ATH: Index Peaks But How Many Index Stocks Are Close to All Time Highs?

While the Nifty is near its all time highs, it’s just an index of a bunch of stocks. How many of those are close to their all time highs?

We introduce the Capital Mind All Time High indicator (ATH) which maps this over time.

CAPM-ATH

These are the number of stocks within 5% of their all time highs. The indicator is built accounting for changes in the Nifty over time, so what you see is the set of stocks that form the Nifty at that date, which are within 5% of their all time highs.

Note: this is data of 12th March 2014.

As you can see the number of stocks close to all time highs peaked at 27 in October 2007, but the number started to fall as the Nifty went higher […]

By |March 14th, 2014|Categories: Nifty|1 Comment

Markets: Feb Moves +3%, but March Sees +4% Already

I’ve just realized I forgot to do the monthly move post for February. Not only has Feb been a good month for the markets with a 3% move, March till the 7th has done another 4%!

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Interestingly, markets in March have been strong on either direction. While 1994, 2001 and 2008 saw very bad march moves of nearly double digit falls, we have seen 1999, 2009, 2010 and 2011 do nearly double digit rises. Which one will 2014 be?

Also, let’s look at the Sensex for larger moves.

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By |March 8th, 2014|Categories: Nifty|Tags: |Comments Off

Nifty At All Time High, Third Time Lucky?

Markets are at a new closing high. The Nifty ended on March 6 at 6401, which breaks through the last highs around this level, which were in 2008 and 2010.

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The Nifty though seems much more reasonable this time on valuations, as we are at about 18 P/E versus 22+ on the last two occasions.

The 200 and 50 day moving averages are also looking upward sloping.

Are we going to get a real breakout this time? Third time lucky, they say, but then they’ll tell you that for the fourth, fifth and sixth time as well.

The fear of course is that we’ll retreat again from these levels. The answer to that lies in the question – are we really at a new high? The fact that […]

By |March 7th, 2014|Categories: Nifty|Tags: |Comments Off

The VIX Futures Contract: Too Big For Retail

We now have trades on the Volatility Index (VIX) futures. In a more detailed post to Capital Mind Premium, I spoke of how the VIX was constructed, and provided a background into Option Pricing. To summarize, one part of the option pricing calculation includes an estimation of volatility in the subsequent days to expiry.

The reason you pay “time value” to options is that there is a risk of the stock being volatile in the time to expiry. Call options suffer the risk of the stock going up beyond the strike price (for the seller of the option, which is a reward for the buyer). The seller prices this risk in the premium demanded for the option. A put seller, accordingly, prices the risk of the stock going down.

The VIX is a glorified average of these implied volatilities, except only on the Nifty, and normalized for 30 days (instead of the number of days […]

By |February 28th, 2014|Categories: Nifty, Options|3 Comments

Nifty Bids Adieu to JP and Ranbaxy, Adds TechM and United Spirits

The NSE has changed the constituents of the Nifty from March 28, 2014.

  • JP Associates is being replaced with Tech Mahindra
  • Ranbaxy is being replaced with United Spirits

This should in general be good news for the United Spirits and TechM stocks, and bad for Ranbaxy and JP. Why? Because Index funds will have to match the portfolio and buy/sell these stocks in that manner. But they have a month to switch over.

But time will tell, and a cursory glance of previous stock changes haven’t really gone down that way. And for good reason too – the amount of money in India in Index funds is not that much (only about 1,000 cr.).

Plus, the weights of Ranbaxy and JP Associates add up to 0.5% (about 0.25% each), which is tiny. (That’s Rs. 5 crore in total, on AUM of 1,000 cr.) These stocks […]

By |February 28th, 2014|Categories: Nifty|Comments Off

Great P/E but Anaemic EPS Growth on the Nifty

Nifty’s Earnings Per Share has now risen to 348, derived from it’s P/E ratio of 17.59. This gives us an EPS growth of just 7.9% over the previous year, showing you a massive difference between valuations and reality.

Nifty P/E versus EPS growth

Even if we assume that P/E is for the future and EPS growth is of the past, then if we offset the P/E chart one year back (that is, compare the P/E of 2013 with the actual growth we saw in 2014) we get a picture of stark differences: (We compare the “normalized” P/E versus EPS growth).

Normalized Nifty P/E versus EPS growth […]

By |February 19th, 2014|Categories: Nifty|Tags: |2 Comments

Nifty Protects 200 DMA, EPS Growth At a Miserable 6%

The Nifty bounced off it’s 200 day moving average to end marginally above the 6,000 mark, a level it hasn’t closed below since 22 Nov 2013, which was more than 2 months ago. The recent new high was on 9 December 2013, after which the market has fallen over 5%.

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The 200 DMA is at 5976 and remains a strong support level. The market is about 14% above the August 2013 lows.

The P/E ratio remains at 17, though it took a little dip in October to December due to the rebalancing of weights. At Rs. 345 per share, the earnings per share of the Nifty has grown just 6% from the same day the last year. There are hardly any results left to come, and this […]

By |February 6th, 2014|Categories: Nifty|Tags: |Comments Off

Monthly Nifty Move of -3.4% Worst In Six Months

The markets start the year badly as January brings with it a -3.4% return on the Nifty, the worst month since August 2013.

 

imageYes, there was a run in the “Fragile Five” currencies, but the rupee only fell 1% in the month. FIIs did exit some debt positions and towards the end of the month, equity position as well.

Look also at the returns in the Sensex:

image Feb is usually a very good month for the markets, but will it please investors this time, with elections around the corner and no full-budget? Let’s see.

By |February 2nd, 2014|Categories: ChartOfTheDay, Nifty|Tags: , |Comments Off

Are SmallCaps Joining the Big Bad Bull Run?

If you take the Nifty turnover (weighted sum of the turnover of all Nifty stocks) and compare it with the turnover of other indexes, what can you see?

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The Nifty:Smallcap turnover ratio has come to yearly lows, and at the same time, the smallcap index itself has underperformed the Nifty massively in the year, down 10% versus Nifty’s +6%

But the green area at the bottom is the actual outperfomance (the difference between the Nifty’s and Small cap performance relative to the start of the year). That tells use that while the Nifty outperformed till September, things have changed quite a bit since then, with volumes shifting towards the small caps on a relative basis.

Since institutions don’t usually trade the small caps, you can assume that the trading volumes dictate shifts in retail investors and broker sentiment. Purely looking at volumes (instead […]

By |December 30th, 2013|Categories: Nifty, Trading|3 Comments

Premium: What’s With The Nifty EPS Crash When We Hit All-Time Highs?

Thanks to those of you that attended the Capital Mind Premium Webinar on Saturday! We addressed the Current Account Deficit and looked at some interesting charts and numbers.

This is an archive of the Capital Mind Premium post sent on 9 Dec 2013.

By |December 10th, 2013|Categories: Bonds, Nifty, Premium|Comments Off

Even at All-Time High, The Nifty Must Double From Here to Adjust for Inflation

As the Nifty hits a new high, it’s useful to see Nifty adjusted for inflation – that is, despite the fact that the Nifty has hit the highest ever value, what does it mean for you once adjusted for inflation?

For this, we look at purchasing power of the money you have today. We have two inflation indexes – the Wholesale Price Index (WPI) since 2000, and the Consumer Price Index (CPI) for Industrial Workers since the same date.

Take an investment in the Nifty in the year 2000, and then “adjust” it for each of these indexes. If the index was 100 in 2000, and it’s now 180, that means prices are up 80% since then. So a Rs. 10,000 today will not buy you what Rs. 10,000 would buy you in the year 2000 – it would buy you, in 2000 terms, things worth Rs. 10,000 * (100/180) = Rs. 5,556. So effectively, you had to grow your money […]

By |December 9th, 2013|Categories: Inflation, Nifty|Tags: |5 Comments

Nifty Hits All Time High at 6400 on State Election Result Euphoria

The state election results are out: the Congress has been decimated in nearly all of the four states for which results were announced yesterday. (It is, however, leading in Mizoram, where results are being declared today)

With a BJP majority in Madhya Pradesh (72%), Chattisgarh (54%) and a whopping 81% in Rajasthan, the mood of the country is fairly clear. That they don’t like the ruling party (Congress) at the centre; the state moves reflect that sentiment.

Delhi poses an interesting situation with the Aam Aadmi Party (AAP) getting 28 of the 70 seats, and the BJP 31, and the Congress lost with just 8 seats after ruling Delhi for 15 years.

The markets have cheered the result, with the Bank Nifty going up 3%, and the Nifty up 2% in early trade. The reason? That this reflects a thumbs-up for the BJP in the parliament elections of May 2014, with enough strength to help push the economy forward after the Congress’ […]

By |December 9th, 2013|Categories: Nifty|Tags: |Comments Off

October Has Been the Month for….Realty

THe Nifty is up nearly 8% in October and there are 10 days left! You might think housing prices have stagnated, or gone down. But October’s given a huge move to realty stocks, as they outperform everything else.

Sector Moves: October 2013

Yes, IIP was bad, and Inflation was high and GDP growth was low (announced on the 30th of Sep) and liquidity is tight and there was a US shutdown + debt limit + everything. But that was a wall of worry that stocks climbed, and climbed fast.

In 2013, we’re now up 4.8% on the Nifty, and the outperformer of the year is IT, followed by Pharma and FMCG:

YTD Performance[…]

By |October 20th, 2013|Categories: Nifty, Stocks|Tags: |1 Comment

Nifty P/E Beats EPS Growth Marginally, Then Breaks Off Downwards Again

The Nifty P/E (Price to Earnings) ratio seems to have gone a little astray towards the end of September, as another quarter ends. At 17.32, the Nifty is not cheap (this is standalone, not consolidated) but what’s interesting is that recently, the P/E was less than the actual one year Earnings Per Share (EPS) growth in percentage, a phenomenon that hasn’t happened since 2008.

Nifty P/E versus EPS Growth

Of course we’ve gone off now, down to 14.6% YoY growth on the Nifty Earnings per Share.

Note: Nifty P/E is released by the stock exchanges every day, and updated when earnings are updated. Nifty EPS is simply the Nifty value divided by it’s P/E.

Consolidated earnings should actually show a lower P/E (since earnings will be higher). I think I’ll […]

By |October 6th, 2013|Categories: Nifty|Tags: |3 Comments