(Cartoonist: Lindsay Foyle;Cartoonstock.com) The PSU Banking Index is the worst performing Sectoral Index in the current calendar year. There has always been a valuation gap between the public sector and private sector banks. This is despite the fact that, for both the sectors, the end customer remains the same. Since the beginning of 2015 the gap has widened. In my opinion, this widening of the valuation gap is an opportunity for buying PSU banks. Why Banking is the key to economic […]
HOW LOW CAN THE RUPEE GO?
The Rupee dollar parity is the single most determining factor for the prices of stocks in India. It is ahead of the economy, earnings, global cues, etc. It seems that as per the REER (Real Effective Exchange Rate) calculation the Rupee is overvalued. The Big Mac Index suggests that it is one of the most undervalued currencies in the world. Surely, one of them is wrong. I have tried to make sense out of this apparent dichotomy. Real Effective […]
HOW TO USE DISPERSION FOR STOCK SELECTION?
(Credit: Robert Mankoff/The New Yorker Collection/The Cartoon Bank) We have had a reasonable correction on the Nifty. The index returns as compared to the sector-wise returns show a high level of dispersion. Have a look: INDEX JAN 01, 2015 JUN 05, 2015 % GAIN/LOSS CNX NIFTY 8284.00 8114.70 -2.04 CNX PSU BANK 4294.65 3280.15 -23.62 CNX METAL 2693.25 2315.50 -14.03 CNX REALTY 203.05 182.25 -10.24 CNX MEDIA 2378.30 2137.15 -10.14 CNX BANK 18750.45 17549.25 -6.41 CNX FINANCE 7449.95 7129.80 -4.30 CNX […]
BRAND VALUE INVESTING – BUY TATA GLOBAL
(Cartoonist: John McPherson;Cartoonstock.com) Tata Global Beverages Limited (TGBL) and Starbucks Corporation, an American global coffee company, are 50:50 partners in the joint venture called Tata Starbucks Limited. This is common knowledge. Why is the brand value being largely ignored by the market? Is it a buying opportunity? I have tried to answer these questions. Definition of Brand value Brand value is the ‘monetary premium that results from having customers who are committed to a particular brand and who are […]
DIAL D FOR DEFLATION?
(Cartoonist: Harley Schwadron;Cartoonstock.com) Has the media been scaring investors into thinking that we are in a deflationary spiral and that deflation spells disaster? Should we factor this while taking investing decisions? Deflation v/s Disinflation There is a fair bit of confusion on the terms ‘disinflation’ and ‘deflation’. Deflation is a sustained fall in prices, just as inflation is a sustained increase in prices. We are all used to inflation. Disinflation is a period of falling inflation. Most of the world […]
STRAY THOUGHTS – LIKE ALICE IN WONDERLAND
Alice in Wonderland – Alice Meets the Cheshire Cat (Illustration by Sir John Tenniel under license from Cartoonstock.com) And, for a Monday morning, a few stray thoughts and a few general observations and a few points of view ( all my own work): Like I have been reading Alice’s Adventures in Wonderland. The book is written by Charles Lutwidge Dodgson in 1865 using the pseudonym ‘Lewis Carroll’. In the book Alice, a seven-year-old English girl, has a dream. In her dream, […]
WILL OIL @ US$ 80 MAKE INDIA FRAGILE?
(Cartoonist: Guy & Rodd; Cartoonstock.com) India has been dropped from the Fragile Five in the second week of March 2015. Why was India dropped? Are oil prices making us anti-fragile? If it is indeed so, is our anti fragility ephemeral? In this post, I have tried to find answers to these questions. What is Fragile? Nassim Nicholas Taleb’s book Anti fragile: How to Live in a World we Don’t Understand contains a very succinct definition of fragility. He describes it […]
HOW TO PREPARE FOR A FED RATE HIKE – BUY STAN
(Cartoonist: Doug Pike; Cartoonstock.com) Prepare don’t predict seems to be the dictum that the smart money is following. The behaviour of world markets in the last two weeks seems to suggest this. The upcoming results season and the fact that the smart money seems to be preparing for a rising rate scenario, are getting factored into stock prices. It is difficult to pick a stock in a richly valued market. The Indian Depository Receipts (IDR’s) of Standard Chartered PLC., […]
WHY WE ARE UNABLE TO BUY THE DIP?
(Cartoonist: Harley Schwadron;Cartoonstock.com) Last week, most of us were contemplating whether the Fed would surprise. It didn’t. However, the dip in the indices was surprising. Why we are unable to buy on the dip? It has been very easy for me to frequently use the words ‘wait for the dip’ in many of my previous posts. Now that the ‘dip’ is well and truly upon us, how many of us are buying? Not many. It is, in fact very […]
ARE NEGATIVE INTEREST RATES THE NEW Y2K?
(Cartoonist: Paresh Nath; Cagle Cartoons) Negative interest rates – the thought or the utterance of such a phenomenon would have been scoffed at, as recently as a year ago. They are now, a reality. The implications are confusing, and that is putting it mildly. In the meanwhile, market volatility has been rising. Volatility is the only factor that has played out as expected. Non-Mandatory Disclosure Last week I was reminded of Behram Contractor who wrote under the pseudonym of […]
