So there’s this stock called Castex Technologies. Let me introduce you to this chart:   The stock rose from Rs. 40 to Rs. 360 and then, it’s been limit down (5% down per day) since. With next to no volume. The company is in the auto component space, and used to be called Amtek India. It’s still promoted by Amtek Auto, which is a listed company but that share is not doing anywhere close to this kind of move. Why did Castex Rise and Fall? Castex has a large FCCB issue due for maturity in April and September 2017. This adds up to about $200 million. The FCCB converts to shares at Rs. 103.005 per share, and if the share price is lower, the FCCB holders will not convert and instead, demand their money back. Instead, now, they’re converting to shares and then apparently attempting to dump shares on to the market.… (Read On…)

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FIIs seem to be easing off on India. As much as we can imagine that China’s loss – it’s market in Shanghai has fallen over 10% in the last two days – is our gain, it really doesn’t seem to be so, looking at foreign investor data. Here’s the picture in charts. 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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Syngene has an IPO coming up, here’s the detail: Offer: 2.2 crore shares Price: Rs. 240 to Rs. 250 Size: Around Rs. 500 cr. From: 27th July to 29th July 2015 Lot: 60 shares (Rs. 15,000 approximately) We make a very cursory analysis of the IPO, as we have realised in recent times, (paraphrasing Samir Arora): If the IPO is bad you don’t want any shares. If it’s good, you wont’ get any shares (allocated). So detailed analysis are largely useless and it’s better to consider buying after the company lists, usually. So this is going to be abrupt and boring. Who gets the money? Not Syngene. They don’t get a paisa from the IPO. All the money goes to Biocon, the promoter of Syngene. This is bad for Syngene – typically it would have taken money from an IPO and expanded operations. But because it is a cash generating company it probably doesn’t want the dilution, and eventually they can dilute away through QIPs etc.… (Read On…)

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A note I’d recently spoken about in Premium shows us something very important. Even as we had a near 2% down day (nothing compared to China which had an 8.5% down day) we are, er, slightly overvalued. 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! I plot the Price to Earnings ratio of the CNX 500, which is the broadest index we have in India. And in that way, I plot its earnings growth over the last year. And what you see is surprising:   We are at the highest P/E ratio levels since January 2008 . And we are at the lowest earnings growth levels in three years . Whoa! Markets go through phases of overvaluation and undervaluation. From Jan 2014 to Jan 2015, earnings growth for the broad index picked up, to reach 20% growth levels and since Jan 2015, results have been just disastrous.… (Read On…)

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We’ve decided to add two more stocks to the Long Term Portfolio. We’ll be adding more as times go by, but here’s the major segment of the change. 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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CARE has downgraded JP Associates ‘ rating to D, which means that according to CARE they are in default, or very likely to default. What they say: The revision in the ratings of the bank facilities and instruments of Jaiprakash Associates Ltd (JAL) takes into account delay in servicing of debt obligations by the company due to its weak liquidity position. But What Do Rating Agencies Know, Huh? The biggest problem with rating agencies is that they react late. Typically a big problem is that they are paid by the companies, not by the buyers of bonds or lenders of loans, to rate the facilities. This means if they cut the rating down, they could lose revenue. Also that they are aware of the consequences of a downgrade – that because they downgrade a company’s loans, it can make life difficult for that very company to borrow any more money. (Will have to pay higher rates as borrowers will require a lower loan) But the point is also that when they do downgrade a company things are really really really bad.… (Read On…)

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