Buy only what you understand

Forget about hot tips and peer pressure. Buy the stock of a company, whose products you or your family members understand. This familiarity could stem from your jobs, purchases or usage. These ideas are available all around if you care to observe. Don’t ever hold on to a stock which does not pass the litmus test of your conviction! It is actually quite simple. Continue reading

The Fed may have quietly put off rate hikes to December 2015

The Federal Open Market Committee (FOMC) meet that ended on July 29th still leaves the big question open; will the Fed hikes in September or will they postpone the rate hike? For one, the Fed has enough time till September 16th as there are no intermediate meetings scheduled. That will give the Fed a full 7 weeks to analyze data on growth, labour, wages and inflation before arriving at a rate hike decision. However, as one breaks up the press release issued by the Federal Reserve Board after the FOMC meet, it looks quite likely that the rate hike may be put off from September to December. Let us understand why! Continue reading

America’s $2 trillion

That is a lot of money stashed away abroad

Most readers may be surprised to know that the US-based companies have kept cash profits to the tune of $2 trillion abroad. That is roughly equivalent to the GDP of India and roughly half the market capitalization of the UK stock market. Close to 9% of this stash belongs to Apple. In fact Apple has a cash chest of $200 billion of which $180 billion is held abroad. If you are wondering about the reasons for the same, it is all about taxes. Continue reading

Counter-vote by LIC – Minority shareholders assert themselves; and that is good

It is hard to say what will be the final outcome of the proposed Cairn-Vedanta deal but one thing comes out crystal clear. The minority shareholders are having a major voice in merger deals. But, first some background.

The recent amendments to the M&A rules in India specifically require approval for any merger from a majority of the minority shareholders. Let us understand this a little further. Continue reading

RBI Credit Policy – Should we expect a rate cut in August?

Come August and the topic once again veers around to the forthcoming bi-monthly monetary review. Will there be a rate cut; seems to be the overriding question. Many of the macros are, interestingly, supporting a rate cut. But the rate cut decision in August may hinge on factors outside of macros. Let me explain!

To begin, macros are favorable…

Inflation is well in control around the 5% mark. The biggest X-factor was the monsoon rainfall. While early July was a fairly dry spell, the deficit seems to have been made up in late July. At the end of the Monsoon, the overall deficit is unlikely to be higher than 6-7%. Secondly, Q1 results have been fairly disappointing and the pressure on operating profits is quite visible. This may again make the case for a rate cut. With major banks starting to pass on rate cuts to the end customer, the RBI cannot really say that transmission is not happening. So, what now? Continue reading

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