With crude prices moving up globally, are oil and gas stocks a good bet? What is your view on this sector?
Oil and gas stocks can do well as crude prices are rising, since their financial performance may improve. Oil and gas producers as well as refiners are the ones who normally see their margins go up due to rising crude prices. On the other hand, oil marketing companies face margin pressures, since their increase in refining margins are more than offset by losses on retail of fuels such as diesel, kerosene, liquified petroleum gas, etc, as their sale prices are regulated.
After the latest round of interest rate rise by the Reserve Bank of India (RBI), what is your view on debt funds? I have Rs 2.5 lakh to invest, which I wouldn’t need for at least a year. What type of debt funds can I consider?
We are already pretty high up on the interest rate cycle. There could be a few more rate increases, but we do not see interest rates going up substantially from here, though the present bias is upwards. However, as a fixed income instrument-investor, one may assume that your investment risk profile is conservative. Therefore, instead of trying to play the yield curve by investing in long-term debt or gilt funds, you could invest in a floating rate fund or a one-year fixed maturity plan, which can give you stable returns.
My broker recently informed me about investing in mutual funds via the stock exchange-enabled platform. I am a regular investor, but have so far invested only through my neighbourhood mutual fund distributor. What are the advantages of the exchange platform? Is there any difference in cost? Also, I often avail margin funding to trade in the markets. So, if I invest in mutual funds through the same broker, can he sell my investments as well in case a margin call gets triggered?
The biggest advantage of investing in mutual funds through the stock exchange-enabled platform is that you do not need to fill in the application forms for various funds. You can just instruct your broker to buy the same for you, as you do for your shares. The cost involved is that your broker will normally charge you brokerage for executing such a transaction. You have to evaluate the cost difference between what you pay your neighbourhood mutual fund distributor and what your broker charges you. With regards to your query regarding your broker being able to sell your mutual fund investments in case a margin call gets triggered, you have to understand that this could be done by the broker, depending on the kind of documentation you have executed with them. In case you have authorised them for inter-segment transfer of funds and/or securities, ideally the broker may be able to do so.
The writer is director, Touchstone Wealth. The views expressed are his own. Send your queries to yourmoney@bsmail.in