A Weekly digest by Indian Bank Wealth Management Services

Wealth Management Services

IBWMS WEEKLY DIGEST

For internal circulation only November 25, 2011

WEEKS TOP STORIES IN THE WORLD OF FINANCE

Markets down for fourth straight week, slump 4% - business-standard.com
India's benchmark share indices, the Bombay Stock Exchange's Sensex and the National Stock Exchange's Nifty, ended down for the fourth straight week amid persistent selling by foreign institutional investors on fears of slowing domestic growth, weakening rupee, moderating factory output data from China and rising debt concerns in Europe. For the week ended November 25, the Sensex crashed 676 points or 4.1% to end at 15,695, its lowest closing level in two years, since 3 November 2009. The S&P CNX Nifty lost 196 points or 4% to close at 4,710. Read more>>

Protest in Parliament as Govt allows FDI in retail - hindustantimes.com

Government on Friday informed Parliament that it has allowed 51% FDI in multi-brand retail, a decision which faced strong criticism, including from key UPA ally Trinamool Congress. In a statement, Commerce and Industry Minister Anand Sharma said both in the Lok Sabha and Rajya Sabha that the policy on single brand retail has also been liberalised, removing the 51% cap on Foreign Direct Investment (FDI). Read more>>

India's forex reserves shrink the most since Lehman Brothers fall economictimes.com
India's foreign exchange reserves have had the steepest three-week fall since the collapse of Lehman Brothers Holdings in 2008, as the Reserve Bank of India wages a half-hearted battle to arrest the currency's fall amid turbulence in the international financial markets. Read more>>

Cyrus P Mistry to succeed Ratan Tata - thestatesman.net

Ending a year-long search, Mr Cyrus P Mistry, managing director of construction major Shapoorji Pallonji Group, was today named successor to Mr Ratan Tata at the helm of over US$ 80-billion conglomerate, Tata Group. A non-Tata family person, 43year-old Mr Mistry will take over from Mr Tata, who retires as the chairman of Tata Sons next December when he turns 75. This is the first time that a person outside the Tata family will head the salt-to-software conglomerate. The Board of Directors of Tata Sons at its meeting today appointed Cyrus P Mistry as the Deputy Chairman. He will work with Ratan N Tata over the next year and take over from him when Tata retires in December 2012, Tata Sons said in a statement. Read more>>

Rupee hits all-time low of 52.73 vs dollar; looks vulnerable economictimes.com

The rupee skidded to an all-time low on Tuesday as oil refiners and other companies scrambled to buy dollars, with the currency looking increasingly vulnerable to a swelling current account deficit. Exposure to short-term portfolio flows, a rising oil import bill and slowing export growth have heightened the risk on the rupee and the outlook remains bearish. Read more>>

RBI wants cos to hedge forex risk before fresh borrowings - financialexpress.com
On top of Wednesdays series of measures to arrest the rupees fall, the Reserve Bank of India has advised companies to take fresh foreign currency exposure only after implementing the hedging policies adopted by their respective boards. An advisory has been sent through banks, said a senior RBI official engaged in forward market development. Read more>>

Apple's iPhone 4S makes India debut zeenews.com

The iPhone 4S, the final gadget unveiled during Apple co-founder Steve Jobs' lifetime, hit store shelves in India on Friday with a starting price of 44,500 rupees.At about four times the US retail price where customers buy mandatory data-service plans, the phone may still find buyers among affluent young professionals in India who are snapping up iconic brands and luxury items.

Read more>>

Investors should remember that excitement and expenses are their enemies - Warren Buffet

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Wealth Management Services

PERSONAL FINANCE SECTION

ELSS is still the best bet to save tax despite higher rates on NSC, PPF economictimes.com
As we approach the annual taxsaving investment season, the landscape of available avenues has changed decisively. As things stand, I would expect investments for tax-breaks to be biased heavily in favour of the government's small savings schemes as opposed to an equity-based tax-saving option like ELSS mutual funds. Read more>>

Health Insurance is Wealth Insurance jagoinvestor.com

Does health insurance really protect your health? Ask yourself this question and deep down in your heart you will hear someone shouting, No Idiot! , There is no policy which can protect your health!. Health can only be protected by right diet; right exercise and right lifestyle. Unless you are doing any of these your health cant be insured. So what is Health Insurance, when it does not protect your health? Read more>>

Infrastructure bonds from IDFC thehindu.com

Infrastructure Development Finance Company Ltd. (IDFC) announced its public issue of Tranche-1 tax-saving long-term infrastructure bonds. Addressing presspersons here on Wednesday, S. J. Balesh, Senior Director (Resources), said these bonds had been classified as long term infrastructure bonds' as per the terms of Sec. 80CCF of the Income -tax Act. The Tranche-1 bonds, having a face value of Rs.5,000 each, would be issued in two series one with 9 per cent interest rate payable annually and the other with 9 per cent interest compounded annually. The bonds would be issued in demat and physical forms and would be listed on the stock exchanges. They would have a statutory lock-in period of five years from the date of allotment. Read more>>

L&T Infrastructure to issue tax-saving infra bonds moneylife.in

L&T Infrastructure Finance Company Ltd to issue Tranche 1 Bonds starting , on November 25, 2011, through a public issue of long term infrastructure bonds with a face value of Rs1,000 each in the nature of secured, redeemable, non-convertible debentures having benefits under Section 80CCF of the Income Tax Act, 1961, aggregating up to Rs1,100 crore for FY2012. The minimum subscription will be five bonds and in multiples of one bond thereafter. The bond issue will close on December 24, 2011, or earlier, as may be decided by the company. The first tranche of bonds will carry an interest rate of 9% per annum payable annually or compounded annually. The Tranche 1 Bonds are proposed to be listed on BSE. Read more>>

How to register a property livemint.com

Here are some basic things you should look at when registering your property. Where should you register? Each city has offices of the registrar or sub-registrars, where you can submit documents relating to your property and get it registered. For example, Delhi has around 13 registrar offices. It is a must to go to the registrar office of the locality in which your property is located. Read more>>

Credit score-based lending touches 57%: Cibil financialexpress.com

In a sign of increasing adoption of prudential loan disbursement practices by lenders, credit information company Cibil today said there had been considerable increase in lending to individuals with high scores by banks. Cibil, which gives rates individuals on a scale of 300 to 900 points, is witnessing a shift in banks' attitudes over the last year, managing director Arun Thukral told reporters here. Till the past fiscal, only 40 percent of individual borrowers had a credit score of over 800, while the data collected this fiscal suggest the same number has moved up to 57 percent, Thukral said. Read more>>

Investors should remember that excitement and expenses are their enemies - Warren Buffet

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Wealth Management Services

TOPIC OF THE WEEK

Fixed Maturity Plan (FMP) v/s Fixed Deposit (FD)

FMP Highlights:

Fixed Maturity Plan is a type of debt mutual fund in which funds are invested for a fixed duration, just like bank FDs the units of this plan mature on a predefined date (and therefore the name Fixed Maturity Plan).

The money collected is invested in fixed-income instruments. It can be money market instruments like CPs, CDs, corporate bonds and even bank fixed deposits.

This lock-in rate is often presented to investors as indicative return. This return is not guaranteed but the fund manager expects to earn that much return based on the investment made. Returns offered by FMPs are usually better than bank FDs.

Expense Ratio: FMPs usually have expense ratios between 0.25% and 1%. Exit Load: FMPs invest for a fixed tenure. So, stability of funds is important for them. Thus, to discourage early redemptions, the exit load is usually high from 1% to 3%.

FMPs invest in debt having different levels of risk. But they usually stick to relatively low-risk debt issues. Any short term capital gain from FMPs is added to you income for that year, and is taxed as per the applicable income tax brackets / slabs.

Any long term capital gain is taxed at a special rate 10% without the benefit of indexation, or 20% with the benefit of indexation.

FMP v/s FDs

Fixed Maturity Plan (FMP) Offered by Safety Duration of investment Mutual Funds (MFs) less safe compared to FDs 1 month to 3 years Money market instruments, corporate bonds and bank FDs Generally return is better than bank FDs

Fixed Deposit (FD) Banks Very safe, safer than FMPs 15 days to 10 years

Money invested in

NA

Rate of return Rate of return (at the time of investment) Expense Ratio Exit Load

Generally return is a little lesser than FMPs

Indicative, not guaranteed

Guaranteed

0.25% to 1% per year Practically there is no exit option Dividend: Tax free Short term gain: Clubbed with that years income, and

0% From 0% to 1% (Penalty for Premature Foreclosure FD)

Income tax (IT) treatment of returns

is taxed as per the applicable IT slabs

Interest earned is clubbed with that years income, and is taxed as per the applicable IT slabs.

Long term gain: Taxed at a special rate 10%

without the benefit of indexation, or 20% with the benefit of indexation.

Investors should remember that excitement and expenses are their enemies - Warren Buffet

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Disclaimer:

Wealth Management Services

This document is not for public distribution and has been furnished solely for internal distribution/information. Opinion expressed is based on the present market conditions and by no means should be considered as advise/ recommendation for investment. While every effort has been made to ensure the accuracy and completeness of information contained, The Bank does not guarantee and assumes no liability for errors and omissions of the information. The Bank assumes no financial liability to the users of this document. This report is not meant for public distribution and has been furnished to you solely for your information. This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Indian Bank is not soliciting any action based upon it. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. Indian Bank or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Indian Bank or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and no infringement. The recipients of this report should rely on their own investigations. Indian Bank and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Past Performance of Markets, Mutual Fund Schemes, Sectors may or may not be sustained in the future. Indian Bank Treasury Branch Wealth Management Services 254-260, Avvai Shanmugam Salai, Royapetteh, Chennai - 600 014 wms@indianbank.co.in

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