Sensex ends 280 points lower after a 1000-pt fall; DHFL tanks 45%


The S&P BSE Sensex partially recovered after crashing over 1,400 points in from the day’s high to settle 280 points lower at 36,842 on Friday.

The Nifty 50 index hit a low of 10,866 levels, but settled 91 points lower at 11,143.

The decline came on the back of a sharp fall in NBFC stocks. DHFL skidded over 50% in intraday trade on fears of a liquidity crisis. The management, however, assuaged investor concerns and said the company has not defaulted on any repayments. The stock settled nearly 45 per cent lower at Rs 337.80 on the BSE. According to the analysts, the IL&FS crisis was the main reason behind the selloff. That apart, a rise in bond yields also weighed on the sentiment.

In the broader markets, the S&P BSE SmallCap index fell 3 per cent to 15,763 levels, while the S&P BSE MidCap index lost 1.7 per cent to end at 15,596 levels.

NSE’s Volatility Index (India VIX), or the fear gauge, rose by over 11%

YES Bank fell 34 per cent in intra-day trade after the Reserve Bank of India (RBI) trimmed Rana Kapoor’s tenure as its MD & CEO. The private sector lender said on Wednesday that the Reserve Bank of India (RBI) had allowed Kapoor to continue only till January 31. According to sources, the RBI has cited corporate governance and regulatory issues for not extending Kapoor’s term. Further, the lender has been directed to search for a successor.

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Reblog: Analyzing Trading Volume: The Ultimate Guide


Volume is representative of how many shares change hands in a stock, and as such, it indicates the interest in a security. Since each stock is different, and has a different amount of shares outstanding, volume can be compared to historical volume within a stock to spot changes, or compared to other stocks to find which are suitable for trading. Volume is also used to confirm price trends, breakouts, and spot potential reversals. Volume has also been implemented into indicators, which can aid in analyzing stocks (and other markets).

Volume Significance

Volume is important because it shows the level of interest in a stock. Current volume in a stock, relative to prior volume, shows if interest is higher or lower in a stock than it was before. High volume, or relatively high volume (compared to prior volume), is more suitable for active traders. Very low volume typically indicates a lack of interest and usually little price movement. Volume is also significant for screening stocks. Average volume—the typical volume seen in a day over a period time—helps greatly in this regard. Day traders need to be able to get in and out of a stock quickly and with ease, so they will want to trade stocks with high daily volume – typically 1 million shares at absolute minimum.Swing traders and investors have a little more leeway and therefore may trade stocks with lower volume, around 500,000 and 100,000 shares or more per day, respectively. They still want stocks that have enough volume to get in and out when they need to, but the urgency is not quite as high as it is for short-term traders.That’s the significance of volume as a defined number; here’s how to analyze it.

Analyzing Volume

There are three primary ways we can use volume in conjunction with price analysis: confirming trends (or not), spotting potential price reversals, and confirming price breakouts (or not).

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Reblog: The Biology of Good Investing


Investment pundits – ourselves included – write a lot about how checking your portfolio too frequently is hazardous to both your financial and mental health. The evidence is overwhelming that those who check their portfolios on a daily basis tend to underperform those who check their portfolios less frequently.

The reason is simple: On any given day, there’s almost a 50-50 chance the market will be up or down. Because people dislike losses more than they enjoy gains – a behavioral finding known as loss aversion – people who check their portfolios daily find the process painful. And just like your gut reaction to pain is to draw away from the source of that pain, your gut reaction to seeing an investment lose money is to make a change. To sell. To panic. To act.

Changing your portfolio, or market timing as our Chief Investment Officer, Dr. Burton Malkiel calls it, is an investor’s Most Serious Mistake.

So what’s the solution? Just check your portfolio less often, right?

Unfortunately, things really don’t get much better if you check less frequently.

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Reblog: IRCON International IPO review


•    IRCON is under Railway Ministry.
•    It enjoys MINI RATNA status.
•    It has planned relisting after a gap of 7 years.
•    Issue is attractively priced with a discount of Rs. 10 per share for Retail investors.
•    It has order on hand worth Rs. 22406 crore.

ABOUT COMPANY:

IRCON International Ltd. (IRCON) is an integrated Indian engineering and construction company, specialising in major infrastructure projects, including, railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV sub-stations, electrical and mechanical works, commercial and residential properties, development of industrial areas, and other infrastructure activities. We provide EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for various infrastructure projects. IRCON also executes on build, operate and transfer mode in various projects in order to meet the requirements of its bids. In 2016, the company ranked number 248 in the list of the top 250 international contractors by Engineering News Record (ENR) of the United States. IRCON is headquartered in Saket, New Delhi and has an overseas office in Malaysia. Additionally, have 26 project offices in India and abroad (including in Sri Lanka, Bangladesh, South Africa and Algeria) and five regional offices to support and manage business operations. IRCON enjoys “Mini Ratna” status.

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Sensex ends 373 points up as rupee recovers; PM eco meet eyed


The equity markets settled 1 per cent higher on Friday as the rupee recovered against the dollar.

The S&P BSE Sensex reclaimed the 38,000 mark to end at 38,091, up 373 points while the broader Nifty50 index settled at 11,515, up 145 points.

In the broader markets, the S&P BSE MidCap settled 1.6 per cent higher and the S&P BSE SmallCap rose 1.4 per cent.

Among sectoral indices, the Nifty Pharma index settled 2.5 per cent higher led by a rise in the share prices of Divi’s Laboratories and Piramal Enterprises. On the other hand, the Nifty Bank index rose 1.3 per cent led by YES Bank and IDFC Bank.

The rupee strengthened by over 60 paise to 71.58 against the US dollar in intra-day trade. On Wednesday, the domestic currency rebounded from its historic low of 72.91 to end higher by 51 paise at 72.18 against the dollar.

This apart, Prime Minister Narendra Modi will hold a meeting with finance ministry officials later in the day to discuss the fall in the rupee and other economic issues. Rupee is Asia’s weakest currency in 2018, down more than 12 percent on a widening current account deficit and higher oil prices.

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Reblog: When a 10% gain makes you feel like a loser


Big gains can be hard to find in the financial markets. Nowadays, though, they seem to be everywhere — and that could change how you feel about taking risks.

As of Nov. 16, the S&P 500 is up 359% since the bull market began March 9, 2009, counting dividends, according to S&P Dow Jones Indices. This year alone through Nov. 16, Alphabet (the parent company of Google) has returned 32%, Amazon.com 52%, Apple 50% and Facebook 56%, including dividends. Bitcoin, the digital currency, has gained more than 700% so far this year.

Against that backdrop, even what investors used to regard as a generous annual gain — say, 10% — starts to feel paltry. New research into a mental process called “contrast effects” shows how that works and how it can alter your behavior.

Finance professors Samuel Hartzmark of the University of Chicago Booth School of Business and Kelly Shue of Yale University’s School of Management analyzed nearly 76,000 earnings announcements from 1984 through 2013 in which companies earned either more or less than investors were expecting.

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Reblog: Bill Miller – The question is not growth or value, but where is the best value?


One of our favorite investors at The Acquirer’s Multiple – Stock Screener is Bill Miller.

Miller served as the Chairman and Chief Investment Officer of Legg Mason Capital Management and is remembered for beating the S&P 500 Index for 15 straight years when he ran the Legg Mason Value Trust.

One of the best resources for investors is the Legg Mason Shareholder Letters. One of the best letters ever written by Miller was his Q4 2006 letter in which he discussed the end of his 15 year ‘winning streak’ and how too many investors miss the most important aspect of investing by focusing on value or growth. Miller writes, “The question is not growth or value, but where is the best value?” It’s a must-read for all investors.

Here’s an excerpt from that letter:

Bill Miller

Calendar year 2006 was the first year since I took over sole management of the Legg Mason Value Trust in the late fall of 1990 that the Fund trailed the return of the S&P 500. Those 15 consecutive years of outperformance led to a lot of publicity, commentary, and questions about “the streak,” with comparisons being made to Cal Ripken’s consecutive games played streak, or Joe DiMaggio’s hitting streak, or Greg Maddux’s 17 consecutive years with 15 or more wins, among others. Now that it is over, I thought shareholders might be interested in a few reflections on it, and on what significance, if any, it has.

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Sensex climbs 147 points as rupee firms; auto, metal stocks rally


The benchmark indices ended higher on Friday aided by strong gains in automobiles and metal stocks after the rupee firmed against US dollar. The S&P BSE Sensex ended at 38,390, up 147 points while the broader Nifty50 index settled at 11,589, up 52 points.

Among the sectoral indices, the Nifty Auto index settled 2.2 per cent higher led by a rise in the share prices of Hero MotoCorp, Bajaj Auto, Mahindra and Mahindra, and Tata Motors. Nifty Metal index, too, rose 1.9 per cent led by MOIL and Jindal Steel & Power.

The rupee was trading higher by 24 paise to 71.75 against the US currency in late morning deals on Friday due to sustained bouts of dollar selling from banks and exporters. Earlier, the rupee resumed slightly higher at 71.95 against yesterday’s closing level of 71.99 a dollar at the interbank foreign exchange market here.

Shares of YES Bank hit an over four-month low of Rs 322 per share, down 5% on the BSE on the back of heavy volumes. The stock was the largest loser among the S&P BSE Sensex and Nifty 50 index.

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Reblog: Burton Malkiel – How to Invest in an Overpriced World


Here’s a great article at the WSJ by Burton Malkiel, author of A Random Walk Down Wall Street and Chief Investment Officer of Wealthfront. Malkiel provides two strategies that might be worth considering in an overpriced world saying:

“What, then, can an investor do to control risk? The two strategies that work are broad diversification and rebalancing.”

Here’s an excerpt from that article:

What should an investor do when all asset classes appear overpriced? The 10-year U.S. Treasury bond currently yields about 2.6%, much lower than the 5% historical average and only slightly higher than the Federal Reserve’s 2% inflation target. Yields of lower-quality bonds are unusually meager compared with those of traditionally safe Treasurys.

For equities, the cycle-adjusted price/earnings ratio, or CAPE—the valuation metric that does the best job in predicting future 10-year rates of return—is about 34. That’s one of the highest valuations ever, exceeded only by the readings in 1929 and early 2000, prior to crashes. Today’s CAPE suggests that the 10-year equity rate of return will be barely positive.

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