Teji Mandi: Three things investors should know on January 25, 2021

Searching for value in PSUs:

Vedanta Resources chairman Anil Agarwal has set up a $10 billion fund in collaboration with Centricus. It is a London based asset management company. The fund will bid for the government companies, coming up for stake sale.

The fund has so far given expressions of interest for BPCL, and Shipping Corporation. Further, EoIs could be made after evaluating options and conducting due diligence.

The fund is created to gain out of the government's disinvestment plans. Currently, many PSUs are at various stages of the disinvestment process.

PSUs surely offer great value. But, their stock returns doesn't reflect it due to unviable business decisions. These companies will be available at valuations fairly lower than their potential. In the past, Anil Agarwal has utilized such opportunities by acquiring stakes in Hindustan Zinc and Balco.

Mutual funds' wishlist from the budget:

The Association of Mutual Funds in India (AMFI) has demanded to bring Mutual Funds at par with ULIPs in terms of tax treatment.

Currently, ULIPs enjoy more tax benefits as compared to Mutual Funds in various aspects. ULIPs attract no capital gains on switching, or no STT is levied on the redemption proceeds. There is no income tax either on the proceeds from ULIPs subject to certain conditions.

This demand has been on the wishlist of the mutual fund industry for a long time. Apart from the tax benefit under 80 (C), future proceeds from ULIPs are tax-free under section 10(10D).

On the other hand, mutual funds have seen a barrage of new taxes introduced in the last five years. It includes higher long and short-term capital gain taxes. Recently security transaction tax is also introduced on buying and selling of equity mutual funds.

Demand for 5G devices picking up:

There has been no official confirmation about the 5G rollout plan in India yet. But, the demand for 5G devices is picking up. There is an increasing number of customers preferring to buy 5G devices.

Keeping that in mind, smartphone maker OPPO India has planned to launch more than six 5G enabled devices in 2021.

5G is going to be an integral part of the fourth industrial revolution with its applicability to artificial intelligence and machine learning-based new-age technologies.

Currently, heavy capital is being invested towards building 5G infrastructure. But, it is difficult to predict when 5G services will be available in India.

The Indian government is yet to announce 5G spectrum sale. Even the leading telecom companies are also not on the same page. RJio has expressed its preparedness to launch 5G by the end of 2021 in India. Airtel might take 2-3 years before being 5G ready.

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