Monday, 20 March 2017

Sensex near all-time high: Does the rally have any more steam?

BSE Sensex, the Indian benchmark index, inched close to record high levels (30,000) the past week after the incumbent BJP government emerged victorious in the largest state election of 2017. That Prime Minister Narendra Modi will secure a second term in 2019 now seems like a foregone conclusion, especially on the backdrop of this emphatic win.

Investors and traders cheered the as-is and anticipated political stability by pushing the benchmark indices close to the record high levels last seen in March 2015.

New High Low Index

New High Low Index (NHLI), as the name suggests, takes into account the number of stocks touching new yearly highs and lows on a trading day on BSE. The formula used for calculation the same is:

New High Low Index =  Number of stocks touching new highs / (Number of stocks touching new highs + new lows)

After back-testing data since 2006, every time the Sensex makes a peak after a strong bull rally, the NHLI level surges to over 80% level for few days. Furthermore, the number of stocks hitting new yearly highs are more than 250 stocks on an average.

In the current rally, the NHLI is sub-70%. As seen in the diagram below, the NHLI is trending downwards in the ongoing rally while the BSE Sensex is trending upwards close to record levels. Additionally, the number of stocks hitting fresh 52-week highs has barely surpassed 150 in this entire rally. The technicals, hence, suggest that the much spoken-about market euphoria is still missing from the market. But this is a positive for traders and investors, as the market hasn’t peaked just yet and still has some cylinders to fire.

Advance-decline ratio 

The breadth of a market, or its advance-decline ratio (ADR), is one of the best indicators used to measure the strength of a bull or bear rally. The ratio measures the total number of stocks advancing to the total number of stocks declining in the market.

In a bull market, when the Sensex is close to its peak, the ADR is above 2.5. However, in the current rally, the ADR is struggling to stay above 1.

Both these data points signal that retail participation is significantly missing from the market. When retail investors invest heavily in the market, putting all their money in stocks expecting it to touch new highs daily, it is a signal that the market is likely to peak out. Currently, the general mood among retail investors is that of caution and they continue to wait on the sidelines awaiting a significant correction to enter the market.

-Riken Mehta

Saturday, 28 February 2015

Budget 2015: Smaller Speech, Bigger Vision!

Smaller speech, bigger vision. This is the summary of Modi government’s first full year budget. Finance Minister kept his speech much shorter and meaningful this year compared to his last year’s budget speech where he said too much but of little use

Arun Jaitley may not have touched upon specific industry or sectors in his latest speech but laid a foundation or stepping stone for the future to unleash India Inc. Jaitley proposed numerous measures related to tax issues, ease of doing business in India, promote start-ups and SMEs, laws to curtail black money, additional funds for infrastructure and extension of social security benefits to the poor people of the country.

For common man, the Finance Minister delivered some goodies but not enough to rejoice them. Direct tax benefits like Increase in medical reimbursements, hike in limit under Section 80CCD by Rs 50000 and higher exemptions on travel allowance will partly get offset by increase in service tax rate from 12.36 percent to 14.28 percent. For corporates, the budget had a long-term vision. While the gross corporate taxes will go up this year due to increase in surcharge on corporate and individual taxes, the Finance Minister soothed India Inc with reduction in corporate tax rates from 30 percent to 25 percent with effect from FY16-17. This was one of the prime features of this budget – a step in the right direction of Modi’s Make In India vision. Setting up a fund to promote start-ups and easy credit for Medium and Small Medium Enterprises will add fuel to the country’s growth engine and creation of jobs in the longer term.

Infrastructure has always remained as one of the top agendas for India. With very little room for spending, FM launched a new fund for investment in infrastructure along with measures to raise money from tax free bonds for road, rail and irrigation projects.

In its constant endeavor to decode markets for retail investors, Heckyl prepared a budget e-book “Unleash India Inc” with a 360 degree snapshot of the budget and research views from some of India’s leading broking houses. It covers Budget Impact on market, stocks, sectors, common man’s wallet and India Inc’s businesses. The e-book also summarizes rail budget and economic survey. The e-book concludes with the verdict of the key brokerages views on Budget 2015.

Download Heckyl’s Budget ebook

Thursday, 13 November 2014

Chart check: Will Nifty face resistance around 8400?

Riken Mehta

Follow me on Twitter @mehtariken

The benchmark index Nifty is hitting fresh all-time highs cheering lower commodity prices and expectation of policy rate cut boosting the credit growth cycle in the coming quarters. Rising dollar index is a worrisome sign but excessive liquidity thanks to Bank of Japan’s massive bond buying program is pushing equities higher across the globe. FIIs have pumped in close to 2 billion dollars in the last 20 days keeping rupee in the range of 60-62 against the greenback

As seen from the chart, the Nifty has been moving in a channel since the historic election outcome in May. The Nifty gave false breakouts since then one on the upside in September followed by other on the downside last month. Currently, the Nifty has again broken on the upside moving out of the channel. However, only time will tell whether it is a false breakout and the Nifty will move back in the channel or it has more room to move higher.

December 14, 2014

The Nifty did breakout and manage to stay above 8400 for few days and touch a record high of 8626. However, selling pressure emerged at higher levels and the Nifty moved back inside the trading band only to prove to be another false breakout.

Tuesday, 30 September 2014

Corn Prices at 5-year low; Sukhjit Starch to benefit

Riken Mehta

Follow me on Twitter @mehtariken

Corn prices have witnessed a roller-coaster ride in last 2 years. After hitting a record high of USD 842.38 per bushel in August 2012, US corn future prices have plunged more than 60 percent to hit a fresh five year low this month. Record prices in 2012 lured farmers to harvest more corn in the following years thereby resulting in record output this year. As supply outpaced demand, prices fell forcing farmers to sell crops at lower rates. Eventually farmers will start looking for other crops to harvest where yields are better than corn. This is a typical commodity cycle which happens in several agri crops.

Sukhjit Starch, a Punjab based company is likely to benefit from lower corn prices. The company is one of the largest producers of maize starch, corn-based biochemical products and corn-syrups. As seen from the chart, maize prices shot up in second half of 2012 and company’s margins came under pressure for the next four quarters (Dec-12 to Sep-13). The correction in corn prices led to rebound in margins as raw material cost of percentage to total sales began to moderate.

Thursday, 25 September 2014

Rising dollex spells bad news for Nifty


Riken Mehta

Follow me on Twitter @mehtariken

The US dollar index is trading at four-year high surpassing 85 levels on the upside on Thursday. The dollar index tracks greenback movement against six other major currencies. The current rally in dollar index is sparked by faster US economic growth pushing the US Federal Reserve closer to raise interest rates while the slowdown in Europe and Japan has forced central bankers to increase stimulus and boost liquidity.

As seen from the chart, the Nifty has negative correlation with the dollar index. Indian equity market banks heavily on foreign fund inflows and strength in US dollar index would accentuate selling in equities by FIIs.

The Indian rupee closed at 7-week low in trade on Thursday. FIIs have sold shares worth close to Rs 3000 crore in last three days. It would be premature to say that a deeper correction is underway but one should keep a close look at dollar index before starting bottom-fishing in the market.

Thursday, 11 September 2014

Chart of the day: Brent crude Vs Nifty in past 3 years

Riken Mehta

Follow me on Twitter @mehtariken

The price of Brent crude fell below the USD 100 a barrel mark for the first time since June 2013 on Monday as data from China and the US pointed to slower economic growth in the world’s largest oil consumers.

Investors have driven global prices down 15 percent from mid-June highs as fears about a supply disruption in Iraq or elsewhere faded and concerns about weak global demand grew. This has given more legs to the extended bull run in Indian equities.

While crude prices came off, foreign institutional investors pumped in a net of Rs 1,162 crore into Indian equities, which is expected to help the Central government and the Reserve Bank of India to rein in fiscal deficit and inflation.

Monday, 9 June 2014

BSE Sensex at new highs: What are market internals suggesting?

Riken Mehta

Follow me on Twitter @mehtariken

Indian stocks are trading at all-time high levels in anticipation of GDP growth picking up and that corporate earnings may have bottomed out. Can this rally sustain? Let us look at key indicators if there is still steam left.

Breadth of the market

The breadth of the market is one of the indicators used to gauge the strength of the rally. Advance Decline ratio measures the number of stocks advancing to the number of stocks declining in the market. As seen from the chart the advance-decline ratio is rising with the rally in Sensex which is a good sign. Traders should look for any divergence in the pattern with respect to Sensex movement in future which may suggest that the market is likely to  peak out.

Chart: Sensex (Left Axis), Advance Decline Ratio (ADR)  (Right Axis)

New High Low Index

New High Low Index takes into account the number of stocks touching new yearly highs and lows on a trading day. The rising index along with the uptrend in Sensex suggests a powerful rally. The index is moving higher as Sensex scales new high signaling more stocks are hitting new 52-week highs with a broader participation of stocks in the market.

New High Low Index =         Number of stocks touching new highs                                                                                                                (Number of stocks touching new highs + new lows) 

 Chart: Sensex (Left Axis), New High Low Index  (Right Axis)

Sentiment Index

Sentiment suggests the mood of the traders and investors in the market. There are two groups of people in the market- Informed and uninformed investors (retail investors).  Informed investors invest when market is trading at lower levels, sentiment is pessimistic and uniformed investors are bearish on the market and opt to invest in fixed deposits. When retail investors invest heavily in the market putting all the money in stocks and expect the market to touch new highs every day is a signal that market is likely to peak out. Unfortunately, no public data is available to measure Sentiment index but the general mood is retail investors are currently still cautious and not invested heavily in the market so far. Another good sign!

Friday, 6 June 2014

Robust demand for 3D to continue in FY15: Prime Focus

Riken Mehta

Follow me on Twitter @mehtariken

Prime Focus Limited, a leading player in visual graphics and animation reported consolidated net sales of Rs 235.51 crore in the fourth quarter of FY14 over Rs 196.90 crore, a year ago. The company reported net loss of Rs 8.38 crore in this quarter. The profitability was impacted due to an unrealized quarterly loss on foreign exchange and a non-cash Deferred Tax charge of Rs 7.27 crore. The operating margins of the company improved from 7.51 percent last year to 11.21 percent in this quarter.

Prime Focus recorded consolidated annual net sales of Rs 833.72 crore, a jump of 9.32 percent compared to Rs 762.16 crore, a year ago. The company’s bottomline turned profitable in FY14 with profits of Rs 32.96 crore compared to loss of Rs 20.31 crore.

In an exclusive interview with, Vikas Rathee, Group COO, Prime Focus Limited said the resurgence in demand for 3D to continue into FY15. He is hopeful of achieving robust revenue growth rates in FY15. He expects interest cost to come down in the coming quarters on the back of closure of the backend and cheaper dollar financing.

Here is an edited transcript of the interview.

Q. Could you brief us about Q4 FY13 performance? How do you see your performance for the coming quarter?

Prime Focus posted healthy growth in top-line in Q4 (20%), which was bolstered with 2 big Hollywood films Noah and The Amazing Spiderman 2. Due to a one time increase in costs, there was a dip in margins for Q4. Profitability has also been impacted due to an unrealized quarterly loss on foreign exchange and a non-cash Deferred Tax charge of Rs 7.27 crore. We expect the margins to return to earlier levels in the coming quarters on the back of cost appropriation over various projects and realization of benefits of working on VFX projects out of India.

Q. The company has posted a revenue growth of 20.17%.  Can you tell us how much revenue contribution came from new businesses? How do you see revenue growth going forward along with PAT and margins guidance?

Share of Revenues from new businesses has increased from 69% to 79% in FY14. We expect the resurgence in demand for 3D to continue into FY15. Our key focus is also to continue to increase the share of VFX in our total revenues for FY15. We believe our capex phase is behind us. Overall, we expect stable growth in demand for our creative services business and we expect to increase our market share.
PFT (Prime Focus Technologies) continues to grow at a rapid pace in 12M FY14, where it grew 100% year on year. We continue to add new customers as well as get more demand for our products and services from existing customers. PFT has also expanded inorganically with DAX in the US and the initial progress since closing has been very promising – we see significant opportunity for PFT in the largest media market globally. Although it is difficult for us to project similar growth rates from such a high base, we feel we should again expect very robust growth in revenues from this segment in FY15 as well.

Q. Employee cost and other expenses were significantly higher in this quarter. Was there a wage hike in this quarter? Tax component was also high. Brief us on the same.  

We used Q4 as a quarter to bolster our capacity in VFX, which led to a one time increase in headcount in Q4, which should stabilize again post release of Sin City 2. Both PFT and Prime Focus Limited on a stand-alone basis had strong PBT and as such taxes are a reality. However, the Tax component contained a non-cash deferred tax charge of Rs.72.7mn for the quarter, which is the tax benefit we are getting due to the loss we incurred last year due to the redemption of the FCCBs. We will continue to monetize this benefit in FY15 as well.

Q. What was the total debt at the end of FY14? Will the interest cost come down in the coming quarters?

We have managed to stabilize the debt levels in the Company. Our total debt as of 31st March, 2014 is Rs 800 crore, which includes the Rs 45 crore of the OCD raise which was completed on 31st March itself, i.e. was reflected in our Cash balances as well. What is important to note is that we continue to shift the debt towards Buyers Credit and Financial Leases structures, which are a lot less onerous and cheaper sources of financing capex for the company.

Of the total debt, Rs 92 crore is towards Property loans, which are on the back of the key delivery centers owned by the Company in LA and Mumbai in relation to our Creative Services business, together currently valued at over Rs 200 crore. This also includes the NCD issued to Standard Chartered Private Equity in the parent Prime Focus Limited, including its accrued Redemption Premium value, totaling at Rs.228.3 crore as on 31st March 2014.

We continue to focus on leveraging our foreign company balance sheets to source cheaper financing for the overseas operations. You would notice a good reduction in our average interest rates and we feel we should continue to see a decline in our interest costs as we move forward, on the back of closure of the backend and cheaper dollar financing.

Q. Give us a brief idea on how much money will be used to retire debt and working capital from Rs 45 crore fund raising plans?

Of the total OCD raise,  25%-30% would be used to retire debt, while the balance would be used to fuel the growth of PFT’s international business.

Q. Which are the upcoming movies in this quarter and next?  

Our list kicked off on May 30 with the release of Walt Disney Pictures Maleficent, from director Robert Stromberg, and continues next week with the amazing Edge of Tomorrow from Doug Liman / Warner Bros. Pictures, which releases in the US on June 6

Unfortunately we can't mention all the films we're working on yet, but here's a few that we're really excited about: Maleficent, Edge of Tomorrow, Transformers: Age of Extinction, Earth To Echo, Hercules, Into The Storm, The Expendables 3, Sin City: A Dame To Kill For, The Interview, Kingman: The Secret Service

Q. Your subsidiary Prime Focus Technologies (PFT) recently acquired a US firm, by when do you think it will reflect in your performance?

PFT’s DAX acquisition was effective 1st April, 2014, hence DAX’s contribution will start reflecting from Quarter April to June 2014 onwards. We are very optimistic about PFT’s US operations contributing in a significant manner to the numbers over the next couple of years.

Q. Your technology subsidiary – PFT has seen a steady growth over the years, can you elaborate on how the business has been in the last quarter?

PFT has grown its revenue, really doubled its revenue over last year FY14 once again. We think it is because of two key factors - increased adoption of our cloud-based Media ERP technology platform, CLEAR and of course introduction of new products and services. Some significant wins we have had this quarter - one of the largest South African broadcast networks have adopted CLEAR and CLEAR-based media services.  We also added additional services for BCCI (Board of Control for Cricket in India) as a big sports client. We have had interesting wins from a very large multichannel network which is using us now for a significant part of their content publishing.

The second big activity for us is digital. One, we have developed our own business to business to consumer (B2B2C) platform, the OTT platform, for example where we are delivering IPL (Indian Premier League) and all the multiple sports on, which has quickly become the leading web-based multi-sport OTT platform in India and globally. We have also started digital play-outs and again given all the excitement in digital, we have sort of started a brand new activity of actually doing digital play-outs. We already are laying out over 20 channels now. We are now a YouTube certified partner.

We also announced the acquisition of a company called DAX and that is again an important milestone in the lifecycle of PFT. This is a company that has a cloud based platform that is being used by all the leading studios that are producing content in Hollywood and we saw a team that had uniquely similar blend of media and IT skills. Through DAX we also got access to key customers in the US such as Warner Bros. Television, CBS Television, Fox Television, Lionsgate, Legendary, Starz Entertainment and Showtime. We feel it has been a very satisfactory quarter and even better year for PFT, and we continue to make rapid strides in the global market.

Q. Are there any new markets that you will look at for your VFX, 3D conversion business?  

On the VFX and also in 3D we have made rapid strides and there is good momentum on the back of the success of blockbuster Hollywood movies such as Gravity, Noah, The Amazing Spiderman 2, etc. with a number of upcoming high profile releases such as Maleficent, Edge Of Tomorrow, Transformers and Sin City 2 as I mentioned earlier. We see good momentum across both these fronts in FY15 and we will surely leverage this momentum to capitalize on growth opportunities. We have recently started addressing the China market via a JV. We recently did work on our first contract in China for 3D conversion for a film called Iceman 3D and continue to make rapid strides to increase our market share in China.

Q. Could you brief us about expansion and capex plans for the coming years?

We feel we are done with all the expansion and bulky capex that we have incurred in bringing up our business to the level it is today. The benefits of the investments should accrue for us over the next several years. We do not foresee any major capex for the coming years as we hope to now consolidate our global offering across the various businesses.

Q. How do you see the overall industry outlook for the next one year?

We expect the Industry to remain buoyant. VFX in Hollywood is an evergreen segment, which continues to grow each year with audiences at large preferring to see more of sci-fi and animated films over dramas or live-action. 3D had flattened for a couple of years before Gravity happened, which has again led to a resurgence in the demand for 3D, especially in Asia.
The market for Media ERP type of solutions is still in its infancy stage. Broadcasters face many challenges today like flat revenues, rising operating costs and a new set of customers - highly demanding digital consumers. Virtualizing content supply chain operations, driving efficiencies and media process outsourcing are increasingly becoming their top priority. PFT’s CLEAR Media ERP technology and cloud-enabled services are helping content enterprises do more with less. We are happy to be riding the early growth wave in this segment with huge potential.

Tuesday, 27 May 2014

Chart of the day: Cash market turnover is steadily increasing

Riken Mehta

Follow me on Twitter @mehtariken

May is turning out to be a good month for stock brokers, with daily average cash market turnover (both exchanges combined) touching Rs 25,000 crore. This is the highest in five years, and offers some relief for broking firms, which have been grappling with low volumes for some time now.  While total traded turnover on the bourses (cash + derivatives) has grown over four-fold in the last five years, much of the rise has been driven by increased activity in options contracts, where brokerage charges are a fraction of cash market transactions.

Till mid-2009, cash market turnover would track the rise and fall in benchmark indices. But things changed from 2010 onwards, with cash market turnover falling for extended periods even as benchmark indices were rising.

The rise in average daily cash market turnover in May has been sharp. Between September last year, when the market began rising, till April this year, average daily turnover ranged between Rs 14,000-17,000 crore.

Saturday, 17 May 2014

How India grew under various PMs since 1951

Ritesh Presswala, Riken Mehta 

Follow me on Twitter @mehtariken

The verdict is out. BJP has created history and is set to form the government at the Centre for the next five years, replacing the UPA who was at the helm for last 10 years. Narendra Modi is set to become the first prime minister who was born in independent India. This is the third time that BJP will lead the country after Atal Bihari Vajpayee's stint in 1996 and 1998-2004. The Indian economy is grappling with series of problems like poor infrastructure, stalled projects, high inflation and job creation. The GDP growth is now at decade low and the nation expects Narendra Modi to revive it in his term. Let us see how India grew under various Prime Minsters since 1951.

Graphics by Ganesh Govalkar

Friday, 16 May 2014

F&O Check: Option buyers book out; IVs halve, premium falls

Riken Mehta 

Follow me on Twitter @mehtariken

F&O players had geared themselves for volatility on the day of the election results and took heavy positions in the options market mostly on the long side. A trader or investor bullish on a particular index or stock would buy at the money or out of the money calls to cash in on upside in it.

Traders bought Nifty out of the money calls earlier this week especially 7200, 7500, 7700 and 8000 calls in anticipation of 5 to 10 percent rally today. The Implied Volatility or IV shot up to as high as 40 levels yesterday on huge positions in calls.

Nifty rallied to 7500, gain of 400 points on early trends predicting BJP win and the premiums in most of the calls doubled leading to profit booking in out of the money calls. The Nifty is now down 300 points from day’s high and IVS have fallen to sub 25 levels.

What to buy if Narendra Modi comes to power?

Riken Mehta

Follow me on Twitter @mehtariken

The judgement day is here and market is buzzing with various scenarios and probabilities of how many seats will the Modi led BJP and NDA alliance will be able to get in the Loka Sabha elections 2014. While most exit polls predict the formation of NDA led government with majority, markets will react to final numbers today. Prominent brokerage houses are out with their shopping list for investors if Narendra Modi comes to power. The consensus top stock recommendations by brokerages are  ICICI Bank, Axis Bank, SBI, L&T, Maruti and Reliance Industries.


CLSA in its note to clients said, “NDA will be able to form the next government without much trouble which will be positive for investment plays like ICICI bank, Axis, SBI and L&T. We expect market to remain in consolidation phase in the short term after election. The next government will have the difficult task of managing inflation, fiscal deficit and weak monsoon,” added CLSA.

Axis Capital 

Axis Capital recommends to buy Maruti, ICICI Bank, SBI, HDFC, L&T, Coal India and Sesa sterlite from the Nifty basket. The broking firm also advises to buy REC, PFC, Shriram transport, JSW Energy, Bajaj Finance, Eicher, Motherson Sumi and LIC Housing finance. Capital raising candidates like Aban Offshore, Adani Power, GMR Infra, GVK Power and Idea cellular are also likely to benefit from it.


Macquarie expects the market rally to continue and in best case scenario market may see 15-20 percent upside. The brokerage house believes an absolute majority for NDA might lead to PE re-rating to 16-17 multiple from the current level of 14. Top picks are L&T , SBI , Axis bank , IRB and Adani Ports, said Macquarie.

Bank Of America Merrill Lynch 

Bank Of America Merrill Lynch expects another 8% return by year end. The broking house has year end target of 25500 on the Sensex. The growth will gradually recover to 5.4 percent in FY15 and 6.5 percent in FY16, added broking firm. On currency front, the rupee is expected to appreciate to 57 to the dollar. “We prefer high quality cyclicals like Maruti , ICICI bank and reform exposure stocks like ONGC and SBI. In midcaps, we prefer Eicher, Motherson, Yes bank and Aurobindo ,” said BoA-ML in its note.

Friday, 2 May 2014

CHART: Gold vs Sensex between last Akshaya Tritiya and now

Riken Mehta


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After outperforming equities a handsome margin in FY13, gold lost much of its ‘safe haven’ sheen last year, and ended up lagging the Sensex. Prospects for the yellow metal, in comparison to equities, do not look too bright this year too. Investors are betting on a global economic recovery later this year. Also, the Fed is expected to reduce the pace of its monthly bond purchases going ahead. This in turn should strengthen the dollar. Should the much anticipated global economic recovery materialize, equities will be the clear favourites.

Note: Dont use this chart without credits/attribution

Saturday, 22 February 2014

OMG! Only 14 listed Indian cos valued higher than WhatsApp

Riken Mehta & Sagar Salvi

How big is the Facebook-Whats App deal? Sample this: Only 14 Indian listed companies are valued more than WhatsApp. These big 14 are: TCS , Reliance , ITC , ONGC , Infosys , Coal India , HDFC Bank , Wipro , Sun Pharma , Tata Motors , HDFC , HUL ,  Bharti Airtel and ICICI Bank.

Companies like SBI , NTPC , HCL Tech , Larsen ,  Cairn India and  M&M are valued less than WhatsApp as per Wenesday's closing price. Here's more: WhatsApp has been valued more than combined listed media and retail stocks of India.

WhatsApp is valued more than some of global corporate giants like: Alcoa (USD 12.2bn), Blackstone Group (USD 17.8bn), The Gap (USD 19bn), Harley-Davidson (USD 14.1bn), Marriott International (USD 15.4bn), Moody’s (USD 17.08bn), News Corp (USD 10.27bn), Nielsen (USD 17.6bn), Tiffany & Co. (USD 11.4bn) and Xerox (USD 13.2bn).*

(*Source: NASDAQ)

Social media was abuzz on Thursday, after Facebook Inc announced it will buy fast-growing mobile-messaging startup WhatsApp for USD 19 billion in cash and stock, as the world's largest social network looks for ways to boost its popularity, especially among a younger crowd.

Facebook said on Wednesday it will pay USD 4 billion in cash and about USD 12 billion in stock in its single largest acquisition, dwarfing the USD 1 billion it paid for photo-sharing app Instagram. As part of the deal, WhatsApp co-founder and Chief Executive Jan Koum will join Facebook's board, and the social network will grant an additional USD 3 billion worth of restricted stock units to WhatsApp's founders, including Koum.

In event the merger fails to obtain regulatory approval, Facebook has agreed to pay a breakup fee to WhatsApp of USD 1 billion in cash and issue to WhatsApp shares of Facebook Class A common stock equal to another USD 1 billion.

Some interesting numbers: USD 104 billion Facebook’s valuation at the time of its IPO.

USD 16 Billion Amount Facebook raised in its IPO.

USD 25 Billion Twitter’s valuation at the time of its IPO.

USD 2.1 Billion Amount Twitter raised in its IPO.

USD 1 Billion Price Facebook paid for Instagram in 2012.

USD 8 Million Amount of capital invested in WhatsApp in 2011 by Sequoia Capital.

400,000,000: The number of active users, according to a December blog post from WhatsApp.

450,000,000: The number of active users, today, according to Facebook’s press release.

70%: Percentage of users who are active on the app on a daily basis.

1,000,000: The company says it’s adding more than 1 million new users a day.

945,000,000: Monthly active users on Facebook, as of Dec. 31.

230,00,000: Number of daily active users on Twitter.

50 The number of employees at WhatsApp Five: WhatsApp is the fifth most downloaded app on Android devices.

Zero: Number of ads that appear on WhatsApp. The service doesn’t sell ads    

Friday, 17 January 2014

How market-cap of CNX IT stocks moved in last three years

Riken Mehta
Follow me on Twitter @mehtariken

IT stocks have been on a roll for several months now on renewed optimism in the developed economies of US and UK that will lead to more outsourcing of software contracts to Indian IT companies coupled with rupee depreciation. Let's analyse how market-cap of CNX IT companies have moved in last three years.

Infosys market-cap has surged only 7 percent in last three years as company lagged its peers with slower revenue growth, falling margins, higher attrition rate and reluctance to avoid big ticket acquisitions and sticking to old strategies. TCS   market-cap is 115 percent higher compared to Infosys today while the difference was merely 7% in 2011.

TCS topped Infy as IT bellwether and surprised the street every quarter with its consistent strong performance despite weak macro environment in US and UK in 2011 and 2012.

HCL Tech   has emerged as a dark horse in the entire pack trebling its market-cap in last three years. Improved business strategies, strong leadership, acquisition of higher bracket clients and clocked higher EBIT margins over the years.

Infosys current market-cap of Rs 214078 crore is less than TCS market-cap in Jan 2011 (Rs 226656 cr). Infosys has not even managed to cross TCS market-cap (in 2011) in last three years.

TCS current market-cap is more than combined total market-cap of remaining 18 CNX IT stocks (barring Infosys) In 2011, TCS market-cap was 14% higher compared to Infy. Today TCS market-cap is 115% higher compared to Infy.

Infosys market-cap has surged only 7% in last three years. It has underperformed 14 IT stocks in CNX IT index in last three years.

The difference of market-cap between Wipro (3rd largest) and HCL Tech (4th largest) was 74% in 2011. Today the gap between two has narrowed to 32%.

Tech Mahindra 's market-cap was less than that of Mphasis in Jan 2011. Today, Tech Mahindra's market-cap is 5 times that of Mphasis. In 2011, Mphasis was 6th largest company in terms of market-cap and today Tech Mahindra is 5th largest while Mphasis is 7th.

Tech Mahindra’s market-cap was less than combined market-cap of MindTree , Vakrangee , Hexaware, CMC and KPIT . Today Tech Mahindra’s market-cap has nearly doubled the combined market-cap of MindTree, Vakrangee, Hexaware, CMC and KPIT.

Vakrangee’s market-cap has surged from Rs 700 cr in (Jan 2011) to Rs 4700 cr (nearly 600%) in last three years.

In 2011, Vakrangee was not even a part of CNX IT index and today its 10th largest IT stock in terms of market-cap (Top 10 IT stocks).   Only 5 CNX IT stocks out of 20 have posted negative returns in last three years. Core Education has lost 91% of its market-cap in last three years. (From midcap it has become smallcap stock)

Saturday, 11 January 2014

AAP effect: How sectoral indices have performed post AAP victory

Riken Mehta
Follow me on Twitter @mehtariken


Index % Fall since Dec-9
Nifty -3.02%
CNX IT 10.20%
Bank Nifty -10.45%
BSE Capital Goods -11.19%
BSE Power -8.29%
BSE Auto -4.09%
BSE Realty -3.78%
BSE Oil&Gas -3.75%
BSE Metal  -2.43%

The roller-coaster ride of Baltic Dry Index in last 6 months

Riken Mehta

Follow me on Twitter @mehtariken

Baltic Dry index, a barometer of global trade fell 26 percent this week after the new environmental rules implemented by Colombia. The government halted loading of coal out of the country after US miner Drummond failed to comply with environmental rules. Colombia is world’s fourth largest supplier of thermal coal. Baltic Dry index which indicates the daily charter rate for vessels carrying cargoes of coal, iron ore, and grain lost 11 percent in trade today. This was the steepest intraday fall for the index since October 2008. The index surged nearly 200 percent in the period June-December before peaking out around 2330 levels. The index is down 35 percent in last one month.

Thursday, 9 January 2014

How Infosys has moved in earnings seasons

Riken Mehta
Follow me on Twitter @mehtariken

Check out how Infosys/Infy has moved in earnings seasons

Pre-Result rally is rally from start of the month to one day before results
Post-Result rally is rally from closing price on result day to end of that month

Month Pre-Result Rally Result Day Post-Result Rally
Jan-12 2.13% -8.43% 6.09%
Apr-12 -4.03% -12.66% 2.48%
Jul-12 -1.52% -8.36% -1.65%
Oct-12 -0.07% -5.44% -1.35%
Jan-13 0.16% 16.79% 2.85%
Apr-13 0.95% -21.30% -2.61%
Jul-13 1.18% 10.91% 5.90%
Oct-13 3.80% 4.70% 1.08%
Jan-14 -1.00%