The Reserve Bank of India (RBI) has opted to maintain the Repo Rate at 6.5%, a decision that is viewed positively by experts as beneficial for home loan borrowers and the real estate sector during the festive season. Additionally, this unchanged repo rate offers an extended window of opportunity for fixed deposit (FD) investors to capitalize on the current higher interest rates.
Locking in Higher Interest Rates
Many banks are presently offering FDs with annual interest rates of up to 9% or more for various tenors. Anshul Gupta, Co-Founder and Chief Investment Officer at Wint Wealth, suggests that retail investors should consider securing long-term FDs at these elevated interest rates in the coming 3-6 months. Gupta notes that this period is likely near the peak of the interest rate hike cycle.
Diversifying Investments
To optimize returns and manage risk, investors are advised to diversify their FD investments across different banks. This approach can align with specific financial goals and investment timeframes. Gupta recommends spreading investments across various commercial and small finance banks, as well as non-banking financial companies (NBFCs).
Floating Interest Rates for Home Loans
While FD investors are encouraged to lock in higher rates, home loan borrowers are advised to stick with their floating interest rate loans for now. Despite the availability of fixed-rate loans at discounts, experts suggest maintaining floating rates, as bond markets have already factored in rate cuts, leading to a decrease in 10-year G-Sec yields. The future may hold potential for rate cuts, making floating rates a more flexible option for borrowers.
This decision by the RBI provides an opportunity for both investors and borrowers to make informed financial choices based on the prevailing interest rate environment.
Gold prices have experienced an over 11% decline since their May peak above $2,000 per ounce due to the Federal Reserve’s hawkish stance, which has driven long-term bond yields to a 16-year high. After breaking below the psychological support of $1,900 last week, gold found support around $1,820 and currently resides in oversold territory. Silver also follows a similar pattern.
Non-Farm Payroll Data Impact
The upcoming Non-Farm Payroll (NFP) data is expected to play a crucial role in shaping the precious metals market. A stronger-than-expected NFP report could lead to further correction in gold and silver prices. The consensus estimate for NFP is a gain of 170,000 jobs compared to September’s 187,000 rise. The recent disappointing ADP jobs report has raised concerns of another downside surprise in the NFP data.
Fed’s Influence
Gold’s recent weakness can be attributed to the strengthening US dollar and rising Treasury yields. Despite a recent retracement in the US dollar and yields, gold has struggled to rebound. The Federal Reserve’s hawkish stance continues to limit gold’s upside potential.
Outlook for Gold
While a strong rally in gold is not anticipated in the short term due to potential Fed actions, there is optimism for 2024. Some Fed members favor another rate hike, but the outlook suggests that the Fed may consider rate cuts before August 2024. This prospect could have a positive impact on gold and silver prices.
Technical Analysis and Opportunity
Technically, MCX Gold is in an oversold condition with the Relative Strength Index (RSI_14) at 25, historically indicating potential reversals. The outcome of today’s employment data will be crucial. If it favors gold, it may present a favorable long opportunity. For those with short positions, booking profits is suggested. Going long around 56,000-55,500 with a target of 57,500 and a stop loss at 55,200 could be considered as a potential trade strategy. However, market participants should remain cautious and monitor the Fed’s actions closely for further cues.
A study commissioned by the Financial Planning Standards Board (FPSB) highlights the positive impact of working with certified financial planners (CFPs) on individuals’ financial well-being and overall quality of life. The study compares the experiences of those who navigate their financial journey independently, those who work with a financial planner, and those who seek advice from a CFP.
Improved Financial Well-being and Quality of Life
The study reveals that individuals who work with professional financial planners, especially CFPs, report feeling better off financially and experiencing an improved quality of life. They have greater financial confidence, resilience, and satisfaction with their financial situation.
Key Findings
80% of Indian consumers feel that professional financial planning services have enhanced their quality of life.
75% of consumers feel more financially confident with the guidance of a financial planner.
91% of retirees advised by a CFP professional believe they have enough money for a happy retirement.
76% of clients of financial planners are highly satisfied with their overall wealth.
94% of clients of CFP professionals feel financially secure, and 95% feel better off.
97% of clients of CFP professionals believe that the value of financial planning outweighs the cost.
Beyond Wealth
The study highlights that financial planning benefits extend beyond wealth. Clients of CFP professionals report improved family life, social life, mental health, and work satisfaction. Financial advice positively impacts mental health and overall well-being, with 60% of those working with a CFP professional reporting a positive impact on their mental health.
High Trust and Quality of Life
Clients of CFP professionals exhibit a high level of trust in their financial planners. They score the highest in terms of quality of life, with a score of 82 out of 100, compared to other financial planning professionals and the unadvised. Trust in CFP professionals is also exceptionally high, with 100% of clients trusting their financial planners to act in their best interests.
Conclusion
The study underscores the importance of professional financial planning, especially with CFP professionals, in helping individuals achieve their financial goals, enjoy a better quality of life, and cope with financial uncertainties. It reinforces CFP certification as a symbol of excellence in financial planning.
In a significant decision, the Calcutta High Court has issued a stay order against the Union Home Ministry’s decision to deactivate the Aadhaar cards of a woman and her family members who were accused of being Bangladeshi nationals. The court emphasized that the authorities did not adhere to the required procedures mandated under the Citizenship Act, 1955, and the regulations governing Aadhaar cards when revoking an individual’s Indian citizenship.
Procedural Lapses
Justice Sabyasachi Bhattacharyya, a single-judge, pointed out that before any formal inquiry or adjudication takes place, the respondent authorities cannot strip the petitioner woman and her family of their basic rights as Indian citizens. The court noted that, despite allegations made by the woman’s husband in criminal proceedings, the woman had provided numerous documents during her Aadhaar enrollment, indicating her Indian citizenship.
Burden of Proof
The court underlined that it was the petitioner’s husband’s responsibility to prove, beyond a reasonable doubt, that she and her family were Bangladeshi citizens at the time when the documents, including Aadhaar cards, were issued.
Stay Order
The court ruled that the deactivation of Aadhaar cards and all consequential actions taken by the authorities would remain stayed during the pendency of the writ petition. However, it clarified that authorities were not prevented from proceeding based on the communication challenged in the writ petition, provided they followed due legal procedures.
Next Hearing
The matter is scheduled for further hearing on December 5.
Legal Representatives
Advocates representing the petitioners included Kallol Basu, Shibaji Kumar Das, Ahshan Ahmed, Samik Sarkar, Rupsa Sreemani, Atreya Chakrabarti, and Swapnamoy Sarkar. Additional Solicitor General Ashok Kumar Chakrabarti, along with Advocate Susmita Saha Dutta, represented the Union Government, while Advocate Anuran Samanta represented the Election Commission of India.
WhiteOak Capital Mutual Fund has introduced the ‘WhiteOak Capital Balanced Hybrid Fund,’ an open-ended balanced scheme designed to invest in both equity and debt instruments. The New Fund Offer (NFO) commenced on October 5, 2023, and will remain open for subscription until October 19, 2023.
Investment Objective
The fund aims to achieve long-term capital appreciation and generate income by maintaining a balanced portfolio of equity, equity-related instruments, debt, and money market securities. It is benchmarked against the CRISIL Hybrid 50+50 Moderate Index.
Balancing Equity and Debt
WhiteOak Capital Balanced Hybrid Fund offers investors a straightforward way to participate in both equity and debt asset classes. While equity provides long-term wealth creation opportunities, debt provides stability to the portfolio. This approach intends to provide reasonable returns while minimizing the intermittent volatility associated with pure equity investments.
Tax Benefits
Investments in this scheme are eligible for Long Term Capital Gain Tax with Indexation Benefit, provided the holding period exceeds three years.
Expert Insights
Aashish Somaiyaa, CEO of WhiteOak Capital Asset Management Limited, emphasized the importance of maintaining a balanced approach in investment. He noted that taxation considerations should not be the primary driver for taking on risk, and the fund’s rebalancing strategy aims to provide a better risk-adjusted balance compared to aggressive hybrid funds.
Asset Allocation
The fund’s asset allocation strategy involves investing 40-60% in equity and equity-related instruments, including foreign securities, and 40-60% in debt securities, including securitized debt, money market instruments, cash, and cash equivalents, and/or units of domestic liquid mutual fund schemes across various sectors. The portfolio will rebalance back to a strategic asset allocation of 50% whenever external asset allocation limits are breached due to market movements.
Disclaimer
Investors are advised that mutual fund investments carry market risks, and they should consult their financial advisor before making any investment decisions. The information provided is based on a press release from WhiteOak Capital Asset Management Ltd.
Shares of Larsen & Toubro (L&T) experienced a surge of over 2% after the company secured several ‘large’ projects across various business units. The engineering and construction conglomerate’s stock reached its 52-week high during intra-day trading.
L&T’s Buildings & Factories business won significant projects, including the construction of a residential township in Bengaluru and commercial towers in Hyderabad for a renowned developer. Additionally, the company secured a contract from the Indian Institute of Technology, Kanpur, for constructing a super specialty hospital and an academic block.
While the company did not disclose the exact values of these contracts, they fall under the “significant” category, which typically ranges between Rs 1,000 crore and Rs 2,500 crore according to L&T’s classification of contracts. L&T’s power business arm also secured an order worth up to Rs 2,500 crore from the West Bengal Power Development Corporation Limited.
The positive news boosted L&T’s stock price, making it the biggest gainer among the 30-share BSE Sensex firms. The stock’s performance reflects the company’s ongoing success in securing substantial contracts across various sectors of its business.
The Reserve Bank of India (RBI) is anticipated to keep key interest rates unchanged during its Monetary Policy Committee meeting. Although the RBI faces rising global and domestic risks, including surging crude oil prices and a depreciating Indian Rupee, its focus is likely to remain on inflation.
Experts suggest that the RBI will maintain a policy rate of 6.5% while aiming to keep liquidity tight. While inflation has been driven by food price volatility, there are initial signs of a slowdown in food inflation. Core inflation has remained stable, with some easing observed in August. Liquidity conditions have tightened, leading to elevated borrowing costs.
Stimulating Economic Growth During the Festive Season
Despite these challenges, the RBI is expected to prioritize economic growth, particularly during the festive season. The stable interest rate environment is likely to encourage borrowing, especially for home loans and car loans. The positive economic momentum and lending conditions may lead to increased loan applications in the near future.
While inflation remains a concern, experts do not anticipate further rate hikes by the RBI in this fiscal year. Rate cuts may be considered after the first quarter of the upcoming fiscal year. Overall, the RBI’s decision is expected to support borrowers and stimulate economic activity during the festive season.
Recent changes in visa rules for international students have significantly impacted the decision-making process of Indian students aspiring to study abroad. These changes, aimed at attracting more international students, have made it easier for them to obtain study permits and extend their stay post-graduation.
For example, the United States has introduced student-friendly visa policies, allowing international STEM graduates to apply for post-graduation work permits for 24 months. This has incentivized Indian students to pursue STEM courses and provided them with more time to secure employment and manage their education loan repayments.
Similarly, the UK’s Graduate Visa permits students to stay for 2-3 years after completing their higher studies, while Canada offers a post-graduation work permit for up to 3 years. These favorable policies, including part-time work options, have become crucial factors in students’ destination choices and financial planning.
Growing Demand for Education Loans
The rising cost of overseas education, combined with the desire for world-class education, has driven Indian students to explore opportunities abroad. Education loans have become a viable solution to bridge the financial gap. Institutions like Avanse Financial Services have witnessed a surge in education loan demand, particularly from tier 2 and 3 cities.
Additionally, there has been a significant increase in female students pursuing higher education, especially in STEM fields. The desire for global exposure and qualifications to enhance job prospects in a competitive market has further fueled the demand for education loans.
Overall, these developments highlight the growing importance of education loans in fulfilling Indian students’ aspirations to study abroad. While the United States remains a top choice, there is also a growing interest in countries like the UK, Canada, Germany, and several Nordic nations for higher education.
The Indian government is set to launch a new interest subsidy program worth Rs 60,000 crore, aimed at benefiting both the urban poor and middle-class citizens. Sources reveal that the Ministry of Housing and Urban Affairs’ proposal has received approval from the Expenditure Finance Committee (EFC). This initiative, spanning five years, will provide interest subventions ranging from 3% to 6% per annum on home loans up to Rs 50,00,000.
The EFC, responsible for schemes with a budgetary allocation exceeding Rs 500 crore, has given its nod to this endeavor. It is anticipated that the carpet area requirements for eligible houses under this scheme will be notably higher compared to the existing Credit Linked Subsidy Scheme (CLSS) for urban poor beneficiaries, which falls under the Pradhan Mantri Awas Yojana-Urban (PMAY-U).
Under the current CLSS scheme of PMAY-U, the government offers interest subsidies of 6.5% for home loans up to Rs 6,00,000 for economically weaker sections (with a carpet area of 30-60 sqm), and 4% and 3% for loan amounts between Rs 6,00,000-12,00,000 and Rs 12,00,000-18,00,000, respectively, for those belonging to the MIG-I (160 sqm) and MIG-II (200 sqm) categories, for the purposes of house acquisition or construction. Since its launch in June 2015, PMAY-U has sanctioned 11.89 million houses, with the government disbursing Rs 1.47 trillion for the scheme.
This new scheme is expected to replace the CLSS scheme under PMAY-U and could provide a significant boost to the labor-intensive construction sector. The actual subsidy expenditure for the current fiscal year will depend on the demand from homebuyers. Importantly, the additional expenditure for this scheme will not impact the FY24 budget significantly, as the government has some room to accommodate such expenses within its Rs 10 trillion capex program.
With the festive season approaching, the demand for gold is expected to surge, as it remains a popular investment choice among Indians due to its reputation as a hedge against inflation and a diversification option in investment portfolios. However, the traditional method of purchasing physical gold has its drawbacks, including concerns about purity, security, and high making charges. In contrast, digital gold offers a more convenient and secure way to invest in this precious metal.
Let’s explore the advantages of digital gold and key considerations for potential investors.
Investment Options: Digital gold has transformed the investment landscape, providing a hassle-free alternative to physical gold. It effectively addresses concerns related to authenticity, theft, and storage. Furthermore, digital gold offers investors the flexibility to customize their investments according to their goals and preferences. Here are some popular digital gold options:
Sovereign Gold Bonds (SGBs): SGBs, which offer market-linked returns, are an appealing option for those looking to invest in gold before the festive season. They also provide annual interest to investors, typically at a fixed rate of 2.50% per annum, paid semi-annually on the nominal value. Investors can even use these bonds as collateral for loans.
Gold ETFs (Exchange-Traded Funds): Gold ETFs are cost-effective vehicles for investing in gold. These funds allow investors to purchase gold in small fractions, enhancing accessibility. They are backed by physical gold with high purity levels and can be easily bought or sold in the stock market. Gold ETFs are stored in a DEMAT account, ensuring security. Additionally, transactions involving gold ETFs are exempt from wealth tax, security transaction tax, and other levies, making them a tax-efficient choice.
Gold Mutual Funds: While not directly invested in gold, gold mutual funds offer exposure to gold mining companies and gold ETFs. They do not require a DEMAT account or a trading account, making them accessible to investors who can start with amounts as low as Rs 1000. However, they may have an expense ratio and an exit load if redeemed before one year.
How to Invest in Digital Gold: Investing in digital gold, whether through Gold ETFs, Gold mutual funds, or SGBs, involves several steps:
Open a DEMAT Account: To invest in Gold ETFs and SGBs, you need to open a DEMAT account, enabling electronic storage and trading of these assets.
Choose the Platform: Gold ETFs and SGBs can be purchased through the stock market platform or during primary issuance. For gold mutual funds, visit the nearest branch of the mutual fund company or utilize their online facilities.
Adhil Shetty, CEO of Bankbazaar.com, emphasizes the benefits of digital gold, stating, “Without owning physical gold, you can enjoy the benefit of gold investment where the value of the papers is in sync with the physical gold. When you wish to sell them, an equal amount of money gets credited to your bank account. You’re also protected against purity and safety risks associated with physical gold.”
When selecting the right digital gold investment, consider factors such as liquidity, tax implications for short and long-term gains, minimum and maximum investment amounts, loan facilities against these investments, and ease of investment. Ensure that your gold investments align with your financial goals and avoid overextending.
In conclusion, digital gold offers a modern and convenient approach to investing in this timeless asset. By eliminating the drawbacks associated with physical gold, it provides a secure and flexible avenue for investors. Whether you opt for Gold ETFs, Gold mutual funds, or SGBs, digital gold empowers you to tap into the potential of gold while aligning your investments with your financial objectives.
