Professional Documents
Culture Documents
Volume 2, Issue 3
CHAANAKYA
..Tracking the Economy Stocks don't go straight down and stocks don't go straight up. The market's in trouble ? technically, it's in trouble and fundamentally it's in trouble. We're going to bounce around with a downward bias.
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Issue Attractions
National Headlines International Headline Corporate Interview Quiz Student Editorial Investors Check/Tag lines/Buzz Word
- KEN SHEINBERG
National Headlines
Axis bank makes Rs. 72 crore Provision in 4th quarter for foreign exchange derivatives, HDFC set aside Rs. 471 crore. Reliance Industries LTD. Major petrochemicals industry posted 24% rise in 4th quarter profit. Maruti Suzuki net Profit falls by 34% in the 4th quarter and was RS 297 Crore. RBI hikes CRR by 50 basis points to 8% that will suck Rs. 18,500 Crore from market to keep inflation under control. Infosys 4th quarter net profit grows by 9.2% touching RS 1249 Crore. Venture Capital & Private Equity funds have raised Rs. 28000 Crore in the year 2007. SEBI has allowed AMCs (asset management companies) to invest in real estate through guidelines that AMCs have to follow. Fund houses likely to get Rs. 30K- 50K Crore.
15 days Movements
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International Headlines
US financial groups raise $28 billion, Citigroup- $6B, JP Morgan -$6b, Merrill Lynch$2.5b. BMW takes $370 million charge due to falling prices and rising bad debts in the US. Arcelor-Mittal plans $10 billion Indonesia deals by buying stakes in Krakatau Steel. Delta Airlines and Northwest Airlines agreed to merge to become worlds biggest carrier. GM loses sales to Toyota as it reports 0.6% drop in Q4 Sales to 2.25 Million. Bank of England unveils 50 billion debt market plans.UBS details its sub-prime losses, the banks write downs have swollen to more than $34bn. Royal Bank of Scotland unveils 12 bn. rights issue. Warburg Pincus, the US-based private equity group raised $15billion for its new project. Citigroup reports $5.1 Billion loss in Q1.
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The key to making money in stocks is not to get scared out of them. - Peter Lynch, American Fund Manager
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Quiz
1. The divergence of a mutual fund from its stated investment style or objective. It occurs as a result of intentional portfolio investing decisions by management, a change of the fund's management or, in the case of stocks, a company's growth.
2. The tendency for mutual funds with poor performance to be dropped by mutual fund companies, generally because of
poor results or low asset accumulation. This phenomenon, which is widespread in the fund industry, results in an overestimation of the past returns of mutual funds. 3. A group of mutual funds offered by one investment or Fund Company. Generally, the constituent funds cover a wide range of fund categories and investment objectives. Chains of habit are too light to be felt until they are too heavy to be broken. - Warren Buffet
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Credit risk is the risk of financial loss arising from the failure of the counter party to meet his One of the smallest obligation or failure of a customer to pay principal or interest. Generally credit risk is managed by bank notes in the fixing suitable exposure limits, insurance, securitization, etc. Credit derivatives were developed to world is the Ivory overcome the inefficiencies in the credit market
Coasts 0.10 franc note, issued in 1920. This actually a postage stamp pasted on cardboard.
Did you Know?
Diversify credit risk: Like a zero sum game-credit risk is neither created-nor destroyed-it keeps on 32mm*46mm note is passing from one hand to other Maintain client relationship Banks construct and manage a credit risk portfolio as per their preference Basel 2 requirements: Unbundle credit risk for less capital adequacy System is more stable because loses are borne by wider pool of investors Make assets, such as loan portfolio, more liquid
The term Budget comes from the French Credit Derivative: Definition word BOUGETTE, a little bag, once used for ISDA (Intl Swaps and Derivatives Assn) Definition 1999: CDs are OTC financial contracts defined as off balance sheet financial instruments that permit pills and medication.
one party to transfer credit risk of a reference asset, which it owns, to another party without actually selling the asset. The ICICI experience: It therefore, unbundles credit risk from the credit instrument and trades it separately.
Answers To Quiz
Protection seller (Credit risk buyer or guarantor) refers to the party that contracts to 1. STYLE DRIFT receive premium or interest-related payments in return for assuming the credit risk. 2. SURVIVORSHIP BIAS Protection buyer (Credit risk seller) refers to the party that contracts to transfer the credit risk on 3. FAMILY OF FUNDS an asset to the protection seller. Premium is the fee the protection buyer pays to the protection seller as in case of insurance business Credit event is defined as a scenario or condition agreed between the contracting parties that will trigger the credit event payment from the protection seller to the protection buyer. Credit events usually include bankruptcy, insolvency, merger, failure to pay, rating downgrade etc. Reference Asset : Refers to asset to which payments under the credit derivative contract are referenced or linked. It is also called reference obligation.
Stock Ratnas DLF, BSE 532868, NSE- DLF, CMP- Rs705.25 TARGET PRICE: RS.577 ELGI EQUIPEMENTS, BSE- 500103, NSE- ELGIEQUIP CMP- Rs. 66.50 TARGET PRICE: RS.89 NAGARJUNA FERT, BSE- 500075 NSE NAGARFERT CMP- Rs. 47.45 TARGET PRICE: Rs.24 (CMP Current Market Price) If past history was all there was to the game, the richest people would be librarians. - Warren Buffet, American Investor, Businessman
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Tag Lines:
ABN AMRO Bank - Making More Possible Allianz Group - The Power on your side ANDHRA BANK - "Much more to do, with YOU in focus." Bank of America - Higher Standards Bank of Baroda - India's International Bank BANK OF RAJASTHAN - Dare to Dream Bombay Stock Exchange (BSE) - The Edge is Efficiency
INVESTORS CHECK
Some key technical indicators: Price , volume and open interest PART:A- to start with Price is the most important indicator in technical analysis. Along with the stock price movement, we can correlate its volume behavior for better forecasting. Volume is the number of units (shares) traded during a particular time period (it can be an hour, day, week, etc) ,it serves the purpose of verifying the strength of the particular price move. The investors/traders can keep an eye on volume movement along with price movement. This helps in forewarning them about an impending spurt in price movement when they observe a sudden spurt in volume. Open interest is the number of outstanding contracts, in both futures and options, on a given day. Open interest increases when a buyer or a seller creates new contracts. This happens when the buyer initiates a fresh long position or the seller initiates a fresh short position. Conversely, the open interest decreases when the existing contracts are squared up or exercised or allowed to expire. Relationship between 3 indicators
Buzz Word
Unleveraged beta The beta of an unleveraged required return (i.e. no debt) on an investment when the investment is financed entirely by equity. Wallflower Stock that has fallen out of favor with investors; tends to have a low P/E (price to earnings ratio). A.D.R Ratio The number of ordinary shares into which an A.D.R. can be converted. Greenshoe option Option that allows the underwriter for a new issue to buy And resell additional shares.
Book Quotes:
You must dare to disassociate yourself from those who would delay your journey Leave, depart, if not physically, then mentally. Go your own way, quietly, undramatically, and venture toward trueness at last . - Vernon Howard "We were designed to love and when we do, something good develops inside. We feel clean, rich, whole. Even better, we become less concerned with how we feel and more concerned with the lives of others." - Inside Out by Larry Crabb
Contributions made by :
Taglines & Editing News Did you know, Quotes Stock Ratnas, Quiz Graphs Investors Check Interview Book Quotes, Buzz Word Article Coordination Arihant Patawari Fouzia Taranum Anup Rajan & Ashish Poddar Sukrutha Lavanya Gnana Devi Diwakar Grover Sasmit K. Sahu Nikhil Mehta Fouzia Taranum Manish Sinha