Long Term Capital Gains V/s Midcap Meltdown & LIC V/s. IDBI BANK – what it means for Investors?

Saturday, 21 July 2018

Long Term Capital Gains V/s Midcap Meltdown & LIC V/s. IDBI BANK – what it means for Investors?

Greetings from Hitesh! Modi passed the Parliament No-confidence move with an ease. It was expected as the numbers were supporting to him. There are two issues which are being discussed in the market and I have mentioned both in my title.

Let us deal with the first set: -

Long Term Capital Gains V/s Midcap Meltdown

In the current budget, Govt., expected an income of Rs.20000 Crs in terms of Long term gain tax. It was a reasonable expectation given the kind of market we had at the time of budget.

Post this announcement SEBI came out with Mutual Fund reshuffling directives and all the mutual funds were asked to align their schemes as per their objective of Large Cap / Small Cap or Mid Cap funds.

Looking separately at both, both are good intentions and it seemed SEBI was doing right thing in the interest for small investors.

But the results of the well-intentioned action brought down the Small Cap and Mid cap shares anywhere between 20% to 90%. They might have achieved the goal of aligning Mutual Fund schemes, but they missed the major goal of earning revenue and that too Rs.20000 Crs from Long Term Gains Tax.

LIC V/s. IDBI BANK

Govt may have an intention to support IDBI Bank, increase the valuation and sell the Bank in Future at some good price to other Bank. But, involving LIC in the same does not seem to be a Wise step. LIC has no skill set in BANKING and it has been asked to take over the BANK!!

Over the years, all Govt. have used LIC funds to their whims and fancy. Modi Govt is also doing the same.

I wish their GAMBLE pays the right results to the LIC Policy Holders and IDBI Shares Holders.

How does this relate to Small Guys?

Both the above steps have good intentions but not RIGHT TIME and RIGHT Co-ordination of different Govt. agencies.

There was no need for Mutual Fund reshuffling directives had they wanted to earn the Capital Gains Tax. But the lack of co-ordination and may be a lack of market vision have made the same possible.

Small investors also face the same issues when they come to the market.

1.  They come for Trading and become Investors.

2.  They come for Long term investments and become Traders.

3.  Once they invest for long term, they start worrying about price not moving up or doing ups and down depending on the market mood.

4.  He wants to do little of everything when it comes to investments – Share Market / Real estate / Mutual Funds / Small Saving schemes / Bullion, etc. This obsession may give the EGO satisfaction of doing all but not the big money.  

When co-ordination of all your thoughts and actions are not focused on your major goals, the results are always below average or huge losses.

What is the LEARNING?

Mr.Modi has launched N number of Well intended programmes in last 4 years like Demonetisation / Swach Bharat / GST / E-way bill / Long Term Gains Tax., etc., etc. But he faced the NO-CONFIDENCE as the results of all his actions have failed to generate ACCHE DIN for common people.

Learn from MODI’s mistakes and take your life to the next levels.

Have a Happy Weekend.

Follow me on Twitter @hiteshmparikh or on Whatsapp - +91-9869425399.

Live With Passion…Invest With Passion.

Hitesh Parikh.