Deepak Shenoy's blog

ULIPs: No More "Cover Continuance"

It turns out(*) that the new guidelines for ULIPs in 2010 have claimed another victim: Cover Continuance.

The concept, prior to September 2010: if you bought a ULIP and stopped paying premiums after say 5 years, you could choose to continue to have

  • Insurance cover continued
  • in which case, Mortality charges and policy admin charges would get deducted from fund value.

Now, with the new regulations this is no longer allowed. If you stop paying premiums, you have to take back your money. Subramoney also mentions this in his blog.

Telecom: MNP and Spam Curtailing

Two interesting things are happening in the Telecom world.

Mobile Number Portability

Starting Jan 20, you'll be able to change your cellphone service provider without changing your number. Wow, you think. Everyone will move away from Airtel? But to whom? Like in Political Parties and developed market currencies, you have to choose the lesser evil. The one eyed man in the kingdom of the blind. The apple that's not yet completely get the picture. On a personal note, I might give the newer players a shot, but after seeing what kind of pain is involved in the transition.

Reduced Mobile Spam

Yeah, we hate it. But telemarketers have loved it, and VAS companies thrived because of it. Now it's going to be a dead zone. Come Feb 1, you can choose to not get those annoying SMSes, and if you still do, everyone responsible gets on the firing line. Complaints cause serious monetary damage and threaten the business itself.

Buy the Rumour...

Jayant Pai at PPFAS talks about how markets react wildly to news:

A friend of mine who is a newly converted equity investor was rather perplexed with regard to two developments recently. The Infosys stock fell 5% on the day despite announcing a Year-On-Year (Y-o-Y) net profit growth of 14% (a very decent number, considering its huge size) while the Nifty rose by nearly 2% on a day when the Index of Industrial Production (IIP) data for November 2010 showed a Y-o-Y growth of merely 2.7%. According to him, the opposite should have happened in both the cases. Although short term market moves may happen for apparently no particular reason, one explanation for this may be that it things were already “priced in”. This is jargon for saying that the stock/index had already moved in a particular manner PRIOR to the news.

For good news, you would always "Buy the Rumour and Sell the News". Infy's stock has seen a meteoric rise in the last six months, compared even to the rest of the pack.

Newsletter #2 is out: FII, Onion Prices and more...

Read the Jan 15 Newsletter with FII data, Onion Prices and more…

HDFC Grows EPS 30.46% in Q3 FY 11

Going pretty well, this story is.

HDFC Q3 FY 11 Results

Reasonably revenue growth, nearly 20%. Interest payments went up lesser. This is non-consolidated – last year, their consolidated profits had an EPS of 15% higher (110 cons. versus 95).

December Inflation at 8.43%, Sounds Too Low

The latest release says the December 2010 overall inflation is at 8.43%. Interestingly, manufactured goods saw only a 4.46% inflation, but Fuel saw 11.19% and Primary Articles saw 16.46%.

December Inflation at 8.43%

Sintex: Q3 2011 EPS Up 55%

Sintex has shown great Q3 results. Revenues are up 41% and EPS is up 55%. At 170, the stock quotes at a P/E of 11 on the trailing 12 month EPS of 15.88.

At Yahoo: Market Interventions

I write at Yahoo on Market Interventions:

(Posted in entirety)

There were riots in Bangladesh on Monday when markets went down 9% in an hour. Stocks fell, presumably because their central bank decided to tighten down on bank exposure to equity, and the general index has been slowly sliding from December. It may sound unreasonable to have such an event create a loss of 9% in a single day — or indeed the 27% loss in a month that Dhaka saw — but it comes on the back of a 2010 that saw the index rise 95 percent. Now that fall doesn't seem quite as bad, does it?

Shaken by the public furore, Bangladesh's central bank instructed banks to please buy stocks — and as expected, their index rebounded by 15% on Tuesday. The idea is to never mess with a good thing, I guess.

Intervention doesn't always work. In 2008, Pakistan's stock markets fell about 43% and to somehow stop that, the authorities decided to set a floor price on the index; meaning, stocks couldn't go below a certain value. What happened then, was that the floor became a ceiling — stocks would simply not trade above that level. When the floor was removed in December 2008, stocks fell another 35% before they rebounded.

Primary Articles Inflation at 17.58%

The first data of 2011 is out – Data for Jan 1, 2011 shows Primary Articles at 17.58%.

Primary Articles Inflation Chart

As usual, the revisions of past data are huge.

Infosys Dec 2010 Results: Not Impressive

Infy announces results. They aren’t that great.

  • Revenues above 7,000 crores. Grew that over 20%.
  • Net profit at 1,780 crores, which is 14% growth.
  • EPS at 31.14 for the quarter (14% growth)
  • Trailing Twelve Month EPS at 115.6 which is just 6% higher.

Graphs and tables. Excuse the rusty excel skills.