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Headline News in this issue:
- Kingfisher grounds 50 trainee co-pilots
- HNIs hike cash exposure
- India Inc doles out bonuses
- Dalal Street fears further downturn
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Quotable Quotes
I have never met a man who could forecast the market.
- Warren Buffet
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SENSEX: 9,975.4 DOWN 53.0 % from 52-wk high
FOREX-Rs: USD 48.68 / EUR 65.54 / GBP 84.32
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Kingfisher grounds 50 trainee co-pilots (ET,19Oct08,Mum,P1)
Offers stipend of Rs 20K against take-home salary of Rs 1 lakh
THE crisis in the Indian aviation sector is getting worse. Vijay Mallya owned Kingfisher Airlines has benched 50 trainee co-pilots, asking them to stay at home till further orders. The company has offered them a monthly stipend of Rs 20,000 against their take home salary of up to Rs 1 lakh.
HNIs hike cash exposure (ET,19Oct08,Mum,P1)
Choppy markets have led high net worth individuals (HNIs) in India to re-align their investment strategy. The HNIs are now allotting a greater proportion of their portfolio to cash in comparison to the last year. While high-risk investors are keeping 15-20% of their assets in cash, the percentage rises to about 30% in the case of risk averse investors.
India Inc doles out bonuses (ET,19Oct08,Mum,P1)
DIWALI is the time when most companies in India play Santa to their employees. And this year too, despite the Sensex crying hoarse about recession fears, most of them which have had a tradition of paying bonuses have lined up lip-smacking pay outs and gifts for their workforce.
Dalal Street fears further downturn (ET,19Oct08,Mum,P2)
During the week ended Friday, the market saw one of the worst drubbings in recent years, the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended with a loss of 5.25 percent over the week, completely negating the impressive gain of 7.42 per-cent and 1.54 percent, respectively, during the first two days of trading. Experts believe that the market will futher go down.
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END OF THE DAY STATUS OF THE STOCK MARKET:
Sensex came down by 5.7 % today.
SENSEX: 9,975.4 (-5.7%) NIFTY: 3,074.4 (-6.0%)
. DOWN..53.0 % from 21,206.77 the 52-week high of BSE-SENSEX
. UP..........0.6 % from 9,911.32 the 52-week low of BSE-SENSEX
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Investment & Wealth Creation Advice:
In line with the projection made by us in the last few weeks, Sensex has come down substantially. It is now at about 47% of its 52-week high level. It is expected to go down further by about 1000-2000 points in the next few weeks. However, nobody can ever predict how much it will go down further.
You should now consider making systematic investments over the next few weeks after taking investment expert's advice. If you are planning to invest amount X in the next couple of months in equity shares / mutual funds, then invest 10% of the amount now, as the market may go down further. After a week or so, you could invest another 10% and so on.
As you, as an NRI, may not find it easy to remain in close touch with the Indian market, we recommend that you invest in diversified mutual funds with a 24-36 month investment period.
If you make investments in the right shares and mutual funds when the market is at 11000 or lower levels, you can expect minimum 20% (post-tax) compounded annual returns in the next 3 years.
We recommend that you read the Golden Rules of Investing given below at least once every month to ensure that you do not forget these golden rules and make investments in wrong assets.
Click here to display NSE CNX NIFTY Chart
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Golden Rules of Investing
- Never put all your eggs in one basket. De-risk by making equal investments in realty, fixed-interest instruments, equity / mutual funds and gold when the time is right for making these specific investments.
- Out of the investments planned to be made in equity & mutual funds, make equal investments in 10-15 stocks with strong fundamentals, belonging to 4-6 sectors OR equal investments in 3-5 diversified mutual funds OR a mix of these two asset classes.
- Never invest based on your gut feel or a friend's advice.
- Never make speculative investments. Listen to two or three time-tested investment advisors.
- Never make these 3 common mistakes: 1. Buying shares of a reputed company at a wrong price, 2. Buying shares of a bad company at any price, 3. Buying & Selling shares without consulting time-tested investment advisors.
- Never depend entirely on your broker for making all your buying & selling decisions. Do consult at least two time-tested investment advisors.
- Never lose money. Define your stop-loss rules in consultation with time-tested investment advisors to protect your capital.
- Never borrow to invest in stocks.
- Never believe that you are destined to make it big. Such beliefs often lead to wrong decisions and major losses. Be rational. De-risk. Listen to time-tested investment advisors.
- Avoid investing in stocks / mutual funds or realty or gold when their prices appear to be at a high. Make Systematic Investments with a long-term view when they are at a low.
- Keep the stocks for a long-term or make Systematic Divestments when the markets appear to be at a high.
- Avoid investing in depreciating assets like expensive cars, mobile phones, electronics etc. You should rather put your extra money in appreciating assets like real-estate, equity, mutual funds, gold etc. when these assets are available at bargain prices.
- Caution: Speculative & Short-term investments and investments made without consulting time-tested investment advisors could be detrimental to your financial health.
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