Finxpress dec 12

November 15th, 2016 December 12th, 2016

EDITION XVI . 10

A FinNiche Initiative

EDITORIAL

- SAMARTH AGARWAL

"Loss is nothing else but change, and change is Nature's delight." — Marcus Aurelius Last few days have been full of dismay & grief for the stock investors as well as people of Tamil Nadu. The first shock came in the form of RBI decision when it decided to keep the interest rates unchanged, thus quashing the hope of rate cut by 25bps which was predicted by the 30 economists before the RBI bimonthly meeting. RBI believes that due to surplus liquidity in the banking system will push banks to lower the lending rates.

Another saddening news came in form of death of Tamil Nadu CM Jayalalithaa who is also famously known as “Amma”. After her tragic death, due to cardiac arrest, AIADMK took the decision to put forward name of O Panneerselvam as the Chief Minister of Tamil Nadu.

Late Jayalalithaa known for her strong personality and the love she showered on the people of Tamil Nadu, will be truly missed by many.

Talking about IMT, it is as usual abuzz with several competitions, guest lectures being organized by PRISM, E-cell and Academic committees. Also, as the end term exams of both 1st year and 2nd year students are around the corner, we wish BEST OF LUCK to everyone.

Club FinNiche welcomes any comment, suggestions, or Criticism regarding the magazine. Please do write to us and share your ideas.

Happy Reading!

The Editorial Team Club FinNiche @ IMT Ghaziabad Facebook: https://www.facebook.com/FinNiche/?fref=ts

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CONTENTS Indian Politics and Excess of Personality Cult 2 Zero Rate cut by RBI

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Impact of OPEC Meeting 7 Fin-Humour

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Market

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Startup Tracker

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Fin-Word

13

Did you know

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Fin-Quiz

15

Life @ IMT

17

Sponsors

18

Our FinXpress

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NATIONAL

Indian Politics and Excess of Personality Cult

- RISHI SAXENA

Politicians are spending more public money on their image building ——— Loss of public figure leads to identity crisis of political party ——— Growth of new parties at higher rate than GDP of India

India is a country which boasts of hero worshipping. Be it cricket, movies, politics etc., personality cult is prevalent in every field. A famous topic of discussion amongst Indians politics is never complete without mention of Kejriwal, Modi, Behens, Bhais. Seldom we talk about the party ideology to which these leaders belong.

Congressmen, was that only she would probably emerge as a national level vote-catcher. Leaders like Late Jayalalitha, Chandrababu Naidu, Mayawati, Laloo Yadav, Sharad Pawar, Raj Thackeray, Mamata Banerjee, and so on, are sole leaders of their respective parties. Their personal ambitions are seriously impeding these parties functioning as cohesive units. Centralization of power in the hands of the supreme leader has, it Personality cult, the crowd mentality of Indian seems, obviated the need for organizational hero worshipping, is not only accounting for elections which have not taken place in many distortions in voting behavior of the electorate but national as well State parties for decades. has also resulted in the rise and continued existence of many small parties.

Recent emergence of various small reginal parties can be greatly attributed to the fact that voters In the Congress, right from Nehru to Sonia have lost confidence in bigger parties as the face Gandhi, the emphasis of the leadership had been of party has not been changed from decades. A on personality and not on the organizational unity political expert once commented that, in Tamil of the party. The common political logic Nadu, "politics is driven by personalities and not undergirding the playing of the Sonia card, despite political parties". This can be seen in the having many senior and experienced projection of leaders as cult figures in both Page 2

NATIONAL

electronic and print media. Often this comes at the neglect of a concrete party manifesto outlining policies for development and growth. The scenes in Tamil Nadu reaffirmed the deep-rooted existence of personality cult in Indian politics where the politician is almost kept on the pedestal equivalent to that of the divine. This kind of

positioning of politicians mostly among party cadres have many a times led to law and order problems as the sporadic instances of violence in Tamil Nadu of late are indicative of that behaviour. "Jayalalithaa has done so many things for the state like the Amma canteen. A person earning below Rs 100 a day can today survive in Tamil Nadu. There is nothing wrong in worshipping her. She will remain god for us throughout our life�- AIADMK youth wing secretary, Murali Krishna Prasad. In Uttar Pradesh , Mayavati government erected her statues emphasizing the extent of hero worship in India.

The death of Tamil Nadu Chief Minister Jayalalithaa is a tragedy that underscores the conflict between democracy and personality politics. True governance is now giving way to idolism and voter is becoming a devotee. Whether it is Mayawati or Mamata Bannerjee, the Yadav Image: AIADMK supporters react after clan or Kejriwal, the parties they represent have become secondary. It is only their opinion which Jayalalithaa’s verdict in disproportionate assets counts. Even the party leading the nation of 1.3 billion has its face in Narendra Modi.

Source: Indian Express

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NATIONAL

This personality cult has brought with itself many disadvantages like:

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Politicians are spending more public money on their image building Party manifesto is getting neglected

Loss of public figure leads to identity crisis of political party Creation of several smaller regional parties with vested interests. Which are growing at a rate more than GDP of India

Courtesy: https://factly.in/number-of-political-parties-in-india-growing-faster-than-the-economy/

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NATIONAL

ZERO RATE CUT BY RBI

- NIDHI KUMAR

Repo rate unchanged at 6.25 % ———Prices of certain commodities still high —— — FED rate hike expected in mid-December ——— Volatility in Crude oil and Financial markets

The Reserve Bank’s monetary policy to decide key interest rates was announced on 7th December, amid spike in deposits following demonetization of high-value currency initially raising hope of rate cuts by 25bps. The fifth bi-monthly policy was the second monetary policy announcement after Urjit Patel took over as the RBI governor. Experts suggested that with influx of deposits and stable inflation levels, the RBI would likely cut key policy rate. The six members of the MPC were supposed to vote to decide on the interest rate changes with the RBI governor holding a casting vote in case of a tie. But, the RBI along with the Monetary Policy Committee decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 per cent. The decision of the MPC was consistent with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth. The policy took into consideration the still-prevalent political

risks in the euro area and the UK, emerging geo-political risks that are leading to financial market volatility, the impact of US presidential election and possibility of the Federal Reserve tightening monetary policy, possibility of firming up of crude oil prices after OPEC’s decision to cut output. On the domestic front, the growth of real gross value added (GVA) in Q2 of 2016-17 were realized to be lower than projected on account of a deeper than expected slowdown in industrial activity. Also, it was noted that elevated prices existed for commodities like, sugar and protein-rich items, along with prices of cereals, pulses, and processed foods, which supposedly partly offsets the moderation in food inflation brought about by a strong favorable base effect.

The withdrawal of SBNs was also expected to be transitory and Liquidity management was bolstered by an increase in the limit on securities under the market stabilization scheme (MSS) from `0.3 trillion to `6 trillion on November 29. There have been 3 issuances of cash management bills

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NATIONAL

issuances of cash management bills under MSS for `1.4 trillion by December 6, 2016. It was also realized that the food inflation pressures could re-emerge if the usual winter moderation in food prices do not materialize.

for future downward movements in the headline.

Moreover, volatility in crude prices and the surge in financial market turbulence could put the Inflation target for Q4 of 2016-17 at some risk. On balance, therefore, it was required to wait and watch how these factors play out. Accordingly, the In India, while supply disruptions because of policy repo rate was kept on hold in this review, currency replacement may drag down growth this while retaining an accommodative policy stance. year, MPC found it more important to analyze information before judging their full effects with IMPACT respect to setting the monetary policy stance. If The 10 year benchmark bond yield shot up 20 the impact is transient, growth would rebound basis points to 6.40% from 6.20% strongly. Turning to inflation, food prices other Dec 07/16 - 6.40% than vegetables are currently exhibiting sustained Dec 06/16 - 6.20% firmness and a pick-up in momentum. Another disconcerting feature of recent developments is Sensex and Nifty lost 400 and 100 points the downward inflexibility in inflation excluding respectively after the monetary policy food and fuel which could set a resistance level announcement.

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INTERNATIONAL

Impact of OPEC Meeting

- ADYA JHA

Historic deal signed by the OPEC Countries ——— Full implementation of the deal yet to happen ——— Global market bullish on oil prices ——— Further mood of market depends on the pace of implementation

On November 30, 2016, a historic deal was signed between the OPEC countries. The Organization of Petroleum Exporting countries (OPEC) decided to cut the output of crude oil by around 1.2 million barrels a day to end the global fall of prices of crude oil. Many countries including Iran were earlier opposed to signing the deal, but due to the falling crude oil prices the deal was signed finally.

There had been a huge fall in the prices of crude oil in the past two years. The reason behind it was the price war between Saudi Arabia and the United States in which Saudi Arabia was trying to pull the market share back from the U.S. However, it didn’t go down well with the market and ultimately affected everyone negatively,

leading to the signing of this deal. Saudi Arabia, the largest oil producing of OPEC committed to reduce its production by almost 500,000 barrels per day (bpd), while Iran, the second largest producer of crude oil committed to cut its production by 200,000 bpd. But it’s not done yet. For the successful implementation of the deal, OPEC countries need the help of Russia and other non-OPEC countries to cut their production as well by around 600,000 barrels a day. Russia has already committed to cut its production by 300,000 barrels a day, which means that the other non-OPEC countries together would have to cut another 300,000 barrels a day. Some countries like Brazil and Mexico have indicated that they will unlikely go Page 7

INTERNATIONAL

This deal would have various impacts on the world market scenario. First, the market immediately got bullish on the crude oil after the announcement of the deal. Just after the announcement of the deal, the oil prices were higher by 10% to over $50 a barrel. It is expected to show a gradual decrease which is in direct contrast with the continuous decrease in the crude oil prices in the past two years. Per the experts, though this move may not necessarily increase the oil prices to $100 a barrel, but it will ensure that it doesn’t go as low as $28 a barrel. Also, per some experts, even if the deal moves in the direction of proper implementation, its biggest impacts will start getting visible only after January 2017. The reason for this is the record jump in the activity in the options market tied to February. Both the positions tied to February ‘puts’ (options to sell) and ‘calls’ (options to buy) have risen, but the number of ‘puts’ at the top five most popular February ‘strike prices’ increased almost twice the amount as the number of top five call options.

This shows the defensive play in the market and the hopes associated with it. However, the analysts

warn that if there is no major update in the implementation of the deal then the market may again go in the negative direction.

For oil importing country like India, the rise of oil prices will directly have a negative effect on the economy. Though due to deregulation it may not cause the government burden as much as it used to earlier, but it is bound to have some fiscal and inflationary effects. India is the fourth largest importer of crude oil and imports 85% of the total oil from OPEC countries. India was among those countries which benefitted a lot from the low prices of crude oil. It maintained a growth rate of more than 7%, making it the fastest growing major economy of the world. In a country, quite sensitive to price rises, it helped in keeping the inflation under check. The rise in oil price would disturb the fiscal balance and make it prone to inflation. Per the experts, any price above $60 a barrel will go beyond the comfort level of India. Hence the government should prepare itself for the upcoming situation and look for other possible sources of energy.

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FINHUMOUR - RISHI SAXENA

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MARKET BSE Sensex - Top GAINERS SBIN Bank Of Baroda ICICI Bank Tata Power TechM

2.60 % 2.24 % 2.17 % 1.99 % 1.71 %

- SRIKANT SINGH BSE Sensex - Top LOSERS InfraTel Bajaj Auto Coal India Grasim Eicher Motors

3.31 % 2.10 % 1.81 % 1.78 % 1.74 %

Indian Market Oh What a fortnight it has been! With the never-ending speculations after the win of Donald Trump and demonetization completing one month, it has been a jerky ride for the Indian equity markets. If we talk about numbers, India’s Nifty (down 3.5%) was the second worst performing index in Asia after Philippines, and the fourth globally – after Mexico (down 5.9%), Brazil (4.3%) and Philippines (down 3.9%). The benchmark indices of India S&P BSE Sensex and the Nifty50 which lost around 7.5% during the last month has managed to cover some of its losses since then. Nifty which plummeted to an intraday low of 7916 on November 21 has managed to reach 8261.75 on Dec 9. Among sectoral indices, realty, auto, private bank and FMCG were hit the most on NSE, falling 6% - 16% during this period. On the other hand, metals, pharma, PSU bank and energy indices gained 2.5% - 4.7%.

According to experts, the markets will perform as per the US fed rate action, union budget 2017, progress made in GST etc. It seems no one has much expectations from the market and the Indian market will remain flat, if not down, for the upcoming month. Various brokerages also predict the volatility of market with some even lowering their March 2017 estimates. Motilal Oswal released a statement saying “We further revise our Sensex EPS downward by 2% for both FY17E and FY18E to account for the demonetization impact. Our revised FY17/FY18 Sensex EPS stands at Rs. 1,379/1,703. We now expect Sensex EPS to grow 4%/24% for FY17/18, as against our earlier expectations of 12%/21%. We cut our Nifty EPS for FY17E/FY18E by 2% each. We now expect Nifty EPS to grow 8%/23% in FY17/18, as against our earlier forecast of 10%/24%, to Rs. 424/523,".

Global Market: US stocks have set a string of record highs since the November 8 election hoping a pickup in its economic growth thanks to Donald Trump promises of lower tax and easier regulations. Although the experts are not bullish about the market and are cautious, the S&P 500 SPX has had its best five-week run since March and the Dow index is up 7.8 per cent since the election. Japan’s main stock Nikkei rose to a new high of 18996.37 since December 2015 after the optimism surrounding Donald Trump win.

Market SENSEX NIFTY 50

Open

Closing

26,694.28 8,271.70

26, 747.18 8,261.75

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MARKET

Graph1: BSE Sensex from Nov 29 to Dec 9, 2016

Graph1: NSE Nifty from Nov 29 to Dec 9, 2016

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STARTUP TRACKER - ANSHUMAN NANDWANA

Started by Dinesh Rohira and Ajay Arjit Singh, 5nance is a one-stop platform for all financial needs of a common man. Being a data-driven model, the platform offers aggregation of financial products, advisory with analytics over an integrated interface for free. The interface provided by the platform is simple and easy to use which makes it appealing compared to other financial management platforms available online.

The process is pretty simple. A customer has to register on the website with their credentials such as name, e-mail ID, and their phone number. Once the customer logs in, some basic information (about his salary, savings etc.) is taken to assess the consumer’s risk appetite. Customers are asked about their goals, such as child’s college fees or retirement planning, they’d like to achieve over a certain course of time.

Once these processes are done, the system then shows the customers an array of offerings, structured from short-term to long-term finance planning, across products like mutual funds, corporate fixed deposits, debentures as well as loans.

Functioning in a KYC-regulated environment, the system automates the checks and completes the verifications when the user buys any product. In case a customer is not registered, the platform gets the KYC done for users at their doorstep.

Once a purchase has been successfully made, the metrics are reassessed and the user’s profile gets automatically updated. As the user makes more investments in newer funds, their goals, risk appetite, and overview of their finances also gets automatically updated.

The customers have the right to exit (from an investment) whenever they deem right. The platform also guides the customer telling them the right time to exit a fund. The platform keeps complete track of your investment, making it not just an aggregation tool but rather a life cycle management entity.

Hence, the platform is meant for common people, who have financial goals in their life but are not sure about the best way to achieve them. It is a must try platform for anybody who is financial novice but wants to manage saving in a manner that it can meet their goals.

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FINWORD

Quadruple Witching

- NIDHI KUMAR

Quadruple witching refers to an expiration index that include index futures, stock index options, stock options and single stock futures. While index options and stock option contracts expire on the third Friday of every month, all four of these expire simultaneously on the third Friday of March, June, September, and December. Much of the action surrounding futures and options on quadruple witching days is focused on offsetting, closing, or rolling out positions, as well as arbitrage trades, with the result being elevated volume, particularly in the last hour of trading.

Co-Pay A co-pay is a common feature of many health insurance plans, where the insured pays a set out-of-pocket amount for health care services. Insurance providers often charge co-pays for services such as doctor visits or prescriptions drugs and these are a specified amount rather than a percentage of the bill. They are often paid at the time the service is rendered. Insurance providers charge higher co-pays for appointments with out-of-network doctors than for doctors that are in their network of approved healthcare providers. In most cases, plans with relatively high premiums are likely to have low co-pays, while plans with low premiums are more likely to have high co-pays.

Leveraged Buyout A leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired and the acquiring company are often used as collateral for the loans. The main purpose of LBO is to allow companies to make large acquisitions without doing a very large amount of capital investment. LBOs are conducted for three main reasons. The first is to take a public company private; the second is to spin-off a portion of an existing business by selling it; and the third is to transfer private property, as is the case with a change in small business ownership. However, it is usually a requirement that the acquired company or entity, in each scenario, is profitable and growing.

Exchange-Traded Fund (ETF) An exchange-traded fund (ETF) is an investment fund traded on stock exchanges like stocks. An ETF holds assets such as commodities, stocks, or bonds, and trades close to its net asset value (NAV) over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be a better mode of investment for people because of their low costs, tax efficiency, and stock-like features.

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DID YOU KNOW

- PRANAV GOYAL

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It Costs about 3 cents to make a $1 bill in United States Oil tycoon, John D. Rockefeller, was the world's first billionaire.

The highest-price stock currently sold on the NYSE is Warren Buffett's Berkshire Hathaway, which sells for around $2,47,190 10 percent of the Russian government’s income comes from the sale of vodka Apple’s cash and investments are now equal to GDP of Hungary and more than that of Vietnam and Iraq Until the U.S Federal Reserve was created in 1908, individual banks could create their own money The World’s first bank was Monte Dei Paschi di Siena, founded in 1472 and headquartered in Tuscany, Italy. It still operates today Starbucks has operations in both more countries than both Goldman Sachs and JP Morgan Chase The United States generates more than 20% of the world's GDP with about 4% of the world's population.

Three of the world's 50 largest economies don’t have a dedicated exchange-traded fund (ETF) listed on a U.S. exchange: Iran, Saudi Arabia and Pakistan.

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FINQUIZ

1. What is a Bridge loan?

[A] Adjustable rate mortgage [B] A short term loan made until a long-term financing loan is available [C] A commercial loan for building a bridge

- HRISHIKESH GULKOTWAR

2. What is swing loan?

[A] Adjustable rate mortgage [B] A short term loan made until a long-term financing loan is available [C] A mortgage vehicle that the bank offers to assist borrowers in the transition of changing homes 3. In the world of trade and commerce what is special about the commissioning of Monte dei Paschi si Siena in Italy in 1742?

[A] First demat account opening at a bank [B] First trading bank in the world [C] None of these 4. Name the first Indian woman CEO of a Foreign Bank?

[A] Chanda Kochhar of ICICI Bank [B] Arundhati Bhattacharya of SBI Bank [C] Tarini Vaidya of KBC Bank India & South Asia 5. He is the pioneer in mutual fund industry and often referred as the Father of Index Fund investing. He created the first S&P 500 Index fund. Identify this famous person?

[A] Warren Buffet [B] Rupert H Johnson Sr. [C] John Bogle 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 Page 15

FINQUIZ

7. What term became popular after the newspaper report of Watergate Scandal in the year 1973?

[A] Money Laundering [B] Hedging [C] Bankruptcy 8. In which country's coins you can found the following lines imprinted, 'This is the root of all evils' ?

[A] India [B] UK [C] Vatican City 9. Name this famous personality who founded Pratichi Trust with the use of his Nobel Prize money?

[A] Kailash Satyarthi [B] Amartya Sen [C] Venkatraman Ramakrishnan 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. B 8. C

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4. C 9. B

5. C 10. B

LIFE @ IMT

When I dared to Fly...

- SHUBHAM ARORA

My tiny feet stumbled, but your hands held me; I crawled my way to you, you picked me up and put me on a pedestal; 'Mummy, Daddy', I'd cry for every little problem, like your presence would vanish all my frowns.

Standing at various crossroads, I looked up to you to show me the path, When in despair, your little devil gives me solace; It's in you'll I find my confidante.

Now I open my wings to fly and leave the nest, there will be none to pick me up when I stumble, none to magically wash away those fears.

When I soar high in the sky, I'll crash and bleed but will learn to heal myself; I’d shed a tear or two and smile amidst all the chaos, creating a new shelter in the places I go".

In love with IMT‌.

We at FinNiche wish everyone the best for their Future.

Go for It Managers!

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