Linkfest:Jan 16, 2013

Some stuff I am reading today morning:

NSE bans Deccan Chronicle trading (BusinessLine)

MNC delisting plans get a jolt (ET)

Axis Bank’s retail focus is paying off (Mint)

Pledged shares take a toll on Arshiya (BS)

Pots & panellists (MediaCrooks)

Investing is hard because of bias (Subramoney)

Chasing the cat (TRB)

Learning to be a central banker in 10 easy steps (Cassandra)

Slavery, an Epicurean business model (PsyFi)

22 Insights from the greatest investors in history (BusinessInsider)

Does tracking insider buying and selling work in India?

In theory, insider buying or selling is supposed to be a great indicator of future stock performance.

But I wonder if it works in India.In India, insiders (aka ordinary employees) are usually the last to know anything !!

Some real life anecdotes to illustrate my point:

1.Some friends worked in Financial Technologies when all it made was Odin Software.They got stock options in the 20/30 Rs range.As soon as the stock hit 100, almost all the employees sold their shares…thinking yeh sau se upar thodi jayega.Within a year or so, FinanTech crossed into 4 figures or more !

2.Another friend worked in WNS.He had a ton of stock options.WNS listed handsomely and once the lockin period was over, he had an opportunity to sell at 40$/share.He held on as he read a research report (!) which said that WNS would be the Infosys of the BPO sector.He got out a few years later around 9$/share

3.This is an example of classy inaction.eClerx provides KPO services to clients such as Lehman,MS etc.In the financial crisis of 2008, the stock was hammered out of shape and reached sub 100 levels.No one,not the employees nor the promoters bought their own stock in their own company which they know so well.Around 2 years later, the stock crossed 700 Rs !

These examples suggest tracking insider buying/selling in India is probably a huge waste of time.You are better off doing your own research and following your own processes.

Cement stocks take it on the chin

I always find it interesting when a sector under performs when the markets are doing well.

Cement has been the big underperformer of 2013 so far as can be seen from the table below (Close of 31 Dec,2012-Close of 15 Jan 2013):

Company Rise/Decline in %
BIRLACORPN 7.083471899
NCLIND 4.485488127
ANDHRACEMT 3.333333333
BURNPUR 2.325581395
OCL 1.061712011
KAKATCEM -0.777047221
AMBUJACEM -1.443504231
PRISMCEM -2.104208417
SANGHIIND -2.232142857
BINANIIND -2.372262774
SHREECEM -2.56092835
INDIACEM -2.916895982
ACC -3.05823209
ULTRACEMCO -3.310174697
BVCL -3.553299492
HEIDELBERG -3.726708075
MADRASCEM -5.571370476
GUJSIDHCEM -5.576208178
JKCEMENT -6.493686693
KCP -7.3089701
CHETTINAD -8.026554013
SAGCEM -8.631977946
DECCANCE -8.787878788
MANGLMCEM -10.45679692
JKLAKSHMI -12.22531724