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FINXpress DECEMBER 14, 2014 | A FINNICHE INITIATIVE
In Focus
Do write to us at: finniche.imt@gmail.com
India Russia Summit
Opinion Fight of OPEC and U.S. for market share and its impact on other economic factors| 4
Highlights| 2
Term of Week Seigniorage | 6
Brand World Personality Kailash Satyarthi |11
Cicret Bracelet|12
December, 14 | 2014 | Volume 25
Another week of hectic schedule has gone by with IMT continuing to live by its motto of IMT never sleeps. Report submissions, presentations to be submitted in the coming week and the winter chillness setting in and the year coming to an end, IMT is on a high to the end the year on a positive note.
India—Russia Summit Highlights
Fight of OPEC and US for market share and its impact on other economic factors
Seigniorage
Club FinNiche releases its weekly magazine FinXpress with the In Focus talking about the ‘India—Russia Summit Highlights’. The Opinion gives an overview of ‘Fight of OPEC and US for market share and its impact on other economic factors’. The term of the week describes “Seigniorage", difference between the value of money and cost of producing it physically. Do have a look at the market section, Tech world which brings to you about Cicret Bracelet and Personality of the week, Kailash Sathyarthi.
Hope everyone likes the revamped version of magazine. Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas. Happy Reading! Regards The Editorial Team Club FinNiche
Kailash Sathyarthi
Cicret Bracelet
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By
The bilateral summit
between
India and Russia takes place every
year
alternatively
in
J.Sindhuja
Russian president Putin yet again delivered a
help India in building a total of 12 new
master stroke by signing 20 deals which are of
nuclear reactors which would be a shot in the
worth over $100bn ranging across sectors like
arm
energy, oil & gas and defence. This comes at a
achieving energy security. However each of
when time when his country’s economy is
these reactors are expected to cost thrice the
facing severe headwinds owing to various
value of cost incurred for the Kudankulam
reasons like falling crude oil prices and severe
plants, mainly owing to the tough nuclear
to
the
liability
crisis. The two countries have signed total 7
government.
forthcoming summit will be the
inter-governmental
15th annual
agreements which also include the strategic
Both the premiers have also signed on a pact
vision for cooperation for peaceful uses of
which involves Russia producing state of the
atomic energy.
art helicopters in the Indian factories to
bilateral summit
between the two countries.
by
the
of
western sanctions imposed post Crimean 13
adopted
ambitions
Moscow and in New Delhi. The
and
laws
government’s
Indian
commercial
reduce cost overruns and production delays.
Firstly amongst this plethora of deals, $40bn
This is also the first major defence deal signed
worth was allocated in the nuclear energy
under the ‘Make in India’ campaign as it
space and is spaced out across a span of 2
allows India to export these helicopters to
decades. Under this agreement, Russia will
other countries.
The other key deals which were signed in
Oil
principle are mentioned as below
Zarubezhneft have also entered into an
India
Limited
Agreement on training of Indian military
MOU
personnel
hydrocarbons
in
the
Russian
military
on
joint and
(OIL)
and
exploration also
of
providing
establishments. This move was aimed to
technical assistance for the hydrocarbon
help in facilitating better understanding
projects in India.
among the two defence forces.
New protocol agreement signed between
Enhancement of cooperation in Oil & Gas
the Ministry of External Affairs (MEA) of
sector. This envisages on the possibility
both
of constructing a hydrocarbons pipeline
promulgate much closer consultations
between Russia and India, which has
between the two countries in 17 different
long been neglected due to various
international issues.
the
countries
which
would
factors. To conclude these agreements not only
Tata group company- Tata Power has
further strengthened the Indo Russian
entered
relations but also placed them in a much
into
a
Memorandum
of
Understanding with the Russian Direct higher trajectory. Also these agreements Investment Fund (RDIF) to aggressively come in as a rude shock to the western pursue investment opportunities in the world just when they were beginning to energy sector within Russia.
strengthen their relations with India.
- By Priti Sureka
Oil prices have been dropping sharply over
oil prices continue to fall in such a way, then
the past 6 months. In June, 2014 oil price was
the nation has to either use its reserves or cut
$115 a barrel which now has fallen by more
back its planned spending.
than 45%. Now the oil price is below $60. In response to this, OPEC which controls nearly
After facing some years of recession, Iran’s
Saudi Arabia has billions of
40% of the world market, had a meeting in
economy started to rebuild. The economy is
reserves and it cannot sacrifice
Vienna where it failed to come to an
also facing trouble because of decline in oil
its market share to restore the
agreement regarding production and supply
prices as it also expected oil price to be in the
oil price in global market.
and
range of $100.
ended
up
keeping
production
unchanged. Oil price is determined by demand and These nations are dependent
on high oil prices to meet its budget requirements and thus they are adversely affected by drastic fall in global oil price.
supply and also by expectation. Presently,
demand is very low in Europe and Asia because of weak economic activity and shift from oil usage to other fuels. Geopolitical risks also loom large. Situation of civil war in Iraq and Libya is not allowing them to produce much oil. On the other side, Saudi Arabia has billions of reserves so it is not in favor of sacrificing its market share so as to restore the price. Such a drastic fall affected the
American
and
other
Western
oil
companies who undertook high-cost projects
Given the situation, OPEC seems to adopt a
borrowing heavily expecting high oil price.
price war strategy against oil producers in the U.S. OPEC mainly Saudi Arabia is in favor of
But the situation is worst for Russia and Iran
reduction in oil prices so that it becomes
as these countries are dependent on high oil
unprofitable for U.S. oil producers and they
prices to balance their budgets. The Russian
leave the market. Meanwhile, in the U.S., fall
economy was already facing weak growth
in crude oil prices may tender an economic
and now such jump in global oil prices is
boost as gasoline prices will be reduced and
putting an adverse pressure on the economy.
households will have more money to spend
Oil revenue accounts for about 45% of the
elsewhere. Investment will rise and so as
country’s budget. And the spending of the
capital
Russian Government has assumed oil price to
simulta neously
be in the range of $100 a barrel in 2015. So if
momentum.
formation
in
the
stimulating
economy, growth
The drop in oil prices is having an impact on
will lead to inflation. The reverse case also
shale extraction operations and offshore
holds good. Falling oil prices results in fall
drilling
in price of food. The ultimate result is
of
U.S.
Shale
operations
also
generate employment and it is doing much
deflation.
Therefore,
countries
already
better in U.S.
facing deflation issues will be extremely troubled by inability to pay debt. On the other side, dollar value is rising relative to many other foreign currencies. Hence, debt repayment is likely to be very difficult. LNG prices decrease as oil prices. Hence, fluctuating LNG prices affect investment in infrastructure required to export LNG. As a result, export of LNG has become less. The world is reaching to the limits of debt expansion. Lower oil prices also help interest rate to go up. However, there is always a limit on the borrowing amount by individual, business or government. In such a case, the most obvious solution is
However, it is becoming difficult for shale
Quantitative Easing or other strategies.
drillers to generate enough cash flows to
However, QE cannot be adopted just like
pay back the loan due to low oil prices.
that. There are many pros and cons attached
According to a recent report by Bank of
to it. Firstly, it creates an asset bubble and it
America, 15% of U.S. shale producers are
also encourages investment with lowest
already losing money at current oil prices.
probability of success.
However, Bank of America expects a rebound in oil prices in the second half of
Therefore, the consistent fluctuation rather
2015 .
decline in oil prices and the pricing and production strategy of OPEC countries and
Oil contributes around $1.2 trillion to U.S.
U.S. are affecting not only the concerned oil
GDP and gives over 9.3 million jobs. So it is
producing countries but also other nations
an alarming situation for the U.S. economy.
who are dependent
If oil price rises, food prices will rise and it
heavily burdened by debt.
on oil and who are
- By Mohammed Zakir Ahmed
Seigniorage also spelled as seignorage is the difference between value of money and cost of its production
Seigniorage means right of lord to mint money. Seigniorage is the revenue made by a government from the printing of currency. In other words, it is the difference in the face value of money and cost of making it physically.
monetary seigniorage, where sovereign-issued securities are exchanged for newly minted bank notes by central bank, thus allowing the sovereign to borrow without the need to repay. However it refers to sovereign revenue obtained through debt monetization including expansion of money supply during GDP Seigniorage is the revenue derived by the growth and meeting yearly targets of inflation. government when the cost of minting coins or printing money is less than the market value of A person trades one ounce of gold for a the currency, while if the cost of producing government issued gold certificate, and holds money used in circulation is more than the the certificate for a year and then redeems it in intrinsic value of the money the government gold. If the person ends up with exactly one loses money on seigniorage. It is the value the ounce of gold, no seigniorage occurs. government generates by adding its stamp to an ordinary piece of paper, piece of metal or If instead of issuing gold certificates, a electronic bank entry. Paper/electronic fiat government converts gold into currency at the money has a higher seigniorage as the source market rate by printing currency notes and a is not a physical metal to create it, whereas person exchanges one ounce of gold for its coins have lower seigniorage because the it value of currency. This person keeps the costs to create coins and source metal. currency for an year and then exchanges it all for an amount of gold at the new market value. In the year 1290, King Philip IV lacked If value of currency relative to the value of resources to fund his wars, so he began to gold has changed in the duration, the second debase the currency by increasing seigniorage exchange may yield more or less than one he extracted from melting new coins. This ounce of gold. caused devaluation of French currency, inflation and disappearance of gold and silver If the value of currency relative to gold has in the kingdom. This is exactly same as decreased, then the person receives less than printing of money, an increased monetary base one ounce of gold and seigniorage has with less intrinsic value creates inflation. This occurred. If the value of currency relative to is due to the fact that level of goods available gold has increased, then the person receives for sale are exactly same but more money is more than one ounce of gold and seigniorage available for circulation resulting in higher has not occurred. Assuming that the value of inflation as these goods will be sold at higher one ounce of gold remains constant through prices to compensate. The term also applies to the year.
INDIAN MARKETS BSE benchmark Sensex extended its falling trend for the second consecutive week by plunging 1,107.42 points due to all-round selling pressure in view of declining crude prices and caution ahead of key macroeconomic data. The Sensex resumed almost stable and touched a high of 28,454.85 before falling back to 27,320.05. The 50-issue CNX Nifty of the NSE also plunged by 62.75 point, about 0.75 per cent, to end below 8,300-mark for the first time after one and half months at 8,292.90. Department of Commerce said on Thursday retail sales rose
Open
High
Low
Close
SENSEX
27,598.96
28822.37
28217.50
27,602.01
NIFTY
8,302.00
8626.95
8504.65
8,292.90
0.7% during November, which was the best performance in eight months.
BSE SENSEX With the S&P 500 hitting so many records this year, while
many economies outside the U.S. are growing at a sluggish pace and China showing signs of a slowdown, there’s been an endless stream of warnings that the market is overvalued.
CNX NIFTY
COMMODITIES
Crude
oil
for
was
trading
New
York
Exchange
for
Mercantile
the
Unit
Rs / Unit
% Change
Gold
10 grams
27199.00
-0.20
Silver
1 kg
38649.00
-0.04
Crude Oil
1 bbl
3636.00
-4.66
January
delivery CLF5, -4.10% on
Commodity
EXCHANGE RATES INR/ 1 USD
62.44
INR /1 EURO
77.38
INR/ 100 JAPAN YEN
52.49
INR / 1 POUND STERLING
98.15
$59.18 a barrel.
Major worry for economists,
the U.S. recovery might be stalled by very slow growth in Europe,
and a slowing of
China’s rapid growth.
INTERNATIONAL MARKETS Open
High
Low
Close
NYSE Comp
10,690.14
10,690.14
10,500.50
10,690.14
NASDAQ
4,665.35
4,810.86
3,946.03
4,708.16
S&P 500
2,028.50
2,031.75
2,017.00
2,035.33
FTSE 100
6,461.70
6,461.70
6,297.44
6,461.70
CAC
4,197.48
4,202.52
4,103.49
4,225.86
DAX
9,794.20
9,799.65
9,586.22
9,862.53
NIKKEI 225
17,317.69
17,526.19
17,298.19
17,257.40
SSE 50
2,186.74
2,849.41
1,402.05
2,193.54
Hang Seng
23,328.99
23,445.96
23,230.03
23,312.54
Infosys Founders Including Murthy Sell Stakes for $1.1 Billion Some of the founders like N R Narayana Murthy, Nandan Nilekani, S D Shibulal and K Dinesh of Infosys Ltd sold shares worth $1.1 billion (Rs. 6,807 crore at 1 dollar = 61.88 rupees) in India's second-largest IT services exporter on Monday, cashing in on a more than 20 per cent gain in the stock since the company picked its first outsider as chief executive. Infosys shares have so far risen 23 per cent since the company in June named Vishal Sikka, a former executive at global software firm SAP, as its CEO in a bid to revive growth. IDBI, which holds 16.6 percent in the company, is leading the stake sale talks.
The four founders and members of their families sold 3.26 crore shares in Infosys at a fixed price of Rs. 1,988.87 each, a 4 per cent discount to Friday's close, said Deutsche Bank, the sole book runner of the sale. The four were all company executives who left before Sikka took office. The sale reduces the combined stake of all the founders and their families to 5.1 per cent from nearly 8 per cent, Thomson Reuters data shows. Infosys shares ended down 4.8 per cent, while the Nifty fell 1.2 per cent.
Nifty ends below 8400, Sensex sheds 322 pts on China woes Falling crude is a bigger theme than
even
the
change
of
government at the center earlier this year.
Equity benchmarks as well as broader markets shed more than a percent on Tuesday, tracking sharp fall in Chinese markets and further decline in crude oil prices. More profit booking by investors also triggered sell-off in the market. The 30-share BSE Sensex closed below the psychological 28000-level, down 322.39 points to 27797.01, continuing for the third consecutive session today and hitting a one month low. Globally, Asian markets closed lower with the China's Shanghai down 5.4 percent on profit taking amid expectations of weak GDP in 2015 and liquidity fears. Hang Seng lost 2.3 percent following slump on Wall Street last night while European markets like France's CAC, Germany's DAX and Britain's FTSE dropped nearly one percent post Asian rout and further fall in crude oil prices. Brent crude declined to fresh five-year low of 65.35 a barrel, before showing a recovery to 66.46 a barrel. Back home, all sectoral indices closed in the red. BSE Auto, Bank, Capital Goods, FMCG, Metal and Oil & Gas indices were down 1-3 percent while the fall in Healthcare and IT (down 0.2 percent) was less compared to other indices. Sesa Sterlite was the biggest loser on the Sensex, down more than 5 percent on China woes. Other metals stocks like Tata Steel and Hindalco Industries were down 3 percent each. State-run oil explorer ONGC shed over 4 percent to hit a 7-month low Rs. 351 as Macquarie lowered target price for the stock to Rs. 470 (from Rs. 500). Declining shares outnumbered advancing ones by a ratio of 2044 to 907 on the Bombay Stock Exchange while four shares slipped for every share gaining on the National Stock Exchange.
Telecom Commission approves spectrum base price with riders Inter-ministerial panel Telecom Commission has finalized the base price for spectrum to be auctioned in February with some riders. TC held a meeting yesterday to discuss the next round of spectrum auction including finalization of the base price. The committee of the Department of Telecom had suggested a base price of Rs. 3,646 crore per MHz for the auction of 800 MHz spectrum, used for offering CDMA services, which is 17 per cent higher than what the regulator TRAI has recommended. The DoT imposed Rs.50 crore in each telecom circle for alleged violation of rule on both the companies.
The S&P energy sector was down 2.2 percent on the day. It is down 16.5 percent this year,
The price of 900 MHz and 1800 MHz as recommended by DoT committee could not be ascertained. The TC's decision will now be placed before Telecom Minister Ravi Shankar Prasad for final approval and after that Cabinet might be approached for certain issues. The TC discussed the revised recommendations submitted by sectoral regulator TRAI on the pricing of 800, 900 and 1800 MHz bands. The Telecom Regulatory Authority of India has reiterated its recommendations for 900 and 1800 MHz bands, while it has increased the base price by 15 per cent for 800 MHz band. The next round of spectrum auction is proposed to be held in February and the government is estimated to garner at least Rs. 9,355 crore from sale of radiowaves. Most of the spectrum which is proposed to be put up for sale is being used by Airtel, Vodafone, Idea Cellular and Reliance Communications across various parts of the country. These companies will need to buy back radiowaves to continue their operations in areas where their licenses are expiring in 2015-16.
the worst performing of 10 S&P sectors.
CCI clears Sun Pharma-Ranbaxy deal The Competition Commission of India (CCI) approved generic drug-maker Sun Pharmaceutical Industries' $3.2 billion bid to buy Ranbaxy Laboratories, but ordered the firms to divest seven products to ensure the deal doesn't harm competition. Sun Pharma agreed to buy Ranbaxy from Japan's Daiichi Sankyo Co in April in a deal that would create India's largest, and the world's fifth-largest maker of generic drugs. The CCI said that it had decided that the "adverse effect of the proposed combination on competition can be eliminated by suitable modifications", putting the companies a step closer to completing the deal. The deal is now awaiting approvals from the U.S. Federal Trade Commission and Indian courts.
graduate degree in high-voltage engineering. He then joined a college in Bhopal as a lecturer for a few years.
11th January, 1954
Samrat Ashok Technological Institute, Vidisha
-Nobel Peace Prize 2014
of
-Defenders
Democracy
Award (2009-USA) -Alfonso Comin International Award (2008-Spain) --Medal
of
the
Italian
Senate (2007-Italy) -Heroes Acting to End Modern Day
Slavey
by
US
State
Department (2007-USA) -Freedom Award (2006-USA) -Friedrich
Ebert
Stiftung
Award (1999-Germany) -La Hospitalet Award (1999Spain) -De
Gouden
Wimpel
Award (1998-Netherlands)
Kailash Satyarthi (born Kailash Sharma) is a human rights activist from India who has been at the forefront of the global movement to end child slavery and exploitative child labor since 1980 when he gave up a lucrative career as an Electrical Engineer for initiating crusade against Child Servitude. As a grassroots activist, he has led the rescue of over 80000 child slaves and developed a successful model for their education and rehabilitation. As a worldwide campaigner, he has been the architect of the single largest civil society network for the most exploited children, the Global March Against Child Labor,which is a worldwide coalition of NGOs, Teachers' Union and Trade Unions.
-Robert F. Kennedy Human Rights Award (1995-USA) -The
Aachener
International
Peace Award (1994-Germany)
Academic Profile He attended Government Boys Higher Secondary School, and completed his degree in electrical engineering at Samrat Ashok Technological Institute, Vidisha and a post
Work While teaching as a professor in a college in Bhopal, Mr. Satyarthi decided to work more actively for social change. Along with a set of friends, he founded Bachpan Bachao Andolan (BBA) in 1980. BBA symbolizes the struggle against child labour and child servitude. The organization is also the initiator of the first regional South Asian people’s movement, the South Asian Coalition on Child Servitude (SACCS), a conglomeration of more than 750 civil society organizations. Till date, BBA team has led to the rescue and withdrawal of over 77,328 child bonded labourers and developed a successful model for their education and rehabilitation. Satyarthi, along with Pakistani activist Malala Yousafzai, was awarded the Nobel Peace Prize in 2014 "for their struggle against the suppression of children and young people and for the right of all children to education". Satyarthi is the fifth Nobel Prize winner for India and only the second Indian winner of the Nobel Peace Prize after Mother Teresa in 1979 Personal Life He lives in New Delhi, India. His family includes his wife, a son, daughter-in-law, and a daughter.. He is very fond of cooking.
Paris based design company Cicret
A bracelet that projects the screen of your smartphone directly onto your wrist
Currently, it is in the prototype phase A promotional video shared on the
company’s
site
incoming phone calls and activate the speakerphone functionality on the their smartphone.
Cicret is in the process of raising funds for the further development and production of the Bracelet, but Cicret’s co-founder Guillaume Pommier tells Gizmag that the first prototype will be completed by the end of this year.
The Bracelet uses a pico projector and eight proximity sensors that point towards the user's forearm. It is activated with a twist of the wrist, and when activated, it projects an Android interface onto the users arm. The proximity sensors detect the user's finger movement are and allow them to interact with the interface. It promises to provide the same experience as with any other Android device.
How it works
has
gathered over 4 million views on youtube
With wearables gaining edge, smartphones and tablets are not the only mobile devices in the present age. With the new bracelet, Cicret is taking things up a notch by turning your arm into a smartphone.
Features The Cicret Bracelet consists of an accelerometer and a vibration module, along with an LED for notifications. WiFi and Bluetooth are used for connectivity and there is also a Micro USB port. As far as memory is concerned, it is expected to be made available in 16 GB and 32 GB models. The device will allow users to send and receive emails, browse the web and play games. There will also be a provision to pair up with an existing smartphone, answer
Challenges Currently, projected touch screens lack the responsiveness and visual clarity of glass screens as available with the smartphones. The bracelet would be more useful if Cicret can improve on the technology, to make it more competitive with the smartphones.