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IndiGo's huge aircraft order can help change its long term trend
After much bad news, IndiGo investors at last had something to smile about. IndiGo placed an order for 300 jets from the A320neo family with Airbus. The news resulted in a sharp 8 percent jump in the company's share price, the biggest gain in the past three years. The question is whether the news justifies the sharp run-up? The answer is no in the short term and yes it does in the long term. Read more.
Tax revenue growth in the first half has been pathetic
The Central government's gross tax revenues for the first half of the current fiscal year went up by a mere 1.5 percent, as compared to the first half last year. That's what the latest data from the Controller General of Accounts show. For perspective, gross tax revenues in the first half of 2018-19 were up 8.6 percent as compared to the first half of 2017-18. With tax revenues under such severe pressure, all the talk of more tax cuts in the offing appears to be merely an attempt to boost the stock market. Read more.
Tata Global Beverages: Time to book profits?
Our-in-house research team had recommended Tata Global Beverage as a tactical pick in May 2019. The stock is up 44 percent since then. The factor which has kept investors glued to this stock is the restructuring story, particularly the merger with the consumer businesses of Tata Chemicals. We believe a large part of the restructuring is done and now the company can look forward to being a full-fledged FMCG platform from a beverages-only format. This restructuring story has pushed the stock near to its all-time high and investors can consider harvesting this gain. Read more.
Is it the right time to buy RITES?
In this week's tactical pick, our in-house research team is recommending RITES Ltd, a listed public sector undertaking (PSU) in the railway engineering business. The stock did not participate in the recent rally in the midcap space but it has strong fundamentals and attractive valuations. It is among the fastest-growing companies in the mid-cap and the PSU space. The prime reason for this growth is its strong order book and pick-up in execution. Read more.
Concor " weak macro weighs on earnings
Concor, the leading rail freight transporter, reported a steady set of earnings for the second quarter of the current fiscal year. The weak demand environment had an adverse impact on volumes, but the operational performance was robust on the back of improvement in realisations and margins. Concor's business has a high correlation with the global economy and the decline in volumes is a reflection of weakening trade activity. With rising economic risks, the near-term demand environment appears uncertain. What should investors do? Read more.
Testing independent directors may address the symptoms but will not cure the illness
From December, aspiring independent directors for Indian public companies will have to take a test to qualify to hold the position. To succeed, a person will have to score at least 60 per cent and the score will be published in the annual report of the company with observations by the board on their functioning. But the cardinal reality is that independent directors in India are not truly independent. More than a test of the job knowledge, boards should have independent directors who are socially responsible. Read more.
From our Learn section
The rational and irrational effects of stock splits
Fundamentally, a stock split changes nothing for a company " its debt is not going to vanish, its management will not improve, its order book will not swell up, its costs will not shrink. What does change is liquidity, affordability and market perception. Post-split, at lower stock prices, bid-ask spreads typically reduce. Investor breadth for the stock would improve. And the split may cause the uninitiated investor to perceive it as a "good" stock " after all, the stock had to split because it rose, and if it rose, it is probably going to keep rising. This last argument is of course, flawed. But, empirical evidence suggests that stock splits are more often than not followed by immediate price appreciation. Read more.
Managing your trade is as important, if not more, than selecting a trade
Derivatives as instruments are mostly used in the markets for speculation by using the leverage the instrument provides. Unless one is pretty confident on the analysis, and trades for a swing movement with strict stop-loss, using derivatives to trade is risky. Most traders, especially in their formative years, over-emphasise on analysis. Though analysis and trading as per your strategy is important, managing your trade should also be a key focus area. Trade management involves patience and discipline and as in the case above, can give good returns. Read more.