RBI is getting very active & making sure it is supporting the market much faster than it has in the past

RBI announced 2 things,
- 1,00,000 cr of OMO
- 87,000 cr of USD/INR Swap

Let me explain what it means in this 🧵 (1/4) Liquidity in the banking sector is under serious stress. On the 4th of March the liquidity deficit was ~20K cr. Liquidity has been deficit because of,

- Tax Outflows (Taking money out from the bank)
- Heavy Selling by FII’s (Taking money back)
- Lower government spending (Not receiving more rupees in the market)
- RBI Selling $ in the market (sucking out rupee liquidity) (2/4)

Let me tell you a story of the most brutal correction in India, it was the dot com bubble. Not only because markets corrected 54% but also because it lasted for 19 months.

Lets see what an SIP investor would have experienced (1/6) If you were very smart & started your 25,000 SIP at the exact BOTTOM of the market cycle in Sep 2001 from where the correction ended & markets started going up & you stayed invested till Dec 2024, you would have invested 70 L over 280 months & today that would have become 5.50 cr. at the actual market returns. (2/6)

What’s happening with Gold & what should you do? A quick 🧵

Gold has been going up because of these 4 reasons,

(1) US trade war
(2) Central bank buying
(3) Rupee Depreciation
(4) Falling rates (1/n) (1) US Trade War - There is policy uncertainty because of this. China, Mexico & Canada form close to 40% of America's trade partnership. Trade war leads to a risk off environment (people are scared to take risk in equity) + increase in inflation (as imports from China, Mexico & Canada becomes expensive). This led to Gold going up (2/n)

Bond markets are expecting higher inflation with trump winning & hence the yields are going up, not a good sign for India equity. Let me explain (1/4) (1) If Trump increases duty, it is inflationary as the imports will become costly & hence yields are going up

(2) If trump reduces corporate taxes, it means more stress on the government finances, more borrowings & hence higher yields (2/4)

Continuing our Mutual Fund educational series, here’s the 4th 🧵 in the series,

Topic - “Everything you need to know about Mutual Fund Taxation”
 
Do ‘re-tweet’ & help us educated more retail investors (1/13) If you prefer watching a video instead, here’s a link to the 15 minute detailed video on the same topic -
 
Do subscribe & hit the bell icon to get notified everytime we post an educational video (2/13)

Continuing our Mutual Fund Education Series, here’s the 3rd thread; this will demystify the Hybrid Mutual Fund categories for you.
 
Do ‘re-tweet’ & help us educate more investors to make the right investing decisions (1/9) (Q1) What are Hybrid Funds?
 
Hybrid funds are funds, which invest in multiple asset classes like
- Equity
- Debt
- Gold
- Preference Shares
- REITs & InvITs

With an objective to reduce volatility (vs pure equity funds) & try an generate better risk adjusted returns (2/9)

Continuing our Mutual Fund series, this thread will focus on ‘Demystifying the Debt Mutual Fund Categories’
 
Do ‘re-tweet’ & help us educate more investors (1/10) Debt Mutual Funds have 16 different categories & these categories are differentiated on 3 major parameters,
 
(1) Average Maturity
(2) Mac Duration
(3) Credit Risk (2/10)

"Should we invest or wait now that the markets are at an all time high?" - an investor asked.

I dint want to sound technical & hence told him about India's liquidity story. Do 're-tweet' this quick small 🧵, retail will benefit I think (1/8) - I remember in the early days of my career, I was told markets fell ~60% during Lehman crises because FII's withdrew $2B
- Go back 10-15 years & FII's were a major reason markets moved in India
- Not any more
- Today FII's have only 16.5% holding in India, a decadal low (2/8)

There are 1500+ schemes in mutual funds spread across multiple categories. To build the right portfolio, you need to understand the categories well. It’s less about the scheme & more about the category you choose in Mutual Funds.

This 🧵 is all about the Equity Category. Do ‘re-tweet’ & help us educate more investors (1/11) As per SEBI guidelines, mutual fund schemes are classified as,
 
(1) Equity Schemes - Investing in Large, Mid & Small Cap Equities
(2) Debt Schemes - Investing in Bonds
(3) Hybrid Schemes - Investing in a mixture of Equity & Debt
(4) Solution oriented Schemes - For retirement & Children planning
(5) Other Schemes - Index Funds, ETF’s & Fund of Fund (2/11)

RBI's new guidelines on Default Loss Guarantee (DLG) explained below in this 🧵

Do 're-tweet' :) (1/7) If I want to take a loan, the cheapest always is the Bank & if I dont get it at the bank, I will approach an NBFCs.

Banks & NBFC's are good with Home Loans, Car Loans etc but the penetration of personal loans is not that large & is growing in demand (2/7)

DOW was up 400 points yesterday because it is presumed that the DEBT CEILING deal has been reached.

- But what’s the debt ceiling about?
- Is US going to default on its debt?

Lets understand it in this 🧵. Do ‘re-tweet’ & help us educated more investors (1/13) twitter.com/i/web/status/1… (Q) How does a country run?

- Assume a country to be like a company, which has income & expenses.
- Income source can be tax collections & expense can be government employee salaries, defence sending’s, social security schemes etc. (2/13)

In a world where all central banks are trying to de-dollarise, reduce dependence on the $ & buy more Gold, why did RBI drastically reduce its gold purchases in 2022 where as globally all central banks bought much more?

A quick 🧵, re-tweet if you like it (1/9) (Q) Why does RBI buy Gold at all?

- Assume RBI to be an investor who buys US Treasury Bills also & Invests in Euro as a currency also & uses Gold as well to diversify its investments. We call it forex reserves in technical language (2/9)

A 🧵on the banking sector, demystifying commonly used terms,

- CASA
- Net Interest Income (NII)
- Net Interest Margin (NIM)
- Cost of Liability
- Advances Growth
- Gross v/s Net NPA
- Provisions
- SLR/CRR
- Capital Adequacy Ratio

Do re-tweet to educated more investors (1/n) Banking, as a business is simple to understand, you borrow money (liability for the bank as the bank needs to pay back) and lend (asset for the bank as the bank is expected to receive it bank), the difference between the borrowings & lending is banks income (2/n)

Is US going to default because the CDS spreads have hit a record high?

This image is doing rounds. Not sure how many of us understand whats the Credit Default Swap (CDS) & CDS Spread, so a quick 🧵 (1/7) Lets say you have invested in the 1 year US sovereign bonds. Now you fear with all the news around that the US might default on the bonds. What do you do? You can buy an Insurance which pays you the maturity if at all the US bonds default. That insurance is called the CDS (2/7)

Have you noticed that every time you invest in a new mutual fund, it disappoints you?

Here's a quick 🧵 on why it happens & some learnings.

Do 're-tweet' if you find it useful (1/11) The reason is your fund selection process :) 99% of you'll select funds looking at the last 1 or 3 years of returns & bang, you have invited under performance!

Let me explain, (2/11)

Today is the last day to maximise your returns for this Financial Year in PPF, let me explain in this short 🧵 (1/5) If PPF pays you 7.1% & you are in the 30% tax bracket, thats like earning 10.15% on your FD pre tax. Ofcourse PPF has its own challenges around the maximum investment being 1.5L, 15 years lock-in etc., but its a good investment to have for debt allocation (2/5)

Today is the last day to reduce your tax liability for this year.

No I am not talking about the 1.5L of 80C or 80D. I am talking about Tax Profit & Loss Harvesting. 🧵 (1/8) Suppose you invested in an Equity Mutual Fund or bought a stock directly & have held it for over a year, you would either be making a profit or a loss right?

You can reduce your tax liability in both cases (2/8)

NO there are no charges to you for payments using your UPI even above 2000. Let me explain it in this 🧵

Do 're-tweet' so that we can educate more people (1/14) Have you ever wondered how when you swipe a credit card, get 45 days of credit & not pay any cost if you pay the bill on time? How does the eco system make money? (2/14)

Why FED may increase rates by 0.25% today inspite of the banking crises? 🧵

(Ans) FED is stuck between controlling high inflation on one end & paying more attention to the banking crises on the other & hence might choose a middle path. Let me explain 👇(1/6) (A) Lets talk about inflation first,

- FEDs target is 2% but the current inflation is 6%
- US retail sales data showed a decrease of only 0.4% in Feb
- The latest GDP forecast for Q1 is 3.2% (2/6)

Should you invest in the IDFC US Treasury Bond 0 - 1 year Fund of Funds NFO?

My view is to avoid 🧵👇

Do ‘re-tweet’ & help me educate more retail investors (1/17) (Q1) Why do you invest in a 0-1 year fund like liquid or a money market fund?

(a) The prime reason to my mind atleast is safety, liquidity & better than savings account returns
(b) Anything outside of the above, your expectations are misplaced (2/17)

Active Debt Funds are better placed over Passive Debt Funds right now! A 🧵

It’s a misconception amongst investors that because passive is cheaper, the answer to all their requirements is Passive, not really!

Do re-tweet this 🧵 & help us educate more investors (1/26) (Q1) Very basics first, how does a Debt Mutual Fund work?

(1.1) When you invest lets say Rs. 100 in a debt Mutual Fund Scheme, the fund manager allocates that 100 to multiple bonds. It’s like investing 100 rupees across FD’s of the government, corporate, NBFC’s, banks etc (2/26)