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.

 
 
You can run our comparison tool here: FundCompare
 
 
 

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.

Opening Bell 21.10.2014

Your world at 9am

world.2014-10-21

Equities

Major
DAX(DEU) -1.50%
CAC(FRA) -1.04%
UKX(GBR) -0.68%
NKY(JPN) -0.72%
SPX(USA) +0.91%
MINTs
JCI(IDN) -0.02%
INMEX(MEX) -0.20%
NGSEINDX(NGA) +1.22%
XU030(TUR) +0.94%
BRICS
IBOV(BRA) -2.55%
SHCOMP(CHN) -0.07%
NIFTY(IND) +1.28%
INDEXCF(RUS) -0.60%
TOP40(ZAF) -0.60%

Commodities

Energy
Brent Crude Oil +0.15%
Ethanol -0.17%
Heating Oil +0.04%
Natural Gas +0.03%
RBOB Gasoline +0.38%
WTI Crude Oil +0.15%
Metals
Copper +0.00%
Gold 100oz +0.00%
Palladium +0.14%
Platinum +0.21%
Silver 5000oz +0.00%

Currencies

USDEUR:-0.04% USDJPY:-0.29%

MINTs
USDIDR(IDN) -0.25%
USDMXN(MEX) +0.11%
USDNGN(NGA) -0.09%
USDTRY(TUR) +0.08%
BRICS
USDBRL(BRA) +1.19%
USDCNY(CHN) -0.04%
USDINR(IND) -0.13%
USDRUB(RUS) +0.78%
USDZAR(ZAF) +0.08%
Agricultural
Cattle -0.09%
Cocoa +0.00%
Coffee (Arabica) -5.93%
Coffee (Robusta) +0.00%
Corn +0.43%
Cotton +0.45%
Feeder Cattle -0.21%
Lean Hogs -0.25%
Lumber -0.15%
Orange Juice -0.15%
Soybean Meal +1.00%
Soybeans +0.85%
Sugar #11 +0.24%
Wheat +0.15%
White Sugar +0.00%

Must reads

Cleaning up the coal mess. (IE, #scam)

Ever wonder how online discounts are getting funded by Indian e-commerce players? (LiveMint)

US: if banks continue to break the law, then they should be broken up. Good luck with that. (WSJ)

IBM shit the bed. Is Warren laughing? (FT)

America has decided: Sex is for rich people. (WaPo)

Good luck!

Opening Bell 20.10.2014

Your world at 9am

world.2014-10-20

Equities

Major
DAX(DEU) +3.12%
CAC(FRA) +2.92%
UKX(GBR) +1.85%
NKY(JPN) +3.34%
SPX(USA) +1.29%
MINTs
JCI(IDN) +1.30%
INMEX(MEX) +0.81%
NGSEINDX(NGA) -0.76%
XU030(TUR) +1.48%
BRICS
IBOV(BRA) +2.63%
SHCOMP(CHN) +0.08%
NIFTY(IND) +0.41%
INDEXCF(RUS) +1.79%
TOP40(ZAF) +2.26%

Commodities

Energy
Brent Crude Oil +0.16%
Ethanol +2.46%
Heating Oil +0.08%
Natural Gas -1.04%
RBOB Gasoline +0.08%
WTI Crude Oil +0.50%
Metals
Copper +0.00%
Gold 100oz -0.23%
Palladium +0.23%
Platinum +0.58%
Silver 5000oz +0.00%

Currencies

USDEUR:-0.03% USDJPY:+0.39%

MINTs
USDIDR(IDN) -0.84%
USDMXN(MEX) -0.01%
USDNGN(NGA) -0.71%
USDTRY(TUR) +0.13%
BRICS
USDBRL(BRA) -1.51%
USDCNY(CHN) -0.03%
USDINR(IND) -0.65%
USDRUB(RUS) -0.53%
USDZAR(ZAF) +0.13%
Agricultural
Cattle +0.12%
Cocoa +0.00%
Coffee (Arabica) -2.95%
Coffee (Robusta) +0.00%
Corn -0.65%
Cotton +0.00%
Feeder Cattle -0.55%
Lean Hogs +0.73%
Lumber -0.06%
Orange Juice -0.44%
Soybean Meal -0.36%
Soybeans -0.63%
Sugar #11 -0.54%
Wheat -0.58%
White Sugar +0.00%

Credit Indices

Index Change
Markit CDX EM +1.24%
Markit CDX NA HY +1.03%
Markit CDX NA IG -3.28%
Markit CDX NA IG HVOL -11.49%
Markit iTraxx Asia ex-Japan IG -0.36%
Markit iTraxx Australia +2.00%
Markit iTraxx Europe -3.38%
Markit iTraxx Europe Crossover -22.05%
Markit iTraxx Japan +4.00%
Markit iTraxx SovX Western Europe +2.07%
Markit LCDX (Loan CDS) +0.08%
Markit MCDX (Municipal CDS) -1.29%
US Dollar is rallying, NKY up on reports that Japan’s pension fund is going to buy more equities. SPX staged a smart comeback on Friday. With BJP’s winning streak continuing and reform agenda on track, we are setup for the next leg-up in equities. Let the Diwali fireworks commence!

Must reads

Japan’s massive Government Pension Investment Fund (GPIF) is working on plans to raise the amount of its assets invested in domestic stocks to about 25% — it was 17% as of the end of June. (MW)

Congress-free India. (LiveMint)

The Modi government’s decision to raise natural gas prices to $5.6 per unit from $4.2 will significantly boost the earnings of ONGC. (ET) ONGC 408.10 -10.90 (-2.60%)

Next item for Modi’s administration to tackle: “The whole REITs structure is motivated by tax benefit. Taxation is involved at four stages–first while structuring and transferring assets to REITs or InvITs, second when they distribute income to its investors, third when they are traded and fourth time when there is an exit.” (NDTV, #REIT)

Coal Scam: CBI files case against JSPL. (IE, #scam) JINDALSTEL 145.45 9.95 (7.34%)

Scientists can now delete and fabricate memories in mice. Are humans next? (Vox)

Good luck!

Weekly Recap: Why do we want to be rich?

world.2014-10-10.2014-10-17

Equities

Major
DAX(DEU) +0.70%
CAC(FRA) -0.99%
UKX(GBR) -0.47%
NKY(JPN) -5.02%
SPX(USA) -2.08%
MINTs
JCI(IDN) +1.33%
INMEX(MEX) -1.04%
NGSEINDX(NGA) -5.55%
XU030(TUR) +3.10%
BRICS
IBOV(BRA) -0.94%
SHCOMP(CHN) -1.40%
NIFTY(IND) -1.02%
INDEXCF(RUS) +1.50%
TOP40(ZAF) +1.97%

Commodities

Energy
Brent Crude Oil -4.30%
Ethanol +9.65%
Heating Oil -2.29%
Natural Gas -2.44%
RBOB Gasoline -0.99%
WTI Crude Oil -3.31%
Metals
Copper -0.99%
Gold 100oz +1.32%
Palladium -3.78%
Platinum +0.05%
Silver 5000oz +0.58%

Currencies

USDEUR:-1.07% USDJPY:-0.89%

MINTs
USDIDR(IDN) -0.92%
USDMXN(MEX) +0.81%
USDNGN(NGA) +0.39%
USDTRY(TUR) -1.74%
BRICS
USDBRL(BRA) +1.26%
USDCNY(CHN) -0.09%
USDINR(IND) +0.18%
USDRUB(RUS) +0.69%
USDZAR(ZAF) -0.12%
Agricultural
Cattle -0.10%
Cocoa -0.97%
Coffee (Arabica) -5.03%
Coffee (Robusta) -2.13%
Corn +3.96%
Cotton -1.90%
Feeder Cattle -0.85%
Lean Hogs -17.59%
Lumber -2.48%
Orange Juice -2.49%
Soybean Meal -2.28%
Soybeans +2.92%
Sugar #11 +0.24%
Wheat +3.36%
White Sugar +1.00%

Credit Indices

Index Change
Markit CDX EM -1.19%
Markit CDX NA HY -1.17%
Markit CDX NA IG +4.11%
Markit CDX NA IG HVOL +15.62%
Markit iTraxx Asia ex-Japan IG +7.44%
Markit iTraxx Australia +6.28%
Markit iTraxx Europe +8.22%
Markit iTraxx Europe Crossover +47.19%
Markit iTraxx Japan +6.47%
Markit iTraxx SovX Western Europe +1.20%
Markit LCDX (Loan CDS) -0.40%
Markit MCDX (Municipal CDS) +2.31%
Markets were in full-blown panic mode this week. So much so that the president of the St. Louis Fed, James Bullard, a hawk, had to come out and say that central-bank bond buying should continue beyond its scheduled end this month. And the chief economist at the Bank of England, Andrew Haldane, said “interest rates could remain lower for longer.” Previously, UK interest rates had been expected to rise early next year.

Nifty Heatmap

CNX NIFTY.2014-10-10.2014-10-17

Index Returns

index performance.2014-10-10.2014-10-17

Sector Performance

sector performance.2014-10-10.2014-10-17

Advance Decline

advance.decline.line2.2014-10-10.2014-10-17

Market cap decile performance

Decile Mkt. Cap. Adv/Decl
1 (micro) -9.23% 70/65
2 -3.31% 56/79
3 -3.21% 58/78
4 -2.90% 59/75
5 -3.38% 58/77
6 -2.42% 60/75
7 -3.11% 59/77
8 -1.58% 61/73
9 -2.56% 71/64
10 (mega) -0.98% 67/69
A total bloodbath beyond the mega-caps.

Top winners and losers

LICHSGFIN +6.63%
BANKINDIA +7.90%
UNIONBANK +8.26%
DLF -27.55%
HCLTECH -13.35%
TCS -8.86%
Are rate-cut expectations running ahead of themselves? Rally in banking and home-finance stocks feel a bit overdone. TCS and HCLTECH sold off on earnings. But read this. DLF got royally fcuked by the SEBI.

ETFs

BANKBEES +2.96%
PSUBNKBEES +1.98%
GOLDBEES +1.06%
CPSEETF +0.25%
JUNIORBEES -0.04%
NIFTYBEES -1.11%
INFRABEES -1.63%
A surprising rally in banks while infrastructure remains sick…

Yield Curve

yield Curve.2014-10-10.2014-10-17

Bond Indices

Sub Index Change in YTM Total Return(%)
GSEC TB -0.29 +0.24%
GSEC SUB 1-3 -0.65 -0.25%
GSEC SUB 3-8 +0.01 -0.59%
GSEC SUB 8 +0.03 +0.11%
Curve can’t get any flatter…

Nifty OI

nifty.puts.calls.OCT.2014-10-10.2014-10-17

Bank Nifty OI

bank-nifty.puts.calls.OCT.2014-10-10.2014-10-17

Theme Performance

The CNX 100 Tactical Theme spent the whole week in cash. Both value and momentum strategies got pummeled.

Thought for the weekend

Fearing the future is natural, as is the conviction that ultimately we each must depend on ourselves. But in truth, our safest asset is our collective prosperity. Technological progress and productivity gains continue to make us richer on the supply side.

It would be tragic if productivity gains end up making most of us poorer, just because we find it uncomfortable to face the euthanasia of the rentier.

Source: safe assets, secular stagnation, and financial repression