Porinju Veliyath soothes nerves of novices over LTCG tax
It is no secret that novice investors (including me) have been very tense over the past few days over fears that NAMO and Arun Jaitley would impose tax on long-term capital gains and torpedo the stock market.
Our fears were enhanced when eminent experts warned that such tax would signal ‘Game Over’ and bring the rally to an abrupt standstill and lead to colossal losses for investors.
However, Porinju soothed our nerves by advising that the LTCG tax is not unwarranted and that it would not have a prolonged adverse impact on the stock market.
Instead, he advised that the correction, if any, should be taken advantage of to tuck into high-quality stocks.
Tax on LT Capital Gains in 2018? pic.twitter.com/3i3RGjoScA
— Porinju Veliyath (@porinju) December 30, 2017
No doubt, this soothing assurance prevented several novices from panicking and throwing in the towel.
Today, Porinju’s prediction came true because despite the dreaded LTCG tax having been imposed, the stock market shrugged it off and did not react adversely.
As of now it appears mkt factored in all potential bad news
LTCG or any jazz mkt has factored in 🙂
Mkts welcoming all news as gd news
Mkts in BULL mode!!!!#Budget2018 https://t.co/tg6NMbZm7z— Nigel D'Souza (@Nigel__DSouza) February 1, 2018
Sonia Shenoy of CNBC TV18 explained the nuances of the LTCG tax in a simple yet masterful manner:
at 140..then tax will be on 20 and not on 140—cost). STCG will be cont to be taxed at 15%….tax on distribution of equity oriented at 10%, this will hurt the dividend MF options. FM expects these schemes will bring Rs200bn in the first year
— Sonia Shenoy (@_soniashenoy) February 1, 2018
+ve thoughts #Budget2018
LTCG is a measure to aid GOI rev
U pay LTCG only if mkts move above Jan 31st 2018 highs
Hence Govt can get Tax rev only if markets move up
Sit back & relax while GOI strives harder for our economy inturn reflectin in mkts upmove
Commission charged=10% 😉— Nigel D'Souza (@Nigel__DSouza) February 1, 2018
(Sonia Shenoy with other luminaries of CNBC TV18)
Forget LTCG, “Earnings Blast” will send stocks surging: Raamdeo Agrawal
Raamdeo Agrawal is also dismissive about the impact of LTCG tax. He explained that there will be an “earnings blast” which will be “more powerful” than the LTCG tax and will completely undermine its adverse impact on investors’ sentiment.
“The corporate results, the aggregate profits are already up by 29% and you will see the March quarter will be even larger. The earnings blast is going to be there for the next at least four to seven-eight quarters and it feeds itself. That is more powerful than capital gains tax because in any case, the stock is not determined by the capital gains tax, it is determined by the corporate earnings and corporate earnings growth. And that has not been impacted at all”, Raamdeo said in a tone of supreme confidence.
Raamdeo Agrawal’s view is supported by other experts.
The Budget has no measures to slow down the economy
Economy is on a recovery path
Rural Consumption will improve and as such economic growth will become stronger
Longer term story stronger.— sandip sabharwal (@sandipsabharwal) February 1, 2018
Genuine investors should not be bothered on #LTCG Tax.
Huge frauds related to income conversion to #LTCG will moderate.
People asking for examples,my understanding
You bought Share A at Rs 100, on 31st Jan 2018 it was at 200 and eventually sold at 220.
Tax will be only on Rs 20.— sandip sabharwal (@sandipsabharwal) February 1, 2018
However, some noted experts are irked at the dual tax whammy that investors are exposed to in the form of STT and LTCG Tax.
. @arunjaitley sir, stock investors (not speculators) or ‘co-owners’ now suffer multi-taxes – corporate tax paid by cos, DDT paid by cos, direct incidence of STT on purchase, tax on large cumulative dividends recd & now even LTCG tax on exit (without indexation)! #Budget2018
— Amar Ambani (@AmarAmbani) February 1, 2018
Responsible, progressive, growth oriented budget. Focus on Agri, rural and Infra great for economy. Dual tax of STT and LTCG could have been avoided. @arunjaitley @PMOIndia @FinMinIndia @EdelweissFin
— Vikas Khemani (@vikaskhemani) February 1, 2018
(Porinju in the distinguished company of the charming Dr. Punita Kumar Sinha of Pacific Paradigm Advisers)
Top stock picks to buy now
Anyway, now that the specter of fear relating to LTCG tax has come and gone and the stock market looks stable, we should get back to our favourite activity of picking the best multibagger stocks to buy for 2018 and later.
All Is Well.
Forget the budget now, focus stock picking!— Porinju Veliyath (@porinju) February 1, 2018
'Bhav Copy' of 31 January 2018 will go down in history?
— Porinju Veliyath (@porinju) February 1, 2018
Here again, Porinju has come to our rescue by providing a ready-made list of six fail-safe and potential multibagger stocks to buy.
Let us straightaway dive down into these stocks:
#BudgetWithETNOW | #Budget2018 | Here are the top #BudgetPicks by ace investor Porinju Veliyath (@porinju). Keep an eye on these stocks & stay tuned to ET NOW to catch Porinju LIVE with his market analysis of the Big Budget at 10:00 am today! @nikunjdalmia @AyeshaFaridi1 pic.twitter.com/Gpg1w2n1Ke
— ET NOW (@ETNOWlive) February 1, 2018
(1) HPCL – fail safe blue-chip PSU behemoth
HPCL is one of the all time favourite stocks of Ramesh Damani. He never tires of advising us to buy this blue-chip PSU stock.
In fact, Porinju had earlier recommended HPCL when it was languishing at a throwaway market cap valuation of Rs. 10,000 crore.
HPCL@320 – MktCap 10,000 Cr. Revenue 200k Cr. Stock to quote in 4 digits If the next govt. behave rationally. just sharing my thoughts
— Porinju Veliyath (@porinju) April 30, 2014
Porinju’s view was corroborated by Shyam Sekhar who described HPCL as a “great retail play”.
@porinju The MCAP in 2004 when NDA ruled was much higher than this. The price doesn't reflect a decade of growth in retail. Gr8 retail play.
— Shyam Sekhar (@shyamsek) April 30, 2014
If we had obediently followed Porinju’s advice, we would today be basking in riches because the market capitalisation of HPCL is presently Rs. 60,000 crore.
Porinju has advised that it is not too late for us to make amends.
He explained that HPCL is still at attractive valuations given the ONGC deal and the insatiable demand for diesel in the Country.
(2) Tata Power – restructuring will unravel multibagger potential
Tata Power has the distinction of being earlier recommended by Rajen Shah of Trade Bulls.
In fact, Rajen Shah recommended Tata Power at the same time that he recommended Tata Global Beverages (TGBL) as a “dirt cheap blue chip multibagger” stock.
However, while Tata Global Beverages took off like a rocket and posted massive gains, Tata Power has continued to languish.
Porinju has now recommended a buy of Tata Power on the logic that the restructuring that is underway under the dynamic leadership of N Chandra will cause the blue-chip to see better days ahead.
He also explained that the aggressive push of the Tata group towards Defense business deals will put the spotlight on Tata Power.
Tata Power has also been recommended by DD Sharma, the veteran stock picker.
(3) ITC – biggest beneficiary of shift from unorganised to organised
ITC, the blue-chip diversified conglomerate, needs no introduction.
The stock is not only fail-safe but has steadily churned out multibagger gains over the past several decades.
Porinju explained that ITC is quoting at attractive valuations in comparison to other blue-chip stocks.
He also emphasized that the FMCG business, which was hitherto a burden, would turn profitable soon.
This will provide the much needed catalyst to send ITC surging into orbit.
It is notable that Shyam Sekhar has also recommended that we buy ITC (@4.00).
“Large liquid stocks where business will shift from unorganised to organised is ITC …. even in their FMCG business, I would expect the company to gain more market share at the expense of unorganised smaller players. You are going to see this consolidation, like it or not. Big companies are going to benefit big time from both demonetisation and GST. One stock which is going to benefit from this is ITC and it is at a reasonable valuation to its peers,” Shyam Sekhar said.
(4) HCL Info – excellent play on infotech boom
Porinju recommended HCL Info on the logic that the on-going restructuring will make business simpler and more profitable. He also emphasized that the fact that the promoters increased stake recently is a giveaway to the fact that the Company is headed towards prosperous times.
(5) Inox Leisure – duopoly with insatiable demand
Porinju recommended Inox Leisure on the logic that it operates in an industry where its only rival is PVR.
It is obvious that in a duopoly situation with incalculable demand and limited supply, both stocks will prosper.
Porinju also emphasized that Inox Leisure’s valuations are attractive as compared to that of PVR.
He explained that stocks like Inox Leisure are a good play on increased discretionary spending by affluent youngsters in the economy.
(6) LEEL Electricals – cheap in comparison to arch rivals
Porinju recommended LEEL Electricals on the basis that the Company has witnessed substantial reduction after the sale of the consumer business division to Havells.
He also referred to the fact that LEEL Electricals’ peers like Dixon and Amber are trading at substantial premiums which means that it is only a question of time before LEEL takes off like a rocket.
LEEL was earlier recommended by SP Tulsian, the veteran stock picker. He provided a masterful analysis on why the stock is a great buy now.
Conclusion
Thankfully, there is no dearth of multibagger stock recommendations for us to choose from. In addition to the six stocks recommended by Porinju Veliyath, leading experts have also recommended 10 stocks which have potential to give gains in excess of 100%. Persons who have a short-term perspective and are looking to make a quick buck can look at the top 10 Budget Dhamaka stocks.
One of worst budget in Indian History. LTCG may impact flow to mutual funds and slow down in fresh flows to stock market may impact market adversely. Budget is Anti middle class and anti salary class.
Sir by your logic there should be no investment made in equites in those countries where LTCG is taxed. Will investors forego the benifits of successfuli equity investing in the fear of LTCG? My conviction is that MARKET WILL MOVE ON after a minor blip,if at all it happens.
I understand from the statement made during an interview by some official that LTCG will be under taxation upto a certain period after that it will be exempted.
Don’t consider LTCG in isolation, Modi Govt is most Tax hungry Govt in Indian history. It has converted India into one of highly taxed countries. First you get taxed at 30% on income tax on Salary. After that you pay 4% extra surcharge, recently increased, for education but pay huge fee in education institutions mostly pvt.. Then you pay another upto 30% tax on your consumption when buying goods or services like GST and many other taxes etc. Pay taxes on your saving accounts although you get negative real interest rate on that after considering inflation. Then you pay GST and then road tax when buying a vehicle. Then you pay highly taxed petrol. Then you pay road cess on petrol upto 4 rupees. After that you pay toll tax, one of highest in world. Then you invest residual saving in companies stocks and pay transaction tax. . Companies pay huge taxes like GST and many more taxes. Companies profit is taxed at 30% plus 4%cess.Then companies pay dividend tax. After you receive dividend , you again pay income tax on it. When ever you will sell, pay LTCG also. Most of companies are becoming sick due to heavy taxes resulting in huge Npa of banks. That means Modi Govt has forced every individual or company to work mostly for this most ineffective, unefficient Govt which waste almost major portion of all taxes to drain and hit economy by various innovative destructive ideas at regular intervals. Don’t be Misguided by confused reaction of stock market to LTCG. Don’t underestimate Govt influence over LIC, Sbi mutual funds and other Govt institutions power of giving temporary support to Govt misadventures. Don’t be Misguided by fund managers statement that it will be business as usual, as they earn their bread and butter from market, so will try to calm their investers as they don’t have any other job. I expect some portion of investment going again to Real Estate and Gold. I expect Real Estate prices to firm up. I expect BJP support going down in North India due to mismanagement of Economy by this Govt(Rajasthan Loksabha Bipoll results for 2 seats where BJP lost by around 2 Lakhs votes and lost by BJP in MP Civic polls.) So BJP may not be able to repeat its performance in Elections now onwards.
Exactly Kharbji what you wroye here ” Modi Govt is most Tax hungry Govt in Indian history.” For sure LTCG Tax will make adverse effects . The most happiest and fortunate Namo bhakt ‘fund manager’ in India now is porinju, because he openly supported this tax. His heart of heart is weeping now.
@kharb ,I have to agree with you on most parts of your statement. Concepts may be novel and apparently beneficial for the economy but implementation has not been properly planned,hence faulty due to inexperience in dealing with radical thus disruptive ideas.
At cost of the citizens of this country!!!
I perfectly agree with your entire analysis. This Govt is most tax hungry govt ever in India. It only wants to show to the western world that it has been able to manage fiscal deficit at less than 3.3% – not only expenditure management and other efficiency improvement measures but by taxing the citizens heavily be it in the name of high GST, high tax on petroleum products, STT and now even LTCG.
Hope citizens would teach them a lesson by not reposing faith in BJP in the next State as well as General Election.
Minor blip no.1 2nd Feb!!!
Though I do not watch CNBC TV18 anymore( though I do watch CNBC Awaaz) I would say well done to Varinder Bansal…whereas most, if not all TV anchors project that they do know more than they actually do Varinder Bansal presented himself in the most normal way. ..I do not where is he exactly is he going next maybe ET NOW but since I came to know at the right time I would say well done..and all the best
And Kharb you should remember that in this very forum you wrote that equity investors are a greedy lot and you do not care whether they make profits or losses..and you write so much for what is beneficial to the country…. I am really surprised you of all people are saying LTCG is unwise decision
It’s best not to buy now and sit on cash. With ltcg and state elections in next few months market will have a huge correction this year
this is the starting of a long term downfall in Indian stock market better sell on rise
Modi is overconfident and is taking people for granted..He is trying to boil the ocean rather than doing it gradually. If he starts rubbing everyone the wrong way that will reflect in election results which is not good for the country. He should have introduced LTCG after elections and may be introduced LTCG exemption for 3 year period. He thinks people will forget after one month but if retail investors panic market will go in downward spiral ..
Wow. Surprised by Modi. Basically everyone got concessions and to pay for it all, the equity investor. May cost massively in the elections now. He came and he went…
Really don’t understand what the problem in LTCG? All these taxes are present in all countries and in some countries they are far higher especially in western world.
Why Indian investors are so greedy and do not want to share their wealth in nation building. Ultimately in long run they will get benefited.
Kisine sahi kaha he ki Indians ko sab free me chaiye.
Rail ticket 10% increase hota he to rote he and 400 Rs pizza kahte hue nahi sochte. Cheap mentality.
Specially rich investors are worst in social responsibility. Katro chap sab free me chaiye.
Don’t know admin can post this comment
Rajesh
It is not about sharing money to build the nation – we still get the same pot holes in roads, same water logging issues in Mumbai during rains and much more. Its like we are paying to fund the politicians homes / political parties. We all are ready to pay Rs 3000 for air travel as it saves time. Giving 10% extra for rail tickets should give some benefits to us – we still get the same dirty train, dirty toilets. Don’t you think paying more 10% more tax should improve our life / standard of living by 10%. I pay Rs 400 as I see I get something that is worthy. If it is not I have a choice of not paying Rs 400 again – I will pay Rs 40 for Bhelpuri. Do I have a choice here? If I don’t like where my 10% taxes are used can I request to pay 1% instead.
Total agree with you, nowadays if any one asks these type of tough questions coloring them as anti nationals
Well said!!!
Ashar,
You get the same potholes in road, same water logging issues in Mumbai during rains and much worst.
The reason people get these because they do not understand these are civic body issue ( Mahanagar Palika issue). Educated people do not understand the role of Central, State and local body administrations forget about poor and uneducated.
Building the nation will take years and maybe generations and someone trying to do that. Building nation is not a consumerism. It’s not a supermarket. If I paid ‘x’ amount then I should get ‘y’ services. Look at this mentality and thinking across all communities. In election, people still votes on caste line e.g. Maratha, Jat, Patel and now Rajput and worst is some vote on religion line e.g. M community support Lalu and Mulayam for 25 years. Why don’t we consider this mentality cheap/Katora chap and sick and Gaddar. Where does the nation-building mind-set not arise at the time of voting?
You guys are investors and still do not understand your 10% tax is an investment for next 100-200-300% return. Desh hi nahi bhadega to kya khak kamaoge.
Rajesh
I support the government and totally agree that building a nation can take decades. However my income tax payment comes with minimum expectation that my or my family members must get better living. Look at the life of politicians after they win the election – they invest tons of money to win and earn tons and tons of money once they come to power. Why I become selfish when I ask the same. Are the politicians thinking of building the nation or building their home / bank accounts. If they are really serious then let them show it (reduce the allowances for MPs / MLAs or any such act). Do you recall any such thing done ever in Indian politics.
Each state / central government has power to stop caste politics but they actually support it for their vote bank. If you give VIP treatment to Jats in Haryana, then folks in Rajasthan & Gujarat will ask the same. Why not think of building nation then? Again the leaders of the nation has to show the intent to stop it. The political parties actually support such cheap mentality. Take any state for example.
We are talking about people who might not foresee 100%+ futuristic returns but can the government or anyone guarantee that this 10% tax will be used in nations interest and not personal interests of the ministers. I bet not and hence I oppose.
Wow! What an enlightenment! The nation building that our loving government is doing is quite well seen. But that nation belongs to a handful of 1% who command 75% of wealth! For example (just one, not enough time and space to mention all crap that we are seeing in this govt), the Rafale jet deal. What was negotiated at around Rs 600 crore per jet by the previous govt with the involvement of the most trusted and perhaps the only jet maker in the country, the Navratna PSU, HAL, was opposed by the currently ruling, then opposition, BJP. And now, our PM flies to Paris, does not take anyone, including our National Security Agency or Parliament, into confidence, signs the deal at an apparent cost of Rs 1500+ crore per jet, unceremoniously dumps HAL and hands over the deal to a new in business, but the wealthy political financier, Mr Ambani! That is some nation building, alongwith all other nation building that is being done by killing people for cows and religion, permitting beef in some states and banning in others etc etc etc.
And I tell you, as a professional, I support LTCG wholeheartedly, to be on level playing field with all other income earners. An income is an income. I wouldnt even ask for grandfathering of cost of acquisition – that is rich investor friendly! But in the same breath would demand taxing of wealthy farmers earning more than Rs 12 lakhs per annum (Rs 1 lakh per month for basic subsistence). And in that breath again, demand that all other tax payers, especially the salaried, are given exemption for at least Rs 6 lakhs (Rs 50k pm for subsistence) which is half of what I propose for the rich farmers. No hell will break lose, but yes, no politician has courage to implement this, of course.
Fwd as received …
http://www.sundayguardianlive.com/news/12638-cabal-plans-october-meltdown-share-prices-rout-bjp
Atricious and prepostrous. By forwarding this clip, it appears you support this claim. Do u really believe this mkt can be crashed by a handful of brokers with the advice of an opposition leader. 500k Cr wealth erosion can not be engineered by few individuals.Pls accept reality that this budget by imposing LTCG tax was a last straw in a series of misadventures such as demon, hasty implementation of GST with utter confusion and recent shody an
d ill prepared E way bill implementation. Mr Jaitly has shot his foot in his overenthusiasm to become No 1 reformist.
Really very good for long term