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On Slack: Galloping IndiGo, Crude Spikes, Nestle suit, Dubai Banks Bad Debt, Blow for Tata Motors, Vijay Mallya "wilful defaulter", Tiger Global rampage, Yellen's arguments and more…

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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: Damage of six years has been reversed in a matter of a year: Ridham Desai

Morgan Stanley’s head of India research says competitive federalism has emerged as the NDA‘s biggest contribution to the nation as states put in place critical reforms to attract investments. (Link)

#general: Galloping IndiGo stock outpaces combined m-cap of Jet, SpiceJet

In just eight sessions since listing, the stock of InterGlobe Aviation, the owner of low-cost carrier IndiGo, has notched up some 36 per cent gains to swell the market capitalisation (m-cap) by over Rs 10,000 crore, which is more than the combined market-cap of its two other listed peers, SpiceJet and Jet Airways. (Link)

#commodities: WTI Crude Spikes After Renewed Tumble In US Oil Rig Count

(Link)

#general: Government will continue to pursue Rs 640-crore suit against Nestle India

Government will continue to pursue its Rs 640-crore class action suit filed in NCDRC against Nestle India, although the company’s instant noodles Maggi has returned to the market after the Bombay High Court lifted the ban imposed by food safety regulator FSSAI. (Link)

#general: The Last Days Of Marissa Mayer?

The late October offsite meeting for more than 120 of Yahoo top executives at the Park Central Hotel in San Francisco started well enough. The first day jumped from strategy sessions to upcoming product discussions. But on day two, when the topic shifted to employee engagement, and with CEO Marissa Mayer in and out of the room, things went downhill fast. When Bryan Power, Yahoo’s head of HR, glossed over results from a recent employee survey that showed dramatic double-digit drops in metrics like morale and trust in the company’s executive leadership, various vice presidents began venting to one another. Those murmurs of discontent erupted into outright heckling when another session—billed as an opportunity to improve communication—turned into a lecture from Yahoo’s top brass that many found patronizing. Vice presidents started calling out their superiors for “not listening,” “not understanding” and “not being interested in changing.” Some cursed. (Link)

#general: Dubai Banks Brace for Bad Debt as Borrowers Flee the Country

Dubai’s slowing economy, the rout in commodities and strict debt repayment laws are reviving a phenomenon that symbolized the emirate’s crash in 2009: “skips,” or business owners who quietly leave the country to avoid punishment for defaulting on loans.

A rising number of smaller and medium-sized company owners are abandoning the United Arab Emirates without repaying debt, according to Emirates NBD PJSC, the country’s second-largest bank. People in the SME sector may have left behind 5 billion dirhams ($1.36 billion) of loans this year, Abdul Aziz Al Ghurair, Chief Executive Officer of Mashreqbank PSC and chairman of the U.A.E. Banks Federation, said in Dubai on Monday. (Link)

#general: Factories running 30% below capacity: Rajan

The Reserve Bank of India’s (RBI) governor, Raghuram Rajan, said the economy was being hampered by a drop in public and private investments but held out hope that strong foreign capital flows would help rectify this weakness.

Weak capital investment has been a hurdle in India’s quest to realise its growth potential and with factories running 30 per cent below capacity, private companies are in no rush to invest in new projects. (Link)

#general: Reliance Jio’s entry will increase competition in telecom sector, lower data tarrifs

The impending entry of Reliance Jio will increase competition in the Indian telecom sector and pressurise credit profiles of the top-four telecom companies, Fitch Ratings has said.

In order to be competitive and grab chunk of the market share, Jio is likely to offer cheaper tariffs; Fitch expects that data tarrifs will fall by atleast 15-20% as incumbents compete on price with Jio. (Link)

#general: Fidelity Joins Growing Field of Automated Financial Advice – The New York Times

Fidelity is testing its own automated investing platform, which it is calling Fidelity Go. The move puts the company into head-to
-head competition with so-called robo-adviser start-ups like Betterment and Wealthfront, as well as traditional players like Vanguard and Schwab that recently began offering similar services.

The Fidelity details are listed in a Securities and Exchange Commission filing, and a company phone representative confirmed the existence of the new service, as did a Fidelity spokesman. (Link)

#stocks: Blow for Tata Motors’ defence ambitions

Future infantry combat vehicle contest: Defence ministry rules JLR income not a component of firm’s financial strength. (Link)

#general: Index outlook: Market looks for a foothold

(Link)

#general: Rise in oil consumption hints at likely economic lift-off

A bunch of key barometers of economic health has shown steady improvement in the past months, an encouraging sign that growth may be finally picking up momentum.

Commercial vehicle sales, a key indicator to activity in the economy, have been buoyant of late. While passenger vehicle sales have also been up, consumption of petrol and diesel has surged as crude prices have remained soft. Sales of petrol by volume have been rising for three months in a row, diesel by two and passenger cars. (Link)

#general: F&O volumes plunge after increase in size of minimum contract

Volumes in the derivatives market have seen a sharp dip in November after the market regulator raised the bar for participation in the equity derivatives segment in an attempt to curb retail investor activity in this relatively high-risk segment.

For the month of November so far, the average daily volumes on National Stock Exchange (NSE) have dropped sharply to 3.37 million contracts from 8.78 million contracts in October.

On BSE, the average daily volumes so far in November declined to 0.09 million shares from 0.41 million shares in the previous month. (Link)

#general: SBI declares Vijay Mallya ‘wilful defaulter’, Enforcement Directorate to probe money laundering

Trouble seems to be mounting for Vijay Mallya. State Bank of India – the largest lender to defunct airline Kingfisher has declared the carrier, its promoter Mallya and United Breweries Holdings as “wilful defaulters” after its grievance redressal committee rejected the arguments made by the borrower through its legal representative recently.

The move comes even as the Enforcement Directorate (ED) is set to launch a money laundering probe against Mallya and Kingfisher Airlines. (Link)

#stocks: The Rise and Fall of Subex Founder Subash Menon

On September 27, 2012, two decades after he started the company and one day before his investors were to vote to extend his term as managing director and CEO for another five years, Subash Menon resigned from Subex. He had already stepped down as chairman a few months ago.

It’s normal to reward longtime employees of a company when they leave; and in this case, Menon was the company’s founder too. Yet, he wasn’t eligible for either the separation or the notice period amounts in his employment contract. Subex’s board had in July amended those contracts to first remove the separation payment, and then to prevent a notice period if Menon resigned on his own. (Link)

#general: Tiger Global is on a rampage in India with 18 investments in 2015

“Tiger Global will invest in everything large,” said Nitin Saluja, Co-founder of Chaayos, over a phone conversation post their $5 million series A round from Tiger Global. Chaayos, a chain of tea outlets, became the first ‘offline’ venture that Tiger Global has invested in. Kalyan Krishnamurthy, Managing Director of Tiger Global, joined Chaayos’ board and he also sits on the board of many other high growth startups from India. (Link)

#general: Piramal, Axis Bank invest in Noida realty project

The Piramal Group’s Piramal Fund Management and Axis Bank have co-funded Rs 550 crore in a mixed-use property project of The 3C Company in Noida, an executive in the know has said. This is the largest real estate debt funding deal in the National Capital Region this year.

While the Ajay Piramal-headed group’s arm funded Rs 375 crore in the project, named Delhi One, Axis Bank invested Rs 175 crore which is a structured debt deal, said the executive, who did not want to be identified. (Link)

#general: Cinepolis to have 400 screens operational in India by 2017

Mexican multiplex operator Cinepolis will have 400 screens operational in the country by 2017 and plans to add around 300 more screens in the next seven to
eight years, a company official said.

“We are adding more screens and the total number will go up to 400 by 2017. There is also a healthy pipeline of 300 screens which will take seven to eight years to become operational,” Cinepolis India MD Javier Sotumayor said. (Link)

#general: Bupa acquires additional 23% stake in Max Bupa

Max Bupa Health Insurance (Max Bupa) on Monday announced that its foreign partner Bupa has executed agreements to acquire an additional 23% stake in Max Bupa. 

Bupa will pay around Rs 191 crore to Max India in an all cash transaction, to increase its stake in Max Bupa from 26% to 49%. (Link)

#general: Caught hoarding, Big Bazaar sells tur dal at Rs 100 per kg

Along with traders, retail giant Big Bazaar was also found illegally hoarding foodgrains. District administration seized 23 quintal foodgrains from Big Bazaar, including 11 quintal tur dal. The seized stock was returned after the popular retailer submitted an affidavit that it would sell tur dal at the rate of Rs 100 per kg only. (Link)

#general: Around 14 in fray for two IPL franchises, says BCCI

At least 10 companies have paid Rs.2 lakh each to pick up the so-called invitation to tender, or ITT, documents to bid for the two new teams that will play in the 2016 and 2017 editions of the popular Indian Premier League (IPL) after the suspension of Chennai Super Kings and Rajasthan Royals earlier this year, according to top officials at the Indian cricket board. (Link)

#macronomics: Fed’s Yellen argues for interest rate caution in exchange with Nader

Federal Reserve Chair Janet Yellen on Monday argued for a cautious approach to the pace of interest rises in an unusual exchange with U.S. consumer advocate Ralph Nader.

In a letter to Nader, the Fed chair repeated recent statements that the central bank should only gradually raise interest rates. “An overly aggressive increase in rates … would at undercut the economic expansion, necessitating a lasting return to low interest rates,” Yellen said in the letter.

Nader published an open letter to Yellen on Oct. 30 that asked her to consider the “humble savers” with money in banks and money market accounts who were “frustrated by the Fed’s low rates and melodramatic debate about when to move higher.” (Link)

#stocks: Tata Starbucks generates total revenue of Rs 171.2 crore; 80% jump from previous year

Starbucks, the world’s largest coffee retailer, posted per-store sales that were more than two-and-a-half times higher than its largest rival during its second full year of operations in India, thanks to its premium pricing and locations that attract more customers. While losses have narrowed, profitability remains a challenge, with each store still losing about Rs 60 lakh annually on average. (Link)

#general: E-Tourist visa issuances surge to 56,477 in October compared to 2,705 last year

During the month of October, a total of 56,477 e-Tourist Visa were issued compared to 2,705 during the month of October, 2014 registering a growth of 1987.9%. The government attributed the high growth rate to introduction of e-Tourist Visa for 113 countries as against coverage of earlier Tourist Visa on Arrival scheme for 12 countries.

During January-October, 2015 a total of 2,58,182 tourist arrived on e-Tourist Visa as compared to 21,995 during January-October, 2014 registering a growth of 1073.8% , the government said in a release. (Link1) (Link2)

#backtobasics:

Fibonaccis – The Ultimate Guide To Using Fibonaccis In Your Trading – (Link)

Directional Trend Index (DTI) – DTI was developed by William Blau and published in his book “Momentum, Direction and Divergence”.

To determine the value of the DTI William Blau first calculates a composite momentum from both highs and lows of the last days. In a next step both the composite momentum and the absolute values of the composite momentum are smoothed. The smoothed momentum is then divided by the smoothed absolute momentum
and the result is multiplied with 100.

What happens if it is ban in F&O? How does it affect cash market?

Ban is temporary till positions are cut below the stipulated level. It does not affect cash market but you know which side market is tilting. Also, if you have outstanding positions and stock comes under ban period in F&O, there are penalties from the exchange.

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