Category: Observations

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Observations This is India !

Banks have been exposed…and the market has yawned

Today there was a press conference by Cobrapost where they alleged that HDFC Bank,ICICI Bank and Axis Bank indulged in money laundering.

The markets saw this breaking news conference and yawned.At the time of writing this,

Axis Bank (-0.82%)

HDFC Bank (-0.33%)

ICICI Bank (-0.47%)

These declines are par for the course when Nifty is down by 0.18% and Bank Nifty is down by 0.13%

Does this mean that the markets already knew this “news” or does it mean that markets know that these banks will not face any material fines/penalties?

This is India !

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Observations

If you want a friend on Dalal Street

One of the oldest adages on Wall Street is “If you want a friend on Wall Street, get a dog”

Nothing illustrates this more than the carnage of NHPC.

In the case of NHPC, talk in the market is that a big trader was holding sizeable positions through a combination of margin funding, loan against shares and stock futures. This trader had been told by one of his many brokers that he would have to shift a chunk of his positions elsewhere, as the broker was unable to finance it. The trader had been in the market for the last couple of days, scouting for financiers to fund the position. He is said to have sought the help of a former BSE President who is renowned for his bearish calls on the market.

And while this bear operator declined to fund the position, he is learnt to teamed up with another old hand in the market, also renowned for his bearish calls. The duo is said to have short sold NHPC futures heavily last week. Open interest in NHPC stock futures shot up from under two crore shares (the equivalent of) to over 20 crore shares in a week. On Friday, NHPC March futures were trading at a 5 paise discount to the spot price, indicating massive short selling.

Open interest in NHPC futures declined around 40 percent to 14.55 crore shares on Monday, indicating that bears may have used the steep decline in price to cover up a good part of their short positions.-from MoneyControl

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Observations

The best part of Warren Buffett’s 2012 letter

 

The best part of the letter is Buffett’s lament that his record of beating the S&P 500 over five-year periods, which he has never before discussed publicly, as far as we can recall, is endangered:

 “To date, we’ve never had a five-year period of underperformance, having managed 43 times to surpass the S&P over such a stretch… But the S&P has now had gains in each of the last four years, outpacing us over that period.  If the market continues to advance in 2013, our streak of five-year wins will end.”
The fact that a guy who, with the help of Charlie Munger’s key insight on the importance of buying good businesses rather than cheap stocks as well as the hard work over many years by a lot of smart managers who could have made themselves far richer working on their own, has compounded the net worth of a company 19.7% a year for 48 years (when you compound something nearly 20% a year for 48 years, it adds up to a lot…like, 586,817%—ed.) worries about a 43 period “streak” of five-year wins against the overall stock market, tells you everything you need to know about what it takes to create a track record like Warren Buffett (a flat-out competitive instinct that never quits—ed.)
 So don’t let the “Uncle Warren” veneer fool you.  He set out to be the richest man in the world, and he made it, but not by sitting back and spouting homespun pearls of wisdom: it was by outworking—and outthinking—everybody else.
 And doing that every day, of every week, of every year.
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Observations

Chidambaram’s gifts to India

Mr.Chidamabaram has presened eight union budgets, 2 short of Moraji Desai’s record 10 budgets.

In these eight budgets, Mr.Chidambaram has introduced taxes whose acronyms have become part of daily usage.Have enclosed the list below:

Chidambaram’s Budget # Year New Tax/Proposal Introduced New Acronym introduced
1 1996-1997 Minimum Alternate Tax MAT
2 1997-98 Voluntary Disclosure Scheme VDS
3 2004-05 Securities Transaction Tax STT
4 2005-06 Fringe Benefits Tax FBT
4 2005-06 Banking Cash Transaction Tax BCTT
7 2008-09 Commodities Transaction Tax CTT
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Observations Stock

Is Narendra Murkumbi trying for a backdoor listing of Renuka Energy?

(Full Disclosure:I have shares of Renuka Sugars in my personal and family portfolio)

Ravindra Trading (BSE Scrip Code:504341) is one of the many scrips in BSE which are under suspension.

In Oct 2008, Narendra Murkumbi, promoter of Shree Renuka Sugars made an open offer for the compay.The offer was for  Rs.10/share.

Subsequent to the offer, the control of the company passed on from the original promoters (the Somani group) to Narendra Murkumbi who now holds 73.85% of the stake.

Once Narendra Murkumbi took over, the company got the kiss of life and it started trading coal.

In 2012, the company earned around 1.18 Crores as profits and gave a Rs. 1 dividend to its shareholders.

On Aug 20, 2012, the Board of Directors met and granted in-principle approval for the amalgamation of Shree Renuka Urja Pvt Ltd (under incorporation) and Shree Renuka Energy Limited into the company.

Now, Shree Renuka Energy is a subsdiary of Renuka Sugars.It is setting up a of 3×350 MW Coal Based thermal power plant at village  Vantamuri, in Hukkeri Taluk, in Belgaum District , in Karnataka.

It is headed by J Suresh Kumar (former CFO of Lanco Infratech) who oversaw Lanco’s A$750 million buy of Australia’s Griffin Coal.

While the power plant is still awaiting various permissions and will take time to come up,it appears clear to me that eventually  Ravindra Energy will be renamed as Renuka Energy and investors will be tapped for funds.

Smart moves, Mr.Murkumbi !