1st Nov.

2008
Volume 2, Issue 15

Wealth Incorporation Christ University Institute of Management Finance Club Initiative Presents...

CHAANAKYA
Issue Attractions
National Headlines International Headline Corporate Interview Company Review/Buzz Words
Crossword/Quiz Investors Check Stock Ratnas Quiz Answers Crossword Answers

..Tracking the Economy

Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the
1 1 2 3 4
5-7 6 7 8

right wall. "

-STEPHEN COVEY

National Headlines
Jet Airways

Repo rate - 8%,Reverse Repo- 6% Cash reserve ratio - 6.5% IIP - 4.9%,Inflation rate - 11.04% Bank rate - 6%

15 days Movements
12000 11500 11000 10500 10000 9500 9000 8500 8000 14 15 16 17 18 21 22 23 24 27 29

Sensex (Oct 15-30)

and Kingfisher Airlines announced a strategic alliance to help them reduce costs and enhance their efficiency. Kingfisher Airlines Ltd. plans to review all its international operation plans and chart out new roadmap with Jet Airways India Ltd TCS bags Rs 1,000 cr. passport project and signs a deal with the Ministry of External Affairs for setting up and managing a project through which issue of passports will be expedited. Government doubles the ceiling on investment by FIIs in corporate debt to $6 bn. RBI reduces CRR by 100 bps to 6.5% from Oct 11, move to release Rs.40000 cr. of additional liquidity. Satyam in talks with Bank of America for continuing its contracts signed earlier with Merrill Lynch.

International Headlines

Gold (Oct 15-30)

1400 1350 1300 1250 1200 1150 1100 14 15 16 17 18 20 21 22 23 24 25 27 29

Interest rate futures set for 2009 launch . Credit derivatives to wait until markets recover. The pound tumbled below $1.53 in its biggest drop in at least 37 years after a report showed the UK economy contracted more than forecast in the third quarter. RBI may ease capital norms for foreign banks. FIIs to reverse short positions, says FM. Global stocks decline on recession concern. Ranbaxy becomes part of Daiichi Sankyo. Even after reducing the production by 1.5 million barrel a day OPEC failed to lift prices of crude oil.

3600 3500 3400 3300 3200 3100 3000 14 15 16 17 18 20 21 22 23 24 25 27 29

Oil (Oct 15-30)

50 49.8 49.6 49.4 49.2 49 48.8 48.6 48.4 48.2 48 14 15 16 17

Rs/$ (Oct 15-30)

20 21 22 23 24 27 28 29

"Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it's amazing what they can accomplish." -SAM WALTON (Founder Wal-Mart)

Page 2

Interview with B. Ganesh

Position Held : Manager - Anagram Stock Broking Ltd, Bhopal (MP region) Q1. Sir, Do u think that the markets have bottomed out yet ? Ans. No, because FIIs still hold a significant portion in the Indian equity market and the confirmation about the bearish period ending can come only after the market records continuous gains for 3 to 4 trading sessions. Many companies still have to declare their quarterly results which may have a relative impact on the market sentiments. Also the monetary measures taken by RBI will take some time to show its real impact on the economy. Q2. Most of the blue chip scripts are trading below their issue price, how much growth do you see for an investor in these companies ? Ans. I think it is ideal for any investor to invest in these companies now for a long term period since the fundamentals of these companies are good. In the current situation blue chip companies are the safest to invest in as they will surely give better returns in the long run as compared to other stocks. Q3. What measures do you think will help in bringing back the investors faith ? Ans. Government should bring public sector IPOs to restore confidence in the capital market. Further reduction in bank rates can help in easing the liquidity crunch. They should also further relax the ceiling of FII investment in the corporate bonds which will allow corporate to raise money. Q4. Do you see any impact of the earlier measures taken by RBI ? Ans. Earlier we faced a supply pull inflation, but recently due to the current market turmoil RBI reduced its benchmark rates to compensate for the loss of liquidity in the market. The measures taken by the RBI has brought down inflation to 10.68% as on 30th October 2008 and on a weekly basis inflation is on the decline. Further, the prices of crude oil and other imported commodities have come down which will reduce the current account deficit. This will leave the government with more funds to make sensible investment for the generation of employment. Q5. On what basis are you advising your clients for any investment in the current market ? Ans. We are keeping a close look on the market movements by following the technical charts of companies to find any gaps for the right investment opportunity, along with this we are also carrying on the fundamental analysis of these companies to understand their future earning potential. This helps us to zero in on the companies which are best among the lot. Accordingly we give investment advices to our clients taking cognizance of their risk appetite. "In the end, all business operations can be reduced to three words: people, product, and profits." - LEE IACOCCA

Page 3

Company Review: SATYAM COMPUTER SERVICES LTD.

ABOUT THE COMPANY

Satyam is a leading global business and information technology services company providing consultancy services, systems integration and outsourcing solutions to clients in 20 industries and more than 65 countries. Satyam leverages deep industry and functional expertise by following leading technology practices and by using an advanced global delivery model to help clients transform their highest-value business processes and improve their business performance. The companys 52,865 Associates excel in engineering and product development, supply chain management, client relationship management, business process quality, business intelligence, enterprise integration, and infrastructure management, among other key capabilities. Satyam development and delivery centers in the US, Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China, Malaysia, Singapore, and Australia serve 690 clients including 185 Fortune 500 companies. WORK CULTURE At Satyam, theres life beyond work. The company strongly believes that employees feel satisfied when they have a good personal life. They conduct various work-life balancing programs that create productive work culture while minimizing the potential for tensions between work and other aspects of life. Be their learning & development webinars, self-help workshops for associates and their family members or recreational activities filled with loads of fun and excitement, they have a number of invigorating work-life balancing programs that keep the energy level of their associates high. CAREERS AT SATYAM Satyam is home to nearly 45,700 committed and talented professionals. Satyam offers opportunities that provide fast growth. At Satyam, you will:

Work for Fortune 500 customers Have exposure to mature quality practices and processes Work on best-of-breed technologies Take up challenging end-to-end projects Benefit from mentoring by experienced seniors Keep your skills upgraded by continuous learning Grow as fast as you excel Experience a highly empowered entrepreneurial work life Work in a competitive, free and healthy environment

Buzz Word
Death Spiral: A type of loan investors give to a company in exchange for convertible debt, which, like convertible bonds, typically has provisions that allow investors to convert the bonds into stock at below-market prices. This can cause the original shareholders to lose control of the company.

Book Quotes:
"I do not think there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature."-John.D.Rockfeller

when they perform well.

and business are becoming inextricably interwoven. I don't think Contrarian: An investment style that goes against prevailing market anybody can talk meaningfully about one without the trends by buying assets that are performing poorly and then selling talking about the other." -Bill Gates

Dead cat bounce: A temporary recovery from a prolonged decline or bear market, after which the market continues to fall. "Information technology

"Well, when you're trying to create things that are new, you have to be prepared to be on the edge of risk." - Michael Eisner (former CEO Disney)

CROSSWORD:
1 2

Page 4

Down
3 4 5

Did you Know?

8 9

10

2. This method of trading involves selling of securities without owning them. 4. Any book containing original entries of daily financial transactions. 6. The rate at which RBI lends securities & money to other banks 8. A form of indirect sales tax paid on products and services at each stage of production or distribution, based on the value added at that stage and included in the cost to the ultimate customer.

The Philadelphia Stock Exchange was the first stock exchange created in the US in 1790. The New York Stock Exchange wasn't founded until 1792. Bank of New York was not only the first corporate stock traded under the Buttonwood tree in 1792 but also the first listed company on the NYSE. A m e r i c a n Express started off as a shipping company in 1850. It began selling money orders and travelers checks in 1882 and issued its first credit card in 1958. The first recipient of social security benefits was Ernest Ackerman who received a l u m p - s u m payment of 17 cents in 1937.

EclipseCrossword.com

Across
1. A payment by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor. 3. An economic condition that is characterized by a severe contraction in economic activity, which is manifested. 5. In general, it connotes a shortfall. In the context of a BUDGET, it refers to the excess of expenditure over revenues during a certain period 7. This is a term used to describe a point at which revenues equal costs 9. ____________is the gradual reduction of a debt by means of equal periodic payments sufficient to meet current interest and liquidate the debt at maturity. 10. A financial contract that derives its value from another ASSET or an index of asset values.

Quiz:
Q1. In the world of trade and commerce, what is special about the commissioning of Monte dei Paschi si Siena in Italy in 1742? Q2. Which bank is promoted by 20th Century Finance Corporation and Keppel Tatlee Bank of Singapore in India? Q3. What is a typical underwriting agreement called which allows the underwriters to buy upto an additional 15% of shares at the offering price. Q4 Who is often referred as the Father of Index Fund investing and the pioneer in mutual fund industry. He created the first S&P 500 Index fund. Q5. Which is India's first Equipment Bank launched recently by SREI International Finance Ltd.? Q6. A negotiable certificate is issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. What is it called?

"The wise man bridges the gap by laying out the path by means of which he can get from where he is to where he wants to go." -J.P.MORGAN

Page 5

INVESTORS CHECK
Sweet Is The Wine, Sour Is The Payment If I turn my back Im defenseless, And to go blindly seems senseless If I hide my pride and let it all go wrong, Then, theyll take from me till everything is gone. If I let them go Ill be outdone, But if I, try to catchem Ill be outrun If Im killed by the questions like a cancer Then Ill be buried in the silence of the answer By MYSELF

By: Sebin Emmanuel

This was the song I was listening to when I first heard the news that rattled everyone in Dalal Street. Every word seemed to capture the emotions so strongly and right to the context. All the news channels were flashing the same news with immaculate graphs on the screen depicting the biggest losers & gainers of the day, moving averages, the current market trend and the SENSEX from Diwali07 to Diwali08 (it was a near perfect bell curve!!). SENSEX lost 1,070 points on Friday closing at 8,701.07. Phew!! Hundreds of thoughts ran through my mind when I first heard that. The bad news couldnt have made a worse timing than on Diwali eve. So, where did all the money go? How long will it be before the market resumes its Primary Trend? Have the markets not bottomed up yet? These are few questions that any investor would have in his mind, for which, the real answer is: No One Knows. Few blame the FIIs for the continuing blood bath, while few blame the short sellers, forming a cartel, to pull down the market. The real facts will surface only after when SEBI finishes its investigation into the reasons for the current market turmoil. The Indian equity benchmark indices fell nearly 20% in two trading sessions on Friday and Monday. The following graph shows how the market has behaved in the last six months.
On the top is the candlestick chart for NSE for the last six months. The market began a strong downtrend after ranging for nearly three months till mid September. The Bollinger Band in the graph (blue envelope over the candlestick chart) contracted towards the end of August and remained tight till mid September, reflecting reduced volatility. The Bollinger Band also forms a good Support and Resistance level with its lower and upper band, respectively. Any contraction in the Bollinger Band is an early signal of the market about to break up or down, which in this case, happened in mid-September when the market began its downfall. The NSE broke its support in mid-September (look at the candlestick breaking down the lower band during this period) and then formed a new support level. The confirmation of the downtrend can be done by observing Moving Average Convergence/Divergence (MACD), Relative Strength Index (RSI), Chaikin Money Flow (CMF), On Balance Volume(OBV) and Aroon Oscillator making the bearish centerline crossover and sloping downwards since that period. The CMF has been near the -0.25 level for most of the period since October 1, indicating the distribution pressure in the market and a strong bearish phase. Most of the candlesticks, since the downtrend began are dark, which means that the bears were on the winning side and didnt allow the bulls to snatch the momentum from them. OBV which shows the change in volume of shares as per the fall or rise in the closing prices of the shares/index with respect to the previous close has also been steadily falling. It shows the extent of panic that gripped the market with negative news flooding in and forcing investors to sell the shares to protect their capitals. The candlesticks have been forming lower lows and lower highs with each trading day. It clearly reflects the might with which the bears have made their presence felt in the market.

INVESTORS CHECK
.

Page 6

. Contd.

Did you Know?

The word "dollar is a variation of the German word Taler, the name of a silver piece that was 1st coined in 1518 and, under Charles V, Emperor of Germany, King of Spain, and ruler of Spanish America, became the chief coin of Europe and the New World. In 1862, in the midst of the Civil War, Congress decided to print the 1st noninterestbearing paper currency, which became known as "greenbacks" or
Stock Ratnas
BIOCON BSE: 532523
SE: TARGET PRICE:

BIOCON 167 CMP: 95

JYOTHI LABORATORIES BSE: 532926

JYOTHYLAB TARGET PRICE: 300 CMP: 230.95

SUN PHARMACETICUALS INDUSTIRES BSE: 524715

SE:

SUNPHARMA TARGET PRICE: 1600 CMP: 1142.45

UNION BANK BSE: 532477

SE:

"All dreams can come trueif we have the courage to pursue them." - WALT DISNEY

UNIONBANK TARGET PRICE: 581 CMP: 128.10

(CMPCURRENT MARKET PRICE)

SE:

Page 7

INVESTORS CHECK

. Contd.

Did you Know?

No need to mention the widening histograms of MACD that clearly speak of the widely felt tremor. The histograms have been widening since MACD made a bearish crossover over its trigger line (blue line), which is its 9 day EMA. The widening histograms indicate that MACD has been further distancing itself from the trigger line. Similarly, RSI has been sloping downwards in confirmation with other indicators on the chart. It has been in the oversold region for nearly the entire month and has been below its centerline since mid-September. Though this is an ideal time for investment as many blue chip stocks are trading below their issue price, which would give far better returns as compared to those whod subscribed for the issue, but the panic and fear that has gripped the market has kept investors from making any fresh investments. Their fears are not wrong, which the last candlestick in the chart for Oct-27 proves. It is a small candlestick with a long wick. It means that the bears tried to pull the market further down, but somehow the bulls managed to reduce the damage but couldnt sustain their hold over the market and it closed negatively. This indicates the might of bears in the market and their ability to bring further damage. A look at the Average Directional Index (ADX), Aroon Oscillator and Williams% R shows the current momentum of the bearish phase. The ADX line (black line) in the ADX chart is at 63.23 which shows how strong the momentum of the bearish market is. The +DI line (green line) which reflects the buying pressure in the market is at 5.457, while the DI line (red line) which reflects the selling pressure is at 51.52. The huge gap between the buying and selling pressure is a testimony of the malaise in the market. Also, since mid August the DI line has been above the +DI line reflecting the strength of the bears in the market. So is the case with Aroon oscillator that shows the time elapsed in % after the previous high or low. It is currently at 100 and is far from the centerline which is a good indication of the bearish phase being strong. William %R also is at -81.86 which shows that the markets close was very close to the relative lowest point of the period. So has been the case for entire October month. Using the pivot analysis crucial support and resistance levels for NSE are as follows: Resistance One: 3050.83 ; Support One: 2321.08 Resistance Two: 3517.7 ; Support Two: 2058.17

Exxon is a direct descendant of the Standard Oil Company of Ohio, the corporation J o h n D . Rockefeller had started in 1870, 5 years after he began refining oil in Cleveland. Visa was originally called Bank Americard, a card offered by Bank of America in 1958 in California. The Visa logo colors were chosen because the blue represented the sky and the gold represented color of the hills in California where Bank of America was found.
Quiz Answers

Resistance Three: 3780.68; Support Three: 1591.28 These levels would form the new testing levels for the NSE in near future. The drying up of liquidity from the market has eroded the market capitalization of India Inc. to a great extent. Hidalco, DLF, Tata Motors are a few companies to be named which are trading below their issue price.

Falls in Sensex History

WORST % FALLS IN HISTORY
Date 28-Apr-92 Previous Close 4467.32 Day's Close 3896.90 4505.16 8701.07 3086.37 1280.18 3560.72 3360.89 % Change -12.77 -11.14 -10.96 -9.76 -8.74 -8.41 -8.26 Net Change -570.42 -564.71 -1070.7 -333.68 -122.55 -327.00 -302.64

17-May-04 5069.87 24-Oct-08 9771.7 12-May-92 3420.05 15-Oct-90 6-May-92 31-Mar-97 1402.73 3887.72 3663.53

1. First trading bank in the world The White Knight 2. Centurion Bank 3. Greenshoe Option or overallotment 4. John Bogle 5. Quipo 6. American Depository Receipt (ADR)

People have been talking a lot about, how well regulated our markets are, how strong our fundamentals are and last but no the least, how great the Indian Growth story is, well of course, it is. Only that it has grown negatively for many in this case and the argument that we will not be affected by the global recession is yet to be tested. As a matter of fact, the Indian bourses have been the worst performers all over the world for the October month.

CROSSWORD ANSWERS
1

S S I E
8

U S C A V A T

B I I K

S H O R T S E L L

I N

E
5

P D
7

R E B

E F R

J O U R N
6

R E P

A L

O R A T

I N G

10

EclipseCrossword.com

Contributions made by 2nd year:

Editing/Compiling News Company Review Investors Check/Stock Ratnas Interview Coordination Arihant Patawari Chetan P. Shriya Mohammad Nimakwala Sebin Jerry Fouzia Tarannum B.

Contributions made by 1st year:

Editing/Compiling Did you know, Quiz Quotes, Book Quotes Graphs, Buzzwords Indices Communication Gyanesh Shroff Megha Garg Maria Fernandes Paloma Lobo Hitesh, Paulomi Breganza Archana

Please mail your valuable feedbacks, reviews at chaanakya.ccim@gmail.com