|
| Latest Business news on mobile: sms BIZ to 7333 |
Home > Business > Budget 2006 - 2007 > Report
Small investors must invest only in mutual funds: Kampani
March 01, 2006 16:08 IST
J M Morgan Stanley Chairman and ace investment banker Nimesh Kampani says that the Budget is slowly losing its relevance. He advices small investors to invest only in mutual funds. Read on. . . Santhosh : The NAV of mutual funds is after deducting the expenses or it is before deducting?
Nimesh Kampani : NAV is after deducting all expenses.
Rajan : Is it the right time to dispose of shares ? I am holding some Reliance Capital [Get Quote] shares. Should I hold it for sometime
Nimesh Kampani : Market is at all time high and tops and bottoms are for fools. Therefore, whenever you want to book your profits, leave something on table for the buyer. Economy is going through a growth phase, therefore, there is a structural bull run in the market. I would advise if your cost is low, you may book some profits as paper profits are no good.
jeeva : any change in long term capital gains tax exeption for mutual fund and stocks
Nimesh Kampani : There is no change. However, for domestic companies, FM has introduced increase book profit tax to 10% and he has included long term capital gain to be covered for the purpose of book profit tax. I have not seen the fine print of the budget paper but I believe this will not be applicable to individual investor and FIIs coming through Mauritius route.
buss : Mr Kampani, will Chidambaram's Budget spur growth and the stock markets? Why did the markets drop today first and then rise again?
Nimesh Kampani : Mr Chidambaram's budget will certainly spur the growth in the economy mainly because there is a substantial spending on the agriculture, education, health and infrastructure. We are already at 8.1% GDP growth rate and as Prime Minister of India stated that the growth will spur to 9 to 10%.
Nimesh Kampani :
Nimesh Kampani : Hello to everybody
SAMEER : HELLO MR.KAMPANI,GODD EVENING,I WANT TO KNOW WHETHER THE BUDGET IS GOOD FOR THE STOCK MARKET?WHICH SECTORS SHOULD BE LOOKED FORWARD FOR A LONG TERM INVESTMENT
Nimesh Kampani : Budget has no impact. Slowly it is becoming a non-event. The economy and the stock market will work on its own merit. In the long term, I believe we are in a structural bull market. But there are possibilities of profit booking and if you are a long-term investor, hopefully you will not regret it.
RatanDoshi : Is the Budget inflationary? Will prices of goods rise? Or fall? What do you think?
Nimesh Kampani : I don't think so. Inflation is at 4%. Only if the oil prices go up substantially, there may be some effect on prices.
Leader : How would you rate P Chidambaram's Budget on a scale of 1 to 10 (1 being worst and 10, best)?
Nimesh Kampani : 7 out of 10.
bbbbb : Crazydog says, I am a small investor. Mr Kampani, where should i invest in such a scenario? Which sectors and stocks do you think are good for a small investor to l
Nimesh Kampani : Small investors should only invest in Mutual Funds as the advantage of diversification of portfolio is available through the common pool of money.
Chidu : What is ATM Transaction Service charge
Nimesh Kampani : ATM service trnsaction charge means whenever you use the ATM, you pay the service tax. But I believe if you use the branch to withdraw the money from bank account, you will not be required to pay the service tax.
csaha : Mr Kampani, do you think this budget will affect the Mutual fund investments? If I invest in Mutual Funds, will it really be profitable? And will be profit amount be taxed ?
Nimesh Kampani : The equity mutual fund capital gain tax exactly operates like selling the share in the secondary market and capital gain is free of tax. However, when the mutual fund declares dividend, mutual fund pays the dividend distribution tax and you get dividend tax free. Mutual fund investment will not be affected by the budget. However, any investment is a risk whether equity, mutual fund or even a bond. Therefore, if the market goes up, the mutual fund investment becomes profitable and if it goes down, you can even make losses.
febin : By branch u mean the ATM in the Branch were your account is or we will have to directly withdraw from the branch
Nimesh Kampani : You have to withdraw directly from the branch where your account is.
rajat : Will the increase STT have any negative impact on the stock market as a whole. What was the need of a consecutive increase in STT keeping in mind that the collections under the head was Rs 3000 cr against Long-term Capital gain tax which used to give the exchequer Rs 1000cr only
Nimesh Kampani : I agree with you. The FM, it seems, has felt that investors have made substantial capital gains in this market and therefore, a 25% increase in STT will be absorbed by the market.
Princess : is the reaction of stock markets a good indicator of the budget?
Nimesh Kampani : The market is relieved as there are no major tax hike in the budget.
Chetan : Mr.Kampani Don't you think that there is a need of Sectoral Budgets. E.g. If Govt. earns revenue by way of Excise duty from Automobile Sector then it should use the entire money for development of automobile sector. Similarly, If Govt earns revenue from excise duty on fuel, then it should use entire earning on highway development only. What's ur opinion
Nimesh Kampani : It's a good suggestion but it is diffcult to implement it. Because money when it goes into a pool account, you can only do what you are saying through memorandum accounting and having a strict discipline on finances.
sagah : Do NRI's need to file returns in India?
Nimesh Kampani : If NRIs' income deemed to have earned in India and such income is taxable in India as per Income Tax Act, then they will have to file the return of income.
venu_vrk : Mr Kampani, the fiannce ministry encourages housing loans as a means to encourage spending & providing the linked employments. My question is why doesnt the FM come up with some similar ideas to encourage the rural population. Why cant these rural resources be used completely in the growth of Indian economy.
Nimesh Kampani : I think the FM has provided substantial amount in the budget for spending on rural areas especially agriculture, education, health and new initiative called Bharat Nirman. All these will help the rural population which could create greater amount of purchasing power, employment generation, income creation and savings.
raj : Does FM want us to stop using ATM?
Nimesh Kampani : No. He just wants a small service tax.
sudhakar : Nimesh, 12% is not a small service tax
Nimesh Kampani : The FM is trying to bring goods and services tax by 2010. In the devloped countries, this tax is up to 16%. Therefore, we have to live with this tax of 12%.
Kris : Hello Sir, i have a small suggestion, i am also paying the tax from 1 year, but still am not satisfy, why dont you removed all the tax saving schemes like insurance,mutul funds,all other saving schemes.just make a slot.greater then 100000 - tax 10 % 120000- 300000 - tax 15 %300000 - 600000 - tax 20 %more then 600000 - tax 30 %tax should be paid compulsory, no saving schemes.one more question : are you also getting some tax from mutual fund or insurance ?
Nimesh Kampani : I agree with you. The savings scheme deductions only enable routing of savings to particular sectors such as Life Insurance, Mutual Funds, Public Provident Funds etc but if the investor is well informed, he can take his own decisions and invest and all deductions under Income Tax Act may not be required. Unfortunately, all our invetors are not that well informed and they feel safer investing where the principal amount is safe. Therefore, the FM is unable to increase the tax slab as is suggested by you though the Kelkar Committee had recommnded exactly what you are saying.
blook : Mr Kampani, FBT now allows upto 1lakh exemption, Should employers now contribute to some pension fund of employees to allow employees get close to 2lakh benefit?
Nimesh Kampani : Any contribution above 1 lakh will have FBT payable by the employer. It is his choice to increase the amount and pay FBT for the benefit of employees.
dilip : I read an article y'day featuring you quoting that if you were FM, you 'd not mind spending $50 bn on infrastucture for rise in inflation & the deficit etc. Could you pls be kind enough to explain that a bit further?
Nimesh Kampani : I believe that infrastructure is the most important growth strategy for India. And if we have to go towards 10 to 12% growth rate, we need to spend substantial amount on creating infrastructure. The only way the government can do this by deficit financing and creating productive asset and not spending on government expenditure. When you create infrastructure through deficit financing in short term, there could be an inflationary impact as money supply in the economy increases. The advantage for the spending would be new entrepreneurship and businesses will come up nearby the area where such spending is done. It will have indirect benefit such as when you develop a road, the construction, hotels, residential property boom will take place. This will create emplyment, income, consumption and savings and can have multiplier effect on the economy. It is the only way you can reach higher growth. You will appreciate that by 2010, we will have over 60% of our population below 30 years of age
vipul : What will be effect on airlines fair's due to budget?
Nimesh Kampani : I don't think there is any impact. I have not seen the fine print of budget.
mihir : education cess stays
Nimesh Kampani : Yes.
shivakumar : Hello sir, i want to is there any tax for Insurance amount after maturity
Nimesh Kampani : No i don't think so. Insurance policy for life on maturity for individual investor is tax free as long as it is not a keymen insurance policy.
skbera : Is it justified to give tax exemption on religious donation?Does common people get benefited with this?
Nimesh Kampani : The tax exemption to certain religious institutions are available under Income Tax Act so long as they do spend their money on development activities such as education, medical, apart from religious activities. But I believe that it is a good idea to give tax exemption on religious donations so long as such institutions are not involved in fanatism and terrorism.
Shas : Sir, Is this budget market friendly despite no reforms & increase in STT?
Nimesh Kampani : It is not market unfriendly.
chidmarbaram : Mr.Kampani are you a stock broker/analayist
Nimesh Kampani : I am an investment banker.
ashwin : Mr Kampani, with respect to the increase in STT do you see any impact on the volume of trades in the capital markets. if so do you think its going to be the retail investor who backs out?
Nimesh Kampani : No I don't think so. I believe market will be able to absorb the hike in STT. You may be aware that a substantial volume is generated by FII, mutual fund. Only day traders may get affected but they are able to adjust the STT paid as a deduction from their business income from trading.
manishdn : Sir when we talk abt Service Tax, it is most of the time a bruden on End consumer and not the mediators who provide the service of one company to consumer. They hike the proce in order to accomodate the tax to be paid by them? How it works
Nimesh Kampani : A service tax is payable as a service is rendered. Therefore, any person who benefits from getting this service will have to pay directly or indirectly the service tax. Market forces will determine the pricing of service tax whether will it be passed on to consumers or is absorbed by the service provider.
Nimesh Kampani : Thanks a lot. I enjoyed chatting with you all.
Complete Coverage: Budget 2006 - 2007
7333: The Latest News on Your Mobile!
|
| 
|