HAPPY INDEPENDENCE DAY !!!
LAST ONE YEAR CHANGE
15/08/15 vs 15/08/16
SENSEX 28067 vs 28152 (+0.30%)
NIFTY 8518 vs 8672 (+1.81%)
GOLD$ 1115 vs 1339 (+20.09%)
GOLD(Rs) 25768 vs 31220 (+ 21.16%)
SILVER(Rs) 35429 vs 46130 (+30.20%)
Rs/$ 65 vs 66.90 (+2.92%) 💥
Freedom Was Not Gifted To Us,
It Was Snatched By An Unstoppable Fight,
Fighters Painted With Blood On Their Life’s Canvas,
Still They Never Turned Back With Fright!
HAPPY INDEPENDENCE DAY !!!
What is Brexit and what would happen if Britain left the EU?
What is 'Brexit'?
It's the issue of whether Britain should exit the European Union or not —
a question that will be decided in a historic referendum on June 23.
a question that will be decided in a historic referendum on June 23.
What is happening?
A referendum to decide whether Britain should leave or remain in the European Union. Prime Minister David Cameron promised to hold one if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum. For a start, those wanting Britain to leave the EU see it as an opportunity to reassert British national sovereignty and in a sense liberate Britain from the bottlenecks of EU both politically and financially.
What is the European Union?
The European Union - often known as the EU - is an economic and political partnership involving 28 European countries . It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other. It has since grown to become a "single market" allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas - including on the environment, transport, consumer rights and even things like mobile phone charges.
Why do they want the UK to leave?
They believe Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return. They also want Britain to take back full control of its borders and reduce the number of people coming here to live and/or work. One of the main principles of EU membership is "free movement", which means you don't need to get a visa to go and live in another EU country. They also object to the idea of "ever closer union" and what they see as moves towards the creation of a "United States of Europe".
Advantages of Brexit
Economically, Britain would immediately save $12 billion a year in EU budget payments. Freed from famously cumbersome EU regulations, Brexit supporters say, Britain would attract greater investment and become a more dynamic economic hub — particularly if it still had full access to the EU's tariff-free single market. But that's a big if, and would rely on Britain renegotiating a new trade deal with the EU's remaining 27 member states — many of whom, post-Brexit, would want to make a bitter example of the U.K., to discourage other members from fleeing.
Under the EU's labor rules, any citizen of a member state has the right to live and work in another member state — a rule that has allowed some 942,000 Eastern Europeans to move to the U.K. as the EU has expanded its borders. Brexiters say these migrants have overwhelmed the housing system and abused Britain's generous in-work benefits. At least 34,000 of them are getting child benefits for children who do not even live in the U.K. and sending that money — totaling about $42 million a year — back to their home countries. Leaving the EU would allow Britain more control over how many migrants are allowed to enter. That's become a big selling point after the influx of 1 million refugees into EU countries.
Risks of a Brexit
The uncertainty it would create could destabilize the markets and cause the pound to plummet.
Some extreme predictions are that a Brexit will blow a £100 billion hole in Britain's economy,
and Britain will lose 3 million jobs!
What
is the probability of Brexit?
According to Economist as on today, 44% People Vote for Leaving Europe,
42% for Remaining in Europe and 10 remain Undecided.
Performance vs Outcome
1.
Coca-Cola is fighting 12 consecutive years of soda
consumption decline. Its stock is at an all-time high.
2.
Tesla is changing the world, and orders for its new car
are off the charts. Its stock is at 18 months low.
3.
Cigarette consumption has dropped 44% since 1981.
Altria stock is up 71,000% since 1981.
4.
WalMart net income has tripled since 2000. Its stock
has lost 1.5% since 2000.
5.
Apple has earned almost a quarter trillion dollars of
profit since 2012. Its stock has barely budged.
6.
Amazon's profits round to zero since 2012. Its stock
has tripled.
7.
2009 was one of the worst years for the economy in a
century. The market rose 27%.
8.
2015 was a good year for the economy. The market rose
1%.
9.
Brazil's economy is a disaster. Its stock market is
flat over the last two years.
10. US
is enjoying the longest streak of low unemployment claims in 4 decades. S&P 500 is flat over the last two yrs
And so on.
I'm fascinated with the problem of why really smart people have such a hard time predicting the future. It's mostly because the future is more random than we think. But it's also because future performance (like earnings and economic growth) doesn't tell you half of what you need to know to predict future outcomes. Outcomes are determined by performance within the context of expectations, with importance heavily weighted toward the latter. And if predicting future performance is hard, calibrating them against expectations is close to sorcery.
Even if you accurately forecast future performance, predicting the outcome from that performance requires answering two questions:
Are current expectations reasonable? What will future expectations be?
The first is possible to answer, but pretty hard. We can look at sentiment and valuations to gauge, based on past trends, whether the current mood seems reasonable. But disagreeing with popular sentiment is easier said than done. Few things feel better than fitting in, and having a viewpoint that goes against everyone around you is a mental battle not one person in a ten can maintain for long. Rather than identifying extremes in current sentiment, it's easier to justify the market's mood no matter what it is. Billionaire investor Howard Marks once wrote:
The problem is that extraordinary performance comes only from correct non consensual forecasts, but non consensual forecasts are hard to make, hard to make correctly, and hard to act on.
The second – predicting future expectations – is even harder. To know where stock prices will be in five years, I have to know what mood people will be in five years from now. Which is as ambitious as it sounds. Ask yourself what kind of mood you yourself will be in April 2021, and you'll shake your head in laughter. Ask what kind of mood seven billion strangers will be in April 2021 – that mood, of course, will determine stock prices in five years -- and it's hard to keep a straight face. This is where the disconnect between performance and outcomes occurs:
Accurately predicting five years of economic growth might not do much for the stock market if, five years from now, people are worried about the future five years from then.
As Ben Graham said, "In the short run, the market is a voting machine. But in the long run, it is a weighing machine." Even if future markets are gloomier than they are now, rising profits and compounding business assets can leave investors with a positive return. This "weighing" is why true long-term investing isn't gambling. Real value is created, even if we know exactly when it will flow to shareholders' pockets.
But the more precise we try to forecast, the more we rely on predicting emotions and expectations. In a world where analysts focus most of their time analyzing performance – what earnings will do, or what the economy will do – and it's no wonder we struggle to predict outcomes.
NIFTY 2007 - NIFTY 2015
Now some amazing facts !!
- Out of the Top 20 stocks in 2007 only 10 remain in 2015 in the Top 20 weights.
- Out of top 20 in 2007 there are 4 stocks which are not part of Nifty. ( RPL got merged in RIL ). This constituted 11.67% of Nifty.
- Out of the Top 10 weights in Nifty only 3 remain in Top 10 of 2015. These 3 constitutred 20.03% of Nifty and are now only constituting 14.95% of Nifty.
- The top 4 weights of 2015 Infosys/ hdfc bank / hdfc / itc now command a weight of 28.85% but used to command only a weight of 9.95% in 2007 !! -------------- ( WOW )
- Reliance Industries and Reliance Petroleum i.e RIL an RPL had a combined weight of 14.56% and now its only Reliance with a weight of 5.91% ------------------ ( WOW)
- Rcom was the 7th largest weightage in Nifty is no more part of it. Even Unitech was at the 16th place.
- ONGC the 2nd largest weightage on Nifty is now at the 21st place. From 7.13% to 1.56%.
Sectoral Changes
- The big sectoral shift has been from Oil and Gas to Banking. Oil and Gas was at 24.46% in 2007 and is now 9.14% and Banks were 11.46% are now 23.94%.
- Telcom was a darling in 2007 with a weightage of 11.26% and now closer to 2.1%.
- IT was at 7.2% in 2007 is now at 15.02%
- Metals and PSU banks weightages have reduced by half.
- The big shift is Nifty was an index which in 2007 had majority of the index tilted towards investment linked sectors such as Oil * Gas, Telecom, Power, Industrials. This has now shifted towards sectors which are Banks, Financials, export oriented - IT and Pharma
- Such a shift is a major reason for polarization in sectoral/stock performance and Nifty.So we have a bunch of stocks down 50-70% but Nifty is up 20% since 2007.
The Folly of Short Term Predictions by Udayan
If there’s one thing which I’ve learnt, and perhaps the only thing, is that these things which are said by investment experts, where the Nifty will be 12 months down the line, where the stock price will be four quarters or 8 quarters, is complete and absolute bunkum. You know, there is no way in the world you can predict these things.…
The one things which I regret, in my career as a business or television commentator, is that we’ve played our part in leading people to a very short-termist, predictive kind of a mindset, for equity markets. That is not the asset class. I think we’ve played our part in telling people that listen to the chartists, because they’ll be able to tell you where the market will be tomorrow or next week. Listen to analysts who can predict where markets will be in three quarters time. And I think that’s a mistake. If I could do it differently, in hindsight, I would do it differently.
Because that is not how smart investors behave. They never tell you that my investment in this stock is predicated on my Nifty target of 9500 in 2016. If they did that, they would never make money. But amateur investors make the mistake of doing that; which is why they don’t end up making a lot of money, unfortunately.
The full video is here:
Some of this is true. I have often spoken of my distaste for predictions, even of my own. Because predictions are about a binary thing – either you get it right or you don’t. But profit is a different thing – you can make lots of little profits (you’re right many times!) and one large loss (you’re wrong once!) – which means you have a great record as a predictor but a horrible record as an investor.
But I don’t share his distaste for the short term. We have seen an incredible bull run in the last fifteen years, and a big bear market with a V shaped recovery. We would be ignorant if we didn’t know that the highs of 2007 – when the Sensex was at 21,000 – is still way higher in rupee terms than the 28,000 levels today, because if you factor in 8% inflation, that value was way higher today. We have, in effect, seen inflation lifting stocks, which is why ooh, the long term looks so good.
It’s not so great when you don’t have that inflation supporting you. When you can’t just buy any stock and it will go up. When you have that level of inflation supporting stocks, you can be the “oh I will buy for the long term” and forget about your purchases after you buy. It’s a different story now, when even stories that made great sense in the longer term are no longer so.
The focus on the short term is also about our lack of safety nets. People want to see money fast, because they don’t trust that they will see it later. But there’s a deeper, richer story. It’s the power of the shorter term trader that makes it useful for a longer term investor to work the markets. If there were only long term investors you wouldn’t have a market. If that is true, then it’s as important to cultivate the short term trader as much as it is to help long term investors.
Having said that, the approach of asking for five stocks every hour of a technical analyst will result in, for the most part, junk. The technical analysts know it too, and they also know that you could look at any chart and come up with a bullish or bearish stance in 15 seconds, and it will sound intelligent. The channels love it, and the viewers love it, and the long term investors don’t even bother to watch TV because they’d rather read balance sheets. For the channel, it would be sinful to ignore the short term investor, but it is true, in my opinion, that they could have done a lot more to educate people on the insane risks of mad-bullish or panic-bearish behaviour.
Or, that the short term trader should focus on probabilities, not outcomes. That there’s a point about diversifying short term bets too. That a risk management framework – from sizing positions to setting up stop losses – is essential. That you need a trading log – which most channels do not maintain of their own analysts. (Btw, having been on TV, I know my prediction record isn’t good either. But all our trades, at Capital Mind, have a log, and our results have been good.) Or that you simply need to take it on the chin and accept that either a) you don’t know or b) you’re just wrong – every once in a while.
We have a new breed of long term investors on twitter who will shout out their stocks saying “5% up today” every time a stock moves. And when it falls, they are a long term investor. This is because people are thirsty for the winners, even if it didn’t matter that the investment was just 1% of the person’s portfolio and if it doubled, it would mean a 1% return for him. We are built for focused joys, not lasting happiness. We love the adrenalin of a 5% move, but a 0.5% move on 20 continuous days doesn’t make us salivate. That is why we love reality shows, soap operas, and gambling – because something’s happening or being made to happen all the time.
TV is, really, a reflection of ourselves. Udayan walked away from it all and can probably say all that he wants with a straight face, but the reality is that he loved the short term guy when he was out there, and they loved him back. He’s now like the rich old bald man who tells the struggling young career guy that money shouldn’t be the only thing in life. Right, after you made enough of it.
You dont get an award for dying, & that’s pretty much all that's guaranteed in the long term.
Oh & btw, my prediction for the Nifty for 2016 is – it will move between various numbers.
Reason for Sensex crashing to 13 month low
The BSE Sensex and Nifty are trading near 13
months low and have declined 17% from the 2015 High which we saw on 04
March 2015. In Just 6 months Stock market have wiped out the gains made
in past 13 months.Let me put the reason from both Technical and Fundamental Perceptive Sensex
corrected by 500 points Nifty almost 200 Points making today as Black
Friday.
Fundamental
- Concerns over Fed rate hike
Equity Market likes liquidity, Friday Strong US jobs data and
Unemployment rate coming sub 6% fueled expectations that the US Federal
Reserve may raise interest rates sooner than previously thought.
Hike Rate means sucking liquidity out of system and this will
flight to safe assets in Bonds and stronger currency like USD and money
getting sucked out of Emerging market. India Markets have received
$11Billion in 2015 till date and up 8% till date so profit booking can
be done by FII’s.
- Expensive valuations of Stock Market
Sensex is trading at more than 20 times FY15 and 17 to 18 times
FY16 earnings, ALSO PE (Price to Earning Ratio) as discussed was
touching 24 before correction has started and still trading around 21 so
valuation are still not reasonable.
- No Pick up in Earnings growth
It will take at least two quarters for the easy monetary policy
benefits to trickle down and pick-up in earnings growth is likely to be
the next big trigger for markets. The third quarter results were quite
disappointing worst quarter result in almost 5 years.
Dollar gaining strength
The dollar index is gaining strength against basket of currencies including rupee. Yesterday Mario Darghi has also said to increase QE which will further weaken Euro and Dollar will rise is due course.- Slowdown caused by China and Yuan Devaluation
- Rupee at lowest since September 2013
Technical
- Trading below 200 DMA/8k Level : Nifty/ Sensex are trading well below its 200 DMA, putting pressure on market, as many FII’s have 200 DMA benchmark for buying or selling.Break of sacrosanct level of 8k and closing below it for 2 week is sign of weakness.
- Gann Date Effect- As discussed in Weekly Analysis Gann/Appoint and Gunner plays an important role in finding impulsive move, all studies were pointing towards a big move.
- NF opening volume in first 15 mins was 25 Lakh highest seen in past 2 years suggesting serious long liquidation by smart money.
TATA MOTOR DVR > < TATA STEEL
THOSE WHO CAN'T AFFORD 300 BUCKS FOR TATA MOTORS CAN INVEST IN
TATA MOTOR DVR AROUND 200-210 LEVELS FOR LONG TERM
VOTING RIGHT DIFFERENCE + 5% HIGHER DIVIDEND TRADING @ 34% DISCOUNT
TATA MOTOR DVR AROUND 200-210 LEVELS FOR LONG TERM
VOTING RIGHT DIFFERENCE + 5% HIGHER DIVIDEND TRADING @ 34% DISCOUNT
What is a DVR share?
DVR stands for Differential Voting Right. Companies issue DVR shares to prevent any hostile takeover and dilution of voting rights. This also helps strategic investors who are looking at a big investment in a company, but with fewer voting rights. A Tata Motor DVR has 10 per cent voting right as compared to an ordinary Tata Motor share.
Why should retail investors invest in DVRs?
DVRs are suitable for retail investors who are not concerned with voting rights as they don't intend to affect the decision making of the management. The same company's shares are available at a lesser price for the same fundamentals. Besides, Tata Motors DVR fetches 5 per cent higher dividends as compared to ordinary shares of Tata Motors.
What are the disadvantages?
DVR shares are usually thinly traded. Also, during bearish phase, the discount over Tata Motors shares could widen and this could be a dampening factor.
HSBC: A Look at History Shows World Markets Are Close to the Bottom
Since 1988, the MSCI All Country World total return index has
suffered a drop of more than
10 percent on 16 occasions, averaging a 20 percent decline over a span of 18 weeks.,
By comparison, this retreat has lasted for 14 weeks, during which time the index has given back 19 percent. Though timing the market is a tricky task indeed, Laidler points out that investors who manage to buy the trough can look forward to an average 12-month return of more than 20 percent:
10 percent on 16 occasions, averaging a 20 percent decline over a span of 18 weeks.,
By comparison, this retreat has lasted for 14 weeks, during which time the index has given back 19 percent. Though timing the market is a tricky task indeed, Laidler points out that investors who manage to buy the trough can look forward to an average 12-month return of more than 20 percent:
Other factors such as elevated valuations and low earnings growth
amplified the
pressure on global equities, effectively adding "fuel to the fire."
The S&P 500 has tumbled by at least 2 percent for three consecutive sessions as of Monday,
only the third time this has occurred in more than 50 years.
pressure on global equities, effectively adding "fuel to the fire."
The S&P 500 has tumbled by at least 2 percent for three consecutive sessions as of Monday,
only the third time this has occurred in more than 50 years.
Do Not Panic. Its all going to settle down ^_^
All red over the heatmap. Top loosers from Nifty 50 pack are VEDANTA, GAIL, TATA STEEL, CAIRN crashed more than 13%. And Nearly 31 stocks out of 50 crashed more than 5%.
Sector Heatmap
All sector ends in red. Top loosers are from Airlines, Gems & Jewellery,
Hospitality, Tyres, Real Estate, Paper & Shipping sectors
POWER OF PHARMA - - - WEALTH CREATION (2008-2015)
LARGE CAP Pharma Cos
1. DR REDDY – Rs 387 in 2008 to now CMP – 3547.90.
So investment of Rs 10,000 in 2008 would be today – Rs 91,677 !! ( More than 9 times in 7 years !! )
2. SUN PHARMA – Rs 890 in 2008 to now – Rs 972.95. Meanwhile, stock split from FV 5 to 1 & bonus of 1:1 in 2013; So, if u bought 1 share at Rs 890 in 2008, u would have 10 shares at Rs 972.95 today.
So investment of Rs 10,000 in 2008 would be today – Rs 1,09,320 !! ( Almost 11 times in 7 yrs!!)
3. LUPIN – Rs 430 in 2008 to now CMP – Rs 1833.25. Meanwhile, stock split from FV 10 to 2 in 2010; So, if you bought 1 share at 430 in 2008, you would have 5 shares at 1833.25 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,13,168 !! ( More than 21 times in 7 years !! )
WHAT ABOUT SMALL / MIDCAPs ?
1. TORRENT PHARMA – Rs 112 in 2008 was a 950 CR market cap Co to now CMP – 1208.70 today. So if u bought 1 share at Rs 112 in 2008, u would have 2 shares (bonus 1:1 in 2013) at Rs 1208 today
So investment of Rs 10,000 in 2008 would be today – Rs 2,15,550 !! ( More than 21 times in 7 years !! )
2. GRANULES INDIA – Rs 28 in 2008, was just a 57 CR M cap Co to now 83.80 today. So if you bought 1 share at Rs 28 in 2008, you would have 10 shares (split from FV 10 to 1 in 2015) at Rs 83.80 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,97,163 !! ( Almost 30 times in 7 years !! )
3. NATCO PHARMA – At Rs 38 in 2008, NATCO PHARMA was just a Rs 128 CR market cap Co !! to now CMP – 2213.70 today. No stock split or bonus meanwhile.
So investment of Rs 10,000 in 2008 would be today – Rs 5,82,552 !! ( More than 58 times in 7 years !! )
4. AUROBINDO PHARMA – At Rs 101 in 2008 was a Rs 588 Cr Co to now 1374 today. The Stock split from FV 5 to 1 in 2011. So, if u bought 1 share at Rs 101 in 2008, u would have 5 shares at Rs 1374 today
So investment of Rs 10,000 in 2008 would be today – Rs 6,76,648 !! ( More than 67 times in 7 years !! )
5. AJANTA PHARMA – At Rs 48 in 2008 was just a 57 CR Mcap to now1579. Meanwhile stock split from FV 10 to 2 & a bonus of 1:2. So if u bot 1 share at Rs 48 in 2008, u would hv 7.5 shares at 1579 today.
So investment of Rs 10k in 2008 would be today – Rs 24,42,757 !! ( More than 240 times in 7 years !!! )
1. DR REDDY – Rs 387 in 2008 to now CMP – 3547.90.
So investment of Rs 10,000 in 2008 would be today – Rs 91,677 !! ( More than 9 times in 7 years !! )
2. SUN PHARMA – Rs 890 in 2008 to now – Rs 972.95. Meanwhile, stock split from FV 5 to 1 & bonus of 1:1 in 2013; So, if u bought 1 share at Rs 890 in 2008, u would have 10 shares at Rs 972.95 today.
So investment of Rs 10,000 in 2008 would be today – Rs 1,09,320 !! ( Almost 11 times in 7 yrs!!)
3. LUPIN – Rs 430 in 2008 to now CMP – Rs 1833.25. Meanwhile, stock split from FV 10 to 2 in 2010; So, if you bought 1 share at 430 in 2008, you would have 5 shares at 1833.25 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,13,168 !! ( More than 21 times in 7 years !! )
WHAT ABOUT SMALL / MIDCAPs ?
1. TORRENT PHARMA – Rs 112 in 2008 was a 950 CR market cap Co to now CMP – 1208.70 today. So if u bought 1 share at Rs 112 in 2008, u would have 2 shares (bonus 1:1 in 2013) at Rs 1208 today
So investment of Rs 10,000 in 2008 would be today – Rs 2,15,550 !! ( More than 21 times in 7 years !! )
2. GRANULES INDIA – Rs 28 in 2008, was just a 57 CR M cap Co to now 83.80 today. So if you bought 1 share at Rs 28 in 2008, you would have 10 shares (split from FV 10 to 1 in 2015) at Rs 83.80 today.
So investment of Rs 10,000 in 2008 would be today – Rs 2,97,163 !! ( Almost 30 times in 7 years !! )
3. NATCO PHARMA – At Rs 38 in 2008, NATCO PHARMA was just a Rs 128 CR market cap Co !! to now CMP – 2213.70 today. No stock split or bonus meanwhile.
So investment of Rs 10,000 in 2008 would be today – Rs 5,82,552 !! ( More than 58 times in 7 years !! )
4. AUROBINDO PHARMA – At Rs 101 in 2008 was a Rs 588 Cr Co to now 1374 today. The Stock split from FV 5 to 1 in 2011. So, if u bought 1 share at Rs 101 in 2008, u would have 5 shares at Rs 1374 today
So investment of Rs 10,000 in 2008 would be today – Rs 6,76,648 !! ( More than 67 times in 7 years !! )
5. AJANTA PHARMA – At Rs 48 in 2008 was just a 57 CR Mcap to now1579. Meanwhile stock split from FV 10 to 2 & a bonus of 1:2. So if u bot 1 share at Rs 48 in 2008, u would hv 7.5 shares at 1579 today.
So investment of Rs 10k in 2008 would be today – Rs 24,42,757 !! ( More than 240 times in 7 years !!! )
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