by Editor | Nov 27, 2022 | Business, Economy, Investing
A high rate of inflation hurts the poor, hits demand for consumer goods and adversely impacts investment demand.
SANJEEV SHARMA
New Delhi, Nov 27,2022: A high rate of inflation hurts the poor, hits demand for consumer goods and adversely impacts investment demand.
Sandeep Bagla, CEO, TRUST MF, said that it is widely believed that inflation rate in any economy should be stable at low levels. If rates are too high and volatile, the borrowers cost of capital goes up, making them uncompetitive in the global business arena.
Bagla said high interest rates reduce demand for houses, cars, consumer goods as high EMIs prevent consumers from buying things on loan. Investment demand is also suppressed as new business projects become unviable.
High inflation hits the poor people harder as their income is low and they are not able to afford regular consumer items. For savers, optically the interest income rise, but inflation being high, their purchasing power is adversely impacted.
Consumers cannot maintain their standard of living as inflation for their consumption basket could be higher than the interest rates that earn on their savings. Politicians could lose elections over high inflation.
“So high inflation is neither good for borrowers nor investors. Governments try to maintain low positive inflation,” he said.
In India, RBI has taken a target to maintain inflation at 4 per cent plus minus 2 per cent, i.e., in a range of 2 per cent to 6 per cent.
Inflation also reduces the effective value of savings.
Rachit Chawla, CEO, Finway FSC, said that inflation indicates a steady rise in the cost of living and means the value of money will decrease.
For savers, if the money is saved in cash, inflation will reduce the effective value of the saving as it will account to lesser quantity of goods. Also, during inflation, if an investor is saving money in the bank, the rate of interest he gets will be lower than the rate of inflation.
On the other hand, if a borrower has already owed money before the inflation, it can be beneficial for him/her, since s/he will have more money in their paycheck to pay off the debt.
Savers can stay safe from inflation as long as they are saving in an account which pays a positive real interest. Which means if the interest rate is higher than the inflation, savers would still become relatively better off. Only if someone is saving the money in cash, inflation can make him/her worse off.
Manoj Kumar Dalmia, Founder and Director, Proficient Equities, said the nation is experiencing a spiralling inflation that is driving up the cost of every vital commodity consumed by the populace.
The impoverished in rural and urban areas have an extremely tough time getting by because of this tremendous price load. Increased prices for atta, vegetables, edible oils, and cooking gas result from it.
Dalmia said for savers, if inflation is 6 per cent, you will need to save an additional 6 per cent to ensure that you have enough money saved to support all of your long-term financial objectives, including your dream home, your child’s education, your retirement, and a variety of other things.
For borrowers, if you take out a loan during an inflationary period, you will pay a higher interest rate. Because the cost of items will be greater, you will probably need to qualify for a larger loan amount for loans like a vehicle loan or mortgage, Dalmia said.
Vishal Chandiramani, Managing Partner – Products & COO, TrustPlutus Wealth, said while a moderate level of inflation is welcome in a growing economy, persistently high levels of inflation result in negative real returns for savers if the underlying investments do not generate returns higher than the rate of inflation.
As a result, savers may need to dip into the capital itself to meet their daily expenses. In the case of borrowers, high levels of inflation will lead to high interest rates and a result increased interest expenses on their borrowings.
by Editor | Oct 8, 2022 | Business, Investing
Tata Power to further expand its business footprint with plans to develop upto 8000 MW of utility scale projects, 1000 MW of solar rooftop, and installing 1,50,000 solar pumps in next five years in Rajasthan ~
Jaipur: Tata Power, India’s largest integrated utility, today said that the Company plans to expand its business footprint in Rajasthan. Participating in the ongoing Invest Rajasthan summit in Jaipur, the Company said it plans to develop upto 8000 MW of utility scale projects, 1000 MW of solar rooftop and 1, 50,000 solar pumps in next five years in the State.
Tata Power, along with its fully-owned subsidiary Tata Power Solar, will expand its presence in the State to generate clean energy through solar power. The Company employs more than 4500 people in the State, and its expansion projects will generate employment for more than 6000-8000 people in the next five years.
Dr Praveer Sinha, CEO&MD, Tata Power, said, “Both in terms of potential and what has been done so far, Rajasthan has today emerged as a role model to produce green energy through solar power. I am happy to be here in Invest Rajasthan summit. With its already strong footprint in the State. Tata Power is fully poised to make Rajasthan future ready and realise its full potential and emerge as a Green Power House of the country. We will continue to build on all three business – EPC, Solar Pump and Solar Rooftop, to the benefit of farmers, industries and common citizens of this frontier state.”
Rajasthan is an important state for Tata Power’s renewable business. The Company presently has a portfolio of 4939 MWp. Till date, Tata Power has commissioned 2,066 MW in Rajasthan and around 2,873 MW capacity of solar projects under construction in the State and will be completed in next 12-24 months.
Tata Power plans to have a renewable power portfolio of 10,000 MW in the State in next five years.
TP Ajmer Distribution Ltd, a unit of Tata Power, has completed 5 years of operations and has enhanced consumer experience in Ajmer. Tata Power has ensured safe and reliable supply in Ajmer and also achieved AT&C loss reduction from 22% to 9%.
With the support and favourable policies of the Government of Rajasthan, we are looking forward to opportunities of power distribution in various other cities of the State under the collaborative Public Private Partnership (PPP) model and to serve the citizens of Rajasthan with quality power supply.
With respect to solar pumps, Tata Power plans to set up around 1, 50,000 pumps in next five years in the State. The Company has so far installed nearly 21,600 solar pumps in Jaipur, Hanumangarh, Ganganagar, Jalore and Bikaner.
Tata Power through its rooftop services has a cumulative installed capacity of 65 MW in Rajasthan. The Company has been doing extensive work for industrial belts like marble, granite and stone crushing etc in Rajasthan located in regions like Ajmer, Sirohi, Rajsamand, Jalore and Makrana.
Through its various rooftop offerings, Tata Power has installed over 20 MW of rooftop for these industries. These installations have resulted in cumulative savings of about Rs 20 crore p.a. for customers who are part of the marble / granite and crushing etc.
The Company has also gone beyond just supplying rooftop solutions and also suggested techniques which have benefitted many, especially the stone crushing industry users.
Some of the benefits as a result of our offerings to these belts include reduced expenses as a result of business production, reduced power consumption, and efficient use of energy. Rajasthan is a state that usually has high temperatures during the day. Rooftop installations on certain sites have also helped cool down the internal temperature of the site by 4-5 degrees.
Tata Power’s commitment to their offerings, high quality, and delivery have been some of the standout qualities of our rooftop business.
Tata Power is also working towards setting up a robust EV Charging Infrastructure in the state to enable faster transition towards E mobility. Company has installed over 1100 home chargers and 100 public chargers in Rajasthan.
In the next few years, Tata Power plans to install 10,000 public EV charging points in the State.
Under the Urja programme of the Company has initiated its CSR programme to enable Science, Technology, Engineering, and Mathematics (STEM), and health education as well as teacher-trainings in schools in the State.
About Tata Power:
Tata Power (NSE: TATAPOWER; BSE:500400) is one of India’s largest integrated power companies and together with its subsidiaries and jointly controlled entities, has an installed/managed capacity of 13,974 MW. The company has a presence across the entire power value chain – generation via renewables as well as conventional power including hydro and thermal energy; transmission & distribution, coal & freight, logistics, and trading. The company had developed the country’s first Ultra Mega Power Project at Mundra in Gujarat based on super-critical technology. With 5.1 GW of clean energy generation the company has 37% of clean portfolio. It has successful public-private partnerships in generation, transmission & distribution in India. Tata Power is currently serving more than 12 million consumers via its Discoms, under a public-private partnership model viz Tata Power Delhi Distribution Ltd. with the Government of Delhi in North Delhi, TP Northern Odisha Distribution Limited, TP Central Odisha Distribution Limited, TP Western Odisha Distribution Limited, and TP Southern Odisha Distribution Limited with the Government of Odisha. With a focus on sustainable and clean energy development, Tata Power is steering the transformation as an integrated solutions provider by looking at new business growth in distributed generation through rooftop solar and Microgrids, storage solutions, solar pumps, EV charging infrastructure, ESCO, home automation & smart meters et al. With its 107 legacy of technology advancements, project execution excellence, world-class safety processes, customer care, and green initiatives, Tata Power is well poised for high growth trajectory and is committed to lighting up lives for generations to come. For more information visit us at: www.tatapower.com.
by Editor | Sep 22, 2022 | Business, Economy, Investing
Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company said that investors in a current scenario could look at target maturity funds from a passive ownership standpoint as well as funds like medium duration and dynamic bond funds.
MANISH M. SUVARNA
Mumbai, Sep 22,2022: Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company said that investors in a current scenario could look at target maturity funds from a passive ownership standpoint as well as funds like medium duration and dynamic bond funds.
Here are the excerpts from the interview:
Q: How do you see bond markets and yields if a long-awaited global index inclusion fails to take place once again?
A: We expect the announcement of index inclusion to be a sentiment positive for bond yields. The quantum of likely flows would be a function of what the actual percentage of inclusion would be. For the momentum to sustain, the timelines need to be well articulated.
Q: What are the factors that are driving the bond market currently apart from sentiments of inclusion in the global bond index?
A: Currently, bond markets are facing more headwinds than tailwinds. US bond yields have been on the rise given the expectations of further tightening by the US Fed. The H2 govt bond supply is expected to be announced by the end of the month, which also could increase uncertainty in yields. Lastly, the RBI MPC is expected to announce its rate decision, which is an important factor driving bond markets going forward.
Q: How much rate hike do you expect in the upcoming monetary policy?
A: We assign a higher chance of 50 bps rate hike in the upcoming policy, assuming US FOMC hikes rate by 75 bps with hawkish guidance.
Q: What will be the CPI inflation and growth forecast in the upcoming policy?
A: We believe that the CPI forecast may remain unchanged as the trajectory so far seems to be broadly in line with the RBIs forecast. Given the headwinds on global growth, we could see some minor tweaks on the growth forecasts.
Q: Which tenor bonds are a good bet for investment in the rising interest rate and inflation scenario to earn better returns?
A: Given the flat nature of the yield curve, we like the 4-7 year sovereign curve.
Q: Which debt schemes are better for investors in the current interest rate scenario?
A: In such a scenario, investors could look at target maturity funds from a passive ownership stand point as well as funds like medium duration and dynamic bond funds. Floating rate funds could also be an add on in the current elevated interest rate environment.
by Editor | Aug 30, 2022 | Business, Investing, Markets
Vinod Nair, Head of Research at Geojit Financial Services said Balanced and hybrid schemes are suitable for risk-averse investors to reduce the beta (risk) & volatility of the portfolio. An investor can choose between conservative to aggressive schemes based on the risk appetite.
MANISH M. SUVARNA
Mumbai, Aug 30 , 2022: Vinod Nair, Head of Research at Geojit Financial Services said Balanced and hybrid schemes are suitable for risk-averse investors to reduce the beta (risk) & volatility of the portfolio. An investor can choose between conservative to aggressive schemes based on the risk appetite.
Here are the excerpts from the interview:
Q: What are your views on the companies, banks making a beeline to raise funds through bonds?
A: Credit growth is expected to accelerate post the drab pre & post Covid period. The domestic economy is resilient and forecasted to be healthy despite the recession anticipated in the world economy. Banks are considering raising funds in anticipation of growth and erosion of capital after the legacy issue led by post demonetization and core sector clampdown, resulting in high NPAs. Today, the equity market is volatile, led by global headwinds, while the debt market is robust due to lucrative yields. The ease in regulatory restrictions on bonds & high demand from foreign investors are helping fund raising.
Q: In the current scenario which equity or debt mutual fund scheme is best for investors?
A: Balanced & hybrid schemes are suitable for risk-averse investors to reduce the beta (risk) and volatility of the portfolio. An investor can choose between conservative to aggressive schemes based on the risk appetite. In the case of debt, schemes of medium-term duration are a good option as the interest rate cycle is expected to rise in the short to medium term. In pure equity, schemes with a focus on the domestic economy, consumption, and finance are attractive in terms of stability and valuation.
Q: Which sector is expected to do better in the long-run which investors can loom for?
A: Sectors in swing with the progress of the domestic economy should be able to do well compared to the rest of the other industries. Capital goods (electrical), green energy, EVs, sugar, textiles, and chemicals, electronic manufacturing, are expected to outpace rapidly. Opportunities are also emerging in sectors like IT & Pharma due to moderation in valuation, though volatility can presume in the short-term due to the recession in the world economy.
Q: Both Sensex and Nifty have recouped losses, considering this, where do you see levels on these indices in the coming months?
A: It is a difficult task to forecast the target of the stock market in the short-term. However, considering the quantitative factors determining the trend of the ongoing performance, This bounce can continue in the short-term given the rise in FIIs & domestic inflows, especially for small caps. Chart & F&O data suggest a cap of 18,000 on the upside & 17,000 on the short side for Nifty50 in the near-term. On a fundamental basis, we have a base target of 18,000 for Nifty50 with a peak of 20,600 on a one-year forward basis.
Q How do you pick-up stocks for investment? Will you give this mantra to our readers?
A: Stock picking is a strategy that has to be consistently nurtured in tandem with the traction of the economy & market. You can also do this passively by identifying the stock and invest and grow in the company’s life span. A key point we need to understand is the business model of the company, i.e., is the operational quality of the company compared to the industry. The USP of the company compared to the rest of the industry. It could be the leadership of the company’s products, services, or R&D. Such stocks usually outperform in the industry, and they handsomely outperform the total market if the industry has an optimistic outlook.