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Mint
2 days ago
- Business
- Mint
These bonds offer tax exemption on long-term capital gains. But are they right for you?
When you sell property or assets and make substantial capital gains, your instinct is to minimise the tax you'll pay. One instrument that can help with this is a capital gains bond, also known as 54EC bond, which offers a tax exemption on long-term capital gains if bought withing six months of selling the asset. These bonds, named after Section 54EC of the Income Tax Act, 1961, are issued by government-approved entities such as Power Finance Corporation Limited (PFC), Indian Railways Finance Corporation Limited (IRFC), and Rural Electrification Corporation (REC). However, with a fixed return of 5.25% and a five-year lock-in, are they the best use of your money? If you can earn an annual return of more than 8% elsewhere – say, in a mutual fund – you may be better off paying the tax and investing the rest. Over five years, an 8% annual return on the post-tax amount could surpass the maturity value of a 54EC bond. Mint spoke with experts to help you decide which option is right for your financial goals and risk appetite. What do the experts say? Harshad Chetanwala, co-founder of explained, "Suppose I have capital gains of ₹25 lakh from a property. The entire ₹25 lakh needs to be invested in 54EC bonds within six months to claim the tax exemption. It offers a return of 5.25% over five years. Alternatively, if pay 12.5% long term capital gains tax and invest the remaining sum in a mutual fund or similar instrument yielding around 8%, the final outcome turns out to be quite close." 'If someone can generate 9% or more through balanced advantage or multi-asset funds, the mutual fund strategy will yield a higher post-tax corpus, provided one is comfortable with the higher risk," Chetanwala added. Mutual funds, especially hybrid ones such as balanced advantage funds (BAFs) and multi-asset funds, can offer long-term returns exceeding 10%, but they carry market risk. Amit Sahita, director at Fincode Advisory Services Pvt. Ltd, said, "I am always in favour of avoiding products like 54EC bonds, which optically save tax but actually end up locking up funds with very low returns over long periods. We have always advised our investors to pay the tax and then invest according to their risk profile and timeline." He added, 'The cap for 54EC Bonds is ₹50 lakh, so extremely risk-averse investors, those who prioritise capital protection and guaranteed returns over higher growth, do end up buying them. But the usual strategy of paying tax and investing in a mix of debt and equity funds works better." What about liquidity? Liquidity is another significant factor. 54EC bonds come with a five-year lock-in, while mutual funds offer easier redemption options and allow for rebalancing – a critical advantage in uncertain markets. Ajay Vaswani, a chartered accountant and an NRI tax advisor, said, 'You can pay the capital gains tax and then invest the remaining funds in more liquid and potentially higher-return instruments like mutual funds. These offer greater flexibility, and over time, could provide better returns," he said. He added, "If you're in the 30% tax bracket, your post-tax return from 54EC could further fall since the interest is taxable, which is barely above inflation." This erodes the appeal of 54EC bonds further, especially for high-net-worth individuals." While the math may favour mutual funds, human behaviour tells a different story. Abhishek Kumar, a Sebi-registered investment advisor and founder of SahajMoney, said, "Most individuals prioritize immediate tax savings over long-term investment growth. When people sell property, they're often more focused on saving taxes than making investment decisions that are aligned with their financial goals." Ultimately, the choice between 54EC bonds and paying capital gains tax to invest elsewhere is a personal one. Factors such as your tax bracket, investment horizon, risk appetite, and portfolio composition all come into play. 'If your debt portfolio is underfunded, investing in government bonds could make sense. The key is to look beyond immediate tax saving and consider long-term financial growth and portfolio balance," Kumar said. Final thoughts For conservative investors or those looking to boost their fixed-income allocation, 54EC bonds can serve a purpose. But for those with a medium to long-term horizon and a willingness to take risk, paying the tax and investing in a diversified mutual fund portfolio is probably the more rewarding strategy. "The decision shouldn't be purely based on tax. We've had real-life cases where we advised clients to invest in 54EC bonds when the gains were significant. But when the gains were marginal, we suggested paying the tax and deploying the funds elsewhere for better long-term outcomes," Chetanwala said.
Mint
5 days ago
- Business
- Mint
Buy or sell: Vaishali Parekh recommends three stocks to buy today — 24 July 2025
Buy or sell stocks: buoyed by favourable global cues following the announcement of the US-Japan trade deal, the key benchmark indices of the Indian stock market staged a strong rally on Wednesday. A risk-on sentiment prevailed across Asian markets, further supported by optimism surrounding the ongoing corporate earnings season. The Nifty 50 opened on a firm footing, exhibiting initial range-bound movement during the first hour of trade. However, the index witnessed upward momentum in the latter half, eventually settling near the day's high at 25,219.90, registering gains of 159 points or 0.63% on a closing basis. The broader markets posted a mixed performance, with the Nifty Midcap 100 advancing 0.34%, while the Small Cap index closed flat, indicating selective participation. On the sectoral front, the action was largely stock-specific. The Realty index underperformed, shedding 2.6%, followed by the Media (-0.9%) and FMCG (-0.5%) indices. In contrast, Auto, Metal, Oil & Gas, Consumer Durables, Pharma, Private Banks, PSU Banks, and Telecom sectors clocked modest gains from 0.5% to 1%, reflecting a rotational buying trend across cyclicals and rate-sensitive sectors. Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher, believes that the improved bias is still intact. The Nifty 50 has been sustaining above 25,000 levels after bouncing back from the 50-DEMA support of 24,900. However, the key benchmark index is facing a hurdle at 25,250, and it needs to breach this resistance for further improvement in Dalal Street's mood. On breaking above 25,250 on a closing basis, we can expect the 50-stock index to touch 25,500 and 25,700 soon. Speaking on the outlook of the Nifty 50 today, Vaishali Parekh said, "The Nifty 50 index once again indicated a positive move with overall strong bias visible and has arrived near the near-term resistance hurdle of 25,250 zone, which needs to be breached decisively in the coming sessions. With an optimistic approach maintained, one can expect further targets of 25,500 and 25,700 to be achievable, with most of the frontline stocks well poised for further gains, which can help the index gain further. The 24,900 zone shall remain the major and crucial support for the index." "The Bank Nifty index, once again, picked up momentum, resisting near the 57,300 zone, which needs to be breached above and can expect to make new highs in the coming days, with higher targets of 58,500 and 60,000 levels achievable. The overall bias and sentiment have improved with the heavyweight banking stocks technically looking good and can carry on with the positive move further ahead," said Parekh. Parekh said that immediate support for the Nifty 50 index is 25,100, while the resistance is 25,400. The Bank Nifty would have a daily range of 56,700 to 57,800. Regarding stocks to buy today, Vaishali Parekh recommended three buy-or-sell stocks: GHCL, PFC, and IFCI. 1] GHCL: Buy at ₹ 621, Target ₹ 645, Stop Loss ₹ 605; 2] PFC: Buy at ₹ 419, Target ₹ 440, Stop Loss ₹ 410; and 3] IFCI: Buy at ₹ 61.70, Target ₹ 65, Stop Loss ₹ 60. Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Business Recorder
6 days ago
- Politics
- Business Recorder
‘Punjab to review PFC Award after new LG Act's implementation'
LAHORE: Punjab Finance Minister Mian Mujtaba Shujaur Rehman on Tuesday said that a new Local Government Act is being introduced, and once implemented, the Provincial Finance Commission (PFC) Award will be reviewed. While responding to Amjad Ali Javed in Punjab Assembly Mujtaba Shuja-ur-Rehman said that PML-N has always stood in favour of Local Government rights. Earlier, Amjad Ali Javed complained that his committee cannot even pay electricity bills. Criticizing the corrupt state of banks, he said employees are not receiving their salaries. He questioned the Finance Minister, asking how much longer it will take to receive the Provincial Finance Commission Award (PFC) Award after eight years of waiting. 'Can the Finance Minister provide a clear timeframe?' he asked. PML (N) MPA Ahmed Ahsan Iqbal while speaking on the floor of the House said that Secretary of Local Government is saying that the current situation id extremely dire. Hr also said that the Local Government has no funds left. He emphasized that the responsibilities assigned by the federation to the provinces should similarly be delegated by the provinces to municipal committees, but institutions are not receiving their due rights. He raised the question of which establishment is obstructing the implementation of third-tier governance. The session started 1 hour 46 minutes late under the chair of the Acting Speaker Malik Malik Zaheer Iqbal Channar. During a session of the Punjab Assembly, government member Mumtaz Ali Chang delivered a fiery speech, demanding that the Crime Control Department (CCD) conduct operations in the Kacha area. He highlighted a recent incident in Nawazabad where a man named Hamza was killed, two others were injured, and one went missing due to dacoit firing. Chang stated, 'First, clean your own house. The CCD should also establish a unit in the Kacha area.' He further demanded the formation of a committee to investigate the killings of innocent people and the registration of false cases against them. Asserting that 'justice will restore the Assembly's dignity,' Chang defended his role as a public servant, stating that he actively participates in welfare work. He praised the Chief Minister of Punjab for establishing the CCD, which has reduced fear in areas previously considered inaccessible. He also commended the peace festival organized by the Punjab Governor in the Kacha area on the 11th of this month. Chang questioned why the CCD and Anti-Corruption Department were not conducting operations in the Katcha area despite having the authority. He alleged that police officials owning land in the region were sabotaging operations. 'If the Prime Minister and Chief Minister can go to jail, why can't the dacoits of Kacha?' he asked. He further claimed that reports indicate some notorious police officers are supporting dacoits in the area. Acting Speaker Zaheer Iqbal Channar sought a report on police officials occupying land in the Katcha area, directing that it be presented in the Assembly to identify those involved. He emphasized, 'Identify the dacoits occupying the Katcha area. Separately, Mumtaz Chang raised concerns about the loans and facilities being offered by Punjab Bank Rahim Yar Khan, stating, 'If we don't know what loans this bank is giving, how will the public know?' He urged the government to inform citizens through advertisements. Government member Ahmed Ahsan Iqbal criticized the Bank of Punjab during the session, stating that its reports are not being presented to the Public Accounts Committee. He said, 'The Bank of Punjab always resists in this matter,' adding that the Assembly has the right to know what privileges are being given to the bank's CEO. Meanwhile, the 26 suspended opposition members of the Punjab Assembly have been reinstated. This decision came as a result of successful negotiations between the government and the opposition following their suspension during the budget speech of Punjab Chief Minister Maryam Nawaz. Provincial Minister for Parliamentary Affairs Mian Mujtaba Shuja-ur-Rehman submitted a request in the assembly for the restoration of the opposition members, upon which Acting Speaker Punjab Assembly Zahr Iqbal Channar immediately ordered their reinstatement. The assembly secretariat also issued a notification confirming the restoration. According to details, on June 27, opposition members created a ruckus during the speech of Punjab Minister Maryam Nawaz, leading to verbal clashes and physical altercations. Following the incident, the Speaker of the Punjab Assembly suspended 26 opposition members for 15 sittings. Later, government members submitted four applications to the Speaker, requesting the Election Commission to issue disqualification notices against the opposition members. Copyright Business Recorder, 2025
Mint
14-07-2025
- Business
- Mint
F&O Strategy: PFC to Netweb Tech — Rupak De suggests buy or sell strategy for THESE stocks
The domestic equity market benchmark indices, Sensex and Nifty 50, are expected to open lower on Monday, following mixed global market cues. The trends on Gift Nifty also indicate a negative start for the Indian benchmark index. The Gift Nifty was trading around 25,173.50 level, a discount of 48.4 points from the Nifty futures' previous close. Sensex and Nifty 50, declined for the third straight day on Friday, dropping by nearly 1% due to significant selling in the IT, auto, and energy sectors amid a sluggish start to the earnings season. Analysts pointed out that uncertainties surrounding tariffs and mixed signals from global markets further exacerbated the decline. The Sensex fell by 689.81 points or 0.83%, finishing at 82,500.47. During the trading session, it saw a dip of 748.03 points or 0.89%, hitting a low of 82,442.25. Similarly, the Nifty 50 decreased by 205.40 points or 0.81%, closing at 25,149.85. For the week, the BSE benchmark declined by 932.42 points or 1.11%, while the Nifty 50 dropped by 311.15 points or 1.22%. Nifty 50 remains under pressure, having breached the previous swing low on the hourly chart and slipped below the 21 EMA on the daily timeframe. Short-term momentum continues to be weak, as indicated by the RSI's negative crossover. However, following the recent decline, the index is now testing support near the 200-hour moving average. A sustained move above the 25,150–25,160 zone in the early trades could pave the way for an upswing towards 25,250 and 25,400. On the downside, key support levels are seen at 25,090 and 24,900. Open Interest Analysis: Significant open interest additions were observed in 25,000 Puts and while heavy OI additions were seen at 25,300 Calls; Put writings were relatively muted on Friday. Maximum OI buildup was seen at 25,500 CE. Meanwhile, substantial put writing at the 25,000 strike. Strategy: As the index has reached near its support level, a small bounce from the current level can't be ruled out. Trade: Buy Nifty 17th Jul 25300CE Above 75 TGT 130 SL 44. PFC share price has given a symmetrical triangle breakout on the daily chart, indicating bullish sentiment. Additionally, it has moved above the 200-DMA for the first time in several days. The daily RSI is in a positive crossover and trending higher. With strong price action and technical confirmation, the stock has the potential to move towards ₹ 462 in the short term. A long position can be considered with a stop-loss placed below ₹ 419. Netweb Tech share price has given a consolidation breakout on the daily chart, indicating bullish sentiment. Additionally, it has moved above the 50-DMA for the first time in several days. The daily RSI is in a positive crossover and rising. With strong price action and technical confirmation, the stock has the potential to move towards ₹ 2,050 in the short term. A long position can be considered with a stop-loss placed below ₹ 1,900. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
11-07-2025
- Business
- Economic Times
PFC, REC shares extend gains as Morgan Stanley initiates coverage with overweight rating
Morgan Stanley said it expects both PFC and REC to deliver compound annual loan growth of 12% between FY25 and FY2. Morgan Stanley initiated coverage on REC and PFC with an 'overweight' rating, citing attractive valuations, strong loan growth, and stable asset quality. The brokerage set target prices of Rs 508 for PFC and Rs 485 for REC. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Shares of power sector financing majors REC Ltd and Power Finance Corporation (PFC) gained further momentum in Thursday's trade, following a bullish note from Morgan Stanley, which initiated coverage on both stocks with an 'overweight' global brokerage highlighted attractive valuations, robust loan growth, and stable asset quality as key factors behind its positive outlook for the two state-owned financial intraday trade, PFC shares climbed 1.5% to Rs 434, pushing its market capitalisation to Rs 1,42,811 crore, while REC rose 1% to Rs 401, with a market cap of Rs 1,05,065 Stanley has set a target price of Rs 485 for REC and Rs 508 for PFC, suggesting a potential upside of 22% and 18%, respectively, from their previous closing prices.'PFC and REC should each achieve 12% F25-28e loan CAGRs and 17-19% average ROE,' Morgan Stanley said in a note titled India Financials | PFC and REC: Attractive entry point; initiate with Stanley said it expects both PFC and REC to deliver compound annual loan growth of 12% between FY25 and FY28, along with an average return on equity (ROE) of 17–19%.'At a F27e P/E of 5-6x for self-sustaining low-mid teens loan growth and a 3.8-4.5% dividend yield, with asset quality likely to be stable, we find risk-reward compelling vs. our coverage,' the brokerage said.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
