Infineeti Newsletter Vol 4 Issue 2

Financial focus Weekly Newsletter InFINeeti ISSUE 2

VOLUME 4

2014

 TOP STORIES…………….1  MARKET ACTIVITY…..….2  ECONOMICS .………....…. 3  TERM OF THE WEEK ….. 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 

IMF WARNS INDIA OF ECONOMIC RISKS AS POLLS LOOM The Indian economy, with growth set to fall to its lowest annual level in a decade, is exposed to the withdrawal of global liquidity and India’s own shortcomings, according to the International Monetary Fund. The warning highlights the challenges facing the new government that will emerge from a general election to be held in the next three months.“ India’s growth slowdown is unusual among emerging markets both in its severity and the fact it has coincided with elevated inflation,” the IMF said, blaming domestic problems such as delayed infrastructure project approvals and uncertainty over government policy for two-thirds of the slowdown.

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INDIAN GOVT APPROVES EIGHT FDI PROPOSALS WORTH RS 1,024CRORE The government has approved eight foreign investment proposals, including plans by L&T Infrastructure Development Projects and Welspun Renewables Energy, totalling Rs 1,024 crore.

The proposals were cleared following recommendations from the Foreign Investment Promotion Board (FIPB) headed by Economic Affairs Secretary Arvind Mayaram, the Finance Ministry said. 

CHINA OFFERS TO FINANCE 30 PER CENT OF INDIA’S INFRASTRUCTURE DEVELOPMENT PLAN Even though previous attempts have been turned down by a government cautious about allowing its neighbour to enter critical areas such as telecom or power over security worries, China still has shown interest to fund a big chunk of India's infrastructure development.

A Chinese working group submitted a five-year trade and economic planning cooperation plan to the Indian government in the first week of February, offering to finance as much as 30 per cent of the $1trillion targeted investment in infrastructure to the tune of about $300 billion.

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TOP STORIES : WORLD 

FACEBOOK BUYS MESSAGING APPLICATION WHATSAPP FOR $19 BILLION For as much as $19 billion in cash and stock, Facebook Inc. (FB), the world’s largest social network, agreed to purchase mobile-messaging startup WhatsApp Inc., the biggest Internet acquisition in more than a decade.

The deal includes $12 billion in stock, $4 billion in cash and $3 billion in restricted shares. WhatsApp has more than 450 million members, with 1 million users being added daily.

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G20 AIMS TO ADD $2TRILLION TO GLOBAL ECONOMY Aimed at adding more than US $2trn to the global economy over five years, the world’s biggest economies have agreed to target reforms, marking a shift in emphasis at G20 level from austerity to promoting growth.

“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming five years,” said ministers in a joint G20 communiqué.

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RBS TO PIGGYBACK ON TO POST OFFICE BRANCHES Royal Bank of Scotland has said that with the support of the UK’s vast network of Post Office branches it will increase its street presence tenfold.

Personal and business customers of RBS and its NatWest brand will be able to pay-in cash and cheques at one of the Post Office’s 11,500 locations. It raises the possibility of NatWest and RBS branch closures as many of these can be found in the same towns and cities as existing bank branches.

MARKET ACTIVITY 

MARKETS TO SEE VOLATILITY AMID F&O EXPIRY, GDP DATA The stock market is expected to see volatility this week as traders roll over their positions in the futures & options (F&O) segment and economic growth numbers are released.

Some of the other factors that are likely to impact stock market movement in the truncated trading in the week ahead include the GDP data figure that is scheduled to be released on February 28, inflows by foreign institutional investors and global cues.

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FIIS POUR RS 11,000 CRORE INTO DEBT MARKET IN FEBRUARY Foreign investors have poured almost Rs 11,000 crore into the Indian debt market so far this month after being net sellers of bonds in 2013. The inflows followed a net investment of Rs 12,609 crore in the preceding month. According to market experts, FII inflows into debt are returning on account of the stability observed in foreign exchange and interest rates.

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GOLD POSTS 3rd STRAIGHT WEEKLY GAIN ON US ECONOMY WORRIES Gold rose on Friday, notching its third consecutive weekly gain, as doubts over US economic recovery helped lift bullion's safe-haven appeal.

The yellow metal rallied to a 3-1/2 month high earlier this week after a series of disappointing US economic indicators including weak manufacturing data sparked speculation that the Federal Reserve would slow the tapering of its bond purchase.

ECONOMICS 

INDIA INCREASED THE EXPOSURE TO US SECURITIES TO $68.5 BN IN DECEMBER Data released from US Treasury Department show that India’s holding of US securities rose from $63.9 bn in November 2013 to $68.5 bn in December 2013. Even as the developing world remains apprehensive about the Fed’s decision to taper the stimulus program, India increased its holding of US securities for the third straight month. Except for India, all other BRICS nations trimmed their exposure to American government securities in December.

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FII INFLOW CLOSE TO RS 11000 CRORE INTO DEBT MARKET Following the net investment of Rs 12,609 in the preceding month, FII’s have poured almost Rs 11,000 crore in the debt market so far this month. Stability in foreign Exchange and interest rates seem to be the main reasons for the inflow in debt market according to market experts.

As of February 21, there were 1,726 registered FIIs in the country and 6,367 sub-accounts.

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INDIA HAS MET BUDGET DEFICIT TARGET;FISCAL POSITION STILL WEAK : MOODY’S Commenting on India’s interim budget global rating agency Moody’s said that it is in line with the policy assumptions that link the governments Baa3 rating with stable output. It however cautioned that India’s fiscal position remains weak.

"Moody's notes that India's fiscal deficit ratios have declined over the last two years, but its general (central and state) government fiscal deficits remain higher than those of similarly rated peers," it said.

DID YOU KNOW ?

Textile Manufacturing Is the Second Largest Source of Employment in India Textile manufacturing is the 2nd largest source of employment after agriculture and accounts for 20 percent of manufacturing output, providing employment to over 20 million people.

The share of textiles in total exports was 11.04 percent during April–July 2010, as per the Ministry of Textiles.

Source::http://www.siliconindia.com/news/business/10-Fascinating-Facts-about-Indian-Economy-nid-152244-cid3.html

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TERM OF THE WEEK FINANCIAL DERIVATIVES MARKET

WHAT ARE DERIVATIVES ?

A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.

Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Derivatives are contracts and can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region.

Derivatives are generally used as an instrument to hedge risk, but can also be used for speculative purposes.

For example, a European investor purchasing shares of an American company off of an American exchange (using U.S. dollars to do so) would be exposed to exchange-rate risk while holding that stock. To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future stock sale and currency conversion back into Euros .

FORWARD CONTRACT A customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract settlement can occur on a cash or delivery basis. Forward contracts do not trade on a centralized exchange and are therefore regarded as over-the-counter (OTC) instruments. While their OTC nature makes it easier to customize terms, the lack of a centralized clearinghouse also gives rise to a higher degree of default risk. As a result, forward contracts are not as easily available to the retail investor as futures contracts.

FUTURES CONTRACT A contractual agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.

Source:- www.investopedia.com Ness sources : www.moneycontrol.com

Financial focus Weekly Newsletter InFINeeti

POLICY RATES AND MARKET UPDATES DATE :- 23/02/2014 BANK RATE

9.00

REPO RATE

8.00

REVERSE REPO RATE

7.00

MARGINAL STANDING FACILITY RATE

9.00

SENSEX

20,700.75

NIFTY

6,155.45

WARREN BUFFET MANAGEMENT RULES : RULE 1 Although our form is corporate, our attitude is partnership. Charlie Munger and I think of our shareholders as ownerpartners, and of ourselves as managing partners. (Because of the size of our shareholdings we are also, for better or worse, controlling partners.) We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own the assets.

Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family. For our part, we do not view Berkshire shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives.

The evidence suggests that most Berkshire shareholders have indeed embraced this long-term partnership concept.

The annual percentage turnover in Berkshire’s shares is a fraction of that occurring in the stocks of other major American corporations, even when the shares I own are excluded from the calculation.

Charlie and I hope that you do not think of yourself as merely owning a piece of paper whose price wiggles around daily and that is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family. For our part, we do not view Berkshire shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives. The evidence suggests that most Berkshire shareholders have indeed embraced this long-term partnership concept. The annual percentage turnover in Berkshire’s shares is a fraction of that occurring in the stocks of other major American corporations, even when the shares I own are excluded from the calculation.

InFINeeti Team Ankit Tiwari | 967465010 Ashutosh Deshpande |9088104827 Sanket Tandon | 8697912131 Sobhit Agarwal | 8697912181