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Walmart resumes US lobbying on FDI in India
Online trading on the rise in Punjab, Haryana
NHPC to buy back govt shares
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personal finance
Balanced funds ideal for equity exposure
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Walmart resumes US lobbying on FDI in India
"Discussions regarding Foreign Direct Investment in India" is one of the 10-odd specific issues in the area of trade that were carried out by registered lobbyists on behalf of Walmart during third quarter of 2013, according to its latest Lobbying Disclosure Form submitted to the US Senate. Overall, Walmart lobbyists discussed nearly 50 'specific issues' with the US lawmakers during the quarter, resulting into total expenses of $1.5 million relating to lobbying activities for the reporting period, shows the 19-page disclosure report. Walmart's lobbying activities covered the Senate, House of Representatives, Department of State, US Trade Representatives, US Agency for International Development and the Department of Labour, among others. As per Congressional records, Walmart had halted its lobbying with the US lawmakers and federal agencies on India-specific issues in the preceding quarter, after seeking their support for about five years to facilitate its entry into the high-growth Indian retail market. However, such lobbying activities resumed during the last quarter — a period which also saw hectic parleys in India with regard to Walmart's business activities in the country. After months of discussions, Walmart earlier this month announced buyout of Bharti group's 50% stake in their wholesale retail business in India. Walmart has also been requesting the Indian government to further relax norms for FDI in multi-brand retail business, where 51% foreign equity was allowed last year despite opposition by various political parties. Incidentally, a probe report on Walmart's lobbying for entering India may soon be discussed by the Union Cabinet. The probe is said to have remained inconclusive as Walmart and others did not provide required information. The Indian government had ordered the probe on Walmart's lobbying late last year after a huge political outcry over the American retail giant having spent millions of dollars on its lobbying activities in the US for years on various issues, including on access to the Indian market and the relevant FDI norms. Lobbying is legally permitted in the US, but the companies and their registered lobbyists are required to make detailed disclosures about their activities every quarter. Walmart, on its part, has been maintaining that it has disclosed all its lobbying activities as per the US rules and it did not violate any Indian regulations in this regard. — PTI
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Online trading on the rise in Punjab, Haryana
Trading in shares has been on the rise in India over the past few years. But what has emerged in the process is the trend of online trading, especially with the penetration of broadband in the country. Nithin Kamath, founder and CEO, Zerodha, an online trading firm, talks to Girja Shankar Kaura. Q. What is the genesis of Zerodha? A. I started trading at a very young age and have traded actively with many brokers for more than 12 years. But I realised that there was a gap between what a brokerage firm offers and what a trader wants. This is when the idea of Zerodha was born, a brokerage firm that caters to online traders by having both the platform and support completely online. Since the support is completely online, we could pass the pricing advantage to the client and also increase the efficiency of service. What we offer is internationally known as online discount broking. The idea behind is that in today's online world, the cost of executing a trade doesn't go up with the size of the trade. Q. What is your USP, key differentiation? A. We are members of all the major exchanges — NSE, BSE, MCX-SX, MCX and NCDEX. We provide our customers with trading/demat accounts to trade on all of these exchanges. Our major differentiation is our pricing, we charge a flat fee of Rs 20/trade irrespective of the size of the trade. There is no commitment required from the client in terms of minimum turnover/contract note charges, software fee or any kind of upfront brokerage. And since we have a single plan for all our clients, we can be completely transparent about our business online and hence also provide much more efficient support. Q. How are you revolutionising the online trading platform in India? A. Before Zerodha was launched in India, the only option for a retail client was to pay percentage brokerage. And the costs, which are already high, keep going up higher with the increase in trade size. We have been the catalyst for change to match India with what is happening internationally by charging a flat fee per trade irrespective of the trade size. In less than 3 years from when we started, we have over 27,000 clients and contribute an average of around Rs 3,500 to 4,000 crore on the exchanges, putting us among the top brokerages in the country. We have been the fastest growing brokerage in the nation — all of this growth came at a time when most other brokers were reducing their business size due to the perceived recession in the global economy. Q. Could you throw some light on Zerodha's new initiatives like 60-day challenge and Algo Z? A. With the 60-day challenge, the idea is to help fix some of the problems traders face. In the 60-day challenge, any client of ours can start the challenge and after 60 trading days if he has made money, we refund all the brokerage back to him. Other than refunding the brokerage, we also acknowledge the trader by giving a certificate and we profile special traders on Zconnect. We try and find out what helps them stay profitable in the markets by asking relevant questions and posting the interaction on our blog to our over 50,000 online community. AlgoZ is basically a tool where you can write a technical analysis strategy, back test it and then take it live only if it makes business sense. Everyone today follows technical analysis, but most of them don't know if it would have made money in the past, this tool allows you to do so. Once you have back tested strategies, you can run multiples of them to help you identify opportunity which is not possible manually. We are the only firm in India to have launched AlgoZ for the benefit of traders. Q. What is your opinion about the growth of online trading market in Haryana and Punjab? A. Haryana and Punjab are among the most prospective states in the country for online trading mainly because people are more aggressive in terms of allocating capital towards stocks, commodities and currency. Other than cities like Gurgaon, Chandigarh and a few others, the penetration of online trading is not as much. But, one of the fastest growing segments in both the states is for smartphones with data plans, which is also a leading indicator, suggesting a pick-up in online trading. This mix of having people with disposable income who are aggressive in terms of allocating capital to markets and data which suggests that the trajectory of growth for online trading is going to be steep puts both the states right on the top among the most prospective states in the nation for clients who trade online. Q. Some details about Zerodha Customer Connect. A. One of the most common problems with the trading community is that they end up over trading with the objective of making profits. Overtrading is one of the biggest problems in the business and the main cause for traders/investors to vanish from the markets. There are different styles of trading and not everything suits all; there is scalping, short-term trading, arbitrage, swing trading, futures, options, commodities and so much more.
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New Delhi, October 27 The Empowered Group of Ministers on disinvestment, headed by Finance Minister P Chidambaram, is likely to give its approval to this effect soon, sources said. Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself. "The company has a huge cash reserves. They have agreed to buy back 10% of total shares at a price of 19.25 apiece from shareholders," an official said. "The entire process of approval would be completed by Monday with the approval of the EGoM," the official said, adding the company would go ahead with the buyback as soon as next month. The Board of NHPC has cleared the buyback of over 123 crore shares on a proportionate basis from shareholders, the official added. — PTI
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No rebate on amount deposited in grandson’s PPF a/c
by SC Vasudeva
a) There are two separate PPF accounts in Post Office in the names of my minor grandsons through their mother. Instead of gifting a sum of Rs 1 lakh to my daughter-in-law for depositing the same in these accounts, I have deposited the same directly in these PPF accounts by cheques from my pensionary income. Can I claim income tax exemption treating the amount as gift to my grandsons? (or to my daughter-in-law?) I may add that neither I nor my daughter-in-law will claim benefit u/s 80C for this amount as I have PPF account in my own name and my daughter-in-law contributes to GPF from her salaried income. b) A friend of mine is getting benefit u/s 80C in respect of tuition fee of his unmarried daughter. Now she has become a major but still unmarried and is studying. Now, he has opened an account in her name in a bank. He has gifted her a sum of Rs 50,000 by cheque from his pensionary income on her birthday. Can he claim income tax exemption for this amount? c) Section of the Income-tax Act under which gifted amount is exempted from income tax. — Mohinder Singh A. The amount deposited in the PPF account of your minor grandsons/ daughter-in-law is not deductible from your taxable income and, therefore, no exemption can be claimed in respect of such gifted amounts. Such gifted amounts would not be taxable in the hands of the recipients. I may add that in accordance with the provisions of the Income-tax Act, 1961 (The Act), any income arising from an asset or assets transferred to a daughter-in-law otherwise than for adequate consideration is required to be included in the income of the transferor. The income arising to a minor is required to be included in the income of the parent in accordance with the provisions of the Act provided such income has not arisen to a minor on account of manual work done by him or is from activity involving application of his skill, talent or specialized knowledge and experience. However, clubbing provisions may not be relevant in your case as interest on PPF account is exempt from the levy of income tax. a) According to the provisions of Section 56 of the Act, where any sum exceeding Rs 50,000 is received without consideration by an individual or Hindu Un-divided Family from any person, the same shall be treated as income in the hands of the recipient and would be taxable under head “income from other source”. This section also provides exemption in respect of any sum received from any of the relatives or is on the occasion of the marriage of the recipient or is under a Will or by way of inheritance or in contemplation of the death of the payer. The amount gifted to his daughter by your friend would not be taxable in the hands of the recipient as the same does not exceed Rs 50,000. Further, such gift has been received from a relative as defined in the said section and is therefore covered by the exemption provided in the section referred to hereinabove. The amount gifted by your friend is, however, not deductible from his income. b) Gift tax is not levied at present in respect of any amount or any other asset gifted to a person. However, in respect of gift exceeding Rs 50,000, the provisions of Section 56 of the Act as referred to in (b) above would be applicable. Q. I have retired from the services of PSPCL. My wife is a housewife. In the financial year 2014-15, I intend to deposit Rs 1 lakh jointly (i.e. in my name and in the name of my wife) with bank towards fixed deposit for five years under Section 80(C). Can I deposit Rs 1 lakh jointly towards a fixed deposit with bank under Section 80(C) or not. — Ramesh Kumar A. There should not be any problem in depositing a sum of Rs 1 lakh in joint names (in your name and in the name of your wife) under the fixed deposit scheme covered by the provisions of Section 80C of the I-T Act, 1961. The deposit so made should be allowable as a deduction against your total income under the aforesaid section.
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Young India unprepared for old age
Retirement planning not a priority for majority of them Prashant Tripathy With better food supply and nutrition, healthier lifestyle, better hygiene and most importantly advances in healthcare, Indians now live longer – life expectancy in India went up from 31 years in 1947 to 64 years in 2005. And according to the World Population Prospects 2012 published by the United Nations, the share of people aged 65 years and above in the country is forecast to increase from 5.1% in 2010 to 12.7% in 2050, while the average life expectancy is projected to increase from around 65 years in 2010 to 73 years in 2050. However, longevity is a double-edged sword considering rising medical costs, mounting inflationary pressures and rapidly changing lifestyles. Nonetheless, a longer life span is a blessing and the best way to make the most of this piece of good fortune is to plan for it. Paradoxically, however, Indians do not seem to be keen on planning for the autumn of their lives. A recent study by Max Life Insurance along with a leading research firm Nielsen on Retirement Usage & Attitude covering 1,091 male respondents in the 31-50 years age bracket across the country revealed that a mere 28% of the respondents had started planning for retirement, with a majority investing in life insurance policies. The average age of retirement in India is around 59 years though the Max Life Insurance and Nielsen survey revealed that 24% of the younger crop of working professionals hoped to retire before 55 years, implying that this group would need to have a large retirement corpus that could provide financial security for at least another 20 years. Still, less than 28% of the current working population has begun to plan for its retirement. The rest believe they can start investing for retirement in their late 30s and still accumulate enough wealth for an independent, peaceful and comfortable retired life; in fact 10% of them believe they will have greater financial independence during their sunset years. Only 1% of the respondents agreed that their retired years could imply financial struggle. Though 75% agreed that their routine expenses would increase post-retirement, a majority of them did not have a plan to counter the rise in expenditure! Indeed, metadata suggest India’s salaried class is by and large unprepared for retirement. Wake up & smell the coffee
The importance of planning for retirement and building a nest egg can never be overstated, especially in the context of a longer life expectancy and the evolving socio-economic patterns of our society. Nuclear families are on the rise, adversely impacting the traditional social support mechanisms that existed through joint families. On the other hand, mounting economic pressures are steadily increasing per capita expenditure. Added to this, the lack of a broad social security net makes the India’s elderly vulnerable to penury at the fag end of their lives. Surprisingly, a majority of Indians remain detached from the reality of an impending financial crunch. Half the fraction that claims to have invested for its retirement concedes to ad hoc or convenience-based planning, saving only when they have additional money, without the guidance of a professional financial adviser. As many as 63% of investors refuse to review their retirement needs before retirement, while a majority in non-metro cities ignored inflationary effects while building a retirement corpus. The study suggests that 48% of the members in the overall investor group were oblivious to rising medical costs. Further, more than 50% expected to live with their children during their retired years despite belonging to nuclear set-ups themselves today. Incumbents need to realise that it is easy to save for retirement during the early stages of one’s career when there is no pressure to support the family and minimal health expenses. Deferring retirement planning implies a “cost of delay” – greater the delay, higher the costs. Even in the survey, 65% of the retirement investors were of the opinion that they should have started earlier and at least a third expected to face financial uncertainty after they had retired. Healthy, wealthy & wise
While building a nest egg is critical to a hassle-free retired life, investors need to adhere to simple but intelligent investment techniques during their working years. For instance, investing in a health insurance policy that covers the policy-holder until 70-75 years of age is a smart move to make when you are young and healthy as it becomes increasingly difficult to get adequate coverage with passing age and deteriorating health. Likewise, it is sensible to borrow for children’s education and save for one’s retirement. In the survey, 73% of the respondents considered their children’s education a greater priority than saving for their own retirement without realising that while there are numerous avenues for educational loans, there are limited options for their own financial security after retirement. Besides, an education loan inculcates a sense of financial discipline among the younger generation and prompts them to focus on savings early in life. Another smart tactic is to invest in a life insurance pension plan that guarantees monthly returns. Life insurance by itself is an appealing option for many investors because of the perceived safety, guaranteed high returns and tax breaks available. Investment in a plan that guarantees monthly returns ensures peace of mind for the minimum monthly expenditure anticipated at the time of retirement. However, only 4% of the respondents had invested in such plans. Retirement investment — a matter of choice, not chance
Hoping for a comfortable life after retirement will not help – working towards it will. Plan your retirement under the guidance of a qualified professional who will help you build a balanced portfolio while minimising risk yet safeguarding your interests and ensuring guaranteed and high returns. It is never too early to plan for your retirement — just ensure you are not too late! The author is Chief Financial Officer,
Max Life Insurance. The views expressed in this article are his own |
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Balanced funds ideal for equity exposure
Elders always advise us to take balanced approach in our life. Balancing is an art and one has to learn the same so that you are never lost in any given situation. Balancing in investment is also important to get the desired result. One of the best ways of balancing in investment is proper asset allocation. If you invest exactly according to your asset allocation depending on time horizon and also rebalance your portfolio periodically, mostly it will give you better result. But, if you do not understand these jargons of investment and do not have access to professional help, then there is one more time tested instrument available for investment in equity. The best answer to this volatility and to earn high return in the longer run is investing in Balanced Funds of mutual fund. Balanced mutual fund schemes invest around 65-85% in shares of listed companies and the balance 15-35% in debt instruments. They provide an ideal mix of growth (equity) and safety (debt instruments). Your success as an investor depends upon your ability to choose the right investment options. This, in turn, depends on your requirements, needs and goals. There are three major advantages if you invest in a balanced fund with a long-term view and take calculated risk. Investing in equity
It is a proven fact that in a developing country like India, equity will give good inflation adjusted return if you invest systematically and stick to your investment. As balanced fund largely invest in equity, investors get the advantage of participating in economic growth of the country. It is necessary to understand equity as an asset class before investing. You cannot expect overnight profit from equity, as it is always a long-term game. If you understand and follow the basic rules of investing in equity then this volatility in stock market is unlikely to disturb you. Firstly, your time horizon for investing in equity should be minimum 5 years and above. Never try to time the market and always invest systematically. It is the success mantra for investing in equity. Risk comes from not knowing what you are doing. If you take calculated risk, it will benefit you in the longer run. Economy also runs in a cycle; like good phase, bad phase is also not permanent. Auto rebalancing
It is not only important to invest according to asset allocation but it is equally important to review and rebalance the portfolio periodically. Rebalancing is the process of restoring your portfolio back to its original asset allocation. The rebalancing happens automatically in balanced fund and the same gives you added advantage when the markets are too volatile. As per objective of the scheme, which is pre- decided, a fund manager of the balanced fund can’t invest more or less in equity in any given point of time. So when the markets are high, the fund manager has to compulsory sell equity to maintain the maximum level and likewise when the markets are low fund manager has to increase the investment in equity to maintain the minimum level of equity investment. The process is continuous which a normal investor can’t do because of lack of knowledge and expertise. This is a proven fact that when markets are falling investors sell in panic and when the markets are rising investors become excited to invest further in equity which is not a good idea for equity investment. The returns in equity are generated when the markets are low when you accumulate more units in your folio. The balanced fund exactly does the same thing and therefore gives better result in the longer run compared to traditional instruments. Tax-free debt
In investment, you should look at post-tax returns and not gross return, which is offered to you. The investment in a fixed deposit and postal schemes are subject to normal rate of tax as per your individual tax slab, which reduces your overall return. The investment in debt funds of mutual fund gives you the advantage of indexation after one year but still you have to pay some tax on gain. EPF and PPF have the upper limit where you can not invest more than prescribed limit. The balanced fund is the only instrument where the entire debt is tax free after holding the fund for more than one year as long-term capital gain in equity is tax free. The balanced fund comes under equity category as it invests more than 65% in equity. Even for any reason if you withdraw from balanced fund within one year the tax rate is fixed at 15% and not as per individual slab. This is a huge advantage for those who fall in higher slab rate. Investing in balanced funds of mutual fund is one of the best solutions for investing in equity for the long-term. Further, if you invest in a balanced fund systematically via monthly SIP then it is likely to give you a better result. You should be careful while selecting the right balanced fund, as there are around 20-plus balanced funds available in the market. Choose a fund which is at least 3-year old and has good asset under management (AUM). You should also check the ratings given to the fund by good rating agencies. You should also monitor and review the performance of fund chosen by you and see that it consistently beats the benchmark and is not far behind against its peers. It is always advisable to take the help of a professional so that you can invest in good performing balanced fund. The author is Head – Financial Planning, Apna Paisa. The views expressed in this article are his own |
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What are Options & Futures*
An option gives you the right to buy or sell the underlying asset . A call option gives you right to buy the underlying asset while a put option gives you the right to sell. An option contract specifies the strike price, that is, the price at which you can buy or sell the underlying asset. In Futures, you buy a contract which will have a specific lot size of shares. When you buy a Futures contract, you don’t pay the entire value of the contract but just the margin. Open interest is the total number of contracts not closed or delivered on a particular day. |
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the past few years. But what has emerged in the process is the trend of online trading, especially with the penetration of broadband in the country. Nithin Kamath, founder and CEO, Zerodha, an online trading firm, talks to Girja Shankar Kaura.
With better food supply and nutrition, healthier lifestyle, better hygiene and most importantly advances in healthcare, Indians now live longer – life expectancy in India went up from 31 years in 1947 to 64 years in 2005. And according to the World Population Prospects 2012 published by the United Nations, the share of people aged 65 years and above in the country is forecast to increase from 5.1% in 2010 to 12.7% in 2050, while the average life expectancy is projected to increase from around 65 years in 2010 to 73 years in 2050.
Washington/New Delhi, October 27
Q. My queries are as under:
