Chart of the day: Coffee prices at 2-year low; What's brewing?

Riken Mehta
Moneycontrol Bureau

US Coffee futures hit a 2 year low this week. There are expectations of record harvest in Brazil this year, which is keeping prices under check. That apart, the continued uncertainties from the Eurozone debt crisis ahead of elections in Greece over the weekend also weighed on the markets.

US Coffee C July futures closed on Thursday, at USD 149.05 per pound, the lowest settlement for the second position since mid-June 2010.

The Indian Coffee manufacturers are all set to make handsome profits from the recent slump in coffee prices. The margins of companies like Nestle , Tata Coffee , Tata Global Beverage would improve further on fall in coffee prices.

Chart of the day: Can India curtail oil import bill?

Riken Mehta & Shaheen Mansuri
Moneycontrol.com

In the last eight years, the country's crude import jumped 78% while petroleum products exports went up a 230% from FY05 to FY12 as per the statistics provided by PPAC. Reliance Industries ( RIL ) has been the biggest contributor to it.

Experts attribute this kind of growth to the Jamnagar refinery owned by RIL which is considered the largest in the world with an installed capacity of 668,000 barrels per day.

Even though the gap between exports and imports is still big, rising exports in last eight years helped reduce in the space considerably. From the above analysis, it can be infered that oil is not the only cause for the rupee to fall. Also in the current scenario, Reliance Industries is allowed to export only certain petroleum products. The government should direct the Oil Ministry to take some serious measures to boost petroleum products export thereby curtailing the net oil import bill in the long run.

Year	FY05	FY06	FY07	FY08	FY09	FY10	FY11	FY12 (P)
Net Import (in USD Mn)	22,607	33,845	39,549	55,560	63,151	56,078	68,808	90,765

Chart of the day: Is the worst over for capital goods space?

Capital goods has been the biggest laggard of the index of industrial production (IIP) components, underscoring the slowing investment cycle in the economy. But investors in capital goods shares may be betting that the worst could be over for these companies, and that the risk-reward ratio at these valuations is reasonable. Check the chart below.

*BSE Capital Goods index % returns in 1 month

Time frame: Jan'11 - Jun' 12

Chart of the day: Jubilant about Dominos? A diverse view in less than 30 mins

Riken Mehta
Moneycontrol.com

Jubilant Foodworks, the franchisee for Dominos Pizza in India, enjoys a valuation far higher than that of the company whose pizzas it sells. Investors are willing to fork out a hefty premium for Jubilant’s shares, betting the company can sustain its high earnings growth in the foreseeable future. It is also a marked investor preference for consumption shares in a volatile market contributed to the upswing in its stock price.

Analysts, however caution that at some point, high inflation will start hurting consumption. And when that happens, overpriced consumption stocks like Jubilant may take a beating.

As seen from the chart, Jubilant Foodworks' market-cap since listing is almost neck-to-neck with its parent company Domino's Pizza listed on the New York Stock Exchange. After some number crunching, we discovered that Domino's Pizza has 4898 stores in the United States, that's 10 times more than its Indian subsidiary's 465 stores. Its US counterpart also clocks in revenues which is 5 times higher. The parent company is trading around 18 times (P/E), trailing its twelve months earnings while Jubilant is currently trading at 73 P/E.

Already, many analysts have turned cautious on Jubilant Foodworks after it reported its fourth quarter earnings, saying that growth was likely to moderate because of growing competition.

For chart, Click on the attachment

Chart of the day: Why RBI is not fighting the slide in the rupee

Riken Mehta
Moneycontrol.com

One of the reasons for the rupee sliding sharply against the dollar is the Reserve Bank of India’s reluctance to support the rupee by selling dollars, like it usually does during periods of volatility. And there is good reason, why the RBI is avoiding what could well turn out to be a losing battle. As can be seen from the chart, India’s import cover--the number of months of imports that can be paid for by a country's forex reserves - is at a 12-year low. The import bill has soared in the last few years, but forex reserves have not kept pace.

The import cover is calculated by taking the absolute annual import figure and then divide it by 12 months to get the average monthly import. Divide forex reserves at the end of the same period (Financial year end in this case) by average monthly import to get the import cover ratio.

For FY12, the import cover ratio is 7.2 months. It means that India has forex reserves to cover only the next 7 months of FY13, assuming the imports remain the same at USD 40.7 billion.

For chart, Click on the attachment

Chart of the day: Is rising crude price a key reason for pressure on rupee?

Chart of the day: Is rising crude price a key reason for pressure on rupee?

Chart of the day: Participatory notes are steadily going out of fashion

Riken Mehta
Moneycontrol.com

The White Paper on Black Money mentions Participatory Notes (PNs) as one of the conduits for bringing back illegal funds stashed abroad. However, as the chart below shows, the proportion of overseas funds coming in through participatory notes (PNs) has been steadily declining. And it is not just in relative terms; even in absolute terms, PN holdings have been shrinking. Bearish market conditions for much of the last four years, and increasing vigilance by regulators are the key reasons for this trend, say brokers. See the chart below

Data Source: SEBI