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Buy low sell high through Smart SIPs, dynamic funds

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Investing is all about making profits. Investors need to buy low and sell high. The purpose of this idea is defeated during times when stock markets are expensive and high. Since the amount of Systematic Investment Plan (SIP) in a mutual fund is fixed, the mutual fund SIP keeps on buying high. As a result, your average investment cost may rise higher with each passing month that the market inches up. This problem of ‘buying high’ can be addressed in two ways. One is ‘Smart SIP’, which dynamically adjusts to market conditions every month. So, if equities are expensive, only a small portion of SIP is invested in equity funds and the rest goes into debt/fixed income schemes. The second way is by investing in a dynamic asset allocation fund, where the proportion invested in equity, equity-linked derivatives, and debt is managed actively so that investment in equity is more when prices are low but investment in equity is reduced if the market gets expensive. Dynamic asset allocation funds are offered by fund-houses. Smart SIPs are offered by fund distributors and brokerages. Which one should you choose? DNA Money helps you take an informed decision.

SIPs turning smart

Fund distributors and brokerages have tied up with specific mutual fund companies for their own version of Smart SIPs. These SIP variants, with a minimum monthly amount of Rs 5,000, aim to do the same thing – buy less of equity fund units when markets are high. Invest the rest in debt. When markets fall, buy more equity fund units. In this way, chances of getting better returns are enhanced.

For instance, FundsIndia’s ‘SmartSIP’ in association with Franklin Templeton AMC invests in an equity fund and a debt fund, from the Franklin India stable, every month. By default, the equity fund’s allocation would be 70% and the debt fund would receive 30%. However, allocation to the equity fund and the debt fund will dynamically change every month based on both market fundamentals and momentum factors. In this way, there is no disturbance to the investor’s monthly savings. There is also no need to increase the SIP amount or reduce it. Money from SIP installments is deployed in the equity and debt markets after taking into account the current market variables such as valuations, momentum, market sentiments etc.

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Wadiwala Securities also has a ‘Smart SIP’. It uses PE (Price to Earnings) ratio of index as the indicator of market valuation. When market/index are quoting at more than 19-20 times its earnings, the Smart SIP puts new money of investors into debt. Money invested in debt is waiting to be switched to equities. When market valuations are extremely high, it will switch the complete investment from equity to debt. This money will be moved back to equity when valuations turn attractive. The broking house’s website shows that this Smart SIP facility uses funds from HDFC MF.

According to Srikanth Meenakshi, co-founder and COO, FundsIndia.com, the primary advantage is that SmartSIP has the potential to return higher. “In our back-test analysis over the past 10 years, SmartSIP has given up to 2.6% higher CAGR than a regular 70:30 (equity:debt) SIP. On an average, the outperformance has been 1.6% CAGR,” he says.

From the customer’s perspective, this behaves exactly like a regular SIP – a fixed amount of money gets debited from the bank account and gets invested in a portfolio of funds. “There is no new learning or understanding required from the customer to get going with SmartSIP. All decisions regarding monthly allocation are made by experts taking into account the situation in the equity market. The monthly allocation is transparently disclosed to the investor prior to every SIP installment, including the reasoning that went into deciding the allocation,” says Meenakshi.

Dynamic funds

Dynamic Asset Allocation or Balanced Advantage Funds invest in a mix of equity, equity-related instruments and fixed income securities without any upper cap or lower limit on their exposure to such asset classes. “These funds are free to dynamically change their exposure to various asset classes from 0-100% of their total portfolio on the basis of their in-house quantitative models, which typically have underlying valuations as the variable,” says Naveen Kukreja – CEO& Co-founder, Paisabazaar.com.

These funds can also hedge their equity exposure through positions in equity derivatives to reduce the risk to their equity portfolio and qualify as equity funds for taxation purposes.

So, if you invest in a dynamic asset allocation fund, you don’t need to worry about two funds – one equity fund and a debt fund. Also, dynamic asset allocation funds are different from other hybrid funds. Other asset allocation funds like balanced funds, monthly income plans, etc, come with a pre-set percentage range of allocation for various asset classes. “These funds too can change their portfolio asset allocation depending on various market factors, but only within their pre-set asset allocation ranges determined by the Sebi’s fund categorisation regulations,” points out Kukreja.

Smart SIP vs dynamic funds

While Smart SIPs and Dynamic Asset Allocation funds aim to do the same thing, there are some differences. “The allocation of investors’ money is fully disclosed every month in a transparent manner with SmartSIP. Not so the case with dynamic funds,” says Meenakshi.

The second difference is that in case of dynamic funds, the asset allocation and investment decisions are taken by the MF management team. “In case of these SIP variants, the asset allocation decision appears to be taken by the MF distributor or brokers’ team. They rely on some in-house model to decide how much of equity and how much of debt every month. Of course, once it is decided how much goes into equity and how much goes into debt, the money will be invested in schemes with good fund managers,” says Rajesh Sharma, an investment expert.

The third difference is that though dynamic asset allocation funds are free to dynamically change their exposure to various asset classes from 0-100%, the funds rarely go for 0% equity. Technically, Smart SIPs can go much higher or much lower depending on market conditions, giving them the real power to be dynamic.

Doing dynamic asset allocation on your own

What are the problems if someone does the job of dynamically changing asset allocation on their own? It would require constant observation of changing market trends and valuations and appropriate changes to the investment portfolio. As this requires knowledge and skill-sets that most individual investors may lack, poor market interpretation and wrong decisions may increase the risk of loss and missed opportunities.

Frequent portfolio rebalancing may also increase your investment cost through exit loads and short-term capital gains tax. Thus, dynamic asset allocation funds save individual investors from the complicated task of asset allocation and help reduce the cost associated with the frequent rebalancing of the portfolio,” says Kukreja.

SPREAD YOUR RISKS

  • By default FundsIndia’s SmartSIP invests 70% in equity fund and 30% in debt fund
  • Dynamic asset allocation funds change their exposure to various classes from 0-100% based on quantitative models
  • R Wadiwala’s Smart SIP puts new money into debt when market/index are quoting at more than 19-20 times it earnings

 

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Nisha Shiwani hails from the pink city of Jaipur and is a prolific writer. She loves to write on Real Estate/Property, Automobiles, Education, Finance and about the latest developments in the Technology space.



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Business

First ATM installed at more than 11000 feet above sea level at Kedarnath

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The Uttarakhand chief minister of the double engine government Trivendra Singh Rawat has today inaugurated the ATM service at the historic Kedarnath Shrine precincts at more than 11000 ft altitude, after it was washed away in the massive ecological disaster of June 15. This is the only ATM in the entire Kedarnath valley.

Thanks to the untiring efforts and dedicated commitment of Uttarakhand government for having taken the pains to finally to get the ATM installed at the ancient Kedarnath Shrine after protracted five years, where more than two lakh pilgrims and tourists visit every season to pay their revered obeisance to Baba Kedarnath in His historic shrine established centuries ago.

Even the prime minister Narendra Modi visited this Kedarnath about four to five times after the dreaded ecological disaster for paying obeisance to Lord Shiva at Kedarnath and also directed the state government to expeditiously carry out the reconstruction work in the Kedarnath Dham precincts.

A massive budget was also allocated for the complete facelift of this historic shrine.

If we measure the approximate number of visitors at this historic shrine taking an average of one lakh visitors every season, the figure would come to more than five lakhs.  One can imagine how much inconvenience the visiting pilgrims were confronting in the absence of an ATM. The earlier available ATM was washed away in the heavy deluge on June 15/ 16 2013 that killed thousands of pilgrims from all over India who’d converged for Lord Kedar’s darshan.

We remember the news of this ATM being damaged due to the high-velocity tides and currents and of the deluge of the Chora baari lake also known as Gandhi Sarovar in June 2013.

On the day of this deluge and afterward, wads of notes were seen floating far away in the river which was finally picked up by some Sadhus who tried to siphon them off clandestinely but were caught carrying the wads of notes collected by them floating in the water.

Finally, the government of Uttarakhand realized this inconvenience to pilgrims and opened the only ATM at Kedarnath Shrine. The chief minister Trivendra Singh Rawat jubilantly inaugurated it. Better late than never, after more than five years in 2019 we have the ATM again after it was washed away in 2013.

In a tweet, today along with the pictures of inauguration of this new ATM the chief minister Trivendra Singh proudly tweeted: Harsh ka vishay hai ki Kedarnath Dham mein pehla ATM aaj se shuru ho gaya hai. @ HDFC _Bank dwara sthapit ATM se shradhaluon ko badi raahat milegi. 2013 ki aapda mein Kedarnath mein maujud ATM bah gaya tha.

Matter of pleasure to announce that a first ATM has been installed at Kedarnath shrine. The HDFC ATM will be of immense help to pilgrims. In 2013’s disaster the Kedarnath ATM washed away in the deluge.

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Business

Dr. Ashutosh Karnatak is the new CMD of GAIL ( India) Ltd

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Dr. Ashutosh Karnatak, new CMD of GAIL ( India) Ltd
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Gas Authority of India Limited with its headquarter based in New Delhi’s Bhikaiji Cama Place has nominated its new Chairman Cum Managing Director. Dr. Ashutosh Karnatak earlier serving as Director project GAIL since 2014 has today taken over charge as the new CMD of this highly profit-making organization. The earlier CMD Mr. Tripathi has retired.

Mr. Ashutosh Karnatak carries behind him a rich experience of 37 protracted years in the hydrocarbon sector and is also concurrently serving as Director ( Projects) in GAIL.

As per the financial projections till February 2019 the state-owned gas distribution company GAIL ( India) Limited jumped in the third quarter profit beating market estimate, buoyed by a surge in revenue from its natural gas marketing segment says a TOI report published in February. According to the report, the profit for the quarter ended then on December 31 last came to a whopping 16.81 billion rupees i.e. 234.32 million dollars compared with a profit of 12.62 billion rupees last year as per the GAIL’s projections.

According to the Refinitiv Eikon data quoting TOI report sixteen analysts on average estimated the company, which also engages in the transmission of petrochemicals and liquefied petroleum gas, posted a profit of 15.51 billion in a quarter.

The TOI report of Feb 2019 further says that GAIL’s revenue from operations surged 37.3% to 197.89 billion rupees. Similarly, it’s gas marketing segment which accounts for more than 3, 4th of the total revenue enhanced to a whopping 46%.

Along with Dr. Ashutosh Karnatak who took charge as CMD GAIL, Dr. Kulbhooshan Baluni also took charge as Director IIM Kashipur and Professor Padhy as Chairperson of IIM Kashipur Campus, Dun today. Mr. KC Pandey of Awaj Suno Pahadon ki and Uttarakhand Journalists Forum extended their heartiest congratulations to all of them for their enlightened future.

Dr. K. C Pandey a renowned entrepreneur of Uttarakhand and social activist congratulated Dr. Karnatak on assumption of the charge as new CMD GAIL at his Bhikaiji Cama place office by presenting a bouquetin person.

A post-graduate from IIT Delhi Karnatak graduated in electrical engineering from HBTI Kanpur. He is credited for developing an innovative project monitoring and controlling technique ARJUNA and a capability-building model. He accompanies with him a 39 years experience in Oil and Gas sector who joined GAIL in 2014 and reached its top slot just in a span of 4 and a half years.

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Finance

Benefits of filing ITR (Income Tax Return) even if you are below taxable limit

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ITR Receipt is an important document
Having an ITR receipt is important because it is more detailed than Form 16, entailing your income and taxation along with revenue from other sources.

Use as address proof
ITR receipt is sent to your registered address, which can serve as residential proof.

Helps the bank loan documentation process easier
Being a diligent income tax filer makes it easier for banks to assess your source of income when you apply for loans like an auto loan, home loan, personal loan, etc.
“Banks usually ask for copies of tax returns filed for previous 2-3 years at the time of applying for the loan to ascertain the income capacity of the individual. Hence, to apply for loans a tax return would be required to be filed”.

Avoid penalties or scrutiny from the tax department
From FY 2017-18, up to INR 10,000 would be levied for non-filing of ITR. This black mark will remain for years to come.

For a hassle-free visa application procedure
At times visa authorities ask for copies of past tax returns, hence to apply for a visa a tax return would be required to be filed. Embassies, especially those of US, UK, Canada, etc. when processing your foreign visa application, are particular about your tax-compliance.

To buy an insurance policy with a higher cover
If insurance companies have reasons (non-compliance) to believe that you are a tax-evader, they will not give you policies with more cover.

Refund
When employed, your employer will deduct TDS on your income. However, if you have made investments that are tax deductibles, it reduces your taxable income. So, the TDS deducted can be refunded, but only if you file your return. The same holds true for TDS deducted by any other sources.

Makes life easier for freelancers and independent professionals
Freelancer or self-employed people don’t have Form 16. This is the only document they have to show that he has filed the ITR. Without this, they can face funding issues and transactional problems.

Government tender
Experts say that if one plans to start their business and need to fill a government tender or two for the same, they will need to show their tax return receipts of the previous five years. This again is to show your financial status and whether you can support the payment obligation or not.
However, this is no strict rule. It may vary depending on the internal rules of the government department. Even the number of ITRs required can vary.

Credit Card Processing
Banks can reject your credit card application if you haven’t filed your ITR.

Compensate losses in the next financial year
Unless you file the ITR, you cannot recompense your expenses/losses in the previous financial year to the current. As per the income-tax provisions, if tax returns are not filed on time, unadjusted losses (with some exceptions) cannot be carried forward to future years. Hence, to ensure that the losses are carried forward for future adjustment, a tax return would be required to be filed.

Helps to avoid extra interest
If you don’t file ITR, the belated return could lead to extra interest at 1% per month for the remaining tax payable by you. For example, banks would deduct tax from interest on fixed deposits exceeding a certain threshold. To claim a refund of tax deducted by the bank (if any) on the interest income, a tax return would be required to be filed regardless of the taxable income.

This helpful article curated from the web.

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Business

Have we registered our brand name yet?

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The brand name is the very soul of the company. With the rise in the number of brands in India, the likelihood of the brand name being stolen has increased. Therefore, it is high time that we take measures to protect our brand name through Trademark registration.

Why we should consider trademark registration?

1. Because the brand name is the very identity of our product or service.
2. Because a brand name makes the customers recognize our product among many.
3. Because with trademark registration, we can deter the infringers from stealing our mark.
4. Because trademark registration gives a monetary value to our mark
5. Because trademark registration opens the door to business expansion through licensing.

This important article curated from the web.

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Finance

It’s a pro people budget says PM Modi

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Prime minister Narendra Modi has praised the first budget presented by the fimnance minister Dr. Nirmala Sitaraman after the formation of the NDA 2 government, terming it as prosperous which makes every person of the country self reliant.

Prime minister Narendra Modi in a vedio posted in his twitter handle said that the budget would strengthen the poor of the country and accord the youth an enlightened and prosperous future.
He also ensured that the budget will provide the people of the middle class progress and prosperity.
Terming it as a development oriented budget prime minister Narendra Modi added that not only will the budget simplify the tax structure but will also lead to modernisation of the infrastructure.
Praising his new governments first tenure  prime minister Narendra Modi said  that the people of the country and their lives have tremendous expectations from his government and this budget is very much in tune with their assumptions and expectations assuring them fully that their every demand would and expectations would be fulfilled.
It’s give the assurance that its in a right direction and speed and is therefore all set to achieve  the true objectives.
He said that this budget would strengthen the industries and the industrialists/ entrepreneur and enterpreneurships, both and also enhance the process of women’s participation in the development process of thr country.
Extremely satisfied and jubilant over the new budget, prime minister Narendra Modi called it a green budget in which the environmental, electric mobility and solar sectors were promptly and especially encouraged.
He  said that the previous government under his five year tenure has left behind environment of  pessimism behind  and is all set to move forward  with immense optimism and confidence.
The budget however has increased excise of one rupee each on the petro diesel products, enhanced  2.5 percent tax on silver and gold with additiinal cess on tobacco products.
However on the purchase of a house worth Rs 45 lakhs it has given tax relief on the amount of 3.5 lakh rupees but the middle class got no relief on annual tax exemption.
The income tax limit of five lakh exemption granted in the vote on account budget before the elections however stands applicable with no tax on the yearly income of Rs. five lakhs.
The tax has also been enhanced on the annual income above three and five crores to 3% and 5% respectively.
The Bahujan Samaj Party  and Congress party have severely criticized the budget.
The BSP president Mayawati termed the budget of Modi government as the one implemented for encouraging crony capitalism and crony capitalists including the private sector of the country leading to further  enhancing the problems relating to unemployment, inflation, poverty, farmers n ruler distress of the poor, marginalised classes, the dalits and the toiling masses of the country.
This budget is anti poor which restricts the economic development of the country added Mayawati in her tweet.
The  chief spokesperson of Congress party Randeep Singh Surjewala also criticized the Budget 2019 severely, saying that during the last five years during the Modi government tenure, the excise duty of diesel  has been increased by 443% and on petrol by 211%.
By this way his government has earned Rs 13, 00, 000 crores by cutting the pockets of the common men. Now Modi 2.0 has sprinkled petrol like pouring  ” salt on the burned injury”.
The budget has by increasing Rs. 2 as excise on petrol and diesal literally broken the backbone of the middle class, farmers and the common men of the country.
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Business

DPIIT summons food aggregators like Zomato, Swiggy over predatory pricing

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The Department for Promotion of Industry and Internal Trade (DPIIT) has summoned food aggregators including Swiggy, Zomato, Foodpanda and Uber Eats over restaurants complaint of them engaging in deep discounting. The dispute between restaurants and food aggregators has been going one for almost a year.

DPIIT has called meeting to resolve offline restaurant concerns, which is quite similar to what offline retailers had with e-tailers, said an official aware of the development.

The meeting will be attended by food aggregators and restaurant associations, including the Federation of Hotel & Restaurant Associations of India and National Restaurant Association of India. It will be chaired by DPIIT secretary, Ramesh Abhishek.

Govt will try to address the restaurants issues through mutual discussion and find equal growth opportunity for the industry, reportedly said officials.

Commerce and industry minister, Piyush Goyal, had earlier warned e-comm firms, in almost similar cases, to avoid hurting small businesses through their predatory pricing practices. Goyal had categorically said that the government will not allow small retailers and kirana shops to be wiped out.

The restaurant associations have time and again complained against food aggregators harming their business through making consumers discount addicts.

Two months ago, restaurants had complained, about the impact of deep discounting offered by food aggregators, on their business. Through predatory pricing food aggregators are forcing restaurants to drop prices, restaurants said.

Food aggregators have also indulged in running their own private labels, who are eating away their businesses and using consumer behaviour data to consolidate their business, they added.

In January, over five hundreds of restaurants had complained to the CCI.

 

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Business

Delhi High court restrains Hotelier Association from calling for ban on Oyo Rooms

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The Delhi High court has restrained the Hotelier Welfare Association from issuing any notices to hoteliers and service providers calling for a ban on or seeking to boycott the hotel services provided by Oyo Rooms.

The ex-parte interim injunction order was passed by a vacation Bench of Justice Jayant Nath in a suit by the owner of Oyo Rooms, Oravel Stays Private Limited (plaintiff)  against the Hotelier Welfare Association (defendant).

The Court was informed that the plaintiff is in the business of standardizing unbranded budget hotels, bed and breakfast and guesthouses through online and offline channels.

It was further explained that the plaintiff enters into business arrangements with the service providers or hotelier, in which the service provider or hotelier permits the plaintiff to have full control over pricing, booking brought in by the hotel, publishing room tariffs on its website and/or mobile application at any point in time etc.

It was the plaintiff’s grievance that the defendant had been illegally conspiring and colluding with other similar hotelier associations such as Budget Hotel Association of Mumbai to coerce the plaintiff into submitting to their unwarranted, illegal demands.

Pursuant to the various statements, notices/letters issued by the defendant, several hoteliers had expressed their apprehension in continuing their business-relation with the plaintiff, the Court was further informed.

The Court also perused one such notice allegedly by defendant association, calling upon all hotels to support a nationwide protest against OYO by boycotting and blocking OYO rooms from June 20.

The conduct, the plaintiff argued, had halted its business and could also potentially impact more than 1,35,000 bookings across India.

It was also pointed out that the defendant was earlier the business partners of the plaintiff but have now formed an association and have been acting against the plaintiff.

After hearing the plaintiff, the Court concluded that a prima facie case had been made out against the defendant for an ex parte injunction order.

The Court thus restrained the defendant from issuing notices or calling other hoteliers/service providers to boycott the plaintiff in any manner whatsoever till further orders.

Oyo Rooms was represented by Senior Advocate Neeraj Malhotra, briefed by a team of Advocates from IndusLaw Sandeep Grover, Mohit Chadha, Pankhuri Bhardwaj, Tarang Aggarwal, and Kshitij Parashar.

  1. The matter will be heard next on August 8
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Business

Mindtree gives three board seats to L&T, Subroto Bagchi resigns

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Mindtree’s board has appointed three L&T senior leaders including chief executive officer and managing director executives S N Subrahmanyan. Engineering major L&T, whose target is to up its stake in the mid-tier IT services companies to more than 66%, has got three seats on Mindtree’s board.

The Board of Directors and the Nomination and Remuneration Committee on Thursday approved the appointments of S N Subrahmanyan, J D Patil, Senior Executive Vice President for L&T’s defence business and Ramamurthi Shankar Raman, chief financial officer, L&T as non-executive directors, the company said in a filing.

These appointments will be effective July 16 subject to shareholders’ approval.

Co-founder Subroto Bagchi has resigned from Mindtree’s board. The company said Bagchi, who is retiring on July 16, did not offer himself a reappointment.

The Bengaluru-headquartered IT firm has also approved the appointments of Prasanna Rangacharya and Deepa Gopalan Wadhwa as independent directors on the board.

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Business

Paytm to dole out incentives for merchants at kirana stores

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In a move to make deeper inroads in the country, digital payments company Paytm on Thursday announced to push cashback from peer-to-peer UPI transactions to offline merchant payments at retail kirana stores.

The company is aiming to partner with almost 20 million retail kirana stores, enabling them to accept all digital payment modes including UPI, wallet and cards.

“Paytm will invest money in offline merchant expansion instead of driving incentive led P2P transactions. Our offline merchants create high-frequency usage and an important use-case for Paytm consumers,” said Deepak Abbot, Senior Vice President, Paytm.

UPI P2P payments are mostly done by users to receive‍ some extra money. On Paytm, the UPI users are already the ones who have been using a large host of Paytm services for a long time and don’t nerd cashbacks to make payments.

“To further help merchants get better access to capital and provide more financial security Paytm will invest on lending and insurance, rather than on P2P payments,” the company said in a statement.

Through its payment ecosystem, Paytm has already created a network effect with over 5 billion transactions in 2018-19.

It also claims to have 12 million merchant partners accepting payments through Paytm QR, which accepts all digital payment instruments like UPI, wallets, cards and netbanking.

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Business

Piramal Enterprises Sells Entire Stake In Shriram Transport Finance

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Piramal Enterprises Ltd. has exited Shriram Transport Finance Company Ltd. by selling its entire stake in the asset financier.

The billionaire Ajay Piramal-backed company sold 9.96 percent stake in Shriram Transport to third-party investors, according to an exchange filing. A total of 2.26 crore shares of Shriram Transport changed hands via two block deals in the National Stock Exchange—1.3 crore shares were sold at Rs 1,023.55 apiece and another 0.9 crore shares at Rs 1,027.25.

The total value of the deal stood at Rs 2,316 crore—a gain of 42 percent since 2013 when Piramal Enterprises had bought 10 percent in Shriram Transport for Rs 1,636 crore.

Piramal Enterprises is looking to consolidate the financial services businesses, Chairman Ajay Piramal had Reportedly said after the fourth quarter earnings announcement.

“We are seeing how to create value for Shriram and Piramal shareholders. One of the steps is to bring all Shriram companies into one. That will create value for Shriram shareholders,” Piramal had said in April. “We are also looking to exit. If we get the right value and the right buyer, we may do it.”

Piramal Enterprises also owns 10 percent in Shriram City and 20 percent stake in Shriram Capital—an unlisted holding company of the Shriram Group. It has invested Rs 801 crore and Rs 2,146 crore in Shriram City and Shriram Capital, respectively. Piramal Enterprises’ total investments in Shriram Group stood at Rs 7,259 crore as of March 2019. That, however, was prior to Monday’s block deals.

Shriram Transport shares fell as much as 7.8 percent after the block deal, while Piramal Enterprises’ stock rose nearly 2 percent. That compares with a 0.62 percent decline in the NSE Nifty 50 Index.

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