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Portfolio Advisor | Asset Allocator | Financial Planner | Loves Scuttlebutt | Avid reader | #AKGweekendreadings | CWM® | SEBI Registered| #AKGweeklycharts
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9 Jan
A thread on cumulative FII inflows into India in the CY2020

Background  : This was a widely shared link on social media and also tweeted by FM @nsitharaman amid a lot of discussion around the strong foreign inflows in Indian equities.

moneycontrol.com/news/business/…
India received ~1.6 lakh crore in FII flows last calendar year when most Asian and emerging markets witnessed outflows. This is encouraging stuff one would say. However, this is not the complete story.
The total flows in Secondary markets (Debt + Equity but not including FDI deals in primary markets) are marginally positive. It means as yields collapsed, FIIs switched from Indian debt to Indian equities.

In fact, last 6 CYs (2015-2020) net flow in debt & equity is negligible.
Read 9 tweets
24 Sep 20
A thread on the new Registered investment advisors (RIA) regulations which are coming to effect from 30th Sept, 2020

SEBI came up with the final regulations/explanations yesterday. Here is the link to the circular

sebi.gov.in/legal/circular…
(Q1) Are there any new changes apart from the one notified in 1 July, 2020 and effective now?

Not much, but SEBI has given few clarifications where RIA has raised doubts. Good news is there are no further burden. The new guidelines are almost similar to the consultation paper.
(Q2) So, segregation for clients with respect to advisory and distribution remains?

Yes. Client has to choose one at the time of onboarding itself. Existing clients also need to choose one if they were doing both with same RIA.

Existing investments can continue to hold.
Read 13 tweets
11 Sep 20
(1/n) A thread on the SEBI new circular with respect to increase in equity exposure across multi-cap funds

For brevity, Large caps (LCs), Mid caps (MCs) and Small caps (SCs)
(2/n) Which funds are impacted by this?

ALL multi-cap funds. [It does NOT mean focused funds with multi-cap strategy or Combination funds (large & mid or mid & small cap types)]

A clean reading means Multi-cap funds with international exposure to equities will also be impacted
(3/n) What is the definition of Multi-cap asset funds?

Any asset fund which invests a minimum of 65% allocation in equities. Rest 35% can be invested in other asset classes - debt, international equities, Gold or plain old liquid funds.
Read 10 tweets
9 Sep 20
"Right now, we're in an absolute raging mania. We've got commentators encouraging companies to do stock splits. Companies then go up 50%, 30%, 40% on stock splits. That brings no value, but the stocks go up"

Very interesting comments from Druckenmiller
"I have no clue where the market is gonna go in the near term. I don't know whether it's going to go up 10%; I don't know whether it's going to go down 10%," Druckenmiller said. "But I would say the next three-to-five years are going to be very, very challenging"
"The merging of the Fed and the Treasury, which is effectively what's happening during Covid, sets a precedent that we've never seen since the Fed got its independence," Druckenmiller said. "It's obviously creating a massive, massive mania in financial assets."
Read 4 tweets
31 Aug 20
There are some genuine queries regarding this. It was clarified by the exchanges couple of weeks ago.

Please see the new thread below for further clarification
(1) The minimum margin requirement for BUYING stocks from the client can be 20% of the trade value instead of (earlier decided) full 100% VAR+ELM

In such case, broker will make up for the difference between this 20% and VAR+ELM from its own capital. Most will be happy to do so
(2) 20% margin is NOT required for selling holdings from DP if your broker is doing EPI by 7:30 pm on T-day. Contact your broker to ensure this. Most are doing it as that means higher efficiency and more business.
Read 10 tweets
20 Aug 20
The global economy is recovering at a modest pace after bottoming out in April, with data showing much improvement from May to July. But how long can this pace be sustained? Will social distancing measures and restricted global travel cap the recovery?
Those remain key questions as we gauge the "new normal" across major economies.

Sure, things are getting better with time but how much "better" can things be when there are fears of a second wave brewing in many countries/regions once again?
The health crisis remains a key factor to keep an eye out for and in countries with less fiscal space to act, not addressing the virus situation will just lead to the economic and potentially financial crisis worsening in the coming months.
Read 5 tweets
18 Aug 20
Thread on 3 stocks - Balaji Amines, Thyrocare and Sterlite Technologies (Disc : no position in any of them) being added into watchlist.

Exchanges regularly update the stocks watchlist who come frequently on SMS. It did so last night and included these 3.

bseindia.com/downloads1/Cur…
The stocks are added into the watchlist only as a Cautionary measure to investors.

Most such stocks are "shady" and SMSes on WA & TG/messages on social media are floated to the advantage of operators and at the expense of gullible investors.
However, exchange do not put any limitation on the buying and selling of such securities.

The various surveillance measure (ASM, GSM, T2T etc) are there to warn retail about any sharp run up of stock price on either side.
Read 7 tweets
16 Aug 20
Every decision of the #MSDhoni retirement shows evolved thinking - The Date (15th Aug signifying his army association in last few years), the time (1929 hours when sun set at the southernmost point of India at Cape #Comorin)...
His last Instagram message (#Sahir Ludhianvi lyrics to show how any success or failure is just a fleeting moment) and taking decision at a time when there will be no media interaction (#CSK players are in bio bubble before departure for IPL).
His records, both as a player and as a captain are there for everyone to see but his biggest legacy will lie in how easy he can get detached from the game even while staying fully focused.
Read 5 tweets
6 Aug 20
Repo Rate kept unchanged at 4%
MSF and Reverse repo rate unchanged
Accommodating stance emphasized
Supply chain disruption led to higher inflation outlook in near term
Higher taxes leading to higher energy inflation
2HFY21 inflation may ease
Demand scenario looks bleak.
Real GDP may contract in FY21
Read 9 tweets
29 Jul 20
It's that time of the season again when Divestment talks during a bull run gathers momentum (with little results)

LIC IPO is back on the table with advisors being chosen. Fair enough!

A thread below on why LIC IPO is not going to be a cakewalk
(a) LIC is the largest #DII in India handling $500bn #investment portfolio. LIC act stipulates that all #receipts and payments need to be made out of that fund only. In case govt divest 10% stake (min stake required as per #SEBI regulations), who will do the corpus handling?
(b) LIC act stipulates that the insurer distribute 5% surplus p.a to GOI as #dividend. Most pvt insurers prefer higher ratio to shareholders. Any change in this ratio requires approval from both houses of #parliament. Even investors would insist on clarity before committing $
Read 6 tweets
26 Jul 20
Unusual and unnecessary confusion regarding the new margin rules in certain segments.

A thread explaining the details as per SEBI notice(s) so far...
In 2019 June, SEBI outlined new margin rules for F&O segment citing that intraday losses and margins need to be paid in advance to the broker. Suitable penalties were imposed.

After postponing once in Aug-19, finally the new F&O rules were implemented from 1st Oct, 2019.
In Nov-19, SEBI has issued a circular and made it compulsory for brokers to collect and report all margins from clients in the cash segment upfront

(just like it was done in F&O segment earlier)
Read 17 tweets
21 Jul 20
There are solid reasons for Gold and Silver to keep moving higher.

There is more stimulus to come. EU just approved a 750bn euros fund for Corona recovery. That's a huge slosh of liquidity right there. Remember, they are at negative rates.
The increase in COVID-19 cases globally, especially in the US, mean that the Fed is likely to ease more which will suit gold upside even further

Fed officials have warned that the US outlook is getting worse and easing is the answer.

US is at zero rates.
BOE is expected to add more stimulus to the UK economy next month as it is stuck with Brexit and COVID-19 struggles.

BOE is all set to take UK to negative rates
Read 8 tweets
29 Jun 20
This 7-film announcement virtually sounds a death knell for film exhibitors for next 6 months. Netflix, Amazon and other OTT platforms are likely to follow with similar announcements.
The content supply is a major issue now. With new movies going directly to OTT and actual shootings happening in a calibrated (and slower than usual) manner, means there will be dearth of content in next few months.
Q1 is a no-revenue quarter for over 95% of world cinemas. Even in countries like Sweden, NZ, China and South Korea where cinema halls have been opened, the footfalls are no where close to the pre C-19 levels.
Read 6 tweets
9 Jun 20
What's really crazy about the rally in US is that retail has led this with hedge funds on the sidelines. Now the latter is forced to be involved in FOMO.
Robinhood trading accounts have surged during "historic rally" from March lows. Image
New retail trading accounts have surged since late last year when online brokers started offering zero commission trading. Image
Read 5 tweets
3 Jun 20
A thread on divergence between economic data and market performance

When a coin is dropped from the top of a 50-story building, snapshots at 25th floor and again at 10th floor may be interesting for a photographer, or physicist (due to time frame) but it makes little difference.
That is the scenario with economic data (except its slower). Data is going to get worse. 

It is hardly surprising that activity has slowed down dramatically when broad parts of the major economies have shut down in light of Covid-19.
One way of looking at this is to assume that the virus has disappeared and the damage has happened in the normal course of economy. We were not exactly sky-rocketing pre-Covid for that matter.

In any case, virus is not going to last forever.
Read 5 tweets
15 May 20
Economic stimulus, by definition, is action by the government to encourage private sector economic activity by engaging in targeted, expansionary monetary or fiscal policy.
Policy tools often used to implement economic stimulus include lowering interest rates, increasing government spending, & QE, to name a few. All these tools are means to stimulate demand & spur consumption to keep the economic cycle moving.
However, how providing a loan or credit to a section of the society can be considered as a stimulus package? By a similar measure, can we treat it as income in our books instead of showing it as a liability so that we never have to repay it?
Read 7 tweets
9 May 20
Market outlook newsletter by Paul Tudor
scribd.com/document/46038…
He highlights the coming waves of direct debt monetization that will reshape the economies and financial markets of the world. Image
His view on Technical analysis Image
Read 6 tweets
2 May 20
The lockdown in India has been extended by another 2 weeks but considerable relaxation has been given in Orange and Green Zones to restart activity.

This is a good step to reopening the economy but as usual, requires multiple clarifications over the new instructions.
Some of the green zones (specially in North-East) have recorded single digit Covid-19 cases or deaths so far. Not allowing full inter-state travel via rail, airways or opening up of hospitality industry in these zones is beyond explanation.
The allowing of e-commerce companies to only deliver essentials in the Red zone is again confusing policy play as most MSME companies cannot restart operations effectively till goods are not procured from them.
Read 5 tweets
24 Apr 20
In an unprecedented move, a Mutual fund declared winding up 6 credit risk funds (CSF) overnight having 26,000 crore in AUM. This has caused undue anxiety amid investors as they cannot buy, sell or redeem their units.
(a) Liquidity, Maturity profile and #Credit quality for CSFs should be checked thoroughly before investing. This particular MF had redemption issues earlier with Essel, #ADAG and #Vodaphone exposure. This is not a new issue, but extension of previous investment calls.
(b) #Emergency fund cannot be invested in debt funds specially credit risk funds. If you were doing this, it's time to get a financial advisor on board. If he has recommended these funds, time to change your advisor.
Read 6 tweets