Monthly Archives: February 2014

Everything you wanted to know about ELSS

An ELSS is a diversified equity fund — a mutual fund that invests in stocks and is not concentrated in a sector or market category, and is thus a less risky way to invest in the market— with a three-year lock-in. Within the tax-saving set, it is the only one that offers a pure equity exposure. If you can take the risk of equity, an ELSS is the most attractive tax-saving vehicle today, and there are three reasons to eye it like never before.

What is an ELSS?

As the name of the scheme very clearly suggests, it is a savings scheme that’s linked to equity. And these are the two most important facts to remember even after investing in an ELSS. A savings scheme must necessarily be for the long term, so it’s of no use looking at short-term returns from an ELSS. ELSS is a mutual fund similar to any diversified equity mutual fund that routes your investments into equity markets. However, it stands apart from a regular mutual fund in one major way. ELSS carries a tax benefit on the amount invested, and therefore you have to lock-in your investment in an ELSS for three years.

Features of ELSS

Proxy route to direct stock investments
Lock-in feature provides long-term investing discipline
Provides tax saving benefits and the potential for higher returns
Flexibility to invest small amounts through an SIP

Who can buy?

Section 80C of the Income Tax Act provides tax benefits to a person who buys units of ELSS, either in his own name or jointly. Individuals, HUF

What is the minimum & maximum amount of investment?

Investments can be made through a systematic investment plan (SIP) or lump sum. When markets are volatile, SIP is a better way to invest, save tax and create wealth over a long term. Minimum Amount of investment is Rs.500. There is no limit for maximum amount of investment; however the tax advantage is only up to Rs.1lakh.

With SIP investor can take advantage of fluctuations in the stock market. So investor will get more units when the market is down and get less units when the market is up. For eg if you are investing Rs 1000 every month and you will get 100 units for when Net Asset Value (NAV) is 10 and will get 50 units when NAV is 20. So investing a fixed sum regularly helps to cover the market fluctuations by rupee costs averaging. SIPs are a tried and tested method of minimizing risk and yet enjoying good returns, by regular, periodic investment, over a long horizon.

How is Tax saved?

Investments in ELSS plans are eligible for deduction from gross total income under Section 80C of Income Tax Act. Only Rs.1lakh of investments qualifies for tax benefits under the same section. Your gross income is reduced by the amount you invest in the scheme. If you are paying a tax of 30.9% you can save upto Rs.30, 900/- on an investment of Rs.1lakh or more in ELSS.

Comparison with other options

ELSS has a lower lock-in period compared to other tax saving options. PPF, a tax-saver option is a 15year savings plan, while the National Saving Certificate carries a lock-in of 6years.

Benefits of ELSS

The three year lock-in stipulation might seem harsh, but it has its advantages, it induces discipline into your investing habits. You can lock yourself in low valuations, but also have to give your investment time to work for you. This lock-in keeps corporate money out, which means these schemes do not have to deal with sudden, large scale redemptions. Thus, ELSS tends to have more stable and optimum corpus size, which encourages good fund management.

Why ELSS:

  • Investors in ELSS under Dividend Payout Option have the advantage of getting Tax Free gains even during the lock-in period of 3 years.
  • Lowest Lock-in period of just 3 years, comparing favorably with maturity period of NSC (6yrs) and PPF (15 years).
  • Minimum investment is only Rs.500. very low entry barrier.
  • Investors in ELSS have the advantage of investing through Systematic Investment Plan.
  • Some ELSS schemes offer Free Life Insurance Cover and also Personal Accident Death Cover and even Critical Illness cover!!!
  • Historically, provided better returns than NSC, PPF and ULIPs.
  • Profits earned after the Lock-in Period is completely Tax-Free.
  • Upto Rs.1Lakh is eligible for deductions under Section 80c compared to Rs.70000 in PPF.
  • Due to its 3 year lock-in period, the Fund Manager has the freedom to invest in Fundamentally Strong Shares with huge future potential and can afford to ‘wait’ to unlock the value. Thus, it has been observed that ELSS schemes do beat (in terms of returns) even Diversified Mutual Funds more often than not.

RR Research provides unbiased and independent research in Stock Market, Equity, Commodity Prices, Stock Brokers, Tax Saving Schemes, Equiy broker, FMP, Fixed Maturity Plans, Fixed Income, Debt Market, RGESS, and Mutual Funds in India, NCD, Fixed Deposits, Equity Shares, Non Convertible Debentures and Tax Free Bonds. Visit: – http://www.allvoices.com/contributed-news/16606991-everything-you-wanted-to-know-about-elss

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ELSS Tax Saving Schemes

See on Scoop.itFixed Deposit Schemes

RR Financial Consultants‘s insight:

Features of ELSS:-

1-      Tax Free Dividend

2-      Tax Free long term capital gains

3-      Shorter lock-in-period of 3 years

4-      Full tax deduction Rs. 1 lakh u/s 80C

5-      Potential for Higher returns by investment in equity related investment

For more information please visit: – http://www.rrfinance.com/Fixed_Income/Tax_Saving.aspx

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Fiscal deficit target to 4.1% of GDP for 2014-15!

Key benchmark indices edged higher for the second day in a row after Finance Minister P Chidambaram cut the fiscal deficit target to 4.1% of GDP for 2014-15 at the time of announcement of the Interim Budget for 2014-15 on Monday, 17 February 2014, and said that the government will contain fiscal deficit at 4.6% of GDP in 2013-14 and as the government announced lower – than – expected gross market borrowing of Rs 5.97 lakh crore for 2014-15. The market sentiment was boosted by data showing that foreign funds were net buyers of Indian stocks on Monday, 17 February 2014. The BSE Sensex closed at 20464.06 and 170.15 point up.

Who Moved and Why

  • Ambuja Cements gains after bulk deal.
  • Hindustan Zinc slips on buzz Govt defer disinvestment.
  • ABB India jumps after strong Q4 outcome.
  • Godrej Consumer Products gains after bulk deal.
  • V-Mart Retail gains on institutional buying.
  • Bharti Airtel slips after acquiring Loop Mobile.
  • Select stocks drop ex-dividend.
  • Force Motors spurts after promoters hike stake.
  • Castrol India gains after decent Q4 numbers.

Read detail analysis report here:- http://rrfinance.com/Reserch/Pdf/07-July/DMR/18th_FEB_equity_closing_update.pdf

Godrej Consume

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Current fiscal deficit will be contained at 4.6% of GDP!

Key benchmark indices edged higher on the first trading session of the week after the Finance Minister P Chidambaram said that the fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013-14) and will be pruned further to 4.1% of GDP in 2014-15 and that the current account deficit (CAD) will be contained at $45 billion in 2013-14. The barometer index, the S&P BSE Sensex, closed 97.24 points or 0.48%, up close to 127 points from the day’s low and off about 128 points from the day’s high. The market breadth, indicating the overall health of the market was negative.

Current Fiscal Deficit

Current Fiscal Deficit

Who Moved and Why

  • Punj Lloyd slides after reverse turnaround in Q3.
  • Jet Airways gains on open offer hopes.
  • ABG Shipyard tumbles after reporting net loss in Q3.
  • Most auto stocks rise after proposed reduction in excise duty.
  • MTNL jumps after turnaround in Q3.
  • Allcargo Logistics surges after strong Q3 earnings.
  • IFCI gains as Govt to set up venture fund.
  • Kavveri Telecom drops after reverse turnaround in Q3.
  • Gayatri Projects slumps after poor Q3 outcome.

Read detail analysis report here: – http://rrfinance.com/Reserch/Pdf/07-July/DMR/17th_feb_equity_closing_update.pdf

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SBI slips after weak Q3 earnings!

Key benchmark indices surged in late trade after witnessing a bout of volatility in mid-afternoon trade. Easing of inflation based on the wholesale price index to 8-month low of 5.05% in January 2014, strong response to the telecom spectrum auction which will help the government achieve its fiscal deficit target of 4.8% of gross domestic product for the year ending 31 March 2014 boosted sentiment as the 50-unit CNX Nifty regained the psychological 6,000 level after falling below that level in intraday trade. Gains in Asian and European stocks also underpinned sentiment on the domestic bourses. The BSE Sensex closed at 20374.29 and 180.94 point up.

Economy of India

Who Moved and Why

  • Hanung Toys slumps after reporting net loss in Q3.
  • M&M cuts losses after decent Q3 numbers.
  • SBI slips after weak Q3 earnings
  • United Spirits drops after poor Q3 outcome.
  • Select stocks drop ex-dividend.
  • Amtek Auto jumps after strong quarterly earnings.
  • Telecom stocks gain after spectrum auction concludes.
  • ONGC drops amid volatility after Q3 results.
  • Future Retail spurts on turnaround in December quarter.
  • IOC drops after reverse turnaround in Q3.

Read full story here: – http://goo.gl/YuAvq7

Indian Economy :- http://en.wikipedia.org/wiki/Economy_of_India

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Benchmark indices dropped as weakness in Asian-European stocks!

Key benchmark indices dropped as weakness in Asian and European stocks dampened investors’ sentiment. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit their lowest level in a week. Nifty fell below the psychological 6,000 mark. The BSE Sensex closed 20193.35 down 255.14 point down. The market breadth, indicating the overall health of the market, was weak.

Who Moved and Why

  • Hindalco Industries drops after weak Q3 results.
  • Sun Pharma gains after strong Q3 outcome.
  • Page Industries inches up after strong Q3 outcome.
  • Credit rating agencies sizzle on likely stake-sale deal.
  • Eros International Media jumps after strong Q3 earnings.
  • GMDC falls after weak Q3 result.
  • Hindustan Copper slips after weak Q3 numbers.
  • Tata Communications drops after sequential fall in Q3 net profit.
  • United Breweries advances after strong Q3 result.

Read detail analysis report here: – http://rrfinance.com/Reserch/Pdf/07-July/DMR/13th_Jan_equity_closing_update%20%281%29.pdf

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What are commodity exchanges?

Resource:- www.rrfinance.com/Faq.aspx

Commodity exchanges are institutions which provide a platform for trading in  commodity futures just as how stock markets provide space for trading in equities and their derivatives. They thus play a critical role in robust price discovery where several buyers and sellers interact and determine the most efficient price for the product. Indian commodity exchanges offer trading in  commodity futures in a number of commodities. Presently, the regulator, Forward Markets Commission allows futures trading in over 120 commodities. There are two types of commodity exchanges in the country- 3 national level and 21 regional.

What are the unique features of national level commodity exchanges?

The unique features of national level commodity exchanges are:

  • They are demutualized, meaning thereby that they are run professionally and there is separation of management from ownership. The independent management does not have any trading interest in the commodities dealt with on the exchange.
  • They provide online platforms or screen based trading as distinct from the open outcry systems (ring trading) seen on conventional exchanges. This ensures transparency in operations as everyone has access to the same information.
  • They allow trading in a number of commodities and are hence commodity exchanges.
  • They are national level exchanges which facilitate trading from anywhere in the country. This a corollary of being an online exchange.

Find commodity news and updates here:- http://www.rrfinance.com/Equity-Commodities/Equity-Commodities_Home.aspx

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