Muses of Murari

CNX IT Index is forming bearish flag pattern.

Given that earnings coming out in next few days starting with IT major Infosys, this chart shows an interesting play out. Though INR is depreciating, which is good news for IT exporters, if the IT companies hedged dollar stream to a lower value, this opportunity may of no meaning to them.

Let’s watch how it plays out!

Check out the weekly charts for two stocks below and observe the price movement.
Page Industries sells Jockey apparels in India.

Lovable Lingerie

Rupa & Co, which sells inner garments & other things, listed yesterday.

Rupa blasted up in the initial hours and fizzled out at the end.

If stock price movement of Page Industries & Lovable Lingerie, is anything to go by, looks like market traders are very much in under garment business!!  If this is true, we may see some action Rupa & co in coming days.

Here is interesting article written by Aswath Damodaran on his blog about Buffett & Bank of America deal.

What did Bank of America get out of this deal? Let’s look at what it did not get first:

1. It did not get Tier 1 capital (the most stringent measure of bank capital), which includes only common equity, and thus does not get any stronger on that dimension. (Update: I have been getting mixed responses on this issue from those who are well versed in bank regulatory capital rules, some saying that I am right and others that I am wrong. The fact that it is cumulative preferred stock, according to some, makes it ineligible for Tier 1 capital, whereas others note that Citi was allowed in 2008 to count cumulative preferred as Tier 1.Here is one article that seems to provide clarity  on the topic. My final response. Whether this passes the regulatory rule requirement or not, it does not pass the common sense rule for Tier 1 capital. If financing results in a commitment of $ 300 million each year that you have to meet, or roll over, it cannot be true Tier 1 capital, no matter what the rules say… )
2. It gets no tax deductions, since preferred dividends are not tax deductible. So, the $ 300 million in dividends will have to be paid out of after-tax income.
3. It risks losing flexibility on dividend policy and stock buybacks, as a consequence of the restrictions imposed on this deal.

The only conceivable benefit I see accruing from this transaction to the company is that Buffett has provided some cover for the managers of Bank of America to make two arguments: that the bank is not in immediate financial trouble and that it is, in fact, a well managed bank. I, for one, am not willing to accept Buffett’s investment (or his words) as proof of either, and the way the deal is structured is not consistent with any of the arguments I have been hearing all day (from those who think it is good for Bank of America stockholders).

• First, let us assume that the bank is not in financial trouble and that the market has run away with its fears over the last few months. But, why would a bank that is not on the verge of collapse agree to raising capital at an after-tax rate of 15% and give up power over its dividend and buyback policy? And given the extremely generous terms offered to Buffett on this deal, how can this action be viewed as an indicator of good management?
• Playing devil’s advocate, let’s look at the other possibility, which is that the bank has been hiding its problems and is in far worse shape than the rest of us think. If so, perhaps the terms of the deal make sense to Buffett (high risk/high return), but the deal still does not make sense to Bank of America. If the bank is in that much trouble, it should be raising tier 1 capital, and adding $ 300 million in preferred dividends to its required payments each year makes no sense. And, if it is in fact the case that the bank is in a lot more trouble that we thought, how can Buffett in good conscience then claim that BofA is a “strong, well-led company”?

Either the terms of deal are way too favorable to Mr. Buffett or he is not being forthright in his description of the company… In either case, this does not pass the smell test.

No one could get this clincher deal other than Mr. Buffett!! But, the question is, did he lent his name/good-will to clinch this sweet deal?

Insightful article on recent PE deals valuing few of Indian e-commerce start-ups dizzy highs.

… Flipkart, a loss making company with FY11 topline revenues in the sub- 100 crore range, is raising a round at a $1 billion (that’s 4,500 crore) valuation. And then I hear that its main rival, the similarly-sized Infibeam is doing exactly the same.

.. MakeMyTrip (MMT) just announced gross revenues for the year of 550 crore, net revenues — if you take out the cost of hotel rooms they count as sales — of 270 crore and a profit of 23 crore. That’s about 8 percent on net. A travel agency with 270 crore in revenues and 23 crore in profit is not likely to raise a bead of sweat on Dalal Street. But it’s raising thunderstorms on Wall Street. The stock goes up to a 4,000 crore market cap. That’s enough to buy two Kingfisher Airlines and have enough left over to buy a few Mallya-type yachts. Two hundred times profits? Fifteen times sales? What’s up with the Yanks? Do they know something I don’t?

Past experience says it must be the US myopia on India (“Let’s just buy the Indian expedia!” says a man in a suit in a glass-walled Manhattan office. “Sure, boss,” the underling goes. “And the Indian Google”. “Brilliant, boss”. Little do they know the Indian Google is… Google and the Indian Yahoo is… Yahoo. But I digress.)

US market myopia is perhaps the single cause of survival for our other bellwether Internet firm, Rediff.com. This 15-year-old company announces its third straight year of losses and would be slaughtered if it was listed in India. Once India’s no. 1 site, it’s now barely in the top 10. Four years ago, when the Indian ad market was around 650 crore, Rediff did one-fifth of it with 130 crore. Today, in a digital ad market of almost 2,000 crore, Rediff does less than 100 crore. Some idiot stock analyst in New York calls it “the Google of the Ganges” and clueless punters take the stock price up to a market cap of 1,300 crore.

Rediff 1300 crore market cap? The investors are deeply screwed for their life time!!

I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, “no power on earth can stop an idea whose time has come”. I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome. – Manmohan Singh, Budget Speech, July 24, 1991

Source

Here is my favorite scrip making 52 week lows. Interestingly it is making a bullish WW pattern. If that pattern holds good, we can see very good upside of nearly 70% in coming weeks/months. Here is Glodyne Technoserve daily chart

click on the image to see it in enlarged format

To substantiate the above scenario, we’ve fib fan support in the same area (270 – 280)

click on the image to see it in enlarged format

If you see the charts above, the volumes are high on UP days and usually low in down days. Also volumes are slowly drying up after the scrip reached its peak in Nov’10.

Fundamentally the company is doing all right things. I’ve sense that smart/strong hands are bringing down the price and accumulating it.

Let’s see how things shape up in coming days.

Update : The chart at end of July 8th.

IndusInd Bank scrip making interesting moves…. Cup & Handle pattern.

Disclaimer: This is my study sharing. This is not to be considered as any kind of trading recommendation.

One of my colleagues asked me to pop up money towards his maid’s kids education. I’d idea of contributing certain sum every month for educating needy kids. But to my bad, I never acted towards it. This opportunity came by itself, and I grabbed it. We pooled in 8k rupees. Around Rs. 750 each. It’ hardly an expense in relative to spending we do.

This evening I got a call from that maid. She called from Anantapur, Andhra Pradesh. She thanked me profusely and her voice shows the true gratitude. After the call, I felt deep satisfaction, that I touched a life. Made a minute change in other person’s life. How satisfying it is!!

God bless, I should encounter such genuine opportunities and god willing I should contribute significantly. It’s not about feeling that I get as result, it’s about the realization that true happiness lies in things that we rarely do.

It looks like the flavor of the season is to accept & agree on a single idea – ‘Indian economy slowdown’. Recession in Indian lexicon is totally no-no. So says the elite economists. May be true. Prices are high. Inflation is high. Real Estate companies like DLF are selling lands to throw meatballs to investors by showing lower debts on book and not by selling more properties. So on and so forth.

How Indian stock market going to perform? Logically speaking, since economy is hurting a bit, so should stock prices. But stock market, the mystical goddess, need not follow the logic. Check this spot Nifty daily chart.

It looks to me, it is forming inverse head & shoulder pattern. Though the neckline is a sloping one. If my amateur chart reading turns out true, we can see rally in weeks/months to come. When people come to a consensus, the market ‘maatha’ would do just go opposite to it. Should wait and watch if spot Nifty breaks 5750!

Happy Investing.

Once this question hits us, we try to find answers on complex hurdles we are facing. Like internet penetration across country, online payment gateways, fund transfer charges and so on. But if we keep it simple, I think there are couple of reasons we can attribute to this pattern. One is  psychological reason and other one is economical reason. This aspect was quickly recognized by online retailers like flipkart and embraced it in their business model very well.

Recently, my friend wanted to buy an USB memory stick. And he doesn’t want to shop around. So I suggested him to try flipkart. Initially he was skeptical. Later when I told him, that they have ‘cash on deliver’ scheme, he immediately ordered one. He was delighted to receive his product the next day! This incident points out that two things. Firstly, to get a new customer on board, show him that business delivers. The ‘cash on delivery’ scheme is the real ‘loosen the purse’ trigger. Once you delight them on first experience, you have won a potential life long customer. Secondly, we love to see the product in hand and pay the cash. Don’t we? The well known ‘Indian Tangible aspect’ of buying.

From economic point of view, we have good number of people with #000000 money stashed around. They like to spend their unaccounted money and keep their account money clean. So ‘cash on delivery’ works perfectly here. One another reason I can think of, is behavioral financial issue. We don’t want our account money to get depleted through online transaction. We want it keep increasing. But, we’re fine shelling it out physically, since we see the product while buying! Here too, this scheme just fits right!