Financial focus Fortnightly Newsletter InFINeeti ISSUE 2
Volum e 2
2014
TOP STORIES…………….1 MARKET ACTIVITY…..….2 ECONOMICS .………....…. 3 DOPPELGANGER (SPOT
THE DIFFERENCE)..…..... 4 POLICY RATES AND
MARKET UPDATES…….. 5 WARREN BUFFETT
Financial focus
A one stop guide to know about all the recent happenings in the financial world
TOP STORIES : INDIA
RBI BEGINS REVIEW OF JAN DHAN ROLLOUT A week after the official launch of the Prime Minister’s Jan Dhan Yojana, the Reserve Bank of India has begun a review of the financial inclusion mission. A senior RBI official said the regulator was focusing on performance of banks’ state wise and in and in each district. Read more...
FIVE-DAY VISIT TO JAPAN HIGHLIGHTS GROWING ECONOMIC AND DIPLOMATIC TIES BETWEEN SHINZO ABE AND NARENDRA MODI Narendra Modi and Shinzo Abe are holding formal talks in Tokyo to cement a blossoming relationship between India and Japan cemented with a shared conservative agenda. Modi, who hopes his market-focused policies will boost India's floundering economy, could walk away with almost half a billion dollars' worth of loans for much-needed infrastructure projects, reports said. Read more...
GOVT DETERMINED TO PUSH TAX, FINANCIAL SECTOR REFORMS: PM MODI Narendra Modi today expressed government's determination to push tax and financial sector reforms to improve business environment. "Prime Minister Modi underlined his determination to further improve the business environment in India, including through tax, administrative and financial regulations, in order to boost investment," said a joint statement issued
INDIA AND AUSTRALIA SEAL CIVIL NUCLEAR DEAL FOR URANIUM TRADE Australian Prime Minister Tony Abbott sealed a civil nuclear deal to sell uranium to India on Friday and also offered to increase supplies of conventional fuel to help it overcome chronic shortages. "We signed a nuclear cooperation agreement because Australia trusts India to do the right thing in this area, as it has been doing in other areas," Abbott told reporters. Read
more...
Financial focus Fortnightly Newsletter InFINeeti
TOP STORIES : WORLD
ECB CUTS RATES, LAUNCHES NEW CREDIT SCHEME AS GROWTH EVAPORATES The European Central Bank (ECB) cut interest rates to a fresh record low on Thursday and launched a new scheme to push money into the flagging Euro zone economy. In a series of measures underscoring growing concern about the currency bloc’s health, the ECB cut its main refinancing rate to 0.05 per cent from 0.15 per cent previously and drove the overnight deposit rate deeper into negative territory . Read more...
ALIBABA SEEKS TO RAISE MORE THAN $21 billion IN RECORD U.S. TECH IPO Alibaba Group Holding Ltd seeks to raise more than $21 billion in an IPO that will value the Chinese e-commerce giant at up to $163 billion and rank as the largest-ever technology debut in the United States. Alibaba expects to price its initial public offering between $60 and $66 per American Depository Share, valuing the company at about $162.69 billion. Read more...
U.S. JOB GROWTH BRAKES TO EIGHT-MONTH LOW, LABOR FORCE SHRINKS U.S. employers hired the fewest number of workers in eight months in August and more Americans gave up the hunt for jobs, providing a cautious Federal Reserve with more reasons to wait longer before raising interest rates. Nonfarm payrolls increased 142,000 last month after expanding by 212,000 in July, the Labor Department said on Friday. Read more...
MARKET ACTIVITY
MODI EFFECT: DALA STREET ADDS 10% OR $400 BILLION TO GLOBAL MARKET CAP SO FAR THIS YEAR India has become a dominant force when it comes to building global equity wealth. This year as the global market cap hit $66 trillion, it did so with the help of the tailwind generated by a strong domestic market performance. Global equity market cap has risen 6.06% to $66 trillion so far in 2014 and India's market cap has grown the fastest to $1.5 trillion from $1.1 trillion.
Read More... OIL STEADIES NEAR $102, HEADS FOR WEEKLY DROP ON DOLLAR Brent crude oil steadied near $102 a barrel on Friday, heading for a third weekly drop in four as a strong dollar depressed demand, though data showing lower crude stocks in the United States floor under prices. Oil prices on both sides of the Atlantic fell nearly $1 Read More...
Financial focus Fortnightly Newsletter InFINeeti
IDFC LIKELY TO RAISE RS 800-1000 CRORE CAPITAL VIA QIP OR FPO IDFC, which is in the process of converting into a bank, is soon looking to raise capital in order to cut its foreign shareholding to below 50 per cent and meet RBI bank shareholding norms. IDFC is looking to test markets for a QIP offering size worth Rs 800-1000 crore, say sources. There is also a possibility that IDFC may raise capital via FPO. Read More...
ECONOMICS
FOREX RESERVES SURGE TO $318.64 BILLION FOR THE WEEK ENDED AUGUST 29 The country's foreign exchange reserves surged by US $60.5 million to US $318.64 billion for the week ended August 29, as foreign currency assets rose. Gold reserves remained unchanged at US $21.173 billion in the reporting week. Foreign currency assets (FCAs), a major constituent of overall reserves,
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SERVICE SECTOR GROWTH WEAKEST IN 3 MONTHS India's services sector activity slowed to the weakest in three months in August, tempering optimism about a strong rebound in the South Asian economy. The seasonally adjusted Service Sector Business Activity Index fell to 50.6 from 52.2 in July, according to a HSBC index issued Wednesday. A figure above 50 indicates expansion
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FII’S REDUCE INVESTMENT IN ASIA BUT OUTLOOK ON INDIA REMAINS BULLISH Foreign institutional investors reduced the pace of funds flow into Asia in August, but India is still among those countries in the region that received the maximum inflows during the month, an HSBC survey says. According to the global financial services major, FIIs continued to buy Asian equities in August
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DID YOU KNOW ? INDIA RANKS SECOND IN WORLD FISH PRODUCTION India contributes about 5.4% of global fish production. It is also a major producer of fish through aquaculture. The sector contributes about 1 percent to overall GDP and represents 4.6% of agricultural GDP.
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Financial focus Fortnightly Newsletter InFINeeti
DOPPELGANGER: (Difference between similar sounding Financial terms) LIQUIDITY & SOLVENCY RATIOS Solvency and liquidity, both of the terms refer to any enterprise’s condition regarding financial health, but they have subtle differences between them. On one hand solvency refers to the capacity of an enterprise meeting its long-term financial obligations, whereas on the other hand liquidity refers to the ability of an enterprise meeting its short-term commitments; the term also suggests the capability of the enterprise to sell its assets quickly to convert into cash. To keep it simple, a solvent company is the one that owns more than it owes to others; in other words, it has positive net worth and a debt load which can be managed easily. On the other hand, a company which has sufficient liquidity probably have enough available cash to pay all its bills, but again it might be heading towards a financial disaster down the time. There are financial ratios which are used to measure a company’s liquidity and solvency. #Solvency Ratios: Debt to equity, Debt to assets, Interest coverage ratio etc #Liquidity Ratios: Current ratio, Quick ratio, Days sales outstanding etc
LIBID AND LIBOR The terms LIBID and LIBOR are two of the most important terms when one talks about International Finance scenario. Both LIBID and LIBOR (London Inter Bank Offered Rate) are the rates which are primarily used by the banks in the Interbank market of London. The London interbank market is the wholesale money market in London where the banks exchange currencies either directly or sometimes using the electronic trading platforms. The acronym LIBID stands for London Interbank Bid Rate. It is the bid rate which the banks are willing to pay for Euro currency deposits in the London interbank market. Euro currency deposits mean money in the form of bank deposits of a currency outside the country that issued the currency. However, euro currency deposits can be of any currency in any country. The most common currency deposited as Euro currency is the US dollar. For example, if US dollars are deposited in a European bank or any bank outside the U.S, then the deposit is called a euro currency. To put it in simple words, LIBOR is the interest rate at which banks borrow money from other banks of the London interbank market. The interest rate is published for five different currencies: US Dollar, UK Pound Sterling, European Euro, Japanese Yen and Swiss Franc. The LIBOR is set on a daily basis by the British Bankers' Association. It is published for 7 different maturities: overnight (1 day), 1 week, 1 month, 2 months, 3 months, 6 months and 12 months. A total of 35 different interest rates are posted every day Source: www.Investopedia.com RESULT OF FEW MAJOR COMPANIES-STOCK PERFORMANCE YoY Revenue Increase(%) 140
Share Price Increase(%)
121.17
120 100 80
64.01
60
29.88 30.08
40 20
14.27
19.03 9.42
37.43 18.21 7.43
0 L&T
RIL
TCS
ONGC
HDFC Bank
Financial focus Fortnightly Newsletter InFINeeti
POLICY RATES AND MARKET UPDATES DATE :- 06/09/2014 BANK RATE
9.00
REPO RATE
8.00
REVERSE REPO RATE
7.00
MARGINAL STANDING FACILITY RATE
9.00
SENSEX
27,178
NIFTY
8,085
WARREN BUFFET MANAGEMENT RULES : RULE 5 Rule 5 :Because of our two-pronged approach to business ownership and because of the limitations of conventional accounting, consolidated reported earnings may reveal relatively little about our true economic performance. Charlie and I, both as owners and managers, virtually ignore such consolidated numbers. However, we will also report to you the earnings of each major business we control, numbers we consider of great importance. These figures, along with other information we will supply about the individual businesses, should generally aid you in making judgments about them. To state things simply, we try to give you in the annual report the numbers and other information that really matter. Charlie and I pay a great deal of attention to how well our businesses are doing, and we also work to understand the environment in which each business is operating. For example, is one of our businesses enjoying an industry tailwind or is it facing a headwind? Charlie and I need to know exactly which situation prevails and to adjust our expectations accordingly. We will also pass along our conclusions to you. Over time, the large majority of our businesses have exceeded our expectations. But sometimes we have disappointments, and we will try to be as candid in informing you about those as we are in describing the happier experiences. When we use unconventional measures to chart our progress – for instance, you will be reading in our annual reports about insurance “float” – we will try to explain these concepts and why we regard them as important. In other words, we believe in telling you how we think so that you can evaluate not only Berkshire’s businesses but also assess our approach to management and capital allocation.
InFINeeti Team Adhiraj Bandyopadhyay (9088342361) Gayathri Bhuvanagiri (8274948812) Mehul Gahrana (8017041166) Suryanarayan Panda (9830351387)