Dear Niveshaks

I wonder when we are going to see this vicious circle coming to an end. The whole world witnessed the global downturn in 2008 followed by debt crisis in Dubai and Greece. And now we see Ireland joining the league. While the US economy faced the repercussions due to reckless securitising of sub-prime mortgages and Greece collapsed under the burden of misrepresented government spending, the Irish took an easier path to ruin: by taking out enormous, unregulated loans. While the Irish government might have underestimated the severity of the crisis in the last two years and have still not asked for assistance, but, given the kind of interconnected framework i.e. Euro Zone in which they operate, its neighbouring countries

might not let this continue for a longer period of time. Although European countries don’t affect our economy directly but they do affect sentiments, capital flows, gold prices, and commodity prices and so on. Thus, it makes all the more important for a recovering economy like ours to maintain the growth momentum through timely and appropriate reforms.

The waves of concerns that Ireland and few other countries of Europe may find it difficult to meet their debt commitments couldn't prevent themselves from reaching Indian bourses and dragged it below the psychological levels of 20,000 and 6,000, of Sensex and Nifty respectively. This really makes me (and many of us) believe that we are truly an integral part of so called Global village. Moving forward we can expect to see more downside movement owing to the slowly building Asian cues specifically on concerns that China may further tighten their monetary policy to curb inflation. But with the strong capital inflows from FIIs looking for greater returns and sound Indian economy backed by solid fundamentals, our benchmark indices can surprise us by breaking its greatest achieved heights by the end of this year.

Last month’s cover story gave you a detailed analysis of the Coal India’s IPO and its future outlook. The stock, when listed on 4th November 2010, actually met all its expectations and got listed at Rs. 314 which was at approximately 30% above of what investors had paid. Truly a windfall for all investors. I so wish I too had invested in it. In this month’s cover story, we are going to look, analyse and understand the second quarter results of different key sectors operating in India and their implications. At a time when Indian Financial services landscape is undergoing big time consolidation with the likes of Axis-Enam deal, we, in this edition, also present to you an article on mergers and acquisitions. We are pleased to inform you that we have introduced a new section in Niveshak called “Classroom” for your reading pleasure. In this section, we will explain and elaborate a financial term with the help of a conversation. We hope that this endeavour of ours will prove to be an interesting read for our readers and will help them understand new terms in a much easier way with fun. Looking forward to your valuable feedback and suggestions.

Stay Invested.

Bhavit Sharma

(Editor -Niveshak)

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Dear Niveshaks

The currency space around us is on the threshold of a major transformation. We can distinctly see battle lines formed ahead of a forthcoming currency war that threatens to pit the developed nations against the emerging economies of Asia and South America. Although G-20 has been trying to work around this issue, all their efforts seem to be going in vain. Currency devaluation, which has been a policy weapon of exporting nations like China for quite some time, has become a ubiquitous phenomenon used to gain undue competitive advantage by many nations. This is probably the major reason why emerging economies, especially Brazil which has the highest real interest rates in G-20, are seeking to restrain their currencies as investors seek higher-yielding assets in emerging markets amid near-zero interest rates in the US, Japan and the euro region. The absence of any concrete steps to resolve this do make us believe that the currency wars could well intensify and the recent G-20 accord will prove as worthless as the piece of paper it is written on.

Well… All may not be well on the global platform but we have some recent Indian success stories to cherish. Our last edition had an article which posed some serious questions about Commonwealth Games 2010. To our surprise, India not only managed to host it up better than our expectations but also achieved unprecedented success in it. But one thing which has really grabbed all finance enthusiasts attention in the last few days is Coal India’s IPO. The massive response to Coal India IPO that had been oversubscribed 15 times augurs well for our Indian economy and suggests that it is gaining momentum from the pre-crisis era that began in 2008. This is because of the ‘utility’ model in ‘commodity’ business which is coupled with the characteristics of sellers’ market; we can say that CIL will essentially have a linear earnings curve and impressive return on equity as well as free cash generation. This has also paved the way for share sales of few more PSUs lined up for disinvestment. Our cover story for this month delves into this same topic to give you complete analysis and probable implications of the Coal India IPO which is going to be the largest IPO in India till date.

It is giving me a déjà vu feeling while writing this editorial as it was the same October edition last year when the incumbent Niveshak team had joined this illustrious magazine Niveshak. The time has now come to pass on this legacy to our new team Niveshak. We, the Editorial Team of Niveshak, are pleased to introduce to you our new team, which has been elected to carry on the baton of Niveshak. They are: Alok Agrawal, Deep Mehta, Jayant Kejriwal, Mritunjay Choudhary, Rajat Sethia, Sawan Singamsetty, Shashank Jain, Tejas Pradhan, Vishal Goel and Vivek Priyadarshi. Please join us in welcoming them to Team Niveshak. We are confident that they will take the brand of Niveshak to greater heights. Keep supporting them the way you have been doing to us.

Stay Invested.