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Day: July 13, 2016

Insider in NBCC ?

4 Comments / Controversies, Corporate Governance, Insider Trading, Interesting News Sightings, Investing Approaches, Investing Themes, INVESTOR MISTAKES, IPOs, Real Estate, Reflections, STOCKS, When the Heart Explodes through the helpless Mind / By

Insider Trading in NBCC?

Check this BSE Trading Data past few days

NBCC BSE Trades

On Tuesday,July 5,2016 the Volume was just @ 86k & price closed at Rs 195.40…next day was EID Holiday…Thursday the Volumes jumped up over 10x to 953k shares & share price surged to close at Rs 215.30…till yesterday the surge continued with price closing at Rs 257.40

Today,Wednesday,July 13,2016 The Cabinet Committee on Economic Affairs chaired by the PM cleared the disinvestment of 15% Govt stake in NBCC   ….the price dropped sharply to close at Rs 229.80,down 10.72% from yesterday’s close and down 13.93% from intra-day high of Rs 267

Deliveries which earlier in the month were one third of Trading volumes dropped below 20% last few days on surging volumes

Someone has taken advantage of prior knowledge last week that there was a CCEA meeting scheduled today and this NBCC Disinvestment was on the agenda

Overnight Volumes don’t jump 10 x & 20 x & are accompanied by surging share price without some inside knowledge…one cannot tag off such huge Volume Surges as mere speculation on ‘Buy/Trade on Information & Sell on News’

The Government’s official Press Release today mentions estimated receipts of this 15% disinvestment at Rs 1706 crs…This indicates a Price of @ Rs 190 per share for the 9 cr shares they plan to disinvest…This Price was available only in the first few days of July this month….so this proposal was formulated then for the CCEA Meeting .There are no immediate pre meeting media reports or govt releases announcing the agenda for today’s meeting…so how did Volumes surge dramatically?….if there were such pre releases then one can concede that aggressive big punters  & their circle of followers were taking & making a quick bet like many do on expectations of company results before they are actually made public on or after the announced day of the Board Meeting to approve the same

NBCC’s capital is Rs 120 crs of FV Rs 2 (just split last month from FV Rs 10)  of which Govt owns 90% or 54 cr shares.in 2012 it had disinvested 10% (1.2 cr shares of FV Rs 10)through an IPO at Rs 106 to get Rs 127.20 crs…adjusted for current FV 2 comparison  this IPO was at Rs 21.2

Quick Inside Game for a Quick Big Buck through abnormal Volumes…..If the Insiders have won then who are the Outsider suckers?…are there really any or are these just created volumes or the Insiders have lost out on this ?…Insider Trading can backfire at times you know… read more

State of State Bank of India @ Rs 225 ~ Shareholders Perspective

2 Comments / Banking, Controversies, Corporate Governance, Inspiring and Motivating, Investing Approaches, Investing Themes, INVESTOR MISTAKES, Reflections, Rights Issues, Sectors, Sensex, STOCKS, VALUATION / By

State of State Bank of India @ Rs 225 ~ Shareholders Perspective

Sensex is arguably reckoned to be the Barometer of our Economy & State Bank of India & Larsen & Toubro have been arguably reckoned to be the best India Proxy Plays in our growing Economy

Received a Forward from an Overseas NRI Friend enquiring if it was true that :

  • Rs 5 lakhs if invested in 2000 in a Fixed Deposit of State Bank of India would have been  currently worth Rs 26 lakhs while
  • Rs 5 lakhs if invested in 2000 in Shares of State Bank of India would be currently worth a whopping Rs 5.74 crs !

😈 Someone’s quite excitedly promoting  Investment in State Bank of India  & advocating Equity over Fixed Deposits over a long period….cannot blame the ‘someone’ for the excitement but deliberate exaggeration to prove the point !?

Anyway,gives me another opportunity to showcase the Magic & Power of Compounding with which I normally commence my Training Sessions

So FD ya Share?

Let’s take Investment in the Fixed Deposit first :

Here’s the Interest Rate Scenario in India form 2000 to date 2016

india-interest-rate

The average Interest Rate in the 16 years this Millennium is under 7% with Top High of 14.5% hitting in August 2000 & a low of 4.25% being recorded in April 2009

Assuming even that in July 2000 if one locked in the high rate of @ 14% in a 10 year deposit ,Rs 5 lakhs would have grown at a 14% CAGR to Rs 18.54 lakhs in 2010 & then at 8% CAGR grown to Rs 29.42 lakhs in the eight years till date July 2016….a straight CAGR would be 11.75% for 2000-2016 period….so the FD part of the Forward could be accepted when it states Rs  5 lakhs invested in a FD of SBI in 2000 would have grown to Rs 26 lakhs in 2016….this gives a CAGR of 11%

Now let’s Look at Equity Returns from State Bank of India :

The Forward excitedly proclaims that Rs 5 lakhs invested in the Shares of State Bank of India in 2000 would have grown to Rs 5.74 crs in 2016…..This would mean 11380% absolute returns and a CAGR of near 35%….Not Incredibly Unbelievable but certainly requires Verification

State Bank of India was at Rs 225 in July 2000 & is also Rs 225 today in July 13,2016,sixteen years hence….However the Face Value was Rs 10 in 2000  & now the Face Value is Rs 1

Thus Rs 5 lakhs invested in 2000 would have grown to Rs 50 lakhs now & not Rs 5.74 crs !….Original Investment of Rs 5 lakhs in 2000 would have been 2222 shares @ Rs 225(FV Rs 10)  which on 10:1 Split to FV Rs 1 in November 2014 would have been 22222 shares which at current price of Rs 225 would be worth Rs 50 lakhs.The Absolute Returns would have been 900% while CAGR would be @ 15.5% in this 2000 to 2016 period read more

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