Niveshak March 2012 Issue with Page Flip version

Saturday, March 17, 2012 , Posted by Team Niveshak at Saturday, March 17, 2012

Dear Niveshaks,
The positive mood in the Indian markets continued this past month with the Foreign Institutional Investors infusing record levels of equity into the market. The investment by overseas investors into the Indian stock market since the beginning of 2012 has crossed USD 7 billion level, out of which more than USD 5 billion were pumped in the month of February. The major reason for this is the reversal in the RBI’s Monetary Policy and improved liquidity position. However, the global outlook still looks gloomy with no major headway being made in the Eurozone. As a result, experts believe that there will be a strong upsurge in the prices of precious metals. Silver, they say, is expected to hit highs of INR 1 lakh per kilogram.
This year, the budget was presented on March 16th, instead of the traditional last day of February by the Honorable Finance Minister of India, Pranab Mukherjee. The crux was to find a balance between the growth rate and inflation, while also keeping the fiscal deficit at a manageable level. Infrastructure sector was a major focal point and as a precursor to this, four banking and financial giants, ICICI Group, Life Insurance Corporation, Citicorp Finance India and Bank of Baroda, joined hands to launch the country’s first infrastructure debt fund. A more detailed analysis of the Union Budget would be done in our upcoming issues.
There now seems to be some hope for the debt-ridden Kingfisher Airlines. The Vijay Mallya led airline, heavily plagued by debt has found another alternative apart from asking its creditors to convert their debt into equity. Talks are on to rope in PE buyout majors like TPG, Blackstone and Cerebrus Capital. However, the level of dilution of promoter held equity is still unknown and further selling of stake could happen, by way of Etihad and British Airways, once the Government allows foreign airlines to invest in Indian carriers.
The past month has also brought some cheer to the gloomy primary market, with Facebook filing for its IPO. The much talked about IPO, values the social networking firm between $80-$100 million. On the domestic front, Multi Commodity Exchange, filed for its IPO. This was the first major IPO after the Coal India listing almost one and a half years back. The issue was oversubscribed in excess of 50 times and listed on March 9th at the ceiling of the price band of INR 860 – 1032 owing to strong demand.
With higher capital adequacy ratios demanded by the BASEL 3 norms; major international banks are booking profits in their Asian investments. Citigroup, a global financial major, sold off its 10% stake in HDFC for nearly $1.9 billion clocking an after tax profit of $722 million.
This month’s issue brings to you an insight into the effects of the dreaded twin deficits in different economies. The article of the month explains the role of the currency in shaping the developments all across the world and also analyzes critically the role of currency in Euro debt crisis. The article also discusses about the effects of depreciation of Indian Rupee. The issue also features interesting reads on social media IPOs, scenario of non-performing assets in India and the issue of privatization of PSUs in the country. This month’s classroom section explains to you the concept of ‘Islamic Finance’. We would like to thank our readers for mailing their wonderful articles and appreciation e-mails. It is your constant encouragement and enthusiasm that keeps us going.
Kindly send in your suggestions and feedback to and as always,
Stay invested.
Team Niveshak
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