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.

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.

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 At the outset, We thank all our readers for contributing to the overwhelming success of the first edition of “Niveshak”. We would like to convey our special thanks to Prof. A. Dash, Prof. R. Dwivedi, Prof. B. Panda and Prof. B.Roychoudhury for their contribution. Appreciation and encouragement mails from our Professors, a place in the IIM Shillong website and Feedback from the FPM cell of IIM Kozhikode from the very first issue took all of us by surprise.