Finxpress jan 31

January 31st, 2017

How Trump's new executive order on H1B visas will affect Indian IT sector Dollar– Overvalued

Football Field Valuation

EDITION XVI . 13

A FinNiche Initiative

EDITORIAL

- UTKARSH SUREKA

‘Price is what you pay, value is what you get’ -Warren Buffet The world is in turmoil. A wild card won the hand. Donald Trump can now add ‘President of the United States of America’ to his already impressive resume. It has left the entire world on the back-foot. Everyone is trying to figure out what Trump will do. His whimsical opinion regarding climate change and his determination to make America a walled state has left everyone guessing as to what his next move be. It has also left the financial gurus of the world guessing as to what will happen next. The policies that the US follows has a ripple effect on almost the entire world. A change in the value of the dollar can cause huge repercussions in more than a few countries. In this stormy financial climate, things are not much better at home.

Demonetization is still an inconvenient truth.

Meanwhile, Club FinNiche is proud to announce the completion of our flagship event, RISCON ’17. We can now breathe a sigh of relief. Life continues to be educationally at IMT. We at Club FinNiche are open to any comments, suggestions or criticisms. Please do write to us and share your ideas.

Happy Reading!

The Editorial Team.

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CONTENTS How Trump's new executive order on H1B visas will affect Indian IT sector 2 Dollar– Overvalued

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Fin-Humour

6

Market

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Start-up Tracker

8

Fin-App

9

Fin-Word

11

Did you know

12

Fin-Quiz

13

Life @ IMT

15

Our FinXpress

16

Sponsors

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NATIONAL

How Trump's new executive order on H1B visas will affect Indian IT sector

- AFROZ I. HUSAIN

Banning foreign nationals from seven Muslim dominated countries —— H1B allows US companies to employ foreign workers

On Friday, US President Donald Trump signed an executive order banning foreign nationals from seven predominantly Muslim countries to enter the US and is expected to sign a new executive order aimed at strangulating work-visa programs, including the H1B and L1 visas used by Indian IT professionals, as part of a larger immigration reform effort, a top White House official has said.

The H1B visa is a non-immigrant visa that allows US companies to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields. The technology companies depend on it to hire tens of thousands of employees each year.

such work visas, which was recently introduced by the previous Obama Administration.

As per the draft order, Trump would reverse Obama's extension of the duration of the optional practical training work visas, which allowed foreign students to stay in the US a bit longer after completion of their studies. Within 90 days of the signing of the executive order, the Secretary of Homeland Security would have to review all regulations that allow foreign nationals to work in the US and determine which of those regulations violate the immigration laws or are not in the national interest of America. It would also immediately terminate all parole policies.

The executive order drafted by the Trump Administration not only strangulates H-1B and L1 visas, but also increases inspection and ends employment authorization cards to spouses on

The executive order will also ask the Secretaries of Labor and Homeland Security to restore the integrity of employment-based non-immigrant worker programs and better protect US and

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NATIONAL

foreign workers affected by these programs. The draft order seeks the administration to "consider ways to make the process of allocating visas more efficient and ensure that beneficiaries of the programs are the best and the brightest." It also proposes to establish a commission or

advisory committee to analyze the nation's current immigration policies and their impact on the American society, economy, work force, and the foreign policy and national security interest of the United States.

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INTERNATIONAL

DOLLAR- OVERVALUED

- HRISHIKESH GULKOTWAR

Fig: US Dollar Currency Index, Source: http://data.cnbc.com/quotes/.DXY

Dollar at 52wk high in Dec’16 —— Currency valuation - zero sum game

The dollar has appreciated since the Presidential Election win by Donald Trump and also as the U.S Federal Reserve surprised markets by indicating it would hike rates by three fold, as against the widely expected two fold. Adrian Zuercher Head Asset Management at UBS said that the greenback was overvalued against the G10 currencies, as much as 15-20% against the EURO and 30% against YEN. In 1985, when the US current account deficit was about the same share of GDP as of today, market perception revision caused a drop from 240 to 140 Yen & 3.3 to 1.8 Deutsche Marks. The below graph measures the dollar against a basket of currencies. We can see that it has touched a 52 week high of 103.82, its highest since Dec’02.

The basic reason for believing the dollar to be overvalued is that the US is running large current account deficit ($113 billion in the third quarter of 2016) meanwhile countries like China are running huge current account surplus. The surplus countries are holding a huge share of their wealth in the countries with current account deficit. Such a process is not sustainable and eventually this will have to be corrected.

There could be another reason and that is ‘carry trade’. Investors who have purchased higher interest dollar assets, bought by taking loans in other countries , would liquidate the assets when the dollar depreciates, subsequently leading to a further fall in dollar value.

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INTERNATIONAL

The interest rates in US market are higher indicating a prediction of impending decline of value of dollar. The policies of Trump, if enacted might result in inflation leading to higher interest rates, which might end up supporting the dollar. If he spends money, the fiscal deficit will further increase which is not good for the dollar.

Currency depreciation & appreciation is ‘zero sum game’; but looking at the state of world economy

any sharp decline in dollar valuation will lead to contraction everywhere. For the rest of the world, as their currency appreciates against the dollar, this can be curtailed by reducing interest rates. But looking at Japan, which is in a liquidity trap cannot cut interest rates. The only countries which could benefit from weaker dollar are the demand constrained economies pegged to the dollar.

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FINHUMOUR - SRIKANT SINGH

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MARKET BSE Sensex - Top GAINERS Remsons Ind SRS Ltd. Northgate Com Nucent Estates

- KRISHANT KAUL BSE Sensex - Top LOSERS VKS Projects FCS Software High Ground Ent

The INDIA VIX is up 1.62% at 16.94. S&P BSE Sensex is trading at 27,769.01 down 80.55 points, while NSE Nifty is trading at 8594.80 down 38.25 points. A total of 39 stocks registered a fresh 52-week high in trade today, while 13 stocks touched a new 52-week low on the NSE. ITC is supporting the BSE FMCG index and keeping it in green thus supporting the index. ITC is amongst the few gainers up by more than 1.3% along with Colgate Palmolive which is up by 1.10%. While, other stocks of Avanti Feed is down by 3.44%, United Spirits, Kohinoor, Everready, Vadilal Industries , EID Parry, Pin con Spiruts are laid down by more than 1%. The BSE Mid-cap Index is trading down 0.55% at 129229.87, whereas BSE Small-cap Index is trading down 0.64% at 12986.35. Some buying activity is seen in FMCG, Telecom and Finance indices while Automobile, IT, Bankex, Consumer Goods, Consumer Durables indices are showing weakness on BSE. Idea, Tata Power, ONGC, Bharti Airtel and Power Grid are among the gainers, whereas Infratel, Grasim, Gail, Coal India, Infosys and HCL Tech are losing sheen on NSE in the first trading hour.

Graph1: BSE Sensex from Jan 16 to Jan 27, 2017

Graph2: NSE Nifty 50 from Jan 16 to Jan 27, 2017 Page 7

STARTUP TRACKER - NIDHI KUMAR

AGacquisitions is a Multi Strategy Hedge fund and Investment Company having business operations spread across major financial markets.

The firm utilizes a healthy mix of new age investment techniques and conventional principles of investment management to meet its objective of capturing attractive long term returns over managing short term volatility .Founded by two young brothers, Kanishk and Harsh Agarwal, AGacquisitions is a bold startup. The bank has developed a potent network of global investors and clients which enable them to take on riskier and unconventional transactions. The brothers, who grew up in a business family, started AGacquisitions in the middle of 2010 by focusing on capital-raising for growth companies. They rely on a partnership model and in developing this model, they quickly developed a potent network of global investors and clients which enabled them to taken on riskier and unconventional transactions. These were the kinds of transactions, the larger investment banks restrained from making.

acumen has seen AGacquisitions making path breaking forays in the industry. He has global experience in Investment Banking, Fixed Income and Alternate Investing.

Mr. Harsh Agarwal He is the Founder and Member of the Board of the AGacquisitions Group. He spear heads the business development and new markets initiatives at AGacquisitions. He has significant experience in asset management and alternate investing and has been instrumental in developing proprietary approaches that are extensively used across the company’s investment program.

AGacquisitions India Investment Program is aligned towards achieving absolute returns, using multiple semi-systematic trading strategies. It uses Proprietary trading algorithms to trade future derivative contracts across positional time frames .It addresses concepts such as market cyclicity, trend following, market participant setups, in order to arrive at a systematic strategy that is capable of operating in both bullish and ABOUT THE FOUNDERS bearish market environments. AGaquisitions has Mr.Kanishk Agarwal addressed the main-street banking needs and He is the Founder & Managing Director of the would now address the wall-street banking needs AGacquisitions Group. His in-depth knowledge of of their clients. the hedge fund industry and his acute business

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FINAPP - RISHI SAXENA

History BHIM (Bharat Interface for Money) is a Mobile App developed by National Payments Corporation of India (NPCI), based on the Unified Payment Interface (UPI). It was launched by Narendra Modi, the Prime Minister of India, at a Digi Dhan programme at Talkatora Stadium in New Delhi on 30 December 2016. It has been named after Bhim Rao Ambedkar and is intended to facilitate e-payments directly through banks and as part of the 2016 Indian banknote demonetization and drive towards cashless transactions Platform: Google Play (Available), App Store (Under Development) Available in: English, Hindi, Bengali, Tamil, Telugu, Kannada, Malayalam, Odia, Gujarati Website: NPCI Portal Benefits of BHIM app BHIM allow users send or receive money to other UPI payment addresses or scanning QR code or account number with IFSC code or MMID (Mobile Money Identifier) Code to users who do not have a UPI-based bank account. BHIM allows users to check current balance in their bank accounts and to choose which bank account to use for conducting transactions, although only one can be active at any time. Users can create their own QR code for a fixed amount of money, which is helpful in merchant — seller — buyer transactions. They can also have more than one payment address. If the 12-digit Aadhaar is listed as a payment ID on the BHIM app will not require any biometric authentication or prior registration with the bank or Unified Payment Interface (UPI).

How does BHIM work BHIM lets you choose your preferred bank, after it has verified your mobile number. You get an SMS, so it’s best to use the same number as the one that’s linked to the bank account. BHIM will ask you to set a 4digit passcode. Pick something you won’t forget easily because you’ll need the code every time you open the app. The app will then ask you to select your bank. If your account is UPI activated, it will reflect the relevant number. . You’ll see options to send and receive money, and transact via IFSC. If UPI is not activated, you can put in six digits of your debit card number, and the expiry date, after which the app will Page 9

FINAPP

let you use it. To send money, type in the mobile number or VPA address. BHIM will verify the payee.

Type in the amount, and hit pay. If the payee doesn’t have UPI, tap on the three dots above the send money option. The ACCOUNT + IFSC option will open up, where you can put in the details. One problem currently is that you can access only one account per mobile number. So if your number is linked to two accounts, you will have to disable the selected one and go back to the bank selection option Latest in BHIM The government has enabled the Bharat Interface for Mobile (BHIM) app with Aadhaar and plans to launch the biometric-based Aadhaar Pay payment module in the coming weeks, seeking to accelerate the drive toward digital-money transactions in the country. Aadhaar Pay service will enable people to make and receive payments using their Aadhaar number and the biometric technology, obviating the need to carry mobile phones for payments. As of now, 14 banks have come on board for Aadhaar Pay and the government is in talks with other banks too.

Difference between BHIM and e-wallets  The basic difference between PayTM and the BHIM UPI is that PayTM is a sort of an e-wallet whereas with the BHIM UPI app you make bank-to-bank transfers.  When you use PayTM, you first need to have some money in your PayTM account in order to carry out transactions. If you want to pay someone using PayTM, you first need to transfer some amount to your PayTM account from your debit card or your bank account. Only then you can transfer the amount to the other person.  Whether you are giving money to someone or someone is giving money to you, unless that money is transferred from PayTM to the bank account, the money remains within PayTM and you cannot use it outside of the PayTM ecosystem.  With the BHIM UPI app the money transfer happens from bank to bank. Through the app you are directly connected to your bank account. It uses the phone number registered with your bank account to make the transactions. The transactions, as explained in the app documentation, happen immediately and you can carry out transactions 24 x 7.  With the BHIM UPI app the upper limit of a single transaction is Rs. 10,000 and you can transfer Rs. 20,000 in 24 hours. With PayTM, you can receive up to 25,000 rupees in a month.

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FINWORD

Football Field Valuation

- SAMARTH AGARWAL

A football field valuation method makes use of the graph which shows the valuation of a company according to different methodologies. Some of the methodologies used are:  DCF  Public Comparable  Precedent Transactions The graph will show the different mean valuations and multiples for the different methodologies and allow the person who is conducting the valuation (or most likely their MD) to decide which method to use primarily to achieve the best possible valuation.

Companies are valued using a combination of multiples and future cash flows, and each of these can be taken in a best, worst and median case. For example, with a discounted cash flow, you could assume that the company will have a terminal growth rate of x%, x+1% or x-1% and this would give 3 different final values. Therefore, the discounted cash flow method will give a range of values for the company. This applies to all valuation methods (you can trade at a high, low or average multiple of earnings etc.). The best way to show this visually is using a graph, like the one shown below.

This graph shows a variety of valuation ranges based on different methods and multiples. Straight away you can see that the average of all of these gives a share price of around $57, but that you could argue it is worth anywhere from $45 to $85.

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DID YOU KNOW

- ADYA JHA

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If we divide their net worth by their ages, Carlos Slim and Bill Gates would have each accumulated more than $100,000 of net worth for every hour they have been alive.

If we adjust for inflation, Warren Buffett would have been a millionaire by the age 25.

Compared to 2008, the U.K. economy is now 3.3% smaller whereas the U.S. economy is now 2.9% larger (both adjusted for inflation).

Apple’s cash & investments are now equal to the GDP of Hungary, and also more than those of Vietnam and Iraq.

According to the estimates of Cambridge Associates, 3% of venture capital firms generate 95% of the industry’s returns.

According to RBC Wealth Management, for the first time in 2011, Asia had more millionaires than North America According to the IMF, if Japan’s female labor-participation rate rose to levels of that of Northern Europe, its per-capita GDP could be permanently increased by 8%.

According to a report, by 2050 the median age of workers in China and Japan will be about 50, while that of the U.S is about 40.

According to the report of The Economist, “Over the past ten years, hedge-fund managers have underperformed in the stock market as well as inflation” In the 1960s, while wages & salary income made up more than 50% of the U.S. GDP, it was less than 44% by 2011, since dividends, interest and capital gains made up a growing share of the nation’s income.

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FINQUIZ

1.

[A] [B] [C] [D] 2.

[A] [B] [C] [D] 3.

[A] [B] [C] [D] 4.

Recently, we read in the Economic Newspapers that Indian rupee has recorded the biggest drop since December at 1.3% to 54.49 per US dollar, making it the worst-performing currency in Asia this year. In economic language, what is the correct term used for this drop in Indian Rupee?

Devaluation Depriciation Deflation Depression

- PRANAV GOYAL

In context with the falling rupee, a leading newspaper wrote recently that “RBI has used up most of the available ammunition to prevent the rupee’s slide in the over-the counter market, but without much success“. Which among the following steps was taken by RBI, that has been referred to available ammunition in this statement?

RBI sold the foreign currency in market RBI purchased the foreign currency from market RBI purchased the stocks from various stock exchanges in India RBI Revaluated the Indian Rupee Who among the following is the writer of the bestseller of last decade “The World Is Flat: A Brief History of the Twenty-First Century“?

Amartya Sen Thomas Friedman Eugene Robinson Connie Schultz

[A] [B] [C] [D]

Which among the following scheme launched by Government of India is a “Conditional Cash Transfer” scheme for Girl Child?

Swadhar Svayamsidhha Dhanlakshmi Sabla

5.

[A] [B] [C] [D]

Which among the following is an international grouping of industrialised economies of the world?

G-20 G-8 G-4 OECD

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FINQUIZ

6.

[A] [B] [C] [D]

We read in the newspapers that while doing the regulatory filing, social networking firm Facebook, which is primed for the biggest-ever share offering by an internet firm, has mentioned in its documents that “Users in _____, ____and ____represent key sources of our growth“. The three countries mentioned in this statement as are follows: India, US, UK India, China, US India, US, Brazil India, US, UK

7.

[A] [B] [C] [D]

Slogan of Reserve Bank of India is...?

India’s Central Bank World Wise Honors your trust Invest with Confidence

8.

[A] [B] [C] [D]

Which company’s ticker signal on the NYSE is C? Citigroup Inc Cigna Corp Circor International Inc Coca-Cola co

9.

[A] [B] [C] [D]

Name the first Indian women CEO of a foreign bank ?

Chanda Kochhar Shikha Sharma Naina Lal Kidwai Tarini Vaidya

10. 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] John Bogle [C] Rakesh Jhunjhunwala [D] John Thain

Answers: 1. B 6. C

2. A 7. A

3. B 8. A

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4. C 9. D

5. B 10. B

LIFE @ IMT

“Some people dream of success while others wake up and work hard at it.”

-Napoleon Hill

- ADYA JHA

With the onset of New Year, IMT is again buzzed with a lot of activities around. The first year students at IMT, Ghaziabad attended a workshop on dining etiquettes under the course WSSD. Since the last quarter of the academic year has started, budgets of various committees are being tabled and discussed. We at FinNiche successfully organized the national level inter B-School event RISCON which saw participations from various B-Schools in the country. After receiving over 100 registrations for RISCON, and after going through several rounds of grilling, only seven teams (including the teams from DMS, Delhi, IMI, Delhi, IMT, Ghaziabad) could make it to the finals which was a case study competition. Team Fin-Nominal from IMT, Ghaziabad won this competition, while Team Tubelight and Team Spotlight from IMT, Ghaziabad and DMS, Delhi were first and second runner ups respectively. Also, FinNiche in association with ICICI presents yet another workshop on popular demand. It will be an 18 hour workshop which will be delivered on ‘Derivatives’ across several days. Also, as the days pass by several other events like ‘Nivesh’ and ‘Chakravyuha’ are also round the corner. The enthusiasm in IMT for these events is clearly visible in the campus. Moreover, while some students are celebrating their success in the recently declared CFA level 1 results, rest are geared up for various national and international level competitions like Loreal Brandstorm and others.

We wish you all the best for your success in life!!!

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