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On Slack: ETF Rush, 7,269-cr penalty, Motherson Sumi, Economic Revival, Yellen speaks and more, at Capital Mind

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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!)

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

#general: Will Piramal Realty Prove To Be Lucky For Warburg Pincus And Goldman Sachs?

It is a clear case of oversupply in Thane, with no demand,” says Ahuja, who is one of the 300 registered agents among a crop of 2,000 largely unorganised ones who have mushroomed over the past five years in Thane.

http://www.outlookbusiness.com/the-big-story/lead-story/will-piramal-realty-prove-to-be-lucky-for-warburg-pincus-and-goldman-sachs-1936

#general: Goldman Sachs joins the ETF rush

Trenches are being dug in the next big battleground for the investment industry, as Goldman Sachs’s asset management arm launches its first exchange traded fund to snag some of the billions of dollars pouring into the next generation of passive investment products.

ETFs seek to give investors a cheap, simple way of tracking an underlying market or index, such as the S&P 500 equity gauge, or the Barclays Aggregate for bonds, collecting the passive “beta” of the broad market, as opposed to the “alpha” generated by clever stockpickers or bond kings.

http://www.ft.com/intl/cms/s/0/4ef801b8-5fb8-11e5-9846-de406ccb37f2.html#axzz3mXDIf6RA

#stocks: SEBI slaps Rs 7,269-cr penalty on PACL

The Securities and Exchange Board of India (SEBI) has slapped a penalty of Rs 7,269 crore on PACL. This is the first time that the regulator has imposed such a high penalty.

The adjudicating order, issued on Tuesday, follows an order passed last year directing PACL to refund Rs 49,100 crore it had collected through illicit schemes over 15 years staring September 2013.

http://www.business-standard.com/article/markets/sebi-slaps-rs-7-269-cr-penalty-on-pacl-115092201139_1.html

#general: Is this the Start of India’s Gold Confiscation?

On April 5, 1933, FDR signed Executive order 6102 which made illegal “the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States” in the process criminalizing the possession of monetary gold by any individual or corporation.

This was de facto gold confiscation; De jure it wasn’t, because as compensation for the relinquished gold, Americans would receive 20.67 in freshly printed US dollars for every troy ounce. Anybody who objected faced a fine of $10,000 (just under $200,000 in inflation-adjusted dollars) and up to 10 years in prison.

http://www.zerohedge.com/news/2015-09-10/start-indias-gold-confiscation

#general: Thermal power plant utilization levels at record lows

Capacity utilization, or plant load factor, in the thermal power sector continues to drop. For April to August, the reading was 60%, compared with 64-70% in the last three years. If the current trends continue, the thermal power industry’s utilization levels can hit another low in 2015-16, especially as the peak electricity consumption season is behind us.

The utilization levels of the sector have been on a steady decline since 2009-10, as the accompanying chart shows. The last time the industry saw such low utilization levels was 15 years ago. The key reason for the falling capacity utilization is subdued demand.

http://www.livemint.com/Money/JzepgEUK8043m6sGBE4adN/Thermal-power-plant-utilization-levels-at-record-lows.html

Thermal Plants

#general: Chinese Factory Gauge Drops to Lowest Level Since March 2009

A private Chinese manufacturing gauge fell to the lowest in 6 1/2 years, underscoring challenges facing the economy as its old growth engines splutter.

A global sell off in riskier assets gained pace after the preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics dropped to 47.0 in September. That missed the median estimate of 47.5 in a Bloomberg survey and fell from the final reading of 47.3 in the previous month. Readings remained below 50 since March, indicating contraction.

http://www.bloomberg.com/news/articles/2015-09-23/chinese-factory-gauge-drops-to-lowest-level-since-march-2009

#stocks: Making too much out of Volkswagen episode: Motherson Sumi’s Sehgal

Motherson Sumi’s chairman Vivek Chaand Sehgal told analysts that the market’s concerns are overdone as far as the impact on the company is concerned following the recall of Volkswagen vehicles in the US. Last week, US regulators had asked Volkswagen to recall half a million vehicles that disguised pollution, triggering concerns there would be an impact on Motherson Sumi Syste
ms, which supplies components to several brands of the Volkswagen group.

http://www.business-standard.com/article/companies/making-too-much-out-of-volkswagen-episode-motherson-sumi-s-sehgal-115092201003_1.html

Motherson Sumi

#stocks: Stirring the Soup: Lessons for Value Investors in the Nourishing Growth of Britannia Industries

Britannia Industries (MV $5.46bn), India’s leading biscuit and confectionery maker who had compounded over 400% since the “soup-stirrer” Varun Berry joined in Jan 2013 as COO and took over the CEO/MD leadership baton from veteran Vinita Bali (2006-13) in Apr 2014. Prior to joining Britannia, Berry was the CEO of PepsiCo Foods for South Asia.

http://www.beyondproxy.com/stirring-the-soup-lessons-for-value-investors-in-the-nourishing-growth-of-brittania-industries/

#backtobasics: Concepts & Strategies

Big Boy Iron Condor, Cost Basis Reduction, Scalping etc. Learn more about the key concepts and strategies at https://www.tastytrade.com/tt/learn?locale=en

Turtle Trading: A Market Legend – http://www.investopedia.com/articles/trading/08/turtle-trading.asp

Kondratieff Wave – http://www.investopedia.com/terms/k/kondratieff-wave.asp

#stocks: Larsen & Toubro to sell assets, dilute stake in non-core businesses

Industrial group Larsen & Toubro is looking to sell some assets including roads and infrastructure projects and dilute its stake in non-core subsidiaries to revive performance.

http://www.financialexpress.com/article/industry/companies/larsen-toubro-to-sell-assets-dilute-stake-in-non-core-businesses-chairman/140151/?SocialMedia

L&T

#fixed-income: Dangers lurking in the bond market

Ever since July 2010, when the RBI disallowed banks to charge their borrowers interest rates which are lower than the respective bank’s base rate, there has been a marginal uptick in the otherwise moribund Indian bond markets. The current surge in bond market issuances is a continuation of this trend. The trend has been strengthened by the reluctance of Indian banks to reduce their base rates in tandem with the RBI’s reduction of repo rate.

http://www.thehindubusinessline.com/portfolio/macro-view/dangers-lurking-in-the-bond-market/article7671134.ece?utm_source=email&utm_medium=Email&utm_campaign=Newsletter

#stocks: Textile stocks are back on Slack. Hot discussion on Denim, Arvind, Levis..

Nandan all set to become India’s top denim makerhttp://www.indiantextilemagazine.in/corporate-news/nandan-all-set-to-become-indias-top-denim-maker/

Are jeans falling out of fashion? Levi Strauss reports slowing saleshttp://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11862653/Are-jeans-falling-out-of-fashion-Levi-Strauss-reports-slowing-sales.html

Denim Is in Real Danger of Going Out of Fashionhttp://www.nbcnews.com/business/consumer/denim-real-danger-going-out-fashion-n176211

Delving Deeper into Denim Fabrics in Indiahttp://www.indiaretailing.com/7/1/15/12639/Delving-Deeper-into-Denim-Fabrics-in-India

#stocks: L&T chairman casts doubt on India’s economic revival

The chairman of one of India’s biggest industrial groups, Larsen & Toubro, sees little sign of a recovery in Asia’s third-largest economy, with some of his factories running far below capacity and facing a dearth of new orders.

A M Naik, executive chairman of the 77-year group, often viewed as a bellwether of the economy, said Prime Minister Narendra Modi’s reform agenda had failed to boost business among its core engineering, construction and infrastructure customers. “In terms of economic revival, it is not happening on the ground,” Naik told.

http://www.business-standard.com/article/companies/l115092300634_1.html#.VgK1m3woD68.twitter

#options: Traders make big bucks in Bank Nifty ahead of Reserve Bank of India’s monetary policy

Bets on Bank Nifty, which has recovered from its year-low over the past two weeks, are yielding outsized returns as bulls and bears struggle to hold sway in banking counters ahead of the Reserve Bank of India’s monetary policy on Tuesday.

Premium values of select Bank Nifty options have jumped almost 10 times in the last two days suggesting heightened uncertainty over the next few days. Sample this: On Wednesday, the 17000 September call rose almost 10 times from a low of Rs 35 to a high of Rs 339. A day earlier, the 17000 put, rose from a low of Rs 16 to a high of Rs 148. That’s a one is to around 10 risk-reward ratio in a single trading session.

http://economictimes.indiatimes.com/articleshow/49083325.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

#macronomics: US renews GSP benefits for Indian exporters

After an 18-month prolonged wait, the US government on Tuesday finally extended the generalised system of preferences (GSP) for Indian exporters retrospectively fro
m August 2013, enabling duty-free entry of 3,500 product lines. The move is expected to benefit exporters of textiles, engineering, gems and jewellery, and chemical products, among others, as their biggest market is the US. The USGSP, which expired in July 2013, has been extended with retrospective effect from August 2013 till December 2017.

http://www.business-standard.com/article/economy-policy/us-renews-gsp-benefits-for-indian-exporters-115080500011_1.html

#markets: U.S. stocks: Dow futures surge 200 points after Yellen speech

U.S. stocks looked on track to open sharply higher Friday, helped by Federal Reserve Chief Janet Yellen signalling the economy is strengthening and an interest-rate hike is likely this year. Investors also are bracing for fresh readings on consumer sentiment and the U.S. economy’s growth

http://www.marketwatch.com/story/us-stocks-dow-futures-surge-200-points-after-yellen-speech-2015-09-25

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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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