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X a vi e r I n st i tu t e o f M a n ag e m en t
RBI changes repo rate Chanda Kochhar ranked 4th in Fortune Magazine list Feds to test for interest rate hike Pound slide IMF Warning to Africa Hopes and Misery of EuroZone Market Snapshot
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As per the Second Quarter Review of Monetary Policy 2013-14 released by the Reserve Bank of India (RBI), the Repo rate has been increased by 25 basis points from 7.5% percent to 7.75% keeping in view the surge in inflation and other factors. Marginal Standing Facility (MSF) rate slashed by 25 basis points from 9% to 8.75%. Policy repo rate under the Liquidity Adjustment Facility (LAF) hiked by 25 basis points from 7.5% to 7.75%. The liquidity provided through term repos of 7-day and 14-day tenor has been enhanced from 0.25% of Net Demand and Time Liabilities (NDTL) of the banking system to 0.5%. Cash Reserve Ratio (CRR) untouched at 4%.
As per the Reserve Bank of India (RBI), Indias Forex reserves increased for a third consecutive week adding raising it by $1.9 billion to touch $281.12 billion on account of growth in a key component. In the previous week, the reserves had jumped by $1.51 billion to $279.24 billion. As per RBI, Foreign Currency Assets (FCAs), which form the largest portion of the reserves, jumped $1.8 billion to $252.7 billion in the same period of review. FCAs, expressed in dollar terms, include the effect of appreciation or depreciation of the non-US currencies such as the euro, pound and yen, held in the reserves. The gold reserves remained same at $21.765 billion, while the Special Drawing Rights (SDRs) rose by $25.6 million to $4.46 billion. The reserve position of India with the IMF also improved and rose by $12.7 million to $2.205 billion.
ICICI Bank CEO and MD, Ms Chanda Kochhar has been ranked 4th in Fortune magazines global list of top-50 women business leaders. The list is topped by Brazilian energy giant Petrobras CEO, Maria Das Gracas Foster. Other Indians making it to the list were:National Stock Exchange chief Ms Chitra Ramkrishna (17th) Axis Banks CEO Ms Shikha Sharma (32nd) HSBCs Country Head of India, Ms Naina Lal Kidwai (42nd)
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Finance Minister P. Chidambaram held that the government was keeping a close watch on the top 30 NonPerforming Assets (NPA) accounts of big borrowers (with loans of over Rs.1 crore) in each public sector bank, and asked the lenders to set up separate verticals to recover money from written-off accounts. The current situation is not as bad as it was in 2000, when gross NPAs reached a high of 14%. As of June 2013, the gross NPA of nationalized banks was 3.89%, and that of the State Bank group at 5.50%. Other public sector banks have been advised to set up separate verticals to recover as much as possible from the accounts that were written off. The problem of NPAs has resurfaced after a normal period of 2009-10 and 2010-11 due to slowdown in the economy.
Pound slides most since July versus Dollar on Fed Outlook data
Sterling fell for a second week against the U.S. currency and dropped to the lowest level since June, 2013 U.K. gilts (equivalent to the G-secs in India) also dropped, with 10-year yields rising from a two-month low However, the pound strengthened the most in five weeks versus the euro amid speculation the European Central Bank will cut interest rates as soon as next week to revive growth
Twitter Inc. (TWTR) has attracted more than enough demand to sell all of the shares in its initial public offering Banks managing Twitters market debut were getting sufficient interest from investors for the IPO to be oversubscribed even before they started taking orders Twitter is offering 70 million shares for $17 to $20 each, according to regulatory filings
The Federal Reserve said it will examine how the biggest banks might react to a jump in long-term interest rates and another housing crash as it released the next round of stress-test scenarios designed to monitor the ability of the U.S. financial system to withstand economic shocks The central bank mentioned that as part of two adverse scenarios it will gauge bank resilience against declines in the prices of high-risk, high-yield loans and debt and some high-priced real estate markets around the country The Fed is using the tests -- based on hypothetical adverse conditions and not forecasts -- to encourage the 30 biggest banks to build capital cushions against economic turmoil and 12 of the banks will be subject to the capital review for the first time.
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World News
Qualcomm and Cerberus Join a Bid for BlackBerry
.A consortium that includes the wireless companyQualcomm, the private equity firm Cerberus Capital Management and BlackBerrys co-founders, Mike Lazaridis and Doug Fregin, is preparing a bid for the company ahead of a Monday deadline In Qualcomm, the group has wireless experience and a large corporate entity that could backstop BlackBerrys losses. Cerberus brings cash, and Mr. Lazaridis and Mr. Fregin, who own about 8 percent of the companys equity, would ease the groups path to control The company reported a quarterly loss of nearly $1 billion and a steep decline in revenue Its only competition at this point would be a highly conditional $9-a-share bid from Fairfax Financial Holdings, a Canadian insurance and investment company, which however isnt sure if it could arrange finances for the bid for a formal bid
Taiwan and Japan will sign agreements covering e-commerce and patents in Taipei on Tuesday, in another sign of their closer ties, following a pact over fishing rights in disputed East China Sea waters The five agreements to be signed also include pharmaceutical codes, railway cooperation and maritime and airborne search and rescue Taiwan and Japan forged a much-anticipated agreement in April, under which Taiwanese trawlers will be permitted to fish in waters off East China Sea islands Under the agreement, Taiwanese fishermen will be able to operate in an overlapping 200-nautical-mile exclusive economic zone claimed by Taipei, Tokyo and Beijing
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China's official purchasing managers' index (PMI) for the nonmanufacturing sector rose to 56.3 in October from September's 55.4 A reading above 50 indicates activity in the sector is accelerating, while one below 50 indicates it is slowing China's services industry contributed to 45 percent of gross domestic output in 2012, and it overtook manufacturing as the country's biggest employer in 2011 China's factory activity expanded at its fastest rate in 18 months in October, with strong output the main driver of the expansion
The International Monetary Fund (IMF) has for the first time warned that subSaharan African countries are becoming increasingly vulnerable to global financial shocks as they intensify their reliance on foreign investors The warning in its twice-yearly review of the region comes as African frontier markets such as Nigeria, Ghana and Kenya fret about the side effects of tighter monetary policy in the US The IMF said that African countries had to anticipate continuing volatility and increasing funding costs as advanced-economy central banks gradually move away from their unprecedented accommodative policies Governments from the region have raised a record $8bn (about R80bn) in global sovereign bonds including from several debuts this year, up from just $1bn a decade ago
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World News
Europes Stocks Fall
The euro dropped 1.1% against the dollar. The inflation rate fell to a four year low in October. There are growing expectations that the euro zone's low rate of inflation will push the European Central Bank to cut interest rates. However, the likelihood of an ECB Rate Cut Failed to Prop Up Markets. The European stocks fell as investors continued to weigh up the prospects of a withdrawal of monetary stimulus from the U.S. Federal Reserve.
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European Semester
Europe 2020 is a 10-year strategy for advancement of the economy of the European Union. European Semester, an annual cycle of macro-economic, budgetary and structural policy coordination will monitoring progress and ensure active involvement of member states. The system however may be too complicated to deliver results. Many of its recommendations aren't being followed. Procedures are so complicated that political leaders won't be able to follow and implement recommendations.. Germany wants a parallel system of economic coordination that would be conducted by European leaders, not by the commission as with the semester system. German officials argue this change would give political muscle to economic recommendations that are now being ignored. This year's coordination process has begun. Euro-zone member states are required to submit their draft budgets .The commission will start issuing its opinions on the draft national budgets from Nov 19th.
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Market Snapshot
FMCG major Dabur India has forayed into the packaged milk fruit-shake market in the country under its Real brand. The company said it has test launched the new product in select markets of Delhi and Punjab and plans to roll out in other parts of the country soon. State-owned Allahabad Bank has, from Monday, decided to hike term deposit rates. Hikes have been in the range of 0.25 percentage point to 1.2 percentage points, for deposits below Rs 1 crore. Helped by rally in the market value of Coal India Ltd and Bharti Airtel, top-eight Sensex companies saw their total market valuation climb by a cumulative Rs 47,381 crore last week.
FIIs pour in Rs 15,700 crore in Indian stock market in October. SEBI has said that Total foreign investment in the stock market has reached Rs 90,715 crore so far in 2013. Twitter IPO( New York Stock Exchange) range raised amid high demand. The micro blogging site is offering 70 mn shares for $23 to $25 each, a regulatory filing on Tuesday shows, indicating a market value of as much as $13.6 bn. The Rs 500-crore issue of tax-free bonds by India Infrastructure Finance Company Ltd (IIFCL), which closed on Thursday last week, mopped up Rs 1,234 crore. The issue had opened in early October. IIFCL has exercised the option to retain oversubscription of up to Rs 2,000 crore. Investors have pulled out nearly Rs 34,000 crore from various mutual funds in September against a net inflow of Rs 23,713 crore in August. LIC Nomura Mutual Fund plans to launch a capital protection fund shortly, from which it aims to mop up around Rs 200 crore from investors, a top company official said.
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Terminologies
Iceberg Order
When large participants need to buy and sell large amounts of securities for their portfolios, they can divide their large orders into smaller parts so that the public sees only a small portion of the order at a time - just as the 'tip of the iceberg' is the only visible portion of a huge mass of ice. By hiding its large size, the iceberg order reduces the price movements caused by substantial changes in a stock's supply and demand.
Quadrix
A stock valuation system that uses over 100 variables in seven major categories to determine the value of a stock. The overall score for a particular stock is determined by a weighted average of all 100 variables.
Daisy Chain
A group of unscrupulous investors who, practicing a kind of fictitious trading or wash selling, artificially inflate the price of a security so that they sell it at a profit. Price manipulation is typically very difficult in stocks with heavy volumes, so the stocks with low liquidity are much more susceptible to daisy chains.
YupCap
People in their late twenties or early thirties with post secondary educations and wellpaying jobs who are unable to purchase property. It was due to factors such as high real estate prices, limited personal savings and limited credit history, all of which can make it difficult to get approved for a mortgage.
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X-F in
Finance Association of XIMB xfin@ximb.ac.in
LET FINANCE BE IN THE BLOOD OF EVERY XIMBIAN X-Fin is the finance association of XIMB. This committee emphasizes on fulfilling the needs of students of XIMB by ways of providing tutorials in finance related subjects, giving economy-related advices, and also by conducting live projects. It is a forum for lively discussion and debate among the finance enthusiasts of the institute. X-Fin attempts to develop finance acumen among the student community of XIMB through conducting knowledge sharing sessions and giving information on financial happenings around the world.
(Source: Wikipedia)