8_16th December 2007 (161207)

8/6/2019 8_16th December 2007 (161207)

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“Money is human happiness in the abstract; and so the man who is no longer capable of enjoying such happiness in theconcrete, sets his whole heart on money. —ArthurSchopenhauer, Parerga

National Headlines • Anil Ambani and firms controlled by him will invest Rs . 8,000 crore in Reliance Energy

in a move to help the company double its net worth and increase its borrowing limit.

• Darjeeling Tea is all set to be the first Indian commodity to be included in the EU

registry for geographical indications (Gis)- a move to prevent tea originating from any

other place from being sold under the name ‘Darjeeling’ in the entire EU market.

• Airlines have been directed by the government to come clean on the tax component in

their tariffs. The amount described as tax should be deposited with the govt or returned to

passengers in case of cancellation.

• RBI has allowed banks to give ailing sugar companies a second chance to restructure

their loans. So far, a loan can be restructured only once under the corporate debt

restructuring forum.

• Nasscom has urged the Government to lower the tax burden on software and BPO

companies and create a national fund to invest foreign exchange reserves abroad, so as to

bolster the export driven IT sector

International Headlines • Stronger yen and possible slowdown in the U.S. drive sentiment to lowest level in

2 years for Japanese manufactures

• Financial giant's new CEO, Mr .Pandit strikes fast, brings assets of troubled

investment vehicles onto its balance sheet.

• Investment bank Lehmann Brothers results come in better than expected, but firm

takes a $830 million hit in its fixed-income division. Net income at the bank fell

12 percent, to $886 million, or $1.54 a share, during the fourth quarter ended Nov. 30, from $1 billion, or $1.72 a share, a year earlier.

• Padmasree Warrior appointed as the new CTO of CISCO. She was with Motorola

before this new assignment.

• Tyco CEO receives over $34 mln. pay in 2007.Chief executive, Edward D.

Breen, of the diversified manufacturer gets stock and options with estimated

value of $28.3 million.

• U.S Government says consumer inflation jumped in November by the largest

amount in more than two years, raising oil demand concerns.

16 DEC 2007

Volume 1, Issue 8

…………..Tracking the Economy

“ We simply attempt to be fearful when others are greedy and to be greedy when others are fearful”- Warren Buffet

Issue Attractions

National Headlines

1

International

Headline 1

Corporate Interview

2

Student Editorial 3

Quiz 3

Pearls of Wisdom 4

15 days Movements

CHAANAKYA

Wealth Incorporation - A CCIM Finance Club Initiative Presents

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Interview with Mr. Bishal Chhetri Enam Securities Pvt.Limited

In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten.- Peter Lynch

(Contd. from the previous issue)

Mr Bishal Chettri is presently involved in the regional Wealth Management and Corporate Banking business

for ENAM Securities Pvt. Ltd. He shares his views about the state of the economy and stock markets in gener

CCIM: What kind of investments or funds do you suggest in the present situation to your clients?

Mr Bishal Chhetri: At ENAM, we strive in every possible manner, to acquire a blueprint of the client’s investmentgoals and perspective, fore mostly. That is an imperative cornerstone in our approach to managing wealth. Thus, youwould see that invariably, investment requirements, risk perceptions differ from individual to individual. We thusincorporate a process where the client’s profile is mapped onto our system, which eventually aids us in our investmedecisions for the client... Essentially, at any given situation, a set of clients may have different treatments to their portfolio as against a different set of clients.However for your benefit, for clients initiating investments at this point of time, we are deploying a major portion ofthe funds into our Portfolio Mgmt Service, which reserves the decision to invest into select equity ideas right away otemporarily deploy them into risk free liquid bees. The balance of the portion allocated for equity deployment viamutual funds is deployed on a dynamic systematic investment plan basis. Wherein depending with our comfort levelwith regard to entering the equity markets, the quantum of the funds entering as per the stipulated date can alter.Overall, upon having profiled the client, the allocation b/w equity and debt is fairly established. The Debt portion

currently finds allocation under liquid plus schemes, floaters. Fixed Maturity Plans, Derivative Funds and Structured products.

CCIM: What can Fund Managers do at this point while suggesting to their clients in such a volatile market?Mr Bishal Chhetri: Barring intermediate phases of volatility, the Indian equity markets have, on a longer term basis performed exceptionally well over the last 4 years. The smarter trend clearly arising from hindsight is to remaininvested. The clincher is probably one’s aptitude in picking up the right ideas, favourable sectors. I really don’t thinkthat Fund Managers across the country are doing anything different from normal, I really hope not. As there has beenchange in the leadership of sectors / stocks in the last couple of quarters, you could probably expect this churn tocontinue as and when valuations run ahead of their merit. Thus probably, in the interim, defensive strategies could beexpected , like increasing exposure to cash, or to “defensive” stories (those ideas with higher margins of safety), butmy guess is, Fund Managers would sooner rather than later, lock themselves into compelling above average growth

stories which can propel them into the next decade on a sustainable basis. Are there plenty of such ideas? Probably nas many as we’ve seen over the last two years, but surely, with time, as the GDP’s growth forecast is seen to beclocking closer to double digits, so too could we expect compelling themes and ideas to consistently keep cropping u

CCIM:A word to the students?Mr Bishal Chhetri:You are immensely fortunate to be in the midst of very honourable mentors at a formative stageyour career. Added to that, the opportunities and challenges that beckon to Corporate India over the coming decadeswould be great ingredient for fulfilling many an ambition or a dream. Draw as much inspiration and guidance duringthis fortunate period of foundation laying, as you can expect unprecedented standards of professionalism ,levels of dedication and opportunities ahead of you. Strive to make utmost use of the facilities and interaction provided by youinstitute. Of course, every one of you would know that it pays to keep reminding yourself that hard work always bearfruit.

CCIM:Any suggestions about how to equip themselves?Mr Bishal Chhetri: Reading and assimilating as much information as you can, is a potent weapon in our business.Applying it to your own method of analysis, of course follows up after this initial step. Don’t ever feel inhibited to geto the bottom of a problem or doubt so as to be able to have a clear perception about a particular matter, rather thancarrying a grey or a murky half opinion.Believe in yourself, that’s a huge motivator, and don’t be afraid to dream. India Inc over the next decades will providone too many instances of dreams finding wings… Make sure that your dreams can get nearer to that. Don’t be afraidto think aloud, no matter how contrarian you may sound to the most reputed of pundits out there, as long as your visiremains clear, stick to a conviction and debate as to why not. Lastly, in order to resound your need to believe yoursel please allow me to reproduce a line from a favourite songwriter of mine, “You can’t win, till you’re not afraid to

lose……”

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Did you Know?

The term "Blue Ccomes from the colothe poker chip withhighest value, blue. .

1.Reliance Industr

( trading range 2800-

Resistance level : 30

Target price:3191

(Outlook– positiv

2.State Bank of In

( support levels: 2360

Target price: 256

( Outlook– Positiv

3. Tata Steel( Resistance Level: 9

Sell if price falls below

(Outlook-negativ

4.Infosys:

(support levels: 1615

(Outlook: Negativ

5.Airtel

( support levels: 919,

(Outlook: Negativ

Stock Ratnas

“This market right now is moving on nothing more than emotions. Guess what? It almost always moves on

emotions. David Bach

Did you Know?Annual global spending

education is $80 billion

US and Europeanexpenditure on pet food$17 billion per year.Theglobal expenditure onhealthcare and nutrition

$13 billion

udent’s Article: The Participatory notes issue, was the timing right: A

ternational perspective BY Anand Niraj & Soumyaranjan

The decision of the Securities and Exchange Board of India (SEBI) to curb the use of participatory

s (PNs) for investment in the Indian stock market appears to have had the effect of putting the brakes on the

ying rise in the Sensex. PNs constitute nearly 52 per cent of total investment by foreign in-stitutional

stors (FIIs) in the Indian market; in incremental terms the proportion in recent years has been even higher.

SEBI decisions mark a welcome, if somewhat belated, acknowl-edgement on the part of the finance ministry

he need to ad-dress the PN issue squarely. Consequent to the US Federal Reserve’s move to cut interest rates

eptember, India’s stock market has had the sort of bull run that investors only dream of. From 15,669 on

tember 18, the Sensex zoomed past the 19,000 mark in less than a month.

hree factors in the present bull run must be clearly under-stood. First, there has been a revival over a relativelyg period of investment interest in the emerging markets among the developing countries. Secondly, a switch to

rging markets in the wake of the sub-prime crisis in the US. Thirdly, a strong prefer-ence for India among the

ous emerging markets.

he World Economic Outlook (October 2007) of the International Monetary Fund reports that while net private

tal flows to emerging markets declined consequent to the east Asian crisis from an average of $167 bn in

6-98 to $81 bn in 2001, they have recovered sharply since and are projected at $495 bn in 2007. The reasons

this revival of confidence have been well documented: strong growth and current account surpluses in most

rging markets. The rediscovery of these markets has acquired a new edge consequent to the onset of the sub-

me crisis in the US. These markets are not immune to slower growth in the US but those with .

ccording to a recent report in the Financial Times, of the $29 bn in net inflows to emerging markets this year,

astound-ing 82 per cent has arrived in the seven weeks since early September. In the same period, US,

opean and Japanese equity funds have seen huge outflows. India is among the beneficiaries of such a switch:

FII inflows in the first half of October alone were over $5 bn compared to $11 bn in the preceding ninenths of 2007

he switch in favour of emerging markets is happening at a time when returns in these markets are getting

easingly cor-related with those of industrial economies. As a result, investment is no longer about portfolio

rsification. It is simply the quest for higher returns. This is reflected in the fact that emerging market price-

ings multiples are today at a premium over multiples for industrial economies. Is such a premium justified?

he question is especially relevant to the Indian market where, until the recent correction, the price-earning

tiple was around 18 (compared to 14 for the bigger markets). True, India is the second fastest-growing

nomy in the world. But even if we accept that overall economic growth in India is sustainable at around 8 per

, there are doubts as to the sustainability of earnings growth in light of the pressures on margins from several

ces, notably the appreciation of the rupee.

cisely what valuation is justified for a given growth in earnings is impossible to determine and this indeed is

Greenspan argument for not intervening in the face of rising asset prices. But the argument has less validity in

rging markets where the volume of external flows can be large in relation to the size of the financial markets

hence potentially destabilising. Part of the problem in a market such as India’s is that investors in the stock

ket are not necessarily institutional investors with long-term horizons. Indeed, a combination of a rising

ket and an appre-ciating rupee can be counted upon to draw in hordes of short-term investors who may well

once they have made a tidy return. For this reason alone, too rapid an appreciation in stock prices of the sort

have seen recently is unhealthy – it raises the risk of an abrupt exodus of funds. The deluge also causes

mense challenges for management of monetary policy and the exchange rate

Did you Know?

Tobacco is a $200 bindustry, producing trillion cigarettes a yabout 1,000 cigaretteeach person on earth.

Excessive use of crecited as a major caunon-business bankrusecond to unemploym

QUIZ:

Marcel Ospel, the chairman of which bank has admitted that the bank had failed to understand the sub-ime mortgage positions that led to its $10 billion write down, though it was aware of the massive figures

volved ?

To promote public private partnerships (PPP), Asian Development Bank will provide $500 million loan todia through which institution

Lufthansa, Europe’s second largest airline is buying a stake of 19% in ____, the US low cost domesticline.

VSNL has been renamed as _________ and it is paying a branding fee of 0.25% of its turnover or 5% of

BT as it is using the word _________ in its new name.

M&M ) has launched its Scorpio and Bolero pick up trucks in Sudan in partnership with distributor

(Answers will be published in the next issue)

Answers of the previous issue:

Britain’s Burren energy 2.DLF 3.Wipro 4.pantaloon retail India. 5 .IZB Informatik-zentrum.

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Management Quotes:

• “Management is efficiency in climbing the ladd

success; leadership determines whether the la

is leaning against the right wall.”

Stephen R. Covey

• “Good management is the art of making proble

so interesting and their solutions so constructi

that everyone wants to get to work and deal wthem.”

Pearls Of Wisdom Dinesh Ahuja

Amba Securities

Designation : Equity analyst

Profile: works for his clients in USA and UK who provide a

list of companies on which research reports is prepared and

sent to the clients Responsible for every single penny. Along

with appraising. Various projects, he also automates all manual

process.

Please mail your valuable feedbacks, reviews at [email protected]

Buzz Word

• Value Trap: A stock that has experienced a large price

depreciation and is mistaken to be a value stock .

• Pairs Trade – The strategy of matching a long position with

a short position in two stocks of the same sector. This createsa hedge against the sector and the overall market that the two

stocks are in. The hedge created is essentially a bet that you

are placing on the two stocks; the stock you are long in

versus the stock you are short in.

• Swing Trading - A style of trading that attempts to capture

gains in a stock within one to four days. .

Contributions made by :

Usha V Murthy Soumya Ranjan MohapatraBhavana Kataruka

Anshu AwasthiRavi Shekhar Ajay Dhuvri Ritesh VermaGopal Pai Anand NirajDiwakar Grover (1st yr)

Recognise these People:

(Answer will be published in the next issue)

Answer of Previous Issue: N.balasubramanium Chairman SIDBI, O.P.Bhatt

( Chairman State Bank of India)

1 Down: American express ; Barclays bank; Deutsche Bank

2 Down: bank Of India; Centurion Bank; Zurich FinancialServices

8_16th December 2007 (161207)

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