Back to Blog

Am back to blogging on Finance and Economic topics. I would keep blogging on various financial and economic factors, conditions and news. To start with, the current highlights are:
1) Greece Crisis and EU bail out of Greece.
2) Goldman Sachs sued for fraud (because of the deadly CDOs traded)
3) Rajat Gupta allegedly involved in biggest insider trading of this generation.
4) Markets, Inflation, RBI Rates

and, many more. Keep Following !

SectorWise Sensex

Performance of various Sectoral Indices of Sensex. 

Full Year period is 1-April-2008 to 31-March-2009

First Half period is 1-April-2008 to 1-October-2009

Realty fell the most in last 1 year with a fall of almost 79.1% ! 

Realty is followed by Small-Cap(58.7%), Consumer Durables(58.2%), Metals(58%) and Mid-Cap(53.8%)!! 

In my next post, I will cover the Index movers i.e. the stocks which moved these indices the most. 

Nifty in 2009

Nifty has moved up 2.09% in 2009. It closed at 2959.15 on last day of 2008 and by the end of first 3 months i.e. 31 March 2009 it is at 3020.95! 

This is the list of how Nifty stocks have performed in last 3 months. Note that this is not index movers since they have different weights. 

Also to be noted here is Zee Entertainment is replaced by Axis Bank on 27 March 2009 and and Satyam replaced by Reliance Capital on 12 January 2009 ! 

Name	31-Dec-08	31-Mar-09	% Change
Maruti Suzuki	520.2	779.85	49.91
Mahindra Mahndra	274.5	383.65	39.76
Sterlite Indu	260.1	357.6	37.49
Hero Honda	803.65	1071.15	33.29
Grasim Ind	1219.85	1582.15	29.7
Steel Authority	77.5	96.45	24.45
Reliance Indu	1232.75	1524.75	23.69
ACC	480.15	574.4	19.63
Gail	206.25	245.6	19.08
Infosys Tech	1115.45	1323.9	18.69
Cipla Ltd	186.6	220.05	17.93
ONGC	667.1	780.2	16.95
Pwr Grid Corp	83.15	95.6	14.97
National Alum	189.45	214.65	13.3
Tata Motors	159.85	180.3	12.79
Tata Consult	477.9	538.55	12.69
BHEL	1362.6	1510.55	10.86
Reliance Petro	87.2	95.1	9.06
ITC	171.7	184.85	7.66
Cairn India	172.05	184.1	7
Wipro Ltd	233.4	245.9	5.36
Sun Pharma	1064.15	1111.45	4.44
Tata Communi	501.75	518.35	3.31
Tata Power	749.15	768.6	2.6
Hindalco Inds	51.4	52.05	1.26
Ambuja Cem	70.05	70.6	0.79
Bharat Petroleum	376.1	376.05	-0.01
NTPC	180.6	179.85	-0.42
HDFC Bank	998.35	973.4	-2.5
Idea Cell	52.65	50.1	-4.84
Housing Dev Fin	1486.4	1412.2	-4.99
Hindustan Unilev	250.3	237.5	-5.11
Tata Steel	217.2	205.9	-5.2
ABB Ltd (India)	453.8	426.7	-5.97
Siemens	286.95	268.1	-6.57
Reliance Infrast	579.5	515.55	-11.04
HCL Techno	115.3	102.05	-11.49
Bharti Airtel	715.5	625.75	-12.54
L&T	773.75	671.4	-13.23
Unitech	40.65	34.9	-14.15
Reliance Power	119.95	102.35	-14.67
State Bank IN	1288.8	1067.1	-17.2
AXIS Bank	504.7	414.95	-17.78
Punjab Nat Bk	526.7	411.45	-21.88
Reliance Commun	227.2	174.85	-23.04
ICICI Bank	448.1	332.8	-25.73
Suzlon Energy	62.3	42.35	-32.02
Ranbaxy Labs	252.35	165.7	-34.34
Reliance Capital	541.75	353.45	-34.76
DLF	282.15	167.3	-40.71

If we look at it sectorwise, Banks have gone down. We see ICICI, PNB, Axis Banks, State Bank at the bottom alongwith Reliance Capital. Worst hit in 2009 is DLF!! 

Important sector which saw a positive signal in 2009 is automobile. We see Maruti Suzuki, Hero Honda, Mahindra and Mahindra topping the charts. 

Nifty - change in consituents

India's major equity index has seen change in weightage since last year. First of all a summary of whats added and whats removed in last 1 year:

• on 10-September-2008 Reliance Power added and Dr Reddys Laboratories Ltd removed 
  
• on 12-January-2009 Reliance Capital Ltd replaced Satyam Computer Services Ltd
  

Over the period we saw weightage of Giant PSUs increasing on Nifty. 

• NTPC increased from 5.62% to 8.19% now, increase of 2.58%! 
  
• ONGC increased from 7.83% to 9.10% now, increase of 1.27%! 
  
• Similary Infosys weightage increased by 1.26%, ITC by 1.15%, Hindustan Unilever by 1.03% and Reliance Industries by 1.01%.
  

On the downside we see DLF, Reliance coomunications, Unitech and ICICI losing their weights on Nifty:

• DLF decreased from 3.93% to 1.54% now, decrease of 2.39%!
  
• Reliance communication decreased from 3.79% to 1.82% now, decrease of 1.97%!
  
• Unitech weightage decreased by 1.29%, ICICI Bank by 1.17% and L&T by 1.1%.
  

This chart shows how weights have changed sectorwise:

This shows the current weights in NIFTY:

India Inflation at all time Low

Wholesale price index for the week ending 7th March fell more than expected to 226.7 pulling inflation down to 0.44%, an all time low. Previous all time low was 1.13% in February 2002. Very soon inflation will fall into negative territory now. 

Market Summary (comparing 52 week High-Low)

I did this analysis on 500 stocks in BSE-500 Index. I wanted to check stocks which are farthest and nearest to their 52-weeks Low and 52-weeks high. 

(This is the first time I tried this, so please let me know if there is any mistake and pour in your suggestions and comments)

1) These are the names which are farthest from their 52 week high. Note that these all reached their highs in March-May '08. They have almost lost their entire wealth with Vishal Retail losing as much as 97%. Another known name in the list is Maytas! 

Name	Price	Year High	Year High Date	Distance from High
Vishal Retail Ltd	25.65	879.95	4/1/2008	97.08%
Prajay Engineers Syndicate Ltd	13.15	319.9	3/26/2008	95.89%
Maytas Infra Ltd	33.95	750	4/2/2008	95.47%
B.L.Kashyap & Sons Ltd	89.55	1750	5/2/2008	94.88%
Cals Refineries Ltd	0.36	6.7	5/30/2008	94.63%

2) These are the names which are closest to their 52 week high. Note that Hero Honda and Akruti City are reaching highs this week. Important here is Akruti City which has doubtfully risen almost 84% from 858 to 1577.8 in first 10 days of March. 

Name	Price	Year High	Year High Date	Distance from High
Power Grid Corporation of India Ltd	96.3	108.45	5/5/2008	11.2%
GlaxoSmithkline Pharmaceutical Ltd	1155.85	1233.7	2/18/2009	6.31%
Colgate Palmolive (India) Ltd	448.35	473.8	3/2/2009	5.37%
Akruti City Ltd	1577.8	1610	3/17/2009	2%
Hero Honda Motors Ltd	974.35	985	3/13/2009	1.081%

3) Here are the names which are now closest to their 52-weeks low. But also note here that these names reached their 52-weeks low very recently. 

Name	Price	Year Low	Year Low Date	Distance from Low
Greaves Cotton Ltd	50.4	50.1	3/17/2009	0.59%
Future Capital Holding Ltd	93.7	92.9	3/12/2009	0.85%
Raymond Ltd	70.75	70.05	3/9/2009	0.99%
Allied Digital Services Ltd	147.8	146.05	3/12/2009	1.19%
Vishal Retail Ltd	25.65	25.25	3/17/2009	1.58%
Jubilant Organosys Ltd	86.4	85	3/17/2009	1.64%
Apollo Hospitals Enterprise Ltd	356.45	350	3/17/2009	1.84%
Mindtree Ltd	190.6	187.1	3/13/2009	1.87%
Alok Industries Ltd	11.55	11.33	3/17/2009	1.94%

4) These are the names which are farthest from their 52 week low. 

Name	Price	Year Low	Year Low Date	Distance from Low
Matrix Laboratories Ltd	97.75	48	11/25/2008	103.65%
Dish TV India Ltd	24.6	11.75	10/27/2008	109.36%
Jindal Steel & Power Ltd	1101	517.3	10/27/2008	112.84%
National Aluminium Co Ltd	230.7	108.35	10/27/2008	112.92%
Birla Corp Ltd	170	71	10/27/2008	139.44%
AllCargo Global Logistics Ltd	694.65	271.85	10/31/2008	155.53%
Spice Communications Ltd	63.05	23.25	3/24/2008	171.12%
Akruti City Ltd	1577.8	550.05	1/15/2009	186.85%
Satyam Computer Services Ltd	43.55	11.5	1/9/2009	278.69%

Chart presenting number of stocks and their distance to 52 week low.

Chart presenting number of stocks and their distance to 52 week high.

Declining Inflation

Inflation for the latest week came down to 2.43%. It is little better than I estimated below. But still if WPI number doesn't improve in the coming week then most likely inflation will dip below 0 by March end as I have calculated and shown earlier. Current level of inflation is lowest since June 2002. This is attributed to the record fall in the factory output. 

Now I present the historical graph of Inflation in India since 1995. 

The highlights of Inflation in India since 1995:

1) Lowest inflation was in February 2002, when inflation was at 1.13%.

2) Peak of 2000 can be attributed to the .com bubble when IT companies flooded India.

3) In February 2008, Inflation was at peak of 12.91%. 

Please give suggestions, analysis, information if you have on this topic. 

Easing Inflation

Continuing my previous blog on inflation below. Here is current inflation graph.

We see a steep drop in inflation resulting out of falling crude price which results in lowering price of commodities. Series duty cuts again eased the inflation. It is expected that by March end inflation could come to Zero!

Here is the calculation how inflation can very well cross 0. This is the inflation calculation for last month. Our WPI is decreasing constantly leading to lowering of inflation. WPI till 21/02/2009 is known. Now lets assume that WPI for following weeks remain constant at 227.6 (as it is constantly decreasing so in best case assume it doesn't decrease). So we see inflation for first week of March would be 2.38% and 0.84% for the second week of march. This is because there is a small jump in the inflation same time last year. So even if current WPI remains constant but when it is compared to a higher number the inflation figure comes down. And hence we very well see negative inflation by March end. This is the best case scenario, inflation can get to zero much before if WPI keeps falling.

Date	WPI	Date	WPI	Inflation
07/02/2009	228	09/02/2008	219.4	3.92%
14/02/2009	227.8	16/02/2008	220.4	3.36%
21/02/2009	227.6	23/02/2008	220.9	3.03%
	227.6	01/03/2008	222.3	2.38%
	227.6	08/03/2008	225.7	0.84%
	227.6	15/03/2008	226.4	0.53%
	227.6	22/03/2008	226.6	0.44%
	227.6	29/03/2008	226.7	0.4%
	227.6	05/04/2008	227.8	-0.09%
	227.6	12/04/2008	228.2	-0.26%

In my next blog I will explain impact of inflation less than 0 called 'Deflation'.

Another Stimulus Package: Rate cuts

Reserve Bank of India cut Repo and Reverse Repo Rate by 50 bps. Repo rate, the rate at which central bank (RBI) lends to banks is now at 5%. Reverse Repo is the rate at which central bank takes money from banks is now at 3.5%. This was very much expected for quite some time with growth as a key issue and inflation quite low (As Rate cuts can take inflation higher, but inflation is already at a low of 3.2% now) RBI cut rates to infuse more credit. Banks are now expected to cut lending rates. Though there is no change to CRR, as RBI believes there is enough liquidity in the system.

This Rate cut is done after worse than expected figures across the globe. The global cues for this were:

1. US real GDP contracted sharply at an annualised rate of 6.2% in the fourth quarter of 2008
2. Unemployment rate in the US has moved up to 7.6%
3. The real GDP in the euro area also declined by 1.5% in the fourth quarter of 2008
4. Japanese exports fell by 45.7% in January 2009
5. Japanese economy also contracted sharply by 3.3% in the fourth quarter of 2008

In short the major effect of these cuts could be:

1. Cheaper loans and lower deposit rates by banks
2. Better GDP figures for the 4th quarter
3. Increase in inflation by small amount
4. Weakening INR against USD

There have been series of rate cuts since Dec '08:

Reverse repo rate (%)
Jun 8 ‘06	5.75
Jul 25 ‘06	6
Dec 8 ‘08	5
Jan 2 ‘09	4
Mar 4 ‘09	3.5

Repo rate (%)
Oct 20 ‘08	8
Nov 3 ‘08	7.5
Dec 8 ’08	6.5
Jan 2 ‘09	5.5
Mar 4 ‘09	5

INR, Crude

INR 

1) INR which was getting stronger at 40 at this time last year is now struggling at 52 and some says the situation could get worse and INR could reach 55. 

2) This benefits exporters as they are paid in $ so they got more INR for their products.

3) This also favors IT industry as most of the out sourced work is paid in $. But IT companies hedge themselves against rising INR by buying 6 months to 12 months future. So this fall of INR might not help them. 

4) Also in the current time of global recession exports are already low and Obama's protectionist policy is already affecting Indian IT. 

5) Currently INR bid/ask = 51.6/51.62

6) The Indian finance ministry has begun a public competition to select a design for the symbol of the rupee! 

http://news.bbc.co.uk/2/hi/south_asia/7925248.stm

This is historical performance of Indian Rupee: 

Crude Oil

1) Crude was falling freely for quite some time. It now shows some sign of improvement after production cut by OPEC. 

2) Reached 47.07 a barrel from 40.15 a barrel in a week. 

3) 1 Barrel is 42 Gallons or 159 Lts (US liquid Gallon is equal to 3.7854 Lts)

This is historical performance of Crude Oil:

ADR

What is an ADR / GDR?

Indian companies issue shares which are traded on Indian stock exchanges like BSE, NSE etc. These shares are sometimes also listed and traded on foreign stock exchanges like NYSE (New York Stock Exchange) or NASDAQ (National Association of Securities Dealers Automated Quotation).

The company deposits a large number of its shares with a bank located in the country where it wants to list indirectly. The bank issues receipts against these shares, each receipt having a fixed number of shares as an underlying (Usually 2 or 4).

These receipts are then sold to the people of this foreign country (and anyone who is allowed to buy shares in that country). These receipts are listed on the stock exchanges. They behave exactly like regular stocks – their prices fluctuate depending on their demand and supply, and depending on the fundamentals of the underlying company. These receipts, which are traded like ordinary stocks, are called Depository Receipts.

Following are the major Indian ADRs:
Cognizant CTSH
HDFC Bank Ltd. HDB
ICICI Bank Ltd. IBN
iGATE Corp. IGTE
Morgan India Investment Fund . IIF
Infosys Technologies Ltd. INFY
Mahanagar Telecom MTE
Patni Computer PTI
Dr. Reddy's RDY
Rediff.com REDF
Satyam SAY
Sify Ltd. SIFY
Syntel Inc. SYNT
Tata Motors Ltd. TTM
Videsh Sanchar Nigam VSL
Wipro Ltd. WIT
WNS Ltd. WNS
The India Fund Inc. IFN
Sterlite Industries India Ltd. SLT

28February2009

GDP growth of Indian at 5.3%

GDP growth of India (12 largest GDP of the world) is estimated at 5.3% for the October –December 2008 quarter, which is a 6 year low. This is mainly caused by 2.2% decline in agricultur and 0.2% decline in manufacturing sector.

First 9 months of this Fiscal GDP growth now is 6.9% (Q1: 7.9%, Q2: 7.6%, Q3: 5.3%). Projected growth for this year was 7.1%. Now to get this projected growth last quarter should have 7.7% growth. Considering recession, growth of last quarter is expected to be around 5% and so we"ll miss the projected growth by quite a margin.

How GDP is calculated?

The method of Calculating India GDP is the expenditure method, which is,

GDP = consumption + investment + (government spending) + (exports-imports)

i.e. GDP = C + I + G + (X-M)

The other two methods of calculating GDP are Product wise (Calculating the total production) and Income wise (Calculating the total incomes received by factors of production - labour & capital)

Meanwhile, US economy shrunk by 6.2% for the same period of October-December 2008. This is its worst hit since 1982.

INR at 51.12 against Dollar

INR reached its all time low of 51.12 per dollar. This is mainly due to heavy demand for dollars. Dollar gained against Euro and Pounds yesterday. So, this gave opportunity to investors to buy dollars from India and sell it outside. Widening of Fiscal deficit from 2.5% to 6% already led Re to fall below 50 mark. Taking measures for growth RBI may further cut rates. This will further bring Re down. Another impact would be on inflation which has already reached to a low of 3.2%. We might see further fall in inflation in view of rate cuts and annualisation factor.

List of CEOs of major Indian Companies

Many a times we want to know CEO/Chairman of some major Indian company. I have compiled a list that would be lot helpful. Let me know if there is any correction or if I missed anything.

Company	CEO/Chairman
ADAE	Anil Ambani
Air Deccan	GR Gopinath
Apollo Tyres	Neeraj Kanwar
Ashok Leyland	R Seshasayee
Asian Paints	Ashwin Dani
AV Birla Group	Kumar Mangalam Birla
AZB Partners	Zia Mody
Bajaj Auto	Rahul Bajaj
Bank of Baroda	MD Mallya
Bharat Forge	BN Kalyani
Bharat Petroleum	Ashok Sinha
Bharti Enterprises	Sunil Mittal
Biocon	Kiran Mazumdar Shaw
Birla Corp	RS Lodha
Bombay Dyeing	Jeh & Ness Wadia
Britannia	Vinita Bali
BSNL	AK Sinha
Cadbury India	Bharat Puri
Cipla	YK Hamied
Cromptom Greaves	Gautam Thapar
Dabur	VC Burman
Dr. Reddy's Labs	K Anji Reddy (Chairman)
Dr. Reddy's Labs	GV Prasad (CEO)
EID Parry	SM Datta
Essar Group	Shashi Ruia
GAIL	UD Choubey
Godrej Group	Adi Godrej
Gujarat Ambuja Cement	NS Sekhsaria, Suresh Neotia
HCL Technologies	Shiv Nadar (Chairman), Vineet Nayar (CEO)
HDFC	Deepak Parekh
Hero Group	Brij Mohal Lall Munjal
Hinduja Group	SP Hinduja
Hindustan Petroleum	Arun Balakrishnan
HSBC India	Naina Lal Kidwai
Hyundai India	BVR Subbu
ICICI Bank	Chanda Kochar
ICICI Prudential	Shikha Sharma
ICICI Ventures	Renuka Ramnath
Infosys Technologies	Nandan Nilekani * Narayan Murthy (co founder and chairman), Kris GopalKrishnan (CEO)
IOC	Sarthak Behuria
Ispat Industries	VK Mittal
ITC	Yogesh C Deveshwar
Jet Airways	Naresh Goyal
Kotak Mahindra Bank	Uday Kotak
Larsen & Toubro	AM Naik
Mahindra & Mahindra	Keshub Mahindra, Anand Mahindra
Maruti Udyog	RC Bhargava
Microsoft India	Ravi Venkatesan
Motorola India	FV Vandrewala
Nicholas Piramal	Ajay Piramal
Nirma	Karsanbhai Patel
ONGC	R.S. Sharma
Pantaloon Retail	Kishore Biyani
Pepsi Co.	Rajeev Bakshi
Ranbaxy	Malvinder Singh Mohan
Raymond	Gautam Singhania
Reliance Industries	Mukesh Ambani
Reserve Bank of India	Subbarao
RPG Group	Harsh Goenka
SAIL	SK Roongta
Satyam Computers	Kiran Karnik(Chairman), A.S. Murthy (CEO)
SEBI	Bhave
Shoppers' Stop	BS Nagesh
Standard Chartered	Jaspal Bindra
Star TV India	Peter Mukerjea
State Bank of India	OP Bhatt
Tata Group	Ratan Tata
Tata Steel	B Muthuraman
TCS	S Ramadorai
UB Group	Vijay Mallya
Videocon Industries	Venugopal Dhoot
Wipro	Azim Premji (Chairman), Girish Paranjpe & Suresh Vaswani (joint CEOs)
Yes Bank	Rana Kapoor
Zee Telefilms	Subhash Chandra
Hindalco Industries	Kumar Mangalam Birla
NTPC	R.S. Sharma
Oracle Financial Services Software (i-flex)	Rajesh Hukku
Spicejet	Sanjay Aggarwal

25February2009

Duty cut of 2%

Using every privilege it has to lure voters just before code of conduct for the next general elections is applicable, Finance Minister Mr. Pranab Mukherjee announced 2% cut in excise duty. This will be in addition to the 4% excise duty cut made in December and will continue in the next Fiscal. Note here that the duty cut is only for the items with current excise duty at 10%. There are other slabs with duty more than 10% and other at 4%, though these are not affected. But the items with 10% duty (which now will be at 8%) are 96% of all. So more or less this cut is across the commodities. There is 2% cut in the service tax as well, bringing it down from 12% to 10%. So we see cut in bills if the benefit is transferred to consumer. 

S&P Lower India Rating

Standard & Poor’s (S&P) lowered the outlook for India’s credit rating from stable to negative (BBB-) indicating higher possibility of a downgrade. The revision has increased expectations of a rate cut aimed at boosting sentiment. S&P’s revised outlook has came less than three weeks after it said India will be the second-fastest growing economy after China. But economy prospects and fiscal position are separate issues. India fiscal deficit was as high as 6% as against 2.5% expected budget deficit. Also with the current duty cuts (mentioned above) there will be higher fiscal deficit. Note here that on the same ratings (Long term debt, Local currency) some other countries stands as:

Pakistan: CCC+

Sri Lanka: B+

Kazakhstan: BBB

Israel: AA-

Jordan: BBB

Russia: BBB+

US: A+

Australia, New Zealand: AAA

China: A+

Hong Kong: AA+

Singapore: AAA

Argentina: B-

Brazil: BBB+

Venezuela: BB-

France, Germany, Ireland, Portugal, Netherland, Switzerland, UK, Sweden, Norway: AAA

Iceland: BBB+

SEBI clearance for Satyam sale

SEBI has laid the way for Satyam to issue preferential shares at a price which can be lower than what rules allowed till now. At present, the pricing of a preferential issue is based on the average price of the stock for two weeks or six months, whichever is higher, from the relevant date (which is 30 days prior to shareholders’ approval). This is now relaxed to two weeks average price.

National Rural Employment Guarantee Act

Introduction

• Government of India under Prime Minister Manmohan Singh launched NREGA on 25th August 2005. 
  
• NREGA aimed to provide work to people living below poverty line in rural India.
  
• The NREGA provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work related unskilled manual work at the statutory minimum wages. 
  
• Central Government shall meet the cost towards the payment of wage, 3/4 of material cost and certain percentage of administrative cost. 
• State Government shall meet the cost towards unemployed allowance, 1/4 of material cost and administrative cost of State council.
  
• Adult members of rural households submit their name, age and address with photo to the Gram Panchayat. The Gram panchayat registers households after making enquiry and issues a job card. 
  
• The employment will be provided within a radius of 5 km: if it is above 5 km extra wage will be paid.
  
• TATA Consultancy Services, India's largest IT/ITES sector company has designed the software solution for the state of Andhra Pradesh. NIC, a government of India undertaking, developed solution has been implemented in other areas.
  
• Wages paid would be through a saving bank account in local bank or post office. Government is trying hard to ban wages payment through cash.

Facts

Under NREGA, rural labourers have a legal entitlement not only to work on demand but also to minimum wages. To prevent corruption, a wide range of transparency safeguards has been built into the Act. For example, muster rolls are supposed to be kept at the worksite, displayed at the Panchayat Bhawan, and read out in public at the time of wage payments. Employment and wage details also have to be entered in the labourers’ 'Job Cards', to enable them to verify the records for themselves. Contractors are totally banned.

At the gram panchayat level, the main responsibility for implementing NREGA works lies with the Panchayat Executive Officer (PEO). Another key actor is the Village Labour Leader (VLL), who is supposed to be selected by the gram sabha for the purpose of 'supervising' a specific worksite.

VLLs were there with Sampoorna Grameen Rozgar Yojana (SGRY), a predecessor of NREGA. At that time, the VLL was a de facto contractor. He or she received the work orders, spent the funds, arranged the works, and filled the muster rolls. Under NREGA, funds are routed through the panchayat and the VLL is supposed to be a mere worksite supervisor, who earns wages at the same rate as other labourers.

Current Status of NREGA

• Barely 3.2 per cent of the registered households could avail of 100 days of employment in one year '06-'07.
  
• Average employment provided under the scheme was just 18 days in the same year block.
  
• Rural population, even Government not aware of the scheme.
• Discrepancy in muster roll prepared by the team leader.

14January2009

After a long gap, I am again back to update this blog. Long list of events happened since my last update:

1) Satyam Fiasco: A lot said and known already in all daily newspapers, channels. 

What happened actually? 

How and how much the Satyam books were cooked? 

Why the Books were cooked?

Why the fraud was accepted now? 

Who was benefitted? 

What was the role of PWC? 

What next?

2) Wipro banned by World Bank.

What happened? 

Whats industry practice?

Azim Premji's clearance.

3) Infosys Q3 results much better than expected. 

4) Inflation continue to roll down. Now less than 6%. 

I will proceed from here tomorrow onwards! 

19December2008

Inflation in India at 9 months low
Inflation dropped to 6.84% for the week ending on 6th December. This is mainly because of the fall of crude oil which was reflected in other commodities. This downturn of inflation would continue as the base effect (comparing to last year) would help it to be low. Other reason for the reduction in inflation is the excise rate cut and good crop this season.
Reducing inflation figures caused the bond yield down in hopes of interest rate cuts. (Bond's yield is inversely proportion to interest rates)

Quick Update
Sensex crossed 10,000 mark.
Rupee getting stronger. INR was at 50.35 on 1Dec, 49.57 on 8Dec, 48.05 on 15Dec and 46.89 on 18Dec.
Crude goes further down to $36.22 a barrel falling 9.59% yesterday and 8.12% day before.

18December2008

Fed cuts rates again
The US Federal Reserve cut its target for overnight interest rates to a range of 0-0.25%. This now closes option for any further rate cut. The Fed also said it would expand its policy of buying mortgage-backed securities to support the housing market and that it was now considering the benefits of purchasing long-term treasury bills – a move first used by President Franklin Roosevelt in the Great Depression to push down long-term interest rates.
A treasury bill is taditionally a short term zero coupon bond i.e. they do not pay interest. They are instead issued at a discount to their face value. Like any Government bonds there is very little risk attached to investing in treasury bills. Default risk on a government's borrowings in its own currency is low enough to be regarded as zero.

Gloom at Wall Street
Morgan Stanley posted a $US2.2 billion fourth-quarter loss, wider than the most pessimistic analyst's estimate, as it unexpectedly wrote down the value of fixed-income businesses and lost money in all three of its main divisions.

Goldman Sachs, the 139-year-old investment bank reported its first quarterly loss since becoming a public company 10 years ago. For the period ended November, Goldman reported a fourth-quarter net loss of $2.12 billion, or $4.97 a share, compared with net income of $3.22 billion, or $7.01 a share, a year earlier.

OPEC cuts oil production
Organisation of the Petroleum Exporting Countries (OPEC) yesterday decided to pull an extra 2.2 million barrels per day (bpd) out of production from 1 January. This aimed to put a floor on crude price at $43 a barrel. It seems the news is not taken positively as crude is now trading at $39.8 a barrel.

TATA on Ferrari
Tata will be riding on Ferrari in coming season of Formula -1. Soon we"ll see Tata logo on F-1 cars of Felipe Massa and Kimi Raikkonen. This comes as a 'historic' news as claimed by Ferrari management. Tata on the other hand believes it as one of the cheapest way to get promotion globally.

Satyam (contd. from yesterday)
Satyam share in India fell by 30% yesterday at close. ADRs soar up 50% after Satyam called off the deal. Maytas Infrastructure fell by 20% yesterday and its further down 20% today. One costly mistake has caused Satyam promoters 600 crores.

17December2008

Bernard Lawrence Madoff FraudulenT
In what could be the biggest Ponzi scam of all time, Bernard L. Madoff got arrested on 11thDecember2008. He was amongst the most active in NASDAQ and served as its chairman of the board of directors, and on its board of governors. A Ponzi scheme is a fraudulent investment that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business.
Madoff's fraud may involve up to $50 billion in cash and affect many financial institutions, charities, funds, funds of funds of the world.
Madoff had a remarkable track record of success year after year. A hedge fund run by Madoff described its strategy as focused on shares in the S&P index, averaged a 10.5 percent annual return over the past 17 years. In November 2008, amid a general market collapse, the fund reported that it was up 5.6 percent that month, while the S&P 500-stock index fell 38 percent.
Hedge funds typically hold their portfolio at a securities firm (typically a major bank or brokerage) whereas Madoff's firm was its own broker-dealer and supposedly processed all its trades. Although Madoff was a pioneer of electronic trading, he refused to provide his clients online access to their accounts. He sent out accounting statements by mail, whereas most hedge funds statements and allowed them to be downloaded via computer for easier analysis by investors.

Satyam Maytas
Satyam board pushed a deal to buy Maytas Infrastructure and Maytas Properties, spending $1.6 bn from cash rich Satyam systems. Satyam founder and Chairman B Ramalinga Raju and other insiders hold 36 percent in Maytas Infra and 35 percent in Maytas Properties. Analysts questioned the motives of Satyam's top executives, saying there was a potential conflict of interest because they hold stakes in both companies. This was severely criticised causing Satyam ADR to fell by 55% (ADR: Stock of Indian Company listed in American Exchange). Finally the board bowed to investor pressure and canceled plans to spend $1.6 billion to buy two builders.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to help weather the global economic slowdown. Considering there are no synergies that could boost buying of realty sector industries by IT company. It would be interesting to see if at all Satyam may win back the confidence of investors.

16December2008

Cheaper Home Loan
Buying a Home has become cheaper for Low/Middle income group and in smaller towns. All of 28 Public sector Banks in India have decided to lower the interest rates on home loans and loans for small and medium enterprise, however with some conditions.

Under the scheme launched, interest rate on home loans up to Rs 5 lakh, for a maximum period of 20 years, will not exceed 8.5 per cent for the first five years. However, if interest rates changes further then lower of two will be applicable. The margin for this been reduced to 10 per cent, from the current 20-25 per cent. This means that now a buyer can get 90% of home amount as loan.
Similarly interest rate on loans up to Rs 20 lakh for a maximum period of 20 years has been fixed at 9.25 per cent and the margin has been reduced to 15 per cent. Also there will be a free insurance cover for this loan. Pvt. Banks viz. ICICI and HDFC haven't responded to this yet.
More so, this can't be a big relief to realty sector. Hardly anyone takes 5-20 Lakh loans in metros, or even tier B cities. This makes sense for Public Sector Banks whose majority of customers are those asking for 15-20 Lakh Loans, with average of 7-8 Lakh.
Existing customers are not entitled for this scheme. This is because this measures are taken to boost demand for home and help struggling realty sector.

Banks also said they are reducing the interest rate on loans to micro enterprises by 0.5% and small and medium enterprises by 1%. Both existing and new customers will benefit from the move, which comes into immediate effect.