6 MARKETS MUMBAI | 1 FEBRUARY 2015 1>

SURABHI ROYMumbai, 31 January

After a sharp fall onFriday, the benchmarkindices ended the weekmarginally lower. This fol-lowed the Coal India equityoffering, even as a rise in thenon-performing assets of ICICIBank and Bank of Barodaweighed on bank stocks.

For the week, the BSESensex ended with a loss of 96points at 29,183, while theNational Stock Exchange Niftyclosed 27 points lower at 8,809.The BSE mid-cap index ended0.4 per cent higher at 10,739,while the small-cap index end-ed 0.3 per cent lower at 11,329.

While markets were closedon Monday on account ofRepublic Day, Tuesday sawmarkets ending at a recordclosing high, owing to gains in

financials and ITC. Stocks ofcapital goods companiesgained on hopes of orderinflows, after a breakthroughin the Indo-US treaty for civil-ian nuclear projects.

On Wednesday, the mar-kets ended flat, amid avolatile trading session, as

investors booked profitsahead of the expiry ofJanuary derivatives contracts.On Thursday, the indices end-ed at record closing highs,with the Nifty gaining for the10th consecutive session, thelongest rally since April 2014.This followed the expiry of

January derivatives contracts.A sharp drop in banking

stocks following weak results,as well as the Coal India offer-ing, saw the markets posttheir biggest drop in threeweeks on Friday. In terms ofsectors, the BSE realty indexsurged eight per cent throughthe week. However, the met-als, public sector undertakingand bank indices slipped one-three per cent.

Coal India was the topSensex loser, its stock fallingeight per cent due to the gov-ernments offer for sale. The~22,000-crore Coal India offer-ing, the biggest in the Indiancapital market, was fully sub-scribed on Friday.

ICICI Bank lost 2.5 per centafter the bank said its net non-performing assets for the quar-ter ended December 2014 stoodat 1.27 per cent, against 1.09 per

cent in the previous quarter.Public sector lender Bank

of Baroda slumped 13 per centafter reporting a sharp 68 percent year-on-year drop in netprofit at ~334 crore for the quar-ter ended December, owing tohigher provisions for stressedloans and tax.

Week aheadMarket participants will trackthe Reserve Bank of Indiasmonetary policy review, sched-uled for February 3.

Major companies set toannounce their Decemberquarter earnings next weekinclude, ACC, JSPL, Lupin,Bharti Airtel, Hero MotoCorp,Tata Power. On the global front,data on Purchasing ManagersIndices, as well as an announce-ment by the Bank of Englandand US non-farm payrolls, willbe keenly watched.

Markets end lower on CoalIndia offer, bank woes

WEEKLY CHARTS

Source: Bloomberg Compiled by BS Research Bureau

S&P BSE SENSEX NIFTY

DILIP KUMAR JHAMumbai, 31 January

Indias groundnut export has aworry on quality.

Last year, 35 containerswith around 700 tonnes ofgroundnut were held at a portin Vietnam after Olivier bugswere found in big numbers.These normally take birth incommodities like groundnutwith a high moisture on pre-mature harvesting andimproper handling. The quar-antine agency used chemicalsto kill the insects and request-ed a halt to customs clearance.

The port authorities inVietnam were not clearing thiscargo. The affected exportersapproached us. We took up theissue with the Vietnam author-ities and resolved it, saidKishore Tanna, chairman,Indian Oilseeds and ProduceExport Promotion Council.

The consignments werecleared after fumigating allcontainers but threat of sus-pension of groundnut importfrom India continues, saidSuresh Ramrakhiani, chiefexecutive officer of the Council.Under Vietnamese law,imports shall be suspended if

three consignmentsare detected with seri-ous violation of foodsafety regulationwithin six months.Any such suspensionwould spoil India'scredibility on agriexport, affecting othercommodities andcountries, too.

Groundnut export hit arecord of 832,617 tonnes worth$1,094 million in 2011-12,described as an exceptionalyear. It was 509,665 tonnesworth $526 mn in 2013-14.

In the first half of this finan-cial year, it jumped 37 per centto 261,025 tonnes worth $271mn, as compared to 189,952tonnes worth $221 mn in thecorresponding period last year.

Vietnam has slipped tonumber four slot from its sec-

ond positionthree years ago.Exports toVietnam wereonly 40,466tonnes worth$38.6 mn in 2013-14 from 241,497tonnes worth$313.9 mn in2011-12. We

should explore the potential ofvalue added oilseed productssuch as blanched peanuts andpeanut butter, said Tanna.

Groundnut export might belower this year due to fallingoutput. The Union agricultureministrys first advance esti-mate put output at 5.02 mntonnes in the ongoing kharifharvesting season, as comparedto 5.6 mn tonnes in a similarestimate last year, and 7.8 mntonnes of actual output.

Quality concerns buggroundnut export

LIC: THE QUINTESSENTIAL WHITE KNIGHTState-owned Life Insurance Corporation of India (LIC) has always been the governments go-to investor whenit comes to divesting its holdings in public sector undertakings. Irrespective of the market conditions, LIChasalways been ready to sign big cheques to bail the governmentoutwhen demand from other investors hasbeen poor. On Friday, the insurance behemoth invested around ~10,000 crore in Coal Indias share sale, whichhelped the government raise over ~22,500 crore. LICs purchase accounted for around 44 per centof the shareson offer. This was because the offering sawdecentdemand from other investors, including retail (whoinvested around ~1,850 crore), mutual funds (~603 crore) and foreign investors (around ~6,000 crore). Asnapshotof some keydisinvestments where LIChas bailed the government:

In ~ cr Issue LIC % ofsize investment total

FY12 ONGC 12,750 12,179 95.5FY13 SAIL 1,517 1,069 70.5

NALCO 630 289 45.9RCF 315 142 45.1Hindustan Copper 808 352 43.6

FY14 BHEL 1,887 1,887 100.0Hindustan Copper 260 130 50.0Power Grid 1,637 450 27.0

FY15 Coal India 22,558 10,000* 44.3SAIL 1,720 1,000 58.1

Source: DoD; Stock exchanges; * according to reports By Samie Modak

TINESH BHASIN

For many newly-wedded cou-ples or those planning to tiethe knot, discussing money isnot among the top priorities. NehaSharma regrets this. She marriedher colleague while working at aprominent Knowledge ProcessingOutsourcing (KPO) firm in Mumbai.But the marriage took an ugly turn,when she realised that her husbandhad four personal loans and ~4 lakhoutstanding on his credit cards. Sheagreed to pay off some of his debtsfrom her savings. But the differ-ences grew with time as he couldntcontrol his expenses. And then, themarriage ended in a divorce.

Knowing about each othersfinances is an important step beforemarriage. But most choose to avoidthe subject. Even after marriage,many dont discuss it because thereis a feeling that such discussionscan lead to spats and reveal finan-cial vulnerabilities. Worse still, cou-ples even find themselves in a situ-ation where they are unsure aboutwho will bear the monthly, weeklyor holiday expenses or who will savefor the family needs. But for twopeople who plan to spend their lifetogether, it pays to open a dialogue.Some steps that can help:

Are one or both spendthrifts?Start with understanding your part-ners attitude towards money. Twopeople coming from different fami-lies can perceive money in differentways. Understand whether yourspouse is a spendthrift or a saver. Ishe or she penny wise and poundfoolish? While none of these are bad,understanding the attitude towardsmoney will help you to plan yourgoals, savings and budget.

Deepali Gajra, an analyst with aprivate firm says that she spendsimpulsively while her husband, achartered accountant, is a saver. Tocurtail her expenses, the coupledecided that she should contributehigher towards their savings.Things wont change in a month ortwo but over time, we have seen the

spender slowly cutting down expens-es, said Steven Fernandes, a certi-fied financial planner.

How much do you have? Telleach other where you stand finan-cially. How much have you savedand where? Do you have outstandingdebts, how much they are and howyou plan to repay them. What kind ofexpenditures you have and how youspend your monthly income? If youare into business, how does yourincome vary?

These questions definitelyhelped us to plan things better.Accordingly we planned the venue,gifts and other expenses, saysPriyanka Saini, who will be gettingmarried in February.

Is the balance sheet balanced?Tax experts say that both shouldmanage their finances separately forinitial months as it will help while fil-ing tax returns. Joint accounts andinvestments require a lot of paper-work. The wife needs to change hername in various documents such asPAN card, KYC, and bank account.Similarly, trying to figure out whohas contributed or withdrawn howmuch from the joint bank account

can become a complicated affair.If the wife earns more than the

husband, it is better the financesand investments are mutually keptseparate all the time. If the coupledecides to part ways, joint invest-ments can become a bone of con-tention. For example, there havebeen cases where thewife paid a higherequated monthlyinstallment on a loanwhen the couplebought the housetogether. But on paperthe husband had ahigher share of owner-ship. After a bitter fight, the hus-band staked a claim to the houseand won. Similarly, when wife ismaking her mutual fund invest-ment, she should become the firstholder. The second owner has norights on the investment unless thefirst passes away.

Once the wife changes her nameon all documents, the coupleshould make the spouse benefici-ary and nominee. Dont defer it.This will ensure that the partner isadequately protected in case theresdisability, death or illness.

Do you have targets? Once the

couple starts to settle down, theyshould start working on goals.Creating an emergency fund shouldbe the first step. If both have stablejobs, three months' expenses shouldbe kept in bank or fixed deposits. Ifthe husband is self-employed andincome is not steady, six months'

expenses needs to besaved.

Decide on your shortterm goals things youwould like to do in thenext five years andhow you will save for it.Then, draw a plan forlong-term goals such as

childrens education and mar-riage, and retirement planning.The couple can use gifts receivedin marriage to make their firstinvestment, said Fernandes. Andthats what Deepali and her hus-band did. They did a fixed depositof the money they received inmarriage, which they will use tobuy a house.

You cant afford this: A couplecannot be discussing every pennythey spend. However, between thetwo they need to have a minimumspending threshold limit. This

means, if either of the partners ismaking a purchase above a particu-lar amount, they need to discusswith the other the necessity of it.Say you decide this figure to be~5,000 and one of the partnerswants to buy a mobile phone. Thetwo can talk and decide a budgeton the expenditure.

Should charity begin at home?Couples should set a policy on lend-ing and helping friends and family.There could be someone seekinghelp for illness and there could besomeone who is always in financialtrouble. Financial planners say thatthis is a bone of contention amongmany clients. One solution they rec-ommend is that depending on theincome surplus, the couple shoulddecide the amount they will partwith and how they would deal withsuch a situation.

Is it hers or her parents? Therecould be assets in the name of thegirl that belongs to the father and hemight want to keep it. For example, aproperty or high value fixed deposits.These need to be transferred back tothe parent. There could be insurancepolicies for which the girl's parentshad paid. If she decides to quit her jobor take a break, the couple needs towork out who pays for such invest-ments. In the marriage preparation, these might take a back seat but its always better that asset transfers are done before, said Brijesh Dalmia, a certified finan-cial planner.

Do you need to stop dinneroutings? Draw a list of monthlyexpenses such as payment towardsloans, groceries, utility bills, shop-ping entertainment and so on. Thiswill give a clear picture on themoney thats left in your hands atthe end of month. Financial plan-ners recommend that a coupleshould save minimum 20 per centof their total income. If your budg-et is over 80 per cent, then youneed to pare down expenses.

If the unforeseen happens:Both partners might have health cov-er from the employers. But it alwaysmakes sense to have a family planthat covers hospitalisation in casetheres job loss and the cover fromemployer is discontinued. Financialplanners suggest that couples shouldlook at accidental death and disabil-ity cover.

YOUR MONEY>

11.. EEaarrlliieerr tthhiiss wweeeekk,, AAppppllee aannnnoouunncceedd aa rreeccoorrdd--bbrreeaakkiinnggqquuaarrtteerrllyy pprrooffiitt ooff 1188 bbiilllliioonn UUSSDD.. WWhhoossee rreeccoorrdd ddiidd iittbbrreeaakk ?? AA.. Exxon BB.. Chevron CC.. Google DD.. Microsoft

2. Mr. X, an Indian resident in the 30% income tax bracket,was allotted 1000 fully convertible debentures ofCompany ABC on January 1, 2014. These were convertedinto 1,000 equity shares at ~100 per share on January 1,2015 which he sold on the National Stock Exchange (NSE)on January 12, 2015. The capital gains payable by him willbe closest to AA.. ~9,000 BB.. ~~3,000 CC.. ~4,500 DD.. NIL

33.. ______________________ iiss nnoott ttrruuee wwiitthh rreeggaarrdd ttoo aa HHiinndduuUUnnddiivviiddeedd FFaammiillyy ((HHUUFF)).. AA.. It is eligible for income tax and wealth tax benefits BB.. A partial partition of a HUF is not recognized as per theIncome Tax Act. CC.. Women are permitted to be a part of the HUF DD.. The Bank Account of the HUF can be opened in thename of the Karta

44.. TThhee TTaayylloorr RRuullee lliinnkkss ________________________ wwiitthh ____________________..AA.. Inflation, Interest Rates BB.. Interest rates, Money SupplyCC.. Money Supply, GDP DD.. GDP, Population Growth

55..______________________________________ iiss nnoott rreeggaarrddeedd aass aann eexxaammppllee ooff""FFiinnaanncciiaall BBoooottssttrraappppiinngg"".. AA.. Delaying PaymentsBB.. Borrowing on one's credit card CC.. Minimising inventoryDD.. Borrowing from a bank

Financial literacy

The quiz master is Head - Marketing, PPFAS Mutual FundSend your queries and feedback at yourmoney@bsmail.in

Solutions

11..AA..Exxon held the previous record of 15.20 billion USD, earnedin 2012.

22.. DD..In such cases, the holding period will begin from the date ofallotment of the debentures and not the date of conversion. Asthe converted shares are sold through the stock exchange, thelong-term capital gains tax liability thereon will be NIL.

33..BB..Partition of a HUF under Hindu Law, can be total or partial. Intotal partition all the members cease to be members of the HUFand all the properties cease to be properties belonging to thesaid HUF. However, the Income Tax Act does not recognize apartial partition.

44.. AA.. In economics, a Taylor rule is a monetary-policy rule thatstipulates how much the central bank would or should changethe nominal interest rate in response to divergences of actualinflation rates from target inflation rates and of actual GDPfrom potential GDP. It was first proposed by the U.S. economistJohn B. Taylor in 1993.

55.. DD..Financial bootstrapping is a term used to cover differentmethods of arranging for funds without depending on externalfinanciers (either investors or lenders). Consequently, a bankloan does not fit the description.

BS TUTORIALJayant Pai

If the wife earnsmore than thehusband, it is better the financesand investments are mutually keptseparate

Before you say I doOpen a dialogue as your finances need to marry, too

FINANCIAL PLANNING

PHOTOS: THINKSTOCK

DILIP KUMAR JHAMumbai, 31 January

After a steep 2.4 per centdecline in global markets onThursday, owing to a huge sell-off, gold entered bullish terri-tory on Friday. This followed astatement by the US FederalReserves Federal Open MarketCommittee (FOMC) that itwould remain patient in thebeginning to normalise thestance on monetary policy.

FOMCs stance indicates aninterest rate increase will takelonger than estimated.

Standard gold jumpedabout one per cent in ZaveriBazaar here on Saturday. Thecommodity gained ~300/10g toclose at ~28,200/10g.

Both technically and fun-damentally, we dont see muchdownside in gold. It could bevolatile, but the downside islimited. Therefore, gold couldeasily surpass the psychologi-

cal barrier of $1,300 an oz to hit$1,325 an oz in the near term.The developments in Greece,however, hold the key. Any badnews might take gold evenhigher, said GnanasekarThiagarajan, director,Commtrendz Research.

After hitting a low of$1,251/oz, below the 200-daymoving average of $1,253, goldrebounded on Friday to close at$1,284.1 an oz in London.

After a rally on Friday, goldsettled with more than threeper cent gains, its first month-ly gain this year. Earlier thisweek, prices reacted to theFOMCs first policy meeting ofthe year and saw heavy selling.Also, physical gold in the Asianmarket remained muted. Butslowly and steadily, the trend isturning up, as the currencymarket is turbulent. Energygroups in the US announcedthey would cut investment pro-grammes because of falling oil

prices, which could axe raterise speculations. Also, the cen-tral bank is adding reserves. Allthese could drag the prices to$1,370-$1,380 again. On thedomestic front, prices couldtrade at ~25,500-29,500/10g,said Ajay Kedia, managingdirector, Kedia CommodityCommtrade.

Silver prices ended theweek with a moderate gain of

$0.03/oz at $17.28 an oz onFriday.

Silver is a plain catch ofgold. Eventually, it should per-form much better than gold, asit is the second fiddle. Lots offundamentals are supportinga big rally in silver, but it willtake some time, saidThiagarajan.

With high volatility in bul-lion prices, traders have adopt-

ed a revamped strategy. Onevery fall, they buy some quan-tity to sell on a rise, unlike aone-way buying or sellingmove and wait-and-watchafter the first execution, whichthey used to practice earlier.So, even volatility offers somereturns for investors today,said Kumar Jain, director,Umedmal Tilokchand Zaveri,a city-based bullion dealer.

Gold enters bullish territory28,625

28,125

27,625

27,125

26,625Dec 31,14 Jan 31,15

26,980

28,20041,100

39,850

38,600

37,350

36,100Dec 31,14 Jan 31,15

37,200

39,100

STANDARD GOLD ~10g

Source: IBJA Compiled by BS Research Bureau

SILVER ~/kg

Financial Quantityyear (tonnes)

2011-12 832,6172012-13 535,6372013-14 509,6652014-15* 261,025* April-September Source: Apeda

GROUNDNUT EXPORT

747.36

270.94

1,094.22

Value($ mn)

525.67

Groundnut exporthit a record of832,617 tonnesworth $1,094million in 2011-12,described as anexceptional year. Itwas 509,665tonnes worth $526mn in 2013-14

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