UTI MF terminates 15-year-old scheme

The UTI Mutual Fund Unit Plan was launched in 1993 and has finally been
terminated in February this year though the notice has been sent to
investors just a few days ago. The open-ended scheme also suspended its
fresh sale of units in the year 2000. It was a one-time investment scheme,
which allowed mutual fund investments and also assured a Rs 5 lakh health
cover post-55 years of age. However, the investor at 55 years of age started paying premium for the future health cover and nearly 75,000 investors have actually been refunded this money because of the termination of this scheme.

*The reason for the collapse of the scheme:*

New India Assurance, the company providing the health cover said that the
premium rates and the increasing health expenses made it unfeasible and
unviable to provide health insurance to investors at a nominal cost.

Also in 2003, when UTI was restructured, SEBI said no MF house could offer
schemes that provide assurance of any kind, which is why the scheme was
terminated.

*Which age group will be affected most by this move?

It is the age group between 55- 58 yeas who have been hurt the most, who started paying their premium but still do not have their health cover. So for eg if one invests about 1 lakh at the age of 50 years and at 55 years he starts paying a premium for the health cover of Rs 6,000 a year but the scheme terminated before he turns 58 years, so while the entire premium he has paid to date gets refunded back to him but that is of no interest and to add to that no health cover is available which he assumed he would get at a later date as he had specifically invested in this scheme for this benefit. Therefore, these set of investors have been hurt the most due to termination of this scheme.

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7 important rules of investments/trading

7 important rules of investments/trading

The following is a list of things you want to avoid at all costs. Anyone
of them can literally destroy your financial dreams and goals!

·         1. Trading with money you can't afford to lose

One of the greatest obstacles to successful trading is using money that you
really cannot afford to lose. Examples of this would be money that is
supposed to be used to pay the mortgage, bills, or your child's college
tuition. This is sometimes referred to as "trading with scared money" and
there is a very good reason for that. Ultimately what happens is that when
someone knows in the back of their mind that they are risking the borrow
money; they trade out of fear and emotion versus logic and no emotion. If
you are in this situation, we highly recommend that you stop trading until
you earn enough to put into an account that you truly can afford to lose
without causing major financial setbacks.

·         The need to be "certain"

We all have the need to make sure that the trade we want to make is going to be a good one. Therefore, we look for signs that will give us a confirmation
to enter. This can come in several forms, for example… Tuning into any
Business Channel or the Newspapers to give us news that our script is on the
move or waiting for a couple of extra days to make sure that the script is
really flying and just not on a false breakout. Other traders will get
opinions from friends, family, or broker. Others will wait for ten technical
indicators to line up and give the "green light."

All of these are okay to a point, however the big mistake to avoid is taking
so much time that you let the trade take off without you. Interestingly,
what ends up happening as a result of waiting too long is that you actually
increase your risk. This is because as a script moves higher and higher
there are fewer buyers left in the market and it can come tumbling down
until more buyers step in. It is like a game of musical chairs; eventually
someone gets caught without a chair.

Traders who wait and wait and wait to make extra sure are usually the ones
buying the top tick just before the stocks sells off. They then beat
themselves up thinking they picked the wrong script.

The thing to keep in mind is that there can be no absolute certainty in any
given trade. All we ever can do is take a very educated risk along with a
leap of faith!

·         Words that will kill you! HOPE---WISH---PRAY

If you ever find yourself doing one or more of the above while in a trade
then you are in big trouble! As We have already said, the market does not
give a damn. All the hoping, wishing and praying in the world is not going
to turn a losing trade into a winning one. When you are wrong just use a
simple 4-letter word to correct the situation-SELL!

·         Not Acting on your plan

A big source of trouble arises when a trader starts to deviate from their
strategy. Maybe for a week they will trade according to one set of rules and
the next use something entirely different. You must never deviate from your
methodology once you start. As long as it is a good one statistically, there
is absolutely no reason to change it. The way to make money from it is to
trade it over and over again to exploit the edge it gives you.

·         Not knowing how to get out of a losing trade

It is amazing how many people we have talked to who don't have any clear
escape plan for getting out of a bad trade. Once again, they hope, pray wish
and rationalize their position. As we keep saying, the market does not care
what you think. It does what it does and when you are wrong, you are wrong! The easiest way to keep a bad trade from going really bad is to determine before you get in, where you will get out.

·         Having an ego

We have seen a number of individuals enter the trading game that was
extremely successful in other business ventures. Because of this, they had a
fairly big ego and thought they could not fail. Their egos became their
downfall because they could not except that they were wrong and refused to
bail out of bad trades.

Once again, whoever or wherever you came from does not concern the markets. All the charm, powers of persuasion, number of diplomas or business savvy will not budge the market when you are wrong.

·         Falling in love with a sector or script

Numbers of people are always involved with a particular sector or a script.
Moreover, they are of the view that this sector or script always proves Lucky for them. In addition, they love trading in that script without managing any risk. They are so much confidant that their every trade in that particular script will always result in to a winning or successful trade.

To avoid the situation after but…, never fall in love with a particular
sector or stock, It can cost you dearly!

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Brokerage stocks under fire

Brokerage stocks under fire - Shrinking turnover spells trouble

BL Research Bureau

Nearly a month after the crash of January 2008, many small town brokers and even metro based brokers with retail operations in B and C class cities have still to open up for business. This when there are massive whispered amounts of client level defaults at big brokers like Motilal and Kotak..which will either go for litigation to recover or plain and simply written off.

Stocks of brokerage houses have been bearing the brunt of the selling pressure in the recent correction. This is despite most brokerages staging an impressive third quarter performance.

Stock prices of most broking companies, on an average, have fallen by about 41 per cent in the last one-month vis-À-vis a 20 per cent fall in Sensex.

The fall, however, has been more pronounced (about 30-44 per cent) for companies with pure broking exposure such as Religare, Geojit Financial Services, Emkay Share and Stock Brokers and India Infoline. The fall in prices of banks such as ICICI Bank and Kotak Mahindra with broking exposure got arrested at about 20-33 per cent.

With their revenues pegged directly to the fortunes of the equity markets, companies in the broking space may be up for tough times ahead, with dwindling intra-day volumes and a general loss in risk-appetite among retail investors. Fading investor interest in the IPO market may also add to their woes.

Volumes shrink

The average daily turnover in the cash segment in the NSE has fallen by about 30 per cent from its peak levels. After recording volumes of about Rs 20,709 crore in October 2007, the average per day turnover has shrunk to about Rs 14,393 crore in February. This fall in volumes spell trouble for broking outfits since most of them had in the last one-year reduced commissions hoping to attract increased participation from clients.

While the bigger ones such as Kotak Mahindra, ICICI Bank and HDFC Bank, with unlisted broking entities and other core business activities may survive this market onslaught, broking houses with complete dependence on retail participation may find the going tough.

Performance of companies such as Edelweiss and Motilal Oswal Financial Services with exposure to investment banking operations may also remain sedate, given the fading sheen of the primary market.

Margins and risk

With stock markets increasingly testing newer support levels, brokers' default risk on loans against shares may also increase. This may put to test the efficacy of most brokers' risk control measures

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

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Rising costs throw auto-companies out of gear

Rising costs throw auto-companies out of gear

Mansi Kapur | TNN

Mumbai: Automobile companies may not be in for a smooth ride in the next few months—especially when it comes to profitability. While demand might take a turn for the better in the coming year with a long line-up of new models, increasing production costs and competition are expected to keep operating margins under pressure.

   Production costs, which have been on the rise in the past few quarters,
are expected to go up further in the coming months. Prices of key inputs
like steel and rubber are expected to rise in the coming months. A recent
report from Fitch Ratings on the auto sector said, "Margins of automobile
companies could come under increased pressure during 2008 on account of
higher steel prices expected during the year—with the tight domestic market
limiting OEMs' ability to pass through increased costs.'' Although there
have been two rounds of steel price hikes since January, prices are expected
to rise further in the coming months. The same holds true for rubber prices.

   And though demand for automobiles has grown at a rate of 12% during the
last 10 months of this fiscal, it is still sluggish compared to the 20%-25%
growth it witnessed in the last few years. As a result, manufacturers are
finding it near impossible to pass on the input cost increase to the
customers. "Even though some auto companies have announced price increases in the last few weeks, they have not been able to implement it very
successfully as there are huge discounts being offered at the moment to
retain customers,'' a city-based car dealer said. Most auto companies like
Tata Motors, Mahindra & Mahindra, Bajaj Auto and TVS Motors reported a drop in their margins in the third quarter as compared to the previous years.
Officials from these companies said that margins would continue to remain
under pressure in the near term.

Source- Google Groups

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