Sensex disappoints in FY 16 as many of the 30 constituents lose big value

FY 16 has been a mixed year for Stocks with Markets on a downward drift  with  Sensex closing 9.4% lower  at 25341

Sensex disappoints in FY 16 as many of the 30 constituents lose big value 

Interesting & Heartening to it’s Shareholders ,Reliance has been the biggest constituent gainer at @ 27% while at the other end BHEL has lost half it’s value at 51% !  ~ another 11 companies have lost between @ 19% to 30 % values

Domestic Concerns revolved around  second consecutive failure of monsoon in 2015 &  slow pace of Reforms  & Corporate Earnings Lethargy with growth in single digits despite boasts of GDP Growth of over 7% and lower Inflation and Oil Price falling 40%

Global Concerns revolved around  China’s Growth slowing down considerably & It’s Stock Markets losing a lot of it’s froth in panic falls, continuing recession in Europe & expectations of the US Fed raising rate

Consequently FPI Inflows which were a record US $ 17 b in FY 2015, reversed to outflows of US 2.1 b in FY 16.These outflows would have been higher if last month March 2016  had not seen a reversal back to FPI Inflows of US $ 3.2 b 

In the first three months of this Calendar Year 2016 , January &  February 2016 witnessed significant outflows of US 1.67 b & US $0.8 b respectively that dropped Sensex to 23000 levels.On the back of many countries like Japan,Switzerland and Sweden embarking on Negative Interest Rate Policy,the  US Fed send out dovish signals and has delayed Rate hikes.This saw FPI Equity Inflows smartly cross US $ 3 b in  March 2016  getting them back into the Green in 2016 & revive the Sensex back up @ 10% to 25500 levels or else FY 16 would have seen a Sensex drop of nearly 5000 points & @ 18%,double than what it actually did in the end

Here are some FY 16 Trend observations :

  • Sensex closed down 9.4%.It was down @ 18 % just around a month ago but smartly pulled back on record US $ 3b FPI Inflows in March 2016
  • Of the 30 Sensex Constituents,amusingly after a seven year itch perhaps 🙂  Reliance is the biggest gainer  at 27% taking it’s Market Cap to US $ 49 b,next only to top TCS  which  despite a flat year retains Top Market Cap of US $ 73b !
  • Six Scrips,including all weather favourite TCS (Market Cap US $ 73b) have remained flat
  • Of the Four Banks,only HDFC Bank stays in the Green just about,the rest have lost lot of value from one third to one fifth
  • India Growth Proxy Larsen & Toubro has lost 26% Value
  • Four Pharma Majors have also dropped significantly from 13% to 28%
  •  Three IT Bellweathers saw Wipro down 10%,Infy up 10% and TCS  in between remaining flat
  • Of the Five Auto Majors,the two 2-wheelers are both in the green,two ,Maruti & M & M are flat while Tata Motors has lost 30% value
  •  Three eternal FMCG Favorites,ITC,Asian Paints & HUL have held up
  •    After a Steel Sector Battering past few years,Tata Steel is now catching it’s breath
  • All  Five  Non Bank PSUs continue to flounder ~ BHEL has lost half it’s Value follwed by ONGC down 30% ,Coal India down 19%,NTPC down 13% & Gail down 8%
  • Housing Finance Leader HDFC too has taken a beating of @ 16%
  • Controversial Adani Group’s Adani Ports is down 20%
  • Telecom Leader Bharti Airtel is down 11% despite getting a 4G breather as Reliance’s Jio ,expected to be a sector disruptive force,launch continues to be delayed but should be fully operative by FY 17 year end
  • read more

    IDBI Bank @ Rs 68 ~ Will Govt really let go?

    IDBI Bank @ Rs 68 ~ Will Govt really let go?

    In 1995  IDBI the DFI came out with an IPO at Rs 130.I had given it the notorious sobriquet ‘Instant Death By Investment !’ as the Pricing was way to High.The IPO was bailed out by UTI at the time in a quid quo pro really as then IDBI subscribed to Unit 64 at the high purchase price which was a scam in itself as it was 60% higher than the actual Unit 64 NAV which hovered around par of Rs 10 !

    Then in 2004  IDBI the DFI merged with IDBI Bank  and in 2010 I had recommended it at Rs 130 in 2010 for several reasons.It did climb past Rs 200 the same year but then disappointed and started it’s downward slide as NPA Demons begin surfacing big time.

    Last Month in the second week of February these NPA Demons caused the Share Price to drop below Rs 50

    On February 29,2016 our  FM made this  specific budget phraseology for IDBI :

    “The process of transformation of IDBI Bank has already started. Government will take it forward and also consider the option of reducing its stake to below 50 per cent” 

    It was a no brainer for the Share Price to begin rising the same day from Rs 58 levels to cross Rs 60

    It’s now moved up @ Rs 68

    Here’s the Share Price Trend of IDBI Bank  from 2004 to 2016 (in Rs)

    Year

    Open

    High

    Low

    Close

    2004

    62.90

    115.00

    29.25

    109.80

    2005

    110.95

    130.95

    76.30

    97.15

    2006

    98.15

    110.00

    48.50

    76.30

    2007

    76.80

    181.00

    66.50

    165.30

    2008

    166.50

    180.30

    53.00

    67.65

    2009

    68.00

    140.00

    39.75

    127.45

    2010

    128.00

    202.25

    105.85

    164.75

    2011

    165.75

    168.30

    77.40

    77.80

    2012

    78.30

    121.50

    77.15

    111.40

    2013

    112.10

    118.20

    52.30

    66.45

    2014

    66.85

    116.50

    52.95

    73.15

    2015

    73.25

    95.70

    52.45

    87.80

    2016

    90.80

    91.15

    47.40

    68.85

    The Book Value of IDBI Bank is over Rs 110 giving the relative Valuation of  0.6….that’s of course one accepts current audited GPA levels of Rs 19615 crs ,that’s 8.94% of Advances and with a 62.92 % of Provision Coverage

    Government owns 80.16% of IDBI Bank and if it is open to bring this down below 50% as proclaimed in the Budget by our FM then it begs the question ~ Will they just bring it down but yet retain Management Control or will IDBI really be up for Privatisation and therefore up for Sale ! ?

    Quickly the IDBI Employees have voiced their displeasure and threatened to go on strike in the crucial last week of this month of March 2016 which closes out FY 16

    Why would the IDBI Employees resist Privatisation or Government diluting it’s stake below 50!?

    Seriously ask yourself this ! I reflected and immediately came up two big reasons in my view :

    1. Insecurity of Jobs ~ This is understandable as Employees have huge job security under the Government ~ Bank can Hire but not Fire ~ at best Government can try VRS as they’ve been doing over the years in PSU Banks ~ Connect this with how bloated Government Enterprises really are on workforce be it the Railways or Coal India
    2.  Accountability & Transparency in Operations ~ This would open a Pandora’s Box in the Bank for all the NPAs & who really is responsible in the Bank to have advanced Loans that have turned Bad.Of the over Rs 2 lakh crores advances ,the Bank reportedly has an exposure of  Rs 7000 crs  to the JaiPrakash Group,Rs 15000 crs to the Essar Group and @ Rs 925 crs to Kingfisher Airlines.In fact the ED is investigating Vijay Mallya & his Kingfisher Airlines for Siphoning off  @ Rs 300 crs Funds from the Rs 900+ crs IDBI Loan      

    So will our Government be influenced by the IDBI Employees opposition & not go ahead with it’s plans to sell it’s stake in IDBI Bank to bring it below 50% ?…the Budget already shows FY 17 Disinvestment Target of Rs 36000 crs + Precise Strategic Disinvestment of Rs 20500 crs.This would  include  IDBI Bank Stake Sale planned read more

    Indiabulls Housing Finance & Reliance Communications sinking on Bourses !

    Post Bihar Elections Results observe the rapid decline in share prices of Indiabulls Housing Finance & Reliance Communications!

    Both are sinking on the Bourses  by 15% + & 10% respectively today ….far more than Sensex drop of 1% to 25600 levels !…and both are traded in F & O Segments too !

    Indiabulls Housing Finance down 15% + this morning !

    Indiabulls Housing Finance had recorded a high of Rs 820 on BSE on August 10,2015 and was available at even Rs 750 levels end October 2015,just a fortnight ago!.Last few days it has rapidly sunk and today the intensity was a worrying over 15% to sub  Rs 600 levels this morning

    This is just a day after it announced it was acquiring 39.76 % stake for US $ 100 m in the UK Bank OakNorth as was announced also by the PM in his address to Businessmen in UK yesterday while on a three day UK Trip.Interestingly this acquisition was guided by the outspoken and blunt Dr K C Chakrabarty who is on the Board of Indiabulls Housing Finance and who retired in 2014 as Dy RBI Governor…I had blogged on him then  when he was blasting the banking rot !…See the link below :

    Why Now? ~RBI Dy Governor K C Chakrabarty speaks his Mind on the Banking Rot and seeks to retire a few months early !

    Saturday, March 22nd, 2014

     

    Recently in September 2015  the Company had also raised Rs 3997 crs in a QIP at Rs 702 that took it’s networth past Rs 10000+ crs.It has just announced a third interim dividend for FY 16 on it’s FV Rs 2 Share

    BSE shows an average Two Week  Daily Volume of just 49000 shares .But today there’s mean abnormal selling at just past noon the Volume is 8.6 lakh shares already !

    What’s happening ! ? Anybody knows !?

    Incidentally the Chairman Sameer Gehlaut too is picking up a 10% stake in the UK Bank in his personal capacity

     

    RCom ringing alarm bells on the bourses

    Reliance Communication  recorded a day’s low of Rs 63.75 down over 10% this morning and is trying to recover from there.Just last week it was Rs 82 !….having surged from Rs 50 levels end August 2015….down by 20% from Rs 80+ levels inside days !

    Average Two Week Daily Volume is 16 lakhs but it’s approaching 30 lakhs already on BSE as we approach 12.30 pm!

    Anybody can explain !?

     

    Whatever be the reason ! and there has to be !,such Volatility in such F & O Segment Scrips is unnerving for  Speculators,Traders & Investors et all with the exception of Insiders !

    And Both were positioned well,despite Corporate Governance Issues,to move further ahead on favourable fundamental developments and on current valuations  !…and I did discuss them at my recent NSE Workshop on October 31,2015 highlighting the Corporate Governance Risks though ! read more

    Value Protects in Inefficient & Wildly Swinging Scary Stock Markets

    Value will Protect in a Wildly Swinging Market !

    How Terribly Inefficient our Stock Markets are !

    The Share Price Swings in Small & Mid Caps can be equally exhilarating and devastating !…depends !

    And all this happens when the Sensex and Nifty move in a very narrow range !

    Down ! Down ! Down!

    Look at Amtek Auto’s Crash yesterday and continuing today !…all because the Exchanges announced that it will no longer be traded in the F & O Segment 

    It was Rs 141.50 on August 17,2015.Yesterday August 19,2015 it crashed  by nearly 40% and Rs 50 to hit a low of  Rs 78 before closing at Rs 89 !

    And this morning August 20,2015  it crashed another 40% to a low of Rs 50.70 before now recovering to Rs 67 levels !  

    So the fall in three days from a High of Rs 141.50 to a low of Rs 50.70 is 64% erosion of market cap  from Rs 3100 crs to Rs 1100 crs in just one big Breath ! with High Volumes but low Delivery %….SCARY !

    And this is a Company where the Promoters Dhams & Their Companies own 48.98%,FPIs like Goldman Sachs & Macquarie hold 18.83%,Domestic Institutions like LIC hold 16.47% as on June 30,2015.

    There were over 46000 shareholders on this date.Spare a thought for them !…and for those who were long in F & O !

    …and Spare a Curse for those Broking Houses and FPIs who recommended this Scrip !

    Did not all know that the Group is struggling with over Rs 25000 crs in debt !….Wise after the Event ! 

     

    Date

    Open

    High

    Low

    Close

    WAP

    No. of 
    Shares

    No. of 
    Trades

    Total Turnover

    % Deli. Qty to Traded Qty

    17/08/15

    135.00

    141.50

    127.55

    133.10

    133.54

    11,27,928

    15,415

    15,06,28,023

    17.63

    18/08/15

    133.25

    134.25

    127.40

    128.55

    129.54

    5,32,507

    5,649

    6,89,83,199

    23.42

    19/08/15

    126.90

    126.90

    78.00

    89.00

    100.86

    35,47,065

    26,846

    35,77,46,778

    36.40

    Look at Stampede Capital  !

    Rs 650 two days ago after an all time high of Rs 800 on August 6,2015 and down on two consecutive lower circuits of 20% yesterday at Rs 494 and even today to Rs 406 on BSE !….CRAZY !…and SCARY!….just over 2700 shareholders,one being Superstar Amitabh Bacchan (entered a year and a half ago picking up One Cr shares at Rs 88 & similar at  Rs 110 levels), at June 30,2015 in what is clearly a highly controlled scrip

    Look at Ansal Buildwell ! Big Up & Down Swings in three days ! 

    Clearly Insider trading Involved or can the long positions be defended as aggressive risk taking based in favourable anticipation of a Supreme Court Judgement that was announced yesterday on the Ansal Brothers for the Uphaar Cinema Hall Tragedy that took 59 lives 18 years ago in a devastating Fire !

    On August 17,2015 the Share Price was Rs 123.On August 18,2015,just a day before Supreme Court Order the Price flared to Rs 148.30.Yesterday it closed up on upper circuit at Rs 163.10 ! as Supreme Court announced merely a Fine of Rs 60 crores on the Brothers and no Jail Sentence !….and today it’s on lower circuit at Rs 146.80 nearing noon !…and the rise was being justified as Market Cap just @ Rs 100 crs and land bank value worth Rs 10000 crs !       read more

    Tata Chemicals soaring towards Rs 500 and beyond ~ Fertiliser Business Sale Fertilising!?

    Tata Chemicals’ on the Roll ! up @ 18% this month ! including the 6%+ run up today on highest volumes this month

    As this month of July began I was quoted by Economic Times on July 1,2015 itself in their headline story on Tata Chemicals

    Quoted By Economic Times For My US $ One Billion Valuation Of Fertliser Business Of Tata Chemicals

    The Share Price which was at Rs 415 -Rs 420 levels as June closed shot up past Rs 430 with heavy NSE Volumes of over 1 million shares before dropping back

    But look at today’s NSE Volumes of over 2 Million shares,coming on the back of two consecutive days of over 0.6 million shares each day !

    Share Price has zoomed to a high of Rs 495 before settling lower at Rs 487+

    Have highlighted the abnormal Volume Days in Bold Green so far in July

    Date

    Close in Rs

    Trade Volume

    16-Jul-2015

    487.60

    20,96,459

    15-Jul-2015

    460.20

    6,17,554

    14-Jul-2015

    449.25

    6,06,401

    13-Jul-2015

    444.00

    2,17,645

    10-Jul-2015

    442.05

    1,51,916

    09-Jul-2015

    442.55

    2,17,263

    08-Jul-2015

    437.95

    3,43,375

    07-Jul-2015

    449.25

    3,44,147

    06-Jul-2015

    441.30

    3,00,353

    03-Jul-2015

    434.60

    1,36,190

    02-Jul-2015

    434.00

    2,07,201

    01-Jul-2015

    437.10

    10,19,711

    30-Jun-2015

    420.90

    2,00,767

    It’s also quoted in the F & O Segment with a Contract Lot of 500 !

    Clearly a lot seems to be fertilising on the fertiliser segment sale by Tata Chemicals ! and I’ve opined for a year now that they must sell this low returns business segment if they get a good Valuation and they will ! and the Share Price consequently can move up very strongly even from here !

    Disclaimer : Tata Chemicals was recommended to clients in January 2015 as a SS 2 Select and we would have an interest in it

     

    Falling into the Technical Charting Trap in Stock Markets ! Stop Loss or Stop or Loss!

    Why do Most  Market Traders and Speculators always fall into the Technical Charting Trap !?

    To be kind to Technical Chartists,it’s probably for the same reason we fundamentalists may fall into a Value Trap even when Investing !

    Because we believe !

    Yet I’m pained and at a loss to see the game of feeding on each other continues to flourish for decades between Brokers & Technical Chartists & Market Media,especially Stock Channels !….and all seriously with a poker face  that serves to portray  some wisdom and credibility which is really lacking….sadly they believe in what they’re doing and new suckers are born every minute or old ones have short memories…the whole approach is horrendously incorrect as it seduces those who come looking for quick monies in Equities! ………inevitably and it’s always a foregone conclusion that the victim is always the Broker’s Clients who act out zillions of intraday and few days ideas largely fed by Technical Chartists

    In Bullish Market one does not needs Skills to make Money…everyone is making Money…An Advisor is tested in Bad & Bearish markets

    Yesterday  the Sensex corrected by nearly 500 points & nearly 2% in the day on a meltdown in Chinese Stocks earlier yesterday morning

    Stop Loss was triggered across the Trading Platform .

    Surely most of the technical chartists must be avoiding client calls ! as till day before they were crooning on stock channels to stay and buy long and looking forward to Sensex & Nifty rising on the basis of Market shrugging off, in their view, the Greece problem after the ‘No’ referendum came in for agreeing to strict IMF Measures for more Loans…they yet come on the Channels justifying yesterday  and Stop Loss being triggered !

    This throws up a major Risk,even with Stop Loss in place, in Speculating using the Technical Analysis Approach….Yes,even on a Fundamental Basis stocks may drop,but at least Investors don’t risk losing all principal !

    The way I see “Stop Loss” in the Technical Approach is ” Stop or Loss !” 

    As a Fundamental Guy, Contrarion at times,expect me to hold such a view on the Technical Analysis Approach.I have always held it

    Can only warn those Investing Monies in Equities to know the full risks of Operating & Investment Approaches before indulging in them

    For me it’s always been Fundamental as it should be for all