How to trade Calendar Spreads Profitably on Heckyl’s Commodity Platform

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Calendar spread trading in commodity futures market has traditionally been executed by professional traders. However, anyone can carry out such trading strategy by understanding how to implement it in real market conditions.

Calendar spread is a futures spread between two months (For e.g. November 2016 and February 2017) in the same market (For e.g. MCX Silver Mini). One can calculate spread by subtracting near month’s contract price from next month’s contract price. For example, MCX Silver Mini (SilverM), Nov’16 – Feb’17 spread can be calculated by subtracting November 2016 expiry contract price from February 2017 expiry contract price (See table 1 below).

spread-table
[Table 1]

FINDING OPPORTUNITIES USING HECKYL CALENDAR SPREAD SCREEN:
Generally, difference between spread for one contract should be in line with another contract. If spread for one contract is not in line with another contract, then such cases offer opportunity to trade.

For instance, MCX Silver Mini calendar spreads for September 13 highlighted trading opportunity. Spread for Nov’16 – Feb’17 was Rs 978 on September 13, implying that February 2017 expiry contract was priced Rs 978 higher than the November 2016 expiry contract. On the contrary, spread for Feb’17 – Apr’17 stood at Rs 403, which was less than half of Nov’16 – Feb’17 spread (See image 2 below).

Ideally in such cases, spread for Feb’17 – Apr’17 should move up in subsequent sessions to match the spread level of Nov’16 – Feb’17 .

MCX Silver Mini Calendar Spread on 13th Sept., 2016
image-1_mcx-silverm-sep-13

[Image 2]

CALENDAR SPREAD STRATEGY:
A trader can be long one futures contract and short another. The trade can either be long Feb’17 Silver Mini and short Apr’17 Silver Mini or short Feb’17 Silver Mini and long Apr’17 Silver Mini.

In this case, buying MCX Silver Mini April 2017 expiry contract and selling February 2017 expiry contract was suggested on expectations of increase in spread for Feb’17 – Apr’17 subsequently.

Later, Feb’17 – Apr’17 spread rose to Rs 652 on September 14 (See image 3 below). On September 15, spread for Feb’17 – Apr’17 increased further to Rs 749 (See image 4 below).

MCX Silver Mini Calendar Spread on 14th Sept., 2016image-2_mcx-silverm-sep-14
[Image 3]

MCX Silver Mini Calendar Spread on 15th Sept., 2016
image-3_mcx-silverm-sep-15
[Image 4]

One could have made profit of Rs 1,730 per lot (calculated as [749-403]*5) by initiating calendar spread trade on September 13 and covering the same position on September 15.

To put this into perspective, the margin required to hold a single leg of the spread was approximately Rs. 12,000 on September 13 and the margin requirement in case of calendar spread trade is half of naked futures’ margin.

So profit of Rs 1,730 per lot gets translated into 29 percent gain (before brokerage and taxes) on an initial investment of approximately Rs 6,000 in four days.

THE BOTTOM-LINE:
Risk in calendar spread trading strategy is lower compared to naked futures positions as opposing positions are taken in different expiries of the same underlying commodity. This is why the margin requirement for calendar spreads is generally half of the margin required to hold one leg.

Calendar Spread provides plenty of such opportunities daily. By using Heckyl’s Calendar Spread Screen, one can not only spot trading ideas, but also can make handsome profit with limited risk and minimum capital.

Heckyl Portfolio Analytics – A Better Way to Analyze Performance

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The journey of successful investing starts with selection of quality and growth oriented stocks. At the same time, picking such stocks at fair valuation is also important. Moreover, periodic performance review and rebalancing of portfolio to fix any weaknesses is key to achieve investment goals.

Today, the stock market is filled with uncertainty. Any adverse development on Brexit, interest rates, US elections, central bank actions, commodity prices and economic conditions can have great impact on the market. In such uncertain environment, failure to review performance may turn your portfolio into disaster. However, measuring portfolio performance is not an easy task. Monthly contributions, dividends, and rebalancing make determining portfolio performance more complicated.

Understanding this challenge, Heckyl has developed next generation Portfolio Analytics platform to help retail investors and traders. Our platform provides a 360-degree view of portfolio by analyzing performance on number of key parameters. It measures performance on both basic and advanced criteria. In addition, visualization of key components of portfolio provides a quick glance at performance.

Let us explore Overview screen. This screen offers a high level view of portfolio. User can view his net worth and portfolio asset allocation. In addition, it lists top gainers and losers, intra-day movement, unusual price & volumes and moving average for stocks within portfolio.

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[Image 1: Portfolio Overview]

Meanwhile, exposure screen provides graphical presentation of sector allocation along with portfolio highlights. User can view portfolio risk characteristics and returns in comparison with the benchmark index in portfolio highlights. It also allows user to view short-term gains and tax liability.   

Exposure Screen[Image 2: Exposure]

In portfolio holdings screen, user can view his entire holdings with key metrics. User can view trading performance, as well as realized and unrealized gains. In addition, user can filter and analyze holdings based on personal parameters.

6
[Image 3: Holdings]

Trade analysis screen provides key insights to user for better understanding his trading/ investment style. The system analyses the user’s past and current transactions, so that he can review trading performance over various timeframes. It also allows user to review his trading behaviour, such as winning and losing trades, which sector and market size investments have been most effective.

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[Image 4: Trade Performance]

In addition, this screen highlights the best additions, best exclusions, worst additions and the worst exclusions to the portfolio. It helps the user to find out his strengths, missed opportunities and fine-tune entry and exit points for trades. It also helps user to find his best investment/ trading strategies.

Best additions'
[Image 5: Trade Analysis]

Most importantly, user can view how his portfolio has performed against benchmark index, equity & debt mutual funds and gold over various timeframes.

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[Image 7: Comparative Analysis]

Every investor/ trader should review his portfolio periodically for achieving desired results within acceptable risk. Heckyl’s Portfolio Analytics platform can help you in better performance review. At the same time, it will help you to identify mistakes at a right time and rebalance your portfolio accordingly. So don’t wait, try our Portfolio Analytics platform now!

To know more about Heckyl’s Portfolio Analytics platform, email us at info@heckyl.com

Heckyl Sentiment Score Acts as a Leading Indicator for Canadian Stocks

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Heckyl Technologies, a leading news sentiment and market data analytics firm, has conducted a study to highlight how a trader can use sentiment scores to predict impending stock price movement. We have analyzed news sentiment data for 246 Canadian companies listed on Toronto Stock Exchange (TSX) from January 2016 to July 2016. On numerous occasions, our sentiment score has acted as a leading indicator for the share price movement of 213 companies or 87% of the total sample size.

Our analysis of sentiment and share price data for the past seven months highlighted 1,209 instances where positive or negative change in the sentiment score on a given date has caused a similar movement in share price for the subsequent trading session. On average we found 8 such instances per day or 173 instances per month.

To increase the confidence level, we have skipped cases where positive or negative change in sentiment score was reflected in share price movement on the same day. In other words, we have considered cases where stocks witnessed an improvement in sentiment score on a given day, while the price fell. Similarly, we have shortlisted stocks registering rise in price and fall in sentiment score on the same day.

This exercise has helped us to spot candidates for likely out-performance or under-performance in the next trading session. We believe such an approach could help a trader to build his strategy with greater confidence and trade in the market more aggressively.

The below chart shows the number of Instances when a positive change in sentiment on any day resulted in rise in share price for the subsequent trading session:
Image 1
[Image 1]

The below chart shows number of Instances when a negative change in sentiment on any day resulted in fall in share price for the subsequent trading session:
Image 2
[Image 2]

The below chart shows number of Instances when a negative change in sentiment on any day resulted in fall in share price for the subsequent trading session:
Image 3
[Image 3]

The below chart shows number of instances when sentiment score has acted as a leading indicator for negative change in share price based on the market cap levels:
Image 4
[Image 4]

To know more about study, email us at info@heckyl.com

 

 

Advanced Unusual Activity screener gives you an edge to catch big moves in market

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To succeed in the today’s market, one must know where big money is flowing. One can stay ahead of crowd by keeping a watch on money flow. A trader can look at major moves in volume, which is an indicator of unusual money flow. It also signals that insiders and fund houses are piling into a stock ahead of major catalyst. Usually, they act well before a large spike and exit when the stock reaches anticipated price level.

A trader can combine trend and price action with unusual volume to decipher the next big trend for a stock. But for options trader, tracking unusual price and volume trend is not adequate. One need to dig deeper into market data to identify unusual activities on wide range of indicators and ratios. However, it would be a daunting task for an individual trader. To help such traders, we have launched advanced Unusual Activity screener.

Our easy to use Unusual Activity screener quickly identifies stock options with bullish and bearish trend by analyzing key indicators and ratios in real time. It also spot stocks at breakout level. In addition, it analyses volatility in options contract. User can also view brief description explaining each indicator and ratio.

Let us explore features of our Unusual Activity screener.

Bullish screen:
Bullish screen filters stock options on seven key indicators. These indicators are Call to Put open interest; Call to Put Volume; positive net premium and deltas; unusual call volume; out of the money (OTM) calls and in the money (ITM) puts. It shows stock options with positive sentiments.

1
[Image 1: Bullish Screen]

1[Image 2: Bullish Screen – Highest call to put volume ratio (Aug. 9, 2016)]

Jain Irrigation Systems, which was featured in highest call to put volume ratio screen on August 9, gained 3.76 percent to settle at Rs 77.35 a share on the NSE. 

Jain chart
[Image 3: Jain Irrigation Systems (Aug. 9, 2016)]

Bearish screen:
Bearish screen also filters stock options on seven key indicators. These indicators are O T M puts and I T M calls; negative net premium and deltas; unusual put volume; Put to Call open interest and Put to Call Volume. It shows stock options with negative sentiments.

2
[Image 4: Bearish Screen]

3
[Image 5: Bearish Screen – Unusual Put Volume (Aug. 9, 2016)]

Idea Cellular, which was featured in unusual put volume screen on August 9, lost 5.81% to settle at Rs 97.15 a share on the NSE.

Idea chart
[Image 6: Idea Cellular (Aug. 9, 2016)]

Breakout screen:
This screen highlights stocks at breakout level. It filters stocks based on 10 parameters. These parameters are stocks near 52-week high/ low; biggest price gainers and losers in rupees as well as in percentage; biggest gainers and losers from open and stock with gap up & down on high volume.   

3
[Image 7: Breakout Screen]

Volatility Screen:
This screen analyses implied volatility (IV) and historical volatility (HV) for stock options. It filters stock options based on 41 parameters highlighting sharp change in volatility on various time frames for near, next and far expiry contracts.

4
[Image 8: Volatility Screen]

Bottom-line:

Our advanced Unusual Activity screener is very powerful and useful tool for both novice and experienced traders. This screener not only helps in filtering stock options, but also helps in identifying profitable trades in real-time. So don’t wait, start using Unusual Activity screener now. 

To know more, mail us at info@heckyl.com

Heckyl’s advanced watchlist – your ultimate tool to track stocks, futures and options

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Market presents plenty of trading opportunities in both good and bad times. One can grab such opportunities by accessing reliable market data in real-time. At the same time, one has to make entry and exit at appropriate timing and price levels for pocketing profit. It is, therefore, important to stay alert and keep a watch on the market data. Fortunately, tools such as watchlist are available to monitor stocks.

The last decade has witnessed an exponential increase in digital content generation and rapid technology advancement in finance space. However, most of the brokerage firms were left behind in technological race. As a result, trading platforms used by the most traders are getting outdated in the today’s fast changing world.

Understanding the challenges faced by traders, Heckyl has developed a next generation trading platform offering advanced watchlist. It offers reliable and exhaustive market data at lightning fast speed in real-time.

Heckyl’s feature rich watchlist screens stocks on a wide range of parameters. Our watchlist is highly customized and allows user to select the parameters based on his/ her criteria. User can also create his/ her own watchlist and can track stocks, futures and options in a single screen. Moreover, it offers nine pre-set watchlists for hassle-free monitoring of stocks in the large-cap, mid-cap and small-cap space.

Let us explore features of Heckyl’s watchlist.
New Features

EQUITIES:
User can have quick glance at most active stocks, volume shockers, price gainers and losers at the both NSE and BSE. Our watchlist shows tick by tick stock prices, order book details, returns, news sentiments, technical signals, corporate actions etc. There are 72 parameters available to user in equity watchlist.
Equity

FUTURES:
Futures watch list shows contract details, price, volumes, open interest (OI), spread, implied volatility (IV), cost of carry (CoC), long and short built up, technical signals etc. There are 50 parameters available to user in futures watchlist.

OPTIONS:
In options watch list, user can view contract details, price, volumes, OI, spread, IV, delta, theta, vega, gamma etc. There are 54 parameters available to user in options watchlist.
1

FILTERS:
Watchlist provides option to filter stocks, futures and options. User can select filters based on his/ her criteria.
Watchlist Filters

OPTION TO VIEW CHARTS AND BUY/ SELL STOCKS:
User can view chart in a single click from watchlist screen and analyse stock on technical indicators. Most importantly, user can place buy or sell orders directly from watchlist to quickly grab any trading opportunity.
2

 

How can a trader exploit untapped open data sets to predict monthly auto sales

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Finding actionable information ahead of others is getting tougher with each passing day. Today, the market captures new information at incredibly high speed. As a result, new updates get factored in stock prices almost instantly, leaving little or no scope for individual traders to tap the opportunities. So how can a trader spot new opportunities in a fast paced markets? Is there any way out?

Let us find it out with help of a case study on auto sector monthly sales volumes and its correlation with Google search index and resulting trading opportunity.

Automobile is a high beta sector, which means a marginal movement in the benchmark index could result in high volatility in the sector stocks. At the same time, auto sector is very sensitive to new news flow. Monthly auto sales volume is one of key data points and it is closely followed by the market participants.

Chart 1
[Chart 1: Sales volume trend for Automakers]
Automakers declare their vehicle sales volume every month on the first or second working day. Every month, auto stocks remained in limelight around that time. Stocks of auto companies react positively or negatively based on the change in the sales volume. 

Shares of Tata Motors, M&M, Ashok Leyland and TVS Motor closed higher on the official data release date. On other hand, Maruti Suzuki, Eicher Motors, Hero MotoCorp and Bajaj Auto lost marginally. Meanwhile, the 30-share benchmark Sensex closed over a half a percent higher on July 1.

Chart 2
[Chart 2: Impact of change in sales volume on auto stocks] 
Opportunities to trade on auto sales volume can be spotted every month. To exploit such trading ideas, one must know how the monthly sales performance will be. Past volume trend analysis and expected near-term growth can help in projecting sales volume. However, estimates obtained from such analysis may not always give accurate results for a very short period.

Fortunately, there is plethora of untapped open data sets available on the web, which can help in forecasting future trend with high precision. For instance, Google search trends can act as a lead indicator for monthly auto sales. It gives result on how many times a particular keyword is searched on the internet in real time. In this case, it can be very useful tool to assess the strength in underlying demand for vehicles. Let us see, how it can help in predicting auto volumes.

Maruti Suzuki:
The weighted average Google search interest for all car models of Maruti Suzuki started falling after reaching peak in March 2016. Average Google search interest for the first 27-days/month signaled impending decline in sales volume ahead of official data release. As indicated, Maruti witnessed a decline in total sales volume in the subsequent months.

Chart 3
[Chart 3: Maruti Suzuki – Correlation between Google Search and Sales Volume
At 0.5, correlation between Google search interest and sales volume for Maruti’s all brands was quite strong in the last 2-years.

Tata Motors – JLR:

Google search interest for Jaguar Land Rover (JLR), Tata Motors’ UK arm, was on the rise for the last couple of months. Uptrend in the average Google search interest for the first 27-days/month has also reflected in JLR’s sales volume subsequently.

Chart 4
[Chart 4: JLR – Correlation between Google Search and Sales Volume]
JLR witnessed a fair degree of correlation between Google search interest and sales volume for all brands. It stood at 0.44 and 0.3 for the past 1-year and 2-years respectively.

Bottom-line:

Insights derived from Google search trends has wider applicability. A trader can use Google search trends on top of historical volume trend analysis to predict monthly auto sales volume ahead of official data release. Based on the auto volume expectations, a trader can buy or sell a particular auto stock towards the end of the month and exit the trade later when the anticipated sales volume numbers are out.

However, one must also check whether the stock is in overbought or oversold zone before jumping on to trade. At the same time, one should note that sales data is not the only factor that can impact the stock price movement on the first or second working day of a month.

To know more, mail us at info@heckyl.com

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Rolta_How_could_lenders_have_spotted_impending_default

Here’s how to identify top performing stocks in your favorite industry

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For an investor, buying quality and growth oriented stocks at fair price points is a key for making money in the market. But with so many options, selecting such stocks can be an uphill task for individual investor. Moreover, going through each and every income statement and balance sheet to identify fundamentally strong companies within the sector is a daunting task.

Understanding this need, Heckyl launched Peers screen to help investors distinguish between good and bad companies within any industry. Peers screen measures the performance of each company within the sector on three key parameters – quality (assess balance sheet strength), growth (how the company has grown over the years) and value (spot stocks with cheap or expensive valuations).

Based on the score combination of Quality vs Value, Value vs Growth and Quality vs Growth, each industry player is placed in one of the four square matrices. In addition, Peers screen presents tabular view so that user can check numeric score for the selected company and its close competitors.

One can judge whether the stock might outperform or underperform by quickly looking at company’s position in the matrix.

Let us see how one can use Peers screen. We have scanned through Peers screen for Sun Pharma to check whether the India’s largest drug maker is the best bet in the pharma industry or not. Check below image for Sun Pharma’s Peers screen:
Peers Snapshot Small

Based on Quality vs Value score combination, Sun Pharma was placed in matrix for fair quality and overvalued stocks, which tends to underperform. Meanwhile, Value vs Growth score combination suggested likely underperformance from Sun Pharma due to expensive valuation and slower growth. Quality vs Growth score combination also signaled underperformance from Sun Pharma due to fair quality and slower growth. By looking at score (Quality: 6/20; Growth: 0/20; and Value: 0/20) and four square matrix, one can reconsider decision to invest in Sun Pharma.

At the same time, one can explore other alternatives highlighted in the matrix for “Stocks tend to outperform”. Let us have a look at alternatives in the table below:
Score Snapshot

Lupin secured place in the matrix for “Stocks tend to outperform” for all three score combinations (Quality vs Value, Value vs Growth and Quality vs Growth). Moreover, Lupin topped the list for two out of three score combinations (Value vs Growth and Quality vs Growth). The score (Quality: 16/20; Growth: 14/20; and Value: 14/20) suggests Lupin is the fast growing company with excellent balance sheet quality. At the same time, the stocks is undervalued presently. By exploring Peers screen, one can conclude that Lupin is one of the better bets in the pharma industry.

The Bottom-line:
Peers screen is the powerful tool to scan companies within the industry. It not only helps investor to distinguish between fundamentally strong and weak companies, but also helps in identifying better investment alternatives in the sector.

By using Peers Screen, existing investors can find out whether they are holding on to top performers in the industry or not. On the other hand, new investors can use Peers screen to invest only in top performing stocks.

So don’t wait, start exploring Peers screen now.

To know more, mail us at info@heckyl.com

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Can_Early_Warning_System_Identify_Distressed_Borrowers_Ahead_of_Time

15-Minutes Built-up Screen: How to make profit by using long and short strategies?

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Are you interested in derivatives trading but don’t know how to start and make money from it? Heckyl is the right place for beginners and experienced traders to kick start their trading in futures. We will explain you how you can spot profit making opportunities in real-time.

The internal market data is key to grab opportunities in futures. So first you need to monitor open interest (OI), price and volume of a stock or an index contract. Second, you need to understand and interpret this data to confirm price trend. Third, when you are sure of bullish or bearish price signals, you can initiate long or short strategy in the specific futures contract. Fourth and most important thing is a discipline approach for profitable trade.   

Open interest is a total number of open contracts on a security. For each buyer of a futures contract there must be a seller. From the time the buyer or seller opens the contract until the counter-party closes it, that contract is considered ‘open’. A large open interest signals more activity and liquidity for the contract.

By monitoring the changes in the open interest, price and volume figures, one can draw important conclusions about the market activities, which can help in predicting the near-term price trend. Below table shows how one can read futures contract data.

  Price Open Interest Signal
Long Built-up Rising Up Strong/ Bullish
Short Built-up Falling Up Weak/ Bearish
Long Unwinding Falling Down Weak/ Bearish
Short Covering Rising Down Strong/ Bullish

However, monitoring and analyzing open interest, price and volume data for hundreds of contracts for stocks and indices in real time is a daunting task for an individual trader. Understanding this need, Heckyl has launched the 15-Minutes Built-up screen. This screen gives a snapshot every 15 minutes for the open interest and a breakup of fresh and square-off contracts along with price and volumes. There will be 25 intervals of 15 minutes each in a trading session, which opens at 9.15 am and closes at 3.30 pm.  

Let us see, how the 15-Minutes Built-up screen will work for you.

Case Study: Bank of India

On 3rd June 2016, Bank of India, a public sector lender, witnessed a huge short built up indicating bearish outlook on the stock. Out of the 25 intervals, Bank of India recorded 16 short built-ups and 5 long built-ups.

In the below image, one can see how a large number of short built-ups in Bank of India have impacted the price negatively.  

screencapture-tlounge-edelweiss-in-PlatformWeb-Platform-CompanyFNODashBoard-Dashboard-1464956064324

After seeing first three zones of short built-ups between 9.15 am to 10 am, a positional trader could have shorted the stock around Rs 86 immediately after 10 am. Subsequently, Bank of India stock fell continuously as short built-ups have dominated the day’s trade. Though the stock advanced briefly for few intervals on the back of long built-ups, it did not helped the stock from falling further. Finally, the stock settled below Rs 83 or 4.66 percent lower from the previous closing.

By using 15 minutes built up screen, one could have made profit by covering short position (which was initiated at Rs 86) around Rs 83, netting a profit of Rs 3 per unit, or Rs 9,000 on one lot of 3,000 units of underlying stock.

Similarly, one could also make profit by going long on stocks, which are witnessing strong long built-ups.  

Case Study: Bajaj Finance

On June 2, 2016, Bajaj Finance has witnessed a strong long built up. The stock witnessed 15 long built-ups and 6 short built-ups. Bajaj Finance recorded a surge in price as long built ups have dominated the day’s trade.

A positional trader could have created a long position around 1.30 pm after noticing long built-ups for preceding four intervals. One could have made profit by initiating long position around Rs 7,690 and covering it around Rs 7,900, netting a profit of Rs 210 per unit, or Rs 26,250 on one lot of 125 units of underlying stock. 

In the below image, one can see how a large number of long built-ups in Bajaj Finance have impacted the price positively. 

screencapture-tlounge-edelweiss-in-PlatformWeb-Platform-CompanyFNODashBoard-Dashboard-1464883898813

Bottom-line:  

15-Minutes Built-up is a powerful screen for traders. This screen not only helps in finding trading opportunities, but also helps in deciding when to exit or close position with profits. However, one must not forgot that the futures market is highly leveraged. A minor price change, could result in a huge profit or loss. So if you are new to the trading world, it is advisable to understand futures’ fundamentals and market dynamics first as there are no short cuts for becoming a successful trader.

Euronext and Heckyl sound gong for new Euronext Market Data App

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Euronext has recently launched the new Market Data App in partnership with Heckyl Technologies. This app is a free and easy way for investors to have all the necessary data with the click of a button. The app has additional features such as a Sentiment Analysis, Trending News and Broker Connectivity. Mike Bourne, Head of Business Development Market Data, the gong along with Gustav Pegers, Head of Sales of Heckyl Technologies.

Cooperation between Euronext and Heckyl Technologies, a leading provider of news and data analytic solutions, sentiment data, market intelligence and trending news on all Euronext-listed companies added to the renewed Euronext Market Data App. Heckyl Technologies, a start-up in London Level39 FinTech hub and this innovative service will allow investors to the Euronext Market Data App to increase understanding of stock market behavior.

Euronext Market Data app features detailed information from the world’s leading indices, stocks, currencies and more. It contains comprehensive price information on stock exchanges and indices of both Euronext and other stock exchanges worldwide. Euronext app is available free of charge and shows price information with a delay of 15 minutes. Last May Euronext won at the presentation of the Inside Market Data Awards 2016 in New York the award for Best New Data Product.

Heckyl is a real-time data analytics company providing news, price, fundamental analysis and portfolio brings through a platform called FIND (Financial in News and Data). FIND can be used by a researcher, trader or analyst to gain useful insights from both unstructured and structured data. The platform brings real-time news, information and market data of companies and markets around the world.

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PSU_banks_gross_NPAs_jump_Rs_134_lakh_crore_as_asset_quality_worsens

IS THE TIDE TURNING IN FAVOUR OF GOLD?

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Gold, one of the top performing assets so far in 2016, has attracted a lot of attention. Turmoil in the equity markets and oil price crash have not only made investors jittery, but also forced many of them to invest in safe haven assets such as gold. As a result, billions of dollars of new money poured into physically backed gold exchange-traded funds (ETFs). In fact, fund inflows in the world’s largest gold ETF, SPDR Gold alone crossed more than $7 billion since December 2015, while gold holdings of ETFs have jumped to their highest level in 27-months. Gold mining companies have been the biggest beneficiary as gold prices have surged 21.6 percent from December 2015 to a 15-month high. The HUI Gold, the index of gold mining companies, has more than doubled from December 2015 level. However, even after the recent rally, gold is still down by 23 percent from the closing level of 2012.

In the last 10-years, 2007 was the best year for gold. It witnessed a 31.4 percent jump in prices as the US economy witnessed subprime mortgage crisis. Gold has enjoyed bullish run during the period of October 2008 to December 2012 along with equities, helped by near-zero interest rates in the US and the Fed’s quantitative easing. During the same period, price of gold and S&P500 witnessed a strong correlation. Later, price of gold and S&P500 saw inverse correlation as yellow metal lost more than 1/3rd of value from 2013 to 2015, while S&P500 remained buoyant during the same period (See chart 1).

Gold SPX
(Chart 1)

From investors’ perspective, it is essential to understand whether this 4-month rally in the safe haven asset is just the beginning of bullish run or mere short-term bounce back. Gold has been considered a hedge against inflation for years. There are several factors which play a critical role in determining prices of gold such as central bank activities, interest rates, currency, strength of economy, geo-political uncertainties, besides demand and supply. Hence, a closer look at each of these factors is warranted to know where gold is heading from here on.
Table

Central Bank Activities:

Central banks keep gold reserves as a store of value. Since 2010, central banks have been net buyers of gold, driven in part by uncertainty over the future of the international monetary systems and the need to diversify reserves.

China and Russia have been adding gold reserves aggressively in an effort to diversify their foreign reserves (See chart 2). In April, top gold consumer, China launched a yuan-denominated gold price fix to exert more control over pricing of the yellow metal and influence in the global bullion market.

Gold Reserves
(Chart 2)

Interest Rates:

The interest rate plays an important role in determining the attractiveness of the investment alternatives. If interest rate goes down, then the demand for safe haven asset goes up, and vice-versa.

Recent policy meetings showed change in tone of the US Federal Reserve from hawkish to dovish. The market experts believed the US Fed will go easy on rate tightening cycle, which it started in December last year, amid weak economic growth and slowly rising inflation. Moreover, the Bank of Japan became the second central bank after the European Central Bank (ECB) to adopt negative interest rates in January.

From the start of this year, the inflation adjusted yield on the 5-year US treasury fell sharply. Gold has also started rallying around the same time (See chart 3). Later, the real yield slipped below zero level in February. Since then, the real yield has remained in the negative territory, helping the yellow metal to maintain the momentum. It suggests there is a strong inverse correlation between the price of gold and the 5-year US treasury real yield.

Gold Yield
(Chart 3)

Currency:

The value of gold is expressed in the US dollars per ounce. Hence, the dollar plays an important role in determining gold prices. When the dollar weakens, the banks as well as investors buy more gold to protect their money and hedge against depreciation in the dollar. On the contrary, when the dollar appreciates, they invest more in the dollar, lowering the demand and the price for the yellow metal.

The dollar index lost 5.8 percent since December 2015 as the value of oil exporter currencies gained tracking rebound in the price of crude. As a result, decline in the dollar helped gold to add more gains (See chart 4).

However, the impact of recently launched yuan-denominated gold benchmark on gold and the dollar inverse correlation remains to be seen.

Gold DYX
(Chart 4)

Growth and Investment Sentiments:

Interest rates and value of the currency are dependent upon the progress of the economy. Based on the positive or negative perception about the economic prospects, investors positioned themselves in equities and safe haven assets. Gold-to-copper ratio is a very useful indicator to capture the industrial growth as well as investment sentiments in the economy. Copper is used in industries across the board, while gold is used as a hedge against uncertainty in the global economy. The ratio basically measures how many pounds of copper it takes to buy one ounce of gold. The uptrend in gold-to-copper ratio signals positive bias towards gold in a slowing global economy. On the other hand, the downtrend in the ratio suggests increased appetite for riskier assets in a stronger economic environment. Since May 2015, gold-to-copper ratio is in uptrend (See chart 5), suggesting the investors are in favour of yellow metal to protect their wealth in a slowing global economy.

Gold Copper
(Chart 5)

Demand & Supply:

The supply of gold declined 3.5 percent in 2015 to 4,258.3 tonnes, while the demand was almost stable at 4,252.6 tonnes in the last year, as per the World Gold Council. On the other hand, the surplus supply has dropped significantly by 96.4 percent from 156.2 tonnes in 2014 to 5.7 tonnes in 2015.

The mine production of gold has been on the decline. Barrick Gold Corp, the world’s largest gold miner, witnessed a fall of 2.1 percent in the production for 2015 to 6.12 million ounce. Barrick issued 2016 production guidance of 5 to 5.5 million ounce, which is substantially lower than the production in 2015.

On the contrary, the world’s top 2 gold consumers, India and China recorded a surge of 40.6 percent and 22 percent in demand for yellow metal respectively in 2015. The demand for gold from the India and the China stood at 848.9 tonnes and 984.5 tonnes respectively in 2015. At the same time, the central bankers bought 588.4 tonnes of gold in 2015, up 0.8 percent from 583.9 tonnes in 2014.

Bottom-line:

Though the world economy has recovered from subprime financial crisis, it is not out of the woods yet. The IMF has recently revised its global economy growth forecast downward by 20 basis points to 3.2 percent. Moreover, the world is facing challenge of negative interest rates. Hence, outlook for price of gold depends largely on the progress of global economy as well as demand from the central bankers and top two yellow metal consumers.

Note: This article was first published in June – 2016 edition of BSE Brokers Forum Magazine.

Will higher provisions continue to threaten banking profitability?

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Non-performing assets (NPAs) or loans that are not being paid back by the borrowers have consistently been a cause of concern for the Indian banking industry over the last few years. Soaring NPAs are not only curtailing banks’ growth and lending operations, but also causing slowdown in the economy. Sensing the problem, the Reserve Bank of India (RBI) has increased surveillance in 2014 to detect concealed bad loans. As a part of surveillance, the central bank asked banks to report all loan accounts where interest is not being paid in time. After analyzing data for three to four quarters, the central bank realized how bad the asset quality problem is. The RBI then asked banks to recognize large loan accounts where interest is delayed routinely as NPAs.

After RBI’s rap, the banks have started aggressive balance sheet clean up drive. The results were clearly visible in the third and fourth quarters of fiscal 2016. From September 2015 level, gross NPAs of 30 banks both public and private surged 70.3 percent to Rs 3,399 billion on Mar. 31, 2016. A sharp increase in NPAs forced the banks to set aside higher provisions for bad loans. As a result, provisions jumped to a new high impacting banks’ bottom-line severely for both December 2015 and March 2016 quarters. Public sector banks were worst hit by the amount of provisions that they have kept aside to cover mounting NPAs.

In fact, aggregate provisions for 19 PSU banks more than doubled from Rs 107.8 billion for September 2015 quarter to Rs 248.8 billion for December 2015. From December level, provisions surged more than 50 percent to Rs 380 billion for March 2016 quarter. On year-on-year basis, provisions jumped 144.6 percent for March 2016 quarter. At the same time, private banks have also witnessed a sharp increase in the provisions. Aggregate provisions for 11 private banks have doubled from Rs 29.81 billion for March 2015 quarter to Rs 63.29 billion for March 2016 quarter.

Provisions, when compared with total income, are looking more worrisome. Aggregate quarterly provisions as percentage of total revenue of 19 public sector lenders soared to 38 percent for March 2016 quarter from 15 percent for the same period last year. Similarly, for 11 private lenders, aggregate quarterly provisions as percentage of total revenue jumped to 9 percent for March 2016 quarter from 5 percent for the prior year period.

Punjab National Bank (PNB) and Bank of Baroda hit the headlines recently after reporting record quarterly losses in the Indian banking history. A surge in provisions had impacted bottom-line of both PSUs, which accounted for 45.7 percent of aggregate provisions of 19 public sector lenders for March 2016 quarter. 

New Provisions and Profits

Banks’ profitability under attack

Bottom-line of 19 public sector banks remained negative on aggregate basis for second consecutive quarter due to sharp increase in provisions during March 2016 quarter. Aggregate loss of 19 public sector lenders more than doubled to Rs 145.4 billion in March 2016 quarter from a loss of Rs 70 billion in December 2015 quarter. At the same time, private banks also witnessed pressure on profitability on the back of higher provisioning. As a result, aggregate net income for 11 private lenders stood at Rs 86.2 billion for March 2016 quarter, down 21.9 percent on quarter-on-quarter basis or 12.8 percent on year-on-year basis.

Between June 2011 and September 2012, aggregate quarterly provisions for 19 public sector banks were close to their net income. Since then, aggregate quarterly provisions remained higher than the amount of profits that they have earned. Similarly, aggregate quarterly provisions of 11 private banks have also remained in the range during January 2011 to March 2012 period. Later, aggregate quarterly provisions of private banks remained in uptrend from March 2012.

New Provision n Profit graph

Banking stocks beaten down as financial health deteriorates

Health Score, a composite financial measure developed by Heckyl, showed deterioration in financials of most of the banks. Aggregate health score for 24 PSU banks stood at 30.6 (on scale of 0 to 100) on May 16, 2016, down from 35.7 on Sep. 29, 2015. As a result, market capitalization of 24 public sector banks wiped out by 22 percent from Rs 3,696 billion on Sep. 29, 2015 to 2,881 billion on May 16, 2016. Out of 24 PSU banks, 15 lenders witnessed a decline in health score, while 6 banks recorded an increase and for 3 lenders it remained stable.

On the other hand, aggregate health score of 16 private sector banks remained stable during the same period. Aggregate market capitalization of 16 banks increased by 2.8 percent from Rs 7,892 billion on Sep. 29, 2015 to Rs 8,114 billion on May 16, 2016. Out of 15 private banks, 7 lenders witnessed a decline in health score, while 6 banks recorded an increase and for 2 lenders it remained stable.

New Health Score

Have banks adequately covered their NPA?

During the third and fourth quarters, 17 PSU banks have set aside Rs 613.8 billion as provision for bad loans, which was more than provisions that they have recorded in the preceding 5-quarters (Rs 546.4 billion). Despite allocating huge amount of funds, the provision coverage ratio (PCR), a measure of the funds set aside by banks to cover NPAs, slipped for most of the public sector lenders. Out of the 17 public sector banks, 14 lenders have recorded a drop in PCR. Meanwhile, 4 out of 7 private banks witnessed a decline in PCR.

Total provisions for these 17 PSU banks stood at Rs 1,487 billion up to Mar. 31, 2016, up 81 percent from Rs 821 billion up to Mar. 31, 2015. At the same time, gross NPAs 17 public sector lenders have almost doubled from Rs 1,401 billion on Mar. 31, 2015 to Rs 2,774 billion on Mar. 31, 2016. As the surge in gross NPAs for 17 PSU lenders outpaced the growth in total provisions, weighted average PCR has declined sharply by 504 basis points.
Weighted average PCR for 17 PSU banks fell to 53.6 percent on Mar. 31, 2016 from 58.64 percent on Mar. 31, 2015. On the other hand, weighted average PCR for 7 private banks decreased marginally from 63.97 percent on Mar. 31, 2015 to 63.52 percent on Mar. 31, 2016.

A decline in PCR is not a good sign as it reduces the cover for bad loans. Higher PCR is the need of the hour for PSU banks as bad loans are growing at rapid pace.

New PCR

Bottom-line:

To catch up with soaring NPAs, public sector banks will have to set aside higher amount of provisions over the next few quarters, which will likely to keep their profitability under stress. On the other hand, private lenders are better placed when compared with their counterparts. But that doesn’t mean, they are out of the woods. In the recently concluded quarter, profitability of private sector banks also got impacted due to higher provisioning. Any uptick in provisions can bring down their profits from current level.

Future trajectory of provisioning requirement depends on how effectively the banks, particularly public sector, controls the ongoing NPA crisis. If deterioration in the NPA level continues, then asset quality crisis in the Indian banking system will accentuate further.

Stay tuned to Heckyl Blogs, we will be highlighting “NPA crisis and how banks can tackle it” in our next blog.

To know more, mail us at info@heckyl.com

Get the power of Heckyl News Analytics for profitable trade

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To succeed in today’s stock market, one must have access to new information that can move the markets higher or lower. At the same time, getting such price sensitive information in time is also important to stay ahead of others. In the last 10-years, we have seen massive explosion in the amount of information that is available on the internet. However, the huge amount of information is making it increasingly difficult for traders and investors to find price sensitive news in time.

In this scenario, if you have a system to swiftly mine the big data and filter noise from information, then you can find and exploit opportunities. Previously, such intelligent systems were mainly available to large institutions and big investors. Even today, they are the first one to react on any news item. On the other hand, lack of access to such system puts most of the retail traders and investors at a disadvantage. In most cases, they are the last person to react on new updates in the market. As a consequence, they are losing out on new opportunities to trade.   

Business newspapers and channels, financial portals and exchange websites are good sources of information. These sources provide a lot of valuable information, but most of it is not bundle to specific requirement of traders and investors.

Last week, business newspapers were busy in covering war of words between the finance minister and the RBI governor on the India’s growth prospects. For the markets, it was least important news. Because the India story hasn’t changed during the last 2-years. Earnings remained dismal, while Sensex is moving in a band. Reduction in interest rates by 150 bps and Modi government’s reforms drive are also not yielding the desired results.

Another such example is stock exchanges. They received hundreds of corporate announcements, which are release on exchange website in real time. Only handful of these announcements are price sensitive. Let’s have a look at some of the announcements that appeared on April 21 below: 

UNIWORTH SECURITIES LTD. – 512408 – Statement of Investor Complaint under Reg. 13(3) of SEBI (LODR) Regulations, 2015 for Quarter ended March 31, 2016 

TATA CONSULTANCY SERVICES LTD. – 532540 – TCS recognised as one of The Times Top 50 Employers for Women in the UK

Are these announcements price sensitive? Can you trade based on it? Of course not. Similarly, most of the news available on the financial portals are either delayed or not grouped properly for the needs of traders and investors. Moreover, not all can have access to business news channels during the market hours.  

To explain it better, we have taken a case of Novartis India, a subsidiary of Swiss pharma giant, Novartis AG. Swiss newspaper Sonntagszeitung reported on Sunday, April 24, that Novartis AG is planning to sell a 13.5 billion Swiss franc ($13.8 billion) stake in its local rival Roche.

Reuters picked up the news item from the Swiss newspaper and reported it on their global business edition around 8 pm (IST) on April 24. The news was not noticed by the market participants till noon on Monday, April 25. It was noticed only after Novartis AG opened up half a percent higher. After that, shares of Novartis India have also started moving higher in the post noon session. Later, the same news item was featured in Reuters India edition. Finally, Novartis India settled at Rs 764.75 a share, up 3.77 percent from previous close of Rs 737 a share.

If you had prior knowledge about this news item, then you had the opportunity to earn intra-day profit of about Rs 25 per share by buying the stock around Rs 740 in the morning and then selling it around Rs 765 in the post noon session. 

Understanding such difficulties in accessing the price sensitive news, Heckyl launched FIND News Analytics platform in 2012 to help the traders and investors. News analytics platform provides market moving alerts along with news sentiments in the real time basis.

In case of Novartis India, Heckyl’s platform issued alert for news item on Novartis AG’s plan to sell stake in Roche at 7.57 pm on Sunday, April 24. Heckyl’s alert has provided user enough time to react on the news in the first half of Monday, April 25. (You can read more about product features in our previous blog, ‘News Analytics in Real-Time’.) 

Below image shows the list of news alerts issued by FIND platform:

Novartis India

Share price chart for Novartis India on April 25:

Novartis share

Bottom Line:

Having latest technology that provides market moving information is the need of the hour. One can not only survive in today’s market but can also make profit by tracking price sensitive news around the stock in real time.

Heckyl, being at the forefront of technology innovation in financial space, is striving hard to empower retail traders and investors with better access to valuable information for profitable trade.               

To know more, mail us at info@heckyl.com

Predict impending stock move using Heckyl Sentiment Analytics

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The age-old battle of between fundamental and technical analysis will always continue. Both methods of analyzing a stock are powerful and have their own strengths and weaknesses. However, in the stock market, prices are largely driven by the new information. The market participants assess the new information and analyse its potential positive or negative impact on the stock. Based on their perception of new information, they take buy or sell positions in the market.

Over the last 10-years, we have seen massive explosion in the amount of information that is available on the internet. In this rapidly changing world, a stock, which looked to be a multibagger two months ago, can turn into a disastrous investment if the relevant news and sentiment around the stock is not tracked regularly. However, the huge amount of information is making it increasingly difficult for traders and investors to analyse the sentiment of each and every news.

Understanding the need, Heckyl launched sentiment engine in 2012. It allows a user to measure the sentiment of a particular news item or news flow around company and evaluate its potential impact in real-time. Sentiment score acts as the lead indicator and alerts traders and investors about impending upward or downward price movement in the stocks. We have taken example of ABB India to explain how sentiment score can be a useful tool.

 

ABB Sentiment

On April 4, ABB India, a heavy electrical equipment manufacturers, witnessed a rise in share price as well as sentiment score. On the next day i.e. April 5, the stock price moved down, but the sentiment score moved up again signaling impending up move. Improvement in the sentiment score was accurately captured by 2.3 percent increase in the stock price on April 6.

Subsequently, the stock price added 5.3 percent more during April 7 to April 11. However, the sentiment score fell back to near zero levels, indicating likely downward pressure. Tracking drop in the sentiment score earlier, the stock gave up 4.4 percent by the end of April 21.

Now the sentiment score started moving higher on expectations of better quarterly earnings. ABB India is expected to announce quarterly results on April 25. If results are announced as per expectations, then there is a high probability of share price catching up with sentiment score. Keep a watch on it!

Bottom Line:
Sentiment score can give early indication of upward or downward price movement in the stock. It can also offer a profitable trading opportunity by quickly identifying a gap between perception and actual reality. In short, one can not only survive in today’s markets but can also make profit by tracking sentiment around the stock in real time.

To know more, mail us at info@heckyl.com

Heckyl stock screeners identifies market beating ideas

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Cover ImageMaking money in the stock market starts with finding a fundamentally strong company. Searching for a good company from thousands of listed companies is a challenging task. The huge amount of data on the internet doesn’t make things any easier. Moreover, segregating actionable information from huge stacks of data is also difficult.

A stock screener can help investor to save time and energy by narrowing the scope of research to a convenient number. Investor can spot the right opportunity by filtering large chunk of datasets based on his preferences and strategy.

Screeners are easy to use tool provided you know what criteria to search for. If you don’t know which conditions should be applied on what domain then they are of little use. Understanding this need, Heckyl has come out with pre-defined screeners, which provides option to play on well-known themes, investment strategies and renowned gurus investing mantras.

Heckyl’s research team has handpicked screeners after years of experience in research and querying historical data to arrive at modelled screeners. Some of our top performing screeners are free cash flow cows; dogs of index; high growth high ROE and low P/E; loss to profit companies; and financial healthy large cap stocks.

To measure the performance, Heckyl has prepared index for each screener. Index assigns appropriate weightage to stocks filtered by screeners from BSE 500. Our dashboard gives overview of screener index performance in charts along with returns delivered in the last one month. User can view list of stocks filtered by screeners by expanding screener widget from dashboard.

Seven out of our nine pre-defined stock screeners have outperformed the broad based Nifty in the past six months. Our free cash flow cows and dogs of index screeners have outperformed the Nifty over 1-month, 3-months and 6-months. Below charts show performance of our screeners in comparison with the Nifty.

Final Image 2

 Dogs of Index

Dogs of index scouts for companies with high dividend yield and reasonable valuations. Stocks in this category are suitable for investors seeking regular income. This screener shortlists companies whose dividend yield is greater than 2 and price to equity (P/E) ratio is below industry average.

One such stock which featured in our dogs of index screener is NMDC. The dividend yield of the state-run mineral producer was at 8.39 percent, which is close to bank deposit rates. Dividend yield is computed as dividend payment as a percentage of share price. The stock is also available at cheap valuation. The stock was quoted at Rs 101.95 on April 8, i.e. 10.6 times (P/E) of trailing twelve months earnings per share (EPS) of Rs 9.64.

On profitability front, return on assets (ROA) and return on equity (ROE) remained healthy at 15 percent and 20.6 percent respectively. Heckyl’s proprietary Health Score for NMDC improved during the last six months to 50 in March 2016 compared with 46 in September last year. Health Score between 40 and 60 indicates “Very Good” fundamentals on scale of 0 to 100.

Correction in the prices of mineral and its impact on financials weighed the stock price. The stock was beaten down 21.8 percent during the last one year. However, the stock is in recovery mode from the end of February. Since then, stock has staged a strong rally of 25.9 percent. A recovery in the mineral prices is key for improvement in NMDC’s financial health as well as share price performance.

 Final Image 1

Free Cash Flow Cows

Free cash flow cows screener returns stable and cash rich companies which are growing their free cash flow and available at cheap valuations. This screener mainly looks for companies, which are posting increase in free cash flow on continuous basis for the last 3 years.

Hindustan Petroleum Corporation (HPCL), one of the leading oil marketing companies (OMCs), tops our free cash flow cows’ screener. HPCL’s free cash flow per share was highest among OMCs at Rs 383.2. The dividend yield of the state-run OMC was at 3.1 percent. The stock is available at reasonable valuation. The stock was quoted at Rs 816 on April 8, i.e. 6.2 times (P/E) of twelve trailing months EPS of Rs 132.

On profitability front, ROA was below industry average at 3.8 percent, while, ROE was above industry average at healthy 17.8 percent.

A decline in global oil prices by over 40 percent in 2015 helped the OMCs to improve profitability. The company swung to profit for quarter ended December 2015. Net profit for the quarter stood at Rs 1,042.3 crores on revenues of Rs 43,500 crores.

The stock had a good run during the last one year helped by favorable oil prices. It gained 21.3 percent in a year. Oil prices are expected to remain stable and unlikely to move up sharply due to oversupply in the global markets. So OMCs are expected remain in limelight as the key beneficiary of lower oil prices.

The Bottom Line:

One should remember that screeners are no replacement for an in depth fundamental analysis. Having said that, screeners are a good place to start your research process as they can save time by narrowing your options.

Heckyl’s easy to use nine pre-defined screeners not only helps in identifying market beating ideas but also provides an edge over traditional screeners by letting investors play on well-known themes, investment strategies and renowned gurus investing mantras. So start screening stocks at Heckyl.

To know more, mail us at info@heckyl.com

 

How to find new opportunities using Heckyl’s Health Score

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Whether the stock market is in bullish phase or in correction mode, there are ample opportunities for investors to make money. Finding such opportunity is easier said than done, especially in the absence of analyst coverage or actionable information on your fingertips.

Analysts tend to focus on large-caps and popular stocks. As these stocks are widely tracked, the room for companies to surprise on any new news gets limited. Analysts typically cover about 400 stocks picked up mainly from BSE500. It is about 12-15 percent of 2,500-3,000 stocks traded at exchanges, leaving many companies open for discovery.

Actionable information, on the other hand, can provide insight on company’s fundamentals for investment decisions. It can be obtained by analyzing huge amount of structured data. It is a cumbersome process and requires specialized skills. For individual investors, it would be a daunting task.

To address these two needs, Heckyl has developed Health Score to gauge financial health of all the listed companies worldwide. It is a composite financial performance score computed by analyzing financials, key ratios and performance indicators. It is based on five main pillars. They are value (scans stocks with cheap or expensive valuations), growth (how the company has grown over the years), past performance (compares key profitability ratios with industry average), quality (assess balance sheet strength) and dividend (finds whether company is good at rewarding investors or not).

To measure the effectiveness of Health Score, we conducted a study on 1,203 companies with market capitalization of over Rs 100 crores. We looked into performance of Health Score for the last six-months. Our study highlighted improvement in fundamentals of 413 companies. At the same time, it has shown deterioration in fundamentals of 647 companies. For 143 odd companies, Health Score remained unchanged.

We shortlisted two companies to show how the share price has actually moved in tandem with company’s Health Score during the last six-months. We found sharp increase in share price of Royal Orchid Hotels on the back of improvement in fundamentals. On the other hand, Jindal Saw witnessed deterioration in fundamentals, which translated into decline in share price.

Revised Health Score & Price - White

Royal Orchid Hotels, an operator of 22 hotels and restaurants in 13 cities, witnessed substantial improvement in Health Score, led by performance of growth indicators. Health Score moved up from 30 in September last year to 56 in March 2016.

Recently, Royal Orchid reported a rise of 23 percent in net profit for quarter ended December 2015 to Rs 2 crores. Meanwhile, the company’s revenue grew 7 percent during the quarter to Rs 24 crores.

Earlier this year, SBI Mutual Fund has sold its entire 8.4 percent stake in the company. Surprisingly, the stock reacted positively to stake sale with gain of over 30 percent in 3-days. However, it came off from high to settle the month of January with 12 percent gain. In the last six-months, shares have rallied over 52 percent.

Below image shows composition of Health Score:

Royal Orchid - Health Score - Screen 1

Royal Orchid Hotels: Health Score Screen 1

Each of the five pillars are further broken down in five key ratios/ performance indicators. In all, there are 25 five key ratios/ performance indicators. Each indicator is followed with a note on performance (see below image).

Below Health Score image highlights five indicators based on value:

Royal Orchid - Health Score - Screen 2

Royal Orchid Hotels: Health Score Screen 2

Steel pipe maker, Jindal Saw has witnessed a sharp decline in Health Score due to poor show on growth indicators and past performance. It dropped from 60 in September 2015 to 36 in March 2016.

Jindal Saw has recorded a steep fall in earnings and revenue for the December 2015 quarter. During the quarter, profit plunged 37 percent to Rs 39 crores, while revenue declined 39 percent to Rs 1,077 crores. Poor financial performance weighed on the Health Score.

Deterioration in fundamentals has also reflected in share price with a drop of 39 percent in the last 6-months.

Below Health Score image highlights performance of growth indicators:

Jindal Saw_Screen 2

Jindal Saw: Health Score Screen 2

Bottom-line:

Health Score is very useful tool for quick assessment of fundamentals of any company. It not only helps in finding gems from neglected stocks, but also gives early warning about deteriorating fundamentals of a company. Performance of Health Score in above listed companies has already priced in the stocks to a large extend. Plenty of stocks in the market are currently yet to catch up with changing fundamentals. So don’t wait, try Heckyl’s Health Score now.

To know more, mail us at info@heckyl.com.

 

Credit Risk… De-Risked!

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We highlighted – via a series of posts on Credit Risk Management (Read the  previous blog –  “Soaring Non-Performing Assets: The Paramount Problem“) – the ever-growing challenge of credit risk in financial institutions, the benefits of real-time analytics and the way in which Heckyl’s unique capabilities can be used to decipher credit risk management puzzle. We bring to you the third post, from the series.final tile

 

Heckyl believes there is a lot more that can be done in the credit risk space in the financial institutions. It is no secret anymore that be it the banks or the non-banking financial companies (NBFC), the wrath of the non-performing assets has spared none. Although, these financial institutions have their existing risk models in place, the important question remains, that is, are they able to comprehensively highlight the impending crisis ahead of time?

Heckyl has developed the First of its Kind Early Warning System for Credit Risk. The platform is an ‘early discovery’ application that empowers the credit risk team with intelligent insights on companies in real-time. It would essentially act as an indicator of pre-default behaviour of companies through deep-dive analytics, by virtue of which any negative buzz around the company will be highlighted as an alert.

In the previous blogs, we highlighted Heckyl’s belief in the enormous potential open data sets hold to generate intelligent analytics around credit risk. Banks, too, have internal data that can be used extensively to reveal industry trends and business patterns. Therefore, the engine leverages on the internal data at banks and combines it with analytics from social media data, Registrar of Companies (ROC) data, open data sets, litigation data, pro-cyclicality and global economic indicators to enable a comprehensive real-time risk monitoring methodology.

Heckyl’s Credit Risk Analytics platform provides dedicated and customized dashboards for all members in the risk team hierarchy:  from the Sales manager to the Relationship manager to the Risk analyst to the highest level i.e. the Chief Risk Officer (CRO). The CRO Dashboard is a one-stop shop for the CRO to get a view on the health of overall portfolio exposures across the industry. On the other hand, the risk analyst can monitor the companies assigned to his portfolio.

We give you a glimpse of the analytical capabilities of a few screens.

A unique way to learn about the health of your portfolio at a glance is through the News Analytics Dashboard. The system analyses the buzz about the companies in your portfolio from 15 lakh open sources across the web world and social media including reactions of analysts, experts, fund managers and traders on blogs and social media sites and drives it in the form of sentiment analysis.Blog 3 -img1

A green colour associated with a company indicates a cumulative positive sentiment for the company based on the news flow for the company, whereas a red colour is indicative of a negative sentiment for the company. This sentiment is updated in real-time for each company basis the real-time news flow from across the web-world and social media. The idea is to make you aware about any such buzz or signal that might indicate a negative performance issue within the company. You can then drill down on a particular company to assess its health in detail.

Blog 3- img2The company overview screen allows you to check the company’s health based on multiple parameters. The news and financial analytics is further broken down to get an overview on the exposure to the company vs industry, risk signals if any, past repayment performance, financial health indicators, etc.  A deteriorating performance of any company against any of these parameters is flagged-off to the risk team. Similar overview screens are available at portfolio and sector level as well.

 

You can further evaluate the company performance by drilling down on its financial health. A Heckyl proprietary financial health-score is generated by the engine for each borrower, which is a function of the key ratios and fundaBlog 3- img3.pngmentals of the company. These parameters are assessed and assigned a weighted-score that is summed up to a cumulative financial score for the company. You can then dive deeper into each of these attributes on the Financial Charts and Trend Analysis Dashboard. The idea is to intelligently combine the worlds of structured and unstructured data to provide a 360O view on your portfolio.

Additionally, the risk team can also analyse the supply-chain correlations, sector correlations, peer-to-peer comparisons, collateral management, global economic factors affecting the portfolio, portfolio benchmark performance, credit limit breaches etc. to have a comprehensive awareness around the companies in his portfolio.  (Look out for these features in the upcoming blogs on Alpha Pulse).

The concept of the product is to provide the risk team with a solution that provides real-time in-depth analysis and critical alerts to give them a time-lead to alleviate at-risk situations and make informed decisions on re-aligning exposure mix. We understand that out of a 100 odd alerts, some risks might have already been accounted for and not all might have similar intensities, but then risk is all about that ‘one signal’ that the financial world misses out on, isn’t it?

To know more about Heckyl’s Risk Management Platform, mail us at info@heckyl.com.

Watch out this space for more on credit risk management solution..

Financial Performance of Airlines Through Open Data Sets

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Aviation_1The aviation sector, after years of underperformance, has been bullish of late as evidenced by the turnaround of Spicejet’s fortunes and a strong response for the Indigo IPO. This turnaround has led to a lot more interest in the aviation sector in recent times. In this article, let us understand how operational factors affect the bottom-line of an airline and the use of open datasets to estimate these factors. An airline’s operational factors can help us understand which airline uses its fleet efficiently, which airline has an optimal route network or which airline’s fleet is optimized for fuel efficiency.

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How PCR and Volume trends can help generate profitable ideas?

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PCR OI and PCR Volume, combined with a detailed actual volume study can be one of the most profitable strategies employed. This can be used to understand where a combination of three different indicators can be used to accurately predict the movements in the short-term.

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Heckyl’s Continued Expansion into the Global FinTech Landscape

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As well as providing key insights into how to use the numerous Heckyl data sets and tools to understand key economic and market driving events, this blog also provides us with an opportunity to keep you up to date with key business development updates.

Our Indian office continues to expand rapidly, as new colleagues come on board to service more clients, as well as develop new business lines and expand our extensive big data capabilities. In our London office we have also been busy on a number of fronts.

Read the rest of this entry »

Soaring Non-Performing Assets: The Paramount Problem

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We highlight – via a series of posts on Credit Risk Management (Read the  previous blog –  “Credit Risk – Under The Spotlight) – the ever-growing challenge of credit risk in financial institutions, the benefits of real-time analytics and the wave of change that can be brought about with Heckyl’s unique capabilities. We bring to you the second post, from the series.

Global financial catastrophes and consequent losses at several banks have compelled risk management systems at banks to get more focused on Credit Risk. The lack of an efficient system in place that can help the banks to efficiently identify the underlying causes of rising NPA figures has begun to reflect negatively on their performance. A high level Bank 1of bad loans is indicative of a large number of loan defaults that directly affects the profitability and net worth of banks. This in turn necessitates larger provisioning requirements to provide a cushion against loan losses, thus reducing overall profits and shareholders value. While banks have been successful in identifying the need of the hour, they seem unable to exactly place their finger on what will address the problem.

Read the rest of this entry »

Simplifying Commodities Trading

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Commodities Profile ImageTrading commodities has been the foundation of human economic activity through the ages, fundamental for our survival as individuals and fundamental for the sustainability of our economic and social systems. However, historically commodity trading has been the preserve of large traders, big commodity powerhouses and institutional investors. This is partly because understanding the nuances of commodities takes more effort than shares which is also why popular media coverage of commodities is minimal as compared to coverage of stocks – you see many more ‘experts’ commenting on stocks as compared to commodities.

Read the rest of this entry »

Credit Risk: Under the Spotlight!

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We highlight – via a series of posts on Credit Risk Management (Read the  prelude –  “Risk Management : How Can we Help You?“) – the ever-growing challenge of credit risk in financial institutions, the benefits of real-time analytics and the wave of change that can be brought about with Heckyl’s unique capabilities. We bring to you the first post, from the series.

The credit crisis of 2008 and resulting failures of high-profile firms proved to be a major wake-up call for financial institutions to put Credit Risk Management under spotlight.credit score image

Exposure to the probability of default by their debtors, also called as Credit Risk, is the major risk the global banking system is facing today. In the current volatile market condition, where Indian companies are confronted with issues like demand slowdown, unfinished projects set up at inflated costs, lengthening working capital cycle squeezing cash flows, it is not uncommon for an institution to default on payments. This leads to huge non-performing loans sitting on the banks’ balance sheets.

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China’s Dragon Takes a Breather, Growth Engine Halts

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Chinese economy background
Chinese economy background

After successful triumphs over US and UK in the last decade bears are back in business in 2015 and this time they have laid their eyes on the world’s fastest growing economy China. It has been fueling the global economic growth for past several years and any slowdown will have repercussions not only on world markets but also on major asset classes.

In order to gauge a country’s economic performance, one can look at key economic parameters like Money market (Interest Rate), Economic growth (GDP Growth Rate), Business performance (Industrial Production), Consumer confidence (Retail Sales), Trade analysis (Exports), Housing sector (Newly Built Home Prices), Investment (Capital Flows), Government reserves (Foreign Exchange Reserves) and finally Equity markets (Shanghai). Let us understand how China’s financial and economic indicators are performing in the current scenario.

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Profitable Trading Tips with the 15 Minutes Built-Up Screen : IDFC Case Study.

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Colourful NumbersWe have continuously flagged “15-Minutes Built Up Screen” in our F&O product as one of the most important screens for devising profitable trading strategies. For every stock, this screen gives a snapshot every 15 minutes for the open interest (OI) and a breakup of fresh and square-off contracts along with volumes.

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How to Make Profitable Trades using Heckyl’s F&O Platform : A Best-Case Example

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maxresdefaultWe highlight a very important feature of Heckyl F&O platform: 15-Minutes Built Up Screen in today’s blog. For every stock, this screen gives a snapshot every 15 minutes for the open interest (OI) and a breakup of fresh and square-off contracts along with volumes.

While there are various use-cases for the 15-minutes built up screen, we highlight the short selling use case in this blog. Short selling implies selling a stock on a particular day and buying the same on the next trading day. The underlying reason for short selling is that the trader expects the stock price to go down. An equivalent of short selling can be buying a put of an appropriate strike price.

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Should the Fed hike rates? Cues for the Global Markets ahead : Part I – Thinking like the Fed

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US-federal-reserveWith low inflation and falling inflation expectations, the Federal Reserve is believed to execute a rate hike this year. The funds rate is the mechanism the Fed uses to regulate short-term interest rates in the economy, which in turn moves across the yield curve.

The Fed has two objectives: stable prices and firm economic growth. The Central banks stimulate the economy by cutting rates when the economy is slowing down. While lower rates can bring economic growth, they mostly come with an inevitable consequence: Inflation.  Read the rest of this entry »

Heckyl’s Social Media Heatmap helps beat the Indian Market Mayhem

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tweetGlobal jitters headed by China on concerns of economic slowdown in the world’s fastest growing economy , led to tremors in the financial markets across the globe. China’s equity market went through a roller-coaster ride in the last six months touching a peak of 5122 on June 6, surging 66 percent in a very short span of time. The stock market bubble finally busted and the index closed near 3000, losing over 40 percent in last three months.

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Portfolio Analytics – shaping the next generation of retail traders

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Portfolio 2As a company Heckyl is known for its big data capabilities finding, collecting, analysing and visualising millions of data sources from around the world, to provide actionable financial insight. This data can then be provided to end users, such as retail traders to help them make informed investment decisions.

However valuable big data also resides within financial institutions and if analysed and visualised in the right way, can be even more powerful. This is the other side of Heckyl’s approach; working with clients to harness the data they have internally, sometimes mixing it with the external data we also collect. Read the rest of this entry »

How to predict movements in stocks using Heckyl tools

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Heckyl’s FIND Futures & Options platform allows users to visualize price movements, OI, Volume & Rollover % sector-wise. This provides users a complete Stock Pixelspicture of the sector performance in one view. E.g. Sectors that are driving the market, sectors that might cause a reversal, lack of traders commitment in sectors (using OI) etc.

In this post, we will see how we can use Heckyl tools to predict individual stock movements through a basic top down approach. Read the rest of this entry »

How Heckyl’s F&O platform can help you to make money?

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MWPL
Market Wide Position Limit

Market Wide Position Limit (MWPL) is a key parameter in analysis of stock F&O. At the end of each day the Exchange disseminates the total OI (open interest) across all Exchanges (NSE, BSE, MCX) in the F&O on individual stocks along with the MWPL for that scrip. If the aggregate OI for any scrip exceeds 95% of the MWPL for that scrip, then the scrip goes into ban in F&O.

 

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Greece Debt Crisis decoded through Heckyl’s lenses

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What is Greece Debt crisis in laymen terms?

It starts with the government of Greece and their citizens. The government paid out generous pensions and benefits to its pensioners, as well as having an early retirement age for many government employees, as compared to other developed countries. This lead to a drop in productivity coupled with a high unemployment rate, while others believed they were too old to work and took early retirement to access the pension benefits. This lead to the government paying out more in pensions and benefits. However the government never had enough money to sustain the welfare system at this level.

If a country is spending by taking on additional debt, then it also needs to collect equal or more revenue to meet those spending figures.

Government spending to GDP

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How to seize a trading opportunity using effective chart visualization

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Options-TradingA successful trade depends on how a trader sets up his trading system with most relevant tools and softwares on his screen for trade analysis. Long term investor will analyse in details the fundamentals of the company on his trading platform while short term trader will monitor the daily price movements along with several market and price data points before executing a trade. Various softwares in the market provide ample indicators for analysis but the key to success is choosing the right indicators.

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Stay ahead of the trend with the Heckyl FIND Alerts Module

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BACKAny rumor or news can break out from any source. As highlighted in our previous blog post, A Needle in the Digital Haystack, spotting opportunities from these new data sets is very valuable. A trading opportunity can come from any source at any time, which makes it necessary to track a huge number of sources but also filter out noise at the same time.

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Adding ‘unique’ content to SunGard’s MarketMap terminal

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Blog Post Profile ImageWe are very pleased to announce that SunGard, one of the world’s leading software and technology service companies, has chosen to use Heckyl’s news and sentiment analysis services on their MarketMap terminal. The new content will be available to MarketMap users across North America, Asia and Europe.

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The Secret Ingredient to Winning as a Heckyl-ite

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Heckyl closed the year 2014-15 with a very special event which has happened for the first time in its history. Heckyl has presented (four) 4 of its long-term team members with a sedan /high end hatchback each, on May 22nd, 2015.

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Risk management: How can we help you?

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Financial Risk management

Risk ImageBroadly risk management consists of identification of the risks and taking suitable actions to counter or control them. Risk management’s objective is to assure uncertainty does not deviate the endeavour from the business goals. Within the details, financial risk management involves using financial instruments to manage exposure to risk, particularly credit risk and market risk. Read the rest of this entry »

Discovering the newest form of alpha in the currency markets

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currency-blogUsing sentiment analysis for gauging general stock sentiment is nothing new in the financial industry. Ever increasing views and reactions of analysts, experts, fund managers and traders on blogs and social media sites, continues to drive this very interesting field of research. But how about analysing social indicators for currency pairs?

At Heckyl we achieve this by using the following parameters in addition to the standard ones explained in our earlier blog Sentiment Analysis in Finance :

  1. Marco-economic news – Tracking macro indicators, central bank announcements, official press releases, government speeches and interviews for both countries separately
  2. Macro Views by leading institutions and analysts for the two countries

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How stock price and sentiment move hand in hand

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A value investor invests in a stock after looking at financials of the company, analysing annual reports and news on stock/sector, reading management outlook and tracking price movement. However, one of the key challenges for investors and even for traders is to track the sentiment around the stock on a daily basis without missing any relevant news.

In today’s world, things change very rapidly and what looked to be a multibagger two months ago can turn into a disastrous investment if the relevant news and sentiment around the stock is not tracked regularly. Trading is all about the timely entry and exit in a stock. A gap between perception and actual reality can offer traders and investors a profitable trading opportunity using sentiment analysis across various asset classes.

Heckyl’s sentiment tool allows a user to measure the sentiment of a particular news item or news flow around an instrument and evaluate its potential impact, in real-time. In today’s blog let us take a look at Heckyl’s Stock Sentiment graph and how effectively one can use it as a precursor to stock price movement. Read the rest of this entry »

Budget 2015: Smaller Speech, Bigger Vision!

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Download Heckyl’s Budget ebook

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. Read the rest of this entry »

Stock Dashboard: A One-stop-shop for F&O traders

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In today’s edition, we will cover Stock Dashboard – a comprehensive snapshot page presenting all the relevant details a trader should have on his dashboard before trading in F&O stocks.

The price of the stock moves in a particular direction depending on numerous parameters.A trader or investor is flooded with heaps of data and indicators baffling him how to gauge the price movement based on these parameters. Also, a trader will have to go through various sources for a specific data thereby losing precious time and opportunity in collating all the data before taking a trade.

Heckyl’s Stock Dashboard offers a concise and timely snapshot of a particular stock or an index after analyzing plethora of information available in the open market. This dashboard also features news, charts and fundamental data along with F&O data so that a trader gets all the information in a single screen.

Stock dashboard Read the rest of this entry »

Adapting to “Social” to make Intelligent Investment Decisions

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The global business environment has been changing rapidly as we are ushered into a new era of the digital age. The rapid emergence of social media, continued penetration of smartphones and tablets, coupled with technology enablers like Analytics and Cloud, are expected to play an important role in how organizations interact with their customers and understand consumer behaviour. Heckyl FIND AlertsSimply put, SMAC is a collaborative term for Social, Mobile, Analytics and Cloud. In our view, these four technologies would be driving innovation in the global business ecosystem, in the coming decade.

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News Analytics in Real-Time

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In today’s edition, we will cover News Analytics platform – A smart tool that not only aggregates news from across the globe but also analyses its impact on equities, commodities, currencies, economies in REAL TIME.

Heckyl’s News platform scrutinizes all the relevant news and tweets that are published on the internet and evaluates its impact instantly. Heckyl’s news platform covers 60 stock exchanges, over 40000 companies, more than 1600 analysts and 865 brokerages across the world. Under our umbrella we also track in excess of 4000 hedge funds as well as equal number of hedge funds managers. Apart from this we also keep an eye on 80000 plus mutual funds and 500 venture capitalists/private equity entities. Read the rest of this entry »