FinXpress September 14 2014

Page 1

The finance club of IMT Ghaziabad is engaged in a continuous endeavor to provide you with a practical exposure to the world of finance and the latest emerging trends in the related fields of Risk Management, Banking Investments and nonfinance topics.

SEPTEMBER, 14 | 2014 | A FINNICHE INITIATIVE

Movement in the FAO Food Price Index | 2

Do write to us at: finniche.imt@gmail.com

The “Performance” till now: 1 year and 100 days | 4

Stock Split | 6

Vishal Sikka |11 Xbox One “Are you ready to play the game” |12


September, 14 | 2014 | Volume 12

Club FinNiche revamped its weekly magazine with a new structure. It brings to you very interesting sections like international markets, inspirational personalities apart from infocus and opinion. A non finance section is also included which will update you with the changing technologies. Movement in the FAO food price index

The Performance till now:1 year and 100 days

Stock split

With the senior batch having their exams, FinNiche launches yet another edition of FinXpress with the In Focus section putting light on ‘Movement in the FAO food price index’ which makes a comprehensive coverage about the trends in food prices. The Opinion gives an overview of ‘Performance till now: 1year and 100 days’ which is about policies taken by the NDA government. The term of the week describes “Stock Split", a decision by the board of the directors to increase the number of outstanding shares by dividing the shares, keeping the total value of shares same. Do have a look at the revamped market section which has included international markets and Tech world which brings to you Xbox One. 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. Best wishes to the Senior Batch. Happy Reading! Regards The Editorial Team Club FinNiche

Vishal Sikka

Xbox One

Disclaimer: FinXpress takes no responsibility for the opinions expressed in the magazine.


- By Priti Sureka

meat costs in Australia, where crowd revamping has decreased fare supplies, and proceeded with solid import request in Asia, China. Normal

As per data given by FAO, world

food

prices

quotations for poultry had minimal change, while

have

those for porcine and bovine meat fell back to a

dropped to the lowest in last

certain degree.

four years.

The FAO

Dairy Price Index averaged 200.8

points, down 25.3 points from the previous Worldwide

generation

month. This decline of 25.3 points indicates

of

export availability and reduction in import

commodities was assessed to surpass consumption by an edge of around 20%.

demand

resulting

in

market

uncertainty.

World food prices have dropped to 196.6

Russia's restriction at the start of the month on

points in August, 2014, the lowest in four years

imports of dairy items from a few nations and

since September, 2010. According to the

loosening imports of entire milk powder by

statistics given by the Food and

China helped in discouraging costs.

Agricultural

Organization, the monthly food price index was The FAO Oil and Sugar price index is also down, meat prices remain strong due to solid

slumped by 3.6% from the previous month.

The FAO Cereal Price Index also dropped by

Except for meat, costs for the majority of the

2.8 points standing at 182.5 points in August,

items measured by the record dipped uniquely.

2014. The Index has been falling constantly

import demand.

since May, to a great extent on crop prospects FAO is an agency of the United Nations which

and plentiful supplies of wheat and coarse

serves the developed and developing countries

grains.

in agriculture, forestry, ensuring food security

worldwide inventory of all the cereals are

and food nutrition. The FAO Food Price Index is

assessed to rise to reach the highest level in

a measure of month to month change in

coming 15 years and good weather conditions

universal costs of a basket of commodities. The

will boost this. By the end of the 2015 season,

FAO Meat Price Index reached to 207.3

the world cereal

points in August which was 2.5 points more

million tons, 12 million tons higher than the past

than its amended quantity for July. The expand

gauge and 6% more than the beginning of the

essentially reflected a solid ascent of bovine

2014-15 season.

However,

according

to

FAO,

the

market could achieve 616


The FAO Vegetable Oil Price Index of August was the lowest level since November 2009.

The FAO Vegetable Oil Price Index showed a

Mixed import and export decisions taken and

decrease of 14.5 points standing at 166.6 points

restrictions put by countries such as China,

in August this year. This was the lowest level

Brazil, India, Thailand, Russia etc. helped in the

since November 2009.

drastic movement in the international prices of such commodities.

A significant part of the decline in August reflects the pattern of palm oil prices which have debilitated under the joint impact of enhanced

Narendra

Modi

with

JosĂŠ

Graziano da Silva is making efforts to promote India's food security

and

sustainable

agricultural improvement.

creation prospects in South East Asia and lower than foreseen import request, fundamentally from China and India. The other oils namely soy, rape and sunflower additionally stayed on a descending pattern. The FAO Sugar Price Index arrived at 244.3 points in August, down by 14.8 points from July, yet at the same time 2.2 points or 1% higher than in August 2013. The critical drop in costs was activated by improved production prospects in India, European Union and the Russian Federation. Furthermore, reports of lower than anticipated import request by China weighed

One of the major concerns of the India’s Prime

contrarily on universal costs. Apart from that the

Minister, is that international trade agreements

decrease in production of sugar in Brazil,

may have an impact on fight against food hunger

helped the downward price pressure.

and setting up of strategic food stocks.

Public and private investment in agriculture in

In a recent meeting, Mr. Narendra Modi and

developing

declining

FAO Director-General, JosĂŠ Graziano da Silva

relatively and therefore, crop yield growth

have decided on how to reinforce and strengthen

became

efforts to promote India's food security and

countries stagnant

developing countries.

or

has

been

declined

in

most

sustainable agricultural improvement.


- by Saksham Kumar

opening of these sectors to FDI will add Delivery of financial services at

about 1-1.5 percentage points to the overall

affordable costs to the low-

GDP growth.

income

segments

of

the

Jan Dhan Yojana: The biggest financial

society.

inclusion program of the new government which promises to give banking access to Mahatma

nearly 7.5 crore households in the country.

Gandhi National

Rural Employment Guarantee Act) It is an act to guarantee

Decisive push to the Aadhar based

100 days of wage employment

transfer: Modi has set the target of One-

in a year to a rural household.

Coincidently, National Democratic Alliance’s (NDA) 100 days and (RBI) governor Raghuram Rajan’s one-year term in their respective offices have occurred more or less together. Did they live up to the expectations of 1.25 billion people who are influenced by them in a great way? Are their respective terms enough to assess their performance till now?

His performance so far is considered one of the most productive governments till now. And why India

has

seen

benefit transfer schemes under MNREGA, pension,

scholarship,

public

distribution

system and LPG subsidies. Narendra Modi has also established a new ministry

for

Water

Resources,

River

Development and Ganga Rejuvenation in his cabinet.

First, let us discuss on the 100 days of NDA.

not?

billion people linked to Aadhar based direct

the

most

effective

Parliament sessions. Let’s first look at the policies initiated by the government. Foreign Direct Investment (FDI) in Railways, insurance and defence: FDI in railways is proposed to be raised to 100 percent while in insurance and defence to 49 percent from the current 26 percent. Estimates suggest that

Building strong foundations of relationships

with

our

neighbours:

Till now

Narendra Modi has been successful in maintaining healthy relations with countries like Nepal and Bhutan. His recent visit to Japan was one the highs of the NDA regime till now. It will be interesting to see what China will offer when President Xi Jinping visits India on September 17 2014.


one of the most important which Rajan bought is the quick transition from being a Central Bank which targeted both growth and Wholesale Price Index (WPI) based inflation The purchase or sale of assets

to one that is now primarily focused on tar-

that are worth more than 50

geting retail inflation. High Interest rates have

percent of a listed company’s

attracted foreign funds into bonds with flows

total or net amount of assets.

crossing $17 billion in 2014 so far Rajan is also successful at giving freedom to banks on setting up branches and developing a way for differentiated licenses.

The

ratio

of

Net

non-

performing assets

to loans

(advances)

used

measure

.It overall

bank’s loan book.

is

quality

Source: Bloomberg

of

The

performance

of

a

Central

Bank’s

governor is judged on two criteria: a) their

to

Turning now to the RBI governor, Raghuram

record to maintain the value of currency b)

Rajan. Is one year long enough to assess the

systematic reforms which they undertake

performance as Central Bank’s governor?

during their tenure. Rajan has done well on the first criteria and his strategy indicates that

When Rajan was appointed as the governor of

he is on the right track for the second criteria

RBI in last September the rupee was at its all

also. There are five pillars of his strategy to

time low against the dollar. RBI offered banks

transform the Indian economy, which are:

concessional swaps to raise foreign currency

A new monetary policy framework

More competitive banking sector with

deposits, which brought in $34 billion and thereby eased the demand in the currency

differentiated licenses

market. The exchange rate has appreciated by around Rs 8 to a dollar since its August 2013

Deepening liquidity in financial markets

low.

Financial inclusion

Improving the ability of banks to deal

RBI has raised the key policy rate by 75 basis points to 8 percent in phases. This was done to ensure that retail inflation is within striking distance of the January 2015 target of eight percent. A report published by Ambit says that

with stress Rajan’s next big challenge is to restore the health of public sector banks, which have seen a sharp rise in bad asset quality.


- By Arihant Jain

So, in a 1:5 stock split, every shareholder with one stock is given 4 additional shares and the price of the share is divided by 5 to

A decision by the company's

keep the total market capitalization at the

board of directors to increase

same level as before.

the number its outstanding shares by dividing the shares,

But, why does a company go for a split

keeping the total value of

stock? Companies choose to for go for

shares same as before.

stock

splits

when

their share

prices

become very high, especially in a rising market. High prices lead to fears of stock The degree to which an asset

becoming inaccessible to regular investors,

or security can be bought or

as only institutions or high net worth

sold in the market without

individuals could move the stock price. A

affecting the asset's price.

wide shareholding helps in reducing the chances of sharp rise or fall in share ICICI Bank, the country’s largest private sector

prices. A stock split also results in increase

A corporate action in which a

lender, recently announced that its board had

in

company reduces the total

approved the splitting of each equity share into

decrease due to split, since many small

number

five. Earlier this year, J&K Bank also announced

investors who think the stock is affordable

a sub-division of share in the ratio of 1:10. In

buy the stock and end up boosting the

fact, since the beginning of the year 2014, 48

demand and therefore pushing the prices

companies have decided to split their stocks. So

up. According to financial experts, stock

let’s understand what does it mean and why

split creates a positive image of the

does companies split their stocks.

company.

When a company declares a stock split, the

Similar to a forward stock split, reverse

number of shares of a company increases but

stock split is also done by the companies.

the market capitalization remains the same.

Under

This happens because the split did not add any

reduces the number of its outstanding

real value and only the value of the share is

shares

decreased but the underlying value remains the

Companies normally execute

same.

stock split in order to retain their listing on

shares.

of

its

outstanding

price

of

shares

reverse by

stock exchange.

stock

immediately

split,

consolidating

after

company shares. reverse


INDIAN MARKETS This week started with the Indian markets reaching their all time highs (Sensex-27,355 and Nifty—8180.20). The markets retreated from theirs highs immediately, as the traders booked profits in the recent out-performer stocks amid caution of the coal block case hearing of Supreme Court. The downslide in market continued through the week, with the market recording biggest drop in a month. Sensex regained the 27000 points on Friday, as participants started selective buying ahead of the industrial data to be released. India’s

GDP

growth

will

accelerate to 6.5%by end of

Open

High

Low

Close

SENSEX

27026.70

27354.99

26936.14

27061.04

NIFTY

8132.95

8180.20

8068.25

8105.50

2015: Moody’s

July IIP (Index of Industrial Production) at 0.5% versus

BSE SENSEX

3.4% in June.

India focused hedge funds up 28.17% year to date.

CNX NIFTY


COMMODITIES Commodity

Unit

Rs / Unit

% Change

Gold

10 grams

26899.00

-0.32

Silver

1 kg

41325.00

0.13

Crude Oil

1 bbl

5669.00

0.64

FOMC meet September 16-17, Wall Street expects a hawkish message.

EXCHANGE RATES INR/ 1 USD

60.79

INR /1 EURO

78.69

INR/ 100 JAPAN YEN

57.00

INR / 1 POUND STERLING

98.89

US Jobless claims rise above 300K,

remain

near

pre

recession levels.

US, EU ready sanctions to stop oil hunt in Russia.

INTERNATIONAL MARKETS

Open

High

Low

Close

NYSE Comp

11059.25

11059.25

10883.66

10911.39

NASDAQ

4087.30

4110.20

4054.20

4069.23

S&P 500

2006.10

2006.86

1980.54

1985.54

FTSE 100

6831.30

6857.30

6763.80

6806.96

CAC

4484.63

4489..02

4411.09

4441.70

DAX

9770.00

9774.50

9620.00

9651.03

NIKKEI 225

15723.00

15994.50

15653.50

15948.29

SSE 50

2326.43

2343.08

2303.27

2331.95

Hang Seng

25237.00

25237.00

24494.00

24595.32


India to revise GDP measurement next year India will soon revise the way it measures gross domestic product to reflect under-represented and informal economic sectors, two government sources said, in an initiative that is expected to show the economy is larger than previously thought. India usually revises the method of calculating national accounts and other macro data every five years, bringing in a newer base year and adjusting for changes in the economy. The 2010 revision almost doubled the estimated The Government is expected to draw the road map for bank

contribution to the economy made by coaching and tuition and gave substantially more weight to the construction, trade and hotel industries. The importance of beauty salons, communication and

capitalization on the basis of

railways declined. Any upward revision this time will be a big boost for new Govt. who is trying to

performance of state-run banks

meet a fiscal deficit target of 4.1 percent of GDP and convince global rating agencies like

in the second quarter of this

Standard & Poor to upgrade India's sovereign ratings.

fiscal. SBI may take over a subsidiary to kick start mergers plan

Aug retail inflation eases to 7.80 percent y/y Easing prices of vegetables, cereals and petroleum products brought down Consumer Price is

Index (CPI) based inflation marginally to 7.8 per cent in August, government data showed on

entry

Friday. However, food inflation during the month under review rose to 9.42 per cent over 9.36 per

strategy in key markets with

cent in July, an official release states. The rate of price rise in vegetables stood at 15.15 per cent

Korean unit Ssangyong Motor

in

and

alliance

its products turned lower at 7.39 per cent and that for fuel and light it came down at 4.15 per cent.

Swedish

However, prices of fruits during the month went up with 24.27 per cent rate of inflation. Inflation in

carmaker Saab and Peugeot

milk and milk products increased to 11.70 per cent during the month under review. Also, pulses

Citroen of France,

and its products were costlier at 6.88 per cent.

Mahindra working

& out

Mahindra a

joint

exploring

opportunities

with

Rel Jio inked Pact with Israel's Airspan

for

low

powered,

short-range towers to deploy 4G .

August as against 16.88 per cent in the previous month. Rate of price increase in cereals and

Bharti Airtel to Sell 3,500 Mobile Towers in Africa Sunil Mittal-led Bharti Airtel will sell more than 3,500 of its mobile towers in six African countries to tower operator Eaton Towers in its bid to reduce costs, exit non-core businesses and raise cash in the run-up to the upcoming spectrum auctions. India’s No. 1 mobile carrier will lease back the towers from Eaton under a 10-year pact, both companies said in a joint statement on Monday, although they did not disclose the size of the 3,500-plus towers sale deal. The deal size would be close to $900 million (about Rs5,400 Crore). Malawi, Niger, Ghana, Burkina Faso, Uganda and Kenya are the countries where Airtel’s towers, which are part of the agreement with Eaton, are located.


Amazon Rolls Out Wholesale Plans for India Amazon is preparing to launch a portal for wholesale merchants in India, the first country outside the US where such an initiative is being planned by the Seattle-based company. The initiative could be led by Samir Kumar, who is at present the company's director of category management, said a third source. The wholesale team will report to Amazon India's country head Amit Agarwal. The India wholesale portal will be similar to Amazon Supply, its online site in the US focused on Companies spending on relief material meant for flood-hit J&K, which is facing a humanitarian disaster

of

enormous

business consumers. The India platform will also target small and medium enterprises. However, it is not clear yet whether the company will offer all categories of products under its wholesale platform. For instance, Amazon Supply does not sell apparel and other soft lines such as furnishings

proportions, will be allowed to count this toward their mandatory 2% spending on CSR initiatives

Wilful Defaulters Face SEBI, RBI Heat

under the Companies Act,

The government and financial regulators appear to have declared war on wilful defaulters as a rising tide of bad loans threaten to derail the banking system and condemn banks to months of Sistema

piffling or modest growth. The Securities and Exchange Board of India or SEBI may bar wilful

Shyam Teleservices plans to

defaulters from raising equity as part of a tough series of measures aimed at deter ring promoters

target India's top builders with

from defaulting on payments even when they have the money . While SEBI is still formulating its

`smart home' solutions to grow

policy, the Reserve Bank of India has moved to tighten its own rules on wilful defaulters. Group

its data services business.

companies who have failed to honor guarantees provided to a defaulting company within the

Telecom

operator

group can also be classified as a willful defaulter, the regulator said.

The

government

kicked

off the big-bang disinvestment programme it announced in the budget

with

the

cabinet

committee on economic affairs (CCEA) clearing stake sales in Coal

India,

ONGC

and

hydropower utility NHPC. This disinvestment

is

expected

to

meet budget target of Rs 43,425

Car Sales Grow for Fourth Straight Month Car sales grew more than 15% in August, the fastest pace so far this fiscal year, helped by big discounts and new launches and also clearly signaling improving consumer sentiment as the festival season begins. The local auto market has not exactly come to its real potential, but data released on Wednesday by the Society of Indian Automobile Manufacturers reflect positive sales across most segments of vehicles. In the commercial vehicle segment, sales have increased after nearly two and-half years, while in cars, August was the fourth straight month when the numbers have risen. According to Siam data, the automotive industry posted total local sales of 16.6 million vehicles last month, the highest for the month of August ever. With an array of recent launches in the passenger-vehicle segment demand is expected to improve further in the usually buoyant fiscal second half starting next month.


- By Anshul Tyagi

Infosys

Technologies

is

an

iconic

company that has been, in last 33 years,

1 June 1967

one of the pioneering

companies in the

IT industry. The world around Infosys is profoundly being reshaped by software. A

Stanford University (Ph.D.)

world where on one hand clients have

Syracuse University

challenges

Maharaja Sayajirao University

to

renew

the

existing

landscape in moving applications and

of Baroda

systems on cloud, opening them up to analytics and big data, bringing them in connection

SAP

with

mobile

devices

and

connecting these to internet. At the same time augmenting in the renewal of their legacy of infrastructure and landscape

Husband, Dad, Son, Brother, Friend,

Student,

with completely new areas of business

Visitor,

Thinker, Innovator, CEO & MD, Infosys, Occasional Surfer on

Infosys on 12 June, 2014 declared Vishal Sikka

life's waves

as CEO and MD of Infosys Technologies.

- is the way he

defines himself.

Vishal Sikka and his views Infosys, with impeccable training Centre at Mysore, believes in ability to learn and hence rightly call it as learnability. Vishal’s main goal is to improve business by augmenting it with innovation. He wants to lay out the directions for the organization keeping the work and ability of founders in mind For

A study in psychology says that beyond a certain level, we lose count of how many people we engage and at what level. What matters is how one structures things, create processes and tools. Vishal, in accordance with this theory, is working on these structures so that he can effectively manage and structure a large organization like Infosys. As a manger, he believes in decentralization,

empowerment,

accountability and trust at all levels. In this universally accessible world, leader is not

Infosys he believes— We, the people are

a person with knowledge, leadership is a

Infosys and not buildings.

collective individual.

process

done

by

every


- By

Abhinay Gandotra

premium with Xbox being rolled out in the market. Xbox is a video gaming brand

For starters, PS4 has a sleek and slanted

created by Microsoft .

design weighing 2.8 kg whereas Xbox One is 10 percent larger than its predecessor and weighs 3.18 kg. The controller comparison is more of

Playstation (PS3 and PS4) is a

choice based in the gaming world. Some people

video gaming brand created by

prefer Sony’s parallel dual analog sticks whereas

Sony.

for others, offset analog sticks of Xbox universe is the way to go. Microsoft

is

launching

its

latest

console

Trade of a commodity through

generation Xbox One in India after seven long

In terms of power and graphics, the topmost

distribution

which,

years on September 23rd. The launch is going to

priority on the list of hardcore gamers, PS4 fares

unofficial,

be big but the impact it creates is yet be to be

better than Xbox One. The distant textures,

unauthorized, or unintended by

seen in the Indian market. For a change this time

moving objects appear softer and there is more

the original manufacturer .

Microsoft will be selling its Xbox One only online

clarity in PS4.

while

legal,

channels are

and that too via just one vendor Amazon. The reason behind going fully online is to keep the

Xbox One though has its own advantages. Its

grey market out.

available with Kinect through which one can control the console, swiping in the air to perform

In its previous launch Microsoft gained the early

commands. Xbox One is more entertaining with its

bird advantage from Sony by a whopping 8

variety of apps. For instance, it has access to 4oD

months. In terms of price also Microsoft had an

which is not available with PS4.

advantage with

its model Xbox 360 priced at

23,900 INR in comparison to Sony’s PS3 priced

Microsoft has promised to launch a preview

at 39,990 INR. This time though there is a

version of DirectX3D 12 graphics toolset his year.

complete turnaround.

This will make up for the slow RAM and the graphic limitations of Xbox. With time the gaps

Sony this time has enjoyed an identical 8 month

between these two new consoles will narrow down

head start with its offering of PS4 and the

further and both the systems will provide the next

features for both Xbox and Sony are similar. Now,

generation gaming experience. So is India ready

we need to see if Sony PS3 can enjoy the same

for the next level of gaming ….


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.