Niveshak October 2010 Issue

Tuesday, November 2, 2010 , Posted by Team Niveshak at Tuesday, November 02, 2010

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.

Bhavit Sharma

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