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Commentary

MV Chronicle: Insurance Liars, Nifty Charts, Downside Triggers

MarketVision’s April 16 Chronicle is on Insurance Liars, Nifty Charts and Downside Triggers.

Submitted by Deepak Shenoy on 17 April 2011 – 12:07am

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(Excerpt follows)

Insurance Liars


I got a call from Reliance Life Insurance (or an agent ) today. They told me about a “Money Multiplier plan” in which

  • You pay Rs. 30,000 for a “cover” of Rs. 300,000
  • If you die your family gets TRIPLE cover – that is, 900,000.
  • The insurer will even pay for any hospitalization or illnesses that happen. I asked if this is extra, they said this comes with the policy.
  • After 10 years, if you survive you get Rs. 700,000 , Guaranteed. I repeated, “Guaranteed?”, and he said, yes. His boss, a lady exec, confirmed that it was guaranteed as well.

I am a cynical guy, but you never know. So I went and looked at the real product on their website and did a calculation for my age (36).

  • The premium for my age, for 300,000 sum assured is Rs. 44,000.

The Nifty Chart

It was a treacherous fractured week in the markets. With Tuesday and Thursday as holidays, markets were looking to have extremely low volume, but it seems that the exact opposite has happened.
Let’s take a look at the Nifty this week, with the volume and Open Interest (near and mid month futures) changes:
Nifty changes
Nifty fell overall, around a half percent, but volumes on the 15th, when it dropped nearly one and a half percent, were very high at 9,200 crores. The futures Open Interest, though, fell in the same time.
It looks like a number of people went long on Wednesday, assuming this move would break through an established downtrend line, but it didn’t. The technical signals on the Nifty are confusing:

 

Downside triggers

A number of negative  events are on the radar nowadays.
Energy: Crude prices have shot up tremendously to $120+ on Brent, even after crude prices fell. Coal prices have gone up about 30% in the year as well. The price of coal and crude is extremely important for us – most of our power generation is impacted, much of our transportation, plastics, air travel and other related costs are dependant.

Editor’s Picks


Greek restructuring increasingly likely (The Big Picture)

Debt holders of Greece and Portugal continue to throw in the towel on the belief of getting fully repaid as 5 yr CDS in both hit record levels and yields spike

China Changes How It Reports GDP – Real Time Economics (WSJ)

The National Bureau of Statistics is bringing China’s gross domestic product data closer to international standards, but will likely ignite some controversy along the way.

Chinese Real Estate Bubble Pops: Beijing Real Estate Prices Plunge 27% In One Month (zero hedge)

Prices drop 26% in a month! Purchases fell 50%.

Briton arrested for swearing “beaten to death” in Dubai police cell (Mail Online)

Lee Bradley Brown, 39, was on holiday at a £1,000-a-night hotel in the Arab state when he was thrown into a filthy cell at the notoriously brutal Bur Dubai police station.

Videos


Three New Videos This Week!

Choose Liquid or Ultra Short Term Fund?

MV Chronicle: Insurance Liars, Nifty Charts, Downside Triggers

A reader asked how he should decide between buying a Liquid fund or an Ultra Short Term fund. Deepak takes you through the differences, in a continuation from the Lesson on Liquid and Ultra Short Term Funds.

(6 min)

See also: An article by Deepak on our blog on why the NAV change was made.

(See Video)

Five Stocks in Five Minutes: April 13, 2011

Deepak takes you through five stocks he’s long right now: Gravita, Camlin, Gujarat Fluoro, REC and Firstlease.

Purely technical – just charts of price and volume.

(5 min)

(See Video)

Liquid and Ultra Short Term Mutual Funds

MV Chronicle: Insurance Liars, Nifty Charts, Downside Triggers

What are Liquid and Ultra Short Term Mutual Funds in India, and why would you consider them versus a Fixed Deposit?

Deepak Shenoy takes you through:
* The concept of liquid funds
* Where do they invest?
* Dividend and Capital Gains taxes involved
* Interest Rates
* Comparison with Fixed Deposits

(15 min)

(See Video)

Past Short Takes:

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