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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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Macronomics: Highest CNX 500 P/E in Eight Years!

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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Infy: Jun 2015 Quarter Results Show Terrible Profit Growth Even Though Revenues Pick Up

by Paul Joseph July 22, 2015 Featured

Infy results had come out yesterday and we do a chart thing with them: Revenues up 7.03% : The Only Good Thing About Results Profits are up 5% yoy but down 2% quarter on quarter. The only metric that works for them is quarter-on-quarter revenue growth. EPS Growth, Too, Falls Earnings Per Share has grown 5% year on year, after showing more than 20% growth last year. Employee Growth at 11%, Utilization at 80% Infy seems to have fixed the falling utilization rates and bumped it up to 80%, which means they have little scope for more productivity. (Yet, their profits fell quarter on quarter, which tells you how much of a problem this is!) Employee net addition year on year is 11% which is probably how much their revenue will grow next year. Given that they don’t have much room for increased productivity, they will have to bank on: higher billing rates or higher USDINR conversion rates. … (Read On…)

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Conversations: Raghu Vohra on How Fixed Income Funds Work

by Paul Joseph July 22, 2015 Featured

In another round of Conversations, we bring you Raghu Vohra, founder at Blackstone Valley Group speaking about How Fixed Income Funds work :   Raghu speaks of how global funds that are called “fixed income” work, of mandates and investments and all that. Add to that a quick note on Puerto Rico and other happenings. In conversation with Deepak Shenoy, we learn that: Fixed Income funds can invest beyond bonds Mandate just as important as regulation Bond managers decision making processes The craziness that’s in Puerto Rico and Greece Hope you like it!… (Read On…)

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Optionalysis: Retail Traders Short Options More than Any Other Market Participant, and Smart Money OI Sets Direction

by Paul Joseph July 20, 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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Real Estate To Fall Big Time, Says Ambit. The Data Seems To Agree.

by Paul Joseph July 20, 2015 Featured

A big Ambit report is doing the rounds – they predict that real estate will fall big time . We are seeing a broad-based real estate pullback, with prices correcting in most tier-1 and tier-2 cities alongside sharp drops in transaction and new launch volumes. The drivers for this slowdown are a mix of supply-side factors (banks have pulled back lending to developers) and demand-side factors (the Black Money Bill has created fear amongst speculators). The result is not just a drop in demand for building materials and challenges for lenders with big mortgage, LAP and housing finance books, but also a generalised slowdown in GDP growth, as the sector which drives 50% of India’s capex and 30% of its jobs conks off. The drivers, they say: Heavy inventory (Mumbai and Delhi have over 10 quarters of unsold apartments) Property prices are falling in Tier 2 cities as well Foot falls at registration offices have fallen Banks have cut lending to RE esp commercial RE Subsidies have been cut, so pilfering and parking in RE has been curtailed Squeeze on black money through the black money bill Rise in the “guidance value” rates that increase the “white” component of a purchase Some Good Charts ICICI has the most exposure to RE: Indiabulls housing has the highest relative LAP (Loan against Property) portfolio: India has one of the highest spreads between rental yields and interest rates: Our view:A Fall is on the Cards We have been noticing a slow down in real estate for around a year now, and it’s looking rough.… (Read On…)

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Premium: How Do You Park Cash For Tax Efficient and Good Returns?

by Paul Joseph July 17, 2015 Featured

We don’t usually do personal finance posts on this forum, but since we’d discussed this a while back on the groups, we thought it’s a good idea to post more information. 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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