Deepak Shenoy Profile picture
Founder, @CapitalMind_in. Free+Premium stock and market research, and wealth management at https://t.co/twksQssgle . Stocks are risky. Tweets not advice.
hopium researcher Profile picture Harjeev Singh Chadha Profile picture Bhaskar Bora Profile picture Viineet Sindhwaani Profile picture Jyoti Profile picture 28 added to My Authors
11 May
Groww buys Indiabulls MF - for a 100 cr. in cash+75 cr. in I-Don't-Know-What. This is getting really interesting!
This is likely to take time, because SEBI will go through similar process to approve a buyer as it will for a sponsor of a mutual fund. It's however a good thing. We need to get new faces. (Disclosure: Capitalmind has applied too)
Note: These figures quoted like 27% of AUM etc. are pure bullshit. Indiabulls is just about getting its money back. It has invested Rs. 170 cr. in the AMC.
Read 6 tweets
5 May
The RBI policy was not much of a change today. They said banks can restructure MSME and individual loans. This just means evergreening, because banks are simply NOT reducing rates even for stressed borrowers.
If you're in trouble, banks can now say okay we'll stretch your loan for longer time. This also they don't do unless you actually default. Then, they don't cut the interest rate - even if their own borrowing costs are down.
You actually want more banks to come in now. Who don't have the legacy and who'll take over the market by offering lower rates, starting with good borrowers. So to fight, everyone will have to cut rates. You need the competition now, can't be a diktat.
Read 5 tweets
4 May
Retail individual investors are the biggest player in our markets. Not FIIs, and not mutual funds. Look at the equity market (non derivative). (Thread)
45% of India's stock market volumes are from retail investors. Up from 33% in 2016.

FIIs went from 23% down to 11%. Domestic institutions at 7%.

And look at the index futures market:
Individuals do 39% of index futures. FIIs merely 15%.
Domestic institutions are 1% - Rest is mostly prop books of brokers.

In index options, prop books dominate at 39%, but retail's gone up from 22% to 32%. FIIs only 16%.
Read 10 tweets
1 Feb
The Big Massive Thread on #Budget2021 - our take at @capitalmind_in
From the economic survey: India's debt situation isn't that horrible. Total debt, which includes debt taken from abroad, is about 122% of GDP - where government debt is 70%. Remember this - because most other countries have hiher govt debt and much higher private debt.
If Covid has hit us badly - and it has, even if markets are like what is wrong with you Deepak - we will recover the fastest. It's just math, though - just getting back from a steeper fall is a higher rate.
Read 114 tweets
10 Jan
Remember this?
It was made when the Dow Jones was here:
The market did correct a whopping 20%....more than a year later. The bottom point of that 20% correction was...uhm, no, let's see it:
Read 6 tweets
15 Dec 20
Does Franklin get away clean after this episode? My thoughts have been with unit holders, but I think we need to speak of a SERIOUS fine for Franklin Mutual Fund for bringing this episode to this shameful end. (Thread)
First, SEBI needs to fine Franklin an entire two years of management fees on the shuttered funds. The money needs to be added back as cash to the funds immediately. This should be upwards of 300 cr. and a decent coverage for defaults if any.
Second, SEBI should appoint a different mutual fund - perhaps one that has much better debt experience, and I'm looking at you, IDFC MF, which should take over the closing down operation of all the shuttered funds immediately. Pay the appointed fund a fee from the Franklin fine.
Read 10 tweets
9 Dec 20
Folks - if you can't pay back your EMI, please create a new bank account at a different bank (Kotak, IDFC and a few others allow it to created online) - idfcfirstbank.com/content/idfcse…

Also notify your lender that you are unable to pay your EMI and to not auto-debit.
Also notify your current bank to not honour any auto-debit from the lender as the loan is under negotiation, and thus to not charge you auto-debit fees.

Then keep zero balance in that account. Get your lender to negotiate, reduce rates, and give you more time.
Read 7 tweets
17 Nov 20
Laxmi Vilas Bank placed under moratorium. This means they're going to mount a rescue of some sort. It's a small bank but we expect
a) Tier 1/2 bond writedowns
b) Equity capital will need to be infused for a rescue
They have Tier 1 + 2 capital of 148 cr. (march 2020) which would have dwindled further. Even a full write down of Tier 2 bonds - roughly 270 cr. - will not be enough. The bank needs 1300 cr. of capital, at the very least.
Ok, update: RBI does a full merger with DBS Bank India. rbidocs.rbi.org.in/rdocs/content/…

Shareholders wiped out (Shares go to 0)
All depositors will be paid in full, after the moratorium.
Read 11 tweets
31 Oct 20
The Loan compound interest waiver is interesting. Banks and NBFCs have to pay you money, into your account, the interest on interest calculated for the moratorium period. Even if you didn't take the moratorium or paid back in time. financialservices.gov.in/sites/default/…
And the money has to be paid before 5 November. And you don't need to apply or anything - the bank needs to calculate and pay on its own.

And then it can claim the money back from the government.
Interestingly, even a 0% interest loan will pay you money back!

(A Zero percent EMI is actually at a higher interest rate - check: capitalmind.in/2020/01/how-ze…)
Read 4 tweets
6 Oct 20
The Shapoorji default of 100 cr. does not really mean that the SP group doesn't have 100 cr., IMHO.

It's a signal that they want to negotiate. It's basically saying, I'm in default, now let's restructure the loans.
The important point is that they defaulted on Commercial Paper in the money market, not on a loan. A loan default could have been "hidden" within the banking system, because banks get 3 months to negotiate before a loan turns NPA.

They chose to tell the world instead.
Also, there's a little bit that Franklin funds own a good portion of the group bonds, and renegotiating now might be an interesting proposition since holders of those funds might be expecting a haircut anyhow.
Read 5 tweets
11 Sep 20
SEBI decides that Multicap funds must truly be multicap - so min 25% in large caps, min 25% in midcaps and min 25% in smallcaps.

Smallcaps are companies below roughly 7,000 cr. market cap. Cannot absorb the buying.

We're going to see money flow out of multicap funds..
This could fuel a smallcap rally, even in anticipation. However,
...the SEBI rule indicates that at 75% equity, a multicap fund can't have foreign exposure beyond 25%, which will hurt some.
Read 5 tweets
2 Sep 20
I have an LIC insurance plan invested 20 years ago. Premium was Rs. 2216 per year. This was a money back policy.

It matures this month. I have to go PERSONALLY visit the LIC office and give documents. Nothing online works.

I will get back Rs. 97,000. That's 6.3% post tax.
Why did I stick with this so long? Insane surrender charges. All past premiums are sunk cost, so ignore that. At any point since 2004 (when I realized how crappy this was), and now, surrendering was a worse choice than just paying up and waiting. Because of high surrender fees.
I thank my stars I didn't take a policy bigger than that. The agent was known to the family, and I was charmed by some calculation at a time when Rs. 97,000 was perhaps a big amount.

Engineer who didn't know the excel RATE function.
Read 4 tweets
18 Aug 20
Reliance buys Netmeds (60%) for 620 cr. This is interesting - remember, Reliance is Indian and can have inventory. I really like this - the game is really one of scale. Disclosure: Invested in Reliance
Netmeds is online and a marketplace and has delivery capabilities, apparently 57 lakh customers in 20K pin codes - The valuation seems to be Rs. 2000 a customer which is steep, but will probably 1/100th that at the Reliance ability to scale.
Netmeds valuation - It raised three rounds - $50M, $14M, $35M - a total of $99M. Assuming reliance ONLY paid 620 cr for Netmeds (it got 60% of the parent), the group was valued at 1000 cr.

That's about $150M. Looks like the investors will just about recover their investment.
Read 6 tweets
14 Aug 20
This is just ridiculous. RBI has 15 lakh crore extra money, and it chooses to give just R.s 57,000 cr. as dividend to the government - in a Covid kind of crisis. Why the RBI is allowed to hoard this kind of money I have no idea. But they need to have given a lot lot more.
RBI's buffers have gone up by over 400,000 cr. in the last few months. Remember this: The RBI balance sheet does not play a role in an economic rescue - only the government does. The RBI can expand balance sheet at will for any liquidity buffers - the government needs the money.
In general, India needs to have a strict rule that RBI cannot have more than a 15% or 20% buffers, period. Current balance sheet size is 47 lakh crores. Current buffers are 15 lakh crores = which is over 30%!

Terribly unnecessary especially at this time.
Read 5 tweets
26 Jul 20
This is an important change that all investors and traders must note. (Thread)
Assume you have only stocks, and have no balance with the broker. You can sell the stocks, but you can only use the money on T+2 - two days later.

Use the money = to buy other stocks, to place F&O trades. (Except one odd case: You can buy options, it seems)
For futures and options players only, this doesn't change. You can trade it like earlier - but intraday leverage is gone. So 20% margin means max 5x leverage (some players were offering intraday 10x etc, which will be removed)
Read 10 tweets
22 Jul 20
Why are real estate prices not falling much? The answer, they'll tell you, is that costs are so much or that anyhow circle rates are this much and prices can't fall below. But really, the answer is more complex.
A big factor is that current owners and buyers don't want prices to fall. Imagine an under-construction project when you've paid Rs. 8000 per sft, and the builder cuts it to Rs. 6,000 to just get it out of his system. You'll protest and demand that your price be cut too.
That is simply unsustainable. If you've agreed to pay Rs. 8,000 then further price cuts are not automatically yours, but people will withhold further payments in the hope they can negotiate. This screws up things for everyone.
Read 9 tweets
28 Jun 20
RBI used to have this 7.75% bonds which was withdrawn recently. Now there's a new set: 7 year locked-in bonds by the government at 7.15% (floating).

Good long term fixed income investment for the retired. (Thread)
New RBI bonds can be bought from SBI and PSU banks. Needs a few forms filled, here's the branches: (Only Individual/HUF. No NRI, Companies, LLPs can apply)
Interest is 0.35% above the National Savings Certificate (NSC) rate, and will float up and down accordingly.

Paid Jan 1, and July 1. First one will be at 7.15% (divide by 2 for the half year payment)
Read 11 tweets
19 Jun 20
Some technical analysis is based on human psychology. (Thread).
What you call a "support" is often a point when the stock stopped before. If it was at 1,000 and fell to 850, and zoomed back to 1,200 you can hear people thinking if it ever falls to 850, I'll buy.

That's why 850 is a "support" because enough people say that's the point to buy.
A "Resistance" is similar. A lot of people buy at what they think is a low . Imagine the stock above fell to 850, and then people bought but it still went further down to 750. Now the 850 buyer is thinking "I'll get out when I break even, i.e. at 850"
Read 8 tweets
19 Jun 20
Thread. Why you should have a will, and why you should care even though you'll be dead when it matters.
If you die without a will, and have a lot of money, things become complicated after you die. Because your next of kin will have to prove they really are your next of kin, and the process of that, without a will, is painful and arbitrary.
They could get what is called a "Succession Certificate", which is saying that you died intestate (this sounds medical, but it just means without a will) and therefore a court will say who are the heirs. In most places, this will work. legalservicesindia.com/article/1182/S…
Cost is 70k+legal.
Read 11 tweets
12 Jun 20
How does the interest on interest work? (Thread)
Lets say your loan was Rs. 40L, and your EMI was Rs. 40,000. If there's a moratorium, and you don't pay anything, your principal will go UP every month based on unpaid interest. So month 1 it might go up to Rs. 40.3 L (assuming 30K interest)

month 2 it will then go to 40.62L.
In Month 2, you're paying interest on the original 40L balance before the moratorium plus the additional balance due to interest in Month 1.

The judges seem to say this:
a) Pay interest on original 40L, yes.
b) Maybe shouldn't pay additional interest on intermediate interest
Read 8 tweets
24 May 20
One interesting thing about China's attempt to become more local is that it results in the world having no qualms about shutting them out.
China wants to substitute all imports locally. Like every single thing. To a fault. They spent money, with government intervention - to invent the one part of the ball point pen they didn't make: the pen tip.

washingtonpost.com/news/worldview…
With that level of focus on not importing, China also makes it difficult for foreign players to operate within China - it's not impossible, but there are issues.
Read 10 tweets