‘I believe equities remain the best asset class for long-term wealth creation’

1.      Why are stock markets hitting new peaks at a time when the GDP is in contraction mode? Is the rally for real?

Stock markets are forward looking. They work on anticipation of the current and future economic outlook. The Covid impact on the economy was predicted in March and hence the markets corrected. As we stand today, the recovery theme has played out well as markets saw renewed interest for domestic equities from all market participants, including FPIs and portfolio investors. Earnings have backed investor expectations and we believe markets are poised to remain positive sans Covid.

 

2.      Why are foreign investors pumping money (over Rs 1,60,000 crore in 2020) into Indian markets?

India has been a standout economy in the global context. Especially in the emerging market world, strong political stability and a robust recovery cycle has been a beacon for international investors. In the post-Covid world, where the world is awash with central bank liquidity, India has been getting a disproportionate share. As an opportunity, India continues to remain an attractive destination for global growth investors since they are increasingly comfortable with the structure of the economy, policy and regulatory framework. The government over the last five years has actively worked to make India more business friendly and this is now paying dividends.

 

3.      My assessment on the debt market? Have interest rates bottomed out?

Domestic bond yields have followed the operative rate downwards as the RBI and the government have emphasised bringing rates lower through policy action and accommodative monetary policy in an attempt to spur growth. While the money market curve and the 3/5-year space have broadly followed suit, longer dated papers especially corporate bonds have remained somewhat anchored. The recent RBI commentary is a clear indication that the RBI intends to keep rates range bound. Unless we see a huge fiscal consolidation or downward growth or inflation shock, rate cuts look unlikely.

For 2021, I believe investors will be best suited to go up the duration curve which would serve investor needs of a higher risk reward. We anticipate the RBI will maintain rates at current levels over the course of the next year at minimum, post which I believe a gradual rising rate environtent will ensue on the back of a recovery in the economy.

 

4.       The market, Which is at a record high, safe for us (small investors/Retail investors)?

From a grim March to a euphoric November, equity markets have been on a rollercoaster ride, a reminder that equities are a volatile yet rewarding asset class. Small investors have increasingly participated in equity markets through the mutual fund route and through direct stock investing.

The value of the Sensex and the Nifty is just a number. We have seen this time and time again. As India grows, financial markets will rise commensurately to reflect this growth.

As I always say why investing regularly is important. Timing the market rarely works and hence investing is a continuous process which when followed diligently has rewarded investors over the long term regardless of when they entered the market.

 SIP flows have been a testament to this understanding. For the better half of three years now, I have seen unwavering SIP flows.

One must remember that markets have been volatile during this phase. Investors who stick with their investment commitments have reaped the rewards of staying patient. I believe equities remain the best asset class for long-term wealth creation and should form some part of every investor’s portfolio.

Way ahead

The month of January 2021 witnessed considerable easing of momentum in equity markets as investors resorted to profit booking after an unprecedented rally in the latter months of 2020. The Nifty 50 index fell by 2.5% to 13,634. Meanwhile, the Nifty MidCap 100 and Nifty SmallCap 100 index rose marginally by 0.8% and 1.6% respectively.

FIIs scaled back their aggressive investment strategy into the Indian equity markets pouring in Rs. 14,512 crs, the lowest since October 2020. Meanwhile, MFs continued their selling spree removing Rs. 12,980 from the equity markets.

FIIs scaled back their aggressive investment strategy into the Indian equity markets pouring in Rs. 14,512 crs, the lowest since October 2020. Meanwhile, MFs continued their selling spree removing Rs. 12,980 from the equity markets.

The union budget announced on Feb 1st 2021, brought with it extreme euphoria as the finance minister chose to take The Path Less Trodden. The budget gave a clear indication of the government's focus on growth through capital expenditure without worrying about the fiscal deficit in addition to adopting cleaner accounting methods.This Budget is historic in a way that breaks the shackles of fiscal constraints. By increasing capital expenditure, the multiplier effect on the economy will be significantly more impactful against the previous route of revenue expenditure which results in limited gains.With significantly lower Covid-19 cases, a well-executed vaccine drive, high level of liquidity in the markets and a pro-growth budget, it is not difficult to be optimistic for 2021. Also providing support were earnings upgrades that continue at an unprecedented pace as activity continues to normalize. Along with the earnings upgrades, India also experienced upgrades to GDP estimates. As per RBI, the GDP for FY22 is set to grow at 10.5%, albeit on a lower base.On the global front, While the UK is struggling to stay afloat due to the rapid spread of the new variant of the virus, the US economy is rejoicing due to the Biden administration coming to power. China remains the fastest growing economy in the world and is projected to be the only country to post a positive growth this fiscal. There are clear signs of economic progression as oil prices are nearing long term average levels and a slight retracement in gold prices, indicating revival of risk appetite among investors.The focus for us has been to deploy the remaining corpus, and we are in the process of actively evaluating opportunities for the same. Current equity market valuations at 41.4x look exorbitant and discount even the highest level of growth expectations. The current Quarter earnings YoY growth for Nifty is at 16.16%(34 out of 50 companies’ results are published).  Due to the lack of any margin of safety, we advise investors to remain cautious and take advantage of any correction from this point on for long term investments.On the Fixed Income front, a higher-than-expected fiscal deficit announced in the budget leading to a higher-than-expected borrowing program to the tune of 12 lac crores led to an uptick in the 10-year G-sec rate by 11 bps to 6.06%. Presently, we are of the opinion that the heightened borrowing by the government will not affect India’s credit rating or ability to service timely repayments of loans. Much depends on how the government engages with rating agencies and divests in a timely manner. With CPI inflation finally cooling to 4.59% after months of breaching its upper limit of 6%, the real returns to a foreign portfolio investor continues to look attractive.We believe that the yield curve is likely to remain steep this year. Due to the crash in yields for ultra-short term, we believe any investment for a period of 1-2 years should be made in Arbitrage funds due to the pickup of spreads in the category. Banking and PSU debt funds can be considered for a greater than 2-year investment period.

ULIPs now taxable like mutual funds!

Finance Bill 2021-22 has proposed to tax gains from ULIP with a premium of more than Rs. 2.5 lakh per year to remove the disparity relative to mutual funds. This means from Feb 1st 2021 if you buy a new  ULIP with a premium of more than Rs. 2.5 lakhs the maturity proceeds will be taxed identically to mutual funds. Death benefits continue to remain tax-free regardless less of the premium amount. This will reduce mis-selling of ULIPs.

This rule applies to the sum of the premium of the ULIPs purchased on or after 1st Feb 2021. For example, if you buy three ULIPs and the total premium is above Rs. 2.5 lakh then the gains from all the three ULIPs will be taxed like mutual funds.

Senior citizens 75 and above need not file IT returns subject to conditions!

Budget 2021 has only one offering for senior citizens. If some conditions are met, those aged 75 and above need not file income tax returns. They have to pay the necessary tax but need not file returns.

The conditions for exemption from filing ITR from 1st April 2021 are:

1. The senior citizen should be a resident and should be 75 years of age or more during the financial year for which tax has to be paid
2. He/She must receive a pension and interest income from the same bank! Different banks are negligible.
3. Only certain specified banks are allowed
4. A declaration should be given to the bank

Another interest income from any other source or any kind of capital gains would mean the person has to pay tax. Thus this benefit will not help many!

How employee contributions over 2.5 lakhs gets taxed like a FD

Finance Bill 2021 has proposed that employee contributions over 2.5 lakh will be taxed as per slab.

Assume that your EPF balance as on 31st March 2020 is Rs. 10,00,000. The employer contribution is, Rs. 20,000 a month; The employee contribution is Rs. 20,000 a month or Rs. 2,40,000 a year (FY).

In this case, there is no change in rule and nothing need to be done. Suppose the employee decided to invest via VPF Rs. 5000 a month. The total annual contribution by the employee is (5000 x 12) + 2,40,000 = 3,00,000.

If the EPF rate is say 8% then 8% of (3,00,000 – 2,50,000) = Rs. 4000 should be shown as income while filing ITR and this will be taxed as per slab rate.

WHY YOU HAVE HATERS, EVEN IF YOU’RE A NICE PERSON

WHY YOU HAVE HATERS, EVEN IF YOU’RE A NICE PERSON

Are you confused as to why you have haters – because you think you’re truly a nice person?

And YES, you ARE nice!

So, what motivates a hater to hate? And why are they choosing you to hate on?

Below I share many reasons why haters gonna hate – for no good reason at all!

Why nice people have haters?

1. You have haters because you’re popular.

Some people only hate you because of the way other people love you.

Another definition for a hater: “Someone who secretly wishes to be you.”

In a way having haters is a good thing. It’s means you are truly loved.

2. You have haters because you did the work to improve your life.

Your haters don’t want to put in the effort to improve their life. As a result, your success reminds them they are not willing to put in effort to succeed.

Plus, your presence reminds them about what’s wrong with them – and what’s missing in their life – so they hate you.

Basically, it’s the ones who are against you who believe in your power the most.

In many ways these people who hate you are (ironically) your biggest fans. They admire all you’ve accomplished – and are quite simply jealous.

3. You have haters because you have risen above them.People who try to pull you down often do so because they see you as above them.

Perhaps you used to be equals – at about the same level. They feel left behind and trapped at their level of existence – and just don’t like any change in their life.

They want to put you back in your place so that things remain status quo – instead of accepting your status improvements.

They’re hating on you to bring you down – to diminish your power and shine – so as to make themselves feel better.

This reminds me of a terrific Zig Ziglar says: “Don’t be distracted by criticism. Remember the only taste of success some people have is when they take a bite out of you.”

4. You have haters because you’re going through a bad time – and your uneasiness makes them uneasy.

They worry your bad luck is contagious. And/or they just don’t want to put in the effort needed to cheer you up and cheer you on.

Basically…If you want to find out who’s a true friend – screw up or go through a hard time – then see who sticks around.

5. You have haters because they feel they’re missing out on being around you.

Perhaps they once rejected you – in some way – for something. Or…in general, they used to feel you weren’t good enough for them. Then you had the audacity to improve yourself and your life! (How dare you! )

As a result, your haters now feel like they are missing out on the new improved you. They need to still dislike you  – so they don’t feel like they are missing out.

Or maybe you simply are choosing not to socialize with them as often as they want. Or work with them. Or maybe you don’t even know them – and they don’t know how to get to know you – and that bugs them – because they feel they’re missing out being around you.

6. You have haters because you overcame a shared problem.

You used to share a problem in common: overeating, or binge drinking, or toxic romantic partners.

You then found a way to leave the problem behind you – while they are still caught up in the chaos.

Your newfound peace causes them angst, regret and self loathing.

7. You have haters because they hate themselves.

These people are simply not capable of love and connection – with anybody.

Maybe they are a narcissist, sociopath or have some kind of personality disorder. Perhaps they had a terrible childhood – and thereby hurt people want to hurt people. Or they were raised with hateful, judgmental beliefs.

As adults, they never awakened to see the wrongness of these limiting beliefs.

Unfortunately, all of these types of people are mostly comfortable with resentment and drama.

Basically, happy people don’t hate. And people who walk around hating aren’t happy.

WE DON’T MEET PEOPLE BY ACCIDENT. WE MEET FOR A REASON.

WE DON’T MEET PEOPLE BY ACCIDENT. WE MEET FOR A REASON.

I believe you don’t meet people by accident – they come into your life for a reason.

Yes, even the crummy ones.

If a relationship doesn’t survive the test of time, it doesn’t mean it still wasn’t meant to be.

Not all encounters with people are supposed to last forever. 

Sometimes the “forever” is not the person – but what we gain from them.

There’s a synchronicity and purpose for each person you meet. Both our positive encounters with people and the negative, challenging encounters we suffer through.

Below are some insightful reasons why we don’t meet people by accident.

We meet people for a reason.

1.Some people are “bridges.”

These people are not meant to last for the long road ahead. They are an enjoyable pathway to get us to where we need to go.

These people are needed to arrive exactly at the time and place you met them – to transport you to the next level of your life journey.

You meet these people for a reason – even if they are only here for a season.

2.Some people are “roadblocks” and “re-directors.”

These people come into your life to delay you – for both little things and big things.

For example, you might have a conversation with someone – which then delays you and prevents you from getting into a bus accident.

Or you might spend time with someone – and this time spent creates a “time hiccup” which delays you – so you wind up meeting a new, amazing, romantic partner.

You might have heard the expression, “Sometimes rejection is a redirection to something better.” Well, that’s what these people do. They might show up as a rejector – but they are a redirector.

3. Some people are “assignments” and “teachers.”

Often your tormentors double duty as your mentors.

They are here to teach you important life lessons – via the process of pain – which helps you to grow who you are.

Their “crisis pain” creates the “crisis fuel” you need – to motivate a necessary change you didn’t want to put in the effort to make.

Plus, some people are just straight-up inspiring teachers – who teach you life lessons in a more loving manner.

4. Some people are “angels”

These people are here to protect you and remind you to stay safe and stay self loving.

They are “guardian angels” of some sort.

Their purpose: Make sure that you do not stray too far from the path you are meant to be on.

In times of need and desperation they help you – when others are not there for you.

5. Some people are “guideposts.”

They represent and symbolize something you want.

Their purpose: Motivate you to keep pursuing what you want – and stay on track.

Their presence helps to make sure you stay awake, energized and committed to moving forward on your soul’s true-to-you journey.

6. Some people are your “tribe.”

These are the ones who are here to stay the long haul.

These people are far and few between – but they are the ones who are loyally there for you during tough times and celebratory times.

They see you clearly and accept you as your “flawesome” self.

Tribe members support you when you are invisible to others.

Tribe members root for you with a pure heart – when others might feel competitive or jealous.