About Deepak Shenoy

Deepak Founded Capital Mind, which mines financial data and provides analytics. Deepak is part of the core team that helps build, grow and keep our data platform up to date. He lives in Bangalore. Connect with him at deepakshenoy@capitalmind.in.

Make Long Term Capital Gains Tax Free Only After Three Years of Holding

Equity capital gains are free if you sell shares after a year. You don’t pay long term capital gains taxes for shares sold on a stock exchange.

But if you look at other “assets”, equity is getting a great deal:

  • For gold, you have to hold for three years before you get “long term” gains, which are taxed at 20%.
  • For real estate the house has to be held for three years, and again 20% gains taxes apply (though taxes can be offset if you buy a new house)
  • For debt mutual funds you have now hold for three years before you can apply “indexation” benefits and claim long term capital gains (which are 20% of indexed gains, or 10% of unindexed gains, whichever is lower)
  • For unlisted companies, you pay 20% capital gains taxes if you sell shares after a year. (This is still one year, but the taxes are large)

Listed stocks are the only real asset class where, after just one year, you pay no taxes whatsoever.

[…]

By |January 14th, 2015|Categories: CapitalGains, Stocks|Tags: |0 Comments

Portfolio: Value Turns to Momentum, and We Just Bought One

CapM Premium Header

Sometimes what was earlier identified as “value” turns to strong momentum. I remember this stock. Would you buy it? (Note: This was 2009) […]

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

Is Firing People with 3 Months Severance Pay Unfair? I don’t think so.

Our earlier post, The Inflexion Point for the IT industry, generated a lot of interest. There were more than 140 comments and it’s been quite a revealing debate, with views from all angles.

One of the players fighting the TCS “layoff” posted what they say is the recording of a “termination interview” recently.

Now, let’s be honest and say that this could have been handled with more subtlety. I’ve had my mistakes too in firing people, and that deep sinking feeling in your stomach stays for days because you know you took away something beloved to the person: a job. But this interview should make the TCS HR think about how to lessen the impact. […]

By |January 13th, 2015|Categories: Commentary, InfoTech||33 Comments

IIP Rises 3.8% in November, But Largely due to Diwali Effect

The Index of Industrial Production (IIP) went up 3.8% but the rise was mostly due to the Diwali effect. Diwali causes IIP to drop, as we have noticed in the past. (See our past post which talks about the Diwali effect). The following graph shows the fact that production falls in Diwali months:

Now look at the current data, which came in for November:

image

Look closely – November 2013 was a “dip” because in 2013, Diwali was in November. In 2014, Diwali was in October, so the dip happened a month early. Meaning, the year on year growth will look bad in October and good in November, purely because of the Diwali effect!

And that’s played out. October was -4.2% and November is […]

By |January 13th, 2015|Categories: IIP|Tags: |1 Comment

Fixed Income Portfolio: Four Mutual Funds We Consider to Profit From Falling Rates

CapM Premium Header

Inflation’s coming down! For December 2014, Consumer Price Inflation is at 5%. This is a critical point – till November, the RBI has been worried about the “base effect”, when prices were very high the previous year so the inflation element would look small. 

With December data, that fear is subdued to a certain extent. The fall in crude prices makes fuel prices go down, but at the same time food prices are low. Inflation might finally have been tamed.

If inflation’s down, RBI will cut rates. If RBI cuts rates, bank stocks will go up, and so might other “interest rate sensitives”. Bond rates will go up (because bond yields should fall).

This post covers the “why” and “how to profit” of Falling Interest Rates. You will see the Fixed Income Portfolio we have promised, with four mutual funds – of which we will buy some to profit from falling […]

By |January 12th, 2015|Categories: Premium|Tags: |0 Comments

CPI Inflation for December 2014 at 5%, That Rate Cut Might Finally Happen!

CPI Inflation for December 2014 has come in marginally higher than the previous month’s all time low of 4.4%. At 5% it’s still considerably below RBI’s medium term target of 6%.

image 

As you can see the slope of the dark blue line has dipped somewhat, giving us hope that prices might have finally come under some control. Much of this of course is related to the price of crude oil, which has continued to see new lows. […]

By |January 12th, 2015|Categories: Inflation||2 Comments

IIP and Core Industries Diverged, but Will IIP Data Go Up Big Today?

There’s been a strange move in the Index of Industrial Production versus the “Eight Core Industries” in the previous month. The 8 core industries are those deemed core as they produce stuff that’s more like natural resources: Coal, Crude oil, Natural Gas, Petro-refined products, Steel, Cement, Fertilizers and Electricity.

Data is released two months late, like the IIP, but the Core Industries data comes a week earlier than the data on IIP.

Core Industries make up 37% of the weight of the IIP, so it has been useful to see the growth of the core industries to gauge how IIP will move. However, in Oct 2014 there was a severe disconnect: the core industries index grew 6.89% but the IIP for October went NEGATIVE on growth to -4.25%.

image

Granted, that was due to a severe degrowth […]

By |January 12th, 2015|Categories: IIP|Tags: |2 Comments

Premium: One Structural Reason For the Sudden Rise in the Rupee

CapM Premium Header

By |January 10th, 2015|Categories: Premium||0 Comments

Macronomics: Foreign Investors Love Government Bonds So Much…

Macronomics Header

By |January 10th, 2015|Categories: Premium|Tags: |0 Comments

Infy Results: Better than Expected, Greater Efficiency Visible

Infosys results for Dec 2014 are out, and we’re going to quickly cover them with just charts. They’ve surprised on the upside:

image

EPS Growth on a Trailing Twelve Month (TTM) basis is nice at 20%, which is okay given the stock has a P/E of 19. But tht’s mostly because of earlier quarters; the Dec 2014 grew over Dec 2013 EPS by only 13%.

image 

Looks like they *are* getting more efficient. Thank goodness for two years of no salary hikes, I guess:

image 

And they’ve gotten back […]

By |January 9th, 2015|Categories: Infosys, Results, Stocks||4 Comments

Portfolio: A Stock That Made New Highs While Markets Retreated

CapM Premium Header

By |January 9th, 2015|Categories: Premium|Tags: |0 Comments

Interviewed at ET Now: My take on Defense, Auto and Large Cap IT

I was on ET Now today, and I spoke of a few things that might be of interest.

1. Defence stocks are a longer term bet:

It may not come in the short term but there are two big bets here. One is that defence expenditure might come equal or more in the budget. Another thing is that they are opening up a little bit. So short-term news is there but longer term, the fact that the sector is opening up and it has not opened up like forever is probably a good sign. A lot of good things might happen.

I probably weaselled out a little here. But the sector is very interesting, with BEML, Bharat Forge, BEL and the like making for higher market cap plays. Smallcaps will

2. Crude makes Auto look good, Agri-Chems are doing well, not touching Housing Fin

Two points here:

Before 2007, we saw 30% correction once every […]

By |January 8th, 2015|Categories: Stocks|Tags: |1 Comment

First Shale Oil Bankruptcy as Crude Touches $50

The first shale oil related bankruptcy came through on Sunday:

Austin-based WBH Energy Partners told a Texas federal bankruptcy court this week that its partner in North Texas oil and gas leases had warned it may foreclose on the private firm’s stake in the leases this month after it failed to pay its $12 million share of operational expenses.

The financial troubles began in September, when Minnesota debt investor Castlelake declined to provide WBH Energy more funds under a credit facility, Joseph Warnock, vice president and co-founder of WBH Energy, said in court papers. The firm and its affiliates were unable to pay their share of expenses under a joint operating agreement or various vendors, according to Warnock.

This was a tiny bankruptcy, as the total money it owes is $30 million (which is Rs. 200 cr.)

US shale oil companies have issued high yield bonds which have collapsed in the wake of the falling crude prices. When […]

By |January 8th, 2015|Categories: General|Tags: , |2 Comments

A 3% Down Day Wakes Up A Docile Market After More Than A Year!

The last time Nifty Lost 250 points….or, rather, 3% in a single day, was 328 trading days ago:

image

The last big down day at 3% was in August 2013. And look at the utter lack of movement in recent times:

image

While this was a horrible day, it has to be seen in context. We have had very little volatility recently. And that’s made a lot of us quite complacent. Today was a wake-up call. It’s not all right to use recent data to back test a theory because the recent lack of volatility was abnormal. At Capital Mind we have continuously highlighted the lack of volatility. It makes no sense […]

By |January 6th, 2015|Categories: Nifty||0 Comments