Infrastructure bonds - are they for me?

Well, again lot of people asking about this. Here are some facts. These are safe investments with fixed returns. They are NCD (non-convertible debentures). The interest rate offered is around 7.5 - 8 % depending on options. It saves tax by way of section 80C, where up to (and only up to) 20K INR gets deducted from your taxable income. So your effective interest rate is slightly better (but just for the year).

Are they worth investing? It is a good bet, if saving tax of about 3-4K matters to you. You could potentially see better FD rates in the future, which can easily cover for the extra 3-4 K you are saving in year 1. My recommendation, if you are tired of FDs then do this. Else wait for FD rates to rise further, ask the branch manager to provide you 10 year rates which will be half a percent lower than your 390 day rate, and put money into that. It provides flexibility of withdrawal and potentially better rates.

Happy investing!

Time to churn your portfolio

Have a lot of stocks sitting in your portfolio for years and not growing? Have an eye on a good growing trend stock? Have a stock that is a huge part of your portfolio, but did not get around to sell and churn it?

Time to make the changes. The markets though are trading at all time high, it is a period where you can look at changing your portfolio. You will get excellent returns on your old stocks (at least from last year). They may still go up. But you can also expect deep corrections while we scale to a Nifty 7K goal in the next 2 years. Use some of these to switch. Sell when you get some good prices on a given day for your stock (up 10% in a week/10 days). Then wait for corrections on the way to buy your list of stocks you wanted to.

For me, I am selling IT (watch currency trend), investing in Infra, Oil and Banks. You can take your calls...Happy investing!

What to do with the markets now?

A lot of you have been asking me on this. My view has drastically changed over the last 4 months or so. While I used to be a guy on "valuations", "PE", I have come to realize that there are phases of the market when we talk different things. The phase of the market when we talk valuations is usually during the steady phase. Market valuations determine what is a relatively inexpensive buy and what is a good long term prospect (3-5 years). The phase of the market we are currently in is the "mania" phase. In this phase "valuations" are thrown out of the window and the market gets into true "animal spirits". Here we need to rely on trends and charts (see Ashu Dutt on ET Now in the mornings). And trends will help you decide two things - stocks to buy for a short term (less than 6 months) and more importantly when to "sell". The FII inflows in the market is huge primarily because of low interest rates in the West and Japan. And this is hedging it in India for a growth. The flows have entered "mania" proportions.

The current mania is concentrated on Financial Services, so the rise is there. Look out for stocks which have a low float and a lot of dormant investors - like LIC or Government. If there is a demand for these stocks, which there will be in a mania, then they will shoot up drastically. PSU bank stocks, PSU insurance, PSU Non Banking companies are good stocks...watch IDBI, IDFC, State bank siblings, Vijaya Bank, etc. So as Ashu says, enjoy the party; but make sure you get out by 2 am, else you will get a bad hangover...happy investing!!