Investment Insights

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Real Interest Rate

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Normally when one speaks of interest rates, it refers to nominal interest rate which is not adjusted for inflation.   Inflation reduces value of money over a period of time. Therefore one needs to adjust for inflation to know the actual return on investment.   Interest rate adjusted for the effect of inflation is known […]

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CBLO Money Market

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With effect from August 2005, non banks are not allowed to participate in call money market and to facilitate non banks participation in money market Collateralised Borrowing and Lending Obligation (CBLO) money market was created.   As the name suggests, in CBLO money market borrowing/lending takes place on collaterised basis.   CBLO was created and […]

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Call Money Market

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Call money market is a market for overnight lending and borrowing of funds.   In call money market, institutions with surplus funds lend on an uncollaterised basis to institutions with shortage of funds.   Rate at which lending and borrowing takes place is known as call rate.   With effect from August 2005, non banks […]

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Index of Industrial Production (IIP)  Index of Industrial Production (IIP) measures the short term changes in production volumes of industrial products.   IIP is compiled and published monthly (12th of every month) with time lag of 6 weeks from the reference month by the Central Statistics Office (CSO) of the Ministry of Statistics & Programme […]

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MIBOR – IDFC MF

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MIBOR  Mumbai Inter Bank Offered Rate (MIBOR) is the rate at which banks borrow from other banks in the Indian interbank market.     MIBOR snap shot     Chart below shows trend in MIBOR overnight rates from fiscal year 2007 till 13th March 2014.     From the above chart, we can observe that […]

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Household Sector Savings-India  Composition of Household Sector Savings  India, household sector savings1 having the highest share of around 70% in total domestic savings comprises of savings in form of physical assets and financial savings. Savings in form of physical assets include real estate, gold and account for around 68% of total household sector savings. Financial […]

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Composition of Domestic Savings  India, domestic savings comprises of savings from household, private corporate and public sector.   Household sector dominates with around 70% contribution to total gross savings. It consists of physical and financial savings.   Private corporate sector contributes to around 20% followed by public sector of around 4% to total gross savings. […]

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Indexation

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What is indexation?   Inflation reduces the value of money over a period of time. Therefore, to calculate tax on the investment return, purchase price should be adjusted to be on the same level with the current market price.   Indexation is a process of adjusting the purchase price for inflation mainly for calculating long […]

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Currency in Circulation  Currency in circulation refers to all bank notes and coins in the economy.   In India, RBI manages currency as part of its role as the central bank of India     Currency in Circulation snap shot    Charts below show trend of currency in circulation over the years, value and volume […]

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Types of Leverage  A company is said to be leveraged1 if it has fixed cost (operating leverage) or debt (financial leverage).     Operating Leverage  A company which has fixed costs in its operations is said to have operating leverage. Operating leverage reflects effect of fixed cost on a company’s operating profits. Higher the ratio […]

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