capital-gains

Syngene IPO: A Very Dull Analysis

by Paul Joseph July 27, 2015 Featured

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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Chart: Oh, We Are Still Overvalued, Says the CNX 500 P/E

by Paul Joseph July 27, 2015 Featured

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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Portfolio: Rejig of the Long Term Portfolio, And Adding Two Stocks

by Paul Joseph July 27, 2015 Featured

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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The Big Mo Corner: Money Buys Half?

by Paul Joseph July 23, 2015 Featured

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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Premium: Of Sun Pharma, Infy and Some Results That Spooked The Day

by Paul Joseph July 23, 2015 Featured

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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Charts: India’s Trade 14% Lower, Even as Deficit Improves With 35% Drop in Gold and Crude Imports

by Paul Joseph July 16, 2015 Featured

India’s trade continues to show two very distinct signals. First, that the deficit is down. Look at the merchandise trade stats for June 2015: the deficit is just $10 billion, which is about as low as it has been in the last few months. Imports are lower both due to lower crude oil imports (due to the lower crude prices, not lower consumption) and lower gold imports (which is both due to lower gold prices and lower consumption). Gold imports are down 37% from last year ( DNA ) and in volume terms has fallen from 221 tonnes for the AMJ quarter 2014 to 203 tonnes in 2015. ( Hindu ) This is great for the current account, where gold has been the make-or-break for us. If you take away gold imports, we actually are a surplus on the current account! The Bad Part: Trade Volumes In The Toilet But wait.… (Read On…)

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RBI Makes Useless Prepaid Card Rules for Metro Transit Systems, What Were They Thinking?

by Paul Joseph July 15, 2015 Featured

The RBI has new “ Guidelines for Prepaid Instruments for Mass Transit System “. This is like telling people now, in 2015, that you are allowed to wear a seat belt inside a car. (Meaning: we’re doing it already!) Mass transit systems like the Mumbai railways, the Delhi Metro or even the tiny little Bangalore Metro have had prepaid cards or tickets for a very very long time. Bangalore’s bus system thrives on multiple layers of prepaid tickets (monthly, weekly, daily!). Season passes for many commute types have been available forever, so why these rules? Because RBI says the word “semi closed”. The Mass Transit system (like Railways) can have other merchants on their platforms, where you could potentially use the card to make payments. I presume this is for purchasing food or water from the platform vendors, for instance. Here’s the rules: The semi-closed PPIs will be issued by the mass transit system operator (PPI-MTS) after authorisation under the Payment and Settlement Systems Act, 2007 to issue and operate such semi-closed PPIs; The PPI-MTS will necessarily contain the Automated Fare Collection application related to the transit service to qualify as PPI-MTS; Apart from the mass transit system, such PPI-MTS can be used only at other merchants whose activities are allied to or are carried on within the premises of the transit system ; The PPI-MTS issuer will ensure on-boarding of merchants (only those permissible as under (iii) above) following due procedure applicable to any other PPI issuer; The PPI-MTS will have minimum validity of six months from the date of issue; The issuer may decide upon the desired level of KYC, if any, for such PPIs; The PPI-MTS issued may be reloadable in nature and at no point of time the value / balance in PPI can exceed the limit of Rs. … (Read On…)

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Why does RBI Sell Bonds, Like It Has Done Today?

by Paul Joseph July 14, 2015 Featured

RBI is doing an OMO sale of government bonds today, and has sold Rs. 8270 cr. worth bonds. Why? This is a good question. Why does RBI sell bonds? Who gets the money? Answer: Not the government. Sure, RBI sells government bonds (as a merchant banker) on every Friday. That’s when the government gets money. A lot of it. 15,000 cr. will be sold just this Friday. But that’s not the same thing as this OMO sale. When the government sells bonds, the RBI is just a banker, organizing the sale through an auction. But RBI also owns some government bonds on its own. RBI is a separate entity and has its own balance sheet, and on that, it owns assets like dollar reserves, rupee bonds etc. It doesn’t buy them from the government (it’s not allowed to) but it buys them from the market, as purchase operations. It has done this consistently in the past, buying bonds on the market as required.… (Read On…)

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Greece Has To Kneel, Beg and Completely Capitulate, Says New Deal

by Paul Joseph July 13, 2015 Featured

Greece finally has a deal. We don’t know if this is agreed upon in pure exhaustion after 17 hours of negotiations, but it’s something that involved total capitulation by Greece . It is even worse than the deal that Greece was getting earlier (before the referendum). It gives Tsipras, the Greek PM, three days to get the major demands passed through the Greek parliament. We saw a few things earlier, in our post, which I’ll paste here: What Now? By July 15, Tsipras must do the following, through parliament: they have to raise the sales tax, and cut pensions. Any misses in the deficit/surplus expected will automatically trigger some very specific spending cuts Greece must keep the statistics and the privatization piece completely independent of the Greek government (or limit the influence) Once this is done, the parliaments of Germany, Austria, Holland, Finland and others that previously opposed a deal will have to say okay to doing the bailout.… (Read On…)

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CPI Inflation for June 2015 at 5.4%, Highest in 8 months But Not In Troublesome Zone Yet

by Paul Joseph July 13, 2015 Featured

Consumer price inflation picked up a little more than expected in June 2015, with the index moving up 5.4% more than the same time last year. This is the highest headline number since October 2014, and a little surprising since there wasn’t anything like this that was expected: Both Rural and Urban inflation have perked up, and the increase in inflation is much more in rural: Food inflation is up over the last month , but so are every other subcomponent  except education and housing. The upward pressure on inflation is surprisingly large. And finally, what is a serious worry: Core inflation comes back up to the highest level since October 2014. Remember that core inflation is the index minus food and fuel. If we remove those, core inflation is up to 4.6%, the highest since October 2014. This is important because in October 2014, crude crashed. That took a lot of prices down.… (Read On…)

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