RBI extends EMI Moratorium for another 3 months. Should you avail?

RBI extended the EMI moratorium for another 3 months period (until August end). This means if you are failed to pay your EMI during this period, your bank will not take any legal action against you. And it will not affect your CIBIL score as well. Should you avail of EMI Moratorium?

First we need to understand the EMI moratorium. Though RBI announced it, the "terms and conditions" behind that will be decided by your bank. The initial misconception about EMI moratorium was your EMI for the period is waived off. Some of us even thought EMIs will be skipped for the period and it will be added at the end of tenure which is also wrong.

The truth is that you have to pay interest for this period. the interest accumulated during this period may increase your tenure along with the no of months you availed moratorium.

Let us consider an example of a person* who took a loan of 5 lakhs for 11% interest with 60 months as tenure. His monthly EMI is ₹10871 and he paid EMIs for 5 months so far. He availed the EMI moratorium for 2 months when he was supposed to pay the 6th month due.

Post moratorium period, his loan tenure will be increased from 60 to 63.3 months (approx). because the interest accumulated for the 2 months (₹8500 approx) will be added to the outstanding principal (after 5th EMI).So he would be ended up paying more money to the bank comparing to the normal scenario.

If you are really running out of the money and not certain about the future then you can avail of the EMI moratorium. But if you can manage the situation and still thinking about availing EMI moratorium then think twice about the extra money you are going to lose at the end.



*The calculations may differ based on your bank's terms and conditions.

Medical Insurance - Need of the hour

Most of us used to think that life insurance policies are good enough considering the cost and term of medical insurance policies. And even some of us used to think that spending money on the medical insurance policy is not useful as we don't claim it for every year or never claimed so far.

But due to the coronavirus outbreak, the importance of taking a medical insurance policy has increased much not only for you but for your family members as well.

Nowadays the hospitalization and medicine expenses are on the higher side and there is a lot of chance that you may get impacted financially due to the recession caused by coronavirus outbreak. So you may find it difficult when a sudden need for money arises due to medical expenses.

If you are a person working in a company which has group insurance then it would be fine otherwise you need to go for one.

If you find it difficult to buy a good medical insurance policy cover, at least buy any basic policy package covering critical illnesses offered by major insurance companies. When you buy a medical insurance policy try to cover all the members of your family including children and elders.

Prepare yourself for the tough time ahead

At the moment of writing this, worldwide around 2.9 million people affected in which 2 Lakh people died already due to coronavirus pandemic. The impact of coronavirus on the global economy is something we have not seen in our lifetime and it looks like this impact on the global economy is going to long last for several months.

The countries which are topped in the coronavirus affected table are the countries which we dreamt to live in the past decades. But unfortunately today Americans and Europeans are the most affected people on this planet. The worst part is that the impact of the economy on these developed nations will hit developing nations like India badly.

Since MNCies are very much dependent on the people of developed countries for their business, they will suffer financially which may lead to reduce outsourcing their work to Indian companies at a larger scale. They may even think of stopping whatever they feel luxury and run their business with essential services only.

You may witness people suffering without a salary hike, or a reduction in salary, or even job loss in the coming months. This is going to be a tough time, people must prepare themselves both financially and mentally. Do not spend money on luxury needs, even spend money wisely for the essential needs.

You may not get enough money to spend in the upcoming months for your essential needs.
So think twice before spending a hundred rupees note.

Short recovery of Indian stock markets on a short week

There was a little hope on the stock market in the last week (short week too). Investors were busy buying good stocks with the hope of normal business resumption by the end of the nationwide lockdown on April 15th, 2020.

On Thursday Nifty 50 ended with 9111 up 363 was a good sign of a short recovery. The recovery lead by Pharmaceuticals companies with growing demands on medicines. There was a 20% increase in Nifty Pharma in the last week. You can hold your pharma stocks instead of selling them for a short gain. you may get a good profit out of those pharma stocks. But keep your eye on stop-loss price too.

There was a little recovery in the Automobile and Banking sectors as well. But as of today, it looks like the lockdown may be extended by the governments. This will definitely impact the stock market more. Since the supply chain is disturbed and manufacturing is put on hold, companies can do hardly anything for earnings.

With lockdown getting extended some experts say the Indian stock market will fall as much as it could. Nifty 50 may go down to very low levels. Do your research and analysis for fundamentally good stocks and keep your list ready, you will be able to buy them for a very cheap price and build your portfolio for a long term gain. 

We have entered the recession

"We have entered recession" said IMF chief on Friday. After 2008-2009, the world is into another recession and it is going to be worst than previous. The global economy is badly affected by Covid-19 pandemic. IMF estimated economy recovery would be in a year's time. But I feel we can think of such estimates only after we find a solution for Corona.

The United States of America turned out to be the most affected country after China and Italy with thousands of positive corona cases every day. After USA and europian countries, the Indian government announced a locked out period for 21 days to fight against corona virus.

The major section of the Indian population including daily wage workers, street shop vendors and farmers will be heavily affected by this lockdown. Though the government announced 1.7 Lakhs Crore worth package for the affected people, I doubt whether that would be sufficient.

This is going to be a tough time for the Indians since many factories, offices, malls, and shops are closed for the lockdown period. It will affect the production, transportation, and consumption of products which will lead to financial loss for people, companies and governments.

Last week Nifty 50 crashed to 7500 range and recovered back to 8660. Maruti Suzuki stocks fell down to ₹4645 (-234) on Friday dragging the Auto Nifty to lower levels. Most of the auto stocks look so cheaper now. With Corona around, not sure when they will bounce back.

Is stock market going nowhere?

As expected the Indian stock market went down to a very low-level last week. On 18th March Nifty 50 went to 7800 levels and recovered back. On Friday Nifty 50 ended on green side at 8745 (+482). But based on the market trending, I have a doubt in my mind, Is it going nowhere?

After the YES bank crisis, both public and private banking stocks are struggling badly. There is a fear among investors in investing in private banks. Karur Vysya Bank (KVB) was one of the best performing private bank stock until last year (~₹92 in Jan 2019). now it crashed down to ₹27. Not sure where it is heading to.

Last week, the US stock market slipped further and ended at 6879. What seems to be more bothering is even commodities are in the red zone. Crude oil futures are below ₹2000 per barrel. But the petrol price is not going below ₹70. Surprisingly the gold price went down last week. 

Still we did not get any way to control the Corona virus spread. It is turning out as the worst nightmare in our days. Already some of the experts claim that it has done enough damage to the global economy like a world war. Day by day it is growing stronger and expanding its arms worldwide.

Since most of us are stuck at home due to the Corona virus. The most affected sections of people are daily wage workers and street shop vendors. The government should support them financially in this tough time.

Investors are confused about investing their money as they could see only red everywhere.

Record break on Stock Market?

What happened last week in stock market was historic. But unfortunately not in a positive sense.
Not just Indian stock market, worldwide stock market indices went down as much as they could.
On Friday pre-opening session, Sensex and Nifty went to a very low level and exchange had to stop the trading and give break for some time.

Friday Nifty 50 went down to 8555(1000 down comparing to previous day close) and after the break it recovered back to the previous day level and surprisingly it went ahead and ended on green side at 9955 (+365).

But I am not feeling positive about market as it is too much volatile. Though Indian and US stock market ended in green side on Friday, unless we find a clue to control the Corona virus it is going to eat up investors money.

Initially I thought economy would require 6 months to recover once we find a way to control Corona virus. But day by day things are getting worse in global economy due to Corona spread which will increase the number of days to recover as well.

Anyway some big fishes i.e large cap stocks are in 30% to 40% cheaper price now. Those who waited for a long time for this cheaper price ranges can buy those stocks with some hope of economy recovery. But please keep some money to buy in dips because stock market may fall further.