Financial Focus Nov-end Volume 5 Issue 1 by InFINeeti- The Business & Finance Magazine of IIFT

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

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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)