CNX 500 Chart: P/E at Close To All Time Highs, EPS Growth Falls to 1.64%

After a great response to our post on the Nifty P/E and EPS growth yesterday, we’ve been requested for a similar post on the CNX 500. This is a larger index so it’s more “broad” as a representation.

And it’s even worse on performance. (Remember, the Nifty EPS Growth was 2.77%)

The P/E ratio of the CNX 500 is at 24.3. This is very close to all time highs. And the EPS growth is an abysmal 1.64%.

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The only good thing is that was about this bad last year around March, after which it moved back up substantially till December. Post Jan 2015, as the results of the December quarter trickled in, EPS growth has been falling and now, it’s just looking to fall below zero again.

For the CNX 500, […]

By |May 21st, 2015|Categories: ChartOfTheDay|Tags: , |2 Comments

IMPS Volumes Go Up 5x In A Year, We Think This Will Be Huge

We’ve written about IMPS – India’s Instant Payment Service – in the past. In 2011, I made an “instant” payment to my friend Shyam. I hit send on my machine and it was on his netbanking immediately – and this is between two different banks!

IMPS has changed substantially. First, more banks offer it now. There are 84 banks that offer it, versus a handful in 2011.

Second, the concept has expanded. From the basic structure of using a “Mobile Identifier” or MMID, which you had to get from your bank, you can now use IMPS to transfer to any other bank account, using the IFSC Code and Account number.

This is brilliant. I’ve been paying my household help using this concept. The money is transferred instantly, so they can see the money in the account immediately – if they are at an ATM, they can get the balance right there and then.

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By |May 21st, 2015|Categories: Banks|Tags: |7 Comments

Premium: KPR Mill Plans a 60% Capacity Expansion, Grows Profits 21%

This is a post sent to Capital Mind Premium subscribers, a result analysis of a portfolio company.
By |May 21st, 2015|Categories: Premium|Tags: |0 Comments

Interviewed at ET Now: On Splitting Airtel, The Upgrade of Persistent Systems and The Bank EPS Push

I was interviewed on ET Now Today, and here are the snippets. Plus, clarifications

Splitting Airtel’s business a good idea, but may hurt Indian shareholders

I believe that splitting Airtel’s business into the Indian and African units is a good idea, but it’s unlikely to happen because of the debt overhang.

Therefore, it would be seen that will the lenders agree on creating a new entity and pass on most of the debt to it. That would be difficult to push. Even if the telecom operator engineers a split, it might have to end up taking a lot more debt on the Indian entity and reduce the debt on the African entity. That would not be good for Indian shareholders as the debt was essentially taken to buy the African business.

In that context, I do not see a possibility of this coming in soon. If such a scenario comes, it will have a one-time hit […]

By |May 20th, 2015|Categories: Banks, Bharti, Video|Tags: , , |6 Comments

The Gold Monetization Scheme: The What, The How and The Capital Mind View

The government has released Draft Guidelines for the new Gold Monetization Scheme.

In Budget2015,  Jaitley had mentioned this. Essentially you can deposit gold with banks and they’ll give you interest (in Gold!) of something like 1% a year, and you are expected to rush to the nearest bank and dump all that yellow metal you have, and save India tons of money in valuable foreign exchange because we import gold like crazy.

The contours of the scheme are in. They’re yet to be finalized, but at least we have something.

Here’s the Process.

You don’t go to a bank. This might sound a little stupid, but bear with us please.

You go to a Purity Testing Center, called a Hallmarking Center. These guys tell you the “genuine” nature of your gold. You give them the gold, they do a prelim test on an XRF machine, and tell you approximate values of pure gold […]

By |May 20th, 2015|Categories: Gold|Tags: |9 Comments

We Have To Free The Rupee Because There Is No Other Choice, Says RBI ED

G. Padmanathan, ED at RBI, spoke about the concept of Rupee convertibility recently. He mentioned a lot of things against making the rupee “capital account convertible”. A concept that typically means foreigners can buy Indian assets and Indians can buy foreign assets without any control. He talks about the upsides – that everyone else is doing it, that it facilitates free trade, forces a country to have better economic policies and lower deficits etc.

Capital Mind‘s view on this is clear – we need capital account convertibility now. In fact, we needed it yesterday.

His objections, or what he calls “negatives”, of such convertibility are:

  • opening up the currency doesn’t necessarily mean money flows to increased productivity as it can even be things like lower taxes. (Our view: That’s what you kept taxes low for, in the first place, to attract investment to something specific. This is not an excuse.)
  • There’s no evidence that opening up the […]
By |May 19th, 2015|Categories: RBI|Tags: |6 Comments

Chart: Nifty EPS Growth at 2.77% Even as P/E Moves To Dangerous Highs

The Nifty Price to Earnings Ratio is at 22+ now. While at the same time the last one year’s EPS growth has fallen to a low of 2.77%!

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It hasn’t been this low since 2010. And it’s not improved even after replacing DLF and Jindal Steel with Yes Bank and Idea (both of which had awesome results) in the March quarter.

Okay, forget one year growth. What about 5 year compounded EPS growth? Huh? That will show you, you silly Capital Mind Fellows.

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Not really.

Markets have been pricing very very high EPS growth, relative to reality, we think. That party could continue of […]

By |May 19th, 2015|Categories: Nifty|Tags: |3 Comments

Macronomics: Three Important Charts – Nifty Results Suck, Indian Trade Contracts, FIIs Still Leaving

We write about the Nifty companies' results so far, how FIIs have behaved in the last few days and more. This post is for Capital Mind Premium subscribers only.
By |May 18th, 2015|Categories: Premium|Tags: |0 Comments

Rising Yield Impact: Bond Auction Flops, Primary Dealers Have to Underwrite 2,600 cr. of 20 and 30 yr Bonds

After the cancellation of the 364 day T-Bill auction on Wednesday, we have further drama in bond markets. The 20 and 30 year bonds, auctioned today for 3,000 cr. each, have failed to get enough bids (or, the RBI didn’t want the government to pay that kind of interest). They have thus devolved on the underwriters, who will have to buy these bonds and find other people to sell them to.

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Around Rs. 2,600 cr. of bond have devolved. Which makes it the first “devolving” auction in FY 2016.

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By |May 15th, 2015|Categories: Bonds, RBI|Tags: |0 Comments

Job Post: UI/UX Developer for our Upcoming Snap Analytics Platform

Capital Mind provides brilliant financial market insights and Analytics to investors and traders in Indian markets. We are looking for an awesome person to join us as our UI/UX developer.

Location: Bangalore. (We’re in Koramangala)

You will be responsible for:

  • Building our “Capital Mind Snap” web analytics product, specifically the front-end to our proprietary data which is currently on Angular/Bootstrap
  • Preparing html/css layouts of our automated Email product
  • Using our backend APIs to source and process data
  • Developing great visualizations of market data through interactive charts and/or javascript tools like D3
  • Working directly with our CTO and CEO

Skills you will have:

  • Good and deep knowledge of HTML/CSS and Javascript frameworks like JQuery and/or Angular. 
  • CSS elements and layouts. Colour combinations, fonts, colours etc. would be a huge plus, as would familiarity with image editing
  • JavaScript modules: Bootstrap, Angular, Jquery, RequireJS, Jquery-UI- Data/Chart JS modules : Eg. Amcharts, D3, DataTable, stockcharts
  • Command line tools: npm, nodejs, grunt
  • Server software: Apache, Nginx, Monitoring Tools
  • Backup / Repository tools : GIT, SVN

What we can provide:

By |May 15th, 2015|Categories: General|Tags: |5 Comments

Portfolio: Yet Another Textile Company In The Limelight

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By |May 14th, 2015|Categories: Premium|Tags: |0 Comments

Optionalysis: Yet Another MA20 Signal Shows Up, Take a Careful Option Position

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By |May 14th, 2015|Categories: Premium|Tags: |0 Comments

What Happened With The 364 Day T-Bill on Wednesday?

Okay, so hardly anyone notices this stuff.

The RBI keeps holding auctions of T-Bills – or Treasury Bills – every week. These are notes for government borrowing that mature within a year. They are traded on the wholesale markets, typically by banks, insurers and mutual funds.

Every week,the RBI auctions 14,000 cr. of T-Bills (in the first half of this financial year). There’s a 91 day T-Bill every week (matures 91 days after issue) for about 8,000 cr. That went through at 7.97%, higher than last week’s 7.85%. This auction got “oversubscribed” by about 7,500 cr. (see auction result). Excess bids of the “non competitive” variety are usually placed by states to park their excess cash. This is also not significantly different from what’s been happening recently.

However the 364 day T-Bill, which had an auction of Rs. 6,000 cr. on Wednesday, seems to have been cancelled.

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By |May 14th, 2015|Categories: FixedIncome, RBI|Tags: |6 Comments

Chart: The Nifty Hasn’t Kept Pace With Inflation Since 2008

At Capital Mind we often do off-beat analysis of the markets. One of the things we do often, perhaps not often enough, is the concept of inflation adjusted returns. If you invested in the Nifty and it went up 10%, but inflation was 10% too, what would your “real return” be? Answer: zero. You haven’t increased your purchasing power one little bit. That means your inflation adjusted return is zero.

But in this we have to understand nuances. When you invest in the Nifty, you don’t realize that you actually get dividends as well. These add to your return, and can be significant. Therefore we have to consider another adjustment for dividends as well, and to keep things simple, let’s just assume that dividends are reinvested into the Nifty. There is data for this, from the NSE, called the “Total Returns Index”.

Using that, we can calculate long term inflation adjusted, dividend reinvested returns of the […]

By |May 13th, 2015|Categories: Inflation, Nifty|Tags: , |9 Comments