Volatility and SIPs

26 09 2017

Financial advisors advice retail investors to enter stock markets through Systematic Investment Plans , SIPs in short. There are two major advantages of SIPs over lumpsum investment, namely, disciplined regular saving ( Franklin advertises it as a good EMI¬†ūüôā) and Rupee Cost Averaging.

Rupee Cost Averaging, means you take advantage of the ups and downs of the stock market by buying more units when the markets are low and fewer number of units when the markets are high, thus keeping the average costs,a tad lower, than if you bought the same number of units every month.

SIPs work better than lumpsum when volatility is high. In a rising market, lumpsum investment of the same amount will give higher returns.

In 2017, volatilty has been relatively very low. The number of days when the markets have moved 1 % down is a lot lesser than previous years.

volatility

Would SIPs of all the Indian retail investors, be the reason why the volatility is low ? As per the AMFI web-site, SIPs are growing rapidly, in August 2017 the SIPs accounted for Rs 5206 crore as opposed to Rs 3497 crore in August last year. So there is  steady continuous buying by Indian institutional investors.

Individually, each investor wanted to benefit from the volatility through SIPs, but collectively, SIPs of all the investors have brought the volatility down. The very reason for entering into an SIP now is questionable !

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RIP Anand Halve

23 11 2016

I follow Kiran Khalap, co-founder of Chlorophyll – India’s first end-to-end brand consultancy firm on Twitter. His twit today on Anand (Andy) Halve’s¬†untimely death made me very sad. To Andy, another co-founder of Chlorophyll goes the credit of shaping the hitherto fledgling discipline of ¬†brand planning in India . And the careers of hundreds of young advertising professionals.

Albeit for a few months, I had ¬†the good fortune of working with Andy in Enterprise in the mid-90’s. His brilliance in fusing rigorous analysis with wild imagination set him apart from his peers.

Andy’s dazzling wit could ¬†lit up even the dreariest of moments. I had never seen Andy losing his cool. Or, short of words. Andy’s joie de vivre was truly infectious.; his ¬†parents were prescient in choosing his name.

In the days and months to come, Andy’s countless friends will be reminiscing about the episodes in their lives made unforgettable by the grace, warmth and joyousness of a gentle soul.

Rest in peace, Andy!

 

 

 

 





Urjit Patel’s Signature in Rs 2000 Note

15 11 2016

After the demonetisation was announced, the newly issued Rs 2000 has come into circulation. The Rs 2000 notes currently being issued have the newly appointed RBI Governor Urjit Patel’s signature.¬†urjit-patel-signature

PM Modi and FM Jaitley have claimed that the preparation and printing of currency notes were being secretly done for the last six months. This would mean the Rs 2000 currency notes should have been under printing for the last six months.

But, Urjit Patel was chosen as the RBI Governor only on August 21, 2016 and he took charge from Raghuram Rajan only on September 4, 2016, just two months before the November 8th announcement.

Something is amiss. Either, the government is lying when it says it has been printing currencies to prepare for demonetisation from the last six months or they had decided  Urjit Patel as the next RBI Governor, atleast four months before the official announcement.

It can be speculated that when Raghuram Rajan made an announcement on June 18, 2016 that he would not take the second term as Governor, already Urjit Patel’s signatures as the next Governor were being taken in the new Rs 2000 note. This could have well led to Rajan’s decision to return to academia.





The US-India real estate link

9 11 2016

A real estate tycoon in White House
Indian real estate tycoons in dog house





Fiat’s Flat Tire in India

23 10 2010

 At a time when the car market is booming in India, one company that is still in rut is Fiat. Fiat announced the day before yesterday that it would create its own retail network to push Fiat cars. Currently, Fiat cars are sold through Tata Motors’ dealer network.

Fiat is a well-known brand in India, having been one of the 2 big car brands in India right through the ’60s and ’70s. Fiat cars were manufactured by Premier Automobiles, a Doshi group company. Even after PAL decided to rename Fiat 1100 as Premier Padmini, the man on the street always called the car Fiat.  

Despite a head start, the history of Fiat in India is one of misses after misses. Post liberalization, Fiat set up a JV with PAL their earlier partner and launched UNO. It was an unqualified failure. The JV itself had its set of problems.

Then Fiat came on its own and launched Fiat Palio, Siena and Petra. After tasting some initial success with Palio, the sales started declining. Poor after-sales service, low mileage and limited dealer network were some of the reasons cited for this failure. Siena and Petra were bad products.

In 2007, Fiat realizing the need for a dealer network signed joint venture deal with Tata Motors. Fiat Automobiles India Ltd is a 50:50 JV between Fiat and Tata Motors. After this deal, Fiat launched some good models and backed it up with a visible marketing campaign. Fiat Grand Punto and Fiat Linea were definitely vast improvement over its earlier products and definitely in consideration for any car purchaser looking for a premium hatchback (Punto) or a sedan (Linea).

The journey of Fiat in India is not unlike Yuvraj Singh, its brand ambassador for Linea. Both have been underachievers. The talent is unquestionable, but somehow performance leaves much to be desired. Sometimes it is an injury, some other time it is a relationship issue and indifferent form at times.

Yet, in the April- Sept 2010 period, Fiat has reported a decline in sales when the rest of car market is booming. This must have forced the Italian bosses to look at a new strategy.

From the experience of Fiat and also Mitsubishi, it is pretty evident that having partners like PAL or Hindustan Motors, who had lengthy experience in  the Indian market, is more of a liability than a strength. Car companies who have come on their own like Hyundai, Honda (JV with SIEL, a passive partner) and Skoda/Volkswagen have done much better.

– G. Mohan





Magazines or Books: Changing Value Propositions

17 07 2009

Recently, while traveling by train from Hyderabad to Kolkata, I was faced with a dilemma, I have not faced before. Whether to buy or a magazine or a book? In the past, they both had their distinct price points, hence did not compete at all. A typical magazine at Rs 15-25 and a book for over Rs 250, had their distinct positioning. Magazines was meant to be read during the journey to catch up on the latest and discarded. Book was supposed to be read at leisure, brought back and stacked at the book-shelf, adding to one’s collection.

 Regular readers of magazines would have noted the sudden across-the-board increase in prices of magazines. BusinessWorld which had long been priced at Rs 10 per week, has been increased to Rs 15. Outlook Business,a fortnightly, is now priced at Rs 25 against Rs 20 until recently. Forbes India has been launched at a premium price of Rs 50/-. Mind you, they mention this is just the invitation price. The general news magazines like Outlook and India Today have also revised their prices.

Wondering if this is in response to rising costs or declining revenues from advertising. Just as the prices of magazines are going up, the prices of Indian paperbacks have been brought down.

I found several bestselling paperbacks like Chetan Bhagat’s “3 Mistakes of my life”, BPO-Sutra, compiled by Sudhindra Mokhasi priced at Rs 95/-. Even non-fiction/ management books like Kishore Biyani’s “It happened in India” and Rashmi Bansal’s “Stay Hungry, Stay Foolish” are priced at a relatively inexpensive Rs 99/- and Rs 125/- respectively. What should I buy, a magazine at Rs 50/- or a book at Rs 95/- ?

Suddenly, the book looked a great bargain. You guessed it right. I ended up buying a Rs 95/- paperback. By playing the price game, it appears that the publishers have been able to expand volumes considerably. Rashmi Bansal wrote in her blog recently, that her book has already crossed the 100,000 mark.

The next time you visit the airport or railway book stall to buy a magazine, do check out the books on offer.

 РG. Mohan





Fighting Economic Downturn: A Saga of Gastronomic Compromises

12 03 2009

 

 

A few days back, Warren Buffett in an interview to CNBC not only mentioned that the US economy had fallen off a cliff but people were changing their habits like he had never seen.

 

Looks like the economic slowdown has not spared the  passionate foodies of  Hyderabad (and Secunderabad) either. I heard a colleague who met with the manager of a restaurant called Arya Tiffins Centre in Secunderabad. It is a typical Udupi kind of joint which serves South Indian breakfast and snack items like Dosa, Idli, Uttappam, Vada etc along with   beverages. It is frequented by office-goers and middle class families. It has a thriving business, with people having to wait to get a seat during rush hours. Its average daily sale was about Rs 1,45,000, until six months ago.

 

Even today, the rush at Arya Tiffins is more or less the same. Yet, the daily average sale has dropped sharply to Rs 1,05,000 Рa drop of over 30%.  The manager blames it on the trading down of eaters due to the slowdown. While the sales of inexpensive   but bland idlis have gone up significantly, down are the sales of fancied items like paneer dosas , mushroom uthappams ,  flavored milkshakes etc.

 

No wonder, the  McDonald scrip is soaring at the US bourses.  

 

– G. Mohan








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