- Wealth PMS
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:
• OPEC faces the prospect of surging US output whenever oil prices rise.
• Their bankruptcy will increase shale supply.
• Banks and investors lose on the debt, so they sell the shale assets cheap.
• Next buyer has lower debt overhang, leading to an even lower cost of development.
Why won’t this work in India?
• India does not have a bankruptcy law.
• The debt will never ever be forgiven and banks will always want to recover against promoter’s future income or even against the assets themselves like they do with arcs.
• The promoter never gets the bank off his/her back, which reduces their potential in the future.
• And if the ARC earns a profit selling the asset, they have to share with the bank.
• Banks prefer the arc route than attempting to actually sell and get the assets out of the system at lower prices because many of them own stakes in the very arcs they sell to.
• Insurance Companies offloading to MFs in Bull Market.
• FIIs too selling to MFs, but pretty flat.
How to read the MACD:
Head and Shoulders pattern is the most common pattern that is easy to spot and any pattern that is easy to spot, doesn’t work everytime; in fact, a shampoo failure causes a strong move in the other direction; e.g. Nifty from 8000 to 8600 after triggering a H&S pattern briefly.
Patterns Success Ratio: http://thepatternsite.com/hst.html
The special yarn is sent to China for fabric then to Vietnam for stitching and then to Japan as shirts in top notch premium stores. This year yarn export to China gone down substantially and situation may remain like this for year or two.
Mayur has been trading in a range Rs.400-500 since Jul 2014. Q4-2015 results were flat with no growth in top or bottom line. I don’t expect growth in topline, but the profits may improve due to fall in input prices.
Long term: The story will be a churn into the next set of sectors. From Banks, Pharma, IT Services and Commodities, the movement will be seen in more of the Industrials (due to cheaper raw materials) and domestic consumption ( auto, some FMCG, retailers, apparel).
Medium term: In 1 year we’ll be depending on election results in some key states, and how the Rajya sabha shapes up. If key bills cannot be passed, our move will have to be entirely private sector led, and the private sector is currently very leveraged.
Short term: US interest rate hike will tell us where we will go. In general don’t see it as bearish, but our current valuations are too high on the index.
China Announces Largest Devaluation in Two Decades
More reading on the Currency War: http://www.zerohedge.com/news/2015-08-11/not-drill-india-russia-and-thailand-prepare-currency-war
Major Impact on Yields of China depreciation?
Not yet..but FPIs piling on. 86% of all limits taken.
“When the news reports say China is devaluing Yuan. How do they do it exactly?”
• The People’s Bank of China just decides the level around which yuan can be traded.
• They decide the value of currency and have a small band around which movement is allowed.
• It is on a downtrend because of a government stake sale.
• Government liquidating 10% of their holdings for about 25k crore.
US health regulator, USFDA, have found the lead level in the popular instant food within acceptable levels for US consumers. The government is seeking Rs. 640 cr in damages for unfair trade practices.
• Ashiana down by 13%
• Summary of Conference Call:
• Booking down by 50+% this quarter; Management says, sharp decline in booking is due to adverse market condition. Apparently with 50%+ decline, they are doing better than market average.
• Enquiry dip by 25%; site visit dip by x%.
• Management cannot meet sales guideline this year.
• Indicated “cash-flow” will be an issue in FY16. Though they will be able to execute current projects.
• New bookings are down 70% in terms of area and value booked.
Note: Patanjali isn’t listed.
• This is largely due to the Rs. 6,000 cr. extra that the government gets in taxes from fuels (we consume 1,000 cr. liters of diesel and petrol in total, on which excise duty has been increased by about Rs. 6 each)
• There’s also the hike in Service Tax from 12.36% to 14% from June onwards.
• Bharat Forge, Britannia, Strides and IDFC dividends are in
• Marksans Pharma results out: http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/8E838226_D7DE_4EEE_8373_BFC2098CE0FB_140755.pdf
• Sagar Cements. Trades at PE of 2.4: http://www.sagarcements.in/about.html
• HPCL Q1: Q1 AVERAGE GRM $8.56/BBL v.s. $2.04/BBL YOY,NET SALES AT ₹51,720 CR v.s. ₹59,173 CR YOY, PAT AT ₹1,590 CR v.s. ₹46.04 CR YOY
• SunPharma has demonstrated scale large acquisitions; Replacement of top management at Ranbaxy means things may get under control
• 50% up on EPS on Garware; profits up from 9.7 cr to 14.6 cr: http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/DFC9E405_187A_45D7_B563_08E9AAE7F9F6_175257.pdf
• Chennai Petroleum Results: http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/A5A3D113_2ABD_4CA4_8412_FC861545FF41_143510.pdf
• Aegis logistics had great results: 50% up on NP and EPS.
For those amateur trader, find out how modern electronic markets work, why stock prices change in the ways they do, and how computation can help our understanding of them!
Thanks for reading!
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.