Valuation of Indian Markets & Relentless FII Selling

Foreign Institutional Investors have been net sellers in the last two months offloading stocks worth about Rs 24,000 Cr [Aug & Sep] Source: NSDL. Domestic Investors have aggressively bought stocks to ward off free fall in the markets. To us it is a sure sign indication of downward revision of Earnings for FY 2018 from Rs 1626 to Rs 1601 and further down to Rs 1550 as we start getting the September quarter results.

Valuation of Indian Markets:
Instead of the BSE 500, we are now taking into (more…)

Why Indian StockMarket Quoting at High P-E ?

We already put out on Twitter that we are booking profits. As against the historical average multiple of 14.7x, the Nifty currently trades at 17.8x i.e, 20% premium. Over the last 10 years, the market has traded above this multiple for only 3% of
trading days.

Earnings growth trend also does not appear to be particularly attractive with earnings revisions still happening on the downside. Hence valuation (more…)

Why Value Investing Does not Work in India ?

Indian small & midcap stocks have witnessed a sharp rally since the lows of Aug 2013 and have outperformed large caps significantly over this period. A large part of this relative outperformance is explained by the price multiple rerating seen over this period. While the price multiple rerating does explain a large part of equity returns in the short run, it is the underlying business performance and earnings growth that should drive performance in the long run.

In fact it’s quite interesting to note that for small stocks, the multiple (more…)

Can PSU Banks Catch Private Peers in Digital Banking ?

private-vs-psu-banks-digital-bankingThe increasing penetration of smartphones and internet availability on these phones coupled with Aadhaar have made onboarding of customers easy for new players and reduced switching cost and transaction time for customers. The stage is, therefore, set for a large scale disruption of the Financial Services industry, both on the liability gathering side (which will largely become cashless) and on the lending side (where loans will become more personalised and smaller).

Analysts are of the view that mobile wallets and payment banks might not be profitable on their own but would be successful as a part of a bigger ecosystem of services and financial services products. In specific, combining mobile wallets / (more…)

Where is the Bottom for Market Sell Off ? Is it a Buying Opportunity ?

SENSEX Targets FallNews that Indian army conducted strikes across the Line of Control (LOC) between India and Pakistan, is on wires. This has pushed USD-INR higher by ~0.6%, equities lower by about 2% from intraday highs. While cross-border firing isn’t rare, attacks across the LOC are. Diplomatic tensions between the two countries have already been high following the attack on an Indian army camp in Uri on 18th September in which 18 Indian soldiers lost their lives and the exchange of words between India and Pakistan in the UN General Assembly recently. In fact, India (more…)

Why Investor Dislike Birla’s Grasim – Aditya Birla Nuvo Merger ?

Grasim Aditya Birla Nuvo DealGrasim Industries Ltd has proposed to merge Aditya Birla Nuvo Ltd with itself. Shareholders of Aditya Birla Nuvo would get 3 shares of Grasim for every 10 shares they hold. Thereafter, Aditya Birla Financial Services – would be demerged and listed as a separate entity where for every 1 share held in Grasim a shareholder will get 7 shares in Aditya Birla Financial Services which would be then listed separately.

Wouldn’t it be better to first demerge Aditya Birla Financial Services from (more…)