Financial services stocks outperform the Nifty year to date - Times of India Financial services stocks outperform the Nifty year to date - Times of India

Saturday, July 7, 2012

Financial services stocks outperform the Nifty year to date - Times of India

Financial services stocks outperform the Nifty year to date - Times of India
MUMBAI: Financial services stocks, as measured by the CNX Finance Index, have outperformed the broader market so far this year. The 15 stock CNX Finance Index, which reflects performance of companies from the banking, financial institutions and other financial services companies, gained 28% since January 2011 compared with the 15% rise in the Nifty.

Leading the advances were Reliance Capital and Bajaj Finserv with returns of 64.09% and 63.13 % year to date.

Speculation that the central bank will re-look at the licence applications triggered a rally in these stocks in the trading sessions following the change in leadership of the finance Ministry.

Despite the sharp rise, Bajaj Finserv trades at a P/E (price to earnings) multiple of 7.55 times, a discount to the CNS Finance Index which trades at 12.68 times.

Based on its P/E, Bajaj Finserv is one of the cheapest stocks in the index after Punjab National Bank, which trades at a P/E multiple of 5.71 times and Rural Electric Corporation which trades at a P/E multiple of 6.74 times.

Whereas Rural Electric Corporation has risen 30.28%, Punjab National Bank has just risen 10.41% year to date and is one of the laggards in the index.

The other laggards are M&M Financial with returns of 10.23% and HDFC with returns of 3.6%.

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Money Watch: Should I put all my assets in 1 brokerage firm? - USA Today

Q: I work at a major brokerage firm. I have transferred all of my assets to this firm and am well diversified in well-known mutual funds, corporate bonds, annuities and a money market fund. Am I putting my financial future at risk because I work exclusively with this firm?

A: It is common for brokerage firms to require employees to keep their investment accounts in-house. As long as you keep in mind a few guidelines, you'll be fine.

It's important to know about the Securities Investor Protection Corporation. The SIPC protects brokerage accounts of each customer when a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing from accounts. It also protects brokerage accounts of each customer up to $500,000 in securities, including up to $250,000 on claims for cash.

If you have an amount invested that exceeds these limits, you can protect it by having separate accounts that are held in different client names, such as one that is in an individual name and another in the name of a husband and wife. The SIPC would protect each account up to the stated limits.

Alternately, you could consider opening a second account with another brokerage firm. That way you'll get up to $500,000 coverage in both accounts. But you may need permission from your employer to open an account outside of your firm.

You should know that the SIPC does not insure losses that occur as a part of regular market fluctuations. Some people believe that SIPC will protect them from losing money on a bad investment, but this is untrue.

You can verify that your brokerage firm is a member of SIPC by calling the SIPC Membership Department at 202- 371-8300 or by going to and searching under the "member database."

There are other financial considerations that you should also keep in mind.

Loss of privacy. Your co-workers may be able to see your account balances.

Expense. Most brokerage firms are rarely the low-cost option, so an employee could effectively be paying more than they need to by having all of their accounts with the employer. If you are allowed to look elsewhere, then you should seek out a better deal at firms such as Vanguard, TD Ameritrade and Fidelity Investments.

Risk. If your employer offers you a 401(k) plan, which almost always needs to stay in-house, you may want to consider holding your non-401(k) money outside for greater diversification and less risk.

And don't forget that most certified financial planners recommend that you keep between nine months and 18 months worth of living expenses in cash or cash alternatives.

Since major brokerages generally pay low interest rates on savings, you can often do better by having your savings in a local or online bank. In the current interest rate environment, a bank money market can be a good option for a better-than-average interest rate.

Banks are also in a better position to provide consumer lending than brokerages. If you may need a mortgage, car loan, home equity loan or personal loan, a bank will likely be a better option.

Regardless of where you keep your investments and savings, it is always a good idea to ask a lot of questions, be informed and to shop around. It is rarely if ever the case that one financial firm will be the only answer for all of your financial needs.

Gregory Plechner,NAPFA-registered financial adviser

Modera Wealth Management, Westwood, N.J.

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Strange bank account transactions point to a money mule - The Guardian

I'm 16 and have just about finished school. In November 2011, I received money from my father for necessities, shopping and costs for a college course. On 26 November, I lost my bank card so decided to cancel it as there was £2,992.99 left in there and the cost of the course is £1,999.99. I decided not to touch my account until nearer the date of the course.

I received an online banking statement in May and 41p was left in the account. Transactions had left my account at places I have never been to or don't need to go to. I have contacted Santander, but it is refusing to refund the amount, as the card should have been cancelled. Without this money I can't go to college. GA, east London

This turned out to be a lot more serious than it first appeared. You claim you had £2,992 in your account before anything happened, but Santander says the balance was showing £9 overdrawn. Then, between 25 and 28 November, four payments (which turned out to be fraudulent) totalling £4,802.13 began crediting your account from another Santander customer's account. After unusual spending on the card, Santander blocked it, but the bank then said you made "repeated calls", cleared security, checked the balance and had the block removed. On 28 November, when the money that went in had been spent and there was only £500 left, you again confirmed to Santander by phone that the previous transactions were genuine. This makes no sense, given that the transfers in were fraudulent and (you now claim) transfers out were not made by you. On the same day, you also reported your card had been lost on the morning of 26 November.

On 11 January 2012, Santander sent you a letter telling you that your account was to be closed because it had received fraudulent transactions, but you did not contact the bank until May, when you finally disputed the four transfers, claiming you had reported the card stolen. But Santander confirmed the fraud began before you reported the card had been lost.

By this time, Santander suspected "mule fraud" – and I agree with them. Money mules receive funds (the proceeds of fraud on other accounts) into their accounts, which they then withdraw and pass back to the fraudsters. Santander suspects you were probably promised a certain sum for helping out. I suspect you contacted the Observer when you realised you had been left less than promised and thought we could claw it back.

You say you have not willingly taken part in a scam and were expecting money to pay for your education from your father, which is why you didn't think £4,000-plus entering your account was strange. But this does not explain why you initially told the bank the fraudulent transactions were genuine, nor does it explain why you believe you have been left out of pocket – you were £9 overdrawn before it kicked off.

Financial Fraud Action UK says criminals looking to recruit a money mule often target vulnerable groups such as university students tempted by the lure of an apparently easy way of making extra cash. When caught, mules can suffer severe penalties, including a prison sentence of up to 10 years. Any profits they have made will be recovered from their accounts to reimburse the victims of fraud, while their bank account will be closed down and a bank may even share details of the activity with other banks (meaning they may no longer be able to open a bank account in the UK).

Santander has forcibly closed your account and you are no longer a customer, but it has not passed details of what happened to the police and you say you have managed to open an account with another bank.

You can email Mark King at or write to Mark King, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include a phone number.

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