Download - Interest rates & its effects on Investments
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Presenter’s Name Presenter’s ID
Gyaneshwary E1300310000151
Sumanth E1300310000107
Farha E1300310000133
Silambarasan Elango E1300310000132
Vishwanathan Ramakrishnan
What are the Regular Investment Habits , and Investing Patterns when there is Increase in Interest Rates &Decrease in Interest Rates ?
Batch Code: HYD01AA0213
Faculty :
30th October 2013
ET FinPro Module - 2
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Agenda
S.No Description
1 Introduction
2 Decrease in Interest Rate
3 Increase in Interest Rate
4 Major Investments
5 Factors attracting Investors towards Bank
6 Factors attracting Investors towards Debt market
7 Preferred Investments
8 Base Rate Behavior 2010 - 2013
9 Correlation between Interest Rates and Bonds
10 Investments Patterns in Past
11 Investors Options in Recent times
12 Role of Media
13 Summary
14 References
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Introduction
Investment
Need For Investment
Major Factor
IncomeExpenses Savings
OR
Invest
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Need For Investment
Future
Expenses
Un-expected events
Expected events
Inflation
Consider me :- INTEREST RATE
Major Factor
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Attract Loan Takers
Promote Economy Control Inflation
Govt. Debts
Attract Depositors
Decrease in the Interest Rate Increase in the Interest Rate
When
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Major Investments
Bank Market
TermDeposits Loans Debt
Funds Gold ETF
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Factors attracting Investors Towards Bank Products
Reputation of Bank
Trustable -Track Record
Low Loan Interest
Rate
High Interest
Rate - TD
Cross Selling
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Base Rate Behavior 2010 - 2013
source : www.rbi.org.in
Inte
rest
Rat
e
Year and Month
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Factors attracting Investors Towards Debt Market
Gilt
Edged
Liquidity
Low
VolatilityIndex Linked Bonds
Diversifi-cation
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Preferred Investment based on Tenure
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Correlation between Interest Rate and Bond Prices
RBI Increase in Rate Attracts FD Bond Prices Fall
Sell BondInvest in FD
RBI Decrease in Rate
Fall in FD Interest Rate
Demand for Bond Increases
Withdraw DepositsBuy Bonds
source : businesstoday.intoday.in
Interest rates and Bond prices share an Inverse relationship
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Example
XYZ Corporation issues- Bond ,face value of Rs 100 ,Coupon Rate 6%.
Increase in Interest Rate : Secondary market Face Value Rs 99. Yield will be (Rs 6/Rs 99)X100 =6.06 %.
Decrease in Interest Rate : Secondary market Face Value Rs 101. Yield will be (Rs 6/Rs 101)X100 =5.94 %.
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Sep 25th, 2013
Inte
rest
Rat
e
Year and Month
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Investments in 2011Investments in 2012Investments in 2013
http://www.phdcci.i
n/
source
business-standard.com
source
RBI
Annual
Report
Based on interest rates:
Inte
rest
Rat
ePe
rcen
tage
of
Inve
stm
ent
Investments in
Year and Month
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Investments in 2011
Investments in 2012
Investments in 2013
Perc
enta
ge o
f Inv
estm
ent
Perc
enta
ge o
f Inv
estm
ent
Perc
enta
ge o
f Inv
estm
ent
Investments in
Investments in
Investments in
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source : indiabudget.nic.in
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Smart Investors always keeps an eye on Daily News Update
Banks cut rates on consumer loans to get funds from government
Banks should show real yield on fixed deposits
Oct 21, 2013 Oct 22, 2013
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Oct 28 , 2013- ET Wealth
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Summary
Why we need to Invest ?
Which was the most Preferred Investment Tenure ?
What were the Regular Investment Patterns?
Where did they Invest when there is Increase in Interest Rate ?
When did they Invest in Bonds ?
How changes in interest rate impacts Bond Prices ?
Who are the better Investor?
6 W & 1 H
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http://rbi.org.in/rbi-sourcefiles/lendingrate/LendingRates.aspx#
http://www.phdcci.in/media_center_details.php?id=329
http://www.hdfcbank.com
http://indiabudget.nic.in
http://www.business-standard.com/article/pf/risk-free-returns-aren-t-enough-113091500695_1.html
http://businesstoday.intoday.in/story/invest-debt-funds-stock-market-volatility/1/20330.html
http://capitalmind.in
http://www.moneycontrol.com
References
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QueriesAnswered
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Thanks a lot !!