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General

On Slack: Corporate Bonds, Aircel-Maxis-ED, RE Himalayan, New gold rule and more….

The Slack Discussions

The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there (Premium subscribers only), pop us a note by replying to this email.

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

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#general-from the past: Buying bonds from secondary market: Go through the checklist

(Link) (Link)

#general: Government may ask banks for at least $295 million in back-taxes

Authorities are demanding that banks pay taxes on services they claim were rendered to customers who maintained accounts above minimum balances. (Link)

#general: Aircel-Maxis case: ED ups the ante on Marans

The Enforcement Directorate has decided to up the ante against former telecom minister, Dayanidhi Maran in connection with the Aircel-Maxis case. The ED which probed the money laundering angle to this case said funds to the tune of Rs 742.58 crore had been generated illegally while also adding that the accused had participated in getting the proceeds through some Mauritius based entities. (Link)

#general: Royal Enfield Himalayan coming to India in March, likely to be priced at Rs2 lakh

The Royal Enfield Himalayan, a 410 cc bike tailored for mountain motorcycling, has been built on an entirely new engine platform. (Link)

#general: New gold rule backfires, boosts unofficial trade

A rule forcing buyers of high-value jewellery to disclose their tax code – has boosted unofficial trading in the world’s second-biggest gold consumer, industry experts say, rather than promote transparency and dent demand.

If the rule does fail, gold inflows will continue unabated, flying in the face of Prime Minister Narendra Modi’s efforts to curb costly imports and stop the metal from being used to hide billions of dollars of undeclared “black money”.  (Link)

#general: Realty players demand below nine per cent interest rates for home loans

CREDAI, the apex body of property developers, today expressed disappointment over the RBI’s decision to keep key policy rates unchanged and demanded that interest rates on home loans should be brought down to below 9 per cent to boost housing demand.

“We are very disappointed. We were expecting a 25 basis points reduction in the repo rate,” CREDAI President Getamber Anand said. (Link)

#general: India’s SEZs need top-class facilities, not tax breaks

(Link)

#macronomics: Private Chinese Company to pull out of Rosneft fuel oil supply deal

hina’s Fortone Group is calling off a deal to buy about $680 million of fuel oil from Russian oil major Rosneft, anticipating heavy losses from falling oil prices and weak Chinese demand, a source with knowledge of the matter said.

The move would mark another soured oil deal involving a private Chinese company after Baota Petrochemical Group failed to secure a letter of credit for two crude cargoes, representing a further blow to Beijing’s moves to open its oil market. (Link)

#macronomics: Flood of Oil Asset Write-downs Seen across Asia on Crude Rout

Investors in Asian oil and gas companies should prepare for a wave of write-downs after a collapse in crude prices.

CNOOC Ltd., Santos Ltd. and Inpex Corp. are among explorers and producers that may report full-year net losses because of write-downs that may be equal to as much as 10 percent of book value, analysts at Sanford C. Bernstein & Co. in Hong Kong wrote in a report Tuesday.(Link)

#macronomics: Which oil nation will need bailing out next?

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#general: Delhi Auto Expo 2016 Begins with Launch of Maruti Suzuki Brezza

The Expo that every automobile enthusiast has been waiting for, after the last one held two years ago, is finally here. It began with the launch of the much anticipated Maruti Suzuki’s compact SUV Vitara Brezza. (Link)

#macronomics-from the past: Who’s afraid of cheap oil?

Low energy prices ought to be a shot in the arm for the economy. Think again – (Link)

#macronomics-from the past: Adjusting the taps on oil price

(Link)

#forex: January seasonal trades #3: Glitter with the gold bugs

We look at seasonal patterns in markets in January and reveal three top seasonal trends for the month. (Link)

#forex: January 2016 forex seasonal trade #2: A glittering start to the year

Gold shines in January. Gold has declined for three straight years, from the lofty heights of $1700 at the start of 2013 down to $1060 today. But in the last four years, it’s been a different story in January as gold has gained an average of 8.39% to start the year. (Link)

#general: Leewards of Davos and Delhi

The world may be looking at India. But two years of drought are taking their toll on village economies, precipitating large-scale migration. (Link)

#general: Musk denies ‘super-rude’ client his Tesla

If you
criticize a company online, you normally get an apologetic response via Twitter. But that wasn’t the case for one Tesla customer who got his order personally cancelled by chief executive Elon Musk after the company was slammed in a blog post. (Link)

#options: Does Selling Option Premium Give You an Edge?

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#general: Private payrolls up 205K in January vs. 195K est.: ADP/Moody’s

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#general: Fed’s Dudley: Conditions tighter than Dec, would weigh on FOMC: Report

(Link)

#general: Rs.5,000 crore to be infused in state-run banks in Q4: Official

The government will infuse around Rs.5,000 crore into state-run banks in the fourth quarter ending March 2016 to strengthen their balance sheets, a senior official said on Wednesday.

“As committed, banks will get infusion of funds in the fourth quarter of this fiscal. Banks will get about Rs.5,000 crore,” Financial Services secretary Anjuly Chib Duggal told reporters on the sidelines of an event here. (Link)

#general-from the past: Banks staring at Rs 6000-crore writeoff on loans to debt-ridden Kingfisher Airlines

Banks are staring at a possible Rs 6,000-crore writeoff on loans to Kingfisher Airlines, the biggest writeoff in Indian corporate history, as the continuing delay in resumption of services means even vulture funds are unlikely to invest in the airline.

Lenders, which have been expecting promoter Vijay Mallya to bring in equity funds for more than a year now, are beginning to reconcile to the fact that chances of an equity investor coming forward is remote while the airline’s troubles are compounding. (Link)

#general: US January ISM nonmanufacturing at 53.5 vs 55.1 expected

The U.S. economy’s service sector expanded in January but at a slower pace than the previous month, according to an industry report released Wednesday.

The Institute for Supply Management (ISM) said its index of non-manufacturing activity fell to 53.5 from 55.8 the month before. The reading was below expectations of 55.1 from a Reuters poll of 73 economists. (Link)

#general: Yahoo for Sale, Says Yahoo, Finally Admitting the Obvious (Also Q4 Results!)

Yahoo chairman Maynard Webb: “The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.” (Link)

#general: Time machine: Infosys to build tallest free-standing clock tower

Software giant Infosys is all set to build the world’s tallest free-standing clock tower at its 345-acre global education centre in Mysuru, a site it proudly claims as the world’s biggest corporate university, in apparent deference to founder and former chairman NR Narayana Murthy’s wishes. (Link)

#general: Oil may rally to $50 raising demand for raw materials

Europe’s largest publicly traded asset manager is calling the bottom for oil and sees a rebound in prices as one of the spurs that may start a new bull cycle in commodities. Schroders says the oil price could rally almost two-thirds to as high as $50 a barrel in a few months as a slump to a 12-year low means producers will have to cut output. That should encourage a wave of retail investors to return to raw materials, according to Geoff Blanning, head of commodities at Schroders. (Link)

#general: Are you financially literate?

S&P’s survey finds that more than 70% Indians fare badly in financial literacy. (Link)

#stocks: Suzlon unit SE Forge exits from debt restructuring plan

Renewable energy player Suzlon Group said its wholly-owned subsidiary, SE Forge Ltd (SEFL), has exited the Corporate Debt Restructuring plan. “SE Forge Limited (SEFL) has exited the Corporate Debt Restructuring (CDR).

Separately, the rating agency CARE has also assigned investment grade ratings, a BBB- rating for its long term bank facilities (including working capital of Rs 392.65 crore) and A3 for its short term bank facilities (Rs 96 crore),” Suzlon Group said in a press release. (Link)

#general: 10-year data shows Sensex in buy zone, but don’t put all eggs in one basket

The S&P BSE Sensex has plunged over 7 per cent so far in 2016, and about 17 per cent in last 12 months. This correction has made valuations a lot more attractive in terms of PE multiple, which is now at 18.5 times, which is what it was in 2014 before the Modi wave started.(Link)

#general: Indian airlines may face headwinds on profitability in FY17

Increasing capacity, pricing pressure and possible cost increases may hurt profit at airlines, according to a sector outlook report by Capa India. (Link)

#general: Bottom in Precious Metals???

There are some signs that the 4-plus year bear trend in the precious metal markets is coming to an end. (Link)

#general: Why Microfinance is becoming a Bad Word All over Again

Inadequate regulation, coupled with the increasing tendency for women to borrow money for consumption rather than income generation is leading to mounting indebtedness in eastern UP and Bihar, and even suicides. (Link)

#general: WhatsApp group chat limit extended to 256 people

WhatsApp has released an update that increases the number of people you can have in a group chat. Before today, the messaging service limited you to 100 people, but now that has more than doubled to 256. (Link)

#general: A Bottom for Hong Kong?

As Hong Kong stocks slip deeper into a bear market, there are signs the rout is overdone. The Hang Seng Index, which has dropped about 22 percent in the past 12 months, is now the cheapest in Asia by dividend yield and price/earnings ratio. (Link)

#general: Indian airlines’ 2015 annual review – IndiGo, Vistara, and Spicejet the leaders

An analysis of the DGCA’s data on domestic air travel shows some interesting and contradicting results. The biggest airline by number of passengers is IndiGo. The most punctual airline is Vistara. Spicejet had its aircraft filled the most, but it is also the leader in passenger complaints. The most reliable is IndiGo which had the fewest flight cancellations.(Link)

#general: Obama to propose $10-a-barrel oil tax to fund rail and highway projects

President Obama is proposing a $10-a-barrel oil tax, phased in over five years, to pay for a variety of transportation initiatives, including new rail corridors, highway projects, pilot projects for self-driving cars and other technologies it said fall under the goal of a “clean transportation” system. (Link)

#general: Public Sector Banks – Will History Repeat Itself?

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#macronomics: No Respite for the Oil Market: Saudi Arabia Cuts Prices

Saudi Arabia on Thursday cut prices for its best-quality crude oil destined for customers in Europe and Asia amid uncertainty about whether the Organization of the Petroleum Exporting Countries will meet to discuss action to raise oil prices.

The move to lower prices would help the world’s largest exporter of crude defend its most lucrative markets against encroachment from rival producers such as Iran, which is ramping up its output now that Western sanctions have been lifted. (Link)

#general: Wooing the British: Eicher Motors’ Siddhartha Lal shifts base to London

The definition of boredom, according to Siddhartha Lal, is doing the same thing for too long. Which is why when he got a chance to shift base from Delhi to London, with his family, there was no hesitation. Lal, CEO of Eicher Motors, the manufacturer of Royal Enfield motorcycles, moved in August last year, primarily for professional reasons. (Link)

#backtobasics:

Backtesting in Excel – Link

Growth and Trend: A Simple, Powerful Technique for Timing the Stock MarketLink

How high can Nifty go in 2015? Here’s the math – Link

LearnTA: BackTesting a Systematic Trading StrategyLink

Musings on MarketsLink

What is Volatility – Link

#recommended-readings:

The Definitive Guide to Point and Figure: A Comprehensive Guide to the Theory and Practical Use of the Point and Figure Charting MethodLink

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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.