I would like to share the below information for your reference.

In the budget, status quo is maintained with respect to individual taxation and benefits. Introduced an option to revise tax filing in case one missed any tax information within two years from the end of relevant assessment year.

There is a tax of 30% on digital assets like Crypto. As per the finance minister the govt will also track the money trail in crypto deals and every transaction will have 1 percent TDS imposed.

RBi will launch Digital Currency. The details are not yet announced.

Announced capital expenditure for infra and allied sectors and others. Huge borrowing programme to offset the revenue deficit.

And coming to markets would like to share a few updates.

In my last mail I highlighted the significance of raising interest rates by the US Federal Reserve. In the last meeting they reiterated to start raising interest rates and reduce liquidity in a gradual manner from the month of March, which I think will have an impact on the valuation of equities.

The same is playing out in the US where newly listed companies, loss making, spac companies corrected more than 60-90% apprx from their peak prices.

Here in India we have started to sense a little bit where new age companies like paytm, zomato etc corrected 50% from peak prices. Going forward we may see time or price correction based on the new developments. Froth getting corrected in many questionable stocks.

Be cautious in dealing with such stocks and other companies which will become active only in bull markets.

Do not chase returns blindly at the cost of your capital,which is irreplaceable. Being a lifetime’s savings, respect it.

Outlook on Equity:

“The best investors do not target return; they focus first on risk, and only then decide whether the projected return justifies taking particular risk”.

One of the major risks in investing is the risk of paying too high price. If our investing success is dependent upon the willingness of someone else buying our stocks at any price, then we are not practicing investing, but something else.

After the good amount of global market rally markets will adjust to the new environment of increasing interest rate scenario. Moderate your return expectations for the next one or two years and be ready for high volatility. For those investing directly, be selective about what you buy, and the price you pay. Even if you are buying a great company it is of no use if the price paid is very high.

Follow asset allocation; don’t go by past return performances.

Debt: For Sr. citizens, as usual I prefer RBI Floating Rate Bonds, and Post Office Sr. citizens Scheme as first priority preferably for those who are not in the tax bracket or 10% bracket.

For higher tax bracket investors debt funds, conservative hybrid, equity savings category are the best to protect the downside, generate cash flows through SWP for better return experience than FD’s.

With the huge borrowing programme lined up and increasing rates once again debt becomes very attractive. The 10 year govt yield is inching towards 7% and SDL(state Development Loans) is more than 7.25%.

The post tax returns from certain categories of debt will be better than the current bank FD rates with a 3-5 year horizon.

Gold: Can consider investing in SGB or ETF’s. It acts as a hedge against any geopolitical issues and financial markets adversities.

I end with a Buffet quote on why most investors fail.

“People get smarter but they don’t get wiser. They don’t get more emotionally stable. All the conditions for extreme overvaluation or undervaluation absolutely exist, the way they did 50 years ago. You can teach all you want to the people, you can ask them to read Ben Graham’s book, you can send them to graduate school, but when they’re scared they’re scared.”

So focus on your goals, follow asset allocation, maintain equanimity in rising and falling markets and don’t chase for returns without respecting risk.
Do let me know in case of any further information.