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On Slack: Havells misadventure, New Aviation policy, IPO market in 2015, Economics of GST, Mother of all bull markets, New High – New Low Index, Suckers Index 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: Havells India’s European misadventure ends well

Havells India Ltd has done well to end its European misadventure without any financial loss. Investors are enthused that the company has finally got rid of the under performing asset, and can now focus on its promising India business.

Havells’s market capitalization rose by around Rs.1,400 crore on Thursday, even higher than the Rs.1,072 crore consideration it will receive for selling 80% of its stake in the overseas business. Investors can’t be blamed—there’s much going in the company’s favour with this deal. (Link)

#general: Ramakrishnan T S: Why high-speed rail is viable

Given that it is a low-energy, low-emission mode of transportation that can reduce costs significantly, India should not miss the opportunity to develop high-speed rail. (Link)

#general: Glaring errors in India’s new aviation policy

A total of Rs 30,000 crore was allocated for five years to Air India by the United Progressive Alliance government in its second term, notes Anjuli Bhargava. (Link)

#general: Facebook service aimed at professionals to launch in coming months

Facebook at Work, Facebook Inc’s (FB.O) professional version of its social network, is expected to launch in the coming months, after spending a year in tests, a company executive said.

The new service, geared towards workplace collaboration, is nearly identical to its ubiquitous social network, with a scrolling news “feed”, “likes” and a chat service. (Link)

#general: Investors from Mumbai, Ahmedabad dominate IPO market in 2015

Individuals from Mumbai and Ahmedabad account for more than half of the funds garnered from retail investors in IPOs so far in 2015, while the national capital has contributed less than 6 per cent.

Together, Mumbai and Ahmedabad contributed over 54 per cent or about Rs 2,200 crore in terms of funds garnered by the IPOs from retail investors, according to an analysis of 18 initial public offerings (IPOs) that hit the capital markets in 2015. (Link)

#general: Amazon’s instant gratification service aims to disrupt delivery

Now Amazon has set its sights on a new goal — taking its logistics technology beyond the warehouse and direct to customers’ doors, as the company pushes into same-day and one-hour delivery.

Amazon has been investing heavily in the logistics needed to extend all the way through its delivery chain. It is buying its own truck trailers, hiring on-demand delivery workers and building a new type of delivery hub — with technology that has thus far been kept under wraps — in major cities from Seattle to New York. (Link)

#macronomics: India to save Rs 2 lakh cr on crude imports as oil hits 11-year low

With the Indian basket of crude oil price plummeting to an 11-year-low of $37.34 a barrel, the country is set to save Rs 2.14 lakh crore on its oil import bill alone in FY16, according to the oil ministry. This is in addition to the benefits to the government in the form of lower petroleum subsidy and expected cuts in fuel prices for consumers.

The price of the basket of crude that India buys, came down to $37.34 (Rs 2,494) a barrel on Tuesday, on an exchange rate of Rs 66.8 a dollar, a 3.2 per cent decline over Monday’s price of $38.61 a barrel. (Link)

#macronomics: Here’s Why The US Dollar Is Peaking

 (Link)

#macronomics: The economics of GST, hostage to politics

The complicated political bargaining that has held up the introduction of the goods and services tax (GST) as well as the arcane discussions about its revenue-neutral rate sometimes draws attention away from the big picture argument about why the Indian indirect tax system needs to be overhauled.

A new paper released this week by the finance ministry on the GST structure does a very good job of explaining the current view on some of the more technical parts of the debate. But it also shows how several years of political bargaining has diluted the original design of what a 2009 report by the task force headed by Arbind Modi repeatedly referred to as a flawless GST. (Link)

#stocks: Banks and the bloated debt of Amtek Auto: Part II

Nothing can substitute close monitoring of the businesses of a borrower. In the case of Amtek Auto, bankers did not do that. (Link)

#general: Discount broking firm Zerodha throws open its Kite Connect to financial technology startups

City-based discount broking firm Zerodha has decided to throw open its application programming interface (API), Kite Connect, to financial technology startups.

Kite Connect offers capabilities required to build an investment and trading platform. Startups will get to use the API free of charge, but those that build a large user base will be asked to pay a fee. The offering is similar to what Robinhood — the tech-driven brokerage backed by Google Ventures — has done in the United States. (Link)

#general: What is GST?

 (Link)

#stocks: CCI seeks public comments on Rs. 500 cr PVR-DT Cinemas deal

After seeking public comments in mega merger transactions including the around $40 billion Holcim-Lafarge deal and the $4 billion Sun Pharma-Ranbaxy deal, fair trade regulator Competition Commission of India (CCI) has now decided to carry out a similar public scrutiny exercise on the movie theatre chain PVR’s Rs.500-crore acquisition of the cinema exhibition business of DLF Utilities Ltd., DT Cinemas.

According to an official statement, CCI was of the prima facie opinion that the proposed combination (the acquisition of DT Cinemas by PVR Ltd.) is likely to have an appreciable adverse effect on competition. (Link)

#stocks: Stakeholders Empowerment Service opposes Sterlite Technologies’ plan to demerge power business

Mumbai-based proxy advisory firm Stakeholders Empowerment Service (SES) has alleged that demerging power transmission business into SPTL and not list the company has literally denied shareholders their right to realise fair market value of their equity shares and indirectly forced them to opt for redeemable shares thus, making the demerged company fully-owned by the promoters. (Link)

#general: What H-1B Visas Would Look Like If All the Legislation to Curb Their Use Is Passed

 (Link)

#general: Mother of all bull markets ahead of us: Jhunjhunwala

Ace investor Rakesh Jhunjhunwala on Tuesday said the domestic equity market is nearing its bottom and a strong upturn is around the corner. “The upturn will get better with time,” he said in an exclusive interview with ET Now.

“I believe we are in a big bull market and the mother of all bull markets is ahead of us,” he said. “India is poised to have the best macros among emerging markets in 2016. Low commodity prices will help India in a big way and this benefit will be far greater than the sovereign fund impact. (Link)

#macronomics: Fitch Warns Of “Historic Junk Milestone” As US Defaults Surge

Despite the rear-view-mirror-gazing optimists proclamations that default rates have been low (which matters not one jot when pricing the future expectations of default into corporate bond cash flows), Fitch just released its forecast for 2016 defaults and notes that more than $5.5 billion of December defaults has increased the trailing 12-month default rate to 3.3% from 3% at the end of November, marking the 13th consecutive month that defaulted volume exceeded $1.5 billion, closing in on the 14-month run seen in 2008-2009. (Link)

#stocks: ICICI Bank shares hit 19-month low

Shares of ICICI Bank Ltd, India’s largest private sector lender by assets, hit a 19-month low on Tuesday, on persisting concerns over asset quality in the banking sector. Continued selling in Indian markets by foreign investors —who hold a significant stake in ICICI Bank—too has depressed the stock.

ICICI Bank fell as much as 2.4% in morning trade and touched an intra-day low of Rs.242.95, a level last seen on 5 May 2014. The stock has fallen during 10 of the last 11 trading sessions. Since 30 November, ICICI Bank stock is down 11% and in the year so far, it is down 31%. (Link)

#general: US town rejects solar panels amid fears they ‘suck up all the energy from the sun’

A US town has rejected a proposal for a solar farm following public concerns. Members of the public in Woodland, North Carolina, expressed their fear and mistrust at the proposal to allow Strata Solar Company to build a solar farm off Highway 258.

During the Woodland Town Council meeting, one local man, Bobby Mann, said solar farms would suck up all the energy from the sun and businesses would not go to Woodland, the Roanoke-Chowan News Herald reported. (Link)

#general: GST draft model law to be finalised in a month

“We are also working on draft GST model law. The draft which has been put up by someone in public domain is not the official one. In fact we are still working on it.

“The draft will take one more month and once that is done, we will be putting it in public domain and the similar process of consultation with trade bodies will be done”, Special Secretary in the Ministry of Finance Rashmi Verma said at an event organised by industry body Assocham. (Link)

#backtobasics:

Basis of Allocation/Basis of Allotment – (Link

Debunking “The Big Short”: How Michael Lewis Turned the Real Villains of the Crisis into Heros – (Link)

Determining Expectancy in Your Trading – (Link)

Guidelines to Combat Making Options Trading Mistakes – (Link)

How To Trade With Price Action – (Link)

Howard Marks: “The Most Important Thing – Origins and Inspirations” – (Link)

Looking Inside The Inside Bar For Day Trading – (Link)

Decay

Let’s Talk In Percentages – (Link)

Market Profile – Basic Concept N Terminology – (Link)

N
ew High – New Low Index –
(Link

Suckers Index = Ratio of Retail’s Long Index Puts to Long Index Calls. If suckers index goes up that means Retail bought more index puts than index calls and vice versa. Sucker’s Index is a sentient indicator of Retail segment speculating on Nifty. They buy more puts than call and market goes up.

Suckers

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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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