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JANUARY 04, 2015 | A FINNICHE INITIATIVE
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Opinion December factory growth at two year high as orders surge| 4
In Focus An Alarming Week for Oil| 2
Term of Week
Tech World
Arbitrage| 6
Personality Vinod Khosla |11
The Future of Cloud Computing|12
January, 04 | 2015 | Volume 28
2015 has arrived, a fresh start for IMTians to make this year eventful and attain greater heights. First years are busy bidding farewell to their peers leaving campus on exchange program where as second years have entered their final term and may be the last term of education and freedom before entering the corporate world.
An alarming week for oil
December factory growth at two year high as orders
Club FinNiche releases its weekly magazine FinXpress, the first of 2015 with the In Focus talking about the ‘An alarming week for oil’. The Opinion gives an overview of ‘December factory growth at two year high as orders surge’. The term of the week describes ‘Arbitrage’. Do have a look at the market section, Tech world which brings to you about ‘The future of Cloud Computing’ and Personality of the week, Vinod Khosla.
surge
Club FinNiche welcomes any comments, suggestions or criticism regarding the magazine. Please do write to us and share your ideas. Arbitrage
Happy Reading! Regards The Editorial Team Club FinNiche Vinod Khosla
The Future of Cloud Computing
Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.
- By Arihant Jain
Retail prices of petrol and diesel are not declining at the same pace as the plummeting
Global Oil prices have fallen sharply over the
prices spiked. It prompted many US and
last couple of months and it has lead to
Canadian companies to drill oil at new places
significant revenue shortfall for many oil
to make sure they take advantage of this
exporting nations. While it was trading to
surge. It paved way for the fall in oil prices:
above USD 110 per barrel 6 months ago, it has
1. Increase
halved since to around USD 55 per barrel.
price of crude. Consumers are paying 8.32 per cent less for
in
output
from
US
shale
producers. 2. Weak demand in many countries in Europe and Asia due to insipid economic
diesel and 11.31 per cent less
Reasons for Fall In the last few years, oil prices have been
for petrol than on June 1.
bouncing over USD 100 per barrel because of
Thus, fear of global oversupply and reduction
growth.
soaring oil consumption in countries such as
in demand sent Brent, the international oil
But, on macro level, the fall of
China and due to conflicts in key oil
market, down almost 50 per cent last year, the
more
can
producing nations such as Libya, production
second-biggest annual loss since trading in
potentially boost growth by up
was not able to meet the demand. Thus the oil
futures contracts started in the 1980s.
than
USD
50
to 0.5 percentage points in the current financial year
In such a situation. OPEC, world’s largest oil
manufacturers but for the specific industries
cartel generally reacts by raising prices or
like the chemical industry or petroleum and
limiting the production of oil but in the
coal products, they’re getting hit directly.
meeting held in November, they decided not
to do so. Many OPEC countries such as Iran, Petrol prices are set to fall to below £1 a litre by the end of this month for the first time in six
years,
analysts
have
suggested.
Saudi Arabia needs oil prices to be high so as
Impact on Countries Countries such as China, India and Japan,
to balance their budgets but they didn’t
who are the highest net importers of crude oil
wanted to let go of their market share and
have now access to cheap energy source. A
they hoped that lower prices would help
large portion of population in these countries
throttle the US oil bloom. This though was
spend a significant portion of their income on
unexpected, led to the free fall of oil prices.
gas, as much as 30% in case of India. China, being the world’s largest net importer of oil,
Analysts have predicted that
saves about USD 2 billion annually for every
the world price of oil will
dollar drop in the oil prices. Though most of
continuing falling, with experts
the Asian countries benefit from this drop,
at
one exception is Singapore. According to
bank
Morgan
Stanley
suggesting that prices could
Bloomberg,
Singapore ranks second in the
even drop below $35 a barrel,
world for reliance on crude and thus depends
but others have warned that
heavily on export of oil.
prices are expected to rise
With oil revenues making 45 percent of
again at the end of the year.
government budget, Russia one of the worst Source: http://www.iea.org/
affected countries in the world. Economists now estimate that Russia's GDP will shrink at
It is evident from the graph above, that
least 4.5 percent in 2015 if oil stayed at $60 per
eventually
barrel. The plunging price of oil has also
oil
supply
exceeded
the
oil
demand leading the sharp fall in oil prices.
caused the ruble's value to collapse — which is leading to panic inside Russia and a rise in
Impact on manufacturers On one hand, a steep decline in the cost of oil
inflation, as imports become drastically more
leads to lower expenses. But on the other,
been struggling to deal with this crisis. On
business
December 15, the country suddenly hiked
may
suffer
because
of
lower
spending by oil and chemical companies on
expensive. So far, Russia's central bank has
interest
rates
from
10.5
percent
to
17
big-ticket items like computers and new percent in an attempt to stop people from machinery.
selling off rubles. Other countries struggling with this price
Though lower raw materials prices is a
drop include Iran, Venezuela, Saudi Arabia
blessing
and to some extent, the United States.
as
it
opens
up
margins
for
- By Shikha Sharma
December factory growth at two year high as orders surge Indian merchandise makers finished 2014 in a
work from abroad stretched at the speediest
higher apparatus, with business conditions
pace since April 2011.
enhancing at the fastest pace in two years in Indian
markets
surged
the
December. Quickened development of the
The rate of extension quickened to the most
most , led by banking stocks,
assembling segment was reflected by quicker
checked in the current 14-month grouping of
which gained on expectations
extensions in yield, new business and foreign
development.
of reforms in the sector
orders, said HSBC.
preproduction stock developing picked to the
HSBC Purchasing Managers’
The headline HSBC India manufacturing
supplies of completed products held by
Index
showed
Purchasing Managers' Index (PMI) moved to
Indian producers rose at the speediest rate
manufacturing activity in India
a two-year high of 54.5 in December, up from
since the overview started in April 2005.
had picked up in December
53.3 in the earlier month. Business conditions
2014
enhanced at a speedier pace in every one of
Accordingly,
the
pace
of
most honed in more than two years. Besides, (PMI)
the three business sector gatherings amid the
The index rose to a two-year high
of
54.5
points
in
December, compared with a 21 -month
high
previous month
of
53.3
the
month, with the most keen extension seen in customer products. Yield in the Indian manufacturing sector climbed in accordance with the headline index in December, with development getting to the speediest in two years. As per various study members, the most recent climb underway was underpinned by stronger request books. Then, Shopper
merchandise
were
the
best
diverged
from
proceeded
with
development of generation and approaching
performing of the expansive areas checked.
new
Most recent information reflected reports of
assembling economy declined in December.
enhancing request in December, as new
That emulated two progressive months of
requests
slight employment creation, in spite of the
expanded
for
the
fourteenth
work,
that the
staffing
pace
levels
in
India's
sequential month. Additionally, the rate of
fact
of withdrawal was
development was checked general and the
fragmentary
speediest since the end of 2012. Also, Indian
misfortunes were clear in two of the three
manufacturing companies enrolled a further
reviewed sub-segments, with the special case
climb in new fare business in December. New
being moderate products.
generally
speaking.
Work
At
last,
higher
costs
paid
for
metals,
disinflationary pattern making progress, the
chemicals and gadgets set upward weight on
RBI is required to discover space for some
info costs in December. That said, the rate of
rate cuts in 2015.'
expense expansion facilitated to the slowest in more than five-and-a-half years and was
The central bank has stayed immovably
well underneath the long-run arrangement
hesitant notwithstanding proceeded with
normal.
were
interest from industry for a cut in the policy
reflected by a generally stifled climb in
rate. At the same time while keeping up the
offering costs amid the month.
norm on the rate in its past bi-month to
Weaker
expense
weights
month monetary policy audit a month ago, it Remarking on the India Manufacturing PMI
had said it may cut rates — even in the
overview,
middle of surveys — if the circumstances
Pranjul
Bhandari,
boss
India
economist at HSBC said, 'Manufacturing
warranted
so.
Reflective
activity force quickened to a two-year high in
development of yield and new requests,
December, drove by a sound increment in
information
new requests from both at home and from
products makers expanded in December. The
abroad. A precarious climb in new requests
rate of extension quickened to the most
from the customer area more than balance a
checked in the current 14 month succession of
lull in new request development from
development.
purchasing
of
among
further Indian
venture merchandise. In our perspective, an ascent in the recent is basic for a genuine pick
Along these lines, the pace of preproduction
-up in monetary development. In accordance
inventory building picked to the most honed
with falling item costs throughout the last
in more than two years. Besides, loads of
few months, info value expansion was
completed
unassuming,
manufacturers rose at the quickest rate since
and
this
pattern
was
additionally reflected in yield costs. With the
merchandise
held
the overview started in April 2.
by
Indian
- By Priti Sureka
Arbitrage
basically
means
simultaneous
purchase and sale of any security, any stock,
between the trading price and actual price after merger.
any asset or any currency in order to earn a Arbitrage means simultaneous purchase
and
sell
of
any
profit from a price difference without any
Only large institutional investors and hedge
risk.
funds can indulge into the activities of
A stock is traded in multiple stock exchanges
arbitrage. Because they are able trade large
security, currency, stock or
and the quoted price may be different on each
block of shares and invest millions. On the
asset in the respective market
stock exchange. Here arbitrage takes place to
other hand, individual investors typically
with an objective of earning
take the advantage of this price disparity.
don’t have large sums of money to take the
Initially, arbitrage used to occur only in
advantages of arbitrage opportunities and
currency market, but today it applies to
they end up taking the advantage of smaller
commodity, futures and stock market as well.
arbitrage opportunities.
profit from the price difference. Arbitrage can only occur when there is a price difference.
Arbitrage helps in keeping the price of the For Example, Share of SAIL is trading at BSE
securities across various markets more or less
at Rs. 80 and the same is trading at NSE at Rs.
same and it removes the price difference and
82. Then one can sell the stock on the NSE and
equalizes the price in various markets after a
simultaneously buy from the BSE. This
certain number of transactions.
transaction will lead to profit without any
Types of Arbitrage
risk.
Merger Arbitrage
Arbitrage also takes place in case of mergers.
Municipal Bond Arbitrage
In some cases, arbitrageurs purchase shares of
Convertible Bond Arbitrage
companies that are the targets of purchase
Regulatory Arbitrage
offers in an expectation of price difference
Statistical Arbitrage
INDIAN MARKETS The major international markets were closed for most of the week for Christmas. The volumes traded in the week were not high. The Benchmark BSE index ended higher at 1.38 percent and broader NSE index ended at 1.35 percent higher, hitting highest levels in three weeks as banking stocks surged on expectations from industry meet underway. Indian shares are expected to trade range bound in the week ahead. Survey showed manufacturing activity expanded at its fastest
Open
High
Low
Close
SENSEX
27479.87
27937.20
27091.38
27887.90
NIFTY
8214.70
8410.60
8214.70
8395.45
pace in two years in December boosted
sentiment
of
the
market.
“India banking
needs
reforms
sector,
in
BSE SENSEX
more
autonomy for state banks�.
CNX NIFTY
COMMODITIES Commodity
Unit
Rs / Unit
% Change
Gold
10 grams
26730.00
0.11
Silver
1 kg
36235.00
0.17
Crude Oil
1 bbl
3391.00
-0.27
Construction spending fell 0.3 percent in November, while the pace
of
growth
in
US
manufacturing sector slipped to
EXCHANGE RATES
six month low in December.
INR/ 1 USD
63.285
INR /1 EURO
75.91
S&P 500 closed the year with a
INR/ 100 JAPAN YEN
52.49
double digit gains for the third
INR / 1 POUND STERLING
96.94
consecutive year.
INTERNATIONAL MARKETS Open
High
Low
Close
NYSE Comp
10985.00
11007.82
10770.00
10830.92
NASDAQ
4315.00
4320.75
4201.00
4216.90
S&P 500
2086.00
2088.75
2038.75
2047.75
FTSE 100
6653.50
6655.30
6508.80
6547.80
CAC
4309.80
4319.80
4222.80
4252.29
DAX
9915.00
9929.50
9689.00
9764.73
NIKKEI 225
17914.00
17914.55
17450.77
17450.77
SSE 50
3157.00
3239.16
3128.40
3233.96
Hang Seng
23831.00
23931.00
23423.00
23857.82
India needs reforms in banking sector, more autonomy for state banks - Arun Jaitley India needs to "conceive" several reforms in the banking sector, Finance Minister Arun Jaitley told reporters on Saturday on the sidelines of a two-day banking retreat. Jaitley added that
there is a need to give greater autonomy to banks and that non-performing loans in some annual consumer price inflation fell to 4.38 percent below the 8
cases was "unacceptable". India's state-run banks recorded the highest level of stressed loans at 12.9 percent of their total advances in September last year, while the same ratio for private
percent which the RBI had
sector banks was at 4.4 percent, according to central bank data. India's top bankers have
hoped to achieve by the end of
gathered in Pune to discuss long-pending reforms vital to improving the health of ailing
the year and the lowest since
public sector banks in Asia's third-largest economy.
the
government
started
releasing it in 2012.
December factory growth at two-year high as orders surge - PMI Indian manufacturing activity expanded at its fastest pace in two years in December as new
orders flooded in and factories kept price increases to a minimum, a business survey showed The private equity activity grew 47.3 percent to touch $10.9 billion in 2014, mainly due to
on Friday. Strong new business reinforces Finance Minister Arun Jaitley's view that the economy will grow "much better" in 2015/16, while weaker inflation gives the Reserve Bank
436 duels fuelled by online
of India (RBI) more room to cut interest rates as expected this year. The HSBC Manufacturing
services like e-commerce firms.
Purchasing Managers' Index (PMI), compiled by Markit, rose to 54.5 in December from 53.3, its highest since end-2012 and its 14th straight month above the 50-mark that separates growth from contraction. The survey also showed input prices slumped to a near six-year low as oil prices tumbled.
Micromax plans upto $500 million IPO Micromax Informatics, India's second-largest smartphone maker, plans to raise as much as $500 million through a stock market listing in its financial year beginning in April, the Economic Times newspaper reported on Saturday. Micromax, which entered the Indian handset market in 2008 with cheap large-screen phones, will sell a minority stake in its initial public offering of shares, the newspaper said, citing unnamed bankers and a company executive. The company has shortlisted Morgan Stanley and Goldman Sachs to manage the offering, the report said, adding that Micromax expects a valuation of 14 times its operating profit.
Digital connectivity should become as much a right as access to school: Modi Prime Minister Narendra Modi on Saturday called for greater academic autonomy, focus on research, and need to nurture future generations of scientists. Mr. Modi was talking at the inaugural function of the 102nd Indian Science Congress at Mumbai University. The need of the hour for a sustainable and prosperous country is to put science and technology at the top of our national priority, Mr. Modi said. "Digital connectivity should become as much a basic right as access to school," he said, adding that India Inc. needed to fund more research through various initiatives including Corporate Social Responsibility.
West Bengal to woo investors at summit Projecting itself as an ideal investment destination, the Government of West Bengal is
organising Bengal Global Business Summit — Bengal Leads 2015 — on January 7 and 8 to attract investment from foreign and domestic companies. Union Finance Minister Arun Jaitley and Union Minister of Road Transport and Highways Nitin Gadkari are expected to attend. The State is seeking investment in sectors such as urban infrastructure and housing, IT software and hardware, food processing, horticulture and floriculture, MSME and textiles, health care, education and skills development, manufacturing, energy and infrastructure, hospitality and tourism and business of entertainment and financial services. Indonesia search and rescue chief says four large parts of AirAsia jet found Indonesia search and rescue teams hunting for the wreck of an AirAsia passenger jet have located four large objects in the Java Sea, agency chief Fransiskus Bambang Soelistyo told reporters on Saturday. The Indonesia AirAsia Airbus A320-200 plunged into the Java Sea on Sunday while en route from Indonesia's second-biggest city Surabaya to Singapore with 162 people on board.
by the need for flexibility to accommodate four teenaged children, the desire to be more experimental and to fund sometimes imprudent “science experiments,” Vinod formed Khosla Ventures to focus on both for profit and social impact investments.
28th January, 1955
IIT Delhi Carnegie Mellon University
Vinod Khosla along with Srikanth Nadhamuni set up Khosla Labs in 2012 as an innovation lab to focus on solving large scale problems driven by technology and entrepreneurial zeal. The team has attracted a set of highly experienced entrepreneurs and professionals who have created successful businesses in India and in the Silicon Valley, with deep product development and implementation experience.
Stanford Graduate School of Business
$1.68 Billion
United States
After graduating with a bachelor’s degree in electrical engineering from IIT, Delhi, Vinod failed to start a soymilk company to service the many people in India who did not have refrigerators. Instead, he came to the U.S. to further his academic studies and received a master’s degree in biomedical engineering from Carnegie Mellon University. Eventually, his startup dreams led him to Silicon Valley, where he received a master’s degree in business administration from the Stanford University Graduate School of Business. Career Vinod started the standards-based Sun Microsystems in 1982 to build workstations for software developers. As the founding CEO of Sun, he pioneered open systems and commercial RISC processors. In 2004, driven
Goal His goals remain the same: work and learn from fun and knowledgeable entrepreneurs, build impactful companies by leveraging innovation and spend time with a partnership that makes a difference. In News In September 2014 a judge ruled that Khosla must let the public access his private beach near Half Moon Bay in California. Khosla’s attorneys fought to change Mallach’s tentative judgment. On 5th December, 14, San Mateo County Superior Court Judge Barbara Mallach issued her final ruling in this matter, rejecting venture capitalist Vinod Khosla’s latest argument that he shouldn’t have to open the gate on a private road leading to the coast.
- By Yojana Ranasaria
Cloud Computing is a type of computing
that
relies
on
sharing network devices rather than
relying
on
personal
devices to handle application.
Amazon Web Services, the pioneer
for
public
cloud
infrastructure will launch C4 cloud soon
computing
instances
Cloud Computing is a type of computing that relies on sharing network devices rather than relying on personal devices to handle application. It is a type of Internet-based computing where cloud is used as a metaphor for Internet. Different services such as storage, applications and servers are shared with the organization’s computer and devices through the Internet. Megatrends that will dominate Computing in the next decade:
Cloud
1. Cloud computing as an innovative driver of the future: New computing platforms are coming up and all the services are being integrated. Efficiency, scale and cost are the major drivers to the development of such new platforms. 2. Mobility: The biggest driver of growth is mobility.
What benefit it has is it makes convenient for people who need to handle multiple devices at the same time. For businesses, we see a huge potential as it can be an enabler with data sharing and storage. It helps in integrating the information systems of an organization. It will help developing work platforms like Work From Home. 3. Social Networking entering the enterprise space: With social media becoming all the more relevant in business space, be it messaging, document sharing, collaborative workspaces etc. , Cloud computing is to see an upward trend in the coming decade 4. Analytics: Big Data: Analytics: using data to greater effect is the area where businesses can look forward to the cloud as it will help them get business at the right time and at the right place.