April 2023 Newsletter

Key Budget impacts of 2023 :

If you are holding a Mutual Fund and it pays dividends, then previously the Tax Deducted at Source would be at 20%. It is proposed to be reduced and hence making Dividend paying mutual funds a good option to Invest in. 😊

Tax slabs have changed and now you will be paying less tax compared to previous years. Here are the upcoming tax rates : Nil rate tax upto 3 lacs , 3 – 5 lacs is 5% and 6 – 9 lacs is 10%. 😊

If an NRI is receiving a gift from a resident in India, then actual value of the gift is now taxable from April 2024 (for a gift value above Rs. 50,000).  ☹

Adani Fiasco:

Adani stocks have been volatile due to the recent Hindenburg report. There are 172 Funds that have exposure to Adani stocks. 64 of them are actively managed and 108 Index or ETF Funds. If your portfolio (stocks + mutual fund) has more than 8% by weight exposure to Adani stocks (Adani Enterprises, Green Energy, Ports & SEZ, Power, Total Gas, Transmission and Wilmar) , its time to relook at your portfolio to reduce volatility.

Investing in Bonds :

Bond Market in India is very liquid and provides a great way to invest for NRI’s. A wide range of options are available. NSE has a goBid app to buy Government bonds directly but the app is a bit clumsy. Mutual funds offer great way to expose yourself to relatively low risk fixed income securities. Government to Corporate to Hybrid are all available but stay away from funds which you don’t understand. Kotak Bond Growth is managed relatively well when it comes to Long duration. SBI is a good option when it comes to Medium duration or Corporate Bonds.

Valuation help :

To better understand India’s market dynamics , Industry level metrics and hence valuation I always refer to Ashwath Damodarans webpage. Its published yearly but is my to-go reference. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datacurrent.html

Look at the Multiples section to understand sector wise multiples (PE , PEG, P/B, EV/IC, ROE/ROIC,P/S,EV/S) and focus on “Just India” link.

Key Personal finance term - Debt Ratio  :

Add all your monthly debt payments (home , car , insurance, credit) and Divide it by your gross income. Lower the number is obviously better. Anything greater than 40% should be treated by caution and time to rework on your finances.