January 19th, 2017
Impact of N. Chandrasekaran as new Chairman of Tata Sons
Latest reports on Indian Economy and their Impact
May’s way to Brexit
EDITION XVI . 12
A FinNiche Initiative
EDITORIAL
- SRIKANT SINGH
There are no dreams too large, no innovation unimaginable and no frontiers beyond our reach. -John S Herrington The last fortnight saw a myriad of activities happening across the globe. The United states is preparing itself to bid adieu to Barack Obama and it’s taking time for the world to let the fact sink in and realize that Trump would be 45th president of US. The world is attentive to his recent statements and his stance on China, Russia, Mexico and developing economies. While Britain is still reeling under the post credit slowdown, speeches of Theresa May have given a new ray of hope with some quoting her as the new Iron Lady of Britain. Only time will tell how much positivity it can bring to the people and the economy. These are hard times in India. Although it’s early to say how much effect demonetization had on the economy with little data available on the transactions, happened from Nov 8-Dec 31, there is a little unease in the minds of the people over the tiff between RBI & the government. If we leave aside the UN reports which have projected growth at 7.6%, major economic institutions have lowered down the projected growth of the Indian economy and the impact is visible from the latest reports. Indian companies have also seen large upheavals with the largest Indian conglomerate onboarding its new chief N. Chandrasekaran who has been appointed after the long crisis between Ratan Tata and Cyrus Mistry. This issue brings to you all the recent stories impacting the world economy and other surprising facts. Club FinNiche welcomes any comment, suggestions, & criticism regarding the magazine. Please do write to us and share your ideas. Happy Reading! The Editorial Team Club FinNiche @ IMT Ghaziabad Facebook page: https://www.facebook.com/FinNiche/?fref=ts Page 1
CONTENTS Impact of N. Chandrasekaran as new Chairman of Tata Sons 2 Latest reports on Indian Economy and their Impacts
4
May’s way to Brexit
6
Fin-Humour
8
Market
9
Start-up Tracker
10
Fin-Word
11
Did you know
12
Fin-Quiz
13
Life @ IMT
15
Sponsors
16
Our FinXpress
17
NATIONAL
Impact of N. Chandrasekaran as new Chairman of Tata Sons
- AFROZ I. HUSAIN
N. Chandrasekaran and the growth of TCS ——- Impact on Shares and Shareholders —— Rajesh Gopinathan as new CEO of TCS ——- New opportunities for N. Chandrasekaran and R. Gopinathan
On 12th January 2017, Natarajan Chandrasekaran was anointed as the chairman of Tata Sons and will take over the position on 21st February. Chandrasekaran, popularly known as Chandra, who joined the Tata group in 1987, rose through the ranks to become TCS CEO in 2009. Under his leadership, TCS revenue has risen almost fourfold and its workforce has almost tripled. Apart from that, he has served as the Chairperson of the IT Industry Governors’ at the WEF, Davos in 201516. Chandra has been playing an active role in the Indo – US and India-UK CEO Forums. He is also part of India’s business taskforces for Australia, Brazil, Canada, China, Japan and Malaysia. He served as the chairman of NASSCOM, the apex trade body for IT services firms in India in 201213 and continues to be a member of its governing Executive Council.
Moving the head of Tata Consultancy Services to the top job at Tata Sons' holding company fills a critical hole for the salt-to-software conglomerate, but it leaves another at its most valuable company ahead of a complex and unpredictable 2017.The departure of Chandrasekaran from TCS has rattled investors. They sent TCS shares down more than 4 percent on Friday, a day after it also posted better-than-expected quarterly results. "The IT industry is facing headwinds, and shareholders would have preferred Chandra to stay as CEO for some more time," said Souvik Guha, an analyst with Shriram Asset Management, which owns shares in TCS. Indeed, for Tata Sons, promoting one-time Tata intern Chandrasekaran to chairman of the $100 billion conglomerate is something of a gamble: to
Page 2
NATIONAL
help unpick the group's boardroom troubles, he leaves behind the growth engine and crown jewel. The vast majority of Tata Sons' annual revenue comes from dividend payouts. Key businesses include Tata Steel and Jaguar Land Rover-owner Tata Motors. But TCS, with its IT services and consulting businesses, accounts for nearly 90 percent of total group revenue. Investor concerns highlight the outsized importance of TCS, more than 70 percent owned by Tata. Chandrasekaran has been replaced at TCS by Rajesh Gopinathan, described by analysts and insiders as a meticulous operations man. However, fund managers fret over the vision for the IT services firm, at a time when it needs to tackle slowing growth in the industry and a problematic period ahead. From an incoming Donald Trump administration in the United States, determined to clamp down on visas vital to the smooth
operations of IT services companies in their biggest market, to the still unravelling fallout from Britain's move to bow out of the European Union, TCS will face one of its most complex years. Some also fear that Chandra will have little opportunity to lavish attention on TCS in the new role, as he will be saddled with untying the Gordian knot of Tata Sons politics, and also overseeing 200 group companies - all against the background of a bitter ongoing spat with its ousted chairman Cyrus Mistry. Mistry has publicly detailed the complex array of problems the conglomerate faces from its troubled European steel segment, from ethical concerns to allegations of fraudulent transactions at its Air Asia India joint -venture, and a host of other issues. Only time will tell how Chandra will fix this rocking boat.
Page 3
NATIONAL
Latest reports on Indian Economy and their Impact
- ADYA JHA
Three months of Demonetization and growth of Indian Economy —— New reform initiatives helping in fulfilling the demand —— Short-term and Long-term impacts
On January 10, 2017, World Bank released January 2017 Global Economics Prospects report. Per the report, the world economy would grow by 2.7% in 2017, while Indian economy would grow by 7.1%. In the previous reports, the growth estimate was predicted to be 7.6%, but due to the recent demonetization drive by the Indian government, there was a fall in the estimated growth rate. Despite the odds due to demonetization, the report remained positive for India and predicted that the growth rate of India would regain momentum in the upcoming years with 7.6% and 7.8% in the following years respectively. This positivity was since there have been many reform initiatives in the recent years, whose long-term prospects would be visible in the
upcoming years. These reform initiatives would help in unlocking the domestic supply bottlenecks and hence help in raising productivity. Also, per the report, India remains the fastest growing emerging economy in the world, leaving China at 2nd spot. As per the report:
“India accounts for almost four-fifths of SAR GDP. Robust private and public consumption is likely to offset slowing fixed investment, weak manufacturing activity, and lethargic exports in India.” Similarly, per the latest CSO (Central Statistics Office) Report as well, the latest growth rate is expected to be 7.1% in 2016-17. The per capita
Page 4
NATIONAL
net national income is estimated to be Rs 1,03,007 (a rise of 10.4% from the previous year), compared to Rs 93,293 during 2016-16 (with a growth rate of 7.4%). Agriculture, forestry, and fishery are likely to show a growth are likely to show a growth rate of 4.1% in 2016-17, compared to 1.2% in 2015-16, while the manufacturing sector is expected to slow down from 9.3% in 201516 to 7.4% in 2016-17. These reports say a lot about the short-term and long-term economy of India. While some government moves have hampered the short-term growth of India, it needs to be understood that if these moves can serve their objectives, then they would prove to be highly beneficial in the long term. With respect to demonetization, currently the impact of demonetization has been the worst in the micro, small and medium enterprises, but if
the government can turn the parallel economy running in the country into the main (official) economy, then the positive impact which would follow on the Indian economy would be huge. Also, due to the lower estimated growth rate, it seems that we need to wait for the RBI rate cuts to happen (though there are chances of rate cuts if we look back at the statement of RBI, where it had stated that it will consider making rate cuts if there is a continuous fall in the inflation rate). Hence, we can see that even though the country goes through difficulties, the one thing which remains intact is the optimism which markets have on the country, which is a very good sign for the country. The government should not only introduce new reforms, but also make sure that the introduced reforms are well executed for the long-term benefits of the country.
Page 5
INTERNATIONAL
May’s way to Brexit
- ANSHUMAN NANDWANA
Speech of Theresa May in London —— Side-lining of United Kingdom by the European Union —— Her position on Brexit —— Criticism by European Union for May’s Speech —— New paths and gateways of opportunities
On January 17, 2017, Mrs. May delivered a speech in the grand surroundings of Lancaster House in London. The speech outlined her Brexit objectives, timelines and other crucial aspects. She chalked out a 12-point Brexit Plan confirming that she would be opting for a ‘Hard Brexit’ to leave European Union. The June referendum of Brexit sent a clear message to the World that leaving of United Kingdom from European Union is inevitable. Many of the people though pondered and were unclear on how the proceedings would shape and what level of protectionism will be followed in the policies. Fluctuations in Pound since referendum too confirmed that business houses sentiments are in a complete ambiguous state. Finally, on January
17, 2017, Theresa May cleared her standing on the Brexit proceedings in a 45-minute speech. She outlined that she wants a full departure from the EU's single market. She said this will help UK to gain full control over its immigration, say no to European court of justice rulings and keep interests of its people at utmost priority. On the darker side, it may lead to sidelining of United Kingdom by the European Union as whole which will result in losing of about 500 million consumers present in the EU. She also vowed to guarantee the rights of EU citizens who already live in the UK and the UK expats who live in other EU countries. While the PM said "the days of making vast contributions to the EU budget will end", she did seem to give herself some leeway on making "an appropriate contribution" on a case-by-case basis.
Page 6
INTERNATIONAL
In broad terms, her speech chalked out following opportunities beyond EU. “June the 23rd was not 12 points to clear her position on Brexit: the moment Britain chose to step back from the world. It was the moment we chose to build a Provide certainty about the process of leaving truly Global Britain” she quoted. Sterling, which the EU plunged on Monday after weekend reports that Control of our own laws May was planning to exit the single market, Strengthen the Union between the four nations jumped against the dollar and was set for its of the United Kingdom biggest advance since the global crisis. It was up Maintain the Common Travel Area with Ireland 2.3 percent at $1.232 as of 1:44 p.m. in London. Brexit must mean control of the number of people who come to Britain from Europe European Union Leaders have criticized May’s Rights for EU nationals in Britain and British speech to a great extent. "Britain has laid out its nationals in the EU plan for #Brexit. Next, it is the job of #EU27 to Protect workers' rights find a common position. United we stand, divided Free trade with European markets through a we fall." Twitted Finnish Finance Minister Petteri free trade agreement Orpo. Many Experts too believe that it would hit New trade agreements with other countries United Kingdom hard with stance it is taking. The best place for science and innovation Co-operation in the fight against crime and terIt seems that it would be hard for UK to deliver on rorism all the points it has promised without impacting its A smooth, orderly Brexit economy. Majority of the points in the speech seemed to be pro United Kingdom while snubbing To commensurate with Hard Brexit, May declared EU’s interests. This would surely agitate European that she would carve out a new "strategic Leaders who in return could come up with partnership" with the EU and that a retaliation or combined protectionism against UK. Much of it is punishment approach by the EU would not be in left to be seen in near future. What all this assures the latter's interest. “We seek a new and equal is that next few years full of uncertainty for UK as partnership — between an independent, well as for European Union, adding up to already self-governing, global Britain and our friends and prevailing uncertainties at global level. All of this allies in the E.U.,” said Mrs. May, according to for sure will hurt businesses and consumer’s excerpts from speech released by her office. She sentiments and hence global growth and demand. also announced that Britain would look for
Page 7
FINHUMOUR - SHUBHAM ARORA
Page 8
MARKET BSE Sensex - Top GAINERS
- HRISHIKESH GULKOTWAR
AXIS BANK GAIL ITC HDFC SUNPHARMA
BSE Sensex - Top LOSERS TCS INFOSYS NTPC MARUTI HERO MOTO CORP
‘BSE Sensex and NSE Nifty50, extended their gains for the third straight week on account of buying in metal, power, banking, auto and oil & gas counters. For the week ended January 13, 2017, the 30-share index closed 1.79 per cent higher, or 478.83 points up at 26,759.23, while Nifty50 settled 1.90 per cent higher, or 156.55 points up at 8,243.80’. (Source: Yahoo Finance, BSE, NSE, ET) The coming week should see a lot of movement and actions once Q3 earnings are declared, also the IT & Pharma stocks have been calm despite Mr. Trumps strong message. Only time would tell how they are affected and how our exports to USA will get affected by ‘Make in USA’ campaign. As of 14th Jan 2017 BSE SENSEX NIFTY-50
OPEN 27378.01 8457.65
Graph1: BSE Sensex from Jan 2 to Jan 13, 2017
Graph2: NSE Nifty 50 from Jan 2 to Jan 13, 2017 Page 9
CLOSE 27238.06 8400.35
STARTUP TRACKER - KRISHANT KAUL
Company Mission: Control your financial destiny bitcoin exchange. Later it was rebranded to Zebpay in September 2014 adding two more Core Values: Champion the mission, Honesty / partners - Saurabh Agrawal and Sandeep Goenka. integrity, Customer service, Simplicity Best practices, Commitment / ownership, Zebpay is India's first bitcoin company to launch Teamwork, Speed, Reliability. simplest mobile Bit coin wallet app that enables bitcoin transactions using mobile number without Company’s Message: We have been involved in bit any complexities to understand bit coin addresses, coins since its early days in 2011. We started taking backups or fear of losing bit coins. Using India’s first bit coin exchange in 2012. We realize Zebpay wallet app, users can buy, sell, store and that for a new user, there is a learning curve to spend bit coin using mobile number and a 4-digit buy, store and use bit coins. We are working hard pin. to make this revolutionary technology simple so that Indians can be proud owners and users of bit For regular people who are not computer geeks, coins. using bit coins has a learning curve. With Zebpay taking care of the security, it makes life really Zebpay is app-enabled bit coin wallet provider simple for the user. Zebpay is as simple to use as headquartered in Singapore with IT office instant messaging apps. The bit coins are 100% in Ahmedabad, Gujarat, India. Bit coin is a digital insured and the wallets are secured using multisig asset and a payment system. It is commonly called wallets. The company uses industry standard a decentralized digital currency. It was invented practices. by Satoshi Nakamoto in 2009. It is open source software. This means, that no person, company or Zebpay was voted as best new bitcoin company at country owns this network just like no one owns CoinAgenda conference in Las Vegas in 2014. In the Internet. The system is peer-to-peer, that is, September 2016, it was announced that Zebpay users can transact directly without an intermediary had crossed 100,000 downloads on Android and like a bank, a credit card company or a clearing iOS stores combined. Later that month, on 21st house. Transactions are verified by network nodes September, Zebpay crossed 100,000 downloads on and recorded in a public distributed ledger called Android Playstore itself. Zebpay crossed Rs 500 the block chain. crore turnover and did more than Rs 100 crore of Zebpay was founded by Mahin Gupta in late 2012 trade turnover in November 2016. under the name Buysellbitco.in and is India's first
Page 10
FINWORD
VOLATILITY INDEX
- RISHI SAXENA
Definition: VIX is a trademarked ticker symbol for the CBOE Volatility Index, a popular measure of the implied volatility of S&P 500 index options. The VIX is calculated by the Chicago Board Options Exchange (CBOE). Often referred to as the fear index or the fear gauge, the VIX represents one measure of the market's expectation of stock market volatility over the next 30-day period. Inception The idea of a volatility index, and financial instruments based on such an index, was first developed and described by Professor Menachem Brenner and Prof. Dan Galai in 1986. Professors Brenner and Galai published their research in the academic article "New Financial Instruments for Hedging Changes in Volatility," which appeared in the July/August 1989 issue of Financial Analysts Journal. What does VIX mean for Stock Market It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge." India’s volatility Index India VIX is India’s volatility Index which is a key measure of market expectations of near-term volatility conveyed by NIFTY stock index option prices. This volatility index is computed by NSE based on the order book of NIFTY Options. For this, the best bid-ask quotes of near and next-month NIFTY options contracts which are traded on the F&O segment of NSE are used. India VIX indicates the investor’s perception of the market’s volatility in the near term i.e. it depicts the expected market volatility over the next 30 calendar days. Higher the India VIX values, higher the expected volatility and vice-versa. How India VIX helps investors? Volatility implies the variation in price of a financial instrument. Thus when the markets are highly volatile, market tends to move steeply up or down and during this time volatility index tends to rise. Volatility index declines when the markets become less volatile. Volatility indices are sometimes also referred to as the Fear Gauge because as the volatility index rises, one should become careful as the markets can move steeply into any direction. Investors use volatility indices to gauge the market volatility and make their investment decisions
Courtesy: https://www.nseindia.com/live_market/dynaContent/live_watch/vix_home_page.htm
Page 11
DID YOU KNOW
Dazzling Facts about Gold
- SAMARTH AGARWAL
Gold has been discovered on every continent on earth. Gold melts at 1064.43° Centigrade. It can conduct both heat and electricity and it never rusts. A medical study in France during the early twentieth century suggests that gold is an effective treatment for rheumatoid arthritis. Due to its high value, most gold discovered throughout history is still in circulation. However, it is thought that 80% of the world’s gold is still in the ground. Seventy-five percent of all gold in circulation has been extracted since 1910. The largest gold nugget ever found is the “Welcome Stranger” discovered by John Deason and Richard Oates in Australia on February 5, 1869. The nugget is 10 by 25 inches and yielded 2,248 ounces of pure gold. It was found just two inches below the ground surface. Gold is so pliable that it can be made into sewing thread. An ounce of gold can be stretched over 50 miles. Amid recession fears in March 2008, the price of gold topped $1,000 an ounce for the first time in history. Traditionally, investors try to preserve their assets during hard economic times by investing in precious metals, such as gold and silver. The World Gold Council released a report in February 2009 that indicated the demand for gold rose sharply in the last half of 2008. The Dow/Gold ratio, which shows how much gold it would take to buy one share of the Dow, is a good indicator of how bad a recession is. In early 2009, the Dow/Gold ratio appeared to be heading toward the same low ratios that occurred during the 1930s and 1980s. Gold is chemically inert, which also explains why it never rusts and does not cause skin irritation. If gold jewelry irritates the skin, it is likely that the gold was mixed with some other metal. In 2005, Rick Munariz queried whether Google or gold was a better investment when both seemed to have equal value on the stock market. By the end of 2008, Google closed at $307.65 a share, while gold closed the year at $866 an ounce. The Olympic gold medals awarded in 1912 were made entirely from gold. Currently, the gold medals just must be covered in six grams of gold. Page 12
FINQUIZ
1. A contra asset account contains what type of balance? [A] Credit [B] Contra [C] Debit
- NIDHI KUMAR
2. "Net Safe Credit Card" is introduced by which Bank? [A] ICICI Bank [B] Axis Bank [C] HDFC Bank 3. "World's Local Bank" is the punch line of which bank? [A] HSBC Bank [B] ICICI Bank [C] HDFC Bank 4. Which bank has received award for excellence in MSME lending? [A] State Bank of India [B] State Bank of Bikaner and Jaipur [C] State Bank of Patiala 5. Name the creative agency that has been appointed by NITI Aayog for running its campaigns? [A] Ogilvy & Mather Ltd. [B] McCann-Erickson India Ltd. [C] Thinkstr 6. Name the first private sector corporate launched the gold fund in India? [A] Dundee Mutual Fund [B] Franklin Templeton Investment [C] BNP Paribas Fund 7. Who of the following was appointed as the Additional Secretary in the Goods and Services Tax (GST) Council? [A] Arun Goyal [B] CK Asnani [C] Mukund Choudhari Page 13
FINQUIZ
8. Who was recently appointed as Chairman of Insolvency and Bankruptcy Board? [A] Rajeev Sharma [B] MS Sahoo [C] Ravi Kumar 9. Which bank signed MoU with Birla Sun Life Asset Management Company for distribution of mutual fund products? [A] Punjab National Bank [B] Karnataka Bank Ltd. [C] State Bank of India 10. Which is the only country having paper currency and have no coins and it introduced cheque only in 1997? [A] Spain [B] Vietnam [C] Turkey
Answers: 1. A 6. A
2. C 7. A
3. A 8. B
Page 14
4. C 9. B
5. C 10. B
LIFE @ IMT
Club FinNiche Presents…
Page 15
OUR SPONSORS
Tagore Road, Block L, Kavi Nagar, Ghaziabad, 201002
DESIGNED AND PUBLISHED BYANKIT SURANA YOGESH PANDEY Page 16
OUR FINXPRESS
Page 17