Latest news with #Govila
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Business Standard
6 days ago
- Business
- Business Standard
Planning to redeem MFs? AY 2025-26 tax rules may hit your returns
A slew of tax changes, effective from July 23, 2024, has altered how your mutual fund gains will be taxed in Assessment Year (AY) 2025–26. From higher long-term capital gains (LTCG) taxes on equity mutual funds to the removal of indexation benefits on older debt funds, investors now need to rethink their strategies. Experts say the timing of redemptions and choice of funds could have a noticeable impact on post-tax returns. Redeeming before or after July 23: Why timing matters Col Sanjeev Govila (retd), certified financial planner and chief executive officer of Hum Fauji Initiatives, a financial advisory firm, says that hesitation could cost investors more in taxes. - Equity MFs: Suppose Rohan invested Rs 10 lakh in July 2021 and sells for Rs 16 lakh. - Before July 23: LTCG tax is 10 per cent after Rs 1.25 lakh exemption, resulting in Rs 47,500 tax. -After July 23: Tax rate rises to 12.5 per cent, increasing tax to Rs 59,375. - Debt MFs (bought before April 1, 2023): Priya invested Rs 10 lakh, now worth Rs 16 lakh. -Before July 23: Indexation reduces taxable gain to Rs 3 lakh; tax = Rs 60,000. - After July 23: No indexation; full Rs 6 lakh taxed at 12.5 per cent, i.e., Rs 75,000. 'The loss of indexation means debt funds are now less nuanced and more expensive tax-wise,' Govila explains. SIPs now have split tax personalities Each SIP instalment is treated separately, and taxation depends on its purchase date. Govila says: -SIPs before April 1, 2023: Debt fund units held >2 years taxed at 12.5 per cent LTCG. -SIPs after April 1, 2023: Entirely taxed at slab rate, irrespective of holding period. For example, Arun, investing Rs 5,000/month since 2022, will find his older debt SIPs taxed favourably compared to those started later. A new six-way tax split Vivek Jalan, partner, Tax Connect Advisory Services LLP, suggests splitting SIP investments into six categories for clarity: - Bought on/before Mar 31, 2023; sold before July 23, 2024; held <36 months – STCG, taxed at slab rate - Bought on/before Mar 31, 2023; sold before July 23, 2024; held >36 months – LTCG, 20% with indexation - Bought on/after Apr 1, 2023; sold before July 23, 2024 – Taxed at slab rate - Bought on/before Mar 31, 2023; sold after July 23, 2024; held <2 years – STCG, taxed at slab rate - Bought on/before Mar 31, 2023; sold after July 23, 2024; held >2 years – LTCG, 12.5% without indexation - Bought on/after Apr 1, 2023; sold after July 23, 2024 – Taxed at slab rate 'Debt mutual funds sold after July 23, 2024, will no longer enjoy indexation. This flat LTCG of 12.5 per cent could hurt long-term investors,' Jalan says. Gold and international funds: Strategic, not tax-smart Chintak Shah, vice president, Anand Rathi Wealth Ltd., points out that gold and international funds have also lost their earlier edge. 'These funds were taxed at 20 per cent with indexation if held for over three years. Now, they're considered long-term after two years but taxed flat at 12.5 per cent, with no indexation,' Shah explains. Whether this is good or bad depends on returns. 'If such funds deliver over 9.5 per cent annual returns, the new regime is more favourable. Otherwise, the old system would have been better,' Shah adds.
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Business Standard
23-06-2025
- Business
- Business Standard
Blend core SIP strategy with dip-buying for tactical market gains
Trading volumes in exchange-traded funds (ETFs) on the National Stock Exchange (NSE) typically spike when the Nifty drops more than 1 per cent, according to media reports. This indicates that savvy investors use such declines as buying opportunities. ETF advantage ETFs are well-suited for dip-buying as they offer intraday liquidity. 'Unlike mutual funds, which are priced only at day-end, ETFs trade in real time, allowing investors to act immediately during sharp intraday declines,' says Arun Patel, founder and partner, Arunasset Investment Services. ETFs have low expense ratios and don't have an exit load. They also provide diversification so that investors don't have to bet on individual stocks. Upside of buying the dip Buying after a market fall enables investors to acquire assets at more attractive valuations. 'Investors get more value for the same investment. It can help lower their average cost of holdings,' says Patel. Behaviourally, the strategy converts volatility into opportunity. 'If done calmly, dip-buying can enhance long-term returns,' says Sanjeev Govila, certified financial planner and chief executive officer, Hum Fauji Initiatives. Further dips possible after buying Dip-buying during bear phases or early in a sell-off can backfire. 'It often amounts to catching a falling knife. Investors may misread temporary bounces or technical signals, only to face deeper declines,' says Patel. 'Markets can continue declining after purchase, testing the investor's patience,' says Govila. If the trend persists, many investors tend to throw in the towel and exit at a loss. Deploying too early leaves investors without dry powder for better opportunities that may come later during the downturn. Evaluate the context Assessing the context is critical. 'Dip-buying is most effective when you can anticipate a turning point — when central banks or governments are likely to step in with supportive measures like rate cuts, liquidity infusions, or fiscal stimulus that may help stabilise the market,' says Patel. Govila suggests the 5-10-15 rule. 'A 5 per cent decline is usually noise, 10 per cent declines deserve attention, while 15 per cent plus declines often present genuine opportunities,' he says. Deployment strategy Avoid overcommitting by setting up a dedicated 'dip fund'. 'Create a separate pool of, say, 5–10 per cent of your total equity allocation, earmarked for such opportunities,' says Govila. Staggered buying reduces regret and improves cost-efficiency. 'Follow the 25-50-25 strategy: Deploy 25 per cent on the first significant decline, 50 per cent if the market falls further, and reserve 25 per cent for extreme scenarios,' he says. Rule-based triggers tied to valuations or index levels can help avoid emotional decisions. Investors should write down their investment rationale before placing such bets. 'Having a written plan, a pre-defined buying ladder, and a long-term mindset rooted in asset quality helps build conviction,' says Ram Medury, founder and chief executive officer, Maxiom Wealth. Be prepared for a long wait Dip-buying can at times require patience. If the dip occurs during a strong uptrend or is triggered by a temporary change in sentiment, recovery can come within months. After the taper tantrum of 2013, the market rebounded strongly within a few quarters as macro stability returned. The Covid-19 crash of March 2020 also saw a swift rebound within a year. If the decline is part of a broader correction or triggered by macroeconomic stress, the wait can be longer. After the 2008 global financial crisis, Indian equities needed nearly two years to recover. 'Historically, markets have taken 12–30 months to recover fully after meaningful corrections. And sector-focused dips may take longer to play out than broad-market dips,' adds Govila. Combine with SIPs Those who buy on dips should not abandon systematic investment plans (SIPs). 'SIP should be the core strategy for retail investors because it is systematic, discipline-driven, and avoids the emotional pitfalls of market timing,' says Medury. SIPs should not be paused during volatile phases. 'Monthly savings done through SIPs provide the power of compounding if done continuously for the long run,' says Swati Saxena, founder and chief executive officer, 4Thoughts Finance. It is best to integrate the two approaches. 'SIPs will provide the benefit of rupee-cost averaging and you can also do opportunistic buying during market downturns,' says Abhishek Kumar, Sebi-registered investment adviser and founder, Saxena suggests routing monthly savings through SIPs and lump-sum investing through dip investing. Key mistakes to avoid Experts say that not every 5 per cent correction is a buying opportunity. Sometimes, those corrections are justified — by lower growth, tighter liquidity, or global shocks. 'Buying prematurely in a falling knife scenario (for example, smallcaps in 2018) can hurt,' says Medury. He suggests using valuation indicators (like P/E relative to historical averages), macro cues (like crude oil spike, GDP growth), and technical support zones to assess the depth of the downturn. Do not engage in dip-buying using leverage, emergency funds, or money needed for short-term goals. Placing heavy bets on a specific sector can also backfire.
Business Insider
19-06-2025
- Business
- Business Insider
LTIMindtree Limited (LTIM) Gets a Hold from Morgan Stanley
Morgan Stanley analyst Sulabh Govila maintained a Hold rating on LTIMindtree Limited (LTIM – Research Report) today and set a price target of INR5,400.00. The company's shares closed today at INR5,450.50. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter According to TipRanks, Govila is an analyst with an average return of -5.4% and a 30.00% success rate. Govila covers the Technology sector, focusing on stocks such as LTIMindtree Limited, Cyient Limited, and L&T Technology Services Ltd.. The word on The Street in general, suggests a Hold analyst consensus rating for LTIMindtree Limited with a INR4,971.15 average price target. The company has a one-year high of INR6,764.80 and a one-year low of INR3,841.05. Currently, LTIMindtree Limited has an average volume of 13.91K.
