- Wealth PMS (50L+)
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:
Pundits sometimes act as if “economic reforms” are a light switch that India’s central government can turn on and off. In reality, the process of reforming the economy is nuanced, involving a diverse set of issues and actors. The following scorecard is a list of twenty-nine big reforms that the Modi government confronted when it took office, and the status of each. Such a list can never be absolutely definitive, and we welcome the feedback of others. We hope this list helps the public understand the choices that are on the table, and that each reform will move at an independent pace. (Link)
Shares of GoPro Inc. are on a three-month bender, and much of the blame can be placed on short sellers.
Shares of GoPro GPRO, -8.60% fell another 6.4% to $21.65 in early trade Friday, after slumping 7.8% on Thursday, pushing the stock below its $24 initial public offering price for the first time. The action-camera company’s shares are down 72% over the last year, while the S&P 500 has traded flat. (Link)
Government today slashed import tariff value on gold and silver to $ 354 per 10 grams and $ 470 per kg respectively, tracking weakness in global markets.
The import tariff value is the base price at which the customs duty is determined to prevent under-invoicing. It is normally revised on a fortnightly basis. (Link)
It is common enough to hear politicians talking about budget cuts and the need to attack subsidies. It’s a little more unusual, however, when those sentiments are being expressed by the kings of the Gulf’s oil-rich emirates, not least because those countries are home to a massive number of Indians.
That’s why it’s alarming to hear the rulers of the United Arab Emirates, Qatar, Kuwait and Oman in the last few weeks warning their citizens about the need to tighten belts. Meanwhile, things look even worse for the alpha male of the pack: The International Monetary Fund has warned that Saudia Arabia could burn through its financial assets in just five years, if oil prices stay as low as they currently are. (Link)
Minister of state for finance Jayant Sinha has been busy implementing plans to deal with some of the pressure points in the economy. In an interview, the former banker discusses the government’s plans in the coming months, including the strategy to deal with reforms. (Link)
How the furniture manufacturing segment grew an astounding 69.9% in September despite slowdown in the real estate sector. (Link)
Fidelity has marked down its investments in startups like Dropbox, Snapchat and Zenefits. Why that could change the way business is done in Silicon Valley. (Link)
In 2009, Anil Kumar was arrested for his role in a lucrative insider-trading ring. That was not his biggest crime. (Link)
More the Merrier Backed by investors, and armed with robust technologies, a raft of online consumer lending portals has mushroomed in the past year. In 2013, there were just two such startups; two years later that number has shot up to 22.
Investors feel that the vacuum left by the traditional banks in terms of not meeting the financial needs of consumers satisfactorily has led to the proliferation of such startups. Financial technology businesses, they contend, are disrupting tradition. (Link)
Most analysts are missing the big picture of the India story which is becoming clearer and clearer by the day. Focussing on quarterly results, small upgrades and downgrades, state elections is taking the focus away from the key feature of the Modi Governments development model which was also summarized very well by Raghuram Rajan a couple of days back when he said “Prime Minister Modi Relying More On Structural Reforms, Less On Fiscal, Monetary Measures To Boost Growth”. (Link)
A year ago Saudi Arabia refused to allow OPEC to try to raise prices by pumping less crude, in the hope that a low price would drive competitors, especially America’s shale-oil producers, out of business. Since then it has used its low cost of production to carve out a bigger slice of the pie. It has fought with Russia and fellow OPEC members to sell oil to China. Seth Kleinman of Citibank says that it has recently sought to displace Russian crude going into refineries in Sweden and Poland, and cut prices across Europe. (Link)
French warplanes laun
ched a ferocious retaliatory assault late Sunday on targets in Raqqa, Syria – the Islamic State’s de facto capital – after coordination with U.S. defense officials who helped with the targeting.
The French Defense Ministry said that 10 aircraft dropped 20 bombs on facilities used by the militant group, which has claimed responsibility for Friday’s terrorist attacks in Paris, striking a command center, a militant-training facility and an arms depot. (Link)
Porinju Veliyath has rained fire and brimstone on all gurus who advise investors to buy “high quality stocks with a moat” at “high P/E”. He has contemptuously referred to these gurus as “big people, fancied guys” and trashed their advice as “the biggest trap”. (Link)
NDA’s loss in Bihar polls is likely to affect its decisions at Centre, especially with respect to GST Bill. The Paris attacks may ramp up geopolitical tension. The rupee could turn more volatile, as and when the US Fed raises the policy rate. (Link)
Asian markets slid Monday after terror attacks in Paris unnerved investors and data showed Japan entered a recession for the second time in two years.
The Nikkei Stock Average fell 1%, South Korea’s Kospi shed 1.1% and Australia’s S&P/ASX 200 slipped 0.8%.
The Hang Seng Index fell 1.4% and the Shanghai Composite Index is flat. The euro weakened 0.6% against the U.S. dollar early Monday, and investors flocked to assets perceived as safe, including gold and the Japanese yen. (Link)
At an event a few months ago in New Delhi, chief economic adviser Arvind Subramanian described the journey of the Indian economy rather pithily when he said that India moved from “socialism with restricted entry” only to embrace “capitalism without exit”. He was simply articulating a long-standing concern on the lack of adequate regulatory apparatus to deal with failed businesses in India. On the parameter of resolving insolvency, India stands at 136 out of 189 countries, according to the Doing Business rankings of the World Bank. (Link)
Following the listing of InterGlobe Aviation (India) on 10 November 2015 and in accordance with FTSE.
Global Equity Index Series Ground Rule section 8.1.3, FTSE announced the changes. (Link)
SpiceJet posted its third straight quarter of net profits, with the announcement of its Q2 results. The airline posted a net profit of INR 23.77 crore, but realised an operational loss of INR 27.91 crore. This loss includes the depreciation and amortisation expense of INR 30.36 crore. The airline has immensely benefitted from lower unit fuel costs which have dropped by 35% to INR 1.17/seat-km, compared to the same quarter last year. Higher load factors at the airline have driven up unit revenues by 7% over the same quarter last year. (Link)
Mahindra & Mahindra has sped past Tata Motors to become largest small commercial vehicle seller in the country, led by its pickup trucks. (Link)
Four companies – Ashok Leyland, Cadila Healthcare, Maruti Suzuki India and Tata Motors – will be added to the prestigious MSCI India index with effect from November 30, while Oil India and DLF are being removed. (Link)
After pulses, rice prices may also shoot up and reach a “boiling point” in the coming months due to depleting stocks and likely fall in its kharif output, according to industry body Assocham.
The report, however, contradicts the current price trend in the market, where wholesale prices of non-basmati prices are ruling down at Rs 25 per kg as against Rs 30 per kg last year. (Link)
Despite deficit rainfall, food grain states Punjab and Haryana have got another bumper paddy crop this year. Both have recorded procurement of over 182 lakh tonnes, much more than last year.
Punjab has recorded higher procurement of 130 lakh tonnes compared to last year’s 118 lakh tonnes, food and supplies department officials said here on Friday. (Link)
Are you an existing mutual fund investor? If YES, then you must have got an email from the fund houses where you have invested to provide some additional information about yourself and about your tax residency related questions in the name of FATCA declaration.
The Securities and Exchange Board of India today passed an interim order barring two promoters of publicly listed entertainment company Pyramid Saimira Theatre Ltd, and 228 others, for allegedly forging a letter and passing it off as a Sebi order in December 2008 to manipulate the company’s stock resulting in substantial losses to investors. (Link)
The Narendra Modi government has begun inter-ministerial consultations to put in place a mechanism and transaction framework to sell loss-making and non-strategic public companies, underscoring its resolve to push ahead with reforms.
A Cabinet note circulated recently has proposed a three-tier mechanism overseen by the cabinet secretary to put strategic sales on the fast track, signalling that the ruling coalition’s recent loss in the Bihar state election won’t stop it from undertaking liberalisation measures that may run into Opposition resistance. (Link)
Apollo Tyres will acquire Germany-based tyre retailer, Reifencom GmbH for 45.6 million euro or nearly Rs 324 crore, the company said on Monday.
“Board of directors at its meeting, held at a shorter notice, on November 16, 2015 have approved the acquisition of Reifencom GmbH through a wholly owned subsidiary of the company,” ApolloTyres said in a statement to the stock exchanges. (Link)
Prime Minister Narendra Modi today favoured raising sugar exports to liquidate surplus stocks because of low domestic demand that has led to a huge cane arrears of over Rs 14,000 crore to farmers.
Modi chaired a meeting of ministers and officials to review issues related to the sugar sector where he called for increasing the ethanol-blending with petrol. (Link)
Over two years, market will deliver 15 percent compounded growth and will give 30 percent returns, Mahesh Nandurkar, Indian strategist at CLSA says adding that the key factor in growth will be capex recovery. (Link)
Deutsche Bank has warned it will lose more than €6bn (£4.4bn) in the third quarter in a record loss.
In a late-night announcement that shocked analysts, Germany’s biggest bank blamed huge impairment charges of €5.8bn for the unexpected losses. Forecasts had been for profits of about €1bn. (Link)
India, Standard Chartered’s biggest profit contributor as recently as 2010, has become a major headache for Chief Executive Officer Bill Winters, who took over from Peter Sands in June. As emerging-market loan losses accelerate, he’s raising money, cutting about 15,000 jobs globally and exiting or restructuring about $100 billion of assets. Standard Chartered has reduced exposure to India by about a fifth. (Link)
Sequoia Capital-backed start-up Hector Beverages Pvt. Ltd said it will spend $10 million to expand capacity at its Mysore plant as it prepares to launch new milk-based beverages such as Thandai, Badam Milk and Chhaas under its flagship brand Paper Boat by March next year.
Hector Beverages raised $30 million in fresh funding in July from existing investor Sequoia Capital and new funds such as Sofina Capital and Hillhouse Capital Management, boosting the company’s valuation to $100 million.(Link)
Over 200 cancer drugs, 186 medicines to treat cardiovascular diseases and 148 stents and cardiac implants will now be available at central government hospitals at prices 50-60% lower than the open market.
The health ministry has launched a programme called AMRIT (Affordable Medicines and Reliable Implants for Treatment), under which the government will run pharmacy retail stores to sell medicines in hospitals like All India Institute of Medical Sciences (AIIMS), Safdarjung Hospital and Ram Manohar Lohia Hospital. (Link)
Robert Shiller and his fellow Nobel laureate George Akerlof, have written Phishing for Phools, about how the sellers of cat food and thousands of other products and services “phish” us into buying things we do not want or need. (Link)
On a conference call with investors on Monday, Infosys chief operating officer (COO) Pravin Rao and newly anointed finance chief MD Ranganath said the company was still facing challenges in key verticals such as energy and telecom. It expects the margins to take a hit and shrink in the second half from the first. (Link)
Let us take a look at the numbers:
Naresh Nambisan’s view on Trading:
Anything you buy, you should be able to manage the trade. Suppose you buy a options for say Rs.10/-, your stop loss Rs.5/-. First lot should be exited for Rs. 15/- which is your original stop loss and second lot should be kept at cost initially and then trailed.
This way you can manage your trade. And try to have minimum 1:3 risk reward trades so that even if you lose 70% of your trades, you still win. But having these rules strictly ingrained and following is important in long run to make dough.
In trading just TA is not enough. And also risk a certain amount of money only on every single trade. If your trade does not comply with that risk, don’t take that trade. Wait for the right risk reward to come to you. Patience is the mantra broadly.
Abhijit Phatak aka AP Pune and Naresh Nambisan on “how are you determining strong stock, what parameters?”
Strong stocks = those which did not fall much when Nifty fell, or those which showed bottoming signs BEFORE Nifty moved up.
One big lesson one learns over the years in trading is – if Nifty is trending up, look for longs in strong stocks, and if Nifty is down, look for shorts in weak stocks.
Abhijit Phatak aka AP Pune and Naresh Nambisan on “A lot of times there is a talk about Europe opening impact – how does it impact – Just the sentiment or does cash move from traders from one market to other swiftly?”
AP – If Europe opens flat, that’s not a problem; but if it opens gap up or down, and a sudden move on either side, that can be a problem here. But all this is seen on our charts too.
NN – Not sure if it does. But whatever Europe or China does, we can’t trade accordingly! So just trust your NF and Scrips charts. Baki sab as AP says “is sprite urf bakwaas : everything is on your chart, trust them and trade them.”
Abhijit Phatak aka AP Pune on Bull & Bear Trend
Characteristic of a bull trend: strong open, drift down, and shoot up in second half
Characteristic of a bear trend: weak open, drift up, and deep fall in second half
Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (Wiley Trading) – (Link)
Demystifying “Open Interest” and Securities in “Ban Period” – (Link)