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I believe in "Baptism by fire" that will transform me from an average joe to a true blue bee's knees in corporate finance and investment banking

Thursday, January 31, 2008

Why hasn't the stock market responded to a Fed rate cut

The markets are continuing their downslide from the recent top of 5383 to sub 5100 levels. in the intermittent time US Fed has cut its rates twice by 75 and 50 basis points respectively. The Fed discount rate has reduced to 3% overall. The move by Fed is largely seen as an act to prevent US from falling into recession and to boost consumer spending across the board. This magnitude of cuts would have usually been seen as a double delight for emerging markets given the excess liquidity flows that would flow into these geographies. However post sub prime mess with increasing defaults by consumers/borrowers, foreclosures and bankruptcy claims of various hedge funds and write offs by investment banks on Asset backed securities, the crisis situation has become an albatross around the neck of the US economy. The unanticipated 75 basis points cut announced last week instead of bringing cheers has taken the world by surprise and struck a cautionary note . Analysts across the globe have started forecasting a large and looming crisis for global markets that would result from a recession in the US economy. FII's all across the emerging markets who have made stellar returns over the last 4-5 years of Bull run have started booking profits even on their long term investments. They are only offsetting the losses made from the sub prime fiasco that was orchestrated by them. In this kind of scenario, money isnt flowing into countries like India and China as most investors prefer to sit on cash. As we all know, liquidity is the mother's milk for all bull markets and in its absence, bears definitely have an upper hand atleast for the moment.
As a note of caution for the FED, they would be prudent enough to know that it was bad credit under the Greenspan regime conjugated with unscrupulous lending practices to consumers with lax credit standards, that led to this collapse. Now by cutting the lending rates, more bad money is going to flow into and out of the US economy. As more bad money flows behind existing bad money, problems only get compounded. Wouldnt it have been more prudent to take the hit, take the losses, suffer write offs, get into recession,face the problems and after having weeded out the excesses in the economy, a prudent call to revive the economy should have been deliberated upon.

Impact of Fed rate cuts:
* Every time the fed rate is cut, the dollar is going to crash even further and as a result crude oil
will shoot up to unprecedented levels. As CLSA has pointed out crude oil at $200 doesnt seem
far away if Fed keeps cutting rates frequently.
* Gold prices, already at life time highs, will inch up even further from current levels as
whenever the OPEC countries feel rich and smell of surplus money, the same flows into gold.
* For Emerging markets like India that were trading at reasonable valuation 4 months ago at
15000-16000 valuations (Nifty 4600 approx), it was the first Fed rate cut by 50 basis points
in October'07 that led to the flow of "hot and speculative" money into India which propelled
the Sensex to the overstreched zone of 21000. Its this excess money that has flown out of the
market within a couple of days on Black Monday and Terrible Tuesday of Jan 21 and 22. Fine
the excesses have been removed or washed away from the bourses but not before sucking
out a lot of blood on Dalal street. Investor's wealth estimated at 7,00,000 crore have been
completely wiped out and traders with positions in 'F n O' (Futures and Options) are still
smarting from their losses. It will take atleast six months or more than a considerable amount
of time for them to recover and get back to their trading terminals. Its more of an emotional
shock rather than monetary losses. Over the past two weeks, the stress levels of traders have
heightened to unexampled levels, so much so that a famous lake in Gujarat has been sealed for
two months to prevent investor suicides.

Its indeed quite understandable as to how difficult it is to be a Fed governor. But Ben Bernanke is purely playing to the gallery at the moment without realising the impact of his actions on the global financial stability.

Monday, January 28, 2008

Financial Services looks attractive

Yes financial services, the sector on which most analysts are extremely bullish on going forward. The reason being, the next trillion dollar opportunity for the Indian economy lies over the next five years from 2008-2012. It was only last year that our GDP crossed $1 billion and with the latter growing at 8.5% p.a on an average, we are the second fastest growing economy in the world only behind China which has been consistently growing at 10% p.a over the last decade albeit the veracity of their claims.

Mumbai is all set to become an International Financial centre (IFC) by 2015 going by the promise held out by Percy Mistry's vision document to make Mumbai an IFC. Once the proposal does come into effect, the amount of financial transactions that would be handled out of India would be inconceivable. The benefits of Mumbai becoming an IFC would also flow in the form on secondary outsourcing and back end work to other ancillary cities like Pune, Chennai, Hyderabad and Bangalore where a lot of talent pool is already available in abundance.

The scope for financial intermediation in our country is pretty high with the huge investible resources waiting to be ploughed in to the market and the demographic dividend expected to last atleast for the next few decades. The savings rate in India is less than 32 % of our GDP, out of which the household savings rate is below 16%. The Housing Mortgage to GDP ratio is also below 6%. These two are enough indicators that go a long way to prove the tremendous scope that exists for financial intermediation in our country.

A large and sizeable pool of financial planners have emerged in our country to address the needs of the" asset and wealth management" industry. India is beginning to produce crorepatis and millionares by the passing of each day. We are transforming oursleves from a tag of " knowledge creators" to "wealth creators" for the world at large. We have reached/seen such a metamorphic rise in the evolvement of corporate India that the French president today is making "humble requests" to the CII to address unemployment problems in France. With so many HNIs (High Net Worth Individuals) taking the world by storm, the wealth accumulated by them needs to be managed and managed well with profitability being the sole objective.

Mutual funds have seen their assets under management (AUM) swell by over 637000 crore as at Dec 07. This indicates the confidence of the average retail investor in the growth prospects of our Indian economy. Every month we find 4 to 5 new fund offers raking in the coffers on a regular basis. Now government has relaxed provisions for PPF and pension funds of public sector undertakings by allowing them to invest in the stock markets lured by the attractiveness of returns therein.

Infrastructure in our country is still facing huge bottlenecks in our country and is crying out for immediate reforms. As we all know, things cant happen overnight. The gestation period to solve problems in infrastructure requires foresight and political will. Given the constraints in coalition politics, even a government with all the requisite potential and wherewithal will obviously flatter to deceive as the UPA has done so far. But still, I for one firmly believe and reiterate that in a democracy like India, problems will find its own solutions and infrastructure is one such element which will address itself. Now coming back to the point of financial intermediation, herein lies a huge opportunity in infrastructure with the amount of investments expected to be flighted in both through FDI and FII routes not to forget our domestic PPP's (public private partnerships). Every sort of an Investment will find its source to either debt or equity. These can only be the two major means to raise resources and that requires financial intermediation.

The opportunities that lie ahead in the form of capital account convertibility and opening up of the banking and insurance sectors will be deliberated upon separately by the author at an appropriate time

Till then to conclude ...our financial services sector looks robust in the medium to long term even without any seminal signs of second generation reforms taking off.

Marketing Research : Inspired to write a few lines on the subject cos of the "ONE"

Marketing research is a systematic and objective research for analysis of information that would be useful to address any given problem in marketing. Iam not an expert in this field but here's what i have gathered from well known scholars and connoiseurs of "marketing research"

It involves the following:
* Identifying the target population/ market segment for a particular product
* Identification of customer choices and keeping a tab on their changing tastes and fashions
* Identifying "White spaces and opportunities" in any market and advising clients on product
segmentation
* Assessing the need for new or improved versions of a product based on customer feedback
* Benchmarking a product against competitors and advising on strategy to counter competition
* Identification of appropriate pricing points for a product in different market segments across
geographical diversities and location of sale/ distribution outlets for a company

and much more....(the list is exhaustive) (Maybe AC nielsen or IMRB experts can add on more to this list)

This function of "Marketing research" can be condensed to mean providing the right information, at the right time, to the right person and thereby becomes a vital cog in the decision making process of any top management. Its a highly useful tool that's designed based on scientific sampling methods to elicit rational responses/solutions to specific problems of marketing.

P.S : I never knew that so much information can be condensed and conveyed through bar diagrams, pie charts and tables until i saw their reports ...guys keep up the good work!!

The problem of food deficit and poverty

The need of the hour in developing India is to eradicate extreme hunger and poverty. We need a coherent policy framework in achieving that end. In our country more than 65% of the population relies on agriculture as their only source of livelihood and with the sector as such registering below 4pc growth rates, its pretty discursive that this is the section of the population that is in crying need of poverty alleviation measures. The most important measure in reducing poverty would be to alleviate the hunger and food requirements of the BLP (Below the Line of Poverty) category.

The present scenario as outlined below does raise a lot of concern for policy makers all across the globe:

*Rapid urbanisation in the developing world and the resultant impact on food markets
*Deterioration of natural resources all across the globe due to industrial demand
*Ineffective farm produce and lack of superior technology to generate high yielding crops
*Imbalanced subsidy regime in developed world vis a vis developing and under
developed nations (i would avoid calling any underdeveloped nation as a third world country
simply because if they are "poor" today its because of the exploitation by the colonial powers
that were occupying them in the past)
* Threats to global peace and security, political imbalance in various countries which exacerbate
poverty concerns
* Rapid demand for food with rise in population is placing a huge strain on environmental
resources

Food security has become a formidable, perennial challenge for the global economy. Food security is all about producing more than enough quantity of food for every human being and addressing the needs of the undernourished populace of the world. It also needs to make use of well developed information systems today to pinpoint the exact location where there is a supply deficit of food and mobilise rapid transport systems to move food quickly to these areas.

The lesson to date is that no sustainable poverty alleviation program will be successful unless it implants itself with efforst to improve rural livelihoods which would mean boosting their income resources. Economic growth originating in agriculture will have a strong impact on poverty and hunger eradication. Increasing employment and productivity in agriculture will stimulate demand for non agricultural goods and as a corollary, the demand for agro based goods should stem up from the non agro based population. Investment in poverty alleviation and hunger reduction is seen as a welfare measure but however it is this investment which generates superior economic returns going forward.

Technological Access
Improved technology, especially for small-scale farmers, hastenes poverty reduction
through increased crop yields and higher incomes. His access to technology has been hampered by gaps in infrastructure, seed and input markets and very often by his inability to fund these inputs. A great deal needs to be done to alleviate small farmers’ constraints to technology access and profitable use. Technologies that build on and complement local knowledge tend to be particularly effective in meeting the needs of poor farmers in marginal environments. Cheap and effective supply of low cost credit by the banking sector with flexible repayment norms and subsidy support from government agencies are the means to the end in this regard. Vigilance mechanisms should be strengthened by policy makers to ensure that the flow of credit/public investments in this sector finds its way to right end user i.e the poor farmer, through appropriate channels leaving no scope for peculation by middlemen and unscrupulous agents.

Importance of Trade

Trade offers opportunities for the poor and food insecure by acting as a catalyst for
change and by promoting conditions in which the food insecure are able to raise their
incomes and live longer, healthier, and more productive lives.

Opening national agricultural markets to international competition – especially from
subsidized competitors, before basic market institutions and infrastructure are in place
can undermine the agricultural sector with long term negative consequences for poverty
and food security. To minimize the adverse effects and to take better advantage of emerging opportunities, such as those arising from agriculture diversification to bioenergy and other non-food products, governments need to understand better how trade policy fits into the national strategy to promote poverty reduction and food security. Expanding the benefits of trade for the
poor requires a range of other factors, including market infrastructure, institutions and
domestic policy reforms.

Public and Private Investment

Public investment in infrastructure, agricultural research, education and extension is
essential in stimulating private investment in agriculture. But actual public expenditures for agriculture and rural development in the developing world do not reflect the importance of the sector to their national economies and the livelihood of their populations. In fact, government expenditures on agriculture come closest to matching the economic importance of the sector in those countries where hunger is least prevalent.FDI or FII inflows into any country also ignore this vital sector given the cyclical pattern of the industry as well as the longer payback period. Private investment will always follow public expenditure in rural infrastructure and the respective governments have to take the seed intiatives.

Marketing Intiatives:

The expanding urban markets is a major challenge for agriculture and food marketing systems in the years to come. Rapidly rising urban food demand, accompanied by trends towards diet diversification, induces an increasingly commercial orientation of production systems, while inefficiencies in the marketing and transport infrastructure will either provide incentives for the location of production in semi-urban areas or encourage lower cost imports.

Urbanisation increases the scope for economies of scale in food marketing and
distribution, while reductions in transactions costs increase the size of the market for
distributors and retailers. The result is not only an impressive increase in the volume of food
marketing handled by supermarkets, but also substantial organisational and institutional
changes throughout the food marketing chain. Now as a result of the retail revolution, inetermediaries and middlemen have been eliminated as a whole and the farmers have begun benefiting from good realisations for their crops. Improvements in the supply chain effected by these retailers through cold storage mechanisms would enrich the quality and productivity of agri products.

Various governments across the globe must take the required initiatives and retain continuos focus on promoting the agriculture sector and tweaking its growth rates through coherent policy measures with the joint efforts and assistance from international institutions like WHO, UN and financial powerhouses like World bank, ADB and IMF. This can go a long way in preserving the world's ecosystem, its biodiversity and would ultimately promote the twin objectives of poverty alleviation and effective environmental governance.

Sunday, January 27, 2008

Dont panic after the fall

The investors are in a state of shock with the way the market is behaving. The last few days have been quite rough for the market with huge amount of volatility. What has happened to the Indian market yesterday and today clearly shows that there is some major concern for the stock market not only for India but also for the global markets. Remember, panic selling is taking place throughout the world with most of the global indices deep in the red.

Now let us take the basic fundamental issue of the Indian stock market. Is it the end of the Bull Run for the Indian market? The answer is clearly No. We don’t see any major change in the fundamental story of the Indian economy. There could be one percentage point decline in the growth of Indian GDP numbers, but otherwise India would continue to be the second fastest growing economy in the world after China. The correction only indicates that the market is not willing to pay 21 times P/E multiple for the Indian stocks. Looking at the FY09 earnings projections, the market is trading at a forward P/E of 14 times. This is a very compelling reason for someone to buy into the Indian stock market. I am not saying that the market would surge in a hurry but senses are bound to prevail after this storm blows over and the dust settles down. In fact, those sitting on cash must buy now as this is a god sent opportunity to invest in the market. The only thing to keep in mind is that the selection of stock has to be really good. Some of the momentum counters not backed by fundamentals have taken a huge beating and I doubt that they would surge in the next round of the rally. The reason is very simple: when front line stocks are available at attractive valuations why would someone buy second rung companies? In fact, mid-cap as well as small-cap stocks would take their own sweet time to bounce back. I would suggest sticking to ‘A’ group companies where many of the stocks have taken a beating just because of the bad sentiment rather than due to any fundamental reason. My best picks in these tumultuous times are Reliance Industries Rs 2330 L&T at Rs 3530 and Bharat Bijlee at Rs 2750.

So what should be the strategy in a market like this? There would be some pain in the market for some more time. We had seen some excesses during the bull run, similarly we would see some excesses in the bear run too. The art of making money in this market is not to panic but to do exactly the opposite of what the people are doing. Buy when everyone else is selling and you would make a great killing in the next 12 months.

Second, don’t invest with a short-term horizon. Keep a long-term outlook for the scrip you have bought as there is a possibility that the good scrip you have bought may fall further for a short while.

Third, never chase the stock in this market. It does not make sense chasing stocks.

Fourth, don’t borrow to invest in the stock market. In fact, if you have already borrowed, slowly reduce your leveraged position.

Fifth, cut your losses in the junk and small-cap stocks where there were no fundamental reasons for them to surge. It’s better to lose 50-75 per cent than to lose 100 per cent as many of these stocks may not remain liquid in this kind of market.

Sixth, never panic in this market. There is no need to change your perception about the stock market. It’s there to survive and one would make good profits provided you have the patience. Don’t watch TV channels and don’t listen to the so-called experts. This would unnecessarily create panic resulting in huge losses. Just stay put. Hold your blue chip stocks as sense would return to the market sooner rather than later.

I am optimistic that equity would do well provided you have the patience and the courage to put money for the long-term. So don’t panic. Now is the time to act sensibly and hold your blue chips to fetch good returns for you. Just reduce your expectations in terms of returns and you would have the last laugh.

Saturday, January 26, 2008

Why is gold considered to be the best hedge against inflation

Gold is especially attractive in times of economic and political crisis. As the most widely accepted global currency, gold is viewed as a source of stability in times of currency inflation, stock market uncertainty and political conflict. When the US $ collapses we find gold value shooting up manifold. This is simply because crude oil is traded in $ per barrel and when dollar value falls, the price of crude oil shoots up as a concomitant effect. With crude oil prices rising and the OPEC group getting richer by the day, the automatic channelisation of the surplus profits finds its way to gold as a safe investment destination.

Gold prices have the advantage of independence from correlation with stock market prices and gold investments can help offset the risks of a portfolio heavy in stocks and bonds. Gold hedges against the possibility of interest rates moving against one’s bond investments and protects against the devaluation of one’s primary currency.

Gold is now at around USD 900 per ounce. It was trading at USD 37 in 1971. Gold then shot up to USD 850 in 1980, collapsed all the way to USD 260 in 1999, and has only now crossed the previous peak of USD 850 that it established 27 years ago.

Because many of the central banks of the world have lost sight of what they are supposed to do.
As a student of economics, we were taught that the role of a central bank was to ensure that it maintained the value of the paper currency issued. It did this by ensuring that every time it printed paper, it had a fixed ratio of gold lying in its vaults( Also known in economic parlance as gold standard). But, over the past few decades - and increasingly over the past few years - the central banks have shifted to a "fiat" currency system whereby they have been printing more paper and not worrying about the gold they have as a reserve for their paper currencies. And paper currencies are, in the end, paper. History has shown us that governments have fallen and paper currencies have died with them. Gold has been a currency - a medium of exchange - for centuries. No paper currency has existed for that long. Not the US Dollar. Not the Sterling Pound. Not the Indian Rupee. As governments have printed larger amounts of paper currencies, these currencies have lost value against real assets like property, or for that matter even a samosa. The danger with fiat currency is that nations may lose discretion and print too much currency or allow too much credit, devaluing the currency and causing inflation. Gold serves as a bulwark against a dropping dollar and other fiat currencies in part because it can’t be produced at will.

Even as global demand has increased, gold mining efforts have actually decreased production because of a decreasing supply of easily accessible reserves. Limitations in the global supply of gold ensure its precious nature.

In 1980, it probably cost you Rs 1 to buy one samosa. Today, it costs you Rs 10. Has the samosa become 10 times larger over the past 27 years? Not at all. The fact is that Indian rupee has lost value over the past 27 years, so the samosa wallah wants more of your rupee to sell you the same samosa. He wants 10 times the rupees for that same samosa. Or look at the price of your house. In 1980, it cost Rs 200 to buy one square foot of property in Cuffe Parade, Bombay. Today, it costs Rs. 40,000 per square foot. That is an increase of 200 times! Money, obviously, buys less these days. Paper money has lost value. This is what is called "inflation".

Now look at gold. It was USD 850 briefly in 1980 - when samosa was available at Rs. 1 and land in Bombay at Rs 200. Today it is at USD 900. Interesting, isn't it? The one currency that governments cannot print at will and which has, across civilisations, been a "store of value" - a hedge against inflation in the language of economics - has not really seen any increase in price over the past 27 years.

If the price of gold was to move in line with the price of samosas, gold should be trading at USD 9,000 per ounce or over Rs 1 lakh for every 10 grammes. But gold can be bought for around Rs. 11,000 for every 10 grammes today. If gold was to have moved along with the price of Bombay property, gold should be trading at Rs. 20 lakhs for every 10 grammes.

That may sound absurd. But sometimes the most attractive investment opportunities are those that sound absurd. Like Infosys at its IPO in 1992 or Zee at its IPO in 1993. You could have multiplied your money by over 1,000 times in each of them.

Don't get me wrong - not every absurd idea is a good investment.And not every investment will increase in value by 10 times let alone by 1,000 times. But, sometimes, simple logic and harsh facts should allow us to make simple investment decisions. Do I expect the price of a samosa to fall to Rs. 1 ? Do I expect the price of Bombay property to fall to Rs. 200 per square foot? Or do I expect gold to start climbing and get closer to the equivalent price of a samosa and the price of Bombay property?

Inflation and uncertainty require insurance. Gold is an insurance against absurd government policies - worldwide. I own gold. Do invest more in gold but mainly through ETF's (Exchange Traded Funds) as they dont have the drawbacks of investing in physical gold like making charges and impurity charges which reduces the quantum of gold u get to purchase with ur investible funds. Also if we compare the movement of gold prices over the last 27 years, one factor that clearly comes out is that gold prices are clearly bearish during the first half of the year and they pick up steam over the second half (from june onwards)..therefore the best phase to buy gold would be the current first half from Jan- June 2008. The crash in gold prices have already commenced. Place your bulk orders now on NSE through Benchmark Gold ETF that is traded on the NSE just like any other scrip. Buy on a staggered basis until june and hold ur investments for the long term.

Its such a blessed feeling to have an index launched in my name

Dow Jones Indexes has tied up with Dharma Investments, a leading private investment firm pioneering the development of faith-based investment, to launch the Dow Jones Dharma Index.

The new indexes will measure the performance of companies selected according to the value systems and principles of Dharmic religions, especially Hinduism and Buddhism. The objective
is to provide the investment community with the most comprehensive benchmarks that comply with these principles. The Dow Jones Dharma Indexes are the first faith-based indexes created to measure faith-compliant equities. Previously Dow Jones Indexes had pioneered this space by launching the Dow Jones Islamic Market Indexes in 1999, which today has become one of the leading Islamic market indexes worldwide.

The Dow Jones Dharma Index series includes the Dow Jones Dharma Global Index, as well as four country indexes for the US, Britain, Japan and India. Bringing our religious values onto the global stage offers sustainable solutions to the problems confronting the world today. The principle of dharma contains precepts relevant to good conduct and the implicit requirement of mindfulness about the sources of wealth - and thereby responsible investing.

The Dow Jones Dharma Index plans to screen the company on a combination of environmental, social, governance and traditional sin sector filters. If one has to be included in the listings, the company must pass a set of industry, environmental, corporate governance and qualitative screens for Dharmic compliance.

Dharma Investments has clarified that environmental screens would include company's impact or policies with respect to emissions, climate change and carbon footprint analysis, oil and chemical spills and waste management and recycling.

Companies from sectors where the nature of their business activities and operations have been termed unacceptable are excluded form the index. An illustrative list of prohibited sectors like Brewers, casinos and gaming, pharmaceuticals, tobacco, alcohol, adult entertainment, animal testing and genetic modification of agricultural products will never form part of the index

So all in all I feel elated to have become one of the "Dogs of the Dow"

Friday, January 25, 2008

The NFO vs IPO debate

Last week while going out for my regular late evening walks, i came across two gullible investors who were discussing the events of the stock market for the past week that had gone by. I was very happy at the first instance to know the levels of interest the markets have created even among bystanders or the lay man on the streets of India. Investing being my favourite topic, as usual i eavesdropped into their tete- a-tete. The word " Reliance" and the prospects of that stock being a multibagger figured frequently in their conversation. One of them (an old man must be atleast 65 plus..we can safely call him a senior citizen..he runs a cyber cafe at the street corner) was issuing his own target for Reliance Industries to reach 5000 by this March end. The thought bubbles that ran in my mind at that moment are reproduced below "Yes ...old man..Reliance will touch 5000 by March end, only and only if crude oil prices were to touch $ 200 per barrel by that time"...i continued to listen to them...Then the old man fires the next sweetener by talking about how NFO's and IPO's are a quick way to make a buck or two.

For the uninitiated an NFO is known as a "New Fund Offerring" of any mutual fund that wishes to raise money from the public at large and deploy it into various asset classes like equities, debt and money market instruments. An IPO is an "Initial Public Offerring" made by companies to raise money for the first time from the public at large through capital market channels to fund their expansion and diversification plans.

Now there is a huge difference between an NFO and an IPO. While an IPO may result in quick profits for an investor provided the valuation of the company coming out with a public issue is right and its fundamentals are strong enough for the company to attract a hefty premium in the stock market, the same cannot be said about an NFO. NFO's take time to invest or deploy their money into the market. They dont take investment decisions in a haste. Sometimes there can be a significant lag effect from the time of collecting the funds to its investment in the market. Its ultimately the asset management company's call and the fund managers prerogative as to when he wants to utilise the funds collected. However in case of an IPO, clear provisions have been demarcated by SEBI which require companies to get listed on the bourses within 18 days from the close of the offer.

Also another wrong notion of the old man was that investing in an NFO that is offerred at a par value of Rs. 10 is better than investing in a Mutual Fund scheme with an NAV of Rs.50. This view is totally absurd as any scheme of a mutual fund will command a higher NAV only because of its superior Investment dynamics and its fund manager's track record. At the end of the day the movement in NAV is determined by the performance of the investments of the scheme.

An existing scheme will atleast have a performance record or a report card to show unlike a NFO which if not managed well will have its NAV dropping below its face value.

Therefore before selecting a particular scheme of a mutual fund these basic test checks will help a long way in ensuring the safety of your hard earned money :

1. Study the Offer document end to end and page to page
2. Compare the performance of various other schemes of the mutual fund and benchmark the
same with the returns of the index (Sensex or Nifty).
3. Study the fund managers track record, previous schemes managed and how each of them
have fared in the past.
4. Identify your time horizon and investing temparament
5. Identify the focus areas or sectors that the fund is bullish on

Lastly, think long term and be long term greedy!!!