This Week

The Economic Times Wealth, August 22-28, 2011

09

Market Outlook: A MAJORITY EXPECTS THE MARKETS TO FALL

Which way will the markets move? Which segment will lead the fall? Hits & duds
Top 3 sectors (in %) Manufacturing . . . . . . . .45 Pharmaceuticals . . . . .40 FMCG . . . . . . . . . . . . . . . .33 Worst 3 sectors Banking & Finance . . . .48 IT and Telecom . . . . . . .40 Realty . . . . . . . . . . . . . . . .33

Reader poll
DO YOU CONSIDER PRECIOUS METALS AS SAFE HAVENS IN TIMES OF MARKET VOLATILITY?
*Readers think that at a time when the equity markets have fallen for the fourth successive week, precious metals will prove to be a much better bet.

66%
YES

Up by more than 2%:

Up by 2%:

At the same level:

Down by 2%:

Down by more than 2%:

0%

15%

20% 50% 15%

38% 48%
Largecap Midcap

14%
Smallcap

An ET Wealth-Synovate poll of market experts on what to look forward to in the week ahead.

30%
NO

4%

CANT SAY

This poll of 40-50 experts of the countrys top broking firms is conducted by market research firm Synovate after market hours every Friday.

Figures may not add up to 100 because of multiple responses.

short take

Product launches
CERTIFICATION STANDARD
Financial Planning Corporation, established by the Financial Planning Standards Board of India has launched the Professional Certification Standards for Financial Planning and Advisory Services Organisations to create quality standards and benchmarks across the financial advisory services. These would help consumers in choosing the right financial intermediary to achieve their long-term goals based on professional and scientific analysis. The certification standards will establish competency levels from level 1-5 for an organisation based on the established parameters, which are scientifically measured and tested. The certification standards would be available from September. money market securities. Both the schemes offer growth and dividend payout options. The minimum application amount is `5,000 and in multiples of `1 thereafter. There are no entry or exit loads for the schemes.

Marketpulse
I

Despite rate hikes, more people are taking loans

PRANAV NAMBIAR espite a series of lending rate hikes since March last year, the growth in personal loans remains robust. According to the data released by the Reserve Bank of India (RBI), in June 2011, the outstanding personal loans stood at `6,95,257 crore, a growth of 17.3% over June 2010. In contrast, the year-on-year (y-o-y) growth recorded in June 2010 over June 2009 was just 6.6%. A similar pattern in growth rates can be seen in the first five months of The borrowing continues the year. The growth Demand for loans has been higher this rate of personal loans is year compared to that in previous years. only marginally lower % Variation (y-o-y) than the 20% y-o-y Jun 2010- Jun 2011growth in gross bank Jun 2009 Jun 2010 credit. Under the RBI Personal loan 6.6 17.3 categorisation, personal Consumer durable loan 7.2 22.0 loans include loans for consumer durables, Housing loan 9.7 17.0 housing, education, Credit card outstanding -27.0 -5.8 vehicles and loans Education loan 28.3 17.7 against shares and fixed Vehicle loan 11.0 22.9 deposits. A sizeable segment of personal loans also includes unsecured personal loans and credit card outstandings. What is the rationale behind this increase in personal loans? Arent the borrowers feeling the pinch of high rates? S Raman, CMD of Canara Bank, says that interest rates is only one of the factors that impacts the decision to take a personal loan. Other factors, such as festive offers and discounts, attractiveness of property prices, etc, also play a role. Housing loans, which form the largest portion of personal loans, grew by 17% in June. Other large segments, such as vehicle loans and education loans, also saw strong double-digit growth at 18% and 23%, respectively . Interest rates are given disproportionate attention. People do not always postpone consumer goods purchases or home purchases just because of a 50-100 basis points increase in rates, says Raman. Other analysts say that the impact of interest rate increase varies according to the nature of the loan. For instance, the impact of rising interest rates on impulse purchases will be low. During a press briefing on 26 July, RBI governor D Subbarao had said that private consumption is still strong. The recent consumer expenditure survey shows that wages had gone up by 20% last year as against consumer price inflation, which is less than 10%, he said. Analysts say that after the 2008 recession, banks reduced their exposure to unsecured personal loans and credit cards owing to the rising non-performing assets (NPAs). Uday Sareen, country head, ING Vysya Bank, says that using the past learnings, enhanced analytics and better data inputs from credit bureaus, banks are now re-entering this segment.

MOBILE TRADING PLATFORM

Commodity broking firm Geojit Comtrade has launched Flip Me, its mobile trading platform, which enables clients to trade more competently in the market. The application has all the features of a normal trading platform, such as market data dissemination, transactions (placement of orders) in NCDEX and NMCE for all listed derivative contracts, market depth, position with ledger balance, order book, trade book, chart, research calls, commodities index, payout request and snap quote.

The heightened fear about the US and Europe slipping into a recession (popularly known as double dip) sent the global stock markets into a tailspin last week. The Indian markets followed global concerns, falling for the fourth successive week. A similar trend is expected this week as well. However, the Indian markets may show some recovery midweek, triggered mostly by short covering as the futures and options cycle ends on 25 August. Market participants across the globe will be closely watching the revised US GDP data for the April-June period to be released this week. This is because the GDP data released by both Germany and France recently were below the market expectations. While the German GDP moved up by just 0.1% against the consensus estimate of 0.5% in the second quarter, the French GDP remained flat against the consensus estimate of 0.2% during the same period. According to economists, the GDP growth for the US in the second quarter is expected to come down from 1.3% to 1.1%. Both Morgan Stanley and Goldman Sachs have lowered their global growth forecast for this year and the next, so weak US numbers will only add to the despair surrounding the world markets.

GOLD ETF
SBI Mutual Fund has launched the SBI Gold Exchange Traded Fund, with which customers can invest in gold without buying or storing physical gold. The new fund offer will open on 22 August and close on 5 September. The fund house will offer a systematic investment plan, wherein the customer can invest as little as `100 per month.

FIXED INTEREST HOME LOAN

ICICI Bank has launched a fixed interest rate home loan scheme, wherein customers can avail of home loans at a fixed interest rate for one or two year years, after which the loan will move to a floating interest rate. Under the one-year fixed rate home loan, the customer can avail of a loan at 10.5% for an amount less than or equal to `25 lakh, 11% for a loan amount between `25-75 lakh and 11.5% for a loan amount greater than `75 lakh. The floating rate from the second year will be linked to the base rate, plus margin, decided at the time of sanctioning the loan.

FIXED MATURITY PLAN

DSP BlackRock Mutual Fund has launched two closedended income schemes. The NFO is priced at `10 per unit. The schemes aim to generate returns and achieve capital appreciation by investing in a portfolio of debt and

weekly calendar
Tuesday
AUG

Wednesday
AUG

Wednesday
AUG

Thursday
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Thursday
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Friday
AUG

23

24

24

25

25

26

Supreme Holding India to sell `70 to release billion 91-day quarterly results. and `30 billion 364-day treasury bills.

Mphasis Limited to release quarterly results.

Pantaloon Retail to release quarterly results.

Food inflation data for the week ended 13 August to be released.

Gillette India to announce quarterly results.