Repost

Back after a very long time. Been busy and distracted by the day job but expecting some more action now!

Thoughts on Filing Income Tax Returns

Having just finish filing the income tax return in a mad rush towards the end of the 31th July deadline, I must say that it's good to see the progress being made in the way the tax filing process is being automated and brought online

The pdf and excel based IT forms are indeed very handy, but from what I could make out, are useful only for those with salary income and maybe something for the banks.

If you have multiple income streams, then good luck filling out the forms without a CA! Even with a CA, I seriously doubt if all IT returns are filed correctly.

The problem is not the forms or the CAs, but the very complex income tax rules in India. Steps have to be taken to simplify our tax rules to ensure that most people do not see filing tax returns as a pain in the backside, and consequently do not shy away from filing their taxes.

Pantaloon Retail

I first thought about buying shares of Pantaloon Retail a few years back while standing in a very long queue at Big Bazaar. While looking around at all the people struggling to actually pay money I was thinking it might be a good idea to be receiving all this money - as a shareholder :)

I did buy some shares in October 2008 (with an eye on on upcoming stock split; which I now know may not be a great idea) and then again in September 2009. Though the stock went above Rs. 500 at a point, it is now at Rs 277; which by the way is the same as I bought it at around 2 and a half years back and lower than what I got it for a year and a half back.

What now? The queues are still there, and the chain is growing, so I'm going to go with my gut and buy some more!

Following up on MeraFoF

Following up on MeraFoF, it has been tracking the Sensex, but lagging a bit behind. The lagging part is not too good, especially if you want to base your investment strategy on it.

Of course, 4 months does not conclusively prove anything, and I remain convinced that over the long run, the MeraFoF would prove to be an investment with lower than average risk and higher than average return.

Buying Before a Bonus Issue or Stock Split

Does it make sense buying a share just before a bonus issue or a stock split?

I just did that (see previous post) and now I am wondering whether that was a wise decision.

Here is the math: KVB bank offered 2 shares at Rs 150 for every 5 held.
I bought my shares at around Rs 550 so my total investment would be...
550x5 = 2750
and then...
150x2 = 300
... which means I buy 7 shares at 3050, or Rs 436 per share.

KVB is at Rs 390 (18 Mar), which means that I have already lost around 10%.

Anyway, lesson for the future: The market will account for these events i.e. bonus, or splits do not come cheap or for free. On the day of the split/bonus the stock price will go down proportionately.

Because the previous post has so little detail... the reasons I bought this stock in the first place were that its financials looked pretty strong (to me), offered regular dividends, and the bank was on an expansion plan. They also offer the highest rates I've seen on term deposits, so they must be doing something right (or so the logic goes).

These reasons still hold true for me and I'm sure the stock will pick up. The lesson here is that bonuses/splits can be safely ignored when deciding to buy a stock.

Links:
KVB on Google Finance
KVB on MoneyControl

Karur Vysya Bank

Bought Karur Vysya Bank @ 547.57 on 15 Feb 2011. Will buy more @ 150 in the rights issues around the corner.