I went to a Coffee Day today and it has the following notice, prominently displayed at the entrance: What it says is: As per instructions received from Economic Offense Wing – Crime Branch, Mumbai and Additional Commissioner of Police, Mumbai Entry is prohibited for representatives, Staff and Employees of: M/S Vihaan Direct Selling (India) Pvt. Ltd. M/S QNET Ltd. Hong Kong M/S Transview Enterprise India Pvt. Ltd. M/S Vanmala Hotels, Travel and Tourism Services Pvt. Ltd. By Order, Cafe Coffee Day…. This is very cool. The MLM scams being perpetrated by the QNet types have been pushed at all sorts of Coffee spots. Mostly, the way they operate is: Call people over to a Coffee day for a meeting to discuss “a business proposition” Hard sell them the scam MLM called QNet Make them pay a few lakhs for entry so they can find the next bakras to call to the Coffee Day next week Rinse, Lather, Repeat Coffee day has perhaps figured out this is a serious problem for their own image.… (Read On…)

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The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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The government now merges The National Spot Exchange Limited (NSEL) with its parent, Financial Technologies (FT). NSEL has been involved in a mega scam (see Capital Mind’s complete coverage ) where it was unable to payout exchange trades. The scam was that the whole thing was supposed to be a commodity exchange, but instead it was used by the exchange and by certain parties to finance themselves, with lay investors buying commodities and selling them immediately back on a forward contract to lock in returns. NSEL is a subsidiary of FT. The problem came when the government banned the “forward” part of the scheme, which unravelled the whole thing – it turned out that the commodities that people had bought (which were sold back), didn’t even exist. That they didn’t exist was because the stocks were held by the counterparties of these trades i.e. the people who were being financed. THose being financed didn’t have enough cash (or commodities) to return, and they were just rolling over all interest and principal into new contracts, because no one was checking.… (Read On…)

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There’s a fight happening in the intellectual circles around inflation, and you shouldn’t be surprised. It involves the terms “model” and “regression” and stuff that involves figments of people’s imagination, but in the end tries to answer the question most important to the RBI: Should we even bother about RBI when we look at inflation? Is Monetary Policy useful at all? Before my opinion muddles the issue further, let’s see what happened. In a column titled “ Where Monetary Policy is Irrevant ” (Indian Express, Sep 13, 2014) Surjit Singh Bhalla wrote about how “Tight monetary policy has as much to do with Indian inflation as it has to do with India’s magnificent loss to England in the recently concluded Test series .”. Essentially, he said, monetary policy doesn’t influence inflation. That RBI raises rates or reduces them has no impact on the very thing it is raised or reduced for, that is, to control inflation.… (Read On…)

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The government will continue the direct subsidy transfer for LPG, but this time it won’t need an Aadhaar card. From 54 districts in mid-November 2014, and for all of India from 1 Jan 2015, we will see the subsidy for LPG being credited directly into bank accounts. The earlier scheme – which was based only on the Aadhaar numbers – has been tweaked to remove the requirement of Aadhaar. According to a press release : The subsidy per domestic subsidized cylinder shall be fixed. All LPG consumers who join the modified DBTL scheme in future can receive LPG cash subsidy: – By linking Aadhaar number to the LPG and bank database as the primary option. OR – Directly into the bank account without necessarily linking it with the use of Aadhaar as the secondary option. This will ensure that no consumer is denied LPG subsidy for want of Aadhaar number. All LPG consumers who had already joined the scheme solely based on Aadhaar number will start getting subsidy in their Aadhaar linked bank accounts after scheme is launched. … (Read On…)

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I was interviewed at ET Now last week, on the morning show with Ayesha Faridi and Niraj Shah . I’ve been itching to bring you more details. Wake Up And Smell The Coffee Coffee prices have been going up recently, largely because of a drought in Brazil. I spoke about how Coffee is a promising sector , and like a company (CCL Products) which is in the space. Note that CCL Products is a company we own as part of the Capital Mind Premium portfolio. Coffee Prices have slightly corrected but if the news on the drought is correct , we are going to see a continued rise in the price of coffee. Check out Capital Mind Premium! Get In-Depth Macroeconomic Analysis, Market Metrics, Proprietary Capital Mind Indexes, a look into the CAPM Portfolio and More Actionable Insights, straight to your Inbox. Take a 30-day Free Trial! The Crude Oil Hedge And then I spoke of how India should hedge some of its Crude Oil exposure .… (Read On…)

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The market’s falling, eh? So what, says the trader. What difference does it make, if money can be made? Making money from falling markets is almost considered unethical, but obviously, it’s not. (If it were, selling toothpaste for a profit would be unethical too) There are three ways you can do it: The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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Reliance is going to be disappointed. The gas price hike that was supposed to be a huge benefit – and that was supposed to be double to over $8 per mmBTu (Million British Thermal Units). But the final price increase is only to $5.61 . Which is not much from the current price of $4.2 in comparison with the increase expected. While this may be bad news in the short term for Reliance, it is good for the industry to have clarity on what will be paid. The new prices will be paid from November 1. We don’t know yet if in Reliance’s case, there will be an upward revision in the prices of gas from Nov 1 – since they haven’t managed to produce as much gas as they had committed, they might have to make up for the difference with the older price and only then be paid the higher price.… (Read On…)

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You know how much inflation eats into your returns? This much: Adjusted for inflation, the Nifty is 10% lower than the highs we saw in 2008. Although the Nifty has moved 30% higher than the 2008 levels in “absolute” (i.e. not inflation adjusted terms). We take the Nifty (including the impact of reinvesting dividends) and show you how inflation has made all the difference: Turns out that despite the recent drop in Gold price, the best return in inflation adjusted terms is in the shiny metal since 2007. However, if you had bought after September 2012, it would’ve given you lousy returns. We map the growth of Rs. 10,000 invested in Gold, Public Provident Fund (PPF) or the Nifty (assume reinvestment of divideds) PPF is the second best, which still lost money in absolute terms. The Nifty’s done badly in comparison: Inflation is one tough beast. If it gets out of control, it distorts your return analysis like in the graphs above.… (Read On…)

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The Nifty continues to “correct”, although it did rise marginally today.  The recent Nifty “peak” about 8173 has come after a long ride up. (Click for a larger image) This chart maps all the retracements that are 10% or more. You can see here that we haven’t had a 10% retracement in the last full year – and we have had at least one a year since 2007. It’s really a very non-volatile market. The market’s at a 20 P/E which is not overvalued but is definitely not fair value either. Even with the recent fall the Nifty’s just 5% below the peak, which is incredible because it has been the biggest retracement in the last year. And, after March, this is the first time we’re trading below the 50 day moving average. A correction is, what we call it, a move of 10% above a recent peak. The fall from 8173 to today’s numbers is just 4.82% which means we’re not really in territory that can be called severely bearish or oversold.… (Read On…)

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