AAP questions MoU between Adani and SBI

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Training its guns on the Adani group, the Aam Aadmi Party on Tuesday demanded immediate intervention of banking sector regulator to scrutinise the memorandum of understanding (MoU) signed between the Adani Group and the State Bank of India. The party said the Reserve Bank of India should step in and question the MoU since there is no justification for the largest public sector bank to provide Rs.6000 crore loan. “The banking sector regulator should scrutinise the improper memorandum of understanding between an Australian subsidiary company of the Adani Group and State Bank of India, which does not appear to be above board. “The Reserve Bank of India, should fulfil its role of the regulator and must question the MoU, since there is no justification for the largest public sector bank of the country to provide a Rs.6,000 crore loan, which is nothing but a sweet deal for the Adani Group,” the party said in a statement. “Though details of the MoU continues to be a closely guarded secret, can the finance ministry deny a fact that many global banks had refused to extend the credit facility for this venture due to environmental reasons ?” the party asked. “Can the ministry deny that the SBI has been pressurised to bail out the Adani Group in a difficult venture the returns of which are uncertain? If and when this company starts coal mining in distant future, will it not sell the coal in an open market at an international price? Can the finance ministry deny this fact ?” the party said.

ONGC Videsh likely to buy stakes in Tullow Oil’s assets

Indian oil company ONGC Videsh is seeking to purchase a stake in the assets of African exploration company Tullow Oil

offshore ghana-strocchi flickr

According to a Reuters report, the overseas investment subsidiary of Oil and Natural Gas Corp (ONGC) is actively looking for oil in assets belonging to Tullow Oil, such as Ghana and Kenya.

India is the fourth largest consumer of oil and imports 80 per cent of its crude. ONGC Videsh hopes to procure 400,000 bpd of crude from markets outside India by 2018, added the report.

In October 2014, DK Sarraf, chairman and managing director of ONGC had stated that the company is keen to exceed its crude imports from 167,000 bpd, which was produced from overseas holdings in the fiscal year to March 2014.

ONGC already has assets in Libya, Sudan and Mozambique, and company officials revealed that it plans to expand in the continent.

Oil dives as the Saudis go to war on prices

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WTI has been dumped lower on the Saudi action of lowering prices to the the US.

The latest move has taken us through the 2012 low at 77.27 and now targets the 2011 lows around 75.00

WTI daily 04 11 2014

The Saudi move to cut prices to the US is being netted off with price rises to Asia and the market is more worried about how far the Saudis will go to protect their market share. While the US won’t export oil those that buy OPEC have to suck it up with the price rises.

While it means we could see oil go much lower, the benefits from lower prices shouldn’t be underestimated. Heavy importers will get the benefit which will filter down into the economy. It will be a big drag on inflation though so we’ll have to make sure we watch the differences between the core and headline numbers with greater detail.

Rate cut by RBI imminent says Royal Bank of Scotland

The Royal Bank of Scotland on Monday said the economic indicators like softening of inflation suggests that key interest rates could be slashed sooner than later by the Reserve Bank of India.

Reserve Bank had kept the key interest rates unchanged while unveiling its fourth bi-monthly monetary policy statement for 2014-15 on September 30.

“I think the RBI is a very fine institution and it is their job to take a call on monetary policy, rate cut and inflation…but the indicators seem to suggest that rate cut would be sooner rather than later,” the RBS’s Country Executive Brijesh Mehra told reporters in Delhi.

The inflation measured in terms of Wholesale Price Index (WPI) touched a five-year low of 2.38 per cent in September.

Besides, retail inflation has also dropped to 6.46 per cent, the lowest since the new series of Consumer Price Index was released in January 2012.

The experts think that the slight tinkering in the key interest rate by RBI in its next bimonthly policy statement scheduled on December 2 will help in perking up economic growth as well as lowering the burden of home and other loan instalments.

Investing mistakes you must avoid

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Investing money is a process that requires an investor to plan, adopt a disciplined investment strategy and have the perseverance to weather the volatile periods during the committed time horizon. Although many of us find investment process quite cumbersome, in reality, it is a simple process provided we follow certain basic principles at all times. Unfortunately, not many investors do so and hence end up making too many mistakes thus derailing their investment process.

For example, it is quite common to see investors trying to buy low and sell high despite it being a proven fact that even the professional fund managers find it difficult to time the market consistently. Moreover, it is ironical that when the market presents great long-term investment opportunities, the same investors get cold feet. Clearly, their fetish for catching the market bottom often makes them vary of taking the plunge. 
Similarly, there are a few other common mistakes that cloud investors’ investment decisions. If you are one of those investors who have been committing investment mistakes, here is how you can avoid them:

Don’t look at investment options with rose coloured spectacles

While there is nothing wrong with expecting the best possible returns on your investments, it is important to know about the potential and the risk associated with different asset classes in your portfolios. Many investors make the mistake of focusing only on the returns and ignoring the attendant risks. This not only causes a mismatch between the reality and expectations in terms of returns but also makes it difficult for them tackle the volatility. No wonder, they often panic and abandon their investment process abruptly, thereby, either suffering huge losses or failing to achieve their important investment goals. To avoid a situation like this, the key is not to underestimate risk and/or overestimate returns. Therefore, you must understand the potential and the risks associated with different asset classes so that you have a clear idea about the risk you are likely to be exposed to and the kind of return you can expect from your portfolio.   

Don’t compromise your goals for some quick gains

We often make a mistake of either investing without a defined time horizon or assigning our investments to certain specific goals. Hence, we often lose sight of our goals when we spot an opportunity to make a quick buck. For example, in a current market like situation, one can get tempted to invest even short money into equity and equity related instruments. Needless to say, if the market turns volatile, one would find it difficult to stay invested and hence may end up either losing a part of one’s investments or earning low returns. Therefore, the right strategy to achieve investment success would be to keep your focus on your goals and honour the time commitment for each of your goals.

Don’t over-diversify your portfolio

While maintaining diversification in your portfolio as an integral part of the achieving investment success, it is also an aspect where investors often err. The general belief is that more number of funds one invests in, the more diversified portfolio would be. One often comes across portfolios where an amount as low as Rs 5,000 is invested through SIP [systematic investment plan] in five funds.

Remember, mutual funds are a diversified investment vehicle and having a number of similar funds can harm the portfolio in more than one ways rather than adding any value to it. For example, while having a quality mid-cap fund can help improve your overall portfolio returns, investing in too many mid-cap funds would invariably make you compromise on the quality of the portfolio as stock picking and sound investment process are major differentiators for these funds. Considering that mid-cap segment suffers from poor liquidity and limited coverage, it is always prudent to opt for a mid-cap fund or two that not only have quality portfolios but also an established performance track record.  

While there is nothing like an optimal number of funds that you need to own to have a sufficiently diverse portfolio, factors such as the size of your portfolio and your asset allocation can help you decide the optimal number.  For example, the debt part of the portfolio may require you to invest in more funds as the key is to manage credit and duration risk. To do so successfully, you will have to invest in different funds suitable for different time horizons.   

Don’t be obsessed with past performance
Although past performance is an important aspect in the decision-making process, relying too much on it can jeopardise your financial future. Even while considering the past performance, you must focus on long-term performance rather than the short term one.  

Mutual funds offer a variety of equity funds, i.e., multi-cap, large cap, mid-cap, sector, thematic and those that follow an aggressive investment strategy such as opportunity and value funds. As we know, different segments of the stock markets behave differently over different time periods. For example, in the current market scenario, you will find either mid-cap funds or funds having higher exposure to mid-cap stocks, sector and thematic funds dominating the list of top performing funds. A strategy of investing in top performing funds now could result in your portfolio becoming too aggressive for your liking and that can be disastrous in the long run.

Similarly, a performance analysis of equity and equity-oriented funds during the periods of market downturns would project a disappointing picture. Relying on the past performance alone would compel you to stay away from equities during the periods best suited for making an investment. Besides, a conservative approach will create a gap between what you will need and what you may accumulate in future. Hence, you must look beyond past performance to make sound investment decisions.

Don’t ignore time diversification

Time diversification, i.e., remaining invested over different market cycles is another factor that requires your attention. It helps in mitigating the risks that you might encounter while entering or exiting a particular investment or category during difficult times in the economic cycle. Remember, longer time periods minimise the impact of these fluctuations.

In fact, time diversification is also important for the debt part of the portfolio. While investing in ultra short-term debt funds, short-term debt funds and fixed maturity plans (FMPs) is fairly straight forward, investing in medium to long-term income funds, especially those that rely on duration play, can be a little tricky. It is important to know that interest rates and bond prices have an inverse relationship. When the interest rates start falling, the market adjusts bond prices to increase the interest rate yields, i.e., their price rise.

Of course, income funds following the duration strategy are ideally suited to investors who don’t mind taking risk to earn a few percentage points higher returns. Here too, as has been seen in the past, many investors wait for the performance numbers to improve before taking the plunge. Many a times, they enter at the fag-end of the rally in the bond prices and hence not only miss out on an opportunity to make decent returns but also risk a part of their capital.

As is evident, you need to look beyond the past performance to benefit from the true potential of different asset classes. A combination of factors such as suitability of investment options in the portfolio, following a disciplined approach to investing and staying committed to your time horizon can work wonders for your investments in the long run.  

Overnight grab BTST BIOCON/valuerupee/SunilBehki

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 I would go BTST with a buy in Biocon.

The pharma space is looking good and Biocon should outperform in tomorrow trading sessions. So I would go with that, with a stop loss of Rs.469 for upper  target of  Rs.490 tomorrow.

Risk free bet at current levels of Rs.476

Electric Vehicle Carpool Lane Privileges Do More Harm Than Good Because They Cause Congestion, Report Finds

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One of the incentives some U.S. states are using to lure buyers to lower-emission vehicles is allowing them to drive without passengers in High Occupancy Vehicle (HOV) carpool lanes. For urban commuters this is an enticing offer, especially on traffic-choked highways around cities like Los Angeles and Atlanta.

Feds Approve Fourth LNG Export Terminal Amid Growing Pressure To Cash In On US Energy Boom

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U.S. energy regulators this week signed off on a fourth facility to export America’s liquefied natural gas (LNG) supplies. The approval to build the Maryland facility comes amid growing pressure from natural gas proponents to expedite the shipment of LNG abroad — a move they say will help to squeeze even more profits from the U.S.

Oil Prices Falling On High Dollar, Weak Global Manufacturing And Surging Production

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Oil prices tumbled by about 3 percent Tuesday after reports that OPEC production is surging higher than expected, slow manufacturing growth in China and Japan and the EU is dampening demand for oil, and traders are pulling out of contracts at the end of the quarter as the dollar reaches multiyear highs.

Ebola And Biotech Stocks: Tekmira, Biocryst, Sarepta, NewLink, Inovio, NanoViricides Up In Premarket

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Biotech stocks rose Wednesday morning on news of the first reported case of Ebola in the U.S. The country’s Centers for Disease Control and Prevention announced Tuesday that a patient was being treated at the Texas Health Presbyterian Hospital in Dallas.