India's IT outsourcers face increasing costs

India's information technology outsourcing sector is heading for crunch time next year, as a rising currency and increasing wage and real estate costs force the industry to rethink how it does business.

Multinationals continue to view the country as one of the most viable outsourcing destinations, but competitive pressures are making other countries look attractive.

Vineet Nayyar, chief executive of Tech Mahindra [Get Quote], described as "horrible" the impact on IT margins of a 12 per cent appreciation of the rupee against the dollar this year.

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"All your emerging sectors are going to have major problems because of the currency adjustment," Mr Nayyar said.

India's IT outsourcing companies have been among the worst performing on the stock market this year. The sector has underperformed the MSCI India index by 47 per cent.

Much of the negative sentiment concerns the stronger rupee, which hit Rs39.16 against the dollar last month, its strongest level since March 1998.

Indian IT outsourcing companies earn most of their revenue in foreign currencies, particularly dollars, but they incur most of their costs in rupees.

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The leading companies, such as Infosys Technologies [Get Quote] and Tata Consultancy Services [Get Quote], have so far largely maintained their margins. Measures they have used to keep margins up include moving more work onshore and hiring cheaper graduates from disciplines other than engineering. They have also employed hedging.

Analysts believe, however, that a longer-term shift in strategy is necessary if India's IT companies are to prevent more work going overseas to emerging centres such as Vietnam, China and Brazil.

Gartner, the research group, in a study of outsourcing destinations, found that India accounted for 28 per cent of the estimated workforce available globally for offshore work. That makes the country the largest such labour pool in the world.

But the study also found that costs were rising fast. Salaries are climbing an average 14.5 per cent a year, almost double the rate in China and the Philippines, and the rate of attrition is 20 per cent to 25 per cent.

"The attrition [rate] leads to the challenge of consistency and therefore of quality for buyers of these services," said Ian Marriott, research vice-president at Gartner. "And so the whole appeal of India is starting to just lose a little bit of the gloss.

"It's still very appealing for a whole variety of reasons but it's starting to get people thinking: should we investigate other locations as well, probably not as an alternative necessarily but in addition to India."

Indian companies needed to move away from thinking that more demand meant more hiring and extracting greater productivity out of existing workforces, Mr Marriott said.

While the larger companies were also trying to become more global and were setting up centres in other offshoring locations, this was not an option for the small and medium-sized outsourcers, he said.

These smaller companies had to become more specialised. "They've got to be very niche by design and very focused on specific markets, specific services, specific kinds of customers," Mr Marriott said.

How to fill up your IPO application

By the second week of November 2007, as many as 81 initial public offerings had listed on the National Stock Exchange this year -- significantly higher than the 73 and 50 issues in 200 and 2005, respectively.

If you have never been to the great Indian IPO party but want to join in, you need to know that the way you fill up your application form could determine your chances of getting an allotment.

Here's a beginners guide to scoring high by filling your IPO application right.

1. How to apply

You need to have a trading and a demat account to bid in an IPO. You can apply offline or online.

Offline

(i) Visit the distributor of the IPO and collect the 'bid-cum-application form.'

(ii) Fill the form carefully. The information asked for will include the name of the applicant, his address, his Permanent Account Number, the category he is applying under, the name of the depository participants (DP), DP ID, beneficiary account number, the number of equity shares the applicant is bidding for, the price per equity share he is willing to pay, and the cheque/draft number. The applicant should fill up the whole form himself and ensure that the name he enters in it is identical to what appears in his demat account.

(iii) Investors have been divided into different categories and the account in favour of which the cheque/demand draft (DD) is drawn depends on the category. So, ascertain your category and mention the correct account. For instance, in the issue of Mundra Port and Special Economic Zone, cheques/DDs of resident qualified institutional buyers had to be drawn in favour of Escrow Account-MPSEZ-QIB-R and those of resident retail and non-institutional bidders in favour of Escrow Account-MPSEZ-R. Write the bid-cum-application form number the reverse of the cheque/DD.

(iv) Companies issue IPOs in different lots, each of them containing a particular number of shares. Your bid will have to be in denominations of lot sizes.

(v) Photocopy the form after filling it.

(vi) Submit the filled application form to sub-syndicate/syndicate members in case of book building and to the bankers directly in case of fixed price issue. Now, you will have to wait to see if you get shares. Take the acknowledgement slip and keep it and the photocopy of the application form with care till you get the shares of your money back.

2. Revision of bid

To revise your bid, submit the bid revision form, which comes along with the bid-cum-application form. The new form will have all the information that you gave in the earlier one and also your revised bid.

3. If things don't happen on time

In case of delay in share allotment or refund if shares are not allotted, write to the registrar of the issue or its lead managers or the compliance officer of the company. If you don't get a reply or it is unsatisfactory, you can complain to the investor grievance cell of the Securities and Exchange Board of India, giving a copy of the application form.

4. Allotment process

There are three categories of investors: qualified institutional investors (like banks, mutual funds and insurance companies), non-institutional investors (NIIs -- individuals investing more than Rs 1 lakh) and retail investors (individuals investing less than Rs 1 lakh). If the NII and retail categories get oversubscribed, a lottery is held among applicants and then shares are allotted on a proportional basis.

So, if the retail category is oversubscribed by 10 times after the lottery, an investor who has applied for 50 shares will get five shares.

5. How to optimise your chance of getting share allotment

(i) Fill the application form correctly so that it is not declared invalid.

(ii) In a book-building issue, the bid has to be made between the floor price and the ceiling price. Let's say the band is Rs 800-850 and there are 100,000 shares in the retail segment. Now, if applications for 10 lakh (1 million) shares come in at Rs 850, all the retail segment shares will be allotted on a proportional basis among applicants at this price after a lottery.

Usually, oversubscription is so overwhelming at the ceiling price itself that allotment is restricted to applicants at this price only. Therefore, you can bid at the ceiling price to increase chances of allotment.

The alternative scenario is when all shares do not get lapped up at the top of the band. Say, applications for 10,000 shares come in at Rs 850. All of them will get allotments as the number of shares applied for at the price is less than the number of shares available.

Then, the next highest bid will be taken. Say, 15,000 shares were applied for at Rs 849. Again, all these applicants will get allotments. This process will continue. Now, if 95,000 shares get allotted by the time Rs 831 is reached, and 10,000 shares are applied for at Rs 830, then Rs 830 will be the cut-off price.

Retail investors have the option of 'applying at the cut-off price.' If 15,000 shares are applied for at the cut-off price, the retail shares that remain (5,000) will be allotted to the cut-off price applicants and those who had bid at the price which turned out to be the cut-off price through the usual way -- lottery and then proportional allotment.

So, if you want to bid at a price lower than the ceiling price, you can increase your chances of getting allotment by specifying in your application that you are bidding at the cut-off price.

(iii) Chances of success if bids go to lottery improve if there are multiple applications.

(iv) The chances of shares coming to your family improve if your relatives apply too.

(v) The NII quota, in which high net-worth individuals (HNIs) bid, is 15 per cent; the retail quota is 35 per cent. So, the possibility of your family getting shares are higher with multiple retail applications by your relatives than with a single HNI application.

Says Vinay Mehta, managing director, Almondz Global Securities: "New issues are more inclined towards retail investors than non-institutional investors as the retail category has a higher allotment and lower oversubscription level."

Many post issues had this oversubscription pattern. Chances of getting allotment are higher when the oversubscription is lower.

Manish Bardia: Man behind Modi's mask

From making small advertisements for local cable networks to playing a key backstage role in Gujarat Chief Minister Narendra Modi's electhttp://www.rediff.com/news/gujaratelection07.htmlion campaign, the 39-year-old Manish Bardia's 16-year-old Moving Pixels Company has come a long way.

The fine arts professional's claim to fame is that he and his 30-member team designed and created the famous Modi masks and contributed to the Brand Modi campaign over the past six years. Bardia, however, prefers to downplay his contribution, attributing a large part of its success to Modi himself.

"Like professionals, we have executed the brief of our client. The entire campaign was conceived by Modiji and there were so many people who contributed to the success of the campaign," says Bardia. "Moreover with Modiji, one just has to execute his ideas and one is through," he adds.

Today, MPC has corporate clients such as Reliance [Get Quote] (Vimal), the Adani Group, Rasna, Motif India, Torrent [Get Quote], Ratnamani Steel, Intas Biotechnology and Hipolin, apart from several central and state government agencies like GSPC as well as various NGOs.

But the turning point in the company's fortunes was, undoubtedly, its bagging of the Modi government's campaign. "I have worked with many corporates. But Modiji's understanding of the media is unmatched and can put any top corporate honcho to shame," says Bardia.

He has carried out various media campaigns for the Gujarat government such as the Vibrant Gujarat 2007 summit, Jyotigram, and GSPC's gas find, to name just a few. MPC has also done four projects for Vasundhare Raje's government in Rajasthan.

It was in 2002, when the post-Godhra riots had resulted in a slowing in business, that Bardia got the chance to work with Modi. He shifted his office from Khanpur, a part of old, communally sensitive Ahmedabad to the posh Vastrapur area some time back. "The earthquake project we got from the state government worked out well," he says with pride.

After completing his commercial art course in 1990 from the C N Institute of Fine Arts in Ahmedabad, Bardia, who hails from a business family of Rajasthan, moved to Mumbai to work for ad agencies. A year later, he returned to Ahmedabad and started MPC in a rented accommodation. Another year down the line, Bardia got five more people to work for him.

"After working for a few years, we got noticed by ISRO and got a project for the PSLV launch. We did the animation for the project," he recalls. After this, there was no looking back.

The Ahmedabad-based company is now a part of the publicity department of ISRO's Mission-to-Moon project. That's where Bardia hopes his work will take his company some day.

GLOBAL MARKETS - Stocks shaken by Bhutto killing; bonds up

SINGAPORE (Reuters) - Asian stocks fell on Friday as news of the assassination of Pakistani opposition leader Benazir Bhutto and fears over regional political turmoil triggered a flight to less risky assets such as bonds and gold.

Investors fear that Bhutto's killing on Thursday at a political rally in Rawalpindi could spark instability in the region and civil unrest within Pakistan.

"It would have quite a big impact on flows into the region since political risk is one the big factors when you invest money," said Martin Arnold, equities economist with Commsec Securities in Australia.

"It is also going to impact commodities, and in particular oil, on expectations that further violence in the region could hamper oil supplies and production," he added.

U.S. light crude was up 19 cents at $96.81 a barrel by 0032 GMT, further boosted by a fall in U.S. crude supplies, while gold changed hands at around $826 an ounce after hitting a one-month high of $830.05 overnight.

Markets in the U.S. were unsettled by Thursday's news, with the Dow Jones industrial average shedding 1.4 percent and the benchmark 10-year U.S. Treasury note jumping 23/32 in price, pushing its yield down to 4.19 percent.

Japanese 10-year bond yields fell to 1.51 percent from 1.55 percent.

Indian-based American Depositary Receipts were dragged lower as Bhutto's death raised concerns about stability in South Asia.

Among the biggest losers were Mumbai-based commercial vehicle maker Tata Motors Ltd and ICICI Bank Ltd, which both shed around 6 percent.

MSCI's broadest index of shares excluding Japan was down 0.2 percent by 0038 GMT.

Benchmark indexes in Australia, South Korea and New Zealand fell by more than 0.5 percent.

Japan's Nikkei index fell 1.5 percent and was on course to end the year as the world's worst performing big stock market.

But global emerging equities dipped just 0.1 percent.

"The assassination in Pakistan pushed up oil prices and there is a worry that mounting geopolitical risks would further boost oil prices," said Kim Hak-kyun, an analyst at Korea Investment & Securities.

"But as Pakistan is not a country with developed financial markets and the country's connection with global credit markets is minimal, the case would have a limited and short-term impact on markets."

Pakistan 5-year credit default swaps, used to insure against restructuring or default, widened by at least 30 basis points on Thursday after Bhutto was killed in a gun and bomb attack.

CDS spreads widened by 30 basis points to 400-430 basis points, said one New York-based trader late on Thursday.

The Pakistan rupee was last quoted at 61.30 against the dollar, just off a 3-year low.

The dollar traded at 113.964 yen, having reached a seven-week high at 114.65 earlier on Thursday.

On top of concern over political unrest in Pakistan, a weaker-than-expected U.S. durable goods report fuelled yet more concern about the U.S. economy.

Benazir Bhutto assassinated

Pakistani opposition leader Benazir Bhutto was assassinated on Thursday in a gun and bomb attack as she left an election rally in the city of Rawalpindi.

State media and her party confirmed her death.

"She has been martyred," said party official Rehman Malik.

Bhutto, 54, died in hospital in Rawalpindi. Ary-One Television said she had been shot in the head.

Police said a suicide bomber fired shots at Bhutto as she was leaving the rally venue in a park before blowing himself up.

"The man first fired at Bhutto's vehicle. She ducked and then he blew himself up," said police officer Mohammad Shahid.

Police said 16 people had been killed in the blast, which occurred during campaigning for a January 8 national election. It is unclear if the poll will now go ahead.

"It is the act of those who want to disintegrate Pakistan because she was a symbol of unity. They have finished the Bhutto family. They are enemies of Pakistan," senior Bhutto party official Farzana Raja told Reuters.

Bhutto's father, Zulfikar Ali Bhutto, was Pakistan's first popularly elected prime minister. He was executed in 1979 after being deposed in a military coup.

A Reuters witness at the scene of the attack said he had heard two shots moments before the blast. Another Reuters witness saw bodies and a mutilated human head strewn on a road outside the park where she held her rally.

NO WORD FROM MUSHARRAF

A spokesman for President Pervez Musharraf said he had to confirm the news before commenting.

U.S. President George W. Bush was informed of Bhutto's death at his Texas ranch, where he was spending the year-end holiday.

Bush had no immediate reaction. A U.S. State Department official said: "The attack shows that there are still those in Pakistan trying to undermine reconciliation and democratic development in Pakistan."

In France, Foreign Minister Bernard Kouchner issued a statement firmly condemning what he called "this odious act".

"He pays homage to the memory of Ms Bhutto, an eminent figure in Pakistani political life," the ministry statement said.

"He reaffirms our country's commitment to Pakistan's stability and its democracy, which must be at the centre of attention of the entire international community."

A suicide bomber killed nearly 150 people in an attack on Bhutto on Oct. 19 as she paraded through the southern city of Karachi on her return from eight years in self-imposed exile.

Islamist militants were blamed for that attack but Bhutto had said she was prepared to face the danger to help the country.

In her speech on Thursday, Bhutto spoke of the risks she faced.

"I put my life in danger and came here because I feel this country is in danger. People are worried. We will bring the country out of this crisis," Bhutto told the rally.

TEARS, SHOTS

People cried and hugged each other outside the hospital where she died. Some shouted anti-Musharraf slogans.

Another former prime minister and opposition leader, Nawaz Sharif, spoke to the crowd.

"My heart is bleeding and I'm as grieved as you are," Sharif said.

Residents of Karachi, Bhutto's home town, said they had heard gun shots after news of her death spread, apparently from her enraged supporters.

On international financial markets, gold and government bonds rose while U.S. stock futures fell on Thursday after news of Bhutto's assassination.

Analysts say the shock of the Bhutto news triggered a classic capital flight to assets which are considered as safe havens in times of geopolitical stress.

Bhutto became the first female prime minister in the Muslim world when she was elected in 1988 at the age of 35. She was deposed in 1990, re-elected in 1993, and ousted again in 1996 amid charges of corruption and mismanagement.

She said the charges were politically motivated but in 1999 chose to stay in exile rather than face them.

Bhutto's family is no stranger to violence.

Both of her brothers died in mysterious circumstances and she had said al Qaeda assassins tried to kill her several times in the 1990s.

Intelligence reports have said al Qaeda, the Taliban and Pakistani jihadi groups have sent suicide bombers after her.

Maruti to raise vehicle prices in January

MUMBAI (Reuters) - Maruti Suzuki India Ltd, India's top car maker, said on Wednesday it will raise prices of some vehicles by 2-3 percent in January because of higher raw-material costs.
Maruti, a unit of Japan's Suzuki Motor Corp, will raise prices by 4,000-12,000 rupees, a spokesman said.
The company's models include the Alto and Swift hatchback. It started a scheduled plant shutdown for maintenance on Sunday, and will resume production on Jan. 2, the spokesman said.
Mahindra & Mahindra Ltd, India's top utility vehicle maker, said last week it would raise prices of its utility vehicles by up to 10,000 rupees per vehicle from Jan. 1 on account of higher raw-material costs.
Indian vehicle makers have traditionally raised prices in January, after the festival season when they often offer discounts and other incentives to boost sales.

Mukesh Ambani: The richest man on earth?

2007 has been an extraordinary one for Reliance Industries Chairman Mukesh Ambani. The 50-year-old's net worth shot up to $63.2 billion on the back of a booming stock market on October 29, making him the richest Indian in the world. Some media reports said Mukesh was now the richest man in the world, but the jury is still out on that.

During this year, the combined market capitalisation of four of his group companies -- Reliance Industries, Reliance Petroleum, IPCL and Reliance Industrial Infrastructure Ltd -- crossed the Rs 500,000 crore mark.

Although he is a modest man, Mukesh Ambani is currently building a 60-storey apartment at Mumbai's Malabar Hill. The building is estimated to cost $1 billion and is being designed after the Hanging Gardens of Babylon. It is expected to be completed by next September.

The media went into a tizzy when he bought his wife Nita a Rs 242 crore (Rs 2.42 billion), customised corporate jet on her birthday on November 1. The aircraft, an Airbus 319, has all the luxury trappings associated with the lifestyle of jet-setting kind such as a sky bar, a master bedroom as well as a bathroom with fancy showers.

The only setback for Ambani this year came in the form of opposition to Reliance Fresh, the retail chain division of Reliance Industries from small, local retailers. The latter attacked the Reliance Fresh stores, claiming that these stores would put their existence at stake. As a result, Reliance Fresh had to pull out of Uttar Pradesh.

Bihar likely to get an IIM in 2008

Bihar's dream of an Indian Institute of Management in Patna is likely to become a reality in 2008, official sources said on Thursday.

In the beginning, the institute will function from a temporary campus situated in the heart of Patna.

A senior official of the state government told rediff.com that IIM, Patna will be headed by rural marketing guru and Dean of Information Technology and Management Kozikhde V Mukunda Das.

"V Mukunda Das is all set to become the first director of IIM, Patna," sources said.

IIM, Patna, in the beginning, will start with only 60 students, which will later be increased with the expansion of its own campus.

Like other IIMs, the proposed institute in Patna will offer MBA and other management degrees. "Admissions to IIM, Patna will be made through the scores of the Common Admission Test conducted by IIM every November," sources said.

In the last year, Bihar chief minister Nitish Kumar to Union railway minister Lalu Prasad have been striving to make Bihar an educationally prosperous state by of setting up two elite institutes for higher learning, the Indian Institute of Technology and the Indian Institute of Management.

Rs 1 lakh car, Jaguar can co-exist: Ratan Tata

Tata Sons chairman Ratan Tata has said it should not be impossible for the world's cheapest (Rs 1 lakh) car to co-exist with prestigious brands like Jaguar and Land Rover despite an image disparity.

In an interview to The Times, Tata Motors [Get Quote] chief Ratan Tata exuded confidence in his company's ability to manage a diverse portfolio starting from the Rs 1 lakh car to British marquees Jaguar and Land Rover, which according to media reports the Indian company is set to acquire.

"How a company manages products in different sectors is the key. Toyota created Lexus, Nissan has Infiniti. No one is saying how can BMW handle the Mini? But they've made a huge success of it. So why is it impossible?" Tata said on being asked how would JLR fit into his company's product portfolio.

The world is waiting to catch a glimpse of the much touted Rs 1 lakh car, which would be unveiled at the Auto Expo in New Delhi on January 10, 2008.

Various reports in the international media suggest that Tata Motors has emerged as the preferred bidder for the two iconic brands of Ford Motors. Indian rival Mahindra and Mahindra and US-based private equity firm One Equity are also in the fray.

Tata Motors, with a bid of $2 billion (about Rs 8,000 crore), is the front-runner and the deal is likely to be sealed in favour of the company by end this week, British media reports said.

When asked to comment on apprehensions raised back home on too many small cars and at a price at which Tata Motors plans to sell them would herald and environmental nightmares, Tata said his product would be one of the greenest vehicles around.

"There are eight million two-wheelers put on the road every year which pollute more and are more dangerous. If you look at the total population, the incremental emissions will be minuscule. Why are we singled out?" Tata said.

8 reasons why stock market traders lose money

Many people think trading is the simplest way of making money in the stock market. Far from it; I believe it is the easiest way of losing money. There is an old Wall Street adage, that "the easiest way of making a small fortune in the markets is having a large fortune."

I discuss below eight ways of undisciplined trading which lead to losses. Guard against them, or the market will wipe you out. I am qualified to speak on this subject because I was myself an undisciplined trader for a long time and the market hammered me into line and forced me to change my approach.

1. Trading during the first half-hour of the session

The first half-hour of the trading day is driven by emotion, affected by overnight movements in the global markets, and hangover of the previous day's trading. Also, this is the period used by the market to entice novice traders into taking a position which might be contrary to the real trend which emerges only later in the day.

Most experienced traders simply watch the markets for the first half of the day for intraday patterns and any subsequent trading breakouts.

2. Failing to hear the market's message

Personally, I try to hear the message of the markets and then try to confirm it with the charts. During the trading day, I like to watch if the market is able to hold certain levels or not.

I like to go long around the end of the day if supported by patterns, and if the prices are consistently holding on to higher levels. I like to go short if the market is giving up higher levels, unable to sustain them and the patterns support a down move of the market.

This technique is called tape watching and all full-time traders practice it in some shape or form. If the markets are choppy and oscillate within a small range, then the market's message is to keep out.

Hearing the message of the market can be particularly important in times of significant news. The market generally reacts in a fashion contrary to most peoples' expectation. Let us consider two recent Indian events of significance.

One was the Gujarat earthquake that took place on 26 January 2001 and the other the 13 December 2001 terrorist attack on the Indian parliament. Both these events appeared catastrophic at first glance. TV channels suggested that the earthquake would devastate the country's economy because Gujarat has the largest number of investors and their confidence would be shattered, making the stock market plunge.

Tragic as both the events were, the market reacted in a different way to each by the end of the day. In both cases the markets plunged around 170 points when it opened, in both cases it tried to recover and while it managed a full recovery in the case of the Gujarat earthquake, it could not do so in the Parliament attack case.

The market was proven correct on both counts. The Gujarat earthquake actually held the possibility of boosting the economy as reconstruction had to be taken up, and also because most of the big installations, including the Jamnagar Refinery, escaped damage. In the case of the attack on parliament, although traders assessed that terrorist attacks were nothing new in the country but the market did not recover because it could see some kind of military build-up ahead from both India and Pakistan. And markets hate war and uncertainty.

In both these cases what helped the cause of the traders were the charts. If the charts say that the market is acting in a certain way, go ahead and accept it. The market is right all the time. This is probably even truer than the more common wisdom about the customer being the king. If you can accept the market as king, you will end up as a very rich trader, indeed.

Herein lies one reason why people who think they are very educated and smart often get trashed by the market because this market doesn't care who you are and it's certainly not there to help you. So expect no mercy from it; in fact, think of it as something that is there to take away your money, unless you take steps to protect yourself.

3. Ignoring which phase the market is in

It is important to know what phase the market is in -- whether it's in a trending or a trading phase. In a trending phase, you go and buy/sell breakouts, but in a trading phase you buy weakness and sell strength.

Traders who do not understand the mood of the market often end up using the wrong indicators in the wrong market conditions. This is an area where humility comes in. Trading in the market is like blind man walking with the help of a stick.

You need to be extremely flexible in changing positions and in trying to develop a feel for the market. This feel is then backed by the various technical indicators in confirming the phase of the market. Undisciplined traders, driven by their ego, often ignore the phase the market is in.

4. Failing to reduce position size when warranted

Traders should be flexible in reducing their position size whenever the market is not giving clear signals. For example, if you take an average position of 3,000 shares in Nifty futures, you should be ready to reduce it to 1,000 shares.

This can happen either when trading counter trend or when the market is not displaying a strong trend. Your exposure to the market should depend on the market's mood at any given point in the market. You should book partial profits as soon as the trade starts earning two to three times the average risk taken.

5. Failing to treat every trade as just another trade

Undisciplined traders often think that a particular situation is sure to give profits and sometimes take risk several times their normal level. This can lead to a heavy drawdown as such situations often do not work out.

Every trade is just another trade and only normal profits should be expected every time. Supernormal profits are a bonus when they -- rarely! -- occur but should not be expected. The risk should not be increased unless your account equity grows enough to service that risk.

6. Over-eagerness in booking profits

Profits in any trading account are often skewed to only a few trades. Traders should not be over-eager to book profits so long the market is acting right. Most traders tend to book profits too early in order to enjoy the winning feeling, thereby letting go substantial trends even when they have got a good entry into the market.

If at all, profit booking should be done in stages, always keeping some position open to take advantage of the rest of the move. Remember trading should consist of small profits, small losses, and big profits. Big losses are what must be avoided. The purpose of trading should be to get a position substantially into money, and then maintain trailing stop losses to protect profits.

Most trading is breakeven trading. Accounts sizes and income from trading are enhanced only when you make eight to ten times your risk. If you can make this happens once a month or even once in two months, you would be fine. The important point here is to not get shaken by the daily noise of the market and to see the market through to its logical target.

Remember, most money is made not by brilliant entries but by sitting on profitable positions long enough. It's boring to do nothing once a position is taken but the maturity of a trader is known not by the number of trades he makes but the amount of time he sits on profitable trades and hence the quantum of profits that he generates.

7. Trading for emotional highs

Trading is an expensive place to get emotional excitement or to be treated as an adventure sport. Traders need to keep a high degree of emotional balance to trade successfully. If you are stressed because of some unrelated events, there is no need to add trading stress to it. Trading should be avoided in periods of high emotional stress.

8. Failing to realise that trading decisions are not about consensus building

Our training since childhood often hampers the behaviour necessary for successful trading. We are always taught that whenever we take a decision, we should consult a number of people, and then do what the majority thinks is right. The truth of this market is that it never does what the majority thinks it will do.

Trading is a loner's job. Traders should not talk to a lot of people during trading hours. They can talk to experienced traders after market hours but more on methodology than on what the other trader thinks about the market.

If a trader has to ask someone else about his trade then he should not be in it. Traders should constantly try to improve their trading skills and by trading skills I mean not only charting skills but also position sizing and money management skills. Successful traders recognise that money cannot be made equally easily all the time in the market. They back off for a while if the market is too volatile or choppy.

No Quick Fix for Subprime Mortgages

WASHINGTON (AP) -- Be ready to wait if you want to get information from a toll-free hot line about freezing the interest rate on your subprime mortgage.

Minutes after President Bush outlined a plan to help strapped homeowners, callers were told to have patience until a counselor could answer their questions and "devote as much time to you as necessary."

But, once they do get through, homeowners may not find the answers they sought.

One caller to the hot line (1-888-995-HOPE) was told there would be "lots of hoops to jump through" to obtain the five-year freeze. The rate hold goes to the heart of the relief effort for people with subprime mortgages, which are loans offered to borrowers with tarnished credit or low incomes.

Even President Bush acknowledged the plan is "no perfect solution." Treasury Secretary Henry Paulson said it was not a "silver bullet."

Only a fraction of the homeowners who face huge jumps in their mortgage payments appear likely to be helped by the plan, negotiated by the Bush administration, to freeze the low introductory rates on their subprime loans for five years. After that, they could be in the same position again.

Homeowners dialing up their mortgage company to get their current rate frozen could be disappointed. The White House plan does not force mortgage companies to give eligible homeowners a break. It is voluntary.

Bush, announcing the initiative Thursday, said 1.2 million people could be eligible for relief. Aid includes the rate freeze and helping people refinance into more affordable mortgages. The Center for Responsible Lending, a group that promotes homeownership and works to curb predatory lending, estimates that just 145,000 families will qualify for the rate freeze. The criteria are too strict, it says.

The White House plan is aimed at stemming foreclosures, which have shot up to record highs as the housing market has gone from boom to bust.

Subprime borrowers have been hardest hit by the meltdown. Initially low interest rates that reset to much higher rates have clobbered those borrowers. Nearly 2 million adjustable-rate subprime mortgages will reset from introductory rates of around 7 percent to 8 percent to much higher rates this year and next. That raises the specter of even more people being forced out of their homes because they cannot keep up with their monthly payments.

Rising home foreclosures are a headache for politicians and a danger for the economy.

Bush tried to shift blame for the crisis to the Democratic-led Congress.

"The Congress has not sent me a single bill to help homeowners," Bush said.

One measure would give the Federal Housing Administration more flexibility; a second would change the tax laws temporarily to help people who have a portion of their mortgage forgiven by banks.

Sen. Charles Schumer, D-N.Y., complained the criteria for Bush's mortgage freeze are too narrow to help most distressed homeowners and worried that legal challenges by investors might stall the effort.

"While we certainly all hope this will be a shot in the arm for the housing slump, it is hardly a panacea," Schumer said. "There are too many families who may be left out, too much left up to the voluntary willingness of the private sector and too little disclosure and transparency to ensure families who do qualify are being helped."

Under the plan outlined Thursday, the rate freeze offer would be available only to people who have not missed any mortgage payments at their introductory interest rate. It also only would apply to loans taken out between 2005 and this past July 31 and scheduled to rise to higher rates in Jan. 1, 2008, and July 31, 2010. To make sure speculators don't get the break, the rate freeze offer applies only to people living in their homes.

The idea behind the administration-negotiated plan is that the five-year freeze will buy time for the housing sales and prices to start rising again. Such a rebound would enable homeowners to refinance their current adjustable rate mortgages into fixed-rate loans with more affordable monthly payments. But some people who want to buy homes and have been priced out of the market are upset that there's no help in sight for them.

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association in the third quarter, a record, 18.81 percent of them were past due. A record, 4.72 percent of the loans entered into the foreclosure process during that period.

Meanwhile, there still is the possibility that investors, who were counting on bigger returns from the higher rate resets, will balk at extending the duration of the lower rate.

George Miller, executive director of the American Securitization Forum, whose members include investors, ratings agencies and other financial players, backed the White House's effort and developed streamlined procedures for lenders to follow when sorting through borrowers' requests for relief. He was hopeful lawsuits could be avoided, but he struck a note of caution.

3 ways to stay on top of stock market

With stock markets oscillating wildly, the bigger concern for investors is to protect their investments over the downturn, rather than clock aggressive growth during the upturn.

Protecting your investments in a falling market is easier said than done. It involves taking on that precise quantum of risk that can spur your investments in a rising market and cut losses in a falling market.

While this sounds very difficult (and it is, even the best fund managers often struggle in striking this sweet balance between risk and return), we have not one, but three ways for you to stay on top of stock market volatility.

1. Good old balanced funds

Balanced funds, if you still remember them, are asset allocation investments. They invest across equity and debt markets (minimum 65% of assets in equities), which leaves them well placed to serve three objectives:

Shift across asset classes based on the best available investment opportunities.

Use the debt component intelligently to de-risk the equity portfolio during volatility in equity markets.

Book profits in equities regularly which again de-risks the equity portfolio by capping the level.

Like balanced funds, monthly income plans (MIPs), offer a similar investment proposition, although to a lesser extent. Since MIPs usually invest 15%-25% of assets in equities they are suited for investors with low-to-medium risk appetite.

In a falling market, when being fully invested in equities can prove perilous, a balanced fund with a 35% debt component might just be what the doctored ordered.

2. Investing through SIPs

Unlike balanced funds, which are usually ignored, SIPs have been widely adopted by investors. The reasons are not far to seek. Investing Rs 500-1,000 every month is a lot easier on the wallet than investing (a minimum of) Rs 5,000 lump sum.

By investing smaller amounts at regular intervals, you can reduce the average cost of your mutual fund investments over a market cycle. This is possible because when markets are volatile, SIPs activated during that period lower the overall average cost of purchase.

So investors who have opted for the SIP route welcome the volatility in stock markets and look forward to more of it going forward.

3. Always stay diversified

When markets are on the rise and everything appears hunky dory, that's when investors are most prone to make mistakes. That is the time when various high risk investments like thematic/sector funds are spawned.

Since a rising tide lifts all boats, most fund houses are quick to respond to a rally by launching high risk investments like thematic funds which they otherwise would not have launched.

Taking on higher risk pays rich dividends in a rising market, which explains why investors are prepared to risk their monies in a thematic fund that they would otherwise not have done.

Don't believe us? Compare the number of investors who invested in technology/software funds in 1999-2000 (before the tech crash) with those who invested in them in 2000-2002 (after the crash). Once the tech crash had set in, technology funds were the most reviled investments.

On the other hand, investors who were invested in well-diversified equity funds were relatively better off in the face of market volatility.

We see a similar situation emerging at present. Investors are going all out to invest in infrastructure funds ignoring the higher risk and the fact that they are in the midst of a stock market rally which enables such funds to generate above-average returns.

If the markets were to correct sharply, themes like infrastructure could be the hardest hit making investors in thematic funds wish that they had invested in diversified equity funds instead.

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Women spend three years of their lives getting ready

London: A recent study has shown that women spend, in total, three years of their lives simply getting ready to leave the house, a British newspaper reported.

On an average, the fairer sex spends almost one and a quarter hours getting dressed for every big night-out, taking into account the time needed for last-minute outfit changes, dress inspections in front of the mirror and poking through handbags.

Typically, 22 minutes are spent in showering and shaving their legs, seven minutes for moisturising or applying fake tans, 23 minutes doing hair and another 14 for make-up, leaving a mere six minutes for the actual process of getting dressed.

Women also typically require 40 minutes to get ready for work each morning and with the amount of time they spend preening, it all adds up to two years and nine months in a lifetime.

The study has been commissioned by Charlotte Newbert, who founded the Nephria beauty brand, the Daily Mail reported.

''It's amazing how our daily routine adds up. But by the time we shower and do our hair and make-up, it can take a while. Many women, and men for that matter, have a strict regime they stick to,” she said.

For men, though, the figures are dismal. They are more likely to spend three months of their lives waiting for their ladies to choose handbags or to try on a pair of shoes one more time.

Men also have to wait for about 17 minutes and 25 seconds whenever they go out with their partners, and for a little above an hour outside changing rooms when they go shopping.

Unsurprisingly, the study also said that almost 70 per cent of the men find the wait irksome; 10 per cent have even ended their relationships because of that.

Discrimination rife in Indian economy

Male graduates applying for private sector jobs in India are far more likely to progress to the next round if they have high-caste Hindu names than if they have surnames associated with dalit (formerly untouchable) or Muslim origins, new research has found.

Far from being a hangover from the past found only at the margins of a newly meritocratic society, such discrimination is rife in the most dynamic sectors of the Indian economy, according to a joint study undertaken by academics from Princeton University and the Indian Institute for Dalit Studies.

Making use of techniques pioneered in the US to measure discrimination against blacks and other minorities, researchers made 4,808 job applications to 548 graduate level openings advertised in newspapers by blue chip Indian and multinational companies, changing only the names of identically qualified candidates.

Lunch with the FT: Rajendra Pachauri

Appropriately qualified applicants with a dalit name had odds of progressing to the next stage of the recruitment process that were two thirds of those of an equivalently qualified candidate with a high caste Hindu name, while those of an equally qualified Muslim candidate were only around a third as good.

The findings, published in India's Economic and Political Weekly, have been released at a politically sensitive time, with the government threatening to extend a system of quotas to the private sector unless businesses voluntarily boost the number of recruits from disadvantaged social groups.

The private sector has argued that the under-representation of dalits, tribes people and Muslims should be solved by improving the public education system - on the grounds that these communities attend inferior schools - rather than through quotas that would crimp freedom to hire and fire.

India's workers get biggest pay rise

The studies, however, cast some doubt on whether, without government intervention, the self-interest of theoretically economically "rational" recruiters, who would want to minimise wage bills by recruiting from the widest possible pool of qualified talent, would be sufficient to correct the problem.

"Reaching the pinnacle of what the Indian education system has to offer is not sufficient to create full and open opportunity," wrote Sukhadeo Thorat, founder of the Indian Institute of Dalit Studies, and Katherine Newman, a sociologist and director of Princeton University's Institute for International and Regional Studies, two of the academics involved with the project.

"Far from fading as India modernises, the problem of discrimination remains a serious one, even at the very top of the human capital hierarchy," the authors said, arguing that recruiters in major companies continued to "subject low caste applicants to negative stereotypes that may overwhelm their formal accomplishments".

Business groups have argued that mandatory extension of quotas to the private sector would hit productivity. They say the organised private sector, which accounts for less than 5 per cent of the workforce, is already suffering from labour market rigidities, such as the need to secure government approval to fire employees.

Manmohan Singh recently became the first sitting Indian prime minister to acknowledge openly the parallel between "untouchability" and apartheid, describing the latter as a "blot on humanity". His government is poised to establish an Equal Opportunity Commission, whose powers have yet to be defined.

Wipro launches video interviews to save cost

The next time you get that interview call from India's third largest IT services provider, Wipro Ltd [], you will probably be asked to do it via video.

Wipro has already screened hundreds of applicants through video kiosks it has set up at three of its campuses - two in Bangalore and one in Chennai.

The company shortly plans to extend this concept, and install over 1,000 video phones at all its 20-odd campuses across the country. Each campus accommodates over 2,000 people.

The process is simple, according to Dhananjay Ganjoo, vice-president (enterprise), Nortel India. The kiosk comprises a video phone, provided by Nortel Networks, with a 4x4 inch screen. The cost of each phone is around $250.

The candidate walks into a video kiosk and dials a pre-determined number at the given time. The human resources (HR) person or panelist at the other end picks up the phone and the interview starts.

"We implemented this to save on costs, time and eliminate impersonations, given that we recruit nearly 5,000 candidates every quarter," explains Jethin Chandran, GM (IT Planning & PMO), Wipro.

The Gartner Group estimates the procedure can reduce companies' travel costs for recruitment by 15 to 20 per cent.

Video phones also appear to solve the problem of impersonation or fake r�sum�s that have plagued the IT industry in particular, which loses crores of rupees in the bargain.

Last year, IT majors like IBM India, Wipro, Satyam [], Infosys [] and TCS [] had to terminate the employment of thousands of such candidates. And a 2006 KPMG study revealed that 15 to 24 per cent of resumes in India are fake and one out of three r�sum�s mis-represents facts. The study noted that the IT, financial, entertainment and telecom sectors face the highest risk.

"To avoid impersonation, the video phone is equipped with a memory card that can capture the photograph of the interviewee," explains Chandran. The photo of the candidate and the interview results are then digitally sent to a central database.

Technology, note analysts, has been providing firms with innovative ways to cut hiring costs, and save time. Take, for instance, the video r�sum�s from Reliance [] World and Monster.

Reliance World, in association with Ilaza VDO, has VDO Resume - an online system that integrates a video file into the candidate's r�sum�. RWorld has over 240 outlets across the company.

Then we have video conferencing, which is done by companies like IBM, HP, Cisco, Nortel and Nike the world over.

"At Cisco, we use a lot of technology including TelePresence, IP phones, video conferencing, wikis, blogs, etc. to increase employee productivity," said Subash Rao, Director, HR, Cisco India.

He added that, till date, over 37,000 meetings were held, out of which nearly 8,000 meetings included participants who avoided travel by attending meetings over TelePresence, which meant savings of $62 million in travel avoidance.

Ronaldo double gives Man Utd 2-0 win

Cristiano Ronaldo [Images] scored twice as Manchester United beat Fulham 2-0 at Old Trafford on Monday to climb to second in the Premier League.

Arsenal, who won 2-1 at Aston Villa on Saturday, lead with 36 points from 14 matches with a game in hand. United have 33, Chelsea 31 and Liverpool and Manchester City 30.

Ronaldo opened the scoring in the 10th minute, hitting a fine volley into the top far corner from Nemanja Vidic's header. It was his 12th goal of the season and seventh in the league.

The Portugal winger, second to Brazil's [Images] Kaka [Images] for the Ballon d'Or at the weekend, struck again 13 minutes into the second half, rising above defender Dejan Stefanovic to head substitute John O'Shea's cross past keeper Antti Niemi.

Kirsten seeks assurances before becoming India coach

Former South Africa opening batsman Gary Kirsten has delayed taking over as India coach, saying he wants assurances from the players over the job.

"I have heard rumours about some senior players expressing their concern about my possible appointment and I would prefer to have clarity on that before I commit myself," Kirsten told Reuters.

Kirsten had been expected to sign his contract on Monday.

• 'Why do you want a guy with no coaching experience'

"I'm not sure whether the players have concerns or not," said the South African. "I only met (captain) Anil Kumble [Images] on my recent trip to Delhi and he was very supportive.

"If there are concerns then I would like to find out whether they are about me as an individual or the process by which I was interviewed and then offered the job."

Indian newspapers had quoted anonymous senior players as saying the existing management structure was working well and Kirsten's appointment was unnecessary.

"There is absolutely no need for a coach at this moment," an unnamed player was quoted as saying in the Mumbai Mirror.

Kirsten said he was keen to speak to more players to make sure he understood their feelings.

"I'm not going to rush because it's a very important position in world cricket and the decision needs to be made carefully and in conjunction with all the right people but mostly the players," he said.

"You can't coach any team if you don't have the players 'buy in'. I've written to the board to explain my feelings."

Australian Greg Chappell quit as India coach in April following the team's shock first-round elimination from the World Cup.

Why Jet Air is a success and ICAI a failure

Writing her columns for a business daily a senior journalist recently wrote of her experiences of flying to Madrid via Brussels from Chennai in a private airline. Pointing out that the flight in the Brussels-Madrid-Brussels sector on Brussels Airlines 'was an eminently forgettable experience,' the scribe went on to add, '. . . but against that flight of a little over two hours, where the airhostesses were indifferent and no blankets were available on a freezing Madrid morning with the temperature close to zero degree Celsius, the Chennai-Brussels sector on Jet Airways [Get Quote] spanking new A330-220 aircraft was a virtual treat."

Further, she goes on to add, 'After exchanging notes with other international journalists -- from China, Canada, the United States and some Europe nations -- who had all travelled business class -- one was convinced that the Jet experience was indeed special.'

At the outset, this rise of the Indian civil aviation industry as a global player needs some elaboration. What is intriguing in the entire story is the fact that contrary to popular economic wisdom, the civil aviation sector remains as one of the most protected sectors even today in India.

It may be a bit baffling for the reader to note that though foreign direct investment is allowed in this sector -- it is open only for those who do not run airline industry abroad. That is, Pizza Hut, for instance, can invest in the airline industry in India, but not Singapore Airlines. Further, foreign airlines are not yet allowed to operate on the domestic sector. Obviously, the rise was fuelled by Indian capital and managerial skills.

The net result of this strategic protection offered to the civil aviation industry is there for all to see. Crucially, it has acquired the necessary technical, financial and managerial capability to partner the very best globally on its own terms while retaining its Indian identity. This, in turn, helps in building up the brand image of the airlines, industry and of the country.

The lessons behind the calibrated opening of the civil aviation sector are instructive and remain, in my view, an appropriate lesson in our process of globalisation.

Lessons of the accounting sector

If civil aviation is a lesson to emulate, the opening up of the Indian accounting sector is in contrast an abject lesson in mishandling the globalisation process. The Indian accounting sector too has extraordinary potential (because of its substantial numbers, knowledge of accounting and of course the English language) to be a global player but has been subjected to premature external liberalization and without adequate preparation.

Consequently it is becoming an endangered species even within India.

You may recall that the entry of the Multinational Accounting Firms (MAFs) into India coincided with the establishment of the World Trade Organisation regime -- why, it even preceded the establishment of the WTO. That is, as the coordinates for the WTO itself were being finalised, the government allowed the MAFs to enter India.

Ostensibly, this was done under pressure from the International Monetary Fund, which was providing financial assistance to the government in the aftermath of the foreign exchange crisis of the early 1990s.

This un-calibrated opening up was in sharp contrast where countries, notably developed ones, were busy erecting entry barriers and legalising them through the GATS-WTO regime. The impact of the premature entry of MAFs on the domestic accounting firms has been the subject of intense debate within the accounting fraternity with a dominant view holding that the entry of the MAFs had a debilitating impact on the accounting profession in India.

A crucial issue that needs to be factored in here is that external liberalisation of services pitted the unbranded, under-prepared and undersized Indian accounting services with branded services of MAFs. This skewed the competition in favour of the MAFs inexorably, so much so that even after a decade it is impossible to comprehend the emergence of a pan-Indian accounting firm even in the next 10 years.

Consequently, after a decadal experience with MAFs, it is evident that Indian accounting profession is now no longer a potential global force. Rather, it is fast becoming a weakened and marginalised local force. By playing the global game at the local level, the MAFs have succeeded in weakening the Indian accounting profession even within India.

In the context of effectuating our potential in the services sector, experts are of the opinion that India has to prepare for the opening up of the services sector while seeking access to markets abroad.

But for any service provider to dominate at the global level it has to be a dominant national player. And the corollary to this rule is that to prevent the emergence of a national power into a global power it is necessary to render it hors de combat at the sub-national stage. . . just as it has been done with Indian chartered accountants by the premature entry of the multinational accounting firms into India.

Why is the accounting profession in India paralysed? The most important issue for chartered accountants to face foreign competition is to acquire size, become multidisciplinary and acquire global partnerships. In this connection, one of the key impediments is the legal limitation placed on the number of partners in partnership firms, which restricts the number of partners to a maximum of 20.

Secondly, accounting firms in India are not yet functionally multidisciplinary. Consequently, Indian accounting firms are unable to compete with MAFs even within India, while MAFs with their deep pockets can penetrate the Indian market with ease.

What has aided and abetted the continued existence of the MAFs within India has been the virtual capitulation of some of the very best in the Indian accounting profession to these MAFs. In fact, some presidents and council members of the Institute of Chartered Accountants of India in the 1990s were party to their own firms tying up with these MAFs.

These leading lights of the profession were keen to play second fiddle and allow MAFs to subsume their identity and in the process avoid competition. Given these vested interests at play, is it possible for the ICAI to effectively act against these MAFs and protect the Indian CAs?

The net result is that the regulator, the ICAI, has been reduced to becoming an ineffective organisation on such matters. Of course, it does provide comic relief by seriously suggesting dress codes for members (ostensibly aimed at improving the image of the profession!), instead of looking at issues that confront the very survival of the profession.

When lobbying proved successful and when it turned personal

It is, indeed, a fact that the domestic airline industry may have successfully lobbied for protective measures; the fact that they have leveraged the same to emerge as successful global service providers -- surpassing even international standards -- is a matter of great pride for every Indian. This is one rare instance where the industry has defied conventional economic thinking and emerged as a success story.

On the other hand, it is pertinent to note that the ICAI has been unable to leverage its position as the premier accounting body of the nation to set the pace of external liberalisation to the benefit of its members. Obviously, when personal ambitions cloud judgement of individuals, especially of those in power, the net sufferers would be the people at large. This is what happened to the accounting profession.

Much as the ICAI would defend its past actions, the fact of the matter is that younger chartered accountants are keen to take up employment -- a sure sign that the accounting profession is doomed in India.

Want proof? Check out the latest statistics that indicate that less than 10% of the younger members are taking to practice, when 50% was the norm till a few years back. Given this fact it is evident that Indian chartered accountants -- as an entrepreneur -- are a vanishing tribe.

And that would spell the ultimate success for MAFs. For, if the accounting entrepreneur is eliminated within India, it could well mean the elimination of competition at the global level. And that could mean India's potential as a serious global player in the accounting sector is, to that extent, dented.

In conclusion, globalisation is the war of entrepreneurs, who are a rare breed and require nurturing by the State. It is the profound duty of the government to ensure that the entrepreneurs succeed by its appropriate choice of policy and programmes.

It is this success of entrepreneurs that propels the image of the country higher in the comity of nations. America is known by Microsoft, Japan by Sony. If Gates and Akio Morita were eliminated even within their own country by competition, their companies would never have emerged as serious global players, leaving their respective brand images of the countries poorer.

For India to emerge as a global power it needs to unleash its potential in the services sector. Accounting sector is one where it could have succeeded easily with, some game plan. Unfortunately, the ICAI has let down the accounting sector, profession and the nation by failing to calibrate the external liberalisation programme.

This is where the civil aviation succeeded and the ICAI failed in India. And for its sorry state of affairs, the accounting profession cannot blame anyone but itself.

Tips to select a good mutual fund

While equity funds are best for long-term returns, you should also plan your exit as your goals come nearer and reinvest in debt funds.

What funds must I invest in for retirement planning? What funds are ideal for my children's education planning?

Mutual funds are the ideal investment option for funding retirement and children's education. However, they must form only a part of such portfolios. Here's why. Capital protection is one of the foremost requirements of a retirement or education fund. And there is not a single mutual fund that carries a capital guarantee on your principal amount. For this reason, you cannot afford to ignore instruments such as the Public Provident Fund (PPF), National Savings Certificate (NSC) and the likes. While these instruments offer a decent risk-free return on investment, they may not suffice for your post retirement or children's education planning needs.

For this reason you could look at equity-oriented mutual funds to boost returns. But when considering equity instruments, take cognizance of one's time horizon of investment. The longer you can stay invested, the more equity allocation you can afford. Hence, if you are 27 years old and plan to retire at 60, you can invest the bulk of your portfolio in equity oriented schemes. This is true for planning children's education as well. If your child is 16 years old and you need the money in two years, you should completely avoid equity funds.

As you near your goal, you ought to start redeeming your equity investments and re-invest these in safer debt-oriented instruments. Hence when you are about 56-58 years old, you can institute a systematic withdrawal plan and reinvest the money in safer instruments.

The category of balanced funds is especially useful for such life stage planning. These funds invest at least 65 per cent of the corpus in equity and the rest is in debt instruments. When the equity segment of the fund does exceedingly well, the fund rebalances the portfolio, booking profits in equity and transferring to debt. This way, your risk exposure is kept in check.

I want to make an additional investment. Which are the new and good funds that I ought to invest in?

This one is really tricky, especially when we have no clue about the investor's portfolio. When making such a decision, take a good look at where you stand. As a first step you can use the portfolio tool on our website.

The first investment decision must be based on your asset allocation i.e how much of your money is invested in equity and debt instruments. Then you ought to look at the allocation and weightage to various funds and fund houses. In case you are overweight on a particular fund or fund house, avoid these funds. In case you are underweight on a well-performing fund, then channelise your investments to such a fund.

Assess your exposure to large-cap and mid-cap stocks. Accordingly pick a fund that will equate any such deficiency. Though these are basic steps, more often than not such a short exercise will help you plan your additional investments.

Before you consider adding more funds to your portfolio, look at current holdings and try to work with them.

One is advised to look at the offer document before investing. To me, all offer documents look similar. What should I look out for?

The offer document is an essential read before investing. In fact, all mutual fund distributors and financial planners are required to give their clients a copy of the same before the investor signs the application form.

Since these documents tend to be exceedingly lengthy and almost identical, you should at least go through the Key Information Memorandum (KIM) of the fund.

Here are some key factors that you need to keep an eye out for.

Investment Objective: This will explain the mandate and scope of investment. Whether the fund is equity or debt oriented, whether the fund will be multi-, large, mid- or small-cap specific, the level of diversification, the option to the fund manager to invest overseas and other such issues.

Type of fund: Is the fund open- or close-ended? In case of a close-end fund, look at the lock-in period, liquidity window and repurchase options.

Costs: Fees, expenses and loads are other big items to look out for.

Investment: Minimum initial investment, methods of purchasing, redeeming and making additional investments, the time taken for redemption, so forth and so on.

Fund Manager: Number of fund managers managing the fund and information on each. This information is useful to those who would like to check the antecedents of the manager. Most of this information is available in the KIM as well, but if you can spare the time, give a good look to the offer document as well.

How must I decide whether to hold on or to exit a fund?

If we had a rupee for every time we came across such a question! But this one has an easy solution. Ask yourself why you want to redeem your investment. If you need the money, go ahead. Are you apprehensive of the fund's performance? In that case, check out how the fund has done over the past three years.
Look at the year-to-date performance of the fund vis-�-vis its peer group. If we are only a quarter or so into the year then look at the one-year return as against the category. Also look at the performance over the past four quarters. This will clearly specify whether the fund has been a consistent performer over the past year or just has an odd good quarter.

Apart from this you could also look at how the fund fits in with the rest of your holdings. In case it is a theme-based fund, see if the theme still has any steam left in it. If you have other funds with a similar investment objective, pick the better performer.

FIR against Anil Ambani over Sikh jokes

A First Information Report has been lodged against Anil Dhirubhai Ambani Group chairman Anil Ambani and senior officials of Reliance [Get Quote] Communication for allegedly circulating derogatory jokes against the Sikh community through its mobile Internet services.

The FIR was lodged by the Lucknow Gurudwara Prabandhak Committee after an emergent meeting held in Lucknow on Monday, official sources said on Tuesday.

"These jokes are insulting as some Sikhs have been abused. They offend the feelings of the entire Sikh community. We cannot tolerate this insult being heaped on us," LGPC president Rajendra Singh Bagga said.

He said the LGPC wanted a written apology from the Reliance Group chairman, failing which they would stage a nation-wide protest against the group all over the country.

Bagga warned that they would not hesitate to boycott all products of the company if it did not tender an apology. When contacted, vice president, corporate communication (north) Reliance Infocomm, Avinash Jain, told PTI that an FIR has been registered.

He, however, said the company had served a legal notice to the Internet service provider, who is responsible for circulating jokes.