Category: Personal Finance

Investors need to be cautious

To begin with, as markets are just 1% away from historic highs, investors should exercise some restraint and not invest lumpsum amounts.

“It’s important to remember overall, equity markets have shown strong resilience even though it faces headwinds from the advent of a possible third COVID wave and persistent inflation readings prompting a potential rate increase. Restrictions this time around was localized and less stringent v/s the lockdown in CY20 leading to positive macro data points both on global and domestic front which is giving confidence to the investors of economic rebound. Hence it would be a tough fight between the Bulls and Bears in the coming days and one needs to remain watchful of possible movement in either direction,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Motilal Oswal places a “buy” on the stock of ICICI Bank

Most brokerages are optimistic on the large private sector banking space and see HDFC Bank and ICICI Bank as the top stock buys.

According to Motilal Oswal, deposit traction would remain healthy for the banking sector, reflecting 10% YoY growth for the system, with banks focusing on ramping up retail deposits. Most banks indicated rates to have bottomed out.

The brokerage believes that ICICI Bank has substantially increased its PCR to 78% (one of the highest in the industry) and carries unutilized COVID-related provisions of Rs 75 billion (1% of loans).

“Slippages were controlled, while the restructuring book stands lower 0.54% of loans providing comfort on asset quality. While near-term challenges would persist, we believe that is well-cushioned with higher provisions on the balance sheet. Thus, we estimate credit costs to moderate to 1.5% in FY22,” the brokerage has said.

“We estimate returns on assets and returns on equity 1.8% and 15.2% for FY23E. Adjusted for subsidiaries, the standalone bank trades at 1.9x FY23E ABV,” the bank has said.

Emkay Research has a “buy” call on ICICI Bank stock

Emkay Research too has a buy call on the stock of ICICI Bank in its report on the BFSI sector. “Better net interest margins trajectory and contained credit cost should lead to healthy profitability. Slippages to remain elevated, but still lower qoq ex of proforma NPAs,” the brokerage has said.

“We believe growth should gradually recover as the unlocking process accelerates, and meaningful asset-quality normalization could be seen in second half. We retain a positive stance on financials but recommend a bottom-up approach. Among banks, we prefer high-quality players like ICICI Bank, HDFC Bank, State Bank of India and Axis in large-caps. IIB is for investors with a long-term horizon,” Emkay Research said in its report.

Be circumspect

While it is easy to recommend a buy on stocks, investors need to be a little worried at where stocks are now. We have been telling investors to buy into stocks only on declines and in small amounts. Covid continues to be a challenge across the globe, as new variants seem to be emerging.

The Dow Jones crashed 725 points on Monday, and so did the Indian markets. Hence, a good idea would be to just buy into the markets on decline and not rush.

Disclaimer

Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.

1. Business line:

These companies’ are into areas where they have specialization unlike their larger peers. This gives them both a cost and competitive advantage. Say for instance, Mindtree typically caters to travel and hospitality vertical while L&T infotech has its forte in the BFSI and manufacturing space. Likewise, Coforge previously NIIT is more into offering aviation solutions.

2. Financials:

– Companies including L&T Tehnology Services have become debt free for the first time in 5 years time.

– Mindtree has posted 10% revenue growth on a sequential basis that has been the best in 3 years.

– Mphasis also has a debt to equity ratio of 0.1 as at the end of FY21.

Scope of IT industry

IT industry is the breadwinner for millions of home in the country and with the outbreak of Covid everything has gone digital and in fact with the surging demand, IT industry in India is seeing an uptick in both hiring as well as the hike that is being offered to employees from the space.

IT spending by end users to increase to $18 billion in 2021

As we write, Gartner, a reputed research firm has said that it expects end user spending on IT to increase to $18 billion in 2021. This is an increase of over 10% in comparison to 2020. In 2020, spending on IT services slowed, but did not decline. While some digitalization projects were stalled due to IT budget contractions and economic uncertainties in 2020, 2021 is experiencing renewed interest in rapid digitalization from end-user organizations”, said Arup Roy, research vice president at Gartner.

Notably as per the Gartner report, the IT sector comprises various areas/verticals namely consulting, business process services, infrastructure implementation and managed services, hardware support, Infrastructure as a Service (IaaS) and Application Implementation and Managed Services.So, while the spending shall see a boost for all of these areas only hardware support shall lag.

Why mid-cap IT stocks?

So, as there has been a case with Coforge with despite the highest exposure to tourism and aviation is making the killing with new high hit in today’s trade, a number of tailwinds are favoring it such as institutional investors and Mutual funds bet on the stock. Likewise, with their niche domain expertise, mid cap IT stocks will continue to perform well going ahead even after standing firm amid the Covid 19 times.

Disclaimer:

The views expressed in the story need not be construed as investment advice. Investors need to do their own research based on their risk profile as stock market investments are risky.

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PPF Account Withdrawal Rules

The account holder can withdraw an amount not surpassing 50 percent of the amount that remained to his or her account at the end of the fourth year preceding the year of withdrawal or at the end of the preceding year, whichever is lower, at any time after the account has been open for five years by applying in Form-2 and submitting it the concerned post office or bank with account passbook.

Before making the withdrawal, the account holder must pay off all outstanding loans, including interest, if any, according to the rules stated under Public Provident Fund Rules 2019. The withdrawal can only be made once a year and only from accounts that have not been closed or terminated. In the case of an account established on behalf of a minor or a person of unsound mind, the guardian can request for a withdrawal at the post office or bank where the account is maintained.

Closure or continuation of PPF accounts without deposits after maturity

The account holder can close his or her account at any time after fifteen years from the end of the year in which the account was opened by submitting a Form-3 to the concerned post office or bank. Prior to the end day of the month before the month in which the account is terminated, the post office or bank where the account was opened would facilitate withdrawal of the whole balance plus interest.

The subscriber can maintain his or her account once it matures without making any new deposits for as long as he or she wants, and the account will continue to generate interest at the prevailing interest rate of that year or quarter. Any amount or balance in the account can be withdrawn once per year by the account holder. Once an account has been kept without contributions for more than a year, the account holder will no longer be able to maintain it with further contributions.

Premature closure of PPF account

Premature closure of an account holder’s account or the account of a minor or person of unsound mind for whom he or she is the guardian is permissible under Public Provident Fund Rules 2019. For making a premature withdrawal the account holder has to file Form 5 and submit it along with the required documents at the responsible bank or post office. The account holder should bear in mind, however, that withdrawals can only be made for the treatment of a serious illness that strikes him, his spouse, or dependent children or parents.

Withdrawals can also be made for the account holder’s further education, dependent children, or a change in residence status. For withdrawal made for the treatment of a disease documents such as medical reports are necessary, and for higher education school fee bills or admission letter is required to make a withdrawal, whereas to make a withdrawal, the account holder must submit a copy of his or her passport and visa, as well as a copy of his or her income tax return if his or her resident status has changed.

Citibank, a subsidiary of Citigroup having headquartered in Bandra Kurla Complex, Mumbai, Maharashtra, has changed its fixed deposit interest rates today. From July 19, 2021, the bank would now provide an interest rate of 1.85 percent to 3.50 percent to the general public and 2.35 percent to 4.00 percent to senior citizens for maturities ranging from 7 to 1096 days.

Citi Bank now provides an interest rate of 1.85 percent on deposits maturing in seven to fourteen days, 1.90 percent on deposits maturing in 15 to 35 days, and 2.55 percent on FDs maturing in 36 to 180 days, following the most recent adjustment. Citibank offers 2.60 percent on term deposits with terms ranging from 181 to 270 days. The Bank offers a 2.75 percent interest rate on FDs with a maturity term of 271 days to 540 days. Fixed deposits maturing in 541 days to 731 days will pay a 3% interest rate. In the maturity period of 732 days to less than 1096 days, FDs will yield 3.50 percent respectively.

Citibank FD Rates 2021

Citibank’s most recent interest rates on fixed deposits below Rs 2 crore, effective July 19, 2021, are listed below.