Trading in the stock market is no less risky then trying to make a living off a roulette wheel; there are significant fluctuations in the price movements. However, unlike the roulette, the randomness here is fuelled by the perception of the participants. One of the tools to identify such perceptions is technical analysis, which is a study of two aspects — the price and the traded volume of a stock. These observations are plotted on a graph across a specific timeline for better analysis. The idea is to understand the mood of the market conveyed through the movements on the chart.
Supports and resistances
Every stock price is the result of an ongoing tussle between buyers and sellers. Not all traders agree upon the prevailing prices, hence the constant movement. But there comes a level when a seller is unwilling to sell and the buyer feels the prices can’t go down further. This is labelled as the ‘support’ level.
At this level, buyers will come in to buy the stock and even sellers with a bearish view may not see the price falling further. A similar agreement on overheated prices between buyers and sellers creates a hurdle or ‘resistance’ for the stock price from going up. These levels are vivid and recurrent. The stock price falls to a particular point and bounces back taking support. At ‘resistance’ points, stocks hit a barrier, restricting further rise.
Break-out
Now, if the stock price penetrates a ‘support’ or a ‘resistance’, that means that the general consensus on what the price should be has changed. This is known as a ‘breakout’. It can be the result of a fundamental change in the stock, and is usually abrupt in nature.
Again, one must see it in conjunction with decent increment in volume, signifying a mass change on the consensus about the new prices levels. Once a resistance is crossed convincingly, it becomes a significant support and once a support is penetrated strongly, it turns in to a resistance.
Trend
Every stock trades with a consistent direction in prices called a ‘trend’. A rising trend is characterised by higher lows and highs. In other words, a consistently rising support level. The opposite holds good for a falling trend. Joining the lows in a rising trend and highs in a falling trend, helps one draw a trend line. A breakout, penetrating the trend line, accompanied with higher volumes, indicates a reversal of the trend. Much like breakout of a resistance and supports, the trend line penetration signals fresh entry or exit points.
Moving averages
There are many indicators used in this science. A look at one of the most popular ones — the moving average (MA). MA is nothing but moving average of successive sets of daily prices, plotted in the price chart. Eg. A 50 day-MA is the average of the past 50 days prices (Pt, Pt-1, …..Pt-49). A stock is bought when this MA is penetrated from below or sold once the price moves below the MA. From a longer term perspective, a 200-day MA is a well-respected indicator.
Technical analysis has several such indicators or tools which can be used to interpret stock price patterns and trade them profitably.
But the most important tool is discipline in trading within the visibility provided by the technical tool. Set your biases aside and restrict the losses and take profits wherever the tools indicat
Saturday, February 21, 2009
Thursday, February 19, 2009
Bonds may outperform gilts over 12-15 months Perception for real
Debt mutual funds can replicate their recent performance and the outlook on interest rates does remain bullish for bond funds, asserts Ms Lakshmi Iyer, Head of Fixed Income/ Products, for Kotak Mahindra AMC.
Excerpts from an interview:
Debt mutual funds have seen a sharp increase in one-year returns. Your income fund, Kotak Bond Fund, generated 14 per cent in a year. Can such returns be replicated the coming year?
I remain quite optimistic about this! The rally in the gilts market has had a deferred impact on the corporate bond segment. And as such, significant rate-spread continues to exist between gilts and similar tenure corporate bonds.
This rate-spread is bound to witness a compression as bond yields decline further to match up to the historical average gap.
In that context, I remain upbeat that despite the near-term technical correction, the bond rally would continue for the larger part of 2009.
The high returns for the past year have been possible because funds such as yours have correctly caught the reversal in the interest cycle and increased their portfolio maturity. Now that interest rate declines are factored in by the market, will returns slow down?
I think that market continues to anticipate an increasingly benign rate regime by RBI given the extent of the economic slow-down and the extent of credit infusion that is required to resurrect the economy.
So, I believe that there still remains some time before rates bottom out.
Further credit infusion into the markets would be necessary to cushion the moderating economy. That leaves good scope for bond/gilt funds to harness double-digit returns for their investors.
Between gilt funds and income/bond funds that invest in corporate bonds, which option should an investor go in for now?
The rally in the debt market is widespread and envelops a wide range of securities.
This intrinsically enhances the return potential of both long-term gilts and bonds.
But over a 12-15 month time-horizon, bonds may outperform gilts, given the sizeable rate arbitrage that exists now.
Are debt funds suitable for risk-averse investors, who otherwise prefer FDs? Debt fund NAVs have been quite volatile over the past few months, with a 16 per cent spike until January and a 3 per cent reversal thereafter….Does investing in debt funds also require a good sense of timing?
What you are referring to here is short-term volatility in NAVs, reflecting price sensitivity to yields. Frankly, the choice of debt funds over FDs is largely dependent on the time horizon and the investor’s risk profile. Yet, I would say that a debt fund would be a more tax-efficient investment choice in the present market.
Bond yields spiked sharply in February as the government announced its borrowing programme. Does the prospect of government debt crowding out private debt increase interest rate risk to your portfolios?
Yes, the high fiscal deficit and the consequently high borrowing programme does induce cause for concern. But I don’t think that it subverts the bullish market outlook.
Are you seeing any signs of a reduction in corporate bond spreads over gilts?
The spread on the said papers has narrowed down to around 300 bps from the 425 bps level in September-October. Going forward, further rate normalisation would be dependent on the macro outlook on the economy and business.
The current spread is indicative of the risk premium that investors are expecting and signifies widespread risk-aversion. I believe that, as the economic momentum picks up and the faith in the corporate performance is restored, spreads will come down to normal levels.
Should debt fund investors worry about credit risk in corporate bond portfolios at this juncture?
The credit quality of the portfolios across fund houses remains predominantly AAA. Kotak Mutual Fund’s internal investment framework requires a portfolio investment of ‘75 per cent and above’ in AAA bonds.
Of this, not more than 20 per cent originates from non-PSU entities.
Even within that, funds tend to avoid industrial sectors where the business outlook remains precarious despite a prime business rating. So we are quite comfortable about the credit risk inherent to our bond portfolio.
Excerpts from an interview:
Debt mutual funds have seen a sharp increase in one-year returns. Your income fund, Kotak Bond Fund, generated 14 per cent in a year. Can such returns be replicated the coming year?
I remain quite optimistic about this! The rally in the gilts market has had a deferred impact on the corporate bond segment. And as such, significant rate-spread continues to exist between gilts and similar tenure corporate bonds.
This rate-spread is bound to witness a compression as bond yields decline further to match up to the historical average gap.
In that context, I remain upbeat that despite the near-term technical correction, the bond rally would continue for the larger part of 2009.
The high returns for the past year have been possible because funds such as yours have correctly caught the reversal in the interest cycle and increased their portfolio maturity. Now that interest rate declines are factored in by the market, will returns slow down?
I think that market continues to anticipate an increasingly benign rate regime by RBI given the extent of the economic slow-down and the extent of credit infusion that is required to resurrect the economy.
So, I believe that there still remains some time before rates bottom out.
Further credit infusion into the markets would be necessary to cushion the moderating economy. That leaves good scope for bond/gilt funds to harness double-digit returns for their investors.
Between gilt funds and income/bond funds that invest in corporate bonds, which option should an investor go in for now?
The rally in the debt market is widespread and envelops a wide range of securities.
This intrinsically enhances the return potential of both long-term gilts and bonds.
But over a 12-15 month time-horizon, bonds may outperform gilts, given the sizeable rate arbitrage that exists now.
Are debt funds suitable for risk-averse investors, who otherwise prefer FDs? Debt fund NAVs have been quite volatile over the past few months, with a 16 per cent spike until January and a 3 per cent reversal thereafter….Does investing in debt funds also require a good sense of timing?
What you are referring to here is short-term volatility in NAVs, reflecting price sensitivity to yields. Frankly, the choice of debt funds over FDs is largely dependent on the time horizon and the investor’s risk profile. Yet, I would say that a debt fund would be a more tax-efficient investment choice in the present market.
Bond yields spiked sharply in February as the government announced its borrowing programme. Does the prospect of government debt crowding out private debt increase interest rate risk to your portfolios?
Yes, the high fiscal deficit and the consequently high borrowing programme does induce cause for concern. But I don’t think that it subverts the bullish market outlook.
Are you seeing any signs of a reduction in corporate bond spreads over gilts?
The spread on the said papers has narrowed down to around 300 bps from the 425 bps level in September-October. Going forward, further rate normalisation would be dependent on the macro outlook on the economy and business.
The current spread is indicative of the risk premium that investors are expecting and signifies widespread risk-aversion. I believe that, as the economic momentum picks up and the faith in the corporate performance is restored, spreads will come down to normal levels.
Should debt fund investors worry about credit risk in corporate bond portfolios at this juncture?
The credit quality of the portfolios across fund houses remains predominantly AAA. Kotak Mutual Fund’s internal investment framework requires a portfolio investment of ‘75 per cent and above’ in AAA bonds.
Of this, not more than 20 per cent originates from non-PSU entities.
Even within that, funds tend to avoid industrial sectors where the business outlook remains precarious despite a prime business rating. So we are quite comfortable about the credit risk inherent to our bond portfolio.
Cautious optimism in Hyderabad
Real estate developers in Hyderabad have adopted a cautious approach to new projects though some prospective buyers have been showing sustained interest since January 2009.
With Government support to the real estate sector coming in the form of some lowering of interest rates by banks, there are early indications of a revival of the market after a tough 2008 fourth quarter.
However, builders feel that the Government can do a lot more to rekindle interest, which including bringing down the service tax imposed on residential property and enhancing the interest rate rebate further.
Industry players say that the focus now is on affordable housing and expanding the scope of their product offerings.
As builders have become cautious with regard to new investments, some feel that it will take a while for the plans to materialise.
The trends vary depending on the nature of property. Commercial property, in particular, is going through a rough patch. The general slowdown has seen rental values in various parts of the city falling.
The Managing Director of Aliens, Mr Hari Challa, is of the view that though buyer interest has been rising, especially in the last two months, the total number of transactions has come down.
The Managing Director of Lanco Infratech, Mr Venkatesh Babu, said that the market conditions are tough and the general economic slowdown has impacted every player in the sector.
“However, we need to distinguish between residential and office-cum-commercial space. The trends are different in these broad areas. In the residential space, we see continued interest, but buyers are seeking lower prices due to current economic conditions,” Mr Babu explained.
However, Mr Babu feels there is marked change in the commercial property space, with large developers adopting a wait-and-watch approach as demand has dwindled in the last two quarters.
But this could lead to another problem, that is, of short supply about 18-24 months from now, which will push up prices. This is particularly so for developers who have purchased land at high rates and are not taking up projects owing to pricing pressures.
Reducing costs
The Chief Executive Officer of Cybercity, Mr Uttam, said that the Government continues to be a big beneficiary of various taxes imposed on buyers. By reducing some of the imposts, it will significantly help bring down overall costs for buyers.
Cybercity is developing an integrated township with an investment of Rs 550-600 crore near Hyderabad. Mr Uttam feels that reducing the service tax on residential property, extending the ceiling limit of Rs 1.5 lakh on interest and hiking the benefits under Section 80 of the I-T Act, will encourage new property purchases.
With fear of job losses due to the slowdown in several sectors, especially information technology and financial services, there is a tendency to postpone purchases till the general economic environment becomes more stable.
The other aspect that is causing a delay in deals coming through is the fact that buyers expect property prices to fall further.
With Government support to the real estate sector coming in the form of some lowering of interest rates by banks, there are early indications of a revival of the market after a tough 2008 fourth quarter.
However, builders feel that the Government can do a lot more to rekindle interest, which including bringing down the service tax imposed on residential property and enhancing the interest rate rebate further.
Industry players say that the focus now is on affordable housing and expanding the scope of their product offerings.
As builders have become cautious with regard to new investments, some feel that it will take a while for the plans to materialise.
The trends vary depending on the nature of property. Commercial property, in particular, is going through a rough patch. The general slowdown has seen rental values in various parts of the city falling.
The Managing Director of Aliens, Mr Hari Challa, is of the view that though buyer interest has been rising, especially in the last two months, the total number of transactions has come down.
The Managing Director of Lanco Infratech, Mr Venkatesh Babu, said that the market conditions are tough and the general economic slowdown has impacted every player in the sector.
“However, we need to distinguish between residential and office-cum-commercial space. The trends are different in these broad areas. In the residential space, we see continued interest, but buyers are seeking lower prices due to current economic conditions,” Mr Babu explained.
However, Mr Babu feels there is marked change in the commercial property space, with large developers adopting a wait-and-watch approach as demand has dwindled in the last two quarters.
But this could lead to another problem, that is, of short supply about 18-24 months from now, which will push up prices. This is particularly so for developers who have purchased land at high rates and are not taking up projects owing to pricing pressures.
Reducing costs
The Chief Executive Officer of Cybercity, Mr Uttam, said that the Government continues to be a big beneficiary of various taxes imposed on buyers. By reducing some of the imposts, it will significantly help bring down overall costs for buyers.
Cybercity is developing an integrated township with an investment of Rs 550-600 crore near Hyderabad. Mr Uttam feels that reducing the service tax on residential property, extending the ceiling limit of Rs 1.5 lakh on interest and hiking the benefits under Section 80 of the I-T Act, will encourage new property purchases.
With fear of job losses due to the slowdown in several sectors, especially information technology and financial services, there is a tendency to postpone purchases till the general economic environment becomes more stable.
The other aspect that is causing a delay in deals coming through is the fact that buyers expect property prices to fall further.
Be ‘penny wise, pound wiser’
Mr Sharma, a gadget freak all his life, has decided to put off the purchase of Sony Vaio’s latest pocket size notebook. Mrs Kumar now encourages her family to eat at home more often, even on days when they have guests for dinner. Kulkarnis, the newly married couple, scrapped their honeymoon plans to Mauritius and instead settled for a visit to a local hill station.
The story is the same everywhere as the entire country prepares itself for a slowdown, of a magnitude and reach probably not seen in recent years. After all, global linkages between economies and sectors have never been this high! But the irony is, while households cut down on expenditure and sit tight on cash and Corporate India does all it can to rein in costs, by doing all this, we may only be hastening the slowdown. Wondering how? Well, here goes.
We know that policy makers worldwide have responded to the slowdown thorugh a spate of interest rate cuts. They are doling out stimulus packages, enabling easy access to liquidity through both domestic and external borrowings and are even contemplating tax cuts — all in the name of keeping the recession at bay.
But the paradox is while the stimulus packages were dished out with the primary assumption was that by making money easily available, corporates and households may spend more.
But so far, the overall response to the various stimuli has not been as rewarding as expected. So, even as reports of waning retail demand, fall in auto sales and drop in company profits fill up the news pages, one can’t help but wonder if there is any way out of this quagmire and a fast one at that.
While we are not going to dwell on how and by when the economy may revive and what approach economists and policy makers should adopt — it is their job and we will let them deal with it — we would like to emphasise on how the investments and expenses you go in for now may go a long way in securing your future.
Spend to stimulate
Spending may well be the way out of this slowdown. That said, be wary of what you spend your hard-earned money on. While you may already be spending on what you think is absolutely essential, do include investments in your future.
Make a list of your monthly expenses and analyse which ones can be avoided, postponed and which are absolutely essential. With most retailers and service providers now offering competitive rates for their product offering, lock in the prices of services you think you may need for the full year.
For instance, instead of paying monthly bills for your DTH service, pay up in advance for the next six months or year. That way you not only get to avail yourself of discounts, you also get to do your wee bit in ‘spending and ending the economic crisis’. This may also be the right time to spend (read invest) on your health, if busy work and travel schedules had been your excuse to ignore it a couple of months ago.
This means, you can, and without guilt enrol yourself now for a daily regimen of workouts. Spending on health may also help you keep avoidable medical expenses at bay.
Another way to sustain spending is by cutting down on expenses that aren’t a must. Cutting down on electricity bills, petrol bills and even water bills is the way to go. Remember the Government gives most of these at subsidised rates. And so, by optimising their usage, you are also helping the Government slice its expense bill.
However, you can afford to be impervious to the crisis at your doorsteps and find your way out by simply spending — which brings us to back to the question on how you can save, even as you continue spending, for the rainy day.
Save to invest
Saving may be the mantra for a rainy day, but saving by merely holding on to cash is certainly not. When jobs are on the line, investments may be your last priority.
But remember if you hope to come clear from this ‘downward spiral’, you will have to make your money work twice as hard as you — which means, you may still have to allocate a good part of your funds towards investments.
Asset allocation, however, can be tweaked to suit your present conditions. But whatever you do, remember to not put all your money in bank deposits and other low-risk instruments. For even if inflation appears under control now, it can in future threaten your savings just like it did six months ago.
That makes its imperative that you channel some of your savings towards equities. If the heightened volatility in the stock market gives you the shivers, try phasing out your equity exposure over a period of time.
Having an equity exposure may seem avoidable now but remember it will go a long way in securing your future once the economy revives.
Investments in gold may also help serve as a good diversifier as more global economies grapple with slowdown or recession.
Use the “holiday” before the economy revives to get your finances in shape. Only that can help you sidestep your very own downturn.
The story is the same everywhere as the entire country prepares itself for a slowdown, of a magnitude and reach probably not seen in recent years. After all, global linkages between economies and sectors have never been this high! But the irony is, while households cut down on expenditure and sit tight on cash and Corporate India does all it can to rein in costs, by doing all this, we may only be hastening the slowdown. Wondering how? Well, here goes.
We know that policy makers worldwide have responded to the slowdown thorugh a spate of interest rate cuts. They are doling out stimulus packages, enabling easy access to liquidity through both domestic and external borrowings and are even contemplating tax cuts — all in the name of keeping the recession at bay.
But the paradox is while the stimulus packages were dished out with the primary assumption was that by making money easily available, corporates and households may spend more.
But so far, the overall response to the various stimuli has not been as rewarding as expected. So, even as reports of waning retail demand, fall in auto sales and drop in company profits fill up the news pages, one can’t help but wonder if there is any way out of this quagmire and a fast one at that.
While we are not going to dwell on how and by when the economy may revive and what approach economists and policy makers should adopt — it is their job and we will let them deal with it — we would like to emphasise on how the investments and expenses you go in for now may go a long way in securing your future.
Spend to stimulate
Spending may well be the way out of this slowdown. That said, be wary of what you spend your hard-earned money on. While you may already be spending on what you think is absolutely essential, do include investments in your future.
Make a list of your monthly expenses and analyse which ones can be avoided, postponed and which are absolutely essential. With most retailers and service providers now offering competitive rates for their product offering, lock in the prices of services you think you may need for the full year.
For instance, instead of paying monthly bills for your DTH service, pay up in advance for the next six months or year. That way you not only get to avail yourself of discounts, you also get to do your wee bit in ‘spending and ending the economic crisis’. This may also be the right time to spend (read invest) on your health, if busy work and travel schedules had been your excuse to ignore it a couple of months ago.
This means, you can, and without guilt enrol yourself now for a daily regimen of workouts. Spending on health may also help you keep avoidable medical expenses at bay.
Another way to sustain spending is by cutting down on expenses that aren’t a must. Cutting down on electricity bills, petrol bills and even water bills is the way to go. Remember the Government gives most of these at subsidised rates. And so, by optimising their usage, you are also helping the Government slice its expense bill.
However, you can afford to be impervious to the crisis at your doorsteps and find your way out by simply spending — which brings us to back to the question on how you can save, even as you continue spending, for the rainy day.
Save to invest
Saving may be the mantra for a rainy day, but saving by merely holding on to cash is certainly not. When jobs are on the line, investments may be your last priority.
But remember if you hope to come clear from this ‘downward spiral’, you will have to make your money work twice as hard as you — which means, you may still have to allocate a good part of your funds towards investments.
Asset allocation, however, can be tweaked to suit your present conditions. But whatever you do, remember to not put all your money in bank deposits and other low-risk instruments. For even if inflation appears under control now, it can in future threaten your savings just like it did six months ago.
That makes its imperative that you channel some of your savings towards equities. If the heightened volatility in the stock market gives you the shivers, try phasing out your equity exposure over a period of time.
Having an equity exposure may seem avoidable now but remember it will go a long way in securing your future once the economy revives.
Investments in gold may also help serve as a good diversifier as more global economies grapple with slowdown or recession.
Use the “holiday” before the economy revives to get your finances in shape. Only that can help you sidestep your very own downturn.
Tuesday, February 17, 2009
Debt funds: Is an encore possible?
For those who turned active investors after 2004, debt funds as an option would have seemed least appealing, given the measly single-digit returns in contrast to the multi-baggers among equity funds. But as the tide turned on equity, debt funds have gained appeal with a good performance over the last year. A 28 per cent return by Canara Robeco Income or ICICI Prudential Gilt Investment PF was possible as result of the interest rate cycle turning decisively southwards.
However, given the steep rally witnessed in bond prices, especially in the quarter ended December, can debt do an encore this year? To gauge this, the factors driving debt fund returns have to be understood.
Since October 2008, when the RBI flagged off the first of a series of rate cuts, the yield of 10-year government securities, or gilts, declined rapidly to a low of 5.2 per cent from about 9.4 per cent (the year’s high) in July 2008. This unexpected reversal in interest rates triggered a sharp rally in the price of gilts.
To benefit from the declining yields and rising bond prices, a good number of gilt funds increased the average portfolio maturity. For instance, ICICI Pru Gilt Investment PF’s portfolio had an average maturity of 12.2 years in September 2008. The same sharply rose to 19.8 years as of January 2009. As longer maturity gilts tend to be more sensitive to rate changes than short maturity ones, funds that lengthened maturity profiles gained the most from the gilt rally. However, investors need to bear in mind that gilt funds with longer portfolio maturity also hold higher risks as they may correct sharply in response to interest rate spikes.
For instance the fund mentioned above fell close to 11 per cent on the back of a sharp and short rally in gilt yields in January. While there could be further interest rate cuts that could trigger bond price rallies, investors should be alive to the fact that a declining rate trend is already priced into bond prices, given that there is no longer any surprise element in the direction of interest rates.
Does this mean that the opportunity in debt funds is capped from here on? Not necessarily, for the following reason: Corporate bond yields have not seen as sharp a fall as gilt yields, as a result of the higher risk perception compared to safer government securities. Spreads, the differential in yields at which corporate bonds trade over completely safe gilts, are currently much above long-term averages. This being the case, a pick-up in credit to the corporate sector, an easing of risk aversion among lenders or a revival in the corporate sector’s fortunes could all trigger a corporate bond price rally.
This essentially means that a fund with a judicious mix of gilt and top-rated corporate bonds may hold higher potential for returns over a one-year plus period, rather than pure gilt funds. Investors with a higher risk appetite could consider such funds. Funds such as Canara Robeco Income, IDFC Dynamic Bond and Birla Sunlife Income Plus are some options.
However, given the steep rally witnessed in bond prices, especially in the quarter ended December, can debt do an encore this year? To gauge this, the factors driving debt fund returns have to be understood.
Since October 2008, when the RBI flagged off the first of a series of rate cuts, the yield of 10-year government securities, or gilts, declined rapidly to a low of 5.2 per cent from about 9.4 per cent (the year’s high) in July 2008. This unexpected reversal in interest rates triggered a sharp rally in the price of gilts.
To benefit from the declining yields and rising bond prices, a good number of gilt funds increased the average portfolio maturity. For instance, ICICI Pru Gilt Investment PF’s portfolio had an average maturity of 12.2 years in September 2008. The same sharply rose to 19.8 years as of January 2009. As longer maturity gilts tend to be more sensitive to rate changes than short maturity ones, funds that lengthened maturity profiles gained the most from the gilt rally. However, investors need to bear in mind that gilt funds with longer portfolio maturity also hold higher risks as they may correct sharply in response to interest rate spikes.
For instance the fund mentioned above fell close to 11 per cent on the back of a sharp and short rally in gilt yields in January. While there could be further interest rate cuts that could trigger bond price rallies, investors should be alive to the fact that a declining rate trend is already priced into bond prices, given that there is no longer any surprise element in the direction of interest rates.
Does this mean that the opportunity in debt funds is capped from here on? Not necessarily, for the following reason: Corporate bond yields have not seen as sharp a fall as gilt yields, as a result of the higher risk perception compared to safer government securities. Spreads, the differential in yields at which corporate bonds trade over completely safe gilts, are currently much above long-term averages. This being the case, a pick-up in credit to the corporate sector, an easing of risk aversion among lenders or a revival in the corporate sector’s fortunes could all trigger a corporate bond price rally.
This essentially means that a fund with a judicious mix of gilt and top-rated corporate bonds may hold higher potential for returns over a one-year plus period, rather than pure gilt funds. Investors with a higher risk appetite could consider such funds. Funds such as Canara Robeco Income, IDFC Dynamic Bond and Birla Sunlife Income Plus are some options.
Nifty future at critical stage
After weeks of being in the losing streak, the Nifty future managed an impressive turnaround, putting in a neat 3.75 gains on the table. While a bulk of the upsurge may have been helped by the squaring-off of short positions; that the week also saw fresh accumulation of Nifty futures suggests a turnaround in market sentiments too. The Nifty future now trails Nifty, which ended at 2948 points, by about six points only. That said, trading volumes continued to remain moderate at about Rs 31000 crore.
Recommendation follow-up
We had given three recommendations last week: 1) Shorting Nifty future with a stop at 2950, 2) Short straddle using 2800-strike for a maximum of two days and 3) Buying March 2500 put. All the three strategies would have ended in the negative.
Outlook
The Nifty future is at critical stage. Despite strong gains on Friday, when the Nifty future crossed its crucial resistance at 2950, albeit only intra-day, we continue to feel that Nifty future will encounter strong pressure going forward. That in spite of the strong show on Friday, Nifty future failed to close above 2950-level validates our view.
However, if Nifty future manages to close above 2950 convincingly, then it may face the next resistance at around 3050 first and then at 3250. On the other hand, if it fails to hold to the current levels and dips below 2875, then Nifty future may find a strong support at 2750.
Option monitor
Among the options, 2900 call and 2800 put shed open interest positions. Though 3000 call was very active, most of the accumulations were on the short side.
The Nifty 3100 call also witnessed short accumulations, indicating that Nifty could face strong pressure at higher levels. On other hand, there was significant accumulation of puts for strikes 2700, 2600 and 2500. Besides, the steady accumulation of options at Nifty March 2500 also suggests a downward bias for the market.
Volatility Index
India VIX or Volatility Index, which measures the immediate expected volatility, has weakened to 43.31 from the previous week’s close of 50.65. However despite the fall, the volatility index managed to touch the 50-point mark many times over during intra-day trades. This suggests that some traders may still be sceptical about the current rally.
Recommendations
In the coming week, market may begin on a soft note. With expectations galore on the interim budget, the Nifty future may be subject to heightened volatility. The break-out however may set the direction for Nifty future for the ensuing weeks. Traders can consider setting a long straddle strategy. This can be initiated by buying 2900-strikes of call and puts (March), which ended last week at Rs 182.4 and Rs 142.15 respectively. While the profit in this strategy can be unlimited, the maximum loss may be limited to the premium paid. Note that this strategy can be kept open for a slightly longer period (say, more than a week). Traders with a penchant for higher risk can also consider buying Nifty March 2500 put.
FII trends
The cumulative FII positions as percentage of the total gross market position on the derivative segment as on February 12 was 33.43 per cent. The FIIs indulged in alternate bouts of buying and selling in the F&O segment. They now hold index futures worth about Rs 7,363 crore (about Rs 6,815 crore) and stock future worth about Rs 12,232 crore (about Rs 11,157 crore). Their index options jumped to about Rs 15,489 crore (about Rs 12,152 crore).
Recommendation follow-up
We had given three recommendations last week: 1) Shorting Nifty future with a stop at 2950, 2) Short straddle using 2800-strike for a maximum of two days and 3) Buying March 2500 put. All the three strategies would have ended in the negative.
Outlook
The Nifty future is at critical stage. Despite strong gains on Friday, when the Nifty future crossed its crucial resistance at 2950, albeit only intra-day, we continue to feel that Nifty future will encounter strong pressure going forward. That in spite of the strong show on Friday, Nifty future failed to close above 2950-level validates our view.
However, if Nifty future manages to close above 2950 convincingly, then it may face the next resistance at around 3050 first and then at 3250. On the other hand, if it fails to hold to the current levels and dips below 2875, then Nifty future may find a strong support at 2750.
Option monitor
Among the options, 2900 call and 2800 put shed open interest positions. Though 3000 call was very active, most of the accumulations were on the short side.
The Nifty 3100 call also witnessed short accumulations, indicating that Nifty could face strong pressure at higher levels. On other hand, there was significant accumulation of puts for strikes 2700, 2600 and 2500. Besides, the steady accumulation of options at Nifty March 2500 also suggests a downward bias for the market.
Volatility Index
India VIX or Volatility Index, which measures the immediate expected volatility, has weakened to 43.31 from the previous week’s close of 50.65. However despite the fall, the volatility index managed to touch the 50-point mark many times over during intra-day trades. This suggests that some traders may still be sceptical about the current rally.
Recommendations
In the coming week, market may begin on a soft note. With expectations galore on the interim budget, the Nifty future may be subject to heightened volatility. The break-out however may set the direction for Nifty future for the ensuing weeks. Traders can consider setting a long straddle strategy. This can be initiated by buying 2900-strikes of call and puts (March), which ended last week at Rs 182.4 and Rs 142.15 respectively. While the profit in this strategy can be unlimited, the maximum loss may be limited to the premium paid. Note that this strategy can be kept open for a slightly longer period (say, more than a week). Traders with a penchant for higher risk can also consider buying Nifty March 2500 put.
FII trends
The cumulative FII positions as percentage of the total gross market position on the derivative segment as on February 12 was 33.43 per cent. The FIIs indulged in alternate bouts of buying and selling in the F&O segment. They now hold index futures worth about Rs 7,363 crore (about Rs 6,815 crore) and stock future worth about Rs 12,232 crore (about Rs 11,157 crore). Their index options jumped to about Rs 15,489 crore (about Rs 12,152 crore).
Contra Funds — Steady returns

In the market carnage of 2008, most equity funds had a tough time containing declines. However, one category of equity funds — contra funds — fared very well on this count. Contra or contrarian funds seek to invest in fundamentally good stocks that are undervalued due to temporary market sentiment, in the hope that when the undervaluation is corrected, such stocks deliver superior returns. Most contra funds do not have a long track record. Only three of the eight contra funds have a three year track record.
Increasing cash positions, lowering mid-cap exposures and switching between momentum and defensive sectors may have helped the cause. A wide gulf between top and bottom rankers suggests the difference in one or more of the above-mentioned approaches.
Performance: Only some contra funds (that were in existence then) have given a above-benchmark performance in the bull market of 2007. Only Magnum Contra and Tata Contra, were the ones which delivered over 80 percent returns from trough of 2007 to peak in early 2008. The rest, while delivering steady returns in absolute terms failed to beat the CNX 500 or the BSE 500.
But in the bear market since that period, six out of the eight contra funds managed to contain losses better than the benchmark and other diversified funds.
Portfolio moves: Most of the portfolio moves of contra funds suggests that their strategy is not too different from normal flexi-cap diversified equity funds. Contra funds had invested 20-60 per cent of their portfolio in mid-cap stocks in late 2007 and early 2008. This has now been trimmed to 15-24 per cent in most of the cases.
. In terms of sectors invested in by these funds, most of them had moved to defensives — software, consumer non-durables and pharmaceuticals, in 2008.
But these funds’ January 2009 portfolio reveals that most of them have banks, petroleum and capital goods among their top sectors. With valuations at reasonably attractive levels in these hot theme sectors of 2007, perhaps funds see value in going back to them.
Most of these funds have over 15 per cent in cash or debt as against being nearly fully invested last year, which helped them ride out market volatility.
So should investors buy more contra funds? Magnum Contra and Kotak Contra may be fair options to consider.
Bank deposits: Optimal choice for short-term exposure?
Most investors want to increase their exposure to fixed-income securities, given the high downside risk in stocks. Several posed us this question: Are bond funds good investments now, even if interest rates increase after a year? Or are bank fixed-deposits a better choice?
This article discusses the risks associated with bonds and bond mutual funds. It shows why term deposits and money market funds may be optimal investments for retail investors who are more concerned about interest rates going up a year hence.
Bond market structure
Bonds carry an inverse relationship with interest rates. When interest rates go up, bond prices come down and so does the net asset value (NAV) of a bond fund.
The sensitivity of bonds to interest rate changes vary with maturity. A long-term bond (maturity of more than 10 years) will be more sensitive to interest rate changes than a short-term bond (maturity between one and five years).
It logically follows from the inverse price-yield relationship that investors who expect interest rates to go up, should hold funds that invest in short-term bonds, for such bonds carry low interest rate risk. And investors who expect interest rates to decline should hold funds that carry long-term bonds, for such bonds will generate higher returns.
The problem, however, is that interest rates are not market determined as stock prices are. Reserve Bank of India (RBI) along with the Government tightly controls interest rates in the economy. This means that market participants may not necessarily have diverse opinion on rates.
Besides, investors are not allowed to set-up short bond positions to take advantage of their view that interest rate will increase a year hence. At best, investors can take long exposure to short-term securities now and switch to their preferred investment after interest rate moves up. It is in this context that a retail investor has to choose from short-term funds, money market funds and bank deposits.
Bonds funds Vs Bank deposits
Short-term bond funds would be appropriate if the investor can liquidate her units just before interest rates move up and reinvest the proceeds in higher interest-bearing instruments.
But given that the RBI controls interest rates and that market participants do not typically have a diverse view, timing the bond market may be difficult. Besides, the high volatility in interest rates exposes short-term bond funds to price risk — the risk that the NAV will decline in value when the investor decides to redeem.
Money market funds typically take exposure to commercial papers, certificate of deposits, call money and treasury bills - instruments with maturity less than one year. These funds are the least sensitive to interest rate changes. They, however, carry higher reinvestment risk — risk that the fund may have to reinvest the proceeds at a lower rate in the future due to decline in interest rates then.
As reinvestment risk is currently low, investors can consider money market funds for short-term exposure. It would be optimal to choose funds that carry higher exposure to treasury bills, call money and certificate of deposits.
But what about term deposit with banks? If the investor matches the deposit maturity with the investment horizon (say 14 months), the reinvestment risk is minimal. Moreover, there is no visible price risk as deposits are not traded in the market.
These investments instead carry inflation risk — the risk that increase in inflation would bring down the purchasing power of the deposit on maturity. But as inflation risk does not seem to be of much concern now, investors could also consider term deposits for short-term exposure.
Conclusion
It is important to understand that term deposit and money market funds are optimal choices when the investment objective is to enhance cash returns till interest rates move up. The advantage is that an investor need not worry about price risk at redemption, as she has to in the case of bond funds.
This article discusses the risks associated with bonds and bond mutual funds. It shows why term deposits and money market funds may be optimal investments for retail investors who are more concerned about interest rates going up a year hence.
Bond market structure
Bonds carry an inverse relationship with interest rates. When interest rates go up, bond prices come down and so does the net asset value (NAV) of a bond fund.
The sensitivity of bonds to interest rate changes vary with maturity. A long-term bond (maturity of more than 10 years) will be more sensitive to interest rate changes than a short-term bond (maturity between one and five years).
It logically follows from the inverse price-yield relationship that investors who expect interest rates to go up, should hold funds that invest in short-term bonds, for such bonds carry low interest rate risk. And investors who expect interest rates to decline should hold funds that carry long-term bonds, for such bonds will generate higher returns.
The problem, however, is that interest rates are not market determined as stock prices are. Reserve Bank of India (RBI) along with the Government tightly controls interest rates in the economy. This means that market participants may not necessarily have diverse opinion on rates.
Besides, investors are not allowed to set-up short bond positions to take advantage of their view that interest rate will increase a year hence. At best, investors can take long exposure to short-term securities now and switch to their preferred investment after interest rate moves up. It is in this context that a retail investor has to choose from short-term funds, money market funds and bank deposits.
Bonds funds Vs Bank deposits
Short-term bond funds would be appropriate if the investor can liquidate her units just before interest rates move up and reinvest the proceeds in higher interest-bearing instruments.
But given that the RBI controls interest rates and that market participants do not typically have a diverse view, timing the bond market may be difficult. Besides, the high volatility in interest rates exposes short-term bond funds to price risk — the risk that the NAV will decline in value when the investor decides to redeem.
Money market funds typically take exposure to commercial papers, certificate of deposits, call money and treasury bills - instruments with maturity less than one year. These funds are the least sensitive to interest rate changes. They, however, carry higher reinvestment risk — risk that the fund may have to reinvest the proceeds at a lower rate in the future due to decline in interest rates then.
As reinvestment risk is currently low, investors can consider money market funds for short-term exposure. It would be optimal to choose funds that carry higher exposure to treasury bills, call money and certificate of deposits.
But what about term deposit with banks? If the investor matches the deposit maturity with the investment horizon (say 14 months), the reinvestment risk is minimal. Moreover, there is no visible price risk as deposits are not traded in the market.
These investments instead carry inflation risk — the risk that increase in inflation would bring down the purchasing power of the deposit on maturity. But as inflation risk does not seem to be of much concern now, investors could also consider term deposits for short-term exposure.
Conclusion
It is important to understand that term deposit and money market funds are optimal choices when the investment objective is to enhance cash returns till interest rates move up. The advantage is that an investor need not worry about price risk at redemption, as she has to in the case of bond funds.
Thursday, February 12, 2009
ALTERNATIVES TO DEBT - ARBITRAGE FUNDS
At a time when equity funds are losing out significantly in performance rankings, arbitrage funds appear to be back into reckoning and with good reason.
These funds have returned in the range of 6.5-9.7 per cent over the year, outpacing both the Sensex and equity diversified category by a huge margin.
But how did these funds manage this feat? What are the risk-return elements associated with arbitrage funds and who should invest in them?
Brass tacks
Arbitrage funds draw mileage from the momentary mis-pricing between stocks, in the cash and derivatives markets.
In other words, these funds play on the price differential between stocks and their futures and use that to lock in specific returns. For instance, consider this arbitrage opportunity in Strides Arcolab.
On February 4, the stock price closed at Rs 66.75, whereas its February futures closed at Rs 70.6.
Arbitrage funds would use such price differentials to sell the stock futures, while simultaneously purchasing an equal number in the cash market. And by doing so, they lock in the price difference minus the cost of transactions as profits.
So, regardless of the price at which the stock closes on the expiry of the Feb futures contract, the fund would have locked in the price differential as its profit.
This may explain how these funds managed to return positively despite their equity exposure when the diversified equity category lost value.
While the same is possible even if the stock price quotes at a premium to the futures price (reverse arbitrage), it is yet to take off in full swing, as it would then involve selling the stock short in the cash market.
Essentially market-neutral, the average returns recorded by these funds are a function of the number and profit potential of the arbitrage opportunities that come their way. And since, there aren’t as many of them, the average return of these funds is moderate and close to that of the money market.
This means these funds may return similarly during both bull and bear markets.
Risk-return payoffs
However, note that besides the availability of arbitrage opportunities, their returns are subject to the trades’ execution (high expense ratio), liquidity in the cash and futures segments of the stocks and, of course, the fund manager’s ability to spot such opportunities.
Since arbitrage funds enjoy a risk profile akin to that of debt funds or fixed deposits (which is why their returns are benchmarked against that of the money market), investors looking for low-risk investment avenues can consider allocating a portion of their funds parked in debt or fixed deposits in arbitrage funds.
These funds have returned in the range of 6.5-9.7 per cent over the year, outpacing both the Sensex and equity diversified category by a huge margin.
But how did these funds manage this feat? What are the risk-return elements associated with arbitrage funds and who should invest in them?
Brass tacks
Arbitrage funds draw mileage from the momentary mis-pricing between stocks, in the cash and derivatives markets.
In other words, these funds play on the price differential between stocks and their futures and use that to lock in specific returns. For instance, consider this arbitrage opportunity in Strides Arcolab.
On February 4, the stock price closed at Rs 66.75, whereas its February futures closed at Rs 70.6.
Arbitrage funds would use such price differentials to sell the stock futures, while simultaneously purchasing an equal number in the cash market. And by doing so, they lock in the price difference minus the cost of transactions as profits.
So, regardless of the price at which the stock closes on the expiry of the Feb futures contract, the fund would have locked in the price differential as its profit.
This may explain how these funds managed to return positively despite their equity exposure when the diversified equity category lost value.
While the same is possible even if the stock price quotes at a premium to the futures price (reverse arbitrage), it is yet to take off in full swing, as it would then involve selling the stock short in the cash market.
Essentially market-neutral, the average returns recorded by these funds are a function of the number and profit potential of the arbitrage opportunities that come their way. And since, there aren’t as many of them, the average return of these funds is moderate and close to that of the money market.
This means these funds may return similarly during both bull and bear markets.
Risk-return payoffs
However, note that besides the availability of arbitrage opportunities, their returns are subject to the trades’ execution (high expense ratio), liquidity in the cash and futures segments of the stocks and, of course, the fund manager’s ability to spot such opportunities.
Since arbitrage funds enjoy a risk profile akin to that of debt funds or fixed deposits (which is why their returns are benchmarked against that of the money market), investors looking for low-risk investment avenues can consider allocating a portion of their funds parked in debt or fixed deposits in arbitrage funds.
REAL ESTATE INVESTMENT - CHENNAI
A reader from Valasarawakkam, a residential area in the western part of Chennai, wanted a word of advice — would a particular residential project planned on the Old Mahabalipuram Road be completed on time? Can the builder be depended upon to stick to schedule? Also, is this the right time to buy?
The answer to the last question would appear to be relatively easy. Industry experts seem to agree this is a good time to buy — developers are aggressively pushing projects, offering discounts and lowering prices; banks are bringing down interest rates on home loans and the indications are that the rates could drop further.
But as for any assurance on whether a particular developer will stick to schedule is not something even experts can answer with any degree of confidence. But there are some pointers to taking a safe decision, they say.
Some safety guidelines
A common response from the industry experts is that buyers should go for property that is got the statutory approvals, where work is in progress — the more advanced stage of completion the better — and most importantly, consider the developer’s track record. Naturally, these projects are bound to be costlier as compared to those that are yet to be cleared by the Government authorities and there is no assured schedule on when the work is going to start leave alone be completed.
So why do developers launch projects that are yet to be cleared? One developer who did not want to be quoted pointed out that developers are trying to tackle a sharp swing in the market — a few months ago, developers could set their own price and there were buyers willing to pick up property at whatever the price, investors were willing to fund projects as they were assured of huge returns. But now builders find themselves having to cut prices, rework plans to cut down on apartment sizes to make them more affordable, and project funds are scarce even for completing projects that they have committed to after investing big money on land.
So, the advance paid on a project that is yet to be launched represents one way of improving cash flows in a slow market. In the last one month, after the harvest festival ‘Pongal,’ in mid-January, that marked the start of the auspicious season, a spate of residential projects was launched. A common feature with many of them was that they were priced aggressively, in what is loosely referred to as the ‘affordable’ segment — which seems to range around Rs 30 lakh and most of these were projects that were awaiting statutory approvals. A process that builders acknowledge can take anywhere between one and two years. Buyers were only too willing to book an apartment in a project that existed only on the developers’ brochures because they were promised at attractive prices. What happens now?
Effectively, the builders cannot start construction on the projects without the approvals and buyers who pay an advance of a few lakh rupees will simply have to wait without seeing any progress. But for the builders it is interest-free money in a tight market. Often the buyers are bound by a contract that prevents them from taking their advance back or they do so after forking out a stiff penalty.
Do your homework
Mr Chitty Babu, Chairman and Managing Director, Akshya Homes, says there is no doubt that it is the right time to buy. Developers are marketing their products aggressively, bank interests are as low as ever and buyers have a wide choice of projects to choose from. But, the buyer has to beware — check the documents thoroughly, see the plan approvals and related paper work are in place, check if the project is progressing and at what stage it is in and most importantly, the reputation and track record of the builder and ability to deliver.
When a buyer pays a couple of lakh rupees as advance for an unapproved project, he may have to wait up to two years for the statutory approvals from the Chennai Metropolitan Development Authority or the Department of Town and Country Planning to happen.
Having invested several crore rupees in a property, the builder has to cough up the interest during the waiting time. A two-year delay can add up to Rs 300-400 a sq.ft to the cost of a project, Mr Chitty Babu says.
Mr M.K. Sundaram, Chairman, Builders Association of India, says buyers should not be in a hurry to rush into a transaction if they find it attractive at first glance. Unless a project has an approved plan and the project is at a stage where a builder specifically earmarks apartments for the buyers, the risk is high. The builder cannot be blamed for making people wait longer because the Government has to sanction the plans.
But who is to blame? All agree it is the Government agencies such as the Chennai Metropolitan Development Authority, the Department of Town and Country Planning that are at fault. Why should it take up to two years for project approval, ask developers. If the government authorities speed up the process of approvals it would represent a huge benefit, they say.
Choose carefully
According to Mr Prakash Challa, President, Confederation of Real Estate Development Association of India, the buyers will have to be choosy about the projects – ensure that the approvals are in place. Reputed builders now compensate buyers when there is an inordinate delay. The confederation is now putting in place an arbitration system that will mediate on issues between developers and buyers when problems crop up. The system is successful in places like Pune and Karnataka and will soon be introduced in Tamil Nadu.
In most cases the developers cannot be blamed for the delay as the system in place is a long and complicated process involving multiple government agencies. The developer can provide the plans and title documents but there are over 15 No-Objection-Certificates that have to be obtained from a range of agencies like traffic police, water supply and drainage, electricity board, airports authority, pollution control boards and the Public Works Department. The process has to be revamped and streamlined, he said.
The answer to the last question would appear to be relatively easy. Industry experts seem to agree this is a good time to buy — developers are aggressively pushing projects, offering discounts and lowering prices; banks are bringing down interest rates on home loans and the indications are that the rates could drop further.
But as for any assurance on whether a particular developer will stick to schedule is not something even experts can answer with any degree of confidence. But there are some pointers to taking a safe decision, they say.
Some safety guidelines
A common response from the industry experts is that buyers should go for property that is got the statutory approvals, where work is in progress — the more advanced stage of completion the better — and most importantly, consider the developer’s track record. Naturally, these projects are bound to be costlier as compared to those that are yet to be cleared by the Government authorities and there is no assured schedule on when the work is going to start leave alone be completed.
So why do developers launch projects that are yet to be cleared? One developer who did not want to be quoted pointed out that developers are trying to tackle a sharp swing in the market — a few months ago, developers could set their own price and there were buyers willing to pick up property at whatever the price, investors were willing to fund projects as they were assured of huge returns. But now builders find themselves having to cut prices, rework plans to cut down on apartment sizes to make them more affordable, and project funds are scarce even for completing projects that they have committed to after investing big money on land.
So, the advance paid on a project that is yet to be launched represents one way of improving cash flows in a slow market. In the last one month, after the harvest festival ‘Pongal,’ in mid-January, that marked the start of the auspicious season, a spate of residential projects was launched. A common feature with many of them was that they were priced aggressively, in what is loosely referred to as the ‘affordable’ segment — which seems to range around Rs 30 lakh and most of these were projects that were awaiting statutory approvals. A process that builders acknowledge can take anywhere between one and two years. Buyers were only too willing to book an apartment in a project that existed only on the developers’ brochures because they were promised at attractive prices. What happens now?
Effectively, the builders cannot start construction on the projects without the approvals and buyers who pay an advance of a few lakh rupees will simply have to wait without seeing any progress. But for the builders it is interest-free money in a tight market. Often the buyers are bound by a contract that prevents them from taking their advance back or they do so after forking out a stiff penalty.
Do your homework
Mr Chitty Babu, Chairman and Managing Director, Akshya Homes, says there is no doubt that it is the right time to buy. Developers are marketing their products aggressively, bank interests are as low as ever and buyers have a wide choice of projects to choose from. But, the buyer has to beware — check the documents thoroughly, see the plan approvals and related paper work are in place, check if the project is progressing and at what stage it is in and most importantly, the reputation and track record of the builder and ability to deliver.
When a buyer pays a couple of lakh rupees as advance for an unapproved project, he may have to wait up to two years for the statutory approvals from the Chennai Metropolitan Development Authority or the Department of Town and Country Planning to happen.
Having invested several crore rupees in a property, the builder has to cough up the interest during the waiting time. A two-year delay can add up to Rs 300-400 a sq.ft to the cost of a project, Mr Chitty Babu says.
Mr M.K. Sundaram, Chairman, Builders Association of India, says buyers should not be in a hurry to rush into a transaction if they find it attractive at first glance. Unless a project has an approved plan and the project is at a stage where a builder specifically earmarks apartments for the buyers, the risk is high. The builder cannot be blamed for making people wait longer because the Government has to sanction the plans.
But who is to blame? All agree it is the Government agencies such as the Chennai Metropolitan Development Authority, the Department of Town and Country Planning that are at fault. Why should it take up to two years for project approval, ask developers. If the government authorities speed up the process of approvals it would represent a huge benefit, they say.
Choose carefully
According to Mr Prakash Challa, President, Confederation of Real Estate Development Association of India, the buyers will have to be choosy about the projects – ensure that the approvals are in place. Reputed builders now compensate buyers when there is an inordinate delay. The confederation is now putting in place an arbitration system that will mediate on issues between developers and buyers when problems crop up. The system is successful in places like Pune and Karnataka and will soon be introduced in Tamil Nadu.
In most cases the developers cannot be blamed for the delay as the system in place is a long and complicated process involving multiple government agencies. The developer can provide the plans and title documents but there are over 15 No-Objection-Certificates that have to be obtained from a range of agencies like traffic police, water supply and drainage, electricity board, airports authority, pollution control boards and the Public Works Department. The process has to be revamped and streamlined, he said.
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