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IDFC Infra Fund NFO: Quick Analysis

I had a chat with the IDFC Mutual Fund team recently. They have an infra fund launching between 14th and 20th of this month, and I spoke to members of their fund management team.

So first - salient points - here's the scheme document. The NFO runs from 14th to 28th of Feb. They will deploy the money starting 5 March. There's an exit load of 1% if you get out within a year. There is no entry load.

Jan 2011 Monthly Inflation at 8.23%

The Jan Inflation Number went back to 8.23% from the December number of 8.43%. This sounds very bullish but I think the data is crappy.

Monthly Jan WPI at 8.23%

At Yahoo: Losses and Endowments

On Feb 10,2011 I wrote about Losses and Endowments:

(Reproduced in full)

Given two choices, which one would you take? You have to walk to me, and

1)      I'll give you a guaranteed Rs. 500, and if I feel like it, I'll randomly throw in a Rs. 500 bonus.

2)      I'll show you Rs. 1,000 but on a whim, randomly, I will take out Rs. 500 before giving the rest to you.

Chances are that the second one looks unattractive, especially if you had to do it over and over again. But your mathematical mind has already realized that if I am truly random in the choices I make, what you make is around the same in both cases. But the second choice makes you believe you have lost Rs. 500, while the first case gives you a feeling of an extra Rs. 500.

Aditya Puri: Don't Free Savings Rate In Crunch

Latha Venkatesh interviews Aditya Puri of HDFC Bank. He makes some excellent points. (Video, Transcript) Video is embedded below. (The transcript's all wonky, see the video)

He doesn't want the savings rate deregulated as long as there is a cash shortage - like right now. And going by that, he says that net-net, the savings rate will come down. I imagine it is true, and that savings rate junkies must consider that liquid funds currently return over 7% and there is really no reason to put lots of money in savings accounts. Getting (taxable) higher interest on savings accounts will only marginally help a few people; having said that the interest should be market determined, not kept at a constant 3.5%. And in the same way banks should be free to charge for services (ATM, cheques etc.) With competition, the nickel-and-diming might reduce, but as you see in the US, it still happens.

The RELIANCE-SEBI Tussle

In 2007, RELIANCE (RIL) sold shares it owned in Reliance Petroleum Limited (RPL) for 223 rupees.

RPL Share Price

The share eventually fell back to 70 in late 2008, and recovered to 130 levels when it was merged with RIL - 1 share of RIL for 16 of RPL, which translates to an RPL price of Rs. 112 (RIL is at 900, and had a 1:1 bonus after the merger). Sadly, at the time the merger price was effectively Rs. 60 per share of RPL or so, which is exactly equal to their IPO price in 2006.

IIP Growth at 1.55% for Dec 2010

The Index of Industrial Production showed a 1.55% growth over last year.

As usual, there were crazy revisions. November data which disappointed everyone with 2.7%, is now revised up to 3.62%. September is up to 4.9% from 4.4%. So this could just be a head fake, for all we know.

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: