Niveshak

Niveshak April 2012 Issue with Page Flip version

noreply@blogger.com (Team Niveshak) — Thu, 05 Apr 2012 07:22:00 +0000

Dear Niveshaks,

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,

Stay invested.

Team Niveshak

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Page flip version - April issue - Finance

Niveshak March 2012 Issue with Page Flip version

noreply@blogger.com (Team Niveshak) — Sat, 17 Mar 2012 04:52:00 +0000

Dear Niveshaks,

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

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

Stay invested.

Team Niveshak

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Page flip version - March issue - Finance

Niveshak February 2012 Issue with Page Flip version

noreply@blogger.com (Team Niveshak) — Sat, 18 Feb 2012 16:09:00 +0000

Dear Niveshaks,

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.

The RBI cut CRR for banks by 50 basis points to 5.50 percent to ease tight liquidity, signaling a policy shift towards reviving growth after nearly two years of fighting inflation. With core inflation still stubbornly high, the Reserve Bank of India, as expected, left its
policy repo rate unchanged at 8.50 percent for the second consecutive review. FDI in single brand has led to emergence of some global majors in Indian market. This will provide stimulus to domestic manufacturing value addition and help in technical up gradation of our small industry. Some more good news is expected on March 16, the day on which Finance Minister Mr. Pranab Mukherjee will present Annual Budget for 2012-2013 in the budget session of parliament commencing from March 12, 2012.There was some respite for international economy as well. The US unemployment rate fell to 8.3 percent in January, its lowest level in more than two years, thanks to an unexpected surge in hiring. This is the major factor which is going to help Barack Obama in the US presidential election, 2012. The financial crisis is calming down. Europe is no longer on the edge of an abyss. All the efforts must now be dedicated to the resolution of the economic crisis.This issue brings to you some more interesting and insightful reads. The cover story this month focuses on The World Economic Forum Annual Meeting in Davos. The issue also features an article on the annual union budget of India, which is going to be presented on 16th March 2012. The article of the month throws light on achieving goal of sustainable economy through innovation. This issue also features other articles on structuring the equity gap and telecom bank-ing. The classroom section explains the concept of “Options Market”.
We, the Editorial Team of Niveshak, would like to take this opportunity to thank our senior team for their valuable contribution to Niveshak. They are: Alok, Deep, Jayant, Mritunjay, Rajat, Sawan, Shashank, Tejas, Vishal and Vivek. Please join us in bidding adieu to all of them and wishing all happy times, good health and bright future in their personal and professional life.

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

Stay invested.

Team Niveshak

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Page flip version - February issue - Finance

Niveshak January 2012 Issue

noreply@blogger.com (Team Niveshak) — Thu, 26 Jan 2012 02:31:00 +0000

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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Page flip version - January issue - Finance

Niveshak December 2011 Issue

noreply@blogger.com (Team Niveshak) — Mon, 26 Dec 2011 14:15:00 +0000

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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Page flip version - December isuue - Finance

Niveshak November 2011 Issue

noreply@blogger.com (Team Niveshak) — Sun, 27 Nov 2011 12:35:00 +0000

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

noreply@blogger.com (Team Niveshak) — Sun, 30 Oct 2011 12:20:00 +0000

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

noreply@blogger.com (Team Niveshak) — Mon, 03 Oct 2011 19:43:00 +0000

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

noreply@blogger.com (Team Niveshak) — Wed, 24 Aug 2011 17:12:00 +0000

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

noreply@blogger.com (Team Niveshak) — Wed, 27 Jul 2011 21:37:00 +0000

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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Open publication - Free publishing - More finance

Call for Sector Reports for 3rd Anniversary Issue

noreply@blogger.com (Team Niveshak) — Tue, 26 Jul 2011 11:14:00 +0000

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

noreply@blogger.com (Team Niveshak) — Thu, 30 Jun 2011 19:57:00 +0000

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)

(click on image or here to view)

Niveshak May 2011 Issue

noreply@blogger.com (Team Niveshak) — Thu, 02 Jun 2011 14:33:00 +0000

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)

(click on image or here to view)

Niveshak April 2011 Issue

noreply@blogger.com (Team Niveshak) — Mon, 02 May 2011 04:10:00 +0000

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)

(click on image or here to view)

Niveshak March 2011 Issue

noreply@blogger.com (Team Niveshak) — Sat, 19 Mar 2011 12:51:00 +0000

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)

(click on image or here to view)

Niveshak February 2011 Issue

noreply@blogger.com (Team Niveshak) — Fri, 25 Feb 2011 10:04:00 +0000

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)

(click on image or here to view)

Niveshak January 2011 Issue

noreply@blogger.com (Team Niveshak) — Sun, 30 Jan 2011 12:13:00 +0000

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)

(click on image or here to view)

Niveshak December 2010 Issue

noreply@blogger.com (Team Niveshak) — Sat, 01 Jan 2011 07:27:00 +0000

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)

(click on image or here to view)

Niveshak November 2010 Issue

noreply@blogger.com (Team Niveshak) — Sun, 28 Nov 2010 09:02:00 +0000

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)

(click on image or here to view)

Niveshak October 2010 Issue

noreply@blogger.com (Team Niveshak) — Tue, 02 Nov 2010 13:19:00 +0000

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)

(click on image or here to view)

Niveshak September 2010 Issue

noreply@blogger.com (Team Niveshak) — Thu, 30 Sep 2010 11:10:00 +0000

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)

(click on image or here to view)

Niveshak Second Anniversary (August 2010) Issue

noreply@blogger.com (Team Niveshak) — Thu, 26 Aug 2010 12:32:00 +0000

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

noreply@blogger.com (Bhav) — Sat, 24 Jul 2010 12:30:00 +0000

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

noreply@blogger.com (Bhav) — Mon, 28 Jun 2010 13:12:00 +0000

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

noreply@blogger.com (Bhav) — Mon, 31 May 2010 13:53:00 +0000

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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