The latest fad to make inroads in the Indian economy from the global arena is FDI in multi brand retail. It was passed by both houses in the just concluded winter session of the parliament. But come January 1st and we witness the rollout of undoubtedly the biggest scheme in the history of independent India.
Our cover story focuses on the same and we evaluate the suitability of cash transfer schemes for India of today. We also portray the India where cash transfers can be extremely successful. Is India ready to embrace this latest offering from the West? Turn on the pages to find out.
The success (failure?) of the cash transfers will be something to watch out for and we sure will keep a tab on that; but are the 2014 FIFA World Cup and the 2016 Olympics not something to watch out for as well? Agreed that it’s a little too early to foresee these events but isn’t Niveshak all about keeping you ahead of the times! This issue’s Article of the Month analyses the effects of these events on the Brazilian economy. While this article takes you years ahead, our Finistory article takes you about a century back to the era of World War I and analyzes the transformation of the US economy in that period.
This month, our Finance Minister, Mr. P. Chidambaram, advised RBI to proceed ahead with issuing of new banking licenses without waiting for amendment of the Banking Regulation Act of 1949. Is this the beginning of a new chapter in the ever-dynamic relationship of the Government of India with its central bank? Explore the same in the FinGyaan section of this issue.
We continue to receive your support in the form of articles and FinQ entries and our sincere thanks goes out to all our esteemed readers for the same. We would also like to thank all the participants for an overwhelming response to our intercollege first-of-its-kind event ‘FinDrishti’. Please continue to motivate us so that we can come out with more insightful reads in the issues to come. And as always,

The gripping excitement of the presidential elections in the US finally came to an end with the re-election of Barack Obama to the White House for another 4 years. This has evoked mixed emotions from the governments and public worldwide. China would perhaps be the most happy with the outcome. The first major test of the President would be to avoid the fiscal cliff, the possibility of which looms large over the US. The focus has now shifted to the all-important once in a decade transition in most populous country on earth. The 18th National Congress of the Communist Party in China witnessed the nomination of a princeling, Xi Jingping as the next President of the country and Li Keqiang as the next premier. This high profile meeting also saw the number of Standing Politburo Committee members reduced to 7 from 9. The world has already started speculating the anticipated behavior from the next leader of the economic powerhouse.
In India, with most ministries acknowledging the need for a body to steer the large investments, the proposal for the National Investment Board is all set to be presented before the cabinet in the coming days. This institution will make India an easier place to do business. The rupee remained weak throughout the month hovering around Rs.55 per dollar. The country expects some major reforms from the Winter Session of the Parliament which started on November 22.
This issue brings to you some more interesting and insightful reads. The cover story this month focuses on the nomination of next president of China, Mr. Xi Jinping and discussions revolve around the possible trajectory of reforms and economic growth under his guidance. The article of the month explores the concept of restructuring of banks, a revival strategy for dwindling financial economy, which leads to the formation of a Good and a Bad Bank. Other articles in this issue focus on the need of diversification for Gulf Cooperation Council (GCC) Economies and Country Risk for Multinational Corporations. Lastly, the Classroom this month explores the topic of Phantom Stocks.
Also, the Editorial Team of Niveshak, is pleased to introduce to you our new team, which has been selected to carry on the legacy of Niveshak. They are: Anchal, Anushri, Gourav, Himanshu, Ishaan, Kaushal, Kritika, Neha and Nirmit. Please join us in welcoming them to Team Niveshak. We are confident that the new team will not only meet but surpass your expectations in this and the coming editions. Keep supporting them the way you have been doing to us.
With a new team, comes a new section. We are glad to introduce a new section Fin-istory, which will aims at critically analyzing history’s most significant events and provide an in¬sight as to how they altered the status quo of the financial world. The present and the next 2 issues will cover significant events during the first quarter of the 20th century. This section will replace the widely cherished column, Fin Perspective.
We would also like to thank our readers for their constant support through wonderful articles and appreciation. It is your endless encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

The month of October has witnessed some major financial events that are likely to shape the future of economic development globally. The Euro-zone appeared last night to be in a stronger position to survive the debt crisis after EU figures revealed member governments cut their annual budget deficits last year.
The EU statistics office, Eurostat, said the aggregate budget deficit in the 17 countries using the currency fell to 4.1% of GDP in 2011 from 6.2% in 2010 – the first year of the sovereign debt crisis. Ireland cut its annual deficit from 31% of GDP to 13.4%, while Germany brought the deficit on its annual budget down to 0.8%, Eurostat said.
Greece, where the crisis started, had the highest debt ratio in Europe last year, reaching 170.6% of GDP, or €355bn (£289bn). It reduced its annual deficit to 9.4% from 10.7% in 2010 and 15.6% in 2009.
The Greek Prime Minister, Antonis Samaras, said his government would receive €31.5bn in loans next month if the Athens parliament pushed through €13.5bn in spending cuts and tax increases, though it remained unclear that MPs would do so.
In the United States, the presidential candidates battled it out during three high intensity Presidential debates and one Vice Presidential debate. While President Obama was terribly out of sorts in the first debate, which in effect highlighted, for the first time the vice presidential debate between Joe Biden and Paul Ryan. However, President Obama was much more focused than his Republican counterpart in Romney in the second and third debates, which has now marginally tilted the scales in his favor. Much was made of the lack of clarity and executional capability of Governor Romney’s five point economic plan and pundits widely believe that his policy would take America back to the days which has caused the mess they presently are in.
Back home in India, the general sentiment is slowly but steadily improving. The stock market is seeing a continued bull run, raising hopes of a sustained economic recovery here. With the inflation numbers stabilizing, all eyes are now on the RBI to bring in effect a rate cut which would significantly increase liquidity in the Indian Markets and fuel growth. The Government has also given its complete backing for all the reforms affected last month and has made a plethora of investor friendly norms in an attempt to attract foreign investment.
Starbucks opened its first outlet in India in Mumbai to a warm reception and encouraging opening weekend collections.
Citigroup CEO Vikram Pandit resigned this month and now the banking giant is headed by Michael Corbat. With global growth slowing, majority of the banks are now aggressive on the retail banking front.
This issue brings to you some more interesting and insightful reads. The cover story this month focuses on the growing concept of campaign finance. The issue also features articles on the future of banks in India, an interesting an insightful read on capital structure arbitrage, Indian foreign exchange reserve and an analysis of whether the MIST would obscure BRIC.
We would also like to thank our readers for their constant support through wonderful articles and appreciation. It is your endless encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

The major reforms announced by the US Federal Reserve as well as the Indian government and their timing and manner of announcements guarantee to boost the Indian economy and market sentiments at large. The US Federal Re-serve’s third round of quantitative easing (QE3) helped to extend gains on global stocks and bonds, and strengthened the US dollar against euro and yen. A similar effect was palpable in the Indian rupee which gained against US dollar. This was further influenced by the government’s decision to raise fuel prices. Indian stock market has also seen some rise because of reforms relating to foreign direct investment (FDI) and disinvestment. The benefits of FDI, especially in the case of multi-brand retail, will accrue over time but investors have to wait for the political clearance. Apart from this, 49% stake in domestic carriers by foreign airlines, 49% in power exchanges, increase of foreign equity cap to 74% in broadcasting services will buy the government some time with the rating agencies, some of who have already put India’s sovereign rating on a “negative” watch list.
The government’s effort to reduce the fuel subsidy bill has helped the Re-serve Bank of India to provide some monetary stimulus by reducing the CRR by 25 basis points and the RBI may also cut the rates in the future. These moves will be positive-both for the domestic stocks and currency. However, the ‘spillover’ effect of these initiatives on inflation cannot be ignored, which has already increased to 7.55%. Over all of these, the major force which drives the market is the political pressure which may roll back any of its latest reforms.
This issue brings to you some more interesting and insightful reads. The cover story of this month focuses on the US Federal Reserve’s latest effort- Quantitative Easing III. The issue also features an article on the future of Dollar as the reserve currency. The article of the month throws light on the full capital account convertibility. This issue also features other articles on the reality of real estate companies and LIBOR’s labor’s lost. The classroom section explains the concept of “CAT Bonds”.
We would also like to thank our readers for their constant support through wonderful articles and appreciation. It is your endless encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

With the major companies declaring their first quarter results, the month of July witnessed various ups and downs in Indian economy. In the IT sector Infosys disappointed the market with a 28.5 per cent increase in revenue and 32.9 per cent increase in net profits lower than the investor’s expectations whereas India’s largest software exporter, Tata Consultancy Services, continued its dream run with a 37.7 per cent growth in revenue and 37.4 per cent growth in net profits. Infosys lowered its dollar revenue FY13 outlook from 8-10% to a dismal 5%, resulting in 8% fall in stock on a single day. Reliance Industries posted a 21% fall in net profit beating the market expectations.
The international agencies also brought both the good and bad news for Indian economy this month. On one hand the Asian Development Bank had lowered its growth forecast for India from 7.0% to 6.5% followed by International Monetary Fund that lowered the growth forecast to 6.1% by a margin of 0.7% for the current fiscal year and on the other hand UNCTAD’s World Investment Report 2012 declared India as the third most preferred FDI destination after China and United States.
Amidst all this, the talks of Indian economy being in stagflation also continue. The news from the political circles brought a pleasant smile on the faces of industry veterans, as CII President Adi Godrej said Pranab Mukherjee, newly elected President of India, is a ‘Man of all seasons’.
On the international front, the biggest shock came from Barclays when its’ CEO Bob Diamond resigned amid an interest rate fixing scandal. The departure of Bob Diamond was followed by the resignation of Jerry del Missier, Barcalys Chief Operating Officer. The Barclays management has been accused by regulators in Britain and US of manipulating the setting of London Interbank Offer Rate, also known as LIBOR. In another major development, Greek Prime Minister Antonis Samaras told former U.S. President Bill Clinton that the country is in great depression and the GDP of the country is expected to shrink by one fifth since 2008 by the end of current fiscal.
The issue brings to you a comprehensive analysis on Power Exchanges in India, covering in detail the issues faced by the Power Exchanges in India and the proposed solutions for the same. The article of the months discusses about the economic crisis being worsened because of the Leadership crisis in India and the possible solutions for the same. The issue also features articles on Asset Restructuring Companies, practice of Consumer Credit Rating in India and unsustainability of widening global imbalances post the financial crisis of 2008. The classroom section explains the concept of technical analysis.
We would also like to thank our readers for their constant support through wonderful articles and appreciation. It is your endless encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

The month of June has witnessed some major financial events that are likely to shape the future of economic development globally. The fear of a dramatic Grexit that kept the world on edge has finally subsided for some time after Greece election results. The emergence of pro-Europe parties in the Greece’s election should relax fears that a country will leave the euro for the first time and unleash global financial turmoil. However, the slim majority won by pro-bailout parties in Greece elections and worries about the Spain’s fiscal and banking problems kept tensions high.
Another major event this month has been the meeting of the G20 members in Las Cabos, Mexico. The dangers that Europe’s escalating debt crisis would drive the global economy back into recession for the second time in less than four years dominated the summit of G20 leaders of industrialized and developing nations, which represent over 80 per cent of world output. European countries showed at the Group of 20 summit that they were considering major steps to integrate their banking sectors so as to break the cycle of highly indebted countries and rescue their banks, which only pushes governments ever deeper into debt.
This year’s meeting of United Nations Conference on Sustainable Development dubbed Rio+20 aimed at setting an agenda for policymakers to act in the coming decades, and promote cuts in fossil-fuel subsidies, support for the use of renewable energy and measures to protect oceans. However, as any agreement will have no force as a treaty, the Rio+20 ended with a whimper rather than a bang compared to the legacy of its predecessor, the 1992 Rio Earth Summit, which led to major conventions on climate change and biodiversity.
In India, RBI kept policy rates unchanged in its mid-quarter monetary policy review because of high headline inflation. The market indices reacted negatively to the news. In spite of a sharper than expected rate cut of 50 basis points in April, slowdown in activity, particularly in investment, showed that the role of interest rates is relatively small and a further rate cut could exacerbate inflationary pressures rather than spur growth. The RBI stance had another adverse impact causing rupee to depreciate to 55.83/84 to a dollar on the day of the review and to its all-time low of 57.12 against the dollar days later.
In another major development, Standard & Poor’s warned that India could become the first BRIC economy to lose its investment-grade credit rating. In a similar move, Fitch added further insult to injury by revising India’s outlook from stable to negative at BBB-.
This issue brings to you some more interesting and insightful reads. The cover story this month focuses on financial woes of solar power in India. The issue also features articles on regulations in Insider Trading in India, company valuations and implications of regulating propriety trading of financial institutions. The Classroom this month explains the nuances of Leveraged Buyout.
We would also like to thank our readers for their constant support through wonderful articles and appreciation. It is your endless encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

This month brought a lot of political turmoil in the European Union Nations starting with Netherlands and then France. Also the economic indicators exhibited by most of the countries like Spain, United Kingdom, Australia, Chain, Singapore, Japan, etc. were not very encouraging. This has led to a rising negative market sentiment that has been reflected in the markets worldwide.
Speaking of India, the statements issued by RBI and discussions of the impact of the growing uncertainty on Indian economy have not been very encouraging. Also the downgrades by S & P and IMF have led to doubt the growth potential of the country in the coming year.
In the light of this situation we present the May 2012 issue of Niveshak with the cover story on: Is India Vision 2020 achievable?
Also this month, many companies reported their earnings. While most of them have performed at par with market expectations, there were a few positive signs too with companies like Nissan overcoming the impact of Japan nuclear disaster and reporting 22% year on year growth in revenues. Also, thanks to rising oil prices, Exxon Mobil replaced Wal-Mart from first place among the Fortune 500 top revenue-generating United States companies.
The article of the month on - Discrediting or Crediting Credit Trends Worldwide, explains the trends in credit industry and its importance. The issue also features interesting reads on Rupee depreciation and its impact on Indian economy, Basel III Framework Origins & Implications and Relevance of Laissez Faire Economy in current scenario. This month’s classroom section explains to you the concept of Book Building.
With final calls being declared for most of the Management Institutes, Team Niveshak would like to extend their heartiest congratulations to all those who have made it through and achieved what they had worked hard for. We hope that you have a fulfilling and enlightening journey ahead.
We would also like to thank our readers for their constant support through wonderful articles and appreciation. It is your endless encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

It is the budget season in the country and all the newspapers across the nation are abuzz with analyses of two of the most important budgets, the Railway Budget and the Union Budget.
The Railway Budget was seen as a golden opportunity for Trinamool Congress nominated Dinesh Trivedi to make a mark in Union Politics. However, with an increase in prices ranging from 2 paise to 30 paise per kilometer, across different sections of the Railways, Mr. Trivedi did his reputation no good. The budget will be remembered more for the political drama that unfolded between him and Ms. Mamta Banerjee. With strong demands to roll-back the fare hike, Mr. Trivedi had no option but to resign leaving the TMC to nominate Mr. Mukul Roy as his successor.
The Union Budget rolled out no such surprises, with Mr. Pranab Mukherjee, now a veteran at presenting budgets, presenting a satisfactory blueprint for the next financial year. The crux of the budget was aimed at maintaining the delicate balance between growth (currently at 6.9%, but pegged to reach levels of 7.6%), inflation (which has seen a continued decline) and the burgeoning fiscal deficit (currently at 5.9%, but pegged to lower down to 5.1%).
For the individual investor, an increase in the income tax slab to Rs.2 lakh brings much cheer. However, the provident fund rate reduced by 125 basis points to 8.25% to offset some of the benefits. The auto industry is likely to take a hit, with an increase in prices highly likely. This is mainly due to an increase in excise duty to 12% from the cur-rent 10% levels. The retail sector saw some cheer with the FM committing to allow FDI in Multibrand retail in the near future and also setting august as the deadline to implement Goods and Services Tax.
Overall, the budget was in line with the expectations of many and did not dish out too many surprises. The cover story this edition, features a detailed analysis of the Union Budget, what it means for a company and to the individual.
The last fiscal seems to have overcome some of the gloominess that existed in the market, with top CEO’s pocketing handsome salaries. Indra Nooyi, the Indian born CEO of PepsiCo pocketed a hefty $17 million in compensation, while the Indian born CEO of Citigroup Inc., Vikram Pandit pocketed a handsome $14.5 million.
Protest-hit Maruti Suzuki has decided to invest Rs.900 crore more at its upcoming R&D centre at Rohtak. This comes in the backdrop of a strong shift in customer focus from petrol cars to diesel ones. The Rs.900 crore investment is over and above the Rs.1700 crore investment in the plant in Gurgaon, which is set to be operational by mid-2013.
This month’s issue brings to you an insight into the Union Budget of Indian Government 2012-2013. The article of the month explains the legal aspects of algorithmic, high frequency and flash trading. The issue also features interesting reads on the investment strategies of India and China in African continent, scenario of weather based insurance index in India and the concept of sovereign credit ratings. This month’s classroom section explains to you the concept of ‘Quantitative Easing’.
With summer placements about to begin for most of our readers, we, at Niveshak wish you all the very best in your respective internship stints.
We would also like to thank our readers for mailing their wonderful articles and appreciation e-mails. It is your constant encouragement and enthusiasm that keeps us going.

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

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

Kindly send in your suggestions and feedback to niveshak.iims@gmail.com and as always,

Stay invested.

From being the worst performer among emerging market currencies in 2011, the rupee has outperformed all emerging market currencies in 2012. Corporates will find dealing with this volatility a challenge as several forecasters are now changing their 2012 projections for the domestic currency. The rupee has gained nearly 8.2% since the beginning of the year up to February 3, which is the highest appreciation compared to other Asian currency. The BSE Sensex shot up to 6-week high on sustained foreign institutional investors (FII) inflows, low food inflation and firm overseas markets. FIIs remained net buyers. Another factor working in favour of markets is the sharp appreciation of rupee.

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Stay invested.

Team Niveshak

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.

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

Stay invested.

Team Niveshak