Deepak Shenoy's blog

Primary Articles: Inflation down to 16.24%

From last week's 18.44%, the WPI release today for 29 Jan shows inflation at the Primary Articles level slowed down to 16.24%.

Inflation

At Yahoo: Moving Averages

I write at Yahoo on Moving Averages:

(Reproduced in full)

In trading circles, much is made of the move of the longer term averages to below "200 DMA" or the 200 day moving average. So what is it?

Firstly, the moving average (MA) is a "technical" term — meaning, something that derives from the price or volume alone, not looking at the underlying fundamentals of a company. Prices, after all, are the only real indicator of what has happened, and prices are driven quite by sentiment —sentiment that is recognizable in patterns in traded prices. Technical analysis is just the field of understanding such patterns.

A moving average help us smoothen daily price changes to give us a picture of a trend and context. Mathematically a moving average is simply the average of the last "n" days; so a 200 day moving average is the average of closing prices of the last 200 days.

Why is it "moving"? Every day the average changes, because it looks at the past 200 days; in effect, as newer prices come in, the oldest prices are moved off the calculation.

RBI Frowns on Gold-Backed Lending by Non-Banks

RBI just hurt Gold Loan companies who had big advertisements on TV and Radio (Mannapuram, Muthoot). From Moneycontrol:

Pantaloon Retail Below May 2009 levels

Pantaloon Retail - the owner of Big Bazaar - has been losing steam tremendously, and is down over 6% today to 253, the lowest it has been since, well May 2009.

The stock has been absolutely hammered all the way from the 520 levels it saw in October 2010.

Readings: Warming, Bonds, Book Writing

Krugman blames global warming for "popular rage" from lack of food. Sadly, this is really shallow. We've had food crises for ages, and we only had a relatively nice period in the last 10 or so years. That we're warming is a fact, but it's not that humans are influencing it, regardless of the so-called consensus. Rage against food prices is usually the straw that breaks a camel's back - people are usually pissed off about other things, like corruption (and Egypt *is* a prime example).Blaming a "vast leftist conspiracy" is just a strawman.

12 steps to get things done. (The Kirk Report)

A great post on Bonds: Bond Trading 101 (Pragmatic Capitalism)

Food has 50% weight in the New CPI, and housing, 10%. Releasing 18th Feb (CPI)

James Altucher on writing books with details. (The Altucher Confidential) Incredible - just 14,000 of his "Trade like a hedge fund" sold. Books don't seem to make much money.

Michael Lewis on Ireland

An excellent piece on Ireland by Michael Lewis. Lewis writes ridiculously well, a writing that is about people and places and interactions and inanities, all knit together to make you feel like you were there. Or at least, that you can imagine you were there. Lush countrysides, built and unoccupied real estate, meetings with senior members of parliament, the comparisons with Iceland, the laid-back manner of the Irish, the dirty behaviour of Merrill Lynch, Polish workers running back home and leaving cars in the airport parking lot, draconian bankruptcy procedures and guys who throw eggs at irresponsible bank chairmen. He has it all, and he has it in a way that makes me wonder why I bother to write. I'm seriously inspired.

Missed The Bus, Banker Scams, Smart Charts and More... (MV Chronicle, Feb 5)

And the next edition of the MarketVision Chronicle is out! Click here to read. (Needs FREE registration)

Have you really missed the bus investing in equity? Here's your time. Or not. Also, a piece about bankers who you think mean well, some interesting charts and the best of MarketVision in the last week. Enjoy!

The Great Indian Data Suckage Story

Economic Times has an article with a list of stocks that are "lower than their book value":

image

Except smart readers have already figured out:

Many companies- TATA GLOBAL, KALPATARU have gone for stock split during this financial year and hence the book value per share is to be arrived at after considering the split/ bonus. Readers generally take the information given in esteemed publications like Economic Times at face value. Please be careful and double-check the numbers before publishing

Er. Bad data, ETIG database?

Surjit Bhalla: Black Money in 2009=1 lakh crore

Mr. Bhalla says something interesting; that the amount of black money in the country is overrated. He complains that political parties that claim that 50% of India's GDP is our black economy; it's not that significant, he says. Here's his tax calculation.

Clearly, the study of black money is an important issue. And tax evaders have to be punished. My estimate of black money in India is based on private income tax collections and details about the calculation are contained in ‘Tax Compliance and Tax Rates’ (in the book, India on the Growth Turnpike, Essays in Honour of Vijay Kelkar). And how much might total black money be in India in 2009? Only about Rs 1 lakh crore, and given our GDP is Rs 60 lakh crore, that is about 1.5 per cent of GDP. These numbers are shockingly small and especially small compared to the GFI estimate which seems to be universally accepted. The GFI numbers imply a black money flow of 7.5 per cent of GDP every year, that is, each year black money equal to five times my estimate flows into the Indian economy. Both numbers cannot be right. Which of these two numbers are closer to the truth?

(The paper he mentions is here)

First, the wording choice is deliberate and I can understand why. Surjit doesn't say "How much total black money exists in India in 2009?" - he asks, how much of it was generated in 2009. Fine, let's go by that definition, but it doesn't change the assertion that 50% of India's GDP might exist as black money.

Going Down in Flames: The 200 DMA Trade

Warning: Technical post.

The 200-DMA setup went seriously against me - there was a slight attempt to take the 200 DMA again, in the morning, but the Nifty completely destroyed itself.

Nifty Intraday