MarketVision’s first newsletter is out. Read the Market Vision Chronicle, Jan 08, 2011. This is an archive only available to registered users (register here, it’s FREE!), who can also choose to get the subscription by email every week. Hope you like it!
Welcome to MarketVision’s first newsletter, the Weekly Chronicle. We wish you a very Happy New Year! In this letter you’ll find a summary of a fraud that could happen, easily, to any of us, market charts and an view on short-term debt mutual funds. Read on!
Yet Another Fraud
The headlines screamed out another fraud, just as 2010 was to pass. Shivraj Puri, a relationship manager at Citibank, Gurgaon, had supposedly taken 300 crores from a bunch of high net-worth investors. He would show a fake SEBI circular that seemingly allowed guaranteed fixed rates of 2-3 percent per month, or 24-36 percent per year.
Except the money stopped coming back.
The question remains – who are these blockheads who invested in a scheme offering guaranteed returns? In this day and age? It turns out they weren’t blockheads at all. One of them, Sanjeev Aggarwal, founded Daksh and sold it to IBM, and now runs a venture capital firm called Helion Advisors. A person that smart – was it just greed or was he a victim of a serious fraud?
From news reports, Sanjeev has lost 32 crores; Puri took blank forms signed from him and used that to embezzle money.
Markets and Charts
The markets collapsed on Friday, with reasonable volume. Technically, there’s not enough to say this is a serious downturn, because the stock staying within a consolidation zone.
The 200 day moving average – an indication of a longer term mean that the markets usually revert to – is at 5600 on the Nifty. That means, if we were to drop another 5%, we will only reach an average value that we usually go down to.
Tells you how much our markets have gone up.
Have some money that you might need in the short term? I do – money for my son’s school fees, which I’ve saved up to a lumpsum, is now looking to be paid over the next year. It has been in equity funds (and gold!) till now, but when it’s time to pay out I move that much money over to safe avenues. My idea was to move money for the next two years of fees, withdrawing every quarter.
But banks are offering horrendously low rates for fixed deposits. A three month deposit gives you a ridiculous 5.5 to 6%. And to top it all, the income gets taxed in my hands, even if I held the deposit for more than a year. I’m not being greedy – even the government is paying 7.1% for 90-day T-Bills, and we all know the government is safer than a bank. Why, then, should we live with lower rates?