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:

#stocks: Post Q2 results & guidance, foreign brokerages turn cautious on Infosys

The stock dropped 3.15 per cent on Tuesday, in addition to a 3.88 per cent fall in the previous session (6.9 per cent in two days), to hit a low of Rs 1,087.10 on BSE. The IT Company on Monday revised its FY16 dollar revenue guidance downward to 6.4-8.4 per cent from an earlier guidance of 7.2-9.2 per cent.

For the September quarter, the company reported a better-than-expected 6.9 per cent sequential growth in dollar revenue in constant currency terms, but maintained FY16 constant currency revenue growth guidance at 10-12 per cent, implying a weak compounded quarterly growth rate (CQGR) of -2.3 per cent to +0.15 per cent in the second half of FY16. (Link)

#general: Operation Black Money impact: HDFC official among 4 arrested by ED in Rs 6000 crore scam

Enforcement Directorate on Tuesday arrested 4 people in connection with Rs 6,000 crore forex scam. These include 2 exporters and 2 middlemen. One of the persons arrested is an HDFC bank employee. All four have been sent to police custody.

Calling it a case of trade-based money laundering, where accused traders evade custom duties and taxes to generate slush funds, the agency arrested Kamal Kalra, working with the foreign exchange division of HDFC bank, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal. (Link)

#general: Cipla’s new U.S. plant received Form 483 just ahead of deal

The FDA inspectors pointed out that between Oct. 26, 2010 and the time of the inspection in May, the firm had used its CAPA only 8 times to deal with issues, with the last being more than two years earlier. But it said the company turned to its change of control procedures instead of the CAPA to see if employee retraining was effective after 10 laboratory reports failures and 56 lab deviation notices in 2014. It also was not used to check the root cause and corrective actions in 90 lab deviation notices in 2014 which led to sample retesting. (Link)

#general: Eros International Acquires Music Messaging Innovator PingTune

Eros International, a leading global company in the Indian film entertainment industry, today announced the acquisition of PingTune, a UK-based music messaging company that allows fans to discover, share and listen to music through their app on iOS & Android. The PingTune acquisition provides Eros’ digital platform ErosNow with a first mover advantage in building a differentiated, one-of-a-kind music experience over any other major platform in India. (Link)

#general: Arun Jaitley named best Finance Minister of Asia by London-based publication

Finance Minister Arun Jaitley has been chosen as ‘Finance Minister of the Year, Asia’ by London-based publication Emerging Markets. In an article the magazine said that Jaitley too deserves ‘some recognition’ for India’s relative economic success over the last 18 months. (Link)

#general: Brazil’s Next Big Crisis Is Scaring Bankers and Wiping Out Jobs

In the smog-filled, run-down industrial hubs that ring the southern end of Sao Paulo, Brazil’s next big crisis is taking root.

The labor market, long the country’s lone economic bright spot as growth stagnated, is suddenly deteriorating rapidly, driving unemployment all the way up to 7.6 percent from a record-low 4.3 percent at the end of 2014. Nowhere are the layoffs that are fueling that surge more acute than here, in this gritty complex of steel, auto and auto-parts factories built decades ago by the likes of Ford Motor Co. and Volkswagen AG. Sao Paulo is now losing almost 20,000 jobs each and every month, the state’s industrial federation estimates.(Link)

#general: The Next China Default Could Be Days Away as Steel Firms Suffer

Another week, another Chinese debt guessing game.This time it’s the steel industry’s turn, as investors wonder if a potential bond default by Sinosteel Co. is an omen of things to come amid slowing demand for the metal used in everything from cars to construction.

The state-owned steel trader, whose parent warned of financial stress last year, may have to honor 2 billion yuan ($315 million) of principal next Tuesday when bondholders can exercise an option forcing the notes’ redemption two years before they mature. If that should happen, China Merchants Securities Co. thinks the firm will struggle to re
pay. (Link)

#general: Walmart takes $20 billion hit as weak forecast scares investors

The world’s largest retailer spooked Wall Street Wednesday morning and endured its biggest stock drop in 15 years when it said it no longer expected sales growth for the current fiscal year. Wal-Mart also warned investors that big investments in beefing up its e-commerce efforts and giving its workers big raises would weigh on profits in the next two years.

Wal-Mart shares fell 10% on the day, wiping out nearly $20 billion in the company’s market value. (Link)

#general: Punjab: When global slump took away the premium tag of basmati

When farmers in Punjab began taking the harvested grain from their Pusa-1509 superfine basmati paddy crop early this month, they were shocked to see it fetch rates below not just half of last year’s levels, but even the official minimum support price (MSP) of Rs 1,450 per quintal for regular ‘parmal’ varieties.

Farmers sold their 1509 paddy at Rs 950 to 1,200 per quintal during the first week of crop arrivals, as against Rs 2,200 last year and Rs 3,500 the year before. Realisations for the other popular improved basmati variety Pusa-1121, too, ranged between Rs 1,750 and Rs 1,990 per quintal, whereas these ruled at Rs 3,000-3,300 and Rs 5,100 in the preceding two years. (Link)

#general: Mahindra Mojo Launched; Priced at 1.58 Lakh

Mahindra has launched the much awaited Mojo at 1.58 lakh ex-showroom Delhi. It is exactly the right approach and strategy that Mahindra Two Wheelers needed to take for this bike to have a blockbuster entry into the market.

The 300cc bike has been positioned as a sports tourer, and will take on a varied mix of rivals from the Bajaj/KTM family besides Honda and some future TVS products. Mahindra is getting a bit of a lead on some of the more obvious rivals like the Bajaj Pulsar CS 400 which will only land next year. Mahindra says the pricing is introductory and will be revised after Diwali. (Link)

#general: September exports plunge 24.3% on weak global demand

Merchandise exports shrank nearly a quarter in September from a year ago, government data showed on Thursday, on weak global demand.

The trade deficit narrowed to $10.48 billion last month from $12.5 billion in August mainly on lower gold and oil imports, the data released by the Ministry of Commerce and Industry showed. (Link)

#general: DCB Bank alters expansion plans after stock drops 30% in two days

Giving in to pressure from investors and analysts, the management at DCB Bank has decided to change its aggressive branch expansion strategy, the bank said on Friday.

In a statement to the stock exchanges, DCB Bank said that instead of adding 150 new branches in 12 months, the bank would do so in 24 months.

The bank said that the change in strategy had been decided after receiving feedback from its investors, analysts and other stakeholders on its previous expansion plans. (Link)

#scam-special: Fooling Everyone: Vijay Mallya Allegedly Transferred Rs 4,000 Crore To Tax Havens

A couple of days back CBI searched the premises of liquor baron Vijay Mallaya and chief financial officer of the defunct Kingfisher Airlines for an alleged default of  900 crore loan in conspiracy with IDBI officials. The CBI has alleged that the loan was sanctioned in violation of norms regarding credit limits.

The consortium of 17 banks had an outstanding exposure of over Rs 7,000 crore payable by Kingfisher. (Link)

#scam-special: NSEL scandal – Before he was moved out, Finance Secy wrote: Revenue dept helping scam-accused Jignesh Shah

In a scathing note to Union Finance Minister Arun Jaitley, four days before he demitted office as Finance Secretary, Rajiv Mehrishi, who is now Home Secretary, said the Department of Revenue had launched a “blatant attempt” to help “Shri Jignesh Shah at the cost of the investors who have been cheated in the NSEL scam”. He said the Revenue Department had come to Shah’s “rescue” against the government’s effort to merge the National Spot Exchange Ltd (NSEL) with its holding company Financial Technologies (India) Ltd (FTIL) promoted by Shah. (Link)

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.