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One SIP At A Time

Investors get a SIP of nectar; Turbulence in the skies again for Air India and Jet; The HAL story and more

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Robust systematic investment plan (SIP) inflow has been one of the highlights of  the mutual fund industry in the past year, with investors pouring in Rs 7,985 crore, through SIPs in October 2018 alone - which is an all-time high. According to Nimesh Shah, AMFI Chairperson and MD & CEO of  ICICI Prudential AMC, “The benefits of SIP are commonly understood today by most retail investors, just the way they know the benefits of doing Yoga”. Leading Mutual Fund Research company, Value Research, has analysed SIP performance of diversified equity funds over the last 25 years (1992-2017) and found that it pays to be patient with SIPs – SIPs across diversified equity funds over a 10-year period yielded negative returns in just 0.3 per cent of  the case.

Holding onto SIPs for tenures longer than four years, typically yielded 15-19 per cent to a patient investor. Investors who initiated their SIPs at the peak of 2007, found that 60 per cent of the SIPs had broken even within two years. By 2011, this number expanded to 99 per cent. That’s how wealth is built - one SIP at a time.  
— Clifford Alvares

A Non Sequitur, Dear Minister

Union Defence Minister Nirmala Sitharaman said recently that negotiations for procurement of 126 Rafale jets had fallen through during the tenure of the United Progressive Alliance government because Hindustan Aeronautics (HAL) did not have the required capability to produce the jets in India, in collaboration with French company Dassault Aviation – which really is ironical. The public sector aircraft manufacturer, which notched up a whopping turnover of Rs 1,82,83.86 crore in FY 2017-18, is the licensed producer of some of the world’s  best fighter jets, including the Sukhoi 30 MKI, Jaguar, Mirage-2000 and the MiGs – all of which meet the stringent requirements of the Indian Air Force.

 HAL has developed an advanced version of the MiG-21 and improved on the avionics of the British Hawk. The LCA Tejas is a HAL endeavour too. And yet, its capability to produce Rafale jets was doubted.  
—  Manish Kumar Jha


A Bitter Brew
Coffee may prove a really bitter brew for connoisseurs in the year ahead.  The Global Agriculture Information Network has forecast a rise in coffee prices in the 2018-19 marketing year (MY 2018/19), because of excessive rainfall in the coffee-growing states of Karnataka and Kerala.
The heavy showers have destroyed coffee berries, especially of the Robusta variety, which should lead to a poor yield in MY 2018/19. Even though excessive rainfall is not believed to have greatly impacted plant mortality, there are apprehensions that fungal diseases may destroy some of the crop. Trade estimates of the loss are a scary 20 per cent higher than that of the Coffee Board of India.  
— Prabodh Krishna

Turbulence In The Skies Again 
The oft-turbulent aviation sector refuses to stay calm. Financially troubled airlines, Air India (public sector) and Jet Airways (private sector), are back in the headlines, screaming ‘stake sale’, ‘fund raising’, ‘investors interest’ etc. Earlier in the year, the government-backed, debt-laden Air India had made an unsuccessful attempt to find investors for the airline. Now an Inter-Ministerial panel has batted for divesting 100 per cent government stake in Air India’s ground handling subsidiary, Air India Air Transport Services (AIATSL), which controls over 80 per cent of the market.

Meanwhile, the cash-strapped full-service carrier, Jet Airways, is also in the news.

An industry buzz that has been flying about for a while and is now gaining momentum by the day, is that Jet Airways promoter, Naresh Goyal, is now open to diluting the 51 per cent stake he holds in the airline, along with his wife.

Sources says Goyal is also in talks with Etihad, the Tata Group and a consortium of Delta Airlines and Air France, for a potential stake sale. “In line with its policy, Jet Airways does not comment on speculation,” said a Jet Airways spokesperson. Will the N ew Year bring in some good news for the aviation sector?  
—  Ashish Sinha

Yezdi in Mahindra stable?
Classic Legends, a Mahindra-owned subsidiary, is drawing up plans to bring two other brands, BSA and Yezdi, under its umbrella in the near future.  The exact timeline has not been firmed up as yet, but the market buzz is that Classic Legends may own the brands sometime late next year, or early 2020.

What the new-age Yezdi products will be like is not quite clear now, but there is speculation that they will be based on the Jawa platform and appeal to a completely different set of buyers.
Owning Yezdi, though, will not quite be a cakewalk for Classic Legends. The Yezdi trademark has a hurdle to cross. It is currently registered for use in leather goods.  
— Avishek Banerjee


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