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Commentary

Weekly Digest: Nifty Adjusted for Inflation, Succinct Financial Advice, Central Banker Anonymous

  • The “Real” Nifty Adjusted for “Real” Inflation Will Shock You

    I spoke earlier about how the Real Nifty – that is, adjusted for inflation and purchasing power drop – is now 32% below the 2007 peak , despite the actual index value being about the same. But that was adjusted for “Wholesale Price Index” (WPI) based inflation. The wholesale index is just one indicator of inflation, and does not consider important elements like services (eg. haircuts, washing and so on) and housing (rent). To get that data, we have a Consumer Price Index (CPI) which includes these…

    • 91 Day T-Bills Return To Single Digits

      Every Wednesday 91 day T-Bills are auctioned, and after Rajan’s first RBI policy, we have a moderation in T-Bill auction yields to 9.7% from the recent highs of over 12%. The government accepted about 2.5x of the issue (which was Rs. 7000 cr.) which is part of the game recently. A higher T-Bill auction size than notified will give the government extra cash. The banks don’t mind – even at the 9.7% rate, it’s higher than the rate they borrow in the MSF window (9.5%) and they can offer the T-Bills…

      • All the Financial Advice You’ll Ever Need

        Sometimes, we over complicate matters, especially in this blog where I will tell you I invest in ultra short term funds because the yield curve is flattening or the flat curve is yielding or both. And then I’ll tell you about how the Nifty looks like it will fall because of a fabulous looking chart with a squiggly line that moves up and down often. This is confusing. You don’t have the time. I get it. So I will tell you the advice you want that should help you navigate your way to financial success.…

        • RBI Bans 0% EMI Loans, Says Customers Must Be Told Real Interest Rate

          Now I look really ignorant, so I will first say, Sorry. And apologies to Economic Times. I had said in an earlier post that ET was probably inventing the story that 0% EMIs will be banned, but they are now officially in a no-no land, with RBI’s new notification . It really says three things: 1. Pass On The Benefits, Charge Full Interest Banks tell you there is 0% interest when you buy certain goods. But in reality there is no such thing. The manufacturer or dealer will give the bank the interest -…

          • RBI Will Remain the Lender of First Resort

            RBI has promised liquidity to the system : Beginning with the Mid-Quarter Review of September 2013, the Reserve Bank of India began a calibrated unwinding of the exceptional measures undertaken since July so as to restore normalcy to financial flows. Currently, the Reserve Bank is injecting about Rs 1.5 trillion into the system on a daily basis through the liquidity adjustment facility (LAF), the export credit refinance facility (ECR) and the marginal standing facility (MSF) taken together.…

            • NSEL: Anand Rathi Raided, Money Laundering, Auditors Flee, Yet Another Default

              Since many of you are bored of NSEL, I’ll stop writing about it NO! This is a matter of serious outrage and we can’t let these fellows go scot free! Meanwhile convicts can remain in power, it seems. Even after a supreme court said they can’t, the government tried to push a bill that would allow convicts to be in parliament (which got rejected). And then, the government passed an ordinance, which gives them six months to get it through parliament; primarily to keep Laloo and a congress bigwig from…

              • Nifty Stocks Above DMA Shows Potential Fall

                A proprietary indicator I’ve developed, called the “Net stocks above the 20 DMA” is showing a potential steep fall in the index. This is calculated by finding out the number of stocks that are above their 20 day moving average and subtracting from it, the number below. This will oscillate between +50 and -50 (for the Nifty).   I’ve observed that the 20 DMA line (red in the chart above) oscillates to extremes. When it pulls back from those extremes is when there is a potential trade. Every time…

                • Will There Be No More 0% EMI Schemes?

                  It seems – and we don’t know this for sure – that RBI is not happy about 0% EMI schemes. In these schemes, people pay on a regular basis (monthly), a smaller amount, rather than the full amount upfront. The 0% means they pay no interest, supposedly, so something that costs Rs. 40,000 can be paid in 10 months with Rs. 4,000 per month. RBI doesn’t like this because banks, while offering such schemes, increase the “processing fee” to a high amount, which effectively is higher than the interest paid.…

                  • Biggest Bond Devolvement of 2013 at Rs. 4,000 cr. Makes This the Worst in 12 Years

                    The 15,000 bond auction devolved over 25% today – that is, there weren’t enough bidders on the bonds and primary dealers HAD to buy it (they had underwritten the issue yesterday). Here’s quick look at how not getting subscriptions for over 4,000 cr. worth of bonds is noteworthy: It’s the biggest absolute default (in amount) since the liquidity squeeze by the RBI in July 2013: It is also the biggest failure by percentage devolved (in a single auction) since 2006: And it catapults 2013-14 into…

                    • Real Estate: Builders Not Delivering, High Unsold Inventory and Then, Defaults

                      In real estate, for you on a Monday, is not good news. They aren’t finishing their projects, says Mansi Taneja at Business Standard . Till July this year, of the committed supply of 406,539 housing units, only 143,838 had been completed, according to data from real estate research firm PropEquity . That comes to 35.38 per cent — just a tad more than a third. In Gurgaon, the committed supply was 22,571. But till July, only 7,645 units, or 33.9 per cent had been delivered by developers. In Noida,…

                      • My name is Ben, and I’m a Central Banker.

                        Five years ago, the economy was in trouble. We decided that the best way for the economy was for us to buy all this mortgage stuff that other people didn’t want to buy. And those falling prices were hurting banks by making them see notional losses, who we absolutely HAD to protect, because otherwise who would lend to deserving businesses? So we decided to print dollars and buy these securities, or, as they were called at the time, insecurities. At first, it felt good. A few months down the line we were…

                        • NSEL: The 5,500-crore Scam No One Wants to Deal With

                          Originally written for Yahoo . An innocuous-looking notification from the Forward Markets Commission (FMC) came in on July 12, 2013. And in the offices of the National Spot Exchange Limited (NSEL), a commodities exchange promoted by the Jignesh Shah-led Financial Technologies (FinTech), things began to change. The notification restricted NSEL from making fresh contracts
                          available as they were likely in contravention of the Forwards Contracts Regulation Act. NSEL first changed its contract duration to…