Markets again painted red
The Reserve Bank of India's monetary policy review on Tuesday, April 17 could be one of the trend setters for the next week
The week ended April 13 for the Indian markets closed at a disappointing note. The BSE Sensex plunged 391.51 points, or 2.24% to 17,094.51 for the week ended Apr. 13, 2012. On the other hand, the broad based NSE Nifty lost 115.45 points, or 2.17%, to 5,207.45 during the week. BSE Mid-cap declined 135.90 points, or 2.10% to 6,337.97, while BSE Small-cap dipped 45.67 points, or 0.67% to 6,799.23 over the week.
It was massive earthquake triggering tsunami fears in the Asian region that shook the markets like a jelly and became one of the reasons which hurt the sentiments of the investors. Besides, wavering global markets and drop in India’s industrial growth were other factors which contributed to end the markets in the red. The week also observed a disheartening beginning of the quarterly result season when IT major Infosys announced drop in net profit on quarter on quarter basis by 2.4%. The company reported a quarter-on-quarter (q-o-q) net profit to Rs 2,316 crore for the quarter ended March 31, 2012 as against its net profit of Rs 2,372 Crore in the previous quarter. The Company’s revenue also dropped 4% q-o-q (22% y-o-y) at Rs 8,852 crore from Rs 7,250 crore in the year-ago period. On year on year basis the profit of the company is up by 27.39% at the end of March 12, 2012.
The Infosys Q4 results led the IT index down 11.5% earning a position of the top loser. Capital Goods, Metal, Power and Consumer Durables which dropped 2.5-4% were the other notable index losers. BSE Bankex lost 0.34%.
Meanwhile, it’s expected that the Reserve Bank of India will announce an interest rate cut on April 17. The market pundits expecting this cut off to take place say that it will definitely boost the investment of different companies in many lending firms.
So, the Reserve Bank of India's monetary policy review on Tuesday, April 17 could be one of the trend setters for the week starting Monday, April 16 other than the developments in the overseas markets.
I have been regularly receiving the queries about the ways and means of investing in gold. ‘Is there any thumb rule to invest in Gold?
For investing in gold, there is no thumb rule. One should increase look for exposure to gold if the economy and stock markets are highly volatile and lot of uncertainties are visible. 2-5 per cent investment in gold is fine in normal circumstances or otherwise, it should be 10 per cent. However the ideal way to invest in gold is to invest in it regularly. And this way one can average out his price purchase and can get higher returns when one decides to encash his gold holdings.
One can own gold in dematerialized form via Exchange-Traded Gold Funds or ETFs. These are the designed to let an investor to track gold prices, though not by actually owning physical gold bullion but by trading a security on the stock market.
There are various funds available, which manage gold EFTs. One can buy units of these funds, hold them as long as one likes and sell them when he wants to. The pricing of gold EFT is transparent. A unit of the fund, which will be valued as per the rate of gold on that day can be bought and sold through the stock exchange.
Regardless of being backed by gold, other influences affect the gold ETF which is in reality a just a share backed by gold rather than the gold itself. This is demonstrated by the fact that one cannot take delivery of solid gold if one cash or trade in his ETFs. He will only be paid in cash. There is a vast difference between owning actual gold and owning a certificate or piece of paper that says you own shares in a gold pool.
Precisely, gold EFTs have wriggled themselves into a niche in today’s gold market by providing a platform for investors to invest in gold who ordinarily would not, without exerting too much effort.
However, it is to be understood that hard gold bullion is still the favourite of die-hard gold investors, especially for the long term. Gold ETFs are just providing a lazy way for investors to jump on the gold bandwagon.
Lastupdate on : Sun, 15 Apr 2012 21:30:00 Makkah time
Lastupdate on : Sun, 15 Apr 2012 18:30:00 GMT
Lastupdate on : Mon, 16 Apr 2012 00:00:00 IST
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