Breakout in Market Breadth

There has been a marked improvement in ‘breadth’ of the market over the last few trading sessions. The improvement in breadth comes after a long period of time and is a welcome change and has to be construed as bullish. It would mean that ‘buy the dip’ mentality has now set in; that in and of itself is a huge sentiment shift in favour of the bulls.

India’s Gig Economy – Part 2

Media attention is currently focused on the two food delivery start ups, Swiggy and Zomato. Both have raised billions of dollars via venture capital funding. The valuations seem to be vaulting higher almost once a quarter, at the very least. What’s the catch? The short answer is there isn’t any. Consumers love food delivery and the restaurants hate it. I have serious doubts of how profitable the food delivery business is, the odds are that it is a ‘cash burn’ […]

India’s Gig Economy

One doesn’t read of India’s economy having transformed from a traditional one to a ‘Gig Economy’. The mainstream media seems unable to overcome its obsession with periodic economic data releases comprising of inflation, manufacturing data etc. For the uninitiated, the words ‘Gig Economy’ refer to temporary jobs that are offered to independent contractors (freelancers), that replace the erstwhile ‘full-time’ jobs. A ‘Gig Economy’ undermines and is many ways contrary to the traditional economy wherein there are full-time jobs involving a […]

Should We Be Buying the Dip?

Nifty OHLC The Nifty OHLC (Open, High, Low, Close) chart for the current calendar year is shown above. The intra-day and closing basis high / low has also been highlighted. Year-to-Date (YTD) and on a closing basis, the Nifty 50 is up by just 0.19 percent. In other words, we are back where we began the year. On any trading day, what matters is the close. The closing price of the Nifty 50 on any trading day is the ‘verdict’, […]

2018: Well Begun is Half Done

The calendar year 2018 has begun with a bang. It’s off to the races, almost immediately. I’ll start with the returns for the year 2017. (Readers can click on any of the images for a magnified view) During the year 2017, how many of the benchmark components clocked returns that beat the benchmark and how does it compare with earlier years? That is shown below for both, the Nifty 50 and the Nifty 500. It shows the breadth of the returns kaleidoscope. The […]

Are we Investing in ‘A Market of Stocks’ or ‘A Stock Market’?

Cartoonist: Schwadron, Harley – cartoonstock.com; Sunday, 10 December 2017 Are we are investing in a loose collection of individual stock names or a monolithic stock market? What would happen to the different stock prices that are not part of the benchmark composition if the benchmark indices were to correct? To answer this question, one needs to understand the difference between the terms ‘a market of stocks’ and ‘a stock market.’ There is a school of thought that says that since it […]

When’s the Crash: Keynes Beauty Contest

Cartoonist: Schwadron, Harley, cartoonstock.com; Sunday, 12 November 2017 John Maynard Keynes is known as an excellent economist for his work titled “The General Theory of Employment, Interest, and Money.” Many renowned economists do not agree with what Keynes has said. Regardless of his economic theories, unbeknownst to most is the fact that Keynes was one of the greatest investors of his time (1883 – 1946). Keynes was one of the first to recognize that investing is an exercise in mass […]

Do Colours Nudge Our Investment Behaviour?

Cartoonist: Veley, Bradford – cartoonstock.com; Sunday, 15 October 2017 The National Stock Exchange of India (NSE) uses the colour Red to indicate a downward tick in the Last Traded Price (LTP) and the colour Blue to show an uptick in the LTP of a given stock symbol. Bloomberg terminals all over the world also use colours to highlight changes in the LTP. Three types of shades are ubiquitous; Red, Blue and Green. Whereas the tone Red is ALWAYS used to indicate […]

Share-Weighted Portfolios: Do they work?

Cartoonist: Carpenter, Dave – cartoonstock.com; Sunday, 18 June 2017 The concept of share weighted portfolios means that one buys an equal quantity of all the shares in one’s portfolio, without any regard to their market price. Nifty 50 as a benchmark – Background Information The Nifty 50 consists of fifty stocks and accounts for twelve sectors of the Indian economy. It tracks the behaviour of the largest and most liquid Indian corporates and captures approximately sixty-five percent of the float-adjusted […]

Is India a Small-Cap Market?

Cartoonist: McMillan, Brad – cartoonstock.com; Sunday, 14 May 2017 In the current bull run, Small-Cap stocks have outperformed their Large-Cap counterparts. This feature is also known as the Small-Cap effect or the size effect. In this post, I have tried to (a) quantify the Small-Cap Premium in the Indian Stock Market and (b) find a way to ‘capture’ this Premium? Small-Cap v/s Large-Cap Historical Returns The image below shows the historical returns of the Small-Cap and the Large-Cap universe from 01 […]