Macronomics: A Macro Look at the Rupee and Foreign Investor Flows

by Paul Joseph July 30, 2015 Featured

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 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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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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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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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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Cloud Services Eat Up Indian IT Outsourcing Earnings

by Paul Joseph July 16, 2015 Featured

I’ve been bearish on IT in the longer term, and in a long post I explain why I think we are at an inflexion point for Indian IT . Over the last quarter, results have been pathetic: HCLTech , Wipro and Infy showed less than 5% earnings growth YoY, and TCS and Tech Mahindra actually showed -30% or lower earnings growth for the March quarter. While TCS had a one time component (bonus) we saw their recent results for the June quarter showing less than 5% earnings growth YoY. And Wall Street Journal has a story on how cloud services are eating up IT sector earnings : The value of outsourcing deals signed in 2014 shrank 17% to $120.4 billion from $145.5 billion a year earlier, according to consulting company KPMG LLC. Indian companies are losing business to firms that have led the way into the cloud, such as International Business Machines Corp., Inc. … (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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SEBI Increases Lot Sizes to Rs. 5 lakh from November, Index and Stock Contracts Will Change

by Paul Joseph July 13, 2015 Featured

SEBI has changed the game for derivatives traders. A new circular (HT Vashistha ) has increased the lot sizes of each contract, so that: The minimum contract size has been upped from Rs. 2 lakh to Rs. 5 lakh. This applies from contracts for the November expiry (that is, for all trading after the October contract expiry) Which means the first “new” lot size will be applicable from the end of July (after the July expiry, the next set of contracts are Aug, Sep, Oct) Lot sizes will be reevaluated every six months. For stocks, futures and options contracts will have sizes of a minimum of 50 with increments or decrements of 25 shares. If even at 50 shares the contract size is greater than 10 lakhs, then the minimum will be 10 shares with increments of 5 shares. For indexes, the minimum is 10, with an increment of 5. So a Bosch at Rs.… (Read On…)

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