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: 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 (fact: Your mind turns to jelly after about 300% in two months, this is much much more.… (Read On…)

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The Big Mo Corner for Capital Mind Premium by Mohit Satyanand.  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 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 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: 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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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 unemployment through cuts in spending.… (Read On…)

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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. … (Read On…)

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Indian stock market P/E ratio zooms upward, while earnings growth has been horrible for the Nifty. Here’s the standalone metric: 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). 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! 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 strong, or trending up.… (Read On…)

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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.… (Read On…)

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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.

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