Niveshak

Niveshak January 2012 Issue

2012-01-26T08:01:00.012+05:30

Page flip version - January issue - Finance

Dear Niveshaks,

2011 has not been very pleasant for the business world, as majority of both the developed and the developing nations have failed to experience rampant growth. Come 2012, we are again heading for a bumpy economy, and the harbingers of growth seem to be miles away.
The Euro Zone occupied the center-stage in the geo politics arena for almost the entire year. The repercussions of the debt of these countries have been felt by economies all across the globe. While the depth and duration of the slowdown in the European Union being difficult to be quantifiable, a continued credit crunch, sovereign-debt problems, lack of competitiveness, and fiscal austerity imply serious problems. The United States, which was on the brink of another major slowdown in 2011, has of late shown signs of recovery, both in terms of output and employment.
The outlook for the developing economies doesn’t seem to be very encouraging. The South East Asian giants- India and china have been revising its growth objective from time to time, and growth in china has been curtailed to a single figure level. India has been battling with a low Industrial production and inflation in the latter half of the year, and the depreciation of the home currency has been a major concern.
However, with a spur in NRI deposits, owing to deregulation of NRI deposit rates, and the hefty selling of dollars by the reserve bank, the rupee has become is emerging. The Industrial production data for the month of November has provided a ray of hope, and all the efforts of the government in combating inflation are finally bearing fruit. Amidst such a situation, the World Bank has slashed the world GDP growth forecast for 2012 to a paltry 2.50%, and 3.40% for 2013. Given the uncertainty prevailing, and importance of euro zone in international business, the future of euro will play be a major role in determining how the world economy will shape up in this year. Thus, the coming year will yet again test the mettle of our economists, financial analysts and business tycoons.
This issue brings to you an exclusive view on the credibility of accountants in the contemporary world. This issue also features an exclusive interview with Mr. Swapnil Dakshindas, a Senior Manager at one of the Big Four Audit firms. The article of the month throws light on the appreciation of yen, and this issue also features other articles on Gold as a lucrative investment, commodity markets and the viability of ‘Real Estate Investment Trusts’ as an investment avenue. The classroom section explains the concept of ‘Insider Trading’.
We would like to thank all the readers for their valuable articles, crossword entries and appreciation e-mails. It is only because of readers’ constant support and encouragement that Niveshak has been such a great success. On these closing thoughts, I on behalf of the entire team of Niveshak would like to wish you all a happy and unforgettable 2012.

Please send in your suggestions and feedback at niveshak.iims@gmail.com and as always,

Stay invested.

Team Niveshak

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Niveshak December 2011 Issue

2011-12-26T19:45:00.010+05:30

Page flip version - December isuue - Finance

Dear Niveshaks,

‘Niveshak’ has completed yet another year. As, we enter our 5th year, we have indeed come a long way from our humble beginnings in 2008. This year we saw more than 700 article entries coming to us from b-schools across India and even more Fin-Q entries. We also published a number of interviews from dignitaries a cross industry and academia. Also, new sections such as Market Snapshot and Classroom were introduced this year which got a lot of appreciation from readers.Surely, these achievements wouldn’t be possible without the continued support and contribution from our readers. As we pass the baton to our new team, I on behalf of the outgoing team would like to thank all the readers for their support and hope that we lived up to the expectation of one and all by contributing our bit to this great knowledge sharing platform called ‘Niveshak’.
The year 2011 was expected to be the year of growth, but instead the year turned to be just the opposite. I am not able to remember a single editorial in the last year where I have written something good about the markets or economy. The benchmark Sensex slipped by more than 20% during the year, the rupee depreciated by even more.Inflation, RBI policy,government in action, Euro crisis continued to dominate the headlines throughout the year and I don’t remember one editorial in last year where I have not mentioned these. I remember the June issue in which our cover story was on ‘double dipped’ recession. I distinctly recollect receiving mails from some optimistic readers about falsely spreading negativity. Two months later‘Economist’ carried a cover story on the same topic and today ‘double-dip’ is real in some parts of Europe and the global economic data point to some very difficult times ahead in other advanced economies as well.
Optimists argue that the global economy has merely hit a ‘soft patch’. Firms and consumers reacted to this year’s shocks by temporarily slowing consumption,capital spending, and job creation. As long as the shocks don’t worsen confidence,growth will recover and stock markets will rally again. However, the ‘double-dip’ proponents argue that the problems of the advanced economies is that of insolvency,not illiquidity; large and rising public and private deficits and debt, damaged financial systems that need to be cleaned up and recapitalized, massive loss of competitiveness, lack of economic growth, and rising unemployment. It is no longer possible to deny that public and private debts in PIIGs nations will need to be restructured. If the problem in advanced economies aggravates, the domino effect will ensure that no part of the world remains unaffected. We sincerely hope that the optimists are right and the new team has something good to write in the next year.
This issue brings to you some more interesting and insightful reads. The cover story this month focuses on Foreign Direct Investment in Indian retail sector.The issue also features an article on the critical review of the Disinvestment policy in India. Other articles in this issue focus on Alternative Investment Assets, Credit Default Swaps and regulation by Credit Ratings Agencies. The Classroom this month explains the meaning and significance of LIBOR. We would like to thank all those who have contributed articles to this issue and sent entries for FinQ.

Merry Christmas and Happy New Year!!

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak November 2011 Issue

2011-11-27T18:05:00.019+05:30

Dear Niveshaks,

The past month like the previous ones since a long time witnessed growing uncertainty in the Euro zone on the possible measures to prevent an economic meltdown. New ECB president Mario Draghi, in his very first public appearance at the European Banking Congress in Frankfurt, displayed stridency of views and called for immediate action from European politicians to implement the decisions taken in earlier summits. The troubled nations of Greece and Italy now have new Prime Ministers, Lucas Papademos and Mario Monti respectively, in the hope of enforcing better reforms to tide over the crisis. A sense of dismay prevailed in the EU when Mr. Papademos refused to give a written pledge to implement austerity measures prior to release of next instalment package from the EU, saying his words were enough. In neighbouring Italy, the political uncertainty raised their 10-year bond yield to as high as 7.48 %. However, Mr. Monti’s slew of policy priorities on labour and pension reforms helped in raising the confidence of investors and lowering the bond yields to manageable levels. Meanwhile in US, the super committee’s progress on measures to reduce the US deficit by at least $1.2 trillion over the next 10 years would be reviewed on 23rd November. It is widely believed that in case the committee falls short of expectations, the financial markets could be headed for another nosedive. These conditions do not augur well for US, which is still trying to emerge from the after effects of the 2008 recession.
There was no respite for the Indian sub-continent as well. High interest rate and unbridled inflation have led to yet another disappointing IIP number for the month of September, which has slumped to a two year low of 1.9 % against 6.1 % in the corresponding month a year ago. The weak number is mainly due to slow-down in capital intensive manufacturing and mining sectors indicating that though the series of rate hikes have not been able to rein in inflation, it has an adverse effect on growth. Global research firm, Macqquarie, has gone to the extent of lowering the next fiscal year (FY2012-13) GDP projection for India to 6.9% citing lack of political reforms by the government as the major reason while maintaining this year growth marginally higher at 7.4 %. The series of rate hikes by the RBI to control the rampant rise in inflation is expected to show some effect from December onwards. In case that happens, RBI governor has indicated that further tightening in terms of interest rate hikes might not be needed.
This issue brings to you some more interesting and insightful reads. The cover story this month focuses on Green Finance especially carbon credits and its relevance in the current scenario. The issue also features an article on the Housing Finance Market in India and the road ahead for it. Another article in this issue focusses on High Frequency Trading used by large banks for proprietary trading. The Classroom this month explains the process of Factoring.
We, the Editorial Team of Niveshak, are pleased to introduce to you our new team, which has been selected to carry on the legacy of Niveshak. They are: Akanksha, Akhil, Anuroop, Chandan, Harshali, Kailash, Nilkesh, Rakesh and Venkata. Please join us in welcoming them to Team Niveshak. We are confident that the new team will not only meet but will surpass your expectations in this and the coming editions. Keep supporting them the way you have been supporting us.

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak October 2011 Issue

2011-10-30T17:50:00.005+05:30

Dear Niveshaks,

The current financial crisis has illustrated how the world markets have moved closer to each other and have become so interconnected that every move in every economy is now being catapulted to the global arena. Every piece of information is being analysed for signs of economic conditions. In fact, if we go by what is being written in press, right from high inflation, dismal growth numbers, hiring freeze and poor earning guidance by corporates, we can fall into a false sense of belief that our economy is already in midst of a recession. The Indian economy today is seen as so interconnected and dependent on the western economy that any problem in the western economy is automatically seen as trouble for the Indian economy as well.

However, if we analyse the situation carefully, the Indian economy is surely slowing down, but is not in the same mess as developed economies. The Reserve Bank of India has forecast a GDP growth rate of 7.7 per cent in FY 2011 while the UNCTAD has pegged the figure a shade lower at 7.6 per cent and the broad consensus among most economists is that it is unlikely to be lower than 7 per cent. Four years ago, if anyone had said the country would grow at 7 per cent, we would have taken it with glee, but three years of 9 per cent growth and talk of touching double-digit expansion had spoilt us. The fact of the matter, that Indian growth story is still intact and what we are seeing now is probably only a temporary phenomenon. The inflation rate is declining; overall domestic demand is growing, though not at the feverish pace of the last five years and jobs are being created, albeit at a slower pace than before though cost pressures have increased. Under the circumstances, the mood of despondency that has set in is unwarranted.

The currency space around us is on the verge of major transformation. The last time something big happened in currency space was in 1971, when the gold standard was abandoned by the then US President Richard Nixon. The move resulted in huge trade imbalances and a massive build-up of foreign currency reserves by countries like China. Something big is all set to happen again in the currency space with the new proposed currency bill by US. The bill is essentially a form of trade protectionism that intends to penalize China for keeping its currency at artificially low levels to boost its exports. The bill not only in violates a series WTO rules, but would also potentially dampen the global economic activity and increase the probability of a double dip recession.

This issue brings to you some more interesting and insightful topics. The cover story this month focuses on the Occupy Wall Street Protest and its implications for the US as well as global economy. The issue also features an article on the Private Equity Industry in India and the road ahead for it. Other articles in this issue focus on infrastructure financing and entry of private players in the Indian banking sector. The Classroom this month explains various types of Fixed Income Securities. We would like to thank all those who have contributed articles to this issue and sent entries for Fin Q.

Hope you find this issue an interesting read.

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak September 2011 Issue

2011-10-04T01:13:00.008+05:30

Dear Niveshaks,

The world economy has been in a bad shape since some months now. The Fed’s announcement of $400 billion ‘Operation twist’ to stimulate the US economy sent global markets on a free fall. The earlier monetary easing by Fed ‘QE2’ failed to revive the US economy and the market seems to have lost faith that the new avatar of monetary easing is going to help either. The Indian markets fell by more than 4% on announcement of monetary easing by Fed, its highest fall in a single day since 2009. The volatility in all markets have increased to an unprecedented levels and the possibility of a double dip has increased further. Fear Index VIX, which is based on volatility has increased by 22% for Indian markets in September and has reached high levels for most markets. Adding to the woes is the Euro crisis which has been worsening every passing day. The possibility of a Greek default is now very real. The Euro crisis which was born out of fiscal profligacy and mispricing of credit risk has now attained a massive scale threatening the disintegration of Euro itself and no Euro zone country seems to be knowing the solution to the crisis.

Meanwhile, the growth of Indian economy has stalled, thanks to RBI, which has been on an ‘interest hike’ spree for quite some time now. However, all the measures by RBI have failed to contain the inflation and the hawkish tone of RBI Governor is scary and an indication that interest rates can be increased further. Unlike the Americans, Indians do not live by credit, and hence a credit squeeze to contain demand may really not be effective in India. When inflation is driven by high prices of food and other basic necessities, a credit squeeze can hardly help, as Indians are unlikely to buy food on credit. This is not to argue that economic growth is the only priority and inflation does not matter, but it is simply unacceptable that economic growth is hurt while inflation remains unchecked. The fact is that the Government can do little to check inflation in an open economy. As a corollary, if commodity prices were to fall in the event of a double-dip recession, the government can hardly claim credit for bringing prices under control. When it is already known that the current inflation is largely driven by high food and raw material prices, squeezing credit to agriculture and allied activities can only make inflation more persistent. But inflation is a political issue and the government must show that it is taking efforts to check inflation. Hence these rounds of interest rate hikes.

This issue brings to you some more interesting and insightful topics. The cover story this month focuses on the outlook of the world economy and whether the ghosts of 2008 will return to haunt us. The issue also features an article on the genesis of Euro Crisis and the way forward for it. Other article focus on down-grade of US, India’s fiscal deficit and whether dollar can replaced as the reserve currency in the coming years as the US economy is losing steam. The Classroom this month explains the topic of Currency wars. Last month, we celebrated our third anniversary with a special issue on Sector Reports. The Anniversary issue was a huge success with more than 100 entries for Sector Reports. We would like to thank all those who contributed the Sector Reports and made our anniversary issue such a success

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak Third Anniversary (August 2011) Issue

2011-08-24T22:42:00.017+05:30

Dear Niveshaks,

We are pleased to present you all the third Anniversary issue of “NIVESHAK”. The same can be downloaded from any of the following links:-

http://tinyurl.com/Niveshak

http://www.scribd.com/doc/63000515/Niveshak-Aug-11

We would like to thank Mr. Sunil Mitra (Finance Secretary, Ministry of Finance), Mr. Utkarsh Majmudar (Vice-President, Global Research, HSBC Bangalore), Dr. Jean Imbs (Professor at Paris School of Economics) and Mr. B.R. Tripathy (Chief Commissioner, Central Excise & Service Tax Department) for giving us interviews and sharing their views with our readers. We would also like thank all the teams who participated in Sector Report Writing Competition for their valuable entries.

The Sector Report Writing Competition conducted across b-schools in India to mark the entry of Niveshak in its 4^th year was a huge success. The competition saw more than 100 teams from premier b-schools sending in their entries. Amidst so many good reports, it was indeed a difficult task to choose the best reports. The result of Sector Report Competition is as below:-

Position	Winners' Name	College	Prize Amount
1st	Sanjeev Kumar and Senthil Subramanian	NITIE, Mumbai	Rs. 5000
2nd	Anshul Mehta & Pranshu Srivastav	DMS, IIT Delhi	Rs. 3000
3rd	Rahul Jayasankaran, Amandeep Singh & Ravisha Kumar	IIFT Delhi	Rs. 1000
3rd	Asmita M Karanje	SIBM Pune	Rs. 1000

Congratulations to all the winners!!

The lucky winner of July Issues Fin Q is Roy Paul Mathew of SJMSOM, IIT Bombay. He receives a cash prize of Rs. 500. If you would like to get your article featured in the coming issue of Niveshak, pick up any financial or economic issue, pen down an article and send in your entry by 10th September, 2011. The best article will be awarded "Article of the month" and the author(s) will get a cash prize of Rs.1000 (Details inside Niveshak Announcements Page).

Stay Invested.

Warm Regards,

Team Niveshak

Indian Institute of Management, Shillong

niveshak.iims@gmail.com

www.iims-niveshak.com

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Niveshak July 2011 Issue

2011-07-28T03:07:00.017+05:30

Open publication - Free publishing - More finance

Dear Niveshaks,

The possible downgrade of US Treasury security dominated the headlines this month. S&P, Fitch, Moody have all warned of a possible downgrade, if US fails to raise its debt ceiling by the August 2 deadline. If the US defaults on its T-bills, something which it last did way back in 1979, the repercussion would be severe both for the US and the global economy. To make matters worse, the economic data from US indicate a stalling economy and a possible QE3 on cards. The expectation of QE3 has already made Gold prices to rally, which was already rallying hard on the back of fiscal concerns in Eurozone. In general, the monetary easing would create more volatility for commodity prices. In the last two instances of QE, money created in US went out into emerging markets and created bubbles in the commodity space, principally in oil but also in gold and other metals. Meanwhile, the euro zone’s debt drama has lurched from one nail biting scene to another. First Greece took centre stage, then Ireland, then Portugal, then Greece again and now Italy. Each time European policymakers reacted with denial, followed at the eleventh hour with a half-baked rescue plan to buy time. With Italy now at the centre stage of the debt crisis, it is clearly a new phase for the Euro debt crisis. No longer confined to the small peripheral economies of Greece, Ireland and Portugal, it has hurdled over Eurozone’s giant like Spain and Italy.

On the domestic front, the Indian economy is resilient, but the happenings over the past six months have not been right for the investor’s sentiments. The policy stance of the government in various fiscal matters and the recent Mumbai blasts have clearly increased the political uncertainty and affected the economic environment in the country. The Government has a lot of ground to cover if the target economic growth is to be achieved. The severe lag in the decision making process of the Government over the last few months, because of the various civil protests, has halted progress across sectors and affected the economic growth. Meanwhile, persistently high inflation and interest rates have hit business as well consumer confidence. The business, particularly the micro, small and medium enterprises (MSMEs) are cutting down on investments while the consumer led sectors such as the auto and housing are also experiencing slowdown due to high interest rates. RBI is further expected to increase the repo rate by 25 basis points at its monetary review, slated for July 26. It would be 11th time that RBI would be raising rates since early 2010. However, the inflation still remains high and a cause of concern for the policy makers.

This issue brings to you some more interesting and insightful topics. The cover story this month focuses on the draft microfinance bill posted by Ministry of Finance recently, its implications and the way ahead for the Indian microfinance industry. The article of the month explores the issue of savings rate deregulation, the pros and cons, and the steps RBI should take in this matter to benefit both banking institution and common people. Other articles in this issue focus on the impact of RBI monetary policy tightening, the role of securitization in structuring debt portfolio and the impact of CDS introduction in India. Lastly, the Classroom this month explores the topic of Capital Account Convertibility.

Hope you find the issue an interesting read.

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Call for Sector Reports for 3rd Anniversary Issue

2011-07-26T16:44:00.008+05:30

Dear Niveshaks,

As Niveshak enters its fourth year of existence, on the eve of 3^rd anniversary edition, Team Niveshak plans to come out with a special issue featuring analysis of various Indian Sectors. For this purpose, we invite Sector Reports from all B-schools across India. The structure of the sector report is described below. The top three Sector Reports would be awarded with Cash Prizes up to Rs. 10000.

For further details, click here to view/download the pdf

Niveshak June 2011 Issue

2011-07-01T01:27:00.007+05:30

Dear Niveshaks,

Despite the series of low-probability, high-impact events that have hit the global economy in 2011, financial markets continued to rise happily until a month or so ago. The year began with rising food, oil, and commodity prices, giving rise to high inflation. Then massive turmoil erupted in the Middle East, further increasing the oil prices. Then came Japan's terrible earthquake, which severely damaged both its economy and global supply chains. And then Greece, Ireland, and Portugal lost access to credit markets, requiring bailout packages from the International Monetary Fund and the European Union. Lately, concerns about America's unsustainable fiscal deficits have, likewise, resulted in ugly political infighting, almost leading to a government shutdown. A similar battle is now brewing about America's debt ceiling, which, if unresolved, introduces the risk of a technical default on U.S. public debt. Until recently, markets seemed to discount these shocks. Apart from a few days when panic about Japan or the Middle East caused a correction, they continued their upward march. But since the end of April, a more persistent correction in global equity markets has set in, driven by worries that economic growth in the United States and worldwide may be slowing sharply.

On the slow track, meanwhile, was India's economy. GDP grew by 8.5 per cent in 2010-11, still very good by global standards but lower than expected, and is seen slowing further to eight per cent in 2011-12. There is cause for caution - high oil prices, stubbornly high inflation, and high interest rates but also cause for optimism, with commodity prices likely to moderate, and inflation seen simmering down by the fourth quarter of 2011. Mid-June, RBI raised interest rates for the tenth time since March 2010 in order to control inflation, even as growth slows in Asia's third-largest economy. The repo rate now stands at 7.5 per cent. The rate increase follows on the heels of recent monetary policy tightening in China and Brazil, other big emerging economies that are battling high prices even as growth slows from last year's heady levels. Elevated inflation is expected to persist in coming months, and could be exacerbated because of the Government’s decision to raise the price of diesel and cooking fuels by Rs. 3 per litre and Rs. 50 per cylinder respectively, in order to ease its subsidy burden as global crude prices remain high.

This issue brings to you some more interesting and insightful topics. The cover story this month focuses on the gaga over the double dipped recession. Economic data from the United States, the United Kingdom, the periphery of the Eurozone, Japan, and even emerging-market economies are signalling that part of the global economy—especially advanced economies—may be stalling, if not dropping into a double-dip recession. The article of the month explores the issue of deregulation of diesel and LPG prices and the way forward for the Government. Another article in this issue focuses on the Euro Crisis and way the crisis needs to be handled going forward. The issue also features an article on the issue of Banking Licenses being given to NBFCs. Lastly, the Classroom this month explores the topic of Credit Rating.

Hope you find the issue an interesting read.

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak May 2011 Issue

2011-06-02T20:03:00.006+05:30

Dear Niveshaks,

The dull and mixed result season has come to an end amidst a month which saw results of five assembly elections, RBI raising interest rates by 50 basis points and the petrol prices being increased by Rs. 5 per litre. The increase in petrol price, which the oil firms had been holding since January even though crude oil had touched a two-and-a-half-year high, came a day after election results of five state assemblies were announced. This is the eighth hike in petrol price since the June 2010 decision of deregulating the petrol price. The rate increase by RBI which was more than expected caused both stock and bond markets to decline on fears of lesser than expected growth in GDP due to tough interest rate scenario. The headline inflation has eased a bit in April due to lower manufacturing prices but the prospect of rising energy costs will keep pressure on the RBI to raise rates going ahead. The wholesale price index, the country’s main inflation gauge, rose an annual 8.66 percent in April, above the median forecast of 8.48 percent rise. However, the softening of inflation seems temporary as the hike in diesel and LPG is likely to be announced by the OMC’s in the coming weeks to reduce their under-recoveries.

The stock markets which posted smart gains in March 2011 on expectations of good Q4 FY11 results, slid down recently due to disappointing corporate earnings results, rising inflation and the most recent one being the RBI’s aggressive rate hike with a view to curb inflation. The fall in the markets was exacerbated by the continued FII selling due to concerns over the impact of the rate hikes on the overall growth. The RBI move to hike rates by 50 bps is a departure from its calibrated approach in recent times and should help in taming inflationary pressures. This move which is expected to put some pressure on the GDP for FY12 could cause some near term pain to the markets due to the concerns over slowdown in growth. However, the proactive move was warranted considering the spiralling inflation in India. Events which could have a bearing on inflation would be the monsoon forecast and the end of the quantitative easing (QE2) in June which could see a dollar rebound and consequent cool off in commodity prices.

This issue brings to you some more interesting and insightful topics. The cover story this month focuses on the big news of this month – the death of Osama and its impact on financial world in general. The article of the month explores the history of world’s second strongest currency Euro , what went wrong with it and how the wrongs can be corrected. Another article in this issue focuses on the importance of SHG’s and their role in ‘Banking the Unbanked’ in the country . The issue also features an article on the current state of Indian debt market and the way it can improve going in the future for corporates to be able to use it effectively to raise funds quickly and fuel their growth. Lastly, the Classroom this month explains the topic of ETF’s.

Hope you find the issue an interesting read.

Stay invested.

Rajat Sethia
(Editor -Niveshak)

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Niveshak April 2011 Issue

2011-05-02T09:40:00.009+05:30

Dear Niveshaks,

Yet another eventful fiscal year has come to an end. The financial year ending March 31, 2011 started off quite well with signs of economic recovery and growth trajectory back to the pre-crisis levels. However, towards the end of fiscal year, problems emerged both at the global and domestic level. At the global level, the major concerns were the slow recovery in theUS economy, the European debt woes and the crisis in the Middle East. The natural calamity in Japan further dampened the sentiments at the global levels. At the domestic level, the GDP growth in the last fiscal year was a strong 8.6 per cent in real terms. The major concerns at the domestic level last fiscal were the slowing production and the continued high inflation, particularly that of food items. The monetary measure taken up by the RBI is expected to moderate the inflation in the coming fiscal year.

The outlook for the fiscal year FY 12 remains positive with strong growth expected both in the emerging and developed markets. The sharp increase in the oil prices owing to the MENA crisis has added a bit of uncertainty to the pace of global recovery. However, it is a temporary phenomenon and the long term outlook remains positive. The inflationary pressures in most EMEs remain high and the central banks in most EMEs have responded by raising the key interest rates which should control the inflation in the financial year ahead. As far as India is concerned, the GDP in the current fiscal year is projected to grow by a healthy 9 per cent. Even though the IIP continues to be weak, other indicators such as the Purchasing Manager Index(PMI), direct and indirect tax collection, exports and bank credit suggest that the growth momentum persists. However, continuing uncertainty about energy and commodity prices may vitiate the investment climate, posing a threat to the current growth trajectory. In particular, the weak performance of capital goods in the IIP suggests that investment momentum may be slowing down.

The quarterly results of major companies remained in the headlines this month. The quarterly results have been mixed. While some big companies such as Infosys and Reliance missed the market expectation, the results of the companies in the auto, pharma and metal space remained in line with expectation. There was no significant impact of results on the markets with the markets remaining range bound through the month. The interest rate and the liquidity scenario have remained tough in the last few months. The outcome of the RBI policy review meet and its impact on the market would be something to watch out for in the coming weeks.

This issue brings to you some more interesting and insightful topics. The cover story this month focuses on the rally in the gold prices, the reasons for the same and the way ahead for the gold prices. The article of the month explores the monetary transmission mechanism in India and ways and means of improving the same by developing the BCD nexus in India. Another article in this issue focuses on the convergence of the Indian accounting standard towards IFRS and its implications for India. The issue also features an article on the new regulatory framework released by RBI for the subsidiarisation of foreign banks in India. Lastly, the Classroom this month explains the topic of leasing. Hope you find the issue an interesting read.

Stay invested.

Rajat Sethia
(Editor -Niveshak)

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Niveshak March 2011 Issue

2011-03-19T18:21:00.008+05:30

Dear Niveshaks,

The last few months have been bad for the world economy in general. The Libyan Crisis, high oil prices, European debt woes and now the Tsunami in Japan, there seems to be no respite for the global markets. The latest natural calamity in Japan sent shock waves across the global markets and pounded commodities and equity markets worldwide. Japan, the world’s third largest economy is also the world’s third largest energy consumers and imports almost all its energy needs. As a result, the rally in the oil market came to a halt and the crude slid below $100 for the first time ever since the beginning of political unrest in the oil-rich Middle East and North African regions. As far as the equities markets are concerned, the MSCI’s entire country world index fell to a five week low and most of the Asian markets tumbled including Sensex which fell by 154 points on back of the Japanese disaster. The IIP numbers for the month of January that came on March 11 also didn’t present a rosy picture. The industrial growth was a meagre 3.7% as compared to a robust 16.8% in the same month last year. The sectors mainly responsible for the tepid overall growth, as measured by IIP, were manufacturing and mining which witnessed significant deceleration in output. One of the reasons for the dismal IIP numbers over the last few months has been the tight monetary policy of RBI to curb inflation. Against a slowing industrial growth, it would be interesting to see the policy measures taken up by RBI in its upcoming policy review meeting on March 17.

The other big story this month has been our Union budget. The three key macroeconomic concerns before the Union Budget 2011-12 were high inflation, high current account deficit, and fiscal consolidation. Additionally, there was an expectation that the government would restart the reform process. The Budget has made an attempt to address all these issues. By and large, the budget was a balancing act. It ventured little and gained little. As far as the market reaction was concerned, no bad news was good news and the markets saw a short lived rally post budget. The three key themes of this year’s budget were fiscal consolidation, inclusive growth and focus on agriculture and infrastructure financing. The greater outlay and liberalization of FDI/FII in infrastructure is an example of Government’s renewed focus on infrastructure sector. Social sector spending too remained one of the top priorities of the government. However, refraining from announcing new schemes, the budget laid stress on providing reasonable allocation to the existing schemes, in order to curb fiscal deficit and provide room for the already committed Right to Food Act.

The month’s cover story on ‘Union Budget’ delves further into various aspects related to the budget and the impact it will have on various industrial sectors. Given the focus of the budget on inclusive growth and infrastructure, the ‘Article of Month’ explores the topic of Housing Microfinance and its role in supporting affordable houses for masses in India. The other big news this month was about General Atlantic buying a tenth of Facebook and valuing the company at $65 billion. Earlier in January, Goldman Sachs had valued the company at $50 billion. The present issue features an article on the Facebook valuation and digs into whether the high numbers truly reflects Facebook’s value. The issue also features an article on the ‘Jasmine Revolution’ in the Middle East and its impact on the inward remittances to India. Lastly, the month’s classroom focuses on the option trading strategy ‘Dividend Arbitrage’ and the type of securities it is best suited for.

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak February 2011 Issue

2011-02-25T15:34:00.006+05:30

Dear Niveshaks,

It’s back to February, the month of Union Budget. As the day of budget is approaching, expectations of the industry and common man have started to build up regarding the various policy measures that government will take to alleviate the various problems that our economy is facing currently. The Indian economy with sinking stocks, skyrocketing inflation and moribund industrial output certainly doesn’t present a rosy picture and the Finance Minister, Mr. Pranab Mukherjee has a tough task ahead in tackling all these issues. Clearly, the biggest of these issues is the inflation, particularly that of food items. Although, the food inflation has eased a bit in early February, it still remains at a high double digit. The RBI has raised short term interest rates seven times since the last budget and is expected to do so for the eighth time in the coming March. While the monetary measures didn’t help much in controlling the supply side driven inflation, it certainly had its effect on the industrial output which has fallen to a very low level as indicated by the latest IIP numbers. The corrective policy measures taken by the government to balance growth with the inflation will be something to watch out for in this budget. Another major issue to watch out for will be the diesel price deregulation. The petrol price deregulation that the government undertook last year helped in reducing the fiscal deficit and minimizing the losses of oil marketing companies. But it is the prices of diesel that constitutes a major share of fuel subsidy bill and hence a diesel price decontrol is urgently needed in order to reduce the fiscal deficit. However, given the current inflationary environment, the step seems to be difficult.

The month of February has been one of the worst for the Indian stock market in the recent times. The benchmark Sensex fell to its seven month low on February 11 before recovering from the shocks of Egypt crisis and weak IIP numbers. Just three months ago, when the US government had announced its monetary easing policy, financial experts had predicted a tsunami of foreign fund inflows leading to a rise in the stock markets in emerging countries. However, nothing of that sort has happened till now. Infact, the foreign institutional investors who had pumped close to 29 billion dollars in 2010 have already withdrawn 1.4 billion dollars from the Indian markets this year till the mid of February. If trends are to be believed, then the Indian stock markets are headed south. However, we all know the inexactness of stock market forecasts and it would be interesting to find out the direction of stock markets in the coming months.

A major issue that dominated the headlines this month was the Egypt crisis. This month’s cover story goes deep into what went wrong in Egypt and the effect it is having on the rest of world. The “Article of Month” is on the burning issue of inflation and the measures government should take in order to control the same. The present issue also features an article on MNREGA, the impact it had and the way ahead. Another interesting article in this issue is on Islamic Banking, issues and concerns surrounding it and the benefits of adopting it in India. Finally, don’t miss the interview of Mr. Himadri Bhattacharya (Executive Vice President at Tata Capital) where he shares his views on varied issues such as the Euro crisis, inflation and the things to watch out for in global and Indian economy in the year ahead.

Stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak January 2011 Issue

2011-01-30T17:43:00.008+05:30

Dear Niveshaks

The year 2011 has started on an unexpected note with the emerging markets coming down and the developed markets, like that of Europe and the US scaling up. This is not entirely surprising given the fact that the emerging markets outperformed the developed markets throughout 2010. The Indian markets, in particular, were clear outperformers with the benchmark Sensex moving up by over 3000 points during 2010 on the back of impressive FII inflows and a robust domestic economy. However, with the advent of 2011, the problems of rising inflation and a slump in industrial production brought the Indian markets down with the BSE Sensex falling about 2000 points below the 2010 highs. With the RBI policy review and the budget coming up, it would be interesting to see what steps our policy makers take in order to curb inflation and yet not hurt the growth. On the international front, we saw China surpassing Japan in terms of GDP last year. The United States embarked upon QE2 to revive its staggering economy. It would be interesting to see in 2011 if the QE2 actually kick starts the US economy. If QE2 works, then it would be the first time that such a monetary policy will work for a nation. On the negative side, QE2 poses a serious risk of asset bubble creation in emerging markets such as India and China. The Euro debt crisis was another major thing that dominated the headlines last year. The monetary and fiscal steps taken by European nations to resolve the crisis would be a significant thing to watch out for in 2011.

The first edition of 2011 will be incomplete if we don’t have a look at the events that happened in the past year and how the current year will shape up in the context of Finance. Our cover story this month delves into the major events of 2010 and gives our outlook on how the economy will shape up in the coming months of 2011. The “Article of Month” gives a further insight into what happened in the banking sector in 2010 and what would be some of the key challenges that the banking sector is going to face in the coming months as the liberal monetary and fiscal policies get withdrawn. One of the important events that happened last year was the SEBI-IRDA tussle over ULIPs. Post winning the battle, IRDA came out with new regulations governing ULIPs. The current issue features an article on the same and the impact it will have on investor perceptions and the future pattern of ULIP investments. The current issue also features an article on Basel III guidelines which came up in September last year. The article goes in depth into the various facets of Basel III norms and what they mean for the Indian Banking Industry. Lastly, the newly introduced Classroom section discusses various aspects of Green Shoe Option.

We the new team feel privileged to be associated with the illustrious Niveshak. The outgoing team including Bhavit, Bhavya, Durgesh, Hitesh, Sumit, Swarnabha, Tanvi and Upasna successfully published the last 12 issues and with all your support brought the magazine to the height where it is today. I would like to take this opportunity to applaud them all on behalf of the new team. Also, I would like to thank all the readers for their valuable articles, crossword entries and appreciation e-mails. It is only because of readers’ constant support and encouragement that Niveshak has been such a great success. On these closing thoughts, I on behalf of the entire team of Niveshak would like to wish you all a happy and unforgettable 2011.

Please send in your suggestions and feedback at niveshak.iims@gmail.com and as always, stay invested.

Rajat Sethia

(Editor -Niveshak)

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Niveshak December 2010 Issue

2011-01-01T12:57:00.012+05:30

Dear Niveshaks

As we all get ready to take a leap into the next decade, I find myself jotting down my thoughts for the last time in editorial. Our team’s journey is finally coming to an end and it is the time when we need to pass on the legacy to the next team. It is indeed a déjà vu feeling of last December when our team had got the opportunity to work for this illustrious magazine. The time since then has passed in a flash. Let us have a quick recap of our eventful journey. We started with the footsteps to 2010 where we saw how this world of finance was going to shape up, followed by auditing what is called as the balance sheet and income statement of our India Inc –Union budget 2010. Later we had a sneak peek of some of the most important events in the world of finance like Greece Debt crisis, Goldman Sachs fraud case, and currency war between nations which did affect the whole globe. We also took you through some of the milestones of the last century in our anniversary edition which was highly appreciated and acclaimed by our readers including those from corporate world. In the meanwhile, we constantly tried to make this magazine a platform to facilitate interaction by introducing interesting sections like Nivesh – A portfolio game and Crossword apart from the Fin Quiz section.

When we took charge of this magazine, the responsibility and expectations were high as the magazine had already achieved a lot in its one year of existence. We started the magazine with the dream of making it even bigger in the field of finance and we firmly believe that we have achieved the same to a great extent. Now Niveshak has become the most coveted platform to facilitate knowledge sharing among the finance enthusiasts of India. This would not have been possible without your support and encouragement. We improved with every issue solely because of the feedback and compliments received from your side which really motivated us and boosted our morale. We take this opportunity to thank the entire B-School fraternity of the country, and especially to those participants who sent numerous appreciation mails, articles, fin-Q and crossword entries. They are the ones who are undeniably the reason behind Niveshak’s success. I would also like to acknowledge the guidance and support of our mentors – Prof Sarkar and Prof Sivasankaran who inspired and motivated us throughout our journey. I must congratulate and also thank the entire team of Niveshak comprising of Bhavya, Durgesh, Hitesh, Sumit, Swarnabha, Tanvi and Upasna for completing this journey successfully. They were phenomenal during the whole journey. Here I would like to make a special mention of Bhavya and Swarnabha whose creative intelligence and perseverance have been instrumental behind Niveshak’s grand success. Last but not the least, I would like to congratulate Biswadeep for creating this masterpiece.

Just as after every sunset, the sun rises again with all the new hopes and enthusiasm, I am confident that the new team Niveshak, with their enthusiasm and motivation, will take Niveshak to greater heights and achieve those feats which our team couldn’t even think of. I just wish the new team gets the same love and support from you which we got in the last 1 year.

Although this is my last editorial, I won’t bid adieu as Niveshak is something to which I shall remain attached forever. Bbye for now.

Stay Invested.

Bhavit Sharma

(Editor -Niveshak)

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Niveshak November 2010 Issue

2010-11-28T14:32:00.005+05:30

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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Niveshak October 2010 Issue

2010-11-02T18:49:00.002+05:30

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

(Editor-Niveshak)

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Niveshak September 2010 Issue

2010-09-30T16:40:00.003+05:30

Dear Niveshaks

Heartiest congratulations to all of you. We, Niveshaks, have completed another circle round the sun and have stepped into our 3^rd year of existence with glory and pride. There have been many learning opportunities for all of us and I am glad to note that we have not missed any significant one in the last one year. Participants of all B-Schools of India and some renowned foreign universities, through Niveshak, captured the essence of all happenings and analysed their implications on the world of finance. During the last 12 issues, we received more than 700 articles (including approximately 110 articles for the August anniversary issue) from the top 30 B-Schools of India. We are extremely thankful to all our article contributors across all B-Schools and to all our subscribers who supported and encouraged us through their appreciation mails and by increasing the count of our subscription. We are also thankful to Public Relations committees of all B-Schools of India who have circulated Niveshak among their participants. For all our readers who are not aware of Niveshak’s second anniversary issue’s launch ceremony, here is the news. General J J Singh, ex- Indian Army chief and incumbent Governor of Arunachal Pradesh graced the launch ceremony by releasing Niveshak which got covered and praised by some major media houses like Times of India and Telegraph. Thanks to all of you.

The beginning of 3^rd year of Niveshak coincidently started with something else also to cheer about. SENSEX recently scaled 20k figure after 32 months and have entered a new bull run with 20% gain from 2010 lows and so have other emerging markets as investors fromdeveloped nations chase returns. BSE Sensex, few days back, gained nearly 800 points (4.2%) in just 5 trading days which was the biggest weekly gain for the index in over a year while on percentage basis this was the biggest upmove in the last 10 months. With the BSE benchmark Sensex breaching the 20,000-level and still going strong, we have good reasons to believe that Indian markets have entered a bull phase and persistent FII inflows may push the index past its highest mark of 21078 in the coming days.

The cover story for this month focuses on Corporate Debt Restructuring which is often perceived as the saviour of firms distressed by an unhealthy proportion of debt in their capital structures. The article explains the procedure of CDR in detail and emphasizes on its relevance in the recent past by picking examples from the airline and retail industry. This edition also brings to you something interesting which has been the talk of the town for the last few weeks. We present to you an article on 2010 Commonwealth Games which are going to be the largest multi-sport event conducted in India to date. Nobody in 2003, when India won the bid for hosting the event, would have thought that the games will be hit by bad weather and criticism of the facilities and village in the last few days before the inauguration. But things aren’t in good shape as of now and the next 15 days are going to tell us whether India will be able to prove itself as a capable host or not. I hope the issue will definitely stimulate and keep you engrossed in the world of finance. Looking forward to your comments and wishes to bring out more interesting issues in the future.

Start following us on facebook and twitter.

Bhavit Sharma

(Editor-Niveshak)

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Niveshak Second Anniversary (August 2010) Issue

2010-08-26T18:02:00.003+05:30

Dear Niveshaks,

Congratulations on your second anniversary. Thank you for having me as the guest editor of your anniversary issue and giving me the opportunity to express my personal views on some of the milestones that shaped the financial world.

These are very fascinating times that we live in – much has been written and analysed since the inception of the recent financial crisis in 2007 which will result in having a deep impact on our mindsets and actions in future atleast for a while. It is important to note that this crisis has been handled in a concerted manner globally and should also have singular ramifications for good or bad. Regulations are getting dusted off and rewritten.

Since the early 20th century, time and again the financial world has been shaken by major events that have brought about lasting reforms in the financial world. To my mind much of these events have to do with liquidity and investor confidence.

The financial panic in 1907 triggered by the collapse in a copper trust resulted in NYSE falling by about 50% from its peak and second highest bankruptcy filings to that date – retracting liquidity and confidence. There was no overarching governing body to step in and return normalcy. It eventually led to the creation of Federal Reserve System. Indeed, a very positive development.

The Roaring Twenties led to the Great Crash in 1929 and a chain of events which resulted in a decade long economic slump in industrialized nations and severe macroeconomic problems – unemployment, decline in money supply and GDPs; Dow reached its nadir point in July 1932. Subsequently the Congress passed the Glass Steagall Act in 1933 which required a separation between commercial banking and investment banking operations to resolve conflicts and to control speculation. The Act was later repealed in 1999 and was blamed to be one of the many causes of the current subprime crisis.

Post World War II, the Japanese government created an environment which encouraged savings. Credit was easy and with so much money available for investments, speculation was inevitable and it resulted in too much money chasing assets and led to an economic bubble between 1986 and 1991 in real estate and stock prices. The ‘bubble-burst’ hit very hard and lasted for more than a decade only to be worsened in the recent crisis. It also resulted in the development of Yen carry trade which eventually collapsed in 2008.

Asia has grieved as well during 1997-98 when the Thai Baht collapsed on the back of de-pegging the currency from USD and significant outflow of foreign debt from Thailand into US-denominated assets due to rise in interest rates in US. This made the country effectively bankrupt and the contagion spread to neighboring countries affecting Indonesia and South Korea most. It was a reminder of the fact that foreign exchange reserves are important and Exchange rate regimes are difficult to maintain. The Asian economies have more than recovered since then but not without suffering some permanent currency devaluations.

With this backdrop I think it was not very difficult to imagine (of course in hindsight) that the Governments will do a good job of steering the world out of the crisis and they have by and large succeeded so far. However what seems to be different this time around is that we have not seen as many bankruptcies and permanent loss of capital (keeping history in perspective) – Assets have mostly just changed balance sheets and that may be something to worry about.

I have brought you a long way to make a small point that when markets are too confident and shooting up, think if what’s driving it is sustainable, because all said the law of gravity still prevails.

Wish all of you a great life.

Ghanshyam Das Khandelwal

Head - Strategic Transactions Group,

HSBC Bangalore

Disclaimer: "The opinions expressed in this editorial are personal to the author and do not reflect those of the HSBC Group."

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Niveshak July 2010 Issue

2010-07-24T18:00:00.004+05:30

Dear Niveshaks

The other day I was wondering about what could have brought China an indomitable competitive advantage which has not only helped it in achieving a phenomenal GDP growth rate but also in making it resilient of the recession which gulped most of the parts of the world 2 years back. A prolonged discussion with one of my colleagues brought forth various points like labour cost, manufacturing competence etc. One thing where our discussion ultimately boiled down to was China’s pegged currency. But recently we saw China making an announcement that it will make Yuan’s exchange rate more flexible thereby breaking the currency’s 23-month-old dollar peg. This move was welcomed by most of the stock indices of the world with Sensex advancing by 1.7% and MSCI Emerging Markets Index by 2.4%. The S&P 500 was 1.2% higher, so were European stocks.

The dollar peg had come under intense fire from critics as China’s export juggernaut roared back to life, while much of the rest of the global economy remained sluggish in the wake of the financial crisis. But China has ruled out any chance of a major appreciation or one-off revaluation. So the question arises whether this unpegging of currency will dampen this form of China’s competitive advantage in due course of time or it is just an intended move to placate critics of China’s currency regime. Our cover story for this month answers this question by stating the possible implications, or I should rather say repercussions, on China and rest of the world.

The May issue carried an article on the much hyped SEBI-IRDA tussle that had surfaced because of the insurance product ULIP. Well… the insurance industry regulator IRDA has emerged victorious in the regulatory turf-war, with the government ruling that it and not the market watchdog SEBI would oversee the product. But what seem important for us are the steps taken by IRDA to ensure that ULIPs sold by agents are based on the financial profile of the individual being approached and not on the fees. This, if implemented on a larger scale, will definitely serve the purpose in the best interest of the investors. In the current edition, we present to you a very interesting article on BP and the oil spill from one of its rigs in the Gulf of Mexico. This focuses specifically on the financial aspects and impacts of the oil spill, which contaminated a vast area of United States marine environment and continues to have a serious impact on the ecosystem, on BP and the whole Oil industry of the world.

Time indeed moves so fast. It gives me immense pleasure to inform you that we, Niveshak, are at the doorstep of our 3^rd year of existence and will celebrate its second anniversary in the next issue. With this new beginning, let us revisit the world of finance with all its failures and their learning from the last century. Yes this is the theme for the next issue. We invite you to write articles on “Milestones that shaped the world of Finance” for the Anniversary edition. However, you can also send articles on any topic of your choice. For more information, please see the declaration page of this issue. We look forward to your support and wishes to continue this growth story at an exponential pace.

What a journey it has been.

Bhavit Sharma

(Editor-Niveshak)

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Niveshak June 2010 Issue

2010-06-28T18:42:00.002+05:30

Dear Niveshaks

FIFA world cup fever has again gripped soccer fans across the globe as this most popular sporting event in the world made its maiden voyage to the continent of Africa in mid-June. We can see the fervour has risen in India too and it won’t be a surprise if football becomes the next big thing after IPL this summer. The impetus to this tournament can be gauged by the fact that it has generated revenue of USD 1.6 billion between 2007 and 2010 as opposed to USD 584 million between 1999 and 2002. Some of the credit behind this goes to the valuation of sponsorship by IEG valuation service whose assessment of the model of a small number of sponsors with a broader right package and competitive environment significantly helped FIFA in selling its packages very profitably. Looking at the euphoria and enthusiasm among football fans, we have brought an article on ‘’Finances and football” for your perusal in this issue.

I, on behalf of team Niveshak, would like to thank you all for liking and appreciating our endeavour of presenting a sector wise analysis of some major sectors in the May issue . We hope to bring more such analysis in future. The sector which witnessed some major happenings last month was Telecom. After 34 days and 183 rounds of intense bidding, 3G spectrum was auctioned for which the total bid price touched Rs 16,750.58 crore on the 34th day of bidding. It was the auction format and severe spectrum shortage, along with ensuing policy uncertainty, which drove the prices beyond reasonable levels of Rs 35000 crore which was calculated in the budget by our finance minister. These prices, although reasonably high for telecom operators, augur well for our economy as the revenue mop up will help the government cut its fiscal deficit to nearly 4.9 per cent from 5.5 per cent of GDP projected in the Budget. Few telecom operators like Reliance Communications are even planning to sell a strategic stake in order to fund its foray in 3G telephony. Thus, we see that the allocation of 3G spectrum to private telecom operators will lead to mass rollouts of 3G services in the country which is expected to bring a paradigm shift in the Indian telecom industry.

“Disclosure of conflicts of interest” has been a point of debate for so long as there is a very thin line between moral obligation and legal obligation of disclosing every possible conflict of interest. Someone alleged of a conflict of interest may simply deny that a conflict exists because he/she did not act improperly. In fact, a conflict of interest can exist even if there are no improper acts as a result of it. But whether this is religiously followed or not by most of the companies is a question that remains unanswered. Our cover story for this month takes up this issue and talks about Wall Street’s most powerful firm Goldman Sachs and Co which is accused by US government of selling mortgage investments without telling the buyers that the securities were crafted with input from a client who was betting on them to fail. The repercussions of this are in front of us. Investors lost heavily whereas the client of Goldman made fortune out of the subprime crisis.

Hope you all find this issue an interesting read. Your feedback and suggestions will be highly appreciated.

Stay Invested for the good times ahead.

Bhavit Sharma

(Editor-Niveshak)

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Niveshak May 2010 Issue

2010-05-31T19:23:00.003+05:30

My Dear Fellow Niveshaks

Have we ever given a thought on why do we, “The investors”, invest in various financial instruments? Well yes. Most of us know the obvious reasons of savings, returns and reducing tax liabilities; which in turn garner our financial health. One financial instrument which has gained popularity off late is ULIP (Unit linked Insurance Plan). But the recent turmoil in the insurance industry caused due to the turf war between market regulator SEBI and insurance regulator IRDA has raised a question before us that whether ULIPs are good or not for our financial health as well as for the whole insurance industry per se. While we are familiar with the benefits, some of the facts about it do throw light on the other side of the coin.

Many investors complain about ‘misselling’ and report that insurance agents guide them towards ULIPs. However, this is not true. Agents’ behavior is driven by the commissions paid on various products. In order to avoid compliance with SEBI’s low cost and high transparency regime, insurers dress up market linked products as insurance products by adding a small percentage of insurance to it. An article in this issue delves deep into this topic to provide you the finer details and intricacies of this bone of contention between the two regulatory bodies. Whether the government will come to the rescue of ULIP victims or whether the powerful insurance industry will succeed in maintaining the status quo remains to be seen. However, regardless of what happens, I see the recent events as a great step forward for the Indian investor.

Our Sensex and other major global indices took a hit few days back when Greece’s economic crisis sent shivers of apprehension across the globe over concern that it could spread like wildfire through Europe and beyond. This crisis makes us ponder over a point that whether fiscal deficits do matter or not given the fact that India has run fiscal deficits of up to 10% of GDP for three decades, yet has enjoyed record growth. On the other hand, European countries that ran high fiscal deficits in good times, and went for even bigger deficits to provide a Keynesian stimulus out of the Great Recession — Greece, Portugal, Spain, Ireland and Italy — are in serious trouble. Our cover story gives a comprehensive coverage of this crisis including its origin, spread, debt restructuring and the impact on the euro.

For the current issue, I, on behalf of the whole team Niveshak, welcome Mr. Rajeev Karwal, CEO and Founder Director of the venture catalyst firm “Milagrow”. Known for his strategic abilities and excellent execution, Mr. Rajeev has worked on startups, turnarounds and more in a career spanning over 25 years. His contribution to the start-ups of Onida, LG and Reliance Retail has given the world a peek into his scale-up and start-up expertise. Winner of India’s Young Manager Trophy 2001, awarded by Confederation of Indian Industry, he has many such laurels under his belt. In the interview with Team Niveshak, he talks of how did he come up with the idea, philosophy and mission of Milagrow. To know more about his views on Micro, small and medium enterprises and their roles in the economic growth of a country, turn to “HeSpeakth” section.

Happy Investing.

Bhavit Sharma

(Editor-Niveshak)

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Niveshak April 2010 Issue

2010-04-30T18:32:00.006+05:30

Dear Niveshaks

It was January 2008 when our sensex touched its peak of 21000. Then came the scary October 2008 when it slid to 8000 mark. And now, again, it has swiftly taken a big leap to pat the 18000 mark. What a roller coaster ride it has been. One of the important pulling factors behind this upside swing has been the drastic monetary steps such as slashing CRR by 300 basis points taken at that point of time which infused confidence as well as liquidity in the market. However, looking at it in a short frame of time, I see that the things are a bit unusual. In an ever-volatile stock market, I find it tough to recall the last time, when the broad based indices — Nifty and Sensex — remained stagnant for the past six months. But this has been the case with Indian stock market since October last year. It has been lurking roughly in the same range of 17000 to 18000. Another food for thought for many Niveshaks is the fact that Sensex is not really far from its all time high. And at the same time, many stocks especially in the information technology, banking and pharmaceutical industries have already reached their all time highs. That leaves investors and people like us confounded to the future course of the market.

The euphoria is not restricted to India only. World stocks are also slowly inching close to their respective 18 months’ high on signs of improving global growth but the Europe remains on the backseat due to prevailing worries about Greece’s debt problems. The recently released strong U.S. data from jobs to manufacturing has spurted hopes that the world’s biggest economy will come out of woods soon. In addition to this, the present dynamics of global oil price movement and currencies’ exchange rate is expected to have a lasting impact on the global economy.

Strengthening U.S. dollar has brought some correction in the oil price which had reached its 18 month high of 87 dollars a barrel. Rising rupee against dollar will also give import based Indian companies an advantage but it may come in the way of RBI’s monetary policy tightening if it chooses to slow down this rise. All of these factors along with the recently released strong IIP numbers and annual reports by Indian firms make us believe that the Bull Run is here to stay.

In continuation with our sustained endeavour to get the latest insights from the corporate, we welcome Ms Deepali Bhargava, India Economist for ING Vysya Bank as the guest of this issue of Niveshak. An illustrious economist - Deepali has to her credit, consistent & accurate directional calls on inflation, interest rates and INR. In a special session with her, she has talked about the Indian economy's recovery path, recent RBI's monetary policy and some issues related to exchange rate policies.

This issue of Niveshak brings to you some more interesting and insightful topics. In the contemporary fierce competition in markets and race for showing higher profits and growth, many companies manipulate their financial position and results to hide the true picture of their financial health. The repercussions of this are in front of us. We saw numerous accounting scandals resulting in bankruptcies and fall of some major firms like Enron, WorldCom etc in the recent past. But the question arises as to what are the different means of manipulating financial statements. So our cover story addresses this question by elaborating various ways of fudging financial accounts and statements and means to detect such abnormalities. Hope you find this issue an interesting read.

Stay invested with us.

Bhavit Sharma

(Editor-Niveshak)

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Niveshak March 2010 Issue

2010-03-30T16:46:00.005+05:30

Dear Niveshaks

Our Indian markets have been looking upbeat since the day they gave a thumbs-up to the budget which was presented by our warhorse Mr Pranab Mukherjee last month. BSE and NSE are hovering at their respective peaks and have come a long way since the time they went into a tailspin in 2008. A slight plunge in the sensex after the railway budget by Didi failed to meet the market expectation of government’s doubling its this year’s order for railway wagon, later, paved the way for resurrection when sensex rose by 400 points reflecting the ecstatic sentiment and relief that the finance minister has rolled back only part of the fiscal stimulus in the union budget. The positive sentiments among us, the common Indian middle class, by this union budget were preceded by the populist stand taken by Mamta Banerjee when she ignored planning commission’s advice to raise passenger fares and left it unchanged. But I have my grave concerns about this, given the rot in finances as indicated by the fall in revenue and operating margin of Indian railways in the last one year.

We have finally got the answers to the questions posed in the last month’s issue when Mr Mukherjee picked the cards of prudence and caution to sustain growth as well as to rein in fiscal deficit through his 6th (5 full-scale budgets and 1 interim) budget 2010-11. It was indeed a please-all budget. Through broadening income tax slabs, he has endeavoured to make some 25 million income tax payers, including you and me, happy. We can expect that this move, which is primarily being done to boost consumption, will pull tax to GDP ratio to as high as 11 percent. However, in order to consolidate the fiscal deficit boundary, the policy planners have gone all out to increase custom duty on crude import and excise duty which, I suppose, will have a deep impact on inflation especially on wholesale price index. The hue and cry from oil firms is expected to continue as the decision of freeing oil prices will be taken up by minister of petroleum in due course. So taking all this into consideration, the long term effect of this budget, its salient features, and its expected and imminent repercussions on various sectors along with its comparison with expectations and growth parameters have been discussed in detail as the cover story of this issue.

I, on behalf of the whole team Niveshak, welcome Mr. Manas J Sharma, AVP Abu Dhabi commercial Bank (UAE) as the guest of this issue of Niveshak. In a special session with him, he has talked about the recent challenges faced by SME sector in UAE and implications of global downturn on UAE’s SME. The interview also revolves around the role of SME sector in any economy and the ways with which SMEs are coping with the recession in the UAE.

In the current issue, we have few articles that go around our cover story and supplement it. A different perspective on the rollback of stimulus has been presented in an article by students of NITIE. The growth path followed by India has been criticized a lot as it fails to pass on the benefits to the rural parts of the country. So an article on financial inclusion throws some light on this as well. I hope this issue continues the tradition of Niveshak of bringing the latest insights of finance world closer to you.

Stay invested for the good times ahead.

Happy New Financial Year 2010-11.

Bhavit Sharma

(Editor-Niveshak)

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Niveshak February 2010 Issue

2010-02-25T17:33:00.005+05:30

Dear Niveshaks

Here comes the month of February- a month which is long awaited by many of us to witness the balance sheet and income statement of our own – India Inc. Yes!! I am talking about the Union budget which is expected to be released on 26th Feb by our finance minister Mr Pranab Mukherjee. His first budget may not have been accepted well by Indian citizens, but this time the old warhorse is leaving no stone unturned. He is expected to target on the GDP growth rate as this budget will be very critical for India to lead the recovery from the global economic crisis. However, looking at the Reserve Bank of India’s (RBI) recent review of the monetary policy, we can predict that the forthcoming Budget will reverse the expansionary fiscal policy and rein in fiscal deficits. After two years of runaway deficits, surely, the time is ripe for the finance minister to initiate the fiscal consolidation process in the forthcoming Budget. Besides this, the Railway Budget 2010-11 is also scheduled to be presented to the Lok Sabha on February 24 after the Budget session of Parliament begins on February 22.

The “January effect” on the sensex also seemed to have faded away by the fag end of January 2010, when our benchmark BSE sensex broke by 490.6 points on a single day due to global cues and fears of tightening monetary measures by central bank. As per the expectations, RBI launched a battering on inflation by increasing the cash reserve ratio by 75 basis points to 5.75 percents. We hope that this move brings cheers to the aam aadmi by dampening the momentum of sharp surge in food prices and uneasy price escalation which has been a cause of worry for all of us. However, there have been some positive results too against the backdrop of this RBI’s decision. The manufacturing sector seems to be poised for revival after the HSBC Markit Purchasing Managers Index (PMI), one of the most reliable indices tracking the health of the manufacturing sector, climbed to its highest level in one-and-half years to 57.6 in January, 2010. We also see IIP numbers reaching new heights. The Indian IT sector, on the contrary, might get perturbed after US president Obama’s decision to end tax breaks to American firms that outsource jobs overseas. But it needs to be seen if the president can afford to walk his emotional talk.

Now as we are speeding on a road to recovery, a question arises in front of us is – Are we achieving this economic recovery at the cost of fiscal deficits and inflation? So to throw a word of caution on this, we have our cover story which highlights some of the inherent financial problems like huge fiscal deficits in India, and which shows a possible way ahead for us in this edition. This reading also provides a primer on the resurgence of mergers and acquisitions post recession and an article on “Calendar Spread” along with some arbitrage trading strategies for Index spread trading. Let us go through some really insightful articles that our friends from across all B-Schools have penned down. Hope this issue would prove to be an interesting read for you.

Wishing you all a very Happy Holi!!!

Happy Investing

Bhavit Sharma

(Editor-Niveshak)

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Niveshak January 2010 Issue

2010-01-25T11:40:00.003+05:30

Dear Niveshaks

The advent of 2010 brought a remarkable change in the functioning of the two major Indian exchanges – BSE & NSE, when they started the new trading yearby advancing market hours by 55 minutes to 9 a.m. As many of us must have predicted, this move saw a widespread opposition from many small brokers, however there were positive responses from institutional and retail investors. These indices have been flat for the time being but with lots of FII money expected to pour in, we can predict the triggering of a bull run. The fiscal tightening by Peoples Bankof China has had its effect on capital markets across the world but its effect seems to have faded away. So we expect the bull to prevail over the bear for most part ofthe year. Strong quarterly results for the last two quarters of FY 09-10 will surely takethe markets on an upward spiral. But if you say that is not real growth, we have the success story of Bihar, a state that has long been epitomized as the worst governed state. The state registered a miraculous growth rate of 11.44% in 2008-09 for which its Chief Minister Mr. Nitish Kumar got the Business reformer award. Add to this, the strong IIP numbers of last quarter and the growth posted by many states indicate that the economy could be out of the woods now. With this ecstatic news, we welcome you all to the year 2010!!

But the first edition of 2010 will be incomplete if we don’t have a glimpseon what happened in 2009 and how the year 2010 is going to shape up in the context of finance. Our cover story shall carry a broad perspective and foresee the future prospects of financial world and economy of India in the coming months of 2010. At the same time, the article will also highlight some of the crucial events like the Dubai crisis and the trends followed by sensex & inflation of the country during 2009.

In the present issue, we bring to you an insight on the agriculture insurance scenario in India along with a proposed product in the same industry. The article also features the problems in the current system of agriculture insuranceand inherent risks of the agriculture sector. As we stand at the doorstep of a new decade now, we take a look at some of the key learnings from financial misfortunes and various crises which left their marks in the last decade. We also introduce you to pension funds of India and try to acquaint you with the need of pension fund reforms for capital market development in India. Owing to the overwhelming responses for the recently introduced “Nivesh” from so many B school students across India, we have decided to continue Nivesh for this edition also.

We, the new team, feel fortunate to be associated with the illustrious Niveshak, brainchild of the first team Niveshak including Amit, Biswadeep, Nilesh, Sareet,Sarvesh, Sujal & Tripurari, who, with the support of the whole MBA fraternityof top 50 B schools of India, took Niveshak to that height where it is today - theonly monthly finance magazine from a business school. It is a delight and pleasurefor us to carry forward the legacy fashioned by our seniors but at the same time it brings in a big responsibility of living up to the standards set by the brand “Niveshak”.We promise that with your support and appreciation, we will try to meet your expectations and build a bigger platform to facilitate knowledge sharing forall the finance enthusiasts of India.
Hope you find this issue an interesting read.

Stay invested for the good times ahead.
Bhavit Sharma
(Editor-Niveshak)

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Niveshak December Issue

2009-12-30T01:53:00.004+05:30

My Dear Fellow Niveshaks,

As we are at the doorstep of a fresh new year which is supposed to provide a break from all the downward slopes, let us take a look over our shoulders at what this year has been and try to find out how the next year is going to be like. We woke up to the morning of 2009 with the nightmares of Sub-Prime still afresh in our minds only to find an Indian parallel to Enron & WorldCom. An Indian company Satyam had hogged the limelight for all wrong reasons. Then there have been several ups and downs in the stock markets across the globe but steadily all of them started on an upturn since March. Indian stock markets showed sudden spikes on the day of declaration of general election results in May but showed negative response to a much awaited budget in August. Corporate houses started showing profits and commodity prices spiralled up as positive sentiments about sovereign economies prevailed. Most of the worst affected financial institutions were among big bucks, clearing their TARP debts and again jumping back to the dirty business of paying hefty bonuses. When it seemed All izz well, stock markets around the world suffered a minor jolt by the so called bankruptcy declaration of Dubai World in November. Towards the fag end of an eventful year, we had a fizzed-out Copenhagen conference on climate change in December. There were numerous other interesting stories among several terrorist attacks. It has been quite an eventful year. But we will try to drag your attention to an altogether different story – the old Team Niveshak has chosen to make way for a new energetic team.

We started Niveshak in August of 2008 just as a Finance Club magazine of IIM Shillong. A very humble beginning indeed. Since then, 15 monthly issues have come out successfully, more than 400 articles have been written for us from 39 institutes and our 15 issues have been circulated in more than 50 top B-Schools of India. Niveshak today has achieved the feat of being the only monthly B-School finance magazine with the largest circulation base. A feat we had never dreamt of when we started. We had just assembled a few articles amongst ourselves and shared in our batch as Niveshak, a platform to share our knowledge. For a few months we preferred to stay indoors in terms of articles and circulation. We were pampered a lot by our fellow students and faculty members during our infancy. Niveshak will always remain indebted to some faculty members who encouraged and appreciated us for feats we were yet to achieve. Soon, we realised it is high time to live up to the expectations of the institute and test ourselves in the hostile (we felt at that time) territories of other B-Schools. A few members joined and Niveshak gained momentum in terms of content, quality & presentation. Amidst lots of apprehensions and scepticism, we sent our November 2008 edition to all B-Schools and invited them to write articles for us. The rest, as has been said several times, is history.

We got numerous appreciation mails, articles and Fin-Q entries from other B-Schools. We were overwhelmed by your response and there has been no looking back since then. We again felt we dint deserve the support and encouragement that other B-Schoolers had showered on us. Every moment we felt we needed to improve. Soon we came up with our own website and current affairs stories among many other improvements. On each of our baby steps, we got huge appreciations and response in terms of articles from our readers in esteemed B-Schools of India. Today, if someone asks me on the reason for success (you may question this) of Niveshak, undoubtedly it is the Finance Fraternity of all the 50 top Indian B-Schools who have supported us throughout the journey. When we asked for your articles for your magazine, you flooded our mail box. We salute your generosity.

It is because of the contributions of yours and your seniors that today Niveshak can be referred to as the Finance magazine of all B-Schools of India. We are extremely thankful to all our article contributors across all B-Schools and to all our subscribers who en¬couraged us through their appreciation mails and by increasing the count of our subscription. We are also thankful to Public Relations committees of all B-Schools of India who have circulated Niveshak among their participants. We are thankful to all our faculty members who inspired us during difficult times and whose support and encourage¬ment made us see this day. Most of all, we thank all the participants of IIM Shillong, without whom Niveshak would not have completed 15 glorious issues. On a more personal note, I was privileged enough to get an opportunity to work with some of the brightest brains like Amit, Nilesh, Sareet, Sarvesh, Sujal & Tripurari as a part of Team Niveshak. They filled the journey with passion, fun and learning. Niveshak would never have been the same without them.

But as time passes by, we choose to pass the baton to more deserving people who can match your expectations better. We have selected a team comprising of Bhavit, Bhavya, Durgesh Nandini, Hitesh, Sumit, Tanvi, Swarnabha & Upasna who we think can serve you better than we did. I just wish that this new team is fortunate enough to get the same love and support from you. Let us wake up to 2010 with the fresh new team, a fresh commitment and a hope to see the bull running on the streets of world finance markets.

This is your editor Biswadeep signing off for the last time. Merry Christmas and a very Happy New Year.

Happy Investing!

Biswadeep Parida

Editor-Niveshak

On Behalf of the Outgoing Team

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Green Financial Products & Services

2009-12-28T21:48:00.004+05:30

Vibhu Mishra

IIFT, Delhi

The field of finance has always been very dynamic and has evolved through the ages. Vagaries in world economy and the evolving global scenario has seen numerous innovations in financial engineering and hence, the genesis of new financial products. Bankers, insurers and asset managers are always receptive towards new products as that would provide impetus and growth to the market.

Why ‘Green’ needs to go Greener?

Green financial products were introduced into the financial industry so as to add value, build careers, boost talent pool across the globe and provide a platform for ethical and eco-friendly investment. Mature organizations realize that the environmental protection has direct relation with competitiveness and profitability. This drives financial institutions to see sustainable development as a long-term attractive business field, pushing them to develop "green" financial products, with the aim, besides cash in, of promotion of sustainable development.

Green Products & Services on Offer

Carbon Funds: A carbon fund purchases emission reduction credits like CERs (Certified Emission Reduction Credits) or ERUs (Emission Reduction Units). Thus, these funds are an attractive option for regulated private companies and also for traditional investors for cash returns. Through recent collaboration between multilateral development banks and private financial institutions, a variety of carbon funds have emerged to help finance GHG emission reduction projects.

Green Mortgages: Green Mortgages are special mortgages for new homes which comply with the benchmark green energy consumption standards. Usually, the interest rate for green mortgages is 1-2 % lower than the market rate. In Netherlands a person can also claim exemption from income tax if he has opted for green mortgage product.

Green Cards: A broad family of green products includes debit and credit cards linked to environmental activities. “Green” credit cards offered by most large credit card companies, typically offer NGO donations equal to approximately half a percentage point on every purchase, balance transfer or cash advance made by the card owner. Annual Percentage Rates (APR) for affinity cards normally range between 15-22%, and many of these include annual user fees. Over the past year, tying credit cards to an offset program has become increasingly popular among European financial institutions. As with other product offset schemes, this supplementary service can be implemented at little cost to the lender, while both tangible and non-tangible returns are potentially sizeable.

Securitization: A risk sharing arrangement for environmental projects. Financial institution represents a guarantor at the mezzanine level of risk, allowing client to transfer risk to bank. Eco-Securitization scheme will test the feasibility of financing “natural infrastructure” by linking sustainable management of resources with the funding capacity and requirements of asset-backed securitization. The long-term aim, under the Eco-Securitization, is to introduce a new debt instrument into the global financial mix that employs the full asset range of a sustainable forestry business as security, including carbon sequestration, biodiversity and water management credits.

Green Insurance: “Green” insurance falls under the latter and typically encompasses two product areas:

1) Those which allow an insurance premium differentiation on the basis of environmentally relevant characteristics; and

2) Insurance products specifically tailored for clean technologies and emissions reducing activities. Mileage-based insurance is offered to vehicle owners. Discount is offered for hybrid and fuel efficient vehicles. Bank can also choose to offset vehicle’s annual emissions. Green Building Replacement and upgrade coverage products. Product covers unique type of “green” risks related to the sustainable building industry.

Across the Globe:

Product	Institutions					Markets
Home Mortgage	Dutch	Banks,	CFS,		HBOS,	Netherlands, U.K., Australia
	Halifax, Bendigo
Home Equity Loan	Bank	of America,		Citigroup,		U.S. , Europe, Singapore
	CFS, Vancity
Credit Card	Robobank, Barclays, Bank of					Europe, U.K. , U.S.
	America
Securitization	IFS, DFID					Global
Bonds	BNP Paribas, Goldman Sachs					Global

There are some issues which impede the growth of Green financial products. Green products have still not been able to position themselves as an economically viable option as many lower cost products exist in the market. Unlike of what is happening today in Europe, where the market of "green" financial products & services is growing substantially, globally, even though the market appears to grow, it is in an early stage, with indefinite boundaries and without having gained unified characteristics, differentiating it from the traditional industries.

The development and penetration of "green" financial products is a dynamic procedure that renders the need for cooperation between all the parties involved. From a financial point of view, it requires encouragement of innovation and investment of resources (financial, human and technological) on their development, while from a business perspective, it requires adoption of instruments and methods (sustainability report, interrelation between environmental and financial efficiency etc) that will contribute to the rational assessment and evaluation of plans, projects and the company itself.

In this framework, the development of an innovative market partnership between financial organizations, consultancy firms and enterprises is proposed, since the interrelation between the parties involved (stakeholders), the co-operations developed and the fulfilment of specific market needs will promote the maturing of the market in the total.

Path of Economic recovery: Future Outlook in the light of past

2009-12-08T15:54:00.024+05:30

Anirban Das

Shibasis Biswas

IIM Ahmedabad

When it comes to grading the current state of the world economy, most professors will brandish a C- (or whatever is the lowest grade in your B School). But the letters presently hogging the limelight in this space are – U, V, L and W, referring to the expected speed and shape of the economic recovery.

The Shapes

An economy in deep recession that drags on for a long period of stagnation, that is what an L shaped recovery signify. Chilling as it is, it is not unprecedented. The Japanese experience in the 90s provides such an example (Figure 1).
The shape we are more used to, and are certainly
hoping for is a V, with the upturn being as sharp as the downturn. Most recessions since 1940 have taken this shape, but with the housing and credit markets devastated, there is a certain sense of apprehension about the pace of recovery.

The data provided by a USA Today survey shows that 37% of the consumers actually expect the economy to take a U shaped path, making a longer arc of bottoming before recovering. This view is particularly important given the lack of similarity of present crisis with earlier downturns. That principally stems from the outsized role the financial system plays in today’s world economy, compared to the underlying sectors of the previous recessions. While Green Shoots are in vogue today, with most of the economies coming out of recession in 3Q, the concerns are still there about the sustainability of the upturn achieved on the back of unprecedented government stimulus.

The concerns in fact bring out the possibility of a completely new shape further down the alphabet – a W shaped recovery. Economists in this league believe that the recovery will lose steam in near term condemning the economy to another sharp downturn before finally picking up for good. Their logic lies in the means used to achieve the recovery – the Fed along with other central banks have printed money and kept interest rates to record low levels to somehow raise the consumer sentiment. The negative effects of these will most probably be manifested in inflationary pressure over-growing the upturn, and regulators being forced to fight it hard, as envisaged by JHU economist Steve Hanke. The resulting prospect of renewed banking losses and increased tax burden is highly likely to produce another dip.

The Economy in 2009 – Where do we Stand

Worst recession since the Great Depressions – GLOBALLY

The key aspect of the present crisis we are in has been the widespread nature of it. The worldwide linkage of the financial system and trade meant that the collapse of financial systems in the USA prompted a synchronized collapse in trading activities across the world. The very reason economists like Simon Johnson, former IMF research director, feels that we are into
a recession that is fundamentally different from previous ones. The United States in 1980s and Japan in 1990s were able to recover because demand from the other parts of the world allowed them to build recoveries based on exports. The pervasive nature of the present recession meant
the whole world was stuck in a deadlock, with everyone losing. Consumer confidence reached its lowest ebb; businesses were squeezed from both ends as credits dried out completely. Job losses reached unprecedented levels (estimated at 7.2 million by the latest Bloomberg data), stock markets crashed world over and the dollar climbed as investors withdrew money from markets to cover their losses and consumer savings rate increased to 5.2% in second quarter on 2009 from 1% before the crash (Bloomberg). Lehman became history, AIG, Citi and GM had to be bailed out by government interventions. In effect, the prides of the world’s largest economy came down crashing. All the talks of decoupling came out to be effective in theory only as the world’s biggest economies entered into recession one by one.

Government Actions

Unprecedented events call for unprecedented actions.
After initial stubbornness (by lettingLehman fail), the
proponents of Efficient Market theory had to come rush out to curb the mayhem that followed. Interest rates were brought down to unforeseen levels by the central banks, with the Fed leading the way with near zero rates (Figure 2). Bail outs became a common word as governments worldwide came out with massive stimulus packages to resurrect the economy (Exhibit 1). An end was not easy to come nevertheless, with all major economies contracting or at least slowing down for multiple quarters.

Green Shoots Emerge – Emerging Economies Lead the Way

They did not come easy, but signs of bottoming out slowly started to emerge in the second quarter of 2009 as the stimulus reached some depth. For the first time since June 2007, economic outlook for the OECD countries were revised upwards compared to the previous issue in the June 2009 issue of the OECD Outlook (OECD). The arrest in the contraction was caused by inventory adjustments by businesses, recovery in non-OECD economies as well as the effect of the stimulus programs (OECD). The biggest effects were seen in the stock markets, with the S&P gaining as much as 47% from its March nadir. Dean Maki, Chief US Economist of Barclays Capital opines that while consumer savings rate will remain high, the excess return from investments should see at least moderate growth in spending. The signs are indeed there now, with Germany, Japan and the USA coming out of the recession in 3rd quarter 2009 (Bloomberg).

The other major part of the recovery story has been the performance of the emerging economies. The findings of the third Global Economic Conditions Survey by the ACCA (a Global body of professional accountants) note significant regional variances as Asia-Pacific, Africa and to some extent Central and Eastern Europe reported higher levels of business confidence and optimism compared to Western Europe and the Americas. The Asia Pacific region was in positive territory in all the major indices measured by the survey, strengthening the growing belief that these economies will pull the world out of the slump. Indeed, the economic data coming out of the new economies like China and India (Exhibit 2) have given rise to renewed hopes of a smooth recovery.

Back to Shapes of Recovery

The question therefore is no more about whether recovery has started; almost every economist agrees that it has. What is not certain though is the pace of the recovery, leading to the argument regarding recovery curve shapes as we defined before. Economists like Michael Mussa (former Research Director at the IMF) argue for the case of a V Shaped curve whereas their counterparts like Simon Johnson are much more pessimistic, predicting the gloomy possibility of a U, W or even a L shaped up-move.

The Optimists

The sources of sustainability are two-fold according to them –

• People’s confidence in government programs will translate into sustained spending as they believe that government interventions will rectify the market inefficiencies

• Analysis of previous recessions shows a clear trend of strong downturns followed by equally strong upturn. Economists like Mussa believe that slower recoveries result from lack of government intervention, which certainly has not been the case here

The growth in the USA is likely to come from –

• Producers moving to cover their largely depleted inventories in the wake of the double effect of huge inventory cuts and government stimulus programs (e.g. Cash for Clunkers) that raised sales suddenly

• Business investment in software and equipments have not risen in the up-move of the previous quarter, staying at a level of 22% cost cut from pre-recession levels.
These historically lag the upturns by a quarter, and is likely to take part in the recovery in
forthcoming quarters

• Housing prices have bottomed out in all probability. With increased facilities for house purchase (low mortgage rates for qualified buyers and low prices) and increased confidence that the worst is over, the housing market is likely to recover one-third of the lost ground since its 2005 peak

• The growth in exports is likely to remain modest, but past experiences (the Regan recovery of 1982-84) indicate that it is not expected to decline significantly during a recovery phase

The growth drivers for the rest of the world are given below:

The Naysayers

Primary arguments of this group remain that –

• The current slow-down is different from any previous recessions due to its global nature, raising the possibility of a global demand deadlock. The root cause of the recession being financial systems, the linkage is too strong for any sort of decoupling to work

• The psychological effect of losing one’s place to stay is likely to haunt the consumer
sentiment for years to come. Even when the prospects look up, spending is not expected to rise to levels from where it can sustain the government spending induced recovery

Indeed, supporting evidence exists in quite a few areas –

• The US fiscal deficit has risen to a historically unforeseen level at $1.75 trillion (Fiscal).
Government’s ability to push in further stimulus is limited

• The unemployment claims have not followed the upsurge of the last few months. New unemployment claims have fluctuated to some extent over the last few weeks, but have stayed at historically high levels (Figure 3)

• Trade is still contracting at double dig
it rates in OECD countries (Figure 4)

• Concerns about the banking system remain (as demonstrated by the high bank Credit Default Swap rates) in spite of the recent improvements in financial system (Figure 5)

• Valuations in stock markets seem to overgrow the up turn, raising clouds of another bubble in the making

Conclusion – What is in Store

The breadth and depth of the present global contraction makes it a unique situation where each and every step by the major participants can assume significant proportion. There is a possibility of underestimating the growth in consumer sentiments, as has been the case with previous recessions. At the same time, the downside risk of overestimating the confidence level is also significant. On the positive side, US GDP rose at 3.5% in Q3, bringing in cheers from all over the globe. But further scrutiny reveals that 1.66% of growth was from Cash for Clunkers (one time effect), while inflationary estimate was 0.8 – 1.5% leaving us with a more realistic estimate of around 1% growth, even in time of unprecedented government boost(Reuters). While predicting a W shaped recovery might seem too pessimistic, emergence of a new world order where growth rates are steady but moderate is a much more probable. For developed countries, this rate may range from 1.5-2% as compared to the 3-3.5% during previous boom times.

While we all would like to see a V shaped recovery, the possibility of that is by no means certain. Role of governments and regulators assume primary importance here, as they need to balance the critical requirements of growth and inflation. A key decision will be the time to withdraw from the stimulus programs, as global markets still seem to be short of reaching the self-sustaining confidence level. Already though, the Australian and Norwegian central banks have raised rates indicating exit fromthe stimulus program. Sooner or later, other governments will have to follow suit, but the timing and manner of those phase outs will determine the course of recovery. Cut-backs must be gradual, and not of sudden nature. The path to recovery is still fraught with dangers; we must tread with extreme caution as the world possibly can’t sustain a recurrence of the worst recession since the great depressions

The Week That Was:-30th Nov - 4th Dec

2009-12-07T20:41:00.005+05:30

MARKET WATCH:
The strong GDP figures at the beginning of the week brought good news for the market. Also, it helped to pacify the investors troubled by the Dubai debt fiasco. Though the week had its own share of ups and downs at both the major indices, the markets closed with a gain of 2.8 percent on Sensex and 3.4 percent on NIFTY.The BSE Sensex saw the intraday highest at 17,361 in past six weeks. It settled at 17,102 an increase of 470 points as compared to last week. The NIFTY closed at 5109 points as it soared up by 167 points from last week.

GDP grows by 7.9%
The gross domestic product (GDP) for India grew by 7.9% in July-September 2009 as compared to 6.1% of the previous quarter.Not only did this rise beat market expectation but also the anticipation of the Finance Minister, Mr. Pranab Mukherjee who had envisaged it to be around 7% for this fiscal year. These figures are in line with the ones before the slow down period of July-September 2008. It gives an indication towards the revival of country’s economy.Although the agriculture sector saw a growth of less than 1% in its output but it was compensated by the other sectors like community services, mining and quarrying, boarding and lodging etc which had a considerably large increase in the last quarter for FY 2009-10.But the financial analysts speculate the third quarter to be critical as the agricultural GDP is expected to be negative. These improved growth figures is also increasing the anxiety of the industry regarding the government’s action for the stimulus packages.

Wal-Mart finalizes three retailers in India
Wal-Mart has chosen Infosys Tech, Cognizant Tech Solutions and UST Global as its vendors for handling their operations in India.These companies would be signing a contract worth over $600 million which would help them earn around Rs 250 crore to Rs 300 crore, annually for first few years. With Wal-Mart following the practice of in-house production, it would heighten the IT outsourcing scenario in India. Infosys and Cognizant would get a larger share of the pie as they would be looking after the application development for Wal-Mart which would be tested by UST Global, as per the contract.

US banks still feel the heat of loans
The number of closed downs for US banks increased to 130 as 6 more banks were seized by the FDIC regulators this Friday.Though the general economy is showing positive signs still the banking industry is slow to recover as FDIC speculates closing down of small banks for another year.
The bank failures in the state of Georgia numbered to 24 with three more being unable to bear the burden of loans last week. The other three were in Virginia, Illinois and Ohio.
The AmTrust Bank of Cleveland, Ohio, had the assets of $12 billion. The other 5 were holding assets of even less than $1 billion. The major reason of the failure of small banks is the fact that real estate was one field where they were actually at par with larger banks during the boom period.The FDIC would receive help of about $45 billion as the banks would prepay it the three years’ industrial assessment.

The Week That Was:- 22nd Nov to 29th Nov

2009-11-29T17:31:00.004+05:30

Market Watch
It has been a turbulent month with respect to the stock markets globally. The current trend is in confused state and needs to get a clear direction to determine the market conditions. It is difficult to sustain any upside on the market due to these fluctuations.
Though the last week started on a positive note and touched a high of 17,290 but due to Dubai debt fear and derivatives expiry, the markets crashed to a low of 16210 at Sensex. Yet the markets recovered and closed at 16,632 points. It was down by 2.3 per cent as compared to previous week’s closing, a fall of 390 points.
The affected stocks included majors like TCS, ICICI Bank, Rel Com, and NTPC by 3-5 per cent each.
The another major index of India, Nifty soared up to a high of 5,138, and fell down to a low of 4,807 in past one week. The week end saw Nifty settling at 4,942, a loss of 111 points.

Satyam lies yet again
The CBI claimed yet another incident of fraud at Satyam Computers on Tuesday, November 24, almost two years after Raju, the founder of Stayam, had admitted to fraud in his company. This time it was a scam of around Rs 5000 crore. As per CBI, people indicted for Satyam fraud case had pledged their share in the stock at an inflated price. Also, they forged the board resolutions to raise loans and divested stocks at a higher value. These new fraud charges are different from the previous Rs 7000 crore fraud.

TATA plans to buy out Actis’ stake in Swaraj
Tata Motors seem to be planning to extend its hold in the automobile industry as it eyes the equity shares of Actis in Swaraj Mazda, CV and bus maker. Actis currently owns 17% share in Swaraj, out of which 7.7% is is own and 9.3% through unit CDC. These were bought at Rs 370 crores in 2004. Tatas’ took notice of this when Actis, the private equity major, indicated that it may divest from Swaraj Mazda. But there are other auto majors and new entrants also who have shown their interest in this deal.

Debt-laden Dubai stirs world
This week Dubai stirred the entire world as its debt problems raised concerns about corporate exposure. It also stands a major risk of the repatriating funds by its foreign investors.
Dubai’s economic growth depends largely on its Dubai world. Hence the creditors of Dubai world and Nakheel property group have been asked to consent on a debt standstill.
India reacted as the gold lost its shine, stocks collapsed, rupee weakened and the returns on bonds dropped. Though, India would not be affected much by this crisis.
In this scenario of predicament, Abu Dhabi has agreed to help Dubai come out of its debts but it clearly said that it will not write-off their debts. Abu Dhabi has already given $15 billion to Dubai indirectly through 2 private banks and UAE central bank.

Niveshak November Issue

2009-11-26T23:59:00.005+05:30

Dear Niveshaks,

As the Sensex kisses the 17,000 mark and the DJIA fiddles with the 10,000 level, it may seem that the Bull which almost seemed to be resting in peace for the past six quarters, has returned. Economists and Analysts have started to have a short look back at the reason of the crisis, a deep look at the extent of its effect on the world economy and a long look at the road to recovery ahead. But in this discussion, did we notice one thing – Recovery is taken for granted. Can we afford to take this as granted? Let me throw a word of Caution.

Huge bailout packages, lowering of interest rates and opening of multiple liquidity windows to flush out the menacing bear from the markets has created a huge problem. Firstly, this has pushed most of the countries into a severe fiscal deficit, in the 8-10% range which may take governments a couple of years to bring them down to 2-3% range. This can have fatal impacts leading to lesser government spending in the next few years leading to lower growth rate. The value of major currencies with the dollar has been very volatile over the past few months. Problems with huge inflow and outflow of money, heavy volatility in currency values, fiscal deficit prevailing in most of the countries may lead them to taking drastic measures on capital account convertibility. So the possibility of a Currency bubble also may not be ruled out.

The billions of dollars bailout packages rolled out in the west found greener pastures in the emerging economies. As a result, these economies defied earnings positions of companies & negative market forces and continued to rise up since March’09. The BSE Sensex for instance was trading at 8-10 times P/E during the recession is now trading at 21 times P/E. This can be attributed to the formation of an asset bubble in the emerging economies. When liquidity starts to dry out, investors will be seen running for cover pulling down the market.

In its last quarterly review, Reserve Bank of India, the regulator, marked an end to the easy money era which was continuing since the recessionary times. Now credit would not be as easy as it was until now. This so-called start of liquidity squeeze may have an impact on the expansionary plans of corporate India. This month credit growth recorded single digits for the first time in last fifteen years. This is not just the case in India, many economies of the world have tried to control fiscal deficit and overheating of economy due to drastic recovery steps by marking an end to the easy money regime. Now this may stop the economy from recovering at the rate at which it was earlier expected.

Earlier we have mentioned that the Chinese have set out on a misadventure of going on a buying spree and have been stock piling inventory which was then available at a very low price. Now this led to rise in commodity prices all over the world. Indicators like the Baltic Dry Index pointed that there in heavy shipping of commodities across the world. No one was wrong. But the reason was deceptive. There was not much increase in consumption in China, rather it was stock piling for future use. After a few days, the largest buyer in the commodity market will be on leave and consume from its stockpile.

Now as the dust settles and the smokes clears, we join the dotted lines and one thing will become clear - The recovery in was not for real. We may fall back again but not as much as we fell last time but after that the recovery will be real. Let us wait for the best times to come back soon and in the mean time let us go through some really insightful articles that our friends from across all B-Schools have penned down. Hope you find this an interesting read.

Happy Investing!

Biswadeep Parida

(Editor-Niveshak)

(click on image or here to view)

Sovereign Wealth Funds

2009-11-25T20:59:00.005+05:30

Santosh Anil Patil

IMT, Ghaziabad

Introduction

There has always been a debate on saving an economy in distress, which nearly went unanswered during the early 2000. But now there is a saviour for such economies. Developed economies did not realize the potential of developing ones, which formed funds of nations called Sovereign Wealth Funds (SWFs). These funds have flown to the rescue of capitalism’s finest. This established the flavour of a new type of investment fund, which otherwise would have gone unnoticed.

These funds have existed since 1950s, but their total size has increased dramatically over the last 10-15 years. In 1990s these funds probably held about $500 billion, but the current total is estimated about $3 trillion. SWF is a state owned investment fund composed of financial assets such as stocks, bonds, property or other financial instruments. SWFs are the most sought after funds these days and come to play to bring in market stability, liquidity and support in times of dire need and have comfortably taken place of central banks. SWFs have been around for years, created from national budget surpluses and huge reserves of oil and US treasury bills. The governments do not have an option since they cannot pump in the entire amount into their respective economies for the fear of inflation and they cannot just pile up the cash and stock it. So the alternative is SWF.

Concept

The idea that governments should mitigate the risk in the future has a long and respectable history. Kiribati, a pacific island country that mined guano for fertilizers set up the Kiribati Revenue Equalization Reserves Fund. Now the guano is long gone but the pile still remains and boosts the GDP of the island by a sixth. Many oil producers run similar schemes. Oil Producers have realized that it is too extravagant to spend everything in one go and it is wiser to save for times when oil prices are low or for the generations when oil production will start depleting. Kuwait Investment authority is also one amongst the oldest SWFs created in 1953 from oil revenues even before Kuwait gained independence from Great Britain.

Trading

SWFs trade using funds earned from

• commodity export revenues

• foreign exchange reserves

Commodity funds can be used

• For fiscal revenue stabilization

• As a check to prevent foreign exchange funds for fanning inflation

The non-commodity funds are used to make stand alone investments.

SWF – Relative Presence

Although SWFs make up only 2% of the world’s $165 trillion worth of traded securities, they come up with enormous potential having more equity than private equity and more funds than hedge funds. The growth

curve is fascinating with the expectation of SWFs crossing

$10 trillion dollar mark. But even with such a growth potential, the funds account for only 3% of global traded securities.

Leading Nations

Assets under management of SWFs increased by 18 % in 2007 itself. Most of this growth resulted from an increase in official foreign exchange reserves from Asian and Middle East countries. Amongst these funds, the top seven are classified as “Super Seven Funds” all of which have assets over 100 billion dollars. The Abu Dhabi Investment Authority, established in 1976, is the world’s largest sovereign fund. The Norwegian SWF is receiving great interest these days. The fund is acknowledged for its transparency ever since its inception in 1996. The fund has invested in low risk non-strategic assets and the investments aim to follow environmental and human rights standards. Along with these major funds, smaller funds are held by Azerbaijan, Trinidad and Tobago, Ecuador and Nigeria which account for around 100 billion dollars.

Investments Made

The SWFs can invest in each and every corner of this world and can function just as an independent investment fund. Since the investments are not revealed, it is always difficult to sense the strategies employed. But the reasonable assumption would be that Sovereign wealth funds invest towards long term investment strategies while at the same time speculating and gaining in the face of short term market volatility. These funds do not borrow money from investments and hence are not highly leveraged, which sets them apart from other funds.

Recently there have been investments in big businesses across many corners by various SWFs. China’s Investment Corporation (CIC) hit headlines recently for investments in major U.S financial firms. In 2005, a United Arab Emirates owned company, Dubai Ports World stirred a controversy in the United States by purchasing a British owned shipping company which gave it a control over certain parts of many US port facilities. Although Dubai Ports World is a state owned business and not a sovereign wealth fund, the incident reflects parallel concerns over the purchasing interest of the SWFs. Recently Singapore, Kuwait and South Korea aided in bailing out of two companies, Citigroup and Merrill Lynch which had lost their lifeline in the financial crisis that had plummeted the financial health of many big firms in America.

Future

The financial stability of a company entirely depends on the efficiency with which its assets are managed and here the investment strategies play a key role. This has become a trend in the recent developments of the financial world. But when it comes to Sovereign Wealth Funds, there is a lot to be known since very few countries publish the information about the investment strategies, assets or liabilities which causes a growing concern in the minds of people all over the world. The solution is simple in the form of transparency which would go a long way to ease the growing concerns. Disclosure of certain information about the investments or assets in one form or other will serve as a proving factor from the investors. Investments through other funds like hedge funds can mitigate the risks and provide a layer of protection against the money laundering schemes. The diversification can be achieved by investment across various indices anytime. Moreover a scandal of one sort or other is inevitable. When there are stakes of trillions, involving hundreds of fund managers who invest in hundreds of investments employing various strategies, there is every possible chance of a blunder as corruption or foolishness creeps in. Hence it is always advised to sense the risk involved in such profound investments and try to mitigate the risk of conflict in every possible manner. It always boils down to the decision of the sovereigns as to make these funds a future or a past, while staying out of controversies which can tarnish their brand image.

On the whole, Sovereign wealth funds have been in the spotlight in the 21st century having set their footprints right into the heart of wealthiest nations and the gargantuan businesses in not more than a decade. The flow of investments with an unregulated ease backed up by the global rise in the economy is a clear indication of their growth. However, with lots of speculation surrounding these funds on ethical issues and the influence of Middle East, the future of SWF remains a mystery. Nevertheless the opportunities that lie ahead are growing at such a pace that these funds can be on top of all funds by 2050.

The Week That Was:- 8th Nov - 14th Nov

2009-11-15T00:44:00.003+05:30

Market Watch

After a sudden collapse on the stock exchange, last week saw Sensex rise by 690.55 points, or 4.27 per cent, at 16,848.83 compared to the previous week, while the Nifty closed at 4,998.95, up 202.80 points, or 4.23 per cent. Nifty could not touch the 5000 mark. This rise could be attributed to the increase in global markets and government’s reform initiatives. Also, the robust growth data lifted the spirits of steel and auto sectors. This increase was the best weekly gain in 11 weeks.

States speak about GST

The much awaited discussion paper on GST was released on November 10 communicating the proposed framework in India. The paper also discusses about administrative and threshold aspects. It was a broad consensus among the various states on GST. The final law would be passed by the central government. The two-tier structure was proposed to enjoy concessional rates for some goods by states, though it would raise the GST rate.

L&T strengthens Power sector, reduces stake in Satyam

The last two weeks has seen two major acquisitions by L&T driving company’s growth in thermal and nuclear power sector. Immediately after bagging the Rs 6897 crore order from Mahgenco- Maharashtra for 3 supercritical Boiler – Steam Turbine Generator Package of 660 MW capacity, L&T entered into yet another deal with Madhya Pradesh Power Generation Co. Ltd. (MPPGCL) on turnkey basis. This Rs 1635.30 crore Balance of Plant (BoP) contract was signed for two Coal fired plants of 600 MW each. L&T faced a tough competition from domestic BoP bidders for this project.

On the other hand, L&T plans to sell one-third of its 6.9% stake in Mahindra Satyam fetching them around Rs 304 crores. It is accounted as a strategic move to book profits as the markets recover.

Inflation surges to 1.34% in October

The new monthly index launched on 14^th November, declared a 0.50% increase in the WPI-based inflation to 1.34% in October. Though the fruits and vegetables became cheaper by 11%, still the heightened prices of a few commodities including wheat and rice in the previous month highly affected the inflation. The fuel and power category also rose by 0.1 per cent during October, mainly due to higher prices of furnace oil (3 per cent) and bitumin (1 per cent).

Value Investing: An Inside Perspective

2009-11-06T01:13:00.011+05:30

Neha Katyal
IMT Nagpur
Value Investing relates to selecting stocks which are under-valued in the stock markets. This under-valuation necessarily means stocks which are selling at less than their estimated fair price and not just any stocks selling at low price.
History
Benjamin Graham is regarded by many to be the father of value investing. The concept of value investing was given by Benjamin Graham and David Dodd in 1934.
Analysis Done for Value Investing
The indicators used for value investing, as given in “Security Analysis” by Benjamin Graham and David Dodd, 1934, are:
1. Price to Earnings ratio (P-E Ratio) should be at least double the AAA bond yield
2. PE ratio of the stock should be less than 40 percent of the average PE ratio for all stocks over the past five years
3. Dividend Yield > Two-thirds of the AAA Corporate Bond Yield
4. Price is less than Two-thirds of Tangible Book Value, where tangible book value is calculated as difference between total book value and value of intangible assets such as goodwill
5. Price is less than Two-thirds of Net Current Asset Value (NCAV), where net current asset value is defined as liquid current assets including cash minus current liabilities
6. Debt-Equity Ratio (Book Value) has to be less than one
7. Current Assets > Twice Current Liabilities
8. Debt is less than Twice Net Current Assets
9. Historical Growth in EPS (over last 10 years) > 7%
10. No more than two years of declining earnings over the previous 10 years
Other investors may indulge in estimation of future growth and cash flows. All these indicators help to identify the under-valued stocks which may be used for value investing. These are the stocks defying the efficient market hypothesis, that is, their market prices do not reflect all the information, existing or new, about the stocks in their market price.
En-cashing Upon the Opportunity
People using the value investing technique make money by buying the stocks of these specific companies when the market price is deflated and selling in the better times. As the intrinsic value of these stocks is higher than the price at which there are trading, these are available at a discount, the discount which later translates into the profit.
People without much experience in investing in the stock markets can use the value investing technique to their advantage by observing the P-E ratios and other indicators. As the stocks are available at less than their fair value, the novice investors can use the value investing technique to their advantage as in this they are able to keep a higher margin of safety, for probable errors. This defensive investment in stocks trading below the fair value acts as a safeguard to adverse future developments common in the stock market.
Precautions while using Value Investing
The investor may wrongly consider an under priced stock as undervalued as well leading to loss of investment. In a bear market, the price of all stocks are low, but that does not have to mean that all of them are undervalued as well and have high earnings potential over the investment horizon.
Value Investing in Current Scenario
The financial sector crisis in the US has seen stocks around the world tumble to levels, which were unthinkable less than a couple of years ago. In a market when most people would agree that the best strategy to play the stock market right now is to stay away from it, value investors, have a different view. The value investing philosophy suggests that the current condition provides an excellent opportunity to pick up shares at very cheap prices. Talking in Graham’s language, this could be one of the times when the market is unjustifiably pessimistic on a large number of stocks. This however, does not imply that all stocks should be bought just because they are trading at way below the bull-run highs. In every bear run, although there are stocks which fall due to genuine falls in their values, there are many which decline simply because of the widespread pessimism among investors. Obviously, the intrinsic value of the company does not swing with the mood of the investors. A large number of stocks consequently end up taking a huge beating without any rational reason and hence trading at huge discounts to their intrinsic value. Thus, every bearish phase brings about some excellent opportunities for the value investor to capitalize upon. In the later part of this article, we will evaluate the performance of some such opportunities provided at the end of the dot-com bust, over the subsequent boom in the Indian stock markets.
Conclusion
In practice, value investing is similar to deriving gains through arbitrage pricing theory, in that, it involves finding stocks which are under priced in a certain market. Using the value investing technique for creating a portfolio of stocks is a better option than buying only a few stocks. The creation of a portfolio may be done by a novice investor as well to reap the benefit of having a higher margin of safety and the obvious benefit of diversification of risk.
For using the value investing technique, the investor must ensure that proper valuation techniques have been used and no extra optimism has been shown. The evaluation may be done using simple fundamental analysis techniques such as Economy-Industry-Company analysis (EIC), estimating future discounted cash flows or may be studied in relation to the market using techniques such as Capital Asset Pricing Model (CAPM).
An assumption made while using the value investing technique is of the marketability of the security. It is assumed that the stock would be easy to sell at the end of the desired investment holding period as the prices of the stock would have risen, making it easy to book profits.

Niveshak October Issue

2009-10-27T01:33:00.002+05:30

Dear Niveshaks,
As the Stock markets rallied in the later part of Samvat 2065 to kiss the 17000 mark on Sensex, the new financial year Samvat 2066 opened on a high note pushing both our benchmark indices BSE Sensex and NSE Nifty to 12 month highs. Hope this jubilation is a sign of things to come. With this hope and celebration in mind, we welcome you to Samvat 2066 and wish that we have a great year of Bull Run.
I still remember 6 months back, newspapers were full of negative economic and financial data from across the globe. Almost all the companies went into the negative income zone and had their shares trading at 12 months low. Countries were pushed to the recession and the brink of depression. Multinational Banks were writing off billions of dollars of bad debts quarter after quarter. We used to celebrate on even the slightest of any good news like any company coming out with positive quarterly earnings, but markets dint react much to such reports. Then we got reports on the whole of sectors recovering like positive IIP, then reports on recovery of whole of economies started to come. Most of these were intentionally created with forward statements to boost the morale of markets. Markets let some of these pass by and reacted heavily to others. We used to celebrate to all these.
But all of a sudden, today I feel that we are no longer searching for positive financial data on news sites. Market indices touching new highs every day has just become a part of the story. The same Banks and companies are making profits. M&A deals, which were either absent at that time or were forced by banks to help some companies survive, are returning with a bang. Have we matured or has this just been a part of life. We are now among reports that within the next two quarters, our financial markets will reach the levels that were prevalent just before the Sub Prime doom. We just hope that this current Bull Run prevails for at the least two more quarters’ so that we get the cheer & jubilation that once made the Wall Street and dalal street the most happening places of the world.
In the current edition we have a cover story on one of the most potent derivative instrument that was recently introduced in India- Currency Futures. Apart from this we have articles on Asset Management and allocation strategies, articles on the Bharti-MTN deal and the current state of Private Equity Industry of India. Hope this issue would prove to be an interesting read for you.

Stay Invested for the good times ahead.
Biswadeep Parida
(Editor-Niveshak)

(click on image or here to view)

Niveshak September Issue

2009-09-21T02:29:00.009+05:30

The global financial system is reminiscing the fall of Lehman Brothers, the event of September 15, 2008, that shook the world economy and sparked the worst financial crisis in generations. A year after, world is slowly but surely coming out of its tremor. The markets across the globe are continuously scaling new heights every week, backed with strong fundamentals from all the sectors. Hence with some level of confidence we can say the financial systems around the world have stabilized and the economy recovery is on its way. Whether this has been possible due to the resilience of economies and financial markets or the prudence of policymakers who responded to the crisis with massive macroeconomic stimulus and other measures to prop up their domestic financial system is already a burning topic of discussion.

The Asian and European market is on upward trend which has been termed as “Cautiously Bullish”, is now waiting for the second quarter results of the corporate. The market sentiments and expectation across the globe has been positive for last three months, with almost all markets giving positive returns. The revival of US market and numerous signs recovery like positive home sales for the first time since 2007 and the growing of order book of manufacturing sectors have brought some cheers to the Wall Street. But the glaring fact which needs to be pointed is that the world is still looking up to US to pull the global economy from the crisis. China on the other hand is showing signs of recovering from the present crisis with the funding from government and bank lending. Today, China is one of the fastest growing economy of the world. We have covered this question whether China is the next economic superpower of the world and will overtake US is highlighted in this issue.

India’s GDP growth for the first quarter of 2009 stood at 6.1%. This exceeds the consensus estimates and an improvement from the last quarter growth which was 5.8%. Hence given the global downturn these figures have brought some cheers to the investors in the Dalal Street and also to the policymakers of the country. But the fiscal deficit at 6.8% of GDP is hot topic of discussion among policymakers and economist. It’s not that only India is facing its worst fiscal deficit in past decade, most of the countries across the globe are facing the problem of huge fiscal deficit. US fiscal deficit stood 12.3% of its GDP. Our cover story is in line with these issues and gives a perspective whether to worry about fiscal deficit and what implication it will have on the recovery from the current crisis.

We have also covered the topic of rising prices and falling inflation which have been making news every week. The basic of inflation calculation in India and the comparison of CPI and WPI method have been outlined. This issue also features the prospects of credit default swaps in India. An inside look into the Build America bonds have also been covered in this issue.

I am glad to mention that this is the beginning of second year of Niveshak journey and would thank all our well wishers for their support for making the Anniversary issue a huge success. We will constantly try to scale new heights. Now in the outset of the recovery of the world economy it’s even more important to track the global cues and be informed. Economists and experts across the global have already stated that it may be ‘V’ or ‘W’ or even square root shape recovery. So it’s the time to keep a watch on the Bull and Bear fight in the global market and support the Bull to win the race.

Stay Invested for the good times ahead.

Biswadeep Parida

(Editor-Niveshak)

(click on image or here to view)

Fintoon Gallery Season II

2009-09-20T13:48:00.005+05:30

The Month That Was

2009-09-20T10:14:00.003+05:30

Market Watch

Stock markets across the globe hit multi-month highs last week (September 7 - 11). In India, the benchmark indices Sensex and Nifty extended their gains to a sixth straight session last Friday and closed at 15-month highs. It was an interesting week to say the least. Monday, the markets opened with a gap lower, and there was a sharp follow-through lower on Tuesday. Once again the markets threatened to begin a larger correction, but by the end of the week they had regained the majority of their losses. The end result was a fairly balanced last month (17 August - 11 September).

The news on the monsoon front turned out to be somewhat encouraging and FIIs, for their part, remained bullish and kept buying stocks almost right through the week. The past one month saw the market slip below 15000 mark due to monsoon worries and global concerns about the economic recovery. The first week, both Sensex and NSE Nifty closed with a loss of 1%. The next week saw the markets gaining steadily by adding around 4.5% on both the indices. The third week began with a negative note but rise in vehicle sales led to the auto market upsurge. The weekend of the third week saw an increase of 1.46% in Sensex and 1.1% rise in Nifty. The indices moved in almost the same trading band as that in the preceding week.

Jet’s Mayhem

Jet Airways had last month terminated the services of two of its senior-most pilots, saying “their services were not required”. Later the two pilots, along with others, formed a trade pilot’s union body in the company, National Aviator’s Guild (NAG), and held a strike to protest their dismissal. The union has termed the sacking “an act of vendetta” and demanded their reinstatement. The deadlock between the two sides was resolved after hours of talks in Mumbai on Saturday, 12 September.

The five-day strike by hundreds of pilots of Jet Airways ended late on Saturday night with the private airline agreeing to unconditionally take back four pilots it had sacked for forming a trade union and the pilots agreeing to resume flying at the earliest. The rapprochement means most Jet flights will begin to operate normally from 13 September, ending one of the worst airline disruptions in the country in recent years.

Proposed Models of Dual GST

Budget 2009-10 has indicated that there will be dual GST - a Central GST and a state GST. There are two ways of making it - one advocated by Finance Commission and one by the Empowered Committee.

One Model envisions Central GST as an incorporation of Central Excise, additional excise duties, service tax and all cess and surcharges. Whereas, the state GST will combine VAT and various other service taxes as well as all state cess and surcharges.

Second Model combines Central Excise (along with additional excise duty, etc.), service tax, sales tax (VAT) and all other state taxes together and makes a common base. Thereafter a certain percentage say is charged by the Centre and some part by the states.

Alarming New MAT Provisions

It comes as a shock for over 250 companies as the government announces the new MAT provision. Large, capital-intensive companies in infrastructure, oil and gas, telecom, pharmaceuticals, real estate etc. will have to pay over Rs. 11,500 crore as additional tax in 2010-11 if the government enacts the proposed Direct Taxes Code in its present form.

In a big blow for such firms, the draft code says companies will have to pay the higher of a 25 per cent corporation tax and a minimum alternate tax (MAT) of 2 per cent on their gross assets. Second, the basis for computing MAT has changed from book profits (15 per cent of the book profits at present) to gross assets. Third, MAT will have to be paid in even loss-making years, with no set-off against future profits. MAT is being sought as an additional burden, which would make sustainability difficult, especially in recessionary periods.

NTPC and DVC Gets Approval

To aim at the power shortage in the country the government has approved an order of Rs. 40,000crore for power equipment for the upcoming thermal power plants of NTPC and Damodar Valley Corporation. The proposals were made for induction of supercritical technology through bulk ordering for 11 units of 660 MW each by NTPC and DVC. After the government’s approval, power producer NTPC plans to float tenders for procuring the equipment for these 11 units within 45 days.

RBI Surplus Shoots by Rs. 10,000 crore

The Reserve Bank of India’s (RBI’s) transferable surplus to the Government of India for 2008-09 jumped 66.6 per cent to Rs. 25,009 crore from Rs. 15,011 crore in the previous year. This is primarily due to the domestic investments on account of an increase in ‘Interest on Domestic Securities and LAF operations’ and ‘Interest on Loans and Advances’. The surplus thus included Rs. 1,436 crore towards the interest differential on special securities converted into marketable securities for compensating the government for the difference in interest expenditure, which the government had to bear consequent on conversion of such special securities.

TATA - Different Strokes

Auto major Tata Motors today reported Rs. 329 crore consolidated net loss for the first quarter of this fiscal as compared to a net profit of Rs. 719.69 crore in the same quarter last fiscal. Although the management at Tata Motors says that the results are not comparable with the previous fiscal as the results for the quarter ended June 30, 2009 include the operations of JLR businesses, acquired on June 2.

IOC Revamps

Government-owned Indian Oil Corporation (IOC) strategize to invest around Rs. 60,000 crore in capacity-building in next five years and in turn, is aspiring to have 15 per cent of its revenue from petrochemicals in the next three years.

There are various expansion plans in each respective sector. A new plant worth Rs. 14,000 crore is under construction at Panipat for propylene. Also, they intend to convert Paradip plant into a petrochemical complex. The company is also eyeing acquisitions of oil producing assets in Africa and South East Asia. The company also signs a joint venture with NPCIL with the aim of entering energy sector. The IOC also plans to expand its retail sector by adding 200 outlets each year.

Idea Demerges from Passive Infra

Idea Cellular telecom operator got an approval from Gujarat high court for demerging its passive infrastructure to its wholly-owned subsidiary Idea Cellular Towers Infrastructure. Also, the company looks forward to its financial restructuring to adjust the amount of “non-compete fee” paid to the erstwhile promoters of Spice communications pending from the acquisition deal between the 2 companies. This news affected the shares of Idea cellular as it moved up by 0.80 percent whereas, Spice com shares raised by 17.5 percent.

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2009-09-09T15:57:00.002+05:30

Niveshak, The Inside Story

2009-08-28T21:39:00.023+05:30

Amit The Inspiration for some of our funny characters of Fintoon

Biswadeep The Undercover Economist

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Niveshak August Issue: Anniversary Special

2009-08-24T19:59:00.007+05:30

Dear Niveshaks,

Congratulations on completing a year with us.

It was last Independence Day when Niveshak (The Investor) first saw light of the day. Now we have completed one full circle round the sun, one full year, four seasons, twelve months and most importantly we sailed through the most turbulent times of the financial world. It all began with the fall of the most formidable names in the world of finance, most notably the Wall Street Investment banks. The world watched with shock and horror as the Wall Street got completely wiped out of the species of its standalone I-Banks.

Before they fell down, they had spread their wings of destruction all over the world and across all the markets, both by geography and by sector. They pushed stock market indices to unimaginable lows across all markets starting from Nikkei & Hang Seng to Dow Jones Industrial Average & Nasdaq composite through BSE & FTSE. Commodity prices & crude oil prices hit rock bottom giving respite to the world reeling under inflation, but no one wanted it that way. International Trade suffered as suggested by the sharp dip in Baltic dry index. Bail outs after bail outs were rolled out by central banks of various countries, but the ailing financial system absorbed it all without throwing any signs of recovery. This exposed countries into further trouble of widening fiscal deficits and currency value erosions.

To fight losses, industries began to shut down, throwing millions into unemployment in the process. As unemployment rates crossed 10% in most countries, economists and analysts began drawing parallels between the Great Depression of 1929 and the Sub-Prime crisis of 2008. The already bleeding US auto industry saw its worst times when two of the iconic brands of USA, General Motors & Chrysler, ran to investors with hats in hand for survival.

From January, Indian markets started showing some signs of recovery but all the fizz was taken out when the once blue eyed boy of Indian IT industry, Mr. B Ramalinga Raju, reported of severe misappropriations in Satyam. The image of India Inc suffered heavily but recovery story was intact. All the sectors improved their performance and in the quarter ending June’09, most of the companies showed profits. India was one of the first to report green quarterly reports.

This story replicated in the west with most of worst hit countries showing profits in Q2 CY09. This was reflected by an upward movement in stock prices across all the exchanges of the world. Most of the financial giants like JP Morgan Chase, Goldman Sachs, Citibank and AIG which, a few days back, were billing overtime for survival also showed surprisingly huge profits even after paying almost all of their federal debts. This brought about much cheer to stock markets. But much before this, on 9th March 09 most of the stock market indices had started their upward journey. This may be attributed to huge bailout money and huge FII money in some countries.

This may have been the worst of all times, but all these provided us with a once in a lifetime learning opportunity. I have already emphasized in one of our earlier editorials that this is the best time to study, rather experience and understand the intricacies of finance and economics. I am very happy to note that we have not missed any significant learning opportunity. Through Niveshak, participants of all B-Schools captured the essence of all the happenings and analyzed their implications on the world of finance. During the last 8 issues, we received more than 200 articles from more than top most 30 B-Schools of India. We are extremely thankful to all our article contributors across all B-Schools and to all our subscribers who encouraged us through their appreciation mails and by increasing the count of our subscription. We are extremely thankful to Prof. Ashok K Dutta, Director, IIM Shillong, for inspiring us to take up this mission. We are thankful to Prof. S. S. Sarkar, our mentor for having inspired us during difficult times and all our faculty members whose support and encouragement made us see this day. Most of all, we thank all the participants of IIM Shillong, without whom Niveshak would not have completed a glorious year.

To grace our anniversary issue, we have an interview with Mr. C. S. Mohapatra, Director of Capital Markets, Ministry of Finance, Government of India. He talks about the present state of regulatory affairs in the Indian Capital Markets and the major reforms which are expected soon.

Our Anniversary issue is a tribute to all the major happenings that shook the world of finance over the last one year. We have attempted to capture most of the major happenings and tried to derive a lesson or two from them. We hope this would be a useful issue for you and we promise to publish more valuable issues in future. Once again, I congratulate all of you and Thank you for all your love, support and encouragement.

Stay Invested with us!

Biswadeep Parida

(Editor-Niveshak)

(click on image or here to view)

The Release of Niveshak Anniversary Edition

2009-08-24T19:42:00.008+05:30

A year being added

Members being multiplied

All fears being subtracted

And stake being divided

Niveshak marks its entry into an another era of Finance.

August 15, 2008 when the journey started we never thought it would be like this that an year after the Anniversary edition would be unraveled by distinguished guests, Mr. Geert Linnebank , ex- Editor in Chief of the Reuters group and Mr. Prabhat Sawain, President of the Shillong Lajong football club.

Mr. Linnebank , a noted figure in the world of media was the Chief Editor of the Reuters newsgroup from 2001 to 2006 and also was the chief architect in the founding of the Times Now channel in association with the Times of India group. Mr. Sawain is the president of the Shillong Lojong FC that has recently become the first football team from the North East to qualify for the I league.

Niveshak , circulated in the top 50 B- schools of the country, is a symbol of the tremendous progress that IIM Shillong has made within the first year of its establishment. A completely online magazine, the Niveshak team led by Biswadeep Parida has managed to garner a huge following in this short span of time. The magazine is a completely student driven activity with everything from the designing and editing to the distribution being done in house.

As cleverly put by one of our designers, Sarvesh Chowdhury, it's right to be said on behalf of Team Niveshak “Yet another first :) ”… and We guess many more to go

Niveshak Turns 1

2009-08-15T23:25:00.002+05:30

Today Niveshak stands on the threshold of a new door, of a new beginning, of a new journey; and we take time to stand and stare at the year that was and the year to come by.

As NIVESHAK completes its one year on this 15th day of August 2009, we take pleasure in expressing our gratitude towards you all.

We thank you all for the continuous support and encouragement which helped us reach this milestone. We are sure with your help we will continue to scale new heights with each passing year.

Thank You All

Team Niveshak

Niveshak To Turn 1

2009-08-04T18:07:00.004+05:30

It is time to look back at “The Year That Was” and collate our learning from it. Pick up any of the big news that hit the world of Finance over the last year or look at the year as a whole. You can choose from one of the topics below or write on any other topic that you think affected us more.

1. The Collapse of Wall Street

2. 21000-8500-15000. what a roller coaster ride?

3. Satyam Fiasco

4. Bankruptcy of Auto Giants

5. Was 2008 worse than 1929?

6. Can the new government in USA & India bring things back on track?

7. Is the crisis bottoming out or is the worst yet to come?

Prizes will be more exciting than ever.

First Prize: Rs 2000

Second Prize: Rs 1000

Niveshak July Issue- Budget Special

2009-07-30T20:55:00.004+05:30

Markets across the globe are at their peaks since the Sub-Prime crisis engulfed the world economy last September. Although it was there for some time, it made its presence felt when the so called rock stars of high street finance, the last four wall street investment banks, ran for cover in the second week of September last year. Since March this year the bull has been spotted on most of the occasions but bear has capitalized on the volatility of the markets on some occasions. Since then, Bull has pushed all the indices by more than 30%. To name a few, Nasdaq composite has moved up by 48%, Dow Jones Composite Index up by 35%, NYSE S&P 500 by 40% and Nikkei by 35%. But the star performer has been our very own Bombay Stock Exchange-Sensex which has risen by more than 80% since March this year. This has been made possible by positive quarterly corporate results, positive government reports, dwindling unemployment figure, and growth in Industrial indices, increased oil prices, increased government spending by all countries, favourable growth projections by banks, government & nongovernment agencies.

Banks like Goldman Sachs, Citibank, JP Morgan Chase which were seen chasing Federal Reserve for life support a few months back booked huge Q2 profits even after servicing debt bullets. This brought more cheer among B-Schoolers than in the market. Corporate houses have been successful in riding this wave and have accumulated huge capital. Indian corporate which raised huge capital through Global Depository Receipts and by Qualified Institutional Placement, were seen a few waves ahead.

All these news make us float in optimism and take a look behind; we see lots of instances where a day of Bear Paws upset days of Bull Run. What does this suggest? This says that there is enough pessimism and volatility in the market; too high for comfort. Any half cooked report of a small negative projection by any non entity on any sector has upset the whole market on many sessions. Macroeconomic fundamentals are projected on flowery assumptions and so are still dicey. They have been intentionally projected to boost sentiments, financial markets & the economy. As a result most of the markets are trading by more than twenty times their Price to Earnings Ratio. Most of the listed companies are trading at more than fifty times their Price to Earnings ratios. This indicates that even at such perceived low levels, the market is irrationally upside and will slip once the dust settles and the smoke clears.

The Union Budget was passed on 6th July with a negative short term effect on the markets. The long term effect of this budget, its effect on various sectors, its comparison with expectations and growth parameters have been discussed in details as the cover story of this issue.

We are very happy that in our next issue, Niveshak will celebrate its first anniversary. With your support, good wishes and contributions, Niveshak has successfully completed a full circle around the sun. Together we have witnessed the most turbulent time of the world of Finance and learnt from it. We have seen the fall of banking stars, we have seen iconic companies turning to Chapter 11 bankruptcy or mergers/acquisitions for survival, we witnessed bankruptcy declaration by sovereign states and then we saw economies navigating through the worst of recessions. To mark the success of our journey together, we shall have a special anniversary issue capturing the roller coaster ride that we have been through, the highs and lows of the world economy over the past year, the most fearsome fight between the Bear & the Bull. We invite you to contribute articles on any specific event of the last year or on “The year that was” as a whole. Yes that is the theme of out anniversary issue. Lots of exciting prizes are waiting to be yours. For more information, please see the declarations page or Niveshak website.

What an awesome “Year that was”.

Team Niveshak

(click on image or here to view)

Fintoon Gallery

2009-07-29T13:38:00.001+05:30

Fintoonist

Dilpreet S. Gandhi

Saurav K. Bagchi

The Week That Was:-12th July - 18th July

2009-07-18T18:22:00.003+05:30

ICAI may seek ban on Price Waterhouse

THE country’s accounting regulator is planning strict action against audit firm Price Waterhouse after two of its partners allegedly failed to check accounting lapses and verify financial statements in the over Rs 7,000-crore Satyam fraud case.

The Institute of Chartered Accountants of India (ICAI) could likely consider recommending blacklisting of Price Waterhouse, which would bar the global audit firm from carrying out auditing in India. However, as the institute can only recommend, its decision can be challenged in a court of law. The institute is likely to announce its decision by the month-end, said people familiar with the development.

Such a move would be similar to the temporary suspension of a Japanese audit firm affiliated with PricewaterhouseCoopers in 2006, on charges of tampering with a client’s accounts. In its independent probe into the Satyam fraud case, ICAI, which is the nodal body for accountants and auditors in the country, has found the two auditors—Subramani Gopalakrishnan and Srinivas Talluri—were not carrying out adequate due diligence while auditing the software major’s books.

(Economic Times)

India to have independent Debt management office

The government has set in motion plans to create an independent office to manage its debt, divesting the central bank of this duty in a landmark reform as it braces to raise more than Rs 4 lakh crore this year to finance the highest fiscal deficit on record.

An independent debt managementoffice will take away the Reserve Bank of India’s (RBI) responsibility of conducting government borrowings, removing the conflict of interest inherent in its role as the setter of interest rates and the banker to the government. A draft bill that will pave the way for the creation of an independent debt management office (DMO) is currently being studied by the law ministry. The bill will be placed before the Cabinet for its approval by the end of this month, said a government official privy to the development.

Countries such as the UK and Portugal already have DMOs to manage public debt

(Economic Times)

Disinvestment roadmap in 3-4 weeks

A clear roadmap on disinvestment of Government holding in central public sector undertakings will be available in the next three-four weeks, the Finance Secretary, Mr Ashok Chawla, said here on Wednesday.

“The roadmap is being worked out. We are in discussions with various Ministries. There will be no strategic sales. The Government will retain 51 per cent,” Mr Chawla said at a post-Budget meeting organised by the Confederation of Indian Industry (CII). Mr Chawla later told reporters that no specific target (besides those in the Budget documents) has been fixed as yet.

On Tuesday, the Finance Secretary held a meeting with the officials of some 10 Ministries to discuss disinvestment-related issues. These Ministries have now been asked to identify disinvestment candidates (other than those already known to the markets) and come up with proposals on this front, official sources said. Mr Chawla also said at the CII meeting that divestment would be undertaken in both listed and unlisted entities. “The roadmap for disinvestment in terms of actual companies — which will go when and in what percentage — is being worked out”.

(Hindubusinessline)

Sterlite raises $1.5 bn via ADS

Largest such issue in two years; equity dilution pulls down firm’s domestic stock 6 per cent

Sterlite Industries, India’s largest copper producer, has raised $1.5 billion (Rs 7,305 crore) through American Depository Shares (ADS), the largest US share sale from India in two years, to develop its power generation business and fund acquisitions. The US offering was priced at $12.15 each, a discount of 6 per cent to Wednesday’s closing price for Sterlite in the US and one per cent higher than the minimum price of $12.14 set by Sterlite. Each ADS represents one equity share.

The ADS sale is the biggest from India since ICICI Bank raised $2.46 billion in June 2007. Earlier the same month, Sterlite raised about $2 billion in an ADS offering. Today’s development suggests that the international market for funds is not as tough as most companies had anticipated.

(Business-Standard)

TCS springs a nice Q1 surprise

Tata Consultancy Services Ltd on Friday announced a 19% growth in net profit for the three months to June, beating analysts’ estimates. This was achieved largely by cutting costs and freezing new hires. Besides, a weaker dollar also drove up the value of its exports to Western economies, where it does most of its business. Net profits for the quarter at India’s largest software services firm by sales rose to Rs1,534 crore, up from Rs1,290 crore in the same period last year. Its sales climbed 12% to Rs7,207 crore year-on-year. The earnings figures for the firm beat estimates by both Bloomberg andReuters financial news services, who had predicted a net profit of Rs1,290 crore (median) and Rs1,273 crore, respectively.

The company has managed to increase volumes by 3.6% and contain the drop in average price realization at a mere 0.25%

(Livemint)

Anil,Spielberg script a $825-m Dream deal

Making his Hollywood debut, Anil Ambani is set to invest around $825 million as a first tranche towards making six films a year for global audiences. In one of the largest deals in global cinema in recent times, Ambani has teamed up with noted Hollywood filmmaker Steven Spielberg for their Los Angeles-based production house, Dreamworks Studios

(TOI)

Budget 2009 @ a Glance

2009-07-08T22:27:00.002+05:30

Soon after Finance Minister Pranab Mukherjee presented the Union Budget 2009, the first negative sign came from the market and Sensex went southward.However, there is silver line for other sectors and already they are showing the Budget 2009 impact.

Cars and TVs reduce prices: In the Budget 2009 presented on Monday Pranab had announced the cuts in excise and custom duties. Already automobile companies like Mitsubishi, Ford, Toyota et al have announced the full benefit to customers.

The Budget 2009 had directed a cut of Rs 5,000 in excise duty on all passenger vehicles with engines over 2000cc that means SUVs get major benefit as 70% of sales in passenger vehicles comes from the small car segment. Mitsubishi’s Outlander, Pajero and Montero, have cut Rs 6000 while Ford’s Endeavour, Toyota’s Camry and Innova, General Motors’ Tavera and vehicles from Mahindra & Mahindra too followed suit.

Consumer companies like Samsung Electronics and LG who are major players in LCD TVs too have said they would pass on the benefit to the customer. Samsung Electronics announced a cut Rs 1,200 on 32 inch monitors, Rs 2000 on 40-inch monitors and Rs 3500 on 46-inch, according to reliable sources. However Samsung spokesman promised further cut from August. So did LG who have less than 30% market share on LCDs. And both auto makers as well as consumer companies are confident to make the best of time till September.

No hike in home loan tax exemption: Despite plea from urban development ministry, Pranab chose it to ignore coolly by not increasing the income tax ceiling on home loan interest payments. "It has been requested that the deduction on account of interest payment available under section 24 of the Income-tax Act should be increased to the extent of full payment paid in housing loan taken, for all categories of assesses, at least in respect of one house," acknowledged Minister of State for Finance S. S. Palanimanickam. The ceiling of Rs 1.5 lakh is applicable only in case of self-occupied property and in the case of rented property, the entire interest paid on home loan is already allowed as a deduction.

Employers may rejig salary: The removal of the Fringe Benefit Tax (FBT) proposed in the Budget is being regarded as a welcome move for companies and may also provide them scope to restructure employee remuneration, say Human Resources experts.

"The abolishment of the FBT is a welcome move from employers. It means that perquisites will be taxed in the hands of employees at the marginal rate of tax applicable to them," observed R. Sankar of PricewaterhouseCoopers India.

Many analysts opined that the withdrawal of FBT will benefit employees rather than the employees. The companies will reintroduce superannuation plans as the third retirement benefit for their employees, said one.

"There are possibilities that companies may look at increasing salaries to an optimal level," another expert was quoted as saying in a news agency.

HR experts said that the removal of 10 per cent surcharge is also a good move and would be seen as beneficial for the salaried class, particularly against the prevailing backdrop of salary freezes and reductions.

Another expert said that the cut in FBT is also a loss for the exchequer: Employers use this opportunity to add this as an incentive for the employees and thus means less salary!.

Not just LCDs got a excise duty cut, Pranab also showered benefits to gems and jewellery and gave bonanza to the upper middle class by doing away 10 per cent surcharge and doubling the threshold on wealth tax of 1 per cent to Rs 30 lakh. Also do not forget pharmaceutical companies.

Items like biscuits, cakes, pressure cookers, vacuum and gas-filled bulbs of retail selling price of not more than Rs 20 per bulb, certain varieties of paper, paperboard and related articles were put under the exempted items list.

Some say Union General Budget as an expenditure budget as Pranab enhanced allocations for National Rural Employment Guarantee Act, National Rural Health Mission and other social sector schemes like Rajiv Awas Yojana and Pradhan Mantri Adarsh Gram Yojana for villages which have a Scheduled Caste majority.

The budget also focused on housing for urban poor, relief for farmers who paid loans on time, hike in allocation for Bharat Nirman and a new scheme for 1,000 villages with Scheduled Caste majority.

Disinvestment: Pranab was expected to mention something for disinvestment in the loss making public sector units who are are bleeding the exchequer. At least 100 such PSUs combined losses over Rs 10000 crores. PSUs like National Aviation Co of India Ltd, that operates Air India is expected to register a loss Rs.5,000 crore in 2008-09, others include NTPC (National Thermal Power Corporation), BHEL (Bharat Heavy Electricals Ltd).

Pharma firms smile: "Reduction in customs and central excise duties for selected drugs will benefit patients," promised a top offical pharma company. Even though the excise duty of 4% has been retained, custom duty has been lowered on some vital life saving drugs. With reduction in custom duty on certain selected life saving drugs, the prices of 9 particular drugs used for the treatment of fatal ailments like cancer, HIV, Hepatitis B and Arthritis are to be cut soon. The prices of two vital heart devices are also expected to come down.

Interest rates to rise: Amidst all these happenings, one sector - bankers - foresee rising interest rates in six months. They say that the days of softer interest rates were over. Since the government would be forced to pack in a dramatic increase in borrowing in the next three months, pressing the Reserve Bank of India (RBI) to buy more bonds from the market, crowding out borrowing by the private sector. On July 11, Finance Minister Pranab Mukherjee will address the Central Board of Directors of the Reserve Bank and is expected to discuss the government’s borrowing programme and other issues. Bankers are also waiting anxiously for the first quarter monetary policy review scheduled for July 28, where the central bank is expected to announce its strategy to ensure that government borrowings would not affect corporate fund raising plans and interest rates.

(Source: MSN News)

Download Budget Highlights

The Week That Was:-29th June - 5th July

2009-07-05T21:44:00.006+05:30

Railway Budget 09-10

Presenting her ministry's budget for the current fiscal in the Lok Sabha, Banerjee said: "The world class facilities in the 50 stations will be developed through innovative financing and under public private partnership mode."

(Source: IBN Live)

RNRL moves SC to restrain RIL from supplying gas

Reliance Natural Resources Ltd of the Anil Ambani group has filed a Special Leave Petition in the Supreme Court. It has sought the court's direction to Reliance Industries Ltd to execute a bankable agreement in line with the Bombay High Court judgment in the Krishna-Godavari basin gas sharing case. Meanwhile, RIL also filed a caveat in the Supreme Court on Friday to ensure that it is given a chance to explain itself in the case. On June 15, the Bombay High Court asked Reliance Industries to supply 28 million standard cubic metres a day of gas from the Krishna-Godavari basin to RNRL for $2.34 million British thermal unit.

(Source: MSN)

WPI seen down 1.35 pc yr/yr

The annual Wholesale Price Index-based inflation stayed in the negative territory for the third week in a row, falling 1.3 per cent for the week ended June 20 after tumbling 1.14 per cent the previous week. The dip in the year-on-year inflation rate was recorded even as prices of food items such as fruits and vegetables rose compared with the same period last year.

(Source: Economic Times)

Merchandise exports decline for eighth consecutive month

Exports in May continued the declining trend and plummeted 29.2 per cent compared with May 2008. Provisional figures for May put exports at $11 billion, down by 29 per cent from $15.5 billion in the same month of 2008. For the first two months of the current fiscal they were down 31.2 per cent at $21.7 billion compared with $31.6 billion in the corresponding previous period. Imports in May at $16.2 billion were down 39 per cent from $26.7 billion in May 2008. While for April-May they were down 38 per cent, at $31.9 billion over the 2008 period.

(Source: LiveMint)

Railway Budget 09-10

2009-07-03T18:05:00.002+05:30

Railways Minister Mamata Banerjee on Friday unveiled a massive plan to revamp railway stations in the country, saying that 50 stations in large cities would get world class facilities, while 50 more would have multi-functional complexes.

Presenting her ministry's budget for the current fiscal in the Lok Sabha, Banerjee said: "The world class facilities in the 50 stations will be developed through innovative financing and under public private partnership mode."

Some of these stations are: CST Mumbai, Pune, Nagpur, Howrah, Sealdah, Bhubaneswar, New Delhi, Lucknow, Varanasi, Amritsar, Kanpur, Guwahati, Jaipur and Chennai Central.

The multi-functional complexes will be developed in "fifty such railway stations in places of pilgrimage, industry and tourist interest," Banerjee said. They will have shopping centres, food stalls, restaurants, book shops, telephone and fax booths, medicine and variety stores and budget hotels as well as underground parking.

State-run IRCON and Rail Land Development Authority will develop these complexes.

Some of the stations where the complexes will come up are Alipurduar, Allahabad, Banspani, Bikaner, Bilaspur, Cuttack, Darjeeling, Dehradun, Ernakulum, Gandhidham and Gwalior.

The minister also proposed to develop 375 "Adarsh stations", which would have better basic facilities such as drinking water, adequate toilets, catering services and waiting rooms.

"These stations will also have dormitories especially for lady passengers and other basic facilities," Banerjee said.

Out of the 375, the railways have already identified 309 stations for the Adarsh station project.

Banerjee added that the railways would extend a helping hand to physically challenged and senior citizens.

"The Indian railways will extend a helping hand to the persons with physical disabilities and old age people. Standard ramps, earmarked parking lots, specially designed coaches in each mail and express train, lifts and escalators would be provided in a phased manner," she said.

(Source: Economic Times)

Budget Summary
* Mamata ends Rail Budget speech with Urdu couplet
* No hike in freight rates
* No increase in passenger fares across classes
* Tatkal scheme to be reduced from 5 days to 2 days
* 12 new 'Durant' AC sleeper trains between major metros
* Non-stop AC 'Durant' trains to be introduced
* 1000 MW power plant with NTPC on Bengal-Jharkhand border
* Kolkata Metro to get more extensions
* Ladies Special to be extended to Kolkata, Chennai, Delhi
* Metro concession in Kolkata to minority students
* Press correspondents to get 50% concession
* Cold storage facilities for farmers to store produce
* New scheme called 'Izzat' for low-income monthly travel
* Total working expenditure estimated at Rs 81,685cr
* Unrealistic high targets of Interim Budget not sustainable
* Freight loading fell short of target
* New coach factory to be set up in Kanchrapara in Bengal
* Mega logistics hubs in Eastern and Western corridor
* Launch of premium parcel service between 3 stations
* New policy to allow private freight terminal
* Railways to lease out land for commercial purposes
* Special recruitment drive to fill up physically challenged posts
* Metro Rail Hospital in Tollygunj to be upgraded
* Hospitals to be developed for railway staff
* Colleges on railway land through public-private partnership
* Girl child scholarship for Group B Railway employees
* To increase number of women commandos in key routes
* Ramps, special bogeys for physically challenged passengers
* To introduce double-decker AC coaches for inter-city travel
* Passengers can buy tickets from Post Offices
* SMS update on waitlisted tickets
* Automatic ticket vending machines in 200 stations
* Ticketing services in 200 new towns and cities
* Infotainment services in Rajdhani, Shatabdi
* 49 stations of religious importance to be upgraded
* To introduce ambulance facilities in long-distance trains
* Depute one doctor in long-distance trains
* Specially designed coaches for handicapped passengers
* Book stores, PCOs to be set up across stations
* Multi-functional complexes for railway users at stations
* Toilet facilities for women at stations
* Public-private partnership to develop stations
* 309 out of 370 stations identified for development
* CST Mumbai, Pune, Nagpur, Howrah, Sealdah to be developed
* Develop 50 stations as world-class
* To lay stress on platform and train security, catering
* Mamata quotes Tagore's "where the mind is without fear..."
* Expert committee on socially unviable projects to be set up
* Mamata invokes Indira Gandhi in her Budget speech
* All-inclusive development needs to happen
* Rail projects governed by social viability: Mamata
* Rail projects shouldn't be gauged by economic viability
* We are proud of the Indian Railways: Mamata
* Mamata Banerjee begins speech in Parliament
* Mamata Banerjee tables her third Rail Budget
* 'My Budget by the people, for the people'

(Source: IBN Live)

Download Entire Budget Speech

Economic Survey 2008-09

2009-07-03T14:10:00.005+05:30

The economic survey prepared by the finance ministry, released ahead of Monday's budget announcement for the fiscal year ending in March 2010, said inflation is no longer a worry and called for an urgent return to the targeted fiscal deficit of 3 percent.

KEY POINTS:
- Economy could grow around 7 percent in 2009/10 if U.S. economy bottoms by Sept.
- Economy could return to 8.5-9 percent growth in medium term if reforms are pursued.
- Fiscal deficit target must be set at 3 percent of GDP at the earliest.
- Interest rates remain high despite easing of monetary policy.
- Calibrated monetary policy approach needed for early return to high growth path.

MARKET REACTION:
- The partially convertible rupee was at 47.7850/7950 per dollar, little changed from 47.79/80 before the survey. It had closed at 47.88/90 on Wednesday.
- The yield on the most traded 2021 federal bond was steady at 7.19 percent, unchanged from before the survey. It had ended at 7.23 percent on Wednesday.
- The 30-share BSE index was up 0.48 percent, from 0.23 percent higher before the report.

BACKGROUND:
- The economy grew 6.7 percent in 2008/09, slower than 9 percent or more in the previous three years.
- Fiscal deficit surged to 6.2 percent of GDP in 2008/09 on higher spending and duty cuts to prime a slowing economy.
- India raised retail fuel prices by as much as 10 percent on Wednesday, the first increase this year, on higher global crude prices.
- Manufacturing activity in India slowed slightly in June but still expanded for a third straight month, on strong local demand. But exports fell for eight consecutive months in May.
- A policy adviser to the prime minister has said the WPI number could show an annual rise of 6 percent by March end, while the economy may expand 7 percent in 2009/10.
- India's monsoon rains this year are expected to be less than normal and weakest in last four years, prompting analysts to predict lower farm output and price rise in the months ahead.
- India's factory output unexpectedly rose in April, and analysts said it confirmed early signs of economic recovery and an end to the central bank's rate cutting cycle.
- In April, the central bank cut its key short-term lending and borrowing rates by 25 basis points to shore up faltering growth in the face of the global economic slowdown. It has cut the rate by 425 basis points since October.

(Source: Reuters)

Niveshak June Issue

2009-06-28T22:53:00.003+05:30

Frustrated with bad financial news for about three quarters, most of the part time & wannabe investor of our street had lost track of the Sensex. But somewhere between spring and summer, quietly and unmourned, bad news vacated its dominating position on the street and allowed a glimmer of hope on the world of hazy finance. Some say that this glimmer of hope is just a feel good factor, too tentative to measure, a faith without validation or just a flash in the pan. But to the rescue of optimists, comes none other than BRICs specialist Goldman Sachs which again predicts that India would be soon jump into the 8% growth zone.

The Congress led UPA government came back to power with a clear mandate and without the shackles of the Left. Prior to that the Indian share market indices had seemingly bottomed out and the Sensex was moving out of sub-10,000 levels to nearly 12,000 mark. If you do not want to believe in the hyper volatile share bazaar, you would surely believe in increasing sales figures of automobiles, steel & cement. The slight improvement in the Industrial Index of Production also brought in some cheer to investors and citizens like never before. Some pessimists believe that this meagre improvement is just a play of numbers and there has been no real recovery yet. A handful of Index figures were blamed to have been calculated on a lower base that prevailed for most of the times last year. To make this statement clear, we can consider the Inflation figures. Even though food prices have skyrocketed, Inflation figures fell down to sub-zero levels after thirty one years. That may seem paradoxical. These die hard pessimists also say that the markets may have been buoyed

up by manipulated figures and a correction is inevitable within a month. But they forget that within a month we have the Budget coming up in which the old warhorse, Mr.Pranab Mukherjee will not leave any stone unturned to justify the faith that the Aam Aadmi has showered on them.

We also have our share of pessimists in our editorial board who try to dig out the reality from the speculation. May be they are desperate to throw a word of caution. Our Cover story for the month carries a detailed analysis of a host of Indian and Global factors to justify that this glimmer of hope is probably not the first light of the sun. There is a short article on what issues must Mr. Mukherjee touch upon in his budget (and further) to make this recovery for real and get India back the tag of the fastest growing economy of the world. The issue of Negative Inflation, as described above, as well as the bankruptcy of one of America’s iconic brands-General Motors have been briefly discussed. We have also covered articles on MiFID, Outsourcing of Finance & Accounting

functions and The Godzilla that ransacked the Wall Street. In this edition, we have tried to derive some key learnings from some of the greatest Derivative disasters of all times. As we hopefully move out of the sub-prime crisis, we will try to answer if the present (or hopefully past) financial turmoil was a market or a policy failure.

All the evidences of economic recovery may be only anecdotal evidences. A few more dots will appear soon. We will happily join them to create the picture of the desperately awaited perpetual BULL. Enough of Optimism. Now get us some real good market news.

Make the Street happy for real reasons.

Team Niveshak

(click on image or here to view)

Deflation or just a statistical muddle?

2009-06-20T15:56:00.004+05:30

The inflation for the week ended June 06, 2009 stood negative by falling sharply to –1.61% from the previous week’s level of 0.13%. However, the negative run of the inflation has raised concerns of the analysts of its co-relation with the actual price scenario in the economy.

The decline in the inflation rate was mainly attributed to the high base effect of the previous year created by a steep 1.8% week-over-week (WoW) increase during the corresponding period of the last year.

The wholesale price index (WPI) stood at 232.7 marginally up by 0.04% on a WoW basis. The WPI has, continued its increasing trend on a sequential basis for the past seven weeks, despite the headline inflation rate remained below 1% for past three months.

The rise in the inflation rate was mainly on the back of a 0.68% WoW rise in the fuel, power & light category. The inflation rate in the primary articles category declined by 0.66% WoW as the inflation rate in the nonfood articles remained negative at –0.92% for the week.

However, the inflation rate in the food articles segment remained high and inched up to 8.71% from 8.6% in the previous week, which is worrisome.

The deflationary trend in the fuel, power & light category has now continued for over six months with the inflation rate for the segment reaching –12.83% for the week.

Interestingly, the inflation rate measured in terms of the Consumer Price Index (CPI) remains high despite the WPI inflation falling to sub-zero levels. The inflation rate in terms of the CPI (for industrial workers) has softened from its peak of 10.5% in January 2009 but still remains high at 8.7% as in April 2009.

The inflation measured in terms of WPI has fallen significantly from its peak of 12.91 in August 2008 and is now in the negative zone.

However, according to experts, the negative inflation rate is more statistical in nature and not a result of any significant fall in the consumption demand. The actual price scenario is much different from, which could be understood from the negative WPI inflation. The fact is that the inflation measured in terms of the CPI is still hovering at higher levels.

Considering the sharp fall in WPI inflation, central bank would require a strong monetary easing policy. However, experts opined that any such move is unlikely as there is ample liquidity in the system and further stimulus may cause the fears of higher consumption led inflation on account of expectations of economic recovery.

Source: Commodity Online

The Week That Was(7th June-13th June)

2009-06-16T17:55:00.007+05:30

SATYAM SURPRISE INVESTORS WITH PROFIT

Satyam Computer Services cheered the markets by announcing revenues of over Rs 2,000 crore and profit of Rs 181 crore for the Oct- Dec quarter. Satyam's revenues could thus touch around Rs 8,000 crore, or $ 1.6 billion, based on an extrapolation of these results. For January 2009, Satyam posted a net profit of Rs 4 crore. In February, net profit stood at Rs 52 crore on revenues of Rs 676 crore. The news saw Satyam shares surge past the open offer price of Rs 58/ share. Analysts said investors are unlikely to tender shares at a discount to the current price and TechM may benefit by receiving a preferential allotment of shares at a discount to the market price. The Indian IT firm on Thursday announced that up to 10,000 employees, or about a fourth of the staff, will join a virtual pool.

SESA GOA ACQUIRES DEMPO'S MINING ASSET

Sesa Goa, India's largest private iron ore exporter, has acquired Goa-based Dempo Group's mining assets for Rs 1,750 crore in an all-cash deal in a move intended to increase its pricing power and strengthen its position in the domestic market. A part of London-listed Vedanta Resources, Sesa Goa on Thursday said it has signed a definitive agreement to buy all outstanding common shares of the unlisted VS Dempo & Co (VSD), which owns 100% of the equity shares of Dempo Mining and a 50% stake in Goa Maritime. The deal includes VSD's net working capital of Rs 145 crore.

FRANCE TELE, TELSTRA & AT&T EYE AIRCEL

France Telecom, Telstra of Australia and US' AT&T are in talks with Malaysia's Maxis Communication to buy a minority stake in Aircel in yet another sign that slowdown and credit crunch are having little impact on telecom deals. The talks between the first two companies and Maxis — which owns 74% in Aircel — revolve around France Tele buying 20-25% in the Indian telecom player, a dominant player in Chennai and Tamil Nadu. The remaining stake in the telco is held by the Chennai-based Reddy family.

INFLATION AT 33-YEARS LOW

Inflation for the week ended May 30 dropped to 0.13%, lowest since the government started recording such data in 1977-78, fuelling speculation that the figure could enter negative territory next week. The decline in headline inflation was largely due to a high base effect, or higher inflation numbers in corresponding the week last year. Week on week, there was a 0.1% increase in the wholesale price index (WPI), led by a sharp 0.6% increase in the prices of food articles, data released by the commerce ministry on Thursday showed. A rise in the rate of inflation over the last couple of months and a relaxed monetary policy led to fears that inflation could become a concern soon. "We think inflationary pressures are sequentially building up," a recent note by Goldman Sachs said.

MARKET REMAINS BULLISH THIS WEEK

The stock market remained bullish for the fourteenth straight week with the benchmark Sensex gaining about 1% as the foreign investors' appetite for Indian equity showed impressive increase since May. The Smallcap and the Midcap segments suffered a sharp setback after outperforming the key index for the last few weeks, which analysts, saw as a required correction for the good health of market. Sectors such as realty, bank and consumer durables also was adjusted downward after a recent strong rally. Withstanding resistance above the 15-K psychological mark, the Bombay Stock Exchange 30-share barometer ended the week under review higher at 15,237.94, adding 134.39 points or 0.89% over its last weekend's close. The National Stock Exchange's 50-share Nifty, however, ended week flat at 4,583.40 against its previous weekend's close of 4,586.90. The market driver Foreign Institutional Investors (FIIs) have begun pouring their investments after the post-election political stability with the government's repeated hints about speedy economic reforms in key sectors amid strong signs of a recovery in Indian economy. The capital inflows amounted to more than Rs 5,500 crore so far in June taking the total inflows till date in the calendar year

to nearly Rs 27,000 crore. After showing a negative growth rate in the last four months, the industrial production for April was up 1.4%, a further indication that economy is on a recovery path. The market is expected to remain upbeat ahead of the full budget to be presented early next month amid high expectations of reforms and decisions on PSU disinvestment programme. The trading volume was relatively low during the week with a total turnover on BSE falling to Rs 39,216 crore from Rs 45,288 crore, and Rs 1,17,890 crore on the NSE from Rs 1,30,005 crore. India's largest private sector company and the top heavyweight in the Sensex pack — Reliance Industries — soared 6.55% over the week amid anticipation that the government may provide a seven-year tax holiday to natural gas producers as it is given to crude oil explorers in the Union Budget 2009-10. A sharp surge in metal prices on the London Metal Exchange triggered a rally in metal stocks at home. As a result, the BSE metal index jumped by 4.49%

The Week That Was (31st May-6th June)

2009-06-07T15:53:00.006+05:30

Sensex up for 13th week, best run in 4 yrs
The BSE Sensex rose 0.6 percent on Friday, extending its weekly run of gains to 13 in a row for the first time in four years, as signals the global economic turmoil was abating boosted risk-appetite across Asia and Europe.
The 30-share BSE index, which climbed to its highest close in almost 10 months, rallied 3.3 percent on the week and boosted its rise to 88 percent from a 2009 low in early March.
Hefty foreign portfolio inflows of more than $6 billion since mid-March and expectations the ruling coalition will pursue investor-friendly reforms to boost growth after it won a second five-year term in May have underpinned the market.

(Source: Economic times)

Humbled GM files for bankruptcy protection
General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.
GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
“The General Motors board of directors authorized the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many,” GM Chairman Kent Kresa said in a written statement. “Today marks a new beginning for General Motors. ... The board is confident that this New GM can operate successfully in the intensely competitive U.S. market and around the world.”

(Source: MSNBC)

Hug, hug, kiss, kiss: multiplex war ends
As with all good arguments, it featured icy silences and bruised egos, power struggles and temper tantrums. And as in all happy endings, the warring parties made up with a hug and a kiss.
In a grand finale that lasted about 14 hours and culminated in a nail-biting finish, the film fraternity resolved its two-month-long stand-off with multiplex owners in the early hours of Friday morning, opening the floodgates for a backlog of cinematic releases, starting with Star Trek, which released on Friday.
“We have agreed, on good terms,” said Mukesh Bhatt, spokesman for the Producers Distributors Forum, whose film Jashn has been slated for a 3 July release, following a sleepless night of talks at Yash Raj studios in the Mumbai suburb of Andheri. “The strike has been called off and we are very happy with the outcome.”
Up to 40 films, including Vishal Bhardwaj’s Kaminey, starring Priyanka Chopra and Shahid Kapoor, as well as Sajid Nadiadwala’s Kambakkht Ishq, with Kareena Kapoor and Akshay Kumar, which had been put on hold since the start of the dispute over revenue-sharing terms on 4 April, are now being lined up for release in the coming months.

(Source: Economic Times)

Fortis Health Leads Race for Wockhardt Hospitals
Fortis Healthcare Ltd. is a front runner to buy rival Indian hospital-chain operator Wockhardt Hospitals Ltd., a person close to the development said Friday.
"Fortis will buy Wockhardt Hospitals sooner rather than later," the person, who declined to be named, told Dow Jones Newswires. He wouldn't say how much stake Fortis Healthcare will buy or at what price.
Television channel CNBC-TV18 reported earlier, citing unnamed persons, Fortis Healthcare would acquire Wockhardt Hospitals for 9.70 billion rupees ($206 million).
Fortis Healthcare, in a notice to India's stock exchanges, however said the report was "speculative," adding, "at this stage the company has not entered into any definitive agreement for the acquisition."
A spokesman for Wockhardt Ltd. said the drug maker's founders, who own Wockhardt Hospitals, aren't selling their entire stake in the hospital operator. He refused to elaborate or comment further.
(Source: Wall Street Journal)

Air France jet missing over Atlantic
An Air France jet disappeared after hitting stormy weather over the Atlantic Ocean on Monday and all 228 people on board were feared dead.
France and Brazil sent military planes and ships to scour a vast area of ocean where the Airbus A330 jet may have come down during the flight from Rio de Janeiro to Paris. But officials said there was little chance that anyone could have survived.
"It's a tragic accident. The chances of finding survivors are tiny," French President Nicolas Sarkozy said at Paris's Charles de Gaulle airport after meeting passengers' relatives.
If no survivors are found, it would be the worst loss of life involving an Air France plane in the carrier's 75-year history. An Airbus A330 has never been lost during a commercial airline flight and it is extremely unusual for an airliner to be brought down by storms.

(Source: Rediff.com)

FDA Is Reviewing Ranbaxy’s Corrective Plan on Drugs to the U.S.
The US drug regulator is reviewing a corrective action plan from Ranbaxy Laboratories Ltd after some medicines from its plants in the nation were barred from being exported to the US. The Food and Drug Administration (FDA) is working very closely with the firm to ensure that all the Ranbaxy products currently in the US market are safe and effective, FDA spokesman Christopher Kelly said in an email on Wednesday. The next steps will be dependent on the actions identified in the plan, he said.

US sales of Ranbaxy, the country’s biggest drug maker, fell for two straight quarters after the US FDA on 16 September blocked the import of 30 medicines produced at two of its factories. The FDA decision to block the products in the US, the world’s largest drug market, led Ranbaxy’s stock to plunge 45% until chief executive officer Atul Sobti said earlier this week that the company had submitted the plan.

(Source: Bloomberg)

GM Goes bust

2009-06-04T20:58:00.004+05:30

A CAR, stripped to its bare bones and rebuilt using only those bits that are strictly necessary, might turn out to be super-light and capable of taking on the speediest of competitors. Or it could just end up as two piles of junk. On Monday June 1st, putting an end to weeks of expectation, General Motors filed for Chapter 11 bankruptcy protection. The idea is that the 100-year-old carmaker will be stripped of debts, other obligations and unsaveable parts and will then emerge from the bankruptcy court ready to perform like a sleek racer. The risk, however, is that it instead emerges as an old crock with a dodgy respray.

Bankrutpcy will certainly ensure the emergence of a smaller firm. The car company is being remade to cope with operating in a North American market with sales of 10m vehicles a year, roughly the number that will find buyers in 2009. GM might expect to get a little over a fifth of that market. To get into shape, more than 12 of its American plants will close and four brands—Pontiac, Saturn, Hummer and Saab—will be sold out of bankruptcy or will disappear for good. Hummer, apparently, already has a buyer. A significant proportion of GM’s dealers will go too. The end result will be over 21,000 GM workers out of a job.

GM’s European operation, Opel, will also go, ensuring that the American company is no longer a truly global car company (although it will retain arms in Latin American and Asia). Opel’s fate is now in the hands of Germany’s government, which sealed a deal on Saturday between GM and Magna, a Canadian car-parts business. Germany, home to many of Opel’s operations, will provide loans and guarantees worth €4.5 billion ($6.4 billion) to keep Opel from entanglement with GM’s bankrutpcy filing and to support the company until Magna takes over.

The demise of GM, a company that made over half of the cars on America’s roads a few decades ago, is a reminder that companies cannot afford to take their eyes off the road. GM, along with Chrysler and Ford, kept their vast share of the American car market only until globalisation had its way. High import duties on profitable light trucks and sports utitily vehicles kept competitors at bay until Asian carmakers set up shop in America (with generous subsidies from states where they located). Detroit’s competitiveness was further weakened by pension liabilities and huge health-care costs that added hundreds of dollars to the cost of each vehicle.

As market share shrunk and profits dwindled, America’s carmakers made periodic attempts to restructure, in the face of stiff union resistance until recent years. But these efforts were insufficient, usually amounting to cutting capacity usually long after market share had evaporated. At least the wholesale rejigging of GM in bankruptcy should bring the two into line for a time. And a deal with the United Auto Workers will allow GM to forgo a $10 billion payment to a union healthcare fund in return for a 17.5% stake in the new GM. Aggrieved bondholders are likely to emerge with 10% of the new firm for loans totalling $27 billion.

The UAW and GM’s other likely new owners—the governments of America and Canada, with 72.5%—have said that they want to sell out as soon as possible after GM emerges from bankruptcy. But will America’s government ever come close to recouping the $50 billion so far sunk into GM?

The cuts will take some of the overcapacity out of the North American car market, unlike the arrangements with Opel, where Germany’s government is intent on preserving jobs and hence the car manufacturintg capability that Europe could do with shedding. But GM’s problem is that it must still compete with Asian manufacturers that make cheap and reliable cars. Chrysler, set to emerge from bankruptcy with Fiat as a partner and Ford, still loaded with debt and other liabilities, will also provide car buyers with more choices. GM now makes some decent vehicles but its reputation it still suffering from the decades when it made bad cars. If GM cannot revive its good name, and if the cycle of falling market share and piecemeal readjustment begins again then GM, in any form, looks doomed.

(Source: Economist)

Niveshak May Issue

2009-05-31T00:20:00.003+05:30

Two Upper Circuits in just a few minutes of trading at the BSE Sensex! Now thats what you call a BULL RUN. It was shocking but we were desperate for such shocks. We are hungry and foolish enough for a few more of such shocks, knowing the fact that this would lead to correction in future. I have never been so confident about throwing positive vibes about the Indian Economy over the last ten issues of Niveshak as I am now. The stock market was buoyed not by any corporate financial results or GDP figures on 18th May 2009, but by a favourable election result that saw the incumbent Congress coming to power with more style and stability. The Indian public brutally punished the Left party for hindering the reforms and growth agenda for years, making clear that we desperately need economic growth and cannot tolerate any nonsense. After that, the market has not only been pushed up by positive sentiments alone but by strong fundamentals as well. The Central Statistical Organization also came up with revised data about the overall performance of the Indian Economy, as well as some favourable future predictions that further pushed up sentiments and the market benchmark indices a bit. This proves the age old fact that Bear and Bull run are an 80% play of sentiments and 20% play of economic fundamentals. And always remember one thing – The Stock market moves 3 months ahead of the real economy. So we can expect recovery in the Indian Economy very soon, maybe today onwards.

There has not been much of good news from the western markets although, there has been some built-up for it. Large western banks wrote off almost all their toxic debts making way for profits in future quarters; expect some positive results for Q209. US iconic automaker Chrysler filed for Bankruptcy protection and was fortunate enough to find out a suitor in European auto behemoth Fiat. This could ensure it a smoother and quicker recovery. White House and Capitol Hill think-tanks are also thinking on similar lines for rehabilitation of General Motors and Ford. Positive results are expected very soon from United States and the Eurozone. Commodity prices are rising and Crude prices have touched USD 60 per barrel. This could be indicating a rise in demand. While the Eastern part of the world may be blamed for not having pulled any miracles to electrify the markets, it must be greatly appreciated for not throwing any disturbing news for the past few days that could have further deepened the crisis. There was some great news of market performance only from India, but we will hold on talks about Decoupling for some time.

Now, let me put my feet back on the ground and lets have a glimpse of the current issue. As, we talk of recovery, we also take a look at the mother cause of all economic crisis the modern world has seen till date. We will see if the basic premise on which modern money is created and multiplied, without any asset backing, builds up a faulty system where inflation and bankruptcies are just a part of the process. Our quest for moving away from traditional financing and search for newer investment opportunities continues as this time we try to acquaint you with the Art of Investing in Art. Hope you got a hint of that on the cover. Under this quest, we will also try to find out if public investment in private equity or PIPE as is popularly known would be a better financing and investing option.

We present to you an Investment B anking perspective of the Indian Ship building Industry. This issue will try to foresee the future prospects and possible roadblocks for the Small and Medium Enterprise sector of India. Who will be the superpower of the Asian Century? The often debated topic – China or India or its Chindia has been taken up by Niveshaks to give a perspective to this gripping encounter. As India prepares to recover, we will also see if Foreign Currency Convertible Bonds carry the seeds for another crisis in the near future.

And now, back to the caveat-The market moves three months ahead of the real Economy.

So, HAPPY RECOVERY.

Biswadeep Parida

(Editor- Niveshak)

(click on image or here to view)

The Week That Was(24th May-30th May)

2009-05-30T13:28:00.007+05:30

India's Q4 GDP at 5.8 per cent

The Indian economy logged a better-than-expected 6.7 per cent growth in 2008-09 despite the global financial meltdown adversely impacting its output in the second-half of the fiscal year under review. This growth performance is, however, the weakest in six years and lower than the growth rate of 9 per cent or above witnessed in the previous three years. It is within the 6.5-7 per cent growth range projected by the Reserve Bank of India for 2008-09.

The Central Statistical Organization (CSO) had in February this year pegged the advance GDP growth estimate for 2008-09 at 7.1 per cent.The country’s GDP grew a robust 5.8 per cent in fourth quarter of 2008-09, lower than 8.6 per cent in the same quarter in the previous year, according to the data released by CSO . The third quarter GDP growth performance has now been revised upwards to 5.8 per cent from 5.3 per cent

http://economictimes.indiatimes.com/Indicators/Indias-Q4-GDP-at-58-per-cent/articleshow/4592389.cms

Oil hits 6-month high above $66 on economic hopes

Oil rose to a six-month high above $66 per barrel on Friday, on track for its largest monthly percentage gain in more than a decade, after US, Japanese and Indian data suggested the economic downturn may be easing. Oil prices have jumped around 30% this month, the largest monthly rise since March 1999, buoyed by expectations of a global economic recovery later this year which helped push stock markets higher.

US crude oil for July delivery settled up $1.23 at $66.31, its highest settlement since November 4, after earlier hitting $66.47, the highest intraday trade since November 5.
http://www.reuters.com/article/hotStocksNews/idUSTRE54R7NA20090529

Tata Motors announce top level reshuffle

Tata Motors on Friday announced a top level reshuffle that will be implemented once current managing director Ravi Kant retires on June 1. In a statement issued to the exchanges, Tata Motors said the company board has decided to retain Mr Kant on the board as non-executive vice-chairman. The board of India’s largest commercial vehicle maker promoted Mr Prakash Telang as the managing director of the company

http://economictimes.indiatimes.com/Corporate-Announcement/Tata-Motors-announce-top-level-reshuffle/articleshow/4593830.cms

N. Chandrasekaran to Become Tata Consultancy CEO

Tata Consultancy Services Ltd. said on Tuesday that its current Chief Operating Officer N. Chandrasekaran will take over as the company's chief executive and managing director from Oct. 6 2009. Mr. Chandrasekaran will replace the current Chief Executive and Managing Director S. Ramadorai, whose tenure has been extended till Oct. 5, India's largest software exporter by revenue, TCS said Mr. Ramadorai's contract was earlier scheduled to end Aug. 8, the company said in a statement to the Bombay Stock Exchange.
http://online.wsj.com/article/SB124335490611354845.html

Q4 Results

Bharti and MTN Deal

2009-05-27T07:52:00.015+05:30

Highlights of the deal:

The proposed $23-billion mega deal between Bharti Airtel and South Africa's MTN would be the biggest ever M&A transaction involving an Indian company.
As per the exploring agreement, MTN and its shareholders would acquire around 36 per cent economic interest in Bharti Airtel. While, the Sunil Mittal-promoted Bharti Airtel would acquire 49 per cent stake in South African telecom giant MTN
If the deal materializes, the combined entity would have revenues of over 20 billion dollars and a subscriber base of over 200 million.
MTN is 50% bigger than Bharti though Bharti grows at 1,000 bps faster than MTN
Bharti commands a higher multiple than MTN, though growth opportunities are extremely similar in both target markets, i.e. India or MEA
Net debt / EBITDA is still pretty good for MTN Airtel given the > 40% growth rates, which should sustain at 35-40% levels at least till FY11/12
Although gearing appears to increase post-transaction EBITDA is strong enough to support debt servicing
Capex requirements possibly range from $5-6 billion going forward, coupled with strong network footprint established by both players in the existing markets.
MTN is essentially part financing the buyout of its own shareholders by paying $2.9 billion to Bharti for the latter to increase its stake to 49% in MTN
Bharti is thinly leveraged currently, and would need to resort to short term acquisition financing to fund the deal
Minority interests of JV partners needs to be assessed
Any further upsides on synergy (capex, management, towers, etc) will only add to the value proposition

The Week that Was(27th April - 2nd May)

2009-05-05T22:41:00.004+05:30

Chrysler bankruptcy deal revealed

US carmaker Chrysler has filed for Chapter 11 bankruptcy protection, and has formed an alliance with Fiat, President Obama has said.

Chapter 11 protects firms from their creditors, allowing them to rearrange their finances while still trading.The move came after talks had broken down with Chrysler's lenders late on Wednesday, the White House said.Chrysler said most of its plants would be shut until the transaction was complete but staff would still be paid. Chrysler chief executive Robert Nardelli said he would step down after the company emerges from bankruptcy. Mr Nardelli has been in charge at Chrysler since 2007 but said he felt it would be an appropriate time to leave after bankruptcy

http://news.bbc.co.uk/2/hi/business/8027109.stm

New Zealand’s Fonterra exits joint venture with Britannia

Soon after having bought out Groupe Danone SA's its 25.48-per cent stake two weeks back, Britannia Industries Ltd announced that it was buying out its partner Fonterra Brands (Mauritius Holding) Ltd's 49-per cent shareholding in Britannia New Zealand Foods Pvt Ltd (BNFZ), the Brittania-Fonterra dairy joint venture. With this, the Wadia group now fully controls all its food businesses. The acquisition makes BNZF a fully-owned subsidiary of Britannia Industries. The companies did not disclose the value of the deal, but Fonterra said it is transferring the stake at a "nominal value''.

Bloomberg quoted a Fonterra executive as saying that the holding, acquired in 2002 for $19.8 million, had been written down in the past two years. "We've taken the decision to exit at a nominal value and be released from any loan guarantees or any further liabilities,'' he said.

http://www.domain-b.com/companies/companies_b/Britannia/20090429_britannia.html

SEBI wants Bharti to clarify on stake hike

The Securities and Exchange Board of India has sought clarifications from Bharti Group on whether the company has violated its norms by increasing promoter’s stake in Bharti Airtel from 60.91 per cent to 67.03 per cent without announcing an open offer.

According to SEBI regulations, promoter group companies who together hold more than 55 per cent stake in an entity, have to go for a public offer if they acquire more than 5 per cent stake in a single financial year. SEBI has taken into account equity shares held by Bharti Telecom Ltd, Pastel Ltd and Indian Continental Investment Ltd in calculating the promoter group’s stake.

http://www.in.com/news/readfeeds-sebi-wants-bharti-to-clarify-on-stake-hike-53335301-1.html

ICAI seeks details from 12 affiliates of global audit firms

Multinational consulting firms and their arrangements with local audit firms are once again under the scanner of the audit profession regulator, the Institute of Chartered Accountants of India (ICAI). The CA institute has shot off letters to 12 Indian chartered accountancy firms that have affiliation with international entities.

These 12 firms have now been asked to furnish documents relating to various aspects of their dealings with the international entities including contract details, arrangement of sharing of fees/profits, details of remittances made to and received from multinational entities, copies of the partnership deeds of the audit firms, sharing of human resources and infrastructure and income-tax assessment orders for the last three years, etc

http://www.icai.org/news.html?news=2901

Inflation rate rises on costlier food items

The annual Wholesale Price Index-based inflation rose 0.57 per cent for the week ended April 18, above the previous week’s annual rise of 0.26 per cent, government data showed on Thursday.

The year-on-year rate of inflation, which had hovered below 0.5 per cent for six weeks since March 2009, increased by 31 basis points largely due to a surge in primary articles and manufactured products, especially sugar

http://www.thehindubusinessline.com/2009/05/01/stories/2009050150510700.htm

The Week That Was(20th Apr-26thApr)

2009-04-26T17:05:00.004+05:30

Reserve Bank cuts key rates

The Reserve Bank of India on Tuesday cut key policy rates - repo and reverse repo - by 25 basis points each in order to push banks to lend more at viable rates and prop up the sagging economy. The RBI, in its Annual Policy for 2009-10, reduced the reverse repo rate to 3.25 per cent. This is lower than the savings bank rate of 3.50 per cent and the repo rate to 4.75 per cent

http://www.indianexpress.com/news/reserve-bank-cuts-key-rates/449761/

Oracle to Purchase Sun Microsystems for $7.4B

Oracle Corp agreed to buy Sun Microsystems in a $7.4-billion deal. The Oracle offer caught the industry by surprise as it came barely two weeks after the collapse of takeover talks between IBM and Sun Microsystems.

http://www.foxbusiness.com/story/markets/industries/technology/oracle-purchase-sun-microsystems-b/

Maruti Suzuki Profit Unexpectedly Falls on Currency

Maruti Suzuki India Ltd announced 18 per cent drop in quarterly net profits despite a 30 per cent growth in total income. The drop is because of increased raw material costs and forex fluctuations offsetting gains from higher car sales. Net sales for the fourth quarter increased by 32 per cent to Rs 6,308.35 crore from Rs 4,762.91 crore in the same period of fiscal 2007-08. However, its net profit for the quarter declined 18 per cent at Rs 243.13 crore from Rs 297.68 crore during previous year period.

http://www.bloomberg.com/apps/news?pid=20601091&sid=aCRufnJNuLx4&refer=india

RIL Q4 net slips 9.3%

Reliance Industries has reported its second consecutive decline in quarterly net profit, as adverse global conditions continued to shrink its refining margins.

Its fourth quarter net profit fell 9.4 per cent, to Rs 3,546 crore, from Rs 3,912 crore a year ago. Its gross refining margin fell to $9.9 from processing one barrel of crude, against $15.5 a year ago. Reliance turnover for the quarter dipped 25 per cent to Rs 29,073 crore against Rs 38,697 crore following drop in oil and gas exploration, production, refining and petrochemicals revenue during the period

http://economictimes.indiatimes.com/Earnings/RIL-Q4-net-slips-93/articleshow/4442315.cms

Shikha Sharma to head Axis Bank

The board of Axis Bank appointed Ms Shikha Sharma, Managing Director, ICICI Prudential Life Insurance Company, as the bank's new Managing Director & CEO. The appointment, however, did not find favour with the current Chairman & CEO, Dr P.J. Nayak, who quit in protest. Ms Sharma's appointment, which will be for a period of 5 years, beginning August 1, 2009, is subject to RBI clearance and shareholders approval.

http://www.livemint.com/2009/04/21003046/Shikha-Sharma-to-head-Axis-Ban.html