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On Slack: Of Dynamatic Tech and Atul Auto, Result Updates and Random Markets

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The Slack Discussions

The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there, pop us a note by replying to this email. (If you’re a trial member this probably sound like Greek to you; it will be available when you sign up!)

Awesome discussions again!

A brief summary of some of the interesting things discussed there in the last few days:

The MA 20 indicators

Capital Mind has designed proprietary indicators – the MA20 and MA5 – which measure breadth within an index. When these indexes cross back from outside to within the +30 to -30 zone, there’s a trade, and we’ve made serious returns in trading that the last few months. 

The MA20 is the Net Nifty stocks above their 20 day moving averages (Number of stocks above minus number of stocks below). The MA5 just uses the 5 day MA instead.

Here’s where we are right now. Nowhere, really:

MA5 MA20

End of monthly multi-baggers? 

“SEBI with an objective to restrict excessive price movements in the securities of listed companies had introduced daily price bands upto 20% on the securities not having derivatives products.” 

http://value-picks.blogspot.in/2015/08/bse-to-introduce-stringent-circuit.html?spref=tw

Retail’s Going Long!

ProClient

• Retail Clients went long – over 35 K contracts added Tuesday

• Retail Clients ended Net long for the first time in August

• FIIs were net short for the first time in Aug 

“The RBI paid a dividend of nearly Rs 66,000 cr to the government: the highest ever from the central bank in its 80-year history” 

More Reading: http://timesofindia.indiatimes.com/business/india-business/RBI-pays-govt-Rs-66000-crore-in-dividend/articleshow/48475424.cms 

Eurogroup says euro zone bailout of Greece approved for $95.6B 

More Reading: http://www.cnbc.com/2015/08/14/commission-confirms-euro-zone-bailout-of-greece.html 

Random Markets, Wide Tails and Normal distributions

We had an interesting discussion on how market returns are distributed. Here’s a summary:

• Vashistha brought forward the proposal that markets are random (not that he believes it) from the book A Random Walk Down Wall Street

• The theory is that markets are random and therefore no edge is to be gained by trading versus just following the index

• But there’s a lot of research that debunks this, plus the obvious people like Soros and Buffett

• Average Sensex returns (daily) follow the bell curve

Daily

But weekly returns are skewed to one side of the mean:

Weekly

The P/E distribution has no “normal” distribution:

pe

And the monthly distribution too is not very “normal” with fat tails.

Monthly

Boost coming for Automakers? India’s own version of Cash for Clunkers 

Government is considering giving financial incentives of up to Rs 1.5 lakh on surrender of 10+ year old vehicles to check pollution and address road safety concerns 

More Reading: http://timesofindia.indiatimes.com/home/environment/pollution/Surrender-of-old-vehicle-to-get-upto-Rs-1-5-lakh-sops-Gadkari/articleshow/48469696.cms

Long legged Candles tell a story

Candle for August is misleading, since we are only halfway through the candle so far,

As long as any dip to 8330 or 8280 is bought and IF we close higher on the monthly, all dips will be bought:

Long Tails

Symphony Explains its Lackluster Results:

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/3CA7C07D_4145_479F_BB05_8E24F8E7EC0E_134938.pdf

 

Ajanta Pharma Profits up 38%:

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/C632D8E6_5E93_45B8_B535_23CDA485E4B2_121854.pdf

 

Gitanjali doubles profits, but has not paid taxes

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/3D433308_80CD_42A0_859A_06423560EDB5_200653.pdf

 

BEML continues to lose money, but lesser than earlier;

BEML seems to always have lousy first quarters

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/1263D459_8C48_4F94_8E98_DC628F32D35C_155307.pdf

 

SAIL has a very bad quarter:

http://www.bseindia.com/corporates/Results.aspx?Code=500113&Company=STEEL%20AUTHORITY%20OF%20INDIA%20LTD.&qtr=86.00&RType=

 

Reliance Capital has decent numbers: 20% up on EPS

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/56CB30AB_03E0_499D_9E99_1AD5399ABD13_141030.pdf

 

Jet Airways, as expected, saw good results Rs. 221 cr. profit after a loss last year:

http://www.bseindia.com/corporates/Results.aspx?Code=532617&Company=JET%20AIRWAYS%20(INDIA)%20LTD.&qtr=86.00&RType=

 

BPCL doubled profits:

http://www.bseindia.com/corporates/Results.aspx?Code=500547&Company=BHARAT%20PETROLEUM%20CORPORATION%20LTD.&qtr=86.00&RType=

 

Amara Raja Results seem muted; not that much growth in EPS (16% YOY):

http://www.bseindia.com/corporates/Results.aspx?Code=500008&Company=AMARA%20RAJA%20BATTERIES%20LTD.&qtr=86.00&RType=

 

Manappuram had a decent 25-30% growth in EPS:

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/B22C8364_EBF4_4B0A_BAC3_5BBB558D134F_162838.pdf

 

Suven shows very bad results: Income down 40%, EPS down 40%

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/E542FC6A_5FEF_4114_9024_BF7E8AC9556E_194753.pdf

 

Cipla shows Blockbuster results: Doubled EPS, Income up 50%

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/DC30E39F_C546_4CCA_962D_A13E5BE36032_184731.pdf

 

The Changing Dynamics of Dynamatic Tech

More Reading: http://www.livemint.com/Companies/rocfSfuUBIcctGCDKVNy9K/Management-Case–Changing-dynamics-of-Dynamatic-Tech.html

Other discussions on the company:

• They share exclusivity with Airbus

• But danger signs:

• They sell and lease back land in Bangalore and record that as exceptional item.

• Then, they repay loans and decide that preclosure fees are one time chargers.

• Then, they take another loan from an NBFC and decide that “incidental charges” are exceptional items. 

Rajasthan is leading in reforms on many fronts:

Taming a mad elephant: Rajasthan will boost minimum government and maximum governance by repealing 150 laws

More Reading:

http://stagingauthors.toiblogs.com/toi-edit-page/taming-a-mad-elephant-rajasthan-will-boost-minimum-government-and-maximum-governance-by-repealing-150-laws-2/

 

George Chen says, “More than 500 stocks in Chinese market now down 10% daily limit after major local brokerages restarted margin and short-selling biz”

The Chinese market tanked 6% on Tuesday. 

 

CID arrests Kingpin in BDA Mutual Fund Scam

“Dash gave oral instructions to the banks to transfer the money from the BDA account to the temporary bank accounts. Later, through pay order and banker’s cheque, money was invested illegally in mutual funds.”

More Reading: http://www.deccanherald.com/content/495824/cidamp8200arrests-kingpin-bda-mutual-fund.html

Tandon is Bullish on Consumer Discretionary

Recent salary hikes leading to consumer spending to the tune of USD 25-50 billion, phenomenal performance of Yes Bank

Read more at: http://www.moneycontrol.com/news/market-outlook/bullishconsumer-discretionary-yes-bank-anand-tandon_2230001.html?utm_source=ref_article

 

“They Fudged Figures and Suppressed Revenue”: On Discoms 

CAG reports that Delhi Discoms Inflated their Losses by Rs. 8000cr.

“Discoms are the second largest bad loans on bad books” 

More Reading: http://timesofindia.indiatimes.com/city/delhi/Discoms-inflated-dues-by-Rs-8000-crore-says-CAG/articleshow/48520042.cms

Ratings Agency, Moody’s Slashes India’s GDP growth target to 7%

Atsi Sheth says, “The reason we have adjusted it down is we have looked at the high frequency data and what we have seen is that the industrial recovery is proceeding but it is proceeding very slowly.”

More Reading: http://www.moneycontrol.com/news/economy/moodys-cuts-india-gdp-target-to-7-says-still-good-enough_2598841.html?utm_source=ref_article 

Full credit to Motilal for the 100-bagger List

The study has identified seven stocks which fulfill the criteria:http://rakesh-jhunjhunwala.in/seven-potential-100-bagger-stocks-to-buy-now/

Such awesomeness with stocks: Aarti Drugs, Granules, Suven, DCB, Tata Elxsi, Shilpa Medicare and Atul Auto. Most of them have already become multibaggers! 

Atul Auto Discussion

• It is just 950 Cr market cap company

• Competitors: Bajaj, Piaggio and TVS.

• Developing countries will be bigger market: eg: Bangladesh and in India, autos will move to Tier II cities.

Atul Auto CFO’s answers on Concall: http://forum.valuepickr.com/t/atul-auto-limited/990/504

Analysis of Atul Auto Limited:

http://www.drvijaymalik.com/2015/06/atul-auto-limited.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FLAXXlY+%28Vijay+Malik%29 

Question of the Day 

Q: Will the USD start getting more expensive or cheaper once the FED starts raising rates? The Chinese have devalued the Yuan, so as a counter move the USD must also devalue to nullify the effect of the yuan depreciation? 

A: Doubtful. The dollar should strengthen in the long term, but it will have nearly no impact when they do raise, other than a few days of anticipation. 

Stock Updates:

• Coal India: Profits down 8%, Total income up 5%

• JSPL suffers a loss of Rs. 339 cr. this time last year, made a profit of Rs. 418 cr.

• Shipping Corporation India(SCI) triples net profit

• Relinfra suffers dip in profit from last year: Rs. 400 cr. vs. Rs. 457 cr.

• Great Eastern Shipping, Aditya Birla Nuvo (10% up on income, 50% on EPS, YoY) show good results

• Syngene up 26% from issue price

• Ashoka PTE co bought 483000 shares of KSCL today,  at 525.67.

• Kaveri Seeds 20 lakh shares marked for delivery; 2.5-3% of equity got exchanged today. 43% marked for delivery.

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Disclaimer

Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your
own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion. 

Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.

 

 

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