the
consistent
ICICI Pru Balanced Advantage 1,02,096 5,000 Continue SIPs in this dynamic asset allocation fund 5,000 funds, the risk profile of
underperformers.
3 and conservative hybrid fund. No need to hike SIP
the investor as well as
Retirement and other ICICI Pru Regular Savings 1,38,370 5,000 amount. 5,000
goals can be reached ICICI Pru Banking & Financial Stop SIPs in this sector fund; switch to ICICI Pru his financial goals.
1,18,099 5,000 0
by small 5% hike in Services Multicap.
SIPs every year. ICICI Pru Long Term Equity 57,301 0 Switch to ICICI Pru Multicap after lock-in period ends. 0
Increase SIP to `10,000 in this stable multi-cap Assumptions used
ICICI Pru Multicap 1,25,750 5,000 10,000
fund. Hike amount by 5% every year. in the calculations
Note from
DSP Midcap 1,21,976 5,000 Stop SIPs and switch to HDFC Hybrid Equity to 0
the doctor INFLATION
consolidate portfolio.
Don’t invest in too HDFC Balanced Advantage 1,29,421 5,000 0 Education For all
many funds. Avoid Increase SIP to `15,000 in this stable hybrid fund. expenses other goals
HDFC Hybrid Equity 1,28,783 5,000 15,000
buying yearly 4 Hike by 5% every year.
winners. Nippon India Focused Equity 1,12,430 5,000 0 10% 7%
Also avoid sector Nippon India Retirement - These funds have underperformed. Switch corpus
1,30,039 5,000 and SIPs to Nippon India Small Cap fund. Hike SIPs by 0
funds. Diversified Income Gen RETURNS
5% every year.
funds are better. Nippon India Retirement - Equity funds Debt options
1,08,882 5,000 15,000
Review investments Wealth Creation
Continue contributions and hike amount by 5% every
and rebalance at least
once in a year.
PF and PPF 18,00,000 12,000 year. Don't withdraw before retirement. 12,000 12% 8%
Start contributing `5,000 a month hike amount by
Reduce risk when goal NPS 0 0 5% every year. Don't withdraw before retirement.
5,000
is near so that you The goals can be reached using the mutual
don’t miss the target.
TOTAL `39,92,933 `88,000 funds marked in the same colour. `1,07,000 PORTFOLIOS
ANALYSED BY

RAJ KHOSLA,
Managing Director

Raise SIPs to `10k a month 1

UNSPECIFIED GOAL: 15 yrs
PORTFOLIO
CHECK-UP
and Founder,
MyMoneyMantra
GOAL

Hardik Patel wants to accumulate `35 lakh in 15 years. PRESENT COST: `35 lakh Target is too ambitious

Here’s what the doctor has advised him:
FUND NAME
SBI Small Cap
SBI Focused Equity
1 Mirae Asset Emerging Bluechip
FUTURE COST: `96.5 lakh
given the current
investments.
WRITE
TO US
AMOUNT EXISTING Increase monthly
INVESTED (`) SIP (`) RECOMMENDED ACTION
investment to `10,000 FOR HELP
Increase SIPs to `3,000 in this outperforming small-cap to reach goal. If you want your portfolio examined,
3,216 1,000 fund. Increase amount by 10% every year. write to etwealth@timesgroup.com
All SIPs must also be with “Portfolio Doctor” as the subject.
Increase SIPs to `4,000 in this outperforming multi-cap Mention the following information:
1,573 1,500 fund. Increase amount by 10% every year. hiked by 10% every year.
 Names of the funds you hold.
Increase SIPs to `3,000 in this outperforming large and Review mutual fund
1,008 1,000 mid-cap fund. Increase amount by 10% every year. portfolio at least once a
 Current value of the investment.
 If you have SIPs running in any

Mirae Asset Taxsaver
Franklin India Ultra Short Bond
TOTAL
25,727 0 Continue holding this outperforming ELSS fund. year. Change if any of them.
 The financial goals for which you
fund’s performance slips.
Bond funds will not yield high returns. Since you have invested.
25,150 0 enough time, shift to SBI Focused Equity. Reduce risk when goal is  How much you need for each
financial goal.
near so that you don’t
`56,674 `3,500  How far away is each goal.
miss the target.
 your feedback & more...
28 The Economic Times Wealth October 7-13, 2019

Readers’ response, online and in print, to ET Wealth stories has been enlightening.
We pick some that add information and perspective to our articles from previous issues.
This refers to Dhirendra Kumar’s dysfunctional RBI. In the absence of a
column, ‘Problem is, people are capable and functional central bank, the
rushing for gold again’. I am not Indian saver has extremely limited safe
convinced by his argument. If gold is
not a good investment, then why are
We can never options other the EPF (not available to 90%
of the public) and PPF (annual contribution
so many mutual fund managers and
financial advisers advocating gold save enough capped at `1.5 lakh). While gold bonds are
a good option, very few people are able to
ETFs to investors? This refers to the cover story, ‘Are you utilise this due to the modalities. Ideally,
Ajay Gupta
ready for the future?’ Till a few years these should be across the counter products
back we could work out how much at all banks.
I totally disagree with Dhirendra we would need to live comfortably Kochar Bipin
Kumar. There are times when gold is a
in retirement. However, the way the
bad investment and there are times The column, ‘Why women need to work’,
cost of living has been increasing, it
when gold is a good investment. The made interesting reading. Men are hardly
appears no amount of savings is going
previous decade was definitely not around to share household responsibilities
to be enough for the future.
good for gold. However, the coming equally to enable the woman to achieve her
Subbu India
decade could be excellent and no other potential in the world. On top of that there
asset class may give as much returns as are expectations of the family and the
gold. There is a global slowdown and society at large.
India is not unaffected. Valuations of Meera Kishen
so-called top quality stocks have gone that is actually in a recession. Globally too, rather than physical gold.
through the roof. This is not because of things are no better. Considering the overall Vikram Rao Another very relevant and beautifully
any amazing growth prospects of these environment, stocks across the globe and crafted article by Uma Shashikant. More
companies but rather due to the particularly in India are headed for a major The author has a valid point. Over the women are choosing not to go to work, if
incessant flow of domestic retail crash. Gold could, therefore, be the only past 6-7 years, solid public sector banks they can afford it. This topic is a great
money into mutual funds through the asset class that will glitter over the next have reported more and more NPAs. Now, conversation starter, amongst women of
SIP route. So we have an equity market decade or so. However, when I say gold, I even cooperative banks are going the all ages. Hoping for more such analyses,
that is trading at nonsensical agree with the author that gold bonds and same way. Depositors are not allowed to keep them coming.
valuations coupled with an economy gold ETFs are the best vehicles to invest in, withdraw their money, thanks to a totally Aishwarya Shingare

REALTY Gurgaon’s oldest micro markets

The DLF areas are well-connected to key job hubs, retail infrastructure and prominent schools.
HOT SPOT
Phase-III Phase-2 DBF Gurgaon Church

DLF SECTORS DLF

Phase-IV Cyber City
State Bank HIGHLIGHTS Consumer preference by
budget segment (`)
GURGAON Passport Seva
Kendra DLF Phase 3
of India
One of the oldest micro-markets in Gurgaon and a
12% 1.5-2 crore
well-known residential, retail and commercial destination
PRICE RANGE Sanskriti 10% 2.5-5 crore
`7,400-14,000 Sarhol Aravalli Bio Kendra Enjoys close connectivity with major employment hubs of 38% 1-1.5 crore
DLF Phase 2 Diversity
per sq ft Park Cyber City, Udyog Vihar and Golf Course Road 19% 50 lakh-1 cr
Privat Lakshita
Demand: MID Hospital Syndicate Hosts quality social & retail infrastructure comprising Others
Veer Bank 21%
Supply: MID IFFCO Severkar prominent schools, hospitals, malls and entertainment hubs
Forest Phase-1 Block Arjan Garh
DLF-I GGN Famous malls here include Ambience Mall, Megacity Mall, Consumer preference
Phase V
Chakkarpur Police
Station
Metropolitan Mall and Sahara Mall, among others by BHK
Block B Kingdom
of Dreams Sunset Point Good connectivity via MG Road, NH-48, Golf Course Road, 2%
Centre for
Sight Eye Delhi Metro and Gurgaon Rapid Metro Rail 3BHK
32nd Hospital
DLF Phase 1
18%
Avenue Block C DLF Phase 4 4BHK
LOCALITY SNAPSHOT 55% 2BHK
Distance from: 25% Others
Schools 18+
20+ Hospitals
Hospitals16+
16+ Restaurants
Restaurants20+
20+
Airport:
Airport: 1438
kmkm Railway
Railway station:station:
13 km 45 kmNH-48: 5 km Banks 20+ Grocery
GroceryStores
Stores15+
20+ Petrol
PetrolPumps
Pumps14+
9+
Consumer preference by
VALUES covered area (sq ft)
PROPERTIES AVAILABLE LOCALITY Price
Capital Rental 6%
(`/sqft) (`/month) 1,500-2,000
(Rs/sqft)
2 BHK: 1,120 (sq ft) 4 BHK: 2,660 14% 29% 2,000-2,500

` 1.03 crore (avg) (sq ft) DLF City Phase 2 9,600-14,000 49,900-75,300
23%
1,000-1,500
2,500-3,000

` 2.66 DLF City Phase 1 7,400-11,300 44,600-72,000

28% Others

3 BHK: 1,990 (sq ft) crore (avg) DLF City Phase 4 9,100-12,000 41,900-63,100
` 1.91 lakh (avg) DLF City Phase 3 8,500-13,900 51,200-85,000

In dia’s No. 1 P ropert y Sit e

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PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co Ltd by Mr. Montoo Jain at 139, Ashram Road, Fadia Chambers,
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RNI No.: GUJENG/2014/55568. VOLUME 06 NO. 40