Monthly Recap: Market Timing

world.2014-9-30.2014-10-31

Equities

Major
DAX(DEU) -1.56%
CAC(FRA) -4.15%
UKX(GBR) -1.15%
NKY(JPN) +1.49%
SPX(USA) +2.36%
MINTs
JCI(IDN) -0.93%
INMEX(MEX) +0.17%
NGSEINDX(NGA) -8.88%
XU030(TUR) +8.03%
BRICS
IBOV(BRA) +1.02%
SHCOMP(CHN) +2.38%
NIFTY(IND) +4.49%
INDEXCF(RUS) +5.49%
TOP40(ZAF) +0.51%

Commodities

Energy
Brent Crude Oil -9.26%
Ethanol +14.37%
Heating Oil -4.74%
Natural Gas -6.14%
RBOB Gasoline -17.18%
WTI Crude Oil -11.32%
Metals
Copper +1.66%
Gold 100oz -3.07%
Palladium +2.58%
Platinum -4.86%
Silver 5000oz -5.92%

Currencies

USDEUR:+0.85% USDJPY:+2.44%

MINTs
USDIDR(IDN) -0.84%
USDMXN(MEX) +0.42%
USDNGN(NGA) +1.09%
USDTRY(TUR) -2.41%
BRICS
USDBRL(BRA) +0.95%
USDCNY(CHN) -0.43%
USDINR(IND) -0.64%
USDRUB(RUS) +8.61%
USDZAR(ZAF) -2.23%
Agricultural
Cattle +6.09%
Cocoa -9.56%
Coffee (Arabica) -3.01%
Coffee (Robusta) +4.07%
Corn +17.10%
Cotton +3.77%
Feeder Cattle -0.31%
Lean Hogs -18.14%
Lumber -2.13%
Orange Juice -8.18%
Soybean Meal +25.67%
Soybeans +13.43%
Sugar #11 +3.69%
Wheat +12.00%
White Sugar +0.19%

Credit Indices

Index Change
Markit CDX EM -14.84%
Markit CDX NA HY +1.20%
Markit CDX NA IG -1.28%
Markit CDX NA IG HVOL +14.53%
Markit iTraxx Asia ex-Japan IG +10.99%
Markit iTraxx Australia +8.31%
Markit iTraxx Europe +0.54%
Markit iTraxx Europe Crossover +88.89%
Markit iTraxx Japan +9.27%
Markit iTraxx SovX Western Europe +3.06%
Markit LCDX (Loan CDS) -0.30%
Markit MCDX (Municipal CDS) +1.13%
A month that started with jitters about the end of QE in the US ended with a monster rally on Japan pushing the button on a broader QE initiative that will see it buying foreign bonds and equities.

Index Performance

index performance.2014-9-30.2014-10-31

Sector Performance

sector performance.2014-9-30.2014-10-31

Market Cap Decile Performance

Decile Mkt. Cap. Adv/Decl
1 (micro) -10.35% 69/66
2 -0.01% 73/64
3 +2.53% 68/69
4 +0.89% 72/65
5 +2.06% 66/71
6 +3.11% 77/60
7 +1.51% 67/70
8 +2.55% 75/62
9 +3.58% 73/64
10 (mega) +4.07% 72/65
Micro-caps under-performed badly. But the clear winner in October were the large-caps.

Top Winners and Losers

YESBANK +22.48%
BANKINDIA +23.00%
BHEL +28.06%
DLF -17.30%
CAIRN -8.56%
EXIDEIND -7.08%
SEBI went after the DLF, now there’s a big question mark whether DLF should continue in the Nifty index.

ETFs

BANKBEES +11.06%
CPSEETF +7.39%
PSUBNKBEES +5.34%
JUNIORBEES +5.30%
INFRABEES +4.37%
NIFTYBEES +4.21%
GOLDBEES -1.73%
Gold was the most hated asset, the end of US QE and all…

Yield Curve

Japan is going to buy foreign bonds. So there:

yield Curve.2014-9-30.2014-10-31

Bond Indices

Sub Index Change in YTM Total Return(%)
GSEC TB -0.06 +0.71%
GSEC SUB 1-3 -0.37 +0.09%
GSEC SUB 3-8 -0.12 +0.74%
GSEC SUB 8 -0.12 +2.38%
Is the Japanese bid factored in?

Interbank Lending

mibor.30days.2014-10-31

Theme Performance

Market Fliers finally woke up. Momentum put in a decent performance. Overall, not a bad month.

Thought to sum up the month

“Humans hate randomness, the idea that we lack control and don’t really know what the future holds. It stimulates excitement to feel like we are in control of the future.”

And financial news organizations from CNBC to print and digital news outlets are all too happy to give viewers and readers what they seem to want. Besides, if publications, Websites, and television networks simply told investors to buy and hold, with periodic rebalancing, it would be that much harder to fill pages and airtime.

Source: The Timeless Allure of Stock-Market Timers

Related:

Weekly Recap: AI

world.2014-10-22.2014-10-31

Equities

Major
DAX(DEU) +4.33%
CAC(FRA) +3.12%
UKX(GBR) +2.29%
NKY(JPN) +8.02%
SPX(USA) +4.36%
MINTs
JCI(IDN) +0.30%
INMEX(MEX) +3.90%
NGSEINDX(NGA) -3.70%
XU030(TUR) +3.53%
BRICS
IBOV(BRA) +4.73%
SHCOMP(CHN) +4.02%
NIFTY(IND) +4.08%
INDEXCF(RUS) +8.32%
TOP40(ZAF) +3.14%

Commodities

Energy
Brent Crude Oil +0.98%
Ethanol +3.33%
Heating Oil +1.93%
Natural Gas +5.71%
RBOB Gasoline -0.35%
WTI Crude Oil -2.17%
Metals
Copper +0.99%
Gold 100oz -6.21%
Palladium +2.45%
Platinum -2.39%
Silver 5000oz -9.14%

Currencies

USDEUR:+1.01% USDJPY:+4.80%

MINTs
USDIDR(IDN) +0.60%
USDMXN(MEX) -0.57%
USDNGN(NGA) +0.27%
USDTRY(TUR) -1.08%
BRICS
USDBRL(BRA) -0.40%
USDCNY(CHN) -0.08%
USDINR(IND) +0.14%
USDRUB(RUS) +4.02%
USDZAR(ZAF) +0.26%
Agricultural
Cattle +1.19%
Cocoa -5.73%
Coffee (Arabica) -1.57%
Coffee (Robusta) +1.29%
Corn +6.31%
Cotton +2.32%
Feeder Cattle -2.09%
Lean Hogs -1.76%
Lumber -1.03%
Orange Juice -4.90%
Soybean Meal +14.76%
Soybeans +8.13%
Sugar #11 -3.09%
Wheat +1.82%
White Sugar -0.40%

Credit Indices

Index Change
Markit CDX EM +0.71%
Markit CDX NA HY -0.05%
Markit CDX NA IG -0.50%
Markit CDX NA IG HVOL -3.58%
Markit iTraxx Asia ex-Japan IG -6.34%
Markit iTraxx Australia -6.48%
Markit iTraxx Europe -1.58%
Markit iTraxx Europe Crossover -0.61%
Markit iTraxx Japan -6.54%
Markit iTraxx SovX Western Europe -0.61%
Markit LCDX (Loan CDS) +0.08%
Markit MCDX (Municipal CDS) -2.24%
So what if the US Fed stopped QE? Japan rode to the rescue in style. If you thought that the Fed buying up treasuries was skewing the market, wait until Japan’s public pension fund starts buying equities and foreign bonds. The markets understandably went “yipi ka yei” on the news.

Nifty Heatmap

CNX NIFTY.2014-10-22.2014-10-31

Index Returns

index performance.2014-10-22.2014-10-31

Sector Performance

sector performance.2014-10-22.2014-10-31

Advance Decline

advance.decline.line2.2014-10-22.2014-10-31

Market Cap Decline Performance

Decile Mkt. Cap. Adv/Decl
1 (micro) +1.38% 68/62
2 +6.38% 78/53
3 +4.52% 74/58
4 +4.30% 71/60
5 +4.00% 70/62
6 +3.98% 74/58
7 +3.13% 75/56
8 +2.85% 71/61
9 +3.03% 74/58
10 (mega) +3.59% 68/64
Stocks rallied across the board after last week’s bloodbath.

Top Winners and Losers

GAIL +9.47%
YESBANK +10.19%
HINDALCO +10.27%
WIPRO -3.42%
BHARTIARTL -2.58%
HINDUNILVR -2.52%
The first week of November is going to see a lot of earnings announcements. Expect a lot of them to miss estimates, given how weak the overall economy was in the last quarter.

ETFs

JUNIORBEES +4.47%
BANKBEES +4.38%
NIFTYBEES +4.25%
CPSEETF +3.79%
INFRABEES +1.22%
PSUBNKBEES -0.67%
GOLDBEES -3.92%
If Fed QE was bullish for gold, shouldn’t Japanese QE also be bullish? Apparently not.

Yield Curve

Quick! The Japanese are coming!

yield Curve.2014-10-22.2014-10-31

Bond Indices

Sub Index Change in YTM Total Return(%)
GSEC TB +0.24 +0.13%
GSEC SUB 1-3 +0.27 -0.09%
GSEC SUB 3-8 +0.08 +0.04%
GSEC SUB 8 -0.06 +0.89%
Long bonds FTW!

Theme Performance

Thought for the weekend

The chief virtue of AIs will be their alien intelligence. An AI will think about food differently than any chef, allowing us to think about food differently. Or to think about manufacturing materials differently. Or clothes. Or financial derivatives. Or any branch of science and art. The alienness of artificial intelligence will become more valuable to us than its speed or power.

Source: The Three Breakthroughs That Have Finally Unleashed AI on the World

Fly or Die: Last Year’s Diwali Picks

It is that time of the year again when brokerage houses try and pick stocks for “muhurat trading.” Let’s see how they fared with their 2013 picks. NIFTY is up +27% since last Diwali.

Kotak Securities

Kotak picked 11 stocks that returned about +50%. Sharpe: 0.16732

kotak's 2013 Diwali picks

Microsec

Microsec picked 9 stocks that returned about +37%. Sharpe: 0.12822; but their portfolio has been pummeled lately.

microsec's 2013 Diwali picks

Globe

Globe’s 10 stocks returned about +37% but with a much lower Sharpe (0.11445) compared to Kotak and Microsec. It hit its peak sometime in July and its been sliding since then.

globe's 2013 Diwali Picks

Prabhudas Lilladher

Prabhudas Lilladher picked 4 stocks. Got to admire their courage here. +45% since Diwali, Sharpe: 0.15509.

Prabhudas Lilladher's 2013 Diwali stock picks

2014 Picks

We have created new themes to track brokers’ 2014 Diwali picks. Kotak, Globe and ET have published their recommendations so far.

You can find all Broker Recommendations here.

Opening Bell 22.10.2014

Your world at 9am

world.2014-10-22

Equities

Major
DAX(DEU) +1.94%
CAC(FRA) +2.25%
UKX(GBR) +1.68%
NKY(JPN) +1.71%
SPX(USA) +1.96%
MINTs
JCI(IDN) +0.86%
INMEX(MEX) +0.90%
NGSEINDX(NGA) +0.29%
XU030(TUR) +1.81%
BRICS
IBOV(BRA) -3.44%
SHCOMP(CHN) +0.52%
NIFTY(IND) +0.61%
INDEXCF(RUS) +0.51%
TOP40(ZAF) +2.13%

Commodities

Energy
Brent Crude Oil +0.06%
Ethanol +0.00%
Heating Oil +0.01%
Natural Gas -0.62%
RBOB Gasoline -0.38%
WTI Crude Oil +0.00%
Metals
Copper +0.00%
Gold 100oz +0.00%
Palladium +0.06%
Platinum -0.34%
Silver 5000oz -0.19%

Currencies

USDEUR:-0.11% USDJPY:-0.14%

MINTs
USDIDR(IDN) +0.27%
USDMXN(MEX) +0.09%
USDNGN(NGA) +0.18%
USDTRY(TUR) +0.00%
BRICS
USDBRL(BRA) +0.77%
USDCNY(CHN) -0.06%
USDINR(IND) -0.07%
USDRUB(RUS) -0.13%
USDZAR(ZAF) -0.06%
Agricultural
Cattle +0.18%
Cocoa +0.00%
Coffee (Arabica) -0.40%
Coffee (Robusta) +0.00%
Corn -0.28%
Cotton +0.59%
Feeder Cattle +0.08%
Lean Hogs +0.06%
Lumber +0.03%
Orange Juice +1.63%
Soybean Meal +0.73%
Soybeans -0.23%
Sugar #11 -1.62%
Wheat +0.24%
White Sugar +0.00%

Credit Indices

Index Change
Markit CDX EM -0.01%
Markit CDX NA HY +0.44%
Markit CDX NA IG -1.10%
Markit CDX NA IG HVOL -1.62%
Markit iTraxx Asia ex-Japan IG -2.51%
Markit iTraxx Australia -1.92%
Markit iTraxx Europe +1.93%
Markit iTraxx Europe Crossover +7.44%
Markit iTraxx Japan -4.56%
Markit iTraxx SovX Western Europe +1.85%
Markit LCDX (Loan CDS) +0.09%
Markit MCDX (Municipal CDS) -0.19%
Diwali fireworks are full on: the S&P 500 gained nearly 2% in one day, the biggest single-session increase since 2011. European markets up overnight. NKY up this morning. Dollar rally took a pause for the cause. Credit spreads are tighter.

Must reads

Diesel prices have been freed. Gas prices have been increased. Small but important steps towards labour market reforms. The coal ordinance. Direct cash transfers to consumers of subsidized LNG. And now, govt has identified eight areas to reform business regulatory processes. Modi has given ministries three months to change rules to cut delays and red tape. (DNA, LiveMint)

ECB looking at corporate bond buys, could act as soon as December. (Reuters) Why? Because big companies in the euro area often act like banks to smaller companies. Since actual European banks seem either unable or unwilling to boost credit to small and medium enterprises because they are insufficiently capitalised, the ECB may be gambling that non-financial corporations can fill in the gap by borrowing ultra-cheaply in the capital markets and then lending the money onward for a modest return to the real economy. (FT)

IBM, Coca-Cola and McDonalds… shattered. (TRB)

The theory behind why investors should diversify: if one or two position do poorly, the other holdings might do well and make up for it. However, consider (WP):

  1. watered-down returns
  2. no safe harbor
  3. false sense of security

The answer is that there is no answer. (StockViz, April 2014)

Good luck and happy Diwali!

Are we setup up for a bond rally?

ICICI came out with an interesting note on why they expects Indian bonds to rally. They outline 5 factors:

  1. Improving current account balance
  2. Falling inflation
  3. Fiscal consolidation
  4. Rising savings rate
  5. Substantial FII inflows

Related: Long-term Gilt Funds, where we layout the same thesis.

 
 
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Please get in touch with Shyam for advice on investing in mutual funds.
You can either WhatsApp him or call him at 080-2665-0232.
He is an AMFI registered IFA who can advice you on IDBI, Mirae, HDFC, ICICI Pru, UTI and Birla Sun Life funds.