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14th September- 2013

Hot Topic Of The Week

Risk Profiling

Last week at the Financial Markets!!!

• SENSEX rose by 462 points (2.40%) and closed to 19732 at end of the week.

• (FIIs) remained net buyer in equity with net inflow of Rs. 5490 crore and net seller in debt segment with net outflow of 2071.5 crore.

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News Impact

• India’s trade deficit for the month of August narrowed to $10.9 billion against $12.26 billion in July 2013.

• Lower trade deficit will lead to higher GDP growth

• Volatility in rupee may reduce.• Economy downgrade fear will reduce

• TRAI recommends big cut in base price for upcoming 2G auctions

• Profit margin may improve of telecom operators.

• Voice and data charges may not increased as cost of spectrum will reduce.

Last week at the Financial Markets!!!


Price Performance of Different Asset Class Better than expected Chinese economy data and reduce tension in

Syria shows profit booking in Gold & Silver.

Better than expected Chinese economy data and reduce tension in

Syria shows profit booking in Gold & Silver.

Next Week in the Financial Markets...?


• Wholesale price Index (WPI) data for the month of August 2013 will be released on September 16, 2013

• Federal Open Market Committee (FOMC) meeting is scheduled on 17th & 18th September, 2013. The committee would provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program.

• Reserve Bank of India (RBI) will release its next mid-quarter monetary policy review, on September 20, 2013

Hot Topic Of The Week

Risk Profiling

Introduction• Risk profiling is one of the most important part of the

investment process.

• It plays an essential role in ensuring the suitability of asset class in your portfolio.

• Risk profiling generally revolve around two questions:1. "How much risk can you handle psychologically?"2. "How much risk should you ideally take on?”


IntroductionThese question reflects 2 important aspects of risk profiling:

1. Risk Tolerance (Emotional/Psychological Aspect)2. Ability to take Risk (Financial Aspect)

Answers to both the above questions may not necessarily be the same


Risk Tolerance• Risk tolerance is a measure of your willingness to accept higher

risk or volatility.

• Those with high tolerance are aggressive investors, willing to accept losing their capital in search for higher returns and vice versa

• There is also an emotional aspect attached to it. An investor may have a high risk tolerance. But when actually the event occurs and he sees his portfolio significantly down he may not be willing to accept it.


Risk Tolerance• An individual should have a realistic understanding of his or her

ability and willingness to stomach large swings in the value of his or her investments.

• Risk tolerance is a measure of how much risk you can handle,

but that is not necessarily the same as the appropriate amount of risk you should take.


Risk Taking Ability• Financial risk capacity can be measured in many different ways,

including time horizon, liquidity, income etc.

• Those with high income can make higher-risk investments as fall in the amount of their portfolios will not make much difference to their finances.

• An investor may have high risk tolerance but if a small drop in value affects his monthly budget, then his risk taking ability is considered to be low.


Asset Class Risk• Every asset class (Safe or Risky) comes with its own set of risk


• Equity Market Risk• Corporate Event Risk (Bonus, Split)• Small Firm Risk • Hedging Demand Risk(International Investment)• Complexity or Efficiency Risk • Liquidity Risk • Interest Rate Risk• Credit Risk• Forex Risk• Extreme Event (War, natural ca)• Operational Risk (System failure)• Regulatory Risk

Tools To Measure Risk



Research Desk

@VALUE PLUS - The Family Office

Office: (0265 -2324600,6629800)Email: [email protected]: www.valueplusinv.com

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