Financial Focus Nov-end Volume 5 Issue 1

Financial focus Fortnightly Newsletter InFINeeti ISSUE 1

Volum e 5

2014

 TOP STORIES……………1  MARKET ACTIVITY…..….2  ECONOMICS .………....…. 3  FINE WORD FROM

FIN WORLD......…………..4  POLICY RATES AND

MARKET UPDATES…….. 5  WARREN BUFFETT

MANAGEMENT RULES… 5

Financial focus

A one stop guide to know about all the recent happenings in the financial world

TOP STORIES : INDIA INDIA’S

TWO-SPEED

ECONOMY

THREATENS

GROWTH

HOPES:

India’s growth rate has been strikingly uneven over the last decade, plunging from over 9% in the boom years between 2004 and 2007 to below 5% between 2012 and 2014.

That’s a large part of the reason new Prime Minister Narendra Modi sailed into office so easily. If Modi wants to fulfill his promises to revive India, though, he’s going to have to address a different kind of disparity, one rooted in geography. Read more...

BSE MARKET-CAP AT RS 100 TRILLION; INVESTOR WEALTH UP 10 TIMES IN DECADE: Scaling a new peak, the total investor wealth in Indian stock market today hit a record high of Rs 100 trillion, marking a jump of ten times in little over a decade. Measured in terms of total market capitalisation of all listed companies on the country’s biggest bourse BSE, the overall investor wealth in the Indian stock market rose to Rs 100.01 lakh crore Read more...

HOW ONLINE MARKETPLACES ARE CHANGING THE LIVES OF THOUSANDS OF MERCHANT: From garages in Mumbai to sari shops in Varanasi, thousands of manufacturers and traders are today tapping a rapidly growing online retail market in India thanks to marketplaces like Flipkart, Snapdeal and Amazon. The ability to reach out to a nationwide market and lower costs are ensuring a sharp increase in sales for the over 80,000 merchants who sell just on these portals. Read more...

HOW THEY KILLED THE MAHARAJA: Call it over-exuberance or singular hype. Officially, we are told that the country’s civil aviation sector is on a high growth trajectory, valued at $16 billion and all set to become the world’s third largest aviation entity by 2020. However, there is a huge deception in this happy story — national carrier Air India is in a pathetic shape, gasping for breath as it stares at a debt running upwards of Rs 55,000 crore and accumulated losses of more than Rs 30,000 crore, leading to shrill demands that it should be privatised. Read more...

Financial focus Fortnightly Newsletter InFINeeti

TOP STORIES : WORLD 

OPEC GUSHER TO HIT WEAKEST PLAYERS, FROM WILDCATTERS TO IRAN Saudi Arabia and its OPEC allies’ firm stand against cutting crude output to slow the plunge in oil prices has set the energy world on a painful course that will leave the weakest behind, from governments to U.S. wildcatters. A grand experiment has begun, one in which the cartel of producing nations -sometimes called the central bank of oil -- is leaving the market to decide who is strongest and how to cut as much Read more...

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INDIA-PAKISTAN FRICTION THREATENS SOUTH ASIA TRADE AT HIMALAYAN SUMMIT Hostilities between rivals India and Pakistan on Wednesday threatened to scupper efforts by South Asian leaders to boost trade among almost a quarter of the world's people, throwing into doubt any prospect of a regional customs union. India and Pakistan have fought three wars, and just last month exchanges of fire across the border Read more...

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RUSSIA PUTS LOSSES FROM SANCTIONS, CHEAPER OIL AT UP TO $140 BILLION PER YEAR Lower oil prices and Western financial sanctions imposed over the Ukraine crisis will cost Russia around $130-140 billion a year - equivalent to around 7 percent of its economy -Finance Minister Anton Siluanov said on Monday.

His comments are the latest acknowledgement by Russian policymakers that sanctions Read more...

MARKET ACTIVITY 

GOLD AT 2-WEEK LOW ON EASING OF IMPORT CURBS BY RBI Gold prices today plunged by Rs 270 to trade at over two-week low of Rs 26,400 per ten gram in the national capital after the Reserve Bank yesterday eased curbs on import of the precious metal. Silver also extended losses for the third day and tumbled by Rs 820 to Rs 35,380 per kg on poor off take by industrial units and coin makers. Read More...

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SENSEX, NIFTY CONTINUE RECORD BREAKING RUN Continuing their rallies, the BSE Sensex and the CNX Nifty set new records during the week under review and closed at new closing highs of 28,693.99 and 8,588.25 respectively on sustained foreign fund inflows amid falling crude prices. Read More...

Financial focus Fortnightly Newsletter InFINeeti 

OVER DOZEN COMPANIES APPLY FOR PUBLIC OFFERS IN FY-15 Looking to tap into the upbeat investor sentiment, over a dozen companies including Videocon D2H and Rashtriya Ispat Nigam Ltd have filed initial papers with market regulator Sebi for getting listed in the current fiscal. Since April, 13 firms have filed the Draft Red Herring Prospectus (DRHP) with Sebi to launch an initial public offer (IPO), while SMC Global Securities Read

More...

ECONOMICS 

INDIA EASES GOLD IMPORT RESTRICTIONS India, the world’s second-biggest user of gold, eased regulations on imports to remove distortions in shipments and curb smuggling. Rules requiring importers to sell 20 per cent of their shipments to jewellers for re-export as jewellery were withdrawn. However, concerns remained over restrictions on gold by other means.

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Read more...

GOVERNMENT TO IMPLEMENT LARGE NUMBER OF FSLRC PROPOSALS : FINANCE MINISTER Steps under consideration include putting in place an Indian Financial Code that will replace the bulk of existing laws in the financial sector and create a single regulator for pension, equity, insurance and commodities markets.

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SHIPPING REFORMS: DUTY CUTS, PORT DEVELOPMENT ON GOVERNMENT AGENDA The government plans to remove the 25-30 percent customs duty levied on fuels used by Indian ships and ease other logistical hurdles to push for more usage of the sea route for both domestic and international cargo. Immediate impact of such a move will be a revenue loss of just around Rs.60 crore per annum. However, long term benefits could be numerous.

Read More...

DID YOU KNOW ?

11 Little Know Facts About China China is the most populous country in the world, and its 1.35 billion nationals consume copious amounts of food and resources. Read More...

Financial focus Fortnightly Newsletter InFINeeti

Fine Word from Fin World: OSTRICH An ostrich does not actually bury its head in the sand when confronted by danger, but flops to the ground and remains motionless. This passive behaviour exacerbates the danger faced by the ostrich, since it becomes an easy target for a predator who is not fooled by this feeble attempt to play dead. Likewise, investors who act like ostriches when faced with market risk – which is unavoidable – or by stock-specific risk could see their investment losses multiply if they do not “get their heads out of the sand” and take remedial action. For example, investors who chose to ignore the barrage of bad news that accompanied the 2008-09 global bear market would have suffered declines of more than 50% in their equity portfolios. Although these steep declines occurred in a relatively short time period, they did not occur overnight.

While an active investor may have been successful in escaping part of these losses by trimming equity exposure before the worst of the market declines, an ostrich investor would have simply ignored the news about the bankruptcies of financial institutions, the global credit crisis, etc. and stayed fully invested. Ironically, this buy-and-hold behaviour can actually benefit an ostrich investor who holds blue-chips over long time periods, since they remain invested through good times and bad. Continuing with the above example, an ostrich investor who stayed with blue-chip U.S. equities through the 2009 market lows and subsequent rebound would have reaped the benefit of a 150% advance in the S&P 500 from March 2009 to September 2013. But while ostrich behaviour can actually pay off if one is invested in bluechip stocks or an index over the long term, it can take a huge toll on a portfolio if an investor has substantial exposure to a speculative stock or sector. An investor who has 20% or more of his or her total portfolio invested in a speculative stock should monitor this exposure carefully, with a view to cutting losses and salvaging at least part of the amount invested if the investment does not work out. Sticking one’s head in the sand may cost the investor dearly in this scenario.

ICARUS FACTOR In Greek mythology, Icarus and his father, Daedalus, were imprisoned in Crete by King Minos. Daedalus created two sets of wings made from wax and feathers. He and his son were to use them to escape by flying. Daedalus warned his son not to fly too close to the sun. Icarus was overcome with the excitement of flying and disregarded his father's warning. He flew higher and higher, approaching the sun. As the wax melted and the feathers fell, so too did Icarus fall to his death in what is now called the Icarian Sea, near Icaria, an island southwest of Samos. The Icarus factor is most often seen when companies plough into businesses that work on different models from their existing lines. As they spend more and more money to try and catch up to companies already dominant in those fields, they use up the cash reserves built up by their core business - sometimes this drain can be fatal.

Source: www.Investopedia.com

INDUSTRY WATCH — BANKS — TOP PERFORMERS

Financial focus Fortnightly Newsletter InFINeeti

POLICY RATES AND MARKET UPDATES DATE :- 30/11/2014 BANK RATE

9.00

REPO RATE

8.00

REVERSE REPO RATE

7.00

MARGINAL STANDING FACILITY RATE

9.00

SENSEX

28,693

NIFTY

8,588

WARREN BUFFET MANAGEMENT RULES : RULE 9 & 10 RULE 9 : We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained.

To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely.

RULE 10 : We will issue common stock only when we receive as much in business value as we give. This rule applies to all forms of issuance – not only mergers or public stock offerings, but stock-for-debt swaps, stock options, and convertible securities as well. We will not sell small portions of your company – and that is what the issuance of shares amounts to – on a basis inconsistent with the value of the entire enterprise.

InFINeeti Team Adhiraj Bandyopadhyay (9088342361) Gayathri Bhuvanagiri (8274948812) Mehul Gahrana (9920934516) Suryanarayan Panda (9830351387)