SENSEX and INR/USD movement

Bombay Stock Exchange Sensitive Index (BSE SENSEX), one of the most popular index, comprising of the top 30 companies listed on BSE Limited. The SENSEX follows the listing methodology of free float market capitalization weightage.  The composition of SENSEX is reviewed from time to time in line with the changing capital market conditions. The BSE selects the company to be listed on SENSEX based on market capitalization of number of shares available for trading and not on the issued.  The SENSEX reflects the companies from various facets of the industries and it is a true barometer of the Indian Capital markets.   

Although there have been several factors affecting the currency movement, there has always been a strong and negative repercussion of any depreciation of Indian Rupee (INR) against American Dollar (USD).

Movement of SENSEX versus USD/INR (in last 1 year)

Source: http://www.bseindia.com/indices/IndexArchiveData.aspx?expandable=1, http://www.investing.com/currencies/usd-inr-historical-data

Some of the factors that have been roughly responsible for depreciation of INR against USD in the past few years are:

•  Change in Interest Rates 
•  Crude Oil and Gold Imports
•  Prices of Crude Oil
•  Employment Data
•  Major Change in US Government Employment Policies
•  Political Statements in relation to Foreign Direct Investments(FDI)

Although, the INR depreciation is beneficiary for export based companies, in the long run, the operating margins of these companies fail to match the gain in currency change. SENSEX, being the most tracked index is most sensitive to any global news affecting the major FII investments in the capital market.

The detailed review of the monthly market movement for BSE Sensex can be tracked at http://www.bseindia.com/indices/monthlyReport.aspx?expandable=0

Thanks and Regards

Team

Saarthi Financial Planner

Email: saarthifp@gmail.com

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Advantages of Investing in Mutual Funds - Part 02

Continued from advantages of Investing in Mutual Funds - Part 01.......


We are covering  the possible advantages of investing in Mutual Funds.

4. Managed by a Professional: Mutual funds appoint expert, financially aware professionals to manage the Mutual fund. These professional use their fundamental and technical analysis to take decisions on behalf of the client. The services which, otherwise, a common man can’t afford are made available via mutual fund.

5. Well Regulated hence transparent: Mutual funds are managed under the purview of SEBI. The Mutual fund comprises of four different structures: Sponsor, trust, Asset Management Company (AMC) and Custodian. The role of the sponsor is limited to providing the required capital to the Mutual Fund. The trust is in charge of the actual floating of the AMC. It has to ensure that the AMC workers in interest of the investor. The AMC is responsible of appointing the fund managers and the different schemes to invest the money in different securities market. They charge an administrative fee on the same for the same. The custodian looks after the actual buy –sell transactions of Mutual Fund. Thus, the ownership and administration in mutual funds is in two different hands and there is no conflict of interest.

6. Diversification and Variety: Based on the objective of his investment, the investor can decide on the type of fund he needs to invest into. He can choose from a variety of options available and also reduce his company specific risk with the diversified holding via a single mutual fund.

7. Convenient Administration: Any individual would find it difficult to manage news regarding his entire capital markets and its policy through his limited knowledge and exposure. With help of Mutual fund, the investor is assured of the fund manager tracking the news for him and taking the right decision at the right time.

Thanks and Regards

Team

Saarthi Financial Planner

Email: saarthifp@gmail.com

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