China Has Gone Nuts Defending Its Stock Market

There comes a time in every country when you find the stock markets tanking and every regulator decides it’s their responsibility to bring the markets back up. This time it’s China. After their stock market fell 30% in less than a month, regulators have begun to see the fall as a huge problem. Even though they didn’t complain on the way up:

image

The fall is probably a result of way too much leverage driving the markets. Chinese investors – and they are a majority, with only 3% foreign participation in mainland indexes – borrowed up the wazoo to speculate in Chinese stocks, which took the markets up huge. At one time, there was an IPO that went up 10% limit, for every single trading day for nearly two months. That’s a whopping gazillion % return […]

By |July 6th, 2015|Categories: China|1 Comment

Why I Think Markets Will Go UP When Greece Says No

Greece has voted. But we don’t know yet what they’ve voted because the words that will echo through news channels and websites for the rest of the evening will be OXI and NAI, No and Yes respectively in what is literally Greek to us. We bring to you a Q&A in the format of a person who only cares about what happens if the vote goes one way or the other.

What happens if Greece Votes Yes?

Yes means this: Dear Greek Government, Get off your high horse. We will take that shitty deal. Because we don’t have any money and the banks are shut and the ATMs are dry. The pensioners are waiting in long lines and I would like nothing more than to see them back inside their houses. Oh, I don’t care at all that 50% of Youth are unemployed and the resulting austerity in this deal will keep them that way, and probably add to elderly […]

By |July 5th, 2015|Categories: Greece|3 Comments

Optionalysis: Put-Call Ratio and MA20 Update – No Trade, But Signs of Peaking

Optionalysis Header

[…]

By |July 4th, 2015|Categories: Optionalysis, Premium|0 Comments

RBI Board Meeting: FII Limits Could Be Raised, NBFCs Might Aggregate Financial Data

Foreign Investor limits on Indian Government bonds might be raised, according to Raghuram Rajan, the RBI Governor, the Hindu reported. But this will be done after consulting SEBI and there’s hardly any time frame provided.

Currently, RBI has all sorts of restrictions on foreign investments:

  • They can’t buy more than $25 billion worth of government bonds
  • And that too only with 3 year residual maturity (so no short term paper)
  • And then also, when holdings reach 90% of the limit, there are auctions in which they have to bid to buy allocations for the remaining
  • They’ve paid as much as 0.8% for such limits (which means their effective yield comes down correspondingly)
  • And then they have $5bn as a special limit for certain kinds of investors (sovereign wealth funds etc)
  • All these limits are in dollars, but converted to rupees at a rate that is historical. Currently they use about Rs. 50 to a dollar so […]
By |July 4th, 2015|Categories: RBI|0 Comments

The Big Mo Corner: Risk, Reward and (Old) Age

CapM Premium Header

The Big Mo Corner for Capital Mind Premium by Mohit Satyanand. 

[…]

By |July 4th, 2015|Categories: BigMoCorner, Premium, The Big Mo|0 Comments

Nifty P/E Close To Extremes While EPS Growth at Lowest in 5 Years, Before July Quarter Results

Indian stock market P/E ratio zooms upward, while earnings growth has been horrible for the Nifty. Here’s the standalone metric:

image

We’ve added two metrics here – one is an area coverted by green lines, a one standard deviation from the average (which is about 19). Most of the time the Nifty is within the 1 SD range.

The orange dotted lines is a 2 standard deviation move – that is, a much higher extreme. (beyond 2SD is noted at about 5% of the observations).

We are currently at about 23.4 – probably a little bit higher today. The 25 P/E number is a good 500 points away – the Nifty needs to be beyond 9000.

But Earnings Growth Sucks

The last two times we crossed 23 P/E, our Nifty earnings were growing […]

By |July 3rd, 2015|Categories: Charts, Nifty|Tags: |3 Comments

Premium: A Player That Has More Cash Than Its Entire Market Cap, Shows Signs of Breaking Out

CapM Premium Header

[…]

By |July 3rd, 2015|Categories: Premium|0 Comments

Reads: How IndiaPlaza Went Down and Out

A great read by Ashish Mishra, on the failure of an Indian e-commerce firm, perhaps the first big one, Indiaplaza.

Starting 2013, the Indiaplaza story went further downhill. One miserable day. After another. People started quitting, debts piled up and Vaitheeswaran found himself cornered. He had knocked on every door he knew and returned empty-handed. Then came the fateful Monday, 12 August 2013, when Indiaplaza vacated its office. But Vaitheeswaran still had some fight left in him. He hit the road again to see if anyone would be interested in buying whatever remained of Indiaplaza—the brand name, software solutions and even the customer data.

Again, there were no buyers.

Indiaplaza, earlier Fabmall, remains close to my heart as one of the first startups ever. I remember when I bought a book from them, and they sent me the wrong one. I’d paid by credit card, and I called up the company, and surprisingly, a co-founder answered. […]

By |July 3rd, 2015|Categories: Startups|3 Comments

Macronomics: China’s Stock Market Drops Viciously, and What It Might Mean For India

Macronomics Header

The Shanghai market has fallen over 20% just from 12th June, and the authorities are scared. According to Bloomberg, Chinese authorities have responded to the fall by:

[…]

By |July 2nd, 2015|Categories: Macronomics, Premium|1 Comment

Be Sceptical: Mantri Developers Offers 100% "Assured" Returns in 3 Years, Yet Again, While SEBI and RBI Watch

1Mantri Developers is at it again. They’re offering 100% assured returns on your “investment”, and SEBI/RBI do absolutely nothing! In fact, they even compare their offered guaranteed returns to things like equities and mutual funds!

From their web site:

image

Sachin tweets this incredible image:

image 

Note: Someone forgot their mathematics. If you double your money in 3 years, the rate of return is 26%, not 33%.

Plus, the “safety” of your principal is exactly what here? What

Remember, Mantri did it again last year : Guaranteeing 100% returns on a property in Bangalore.

According to @tarun […]

By |July 2nd, 2015|Categories: RBI, RealEstate, SEBI|Tags: |6 Comments

Macronomics: Government Bonds See Losses of 90,000 cr. in the June Quarter

We write about how the fall in government bond values during the June quarter could affect Banks' performances. This post is for Capital Mind Premium subscribers only.
By |July 1st, 2015|Categories: Macronomics, Premium|0 Comments

Chart: Foreign Investors Sell More Equity in Jun 2014, But Buy Debt

FIIs continue to sell equity as they sold about Rs. 3,300 cr. in June in equity. However, they have been net purchasers of debt with about Rs. 1,700 cr. worth of purchased positions.

image

While they have sold equity positions in May and June, it’s still a big positive for the whole year. And in Debt too:

image

Foreign investments might have slowed but it looks like domestic investments have come to meet them more than half way. In the near term there are two fears that will keep foreign money tentative:

By |July 1st, 2015|Categories: Charts, FII|3 Comments

Chart: Nifty Ends a Flat June to make it a Flat Year To Date

We’re done with half the year and the Nifty has returned….next to nothing. With a 1% return in 2015 so far, it’s almost been like you could have sold in January and gone away:

 

image

It’s just the first half though, and the end of the year could be substantially different:

image

Just a monthly summary.

By |July 1st, 2015|Categories: Nifty|Tags: |1 Comment

Portfolio: And Two More Additions To The Momentum Stocks

We add 2 stocks to the CAPM Portfolio based on Outlier analysis. This post is for Capital Mind Premium subscribers only.
By |July 1st, 2015|Categories: CAPM Portfolio, Premium|0 Comments