Indian debt market: Need for development

Why there is need for developing the Indian debt market when there are many others issues to be sorted in the financial sector like derivative market, new products etc.The reason particularly is changing dimension of Indian economy that have arises over the last 17 years with the starting of economic reforms.

The Indian debt market is one of the largest markets in Asia and largest in South Asia. It has relatively big size in terms of market capitalization, trading volumes and outstanding securities. Debt market movement works as a leading indicator since it provides risk free rate of interest which has multiplier impact in the market.

Game changer in Indian Financial Market: The Current Decade

Introduction

The primary purpose of this article is to cover innovation in financial product, introduction of new financial product in this decade and regulatory change in the same period which changed the shape of Indian financial market. We have seen that in the last few years, many steps were taken by regulatory body to do such thing which made Indian financial market at par to world developed financial market. So current decade is really considered as one of the major decade in setting up milestone for India in area of finance.

The Existing Takeover Code

Takeover Code concerns itself with the various regulations that an investor has to follow in case he acquires a substantial stake or control in the company. (Acquiring Control and Acquiring a substantial stake may not necessarily be the same because a substantial acquisition may take place even when there is no change in control. For example an investor acquiring 15% stake in a company (a substantial stake) may still not acquire control because of the presence of another investor with 50% stake). The Code is detailed in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997. These are also called as ‘SAST Regulations’ or ‘Takeover Code’. These govern only the listed companies. Under these regulations, if an investor acquires a substantial stake or control in the company (hereby referred to as ‘Trigger points’), then he is compulsorily required to publicise this information by way of a ‘public announcement’ followed by an ‘open offer’ for buying a certain minimum public holding. The minimum limit of making an open offer stands at about 20%. In other words the acquirer will make a public offer to buy a certain percentage (minimum 20%) of the equity capital of the company.

EU BANK STRESS TESTS

The much talked about test, the EU test of banks' ability to withstand financial shocks, is being highly criticized as too easy after only 7 out of 91 failed. European Union policymakers and regulators voiced relief at results but some market analysts and many media commentators derided the whole exercise in which all listed banks passed as lacking in credibility. There was skepticism about EU regulators' conclusion that banks need only a total of 3.5 billion Euros ($4.5 billion) in extra capital.

Only five small Spanish banks, Germany's state-rescued Hypo Real Estate and Greece's Atebank failed outright. More than a dozen others scraped through with just over the required 6 percent of Tier 1 capital in the most stressful scenario and are likely to come under market scrutiny. However, the wealth of data disclosed by banks representing 65 percent of assets, and the commitment of banks, regulators and governments to follow-up action may well outweigh doubts about the stringency of the tests.

Maruti Setting trends for its competition

Zoom away into the future that seems to be the motto of the Automobile manufacturers of India today. With the advent of technology, rapid changes are being made in the automobile industries which have lead to tremendous increase in the profits of these organizations. Updating outdated management system can reap significant benefits for the Automotive Industry. With the implementation of e-resource ERP, the most reliable, low-cost ERP solution available in the Indian market today, companies are producing products which can effectively compete in the International market and at the same time eliminating problems that occur in the areas of management, administration, production and operations.

Financial Inclusion in India

Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups.As banking services are the nature of public good,it is essential that availability of banking and payment services to entire population without discrimination is the prime objective of the public policy.

Concept of Money

The population of High Net worth Individual (HNI) in India has increased from 84,000 to 1.26 lakh. An individual is considered to be HNI if his total investible wealth is $ 1million. If we take an estimate of Indian population to be 1.25 billion it comes to 0.01008%. Good isn’t it showing the enormous amount of progress that we have made?

I have not written this piece to praise or condemn India’s growth. The thing that worries me is that if this is how we measure growth and development we are on a road to perdition. We need to look towards growth in measures more than monetary. We need to look beyond the tradition ways of wealth. I will here try to analyze the concept of money.

Differential Voting Right Shares – Playing Different Roles

As the name suggest, Differential Voting Right (DVR) shares provide different right of ownership as compares to ordinary shares. They have been allowed to issue in India since 2001.Since then only 4 companies had issued shares with DVRs shares.

Shares with DVRs shares are considered as a new product in the equity market. There have been numerous benefits both to the companies and to the investors who do not exercise their voting rights. If we look from the investor point of view, then they can earn better return in lieu of surrendering their voting rights whereas a company can issued equity without diluting their equity stake.

Challenges for Reserve Bank of India

The market is waiting for action of RBI on its coming annual monetary policy on 20nd April 2010.Analysts expecting that firm actions to be taken by RBI against inflation.

India right now has one of the highest inflation rate in the world and RBI seems to be behind the curve despite it started action of exiting its monetary policy ahead of other central banks.As per the weekly data by The Economist,out of 42 major economies only Venezuela seems to have more pressing inflation problem than India.

Are we Ready for Many Small States?

Whenever I get a Call from my Friends at Hyderabad, Only two common Questions , How is Cold at Delhi, How is your MBA Going and they receive every time only a common question from this side, and that is pretty obvious one. Yes, your guesses are very much true, “What has happened with regards to Telangana”. Many of my friends at Delhi ask me “Hyderabad is part of?” I am really bewildered to answer this, because I myself is not sure is it part of Andhra, or Telangana, or will it be a Union territory.

Should the government review fertiliser and food subsidy to curb expenditure?

I think government should definitely have a serious look over the way it provides food and fertiliser subsides and how these subsidies are utilised. If we observe, these subsidies have grown at a CAGR of 45 percent since 2003-03.In 2009-10 food subsidy bill is estimated at Rs.52489 cr.and fertiliser estimated at Rs.75000 cr.The purpose for which these subsidies are provided are not met. Food subsidy is provided to stabilise the price, adequate price to farmers and food security to the nation. But from the last two years food inflation continuously crossing up the double digit mark. In the same manner in case of fertiliser it is provided to increase production but rather these had gone to foreign players.

Infrastructure importance

With a view on the upcoming budget, i thought to write on the importance of infrastructure in our country, both social i.e education, health etc and physical; roads,railways etc.

For an optimist Indian, jammed roads, crowded airports, full internal flights and booked out hotels are the signs of a growing economy at a robust pace. At the same time it also brings home the reality, that is, the poor infrastructure scenario.

Vision India

Why it can’t be done?

Why do our new generation fear? Why don’t they try to think about others, rather them themselves? Why can’t our country prosper? As our professor said, “People tend to think about themselves first, then family, religion, caste, state, country, planet”. This country has no dearth of human intelligence which is the most important asset for any country, why can’t it be utilized properly. Why is the right environment not provided to them to flourish? Why do we still lag behind? The answer lies in some radical minded people who for their own vested interest exploit others and the country. The menace of this disease is so deep-rooted that people have lost faith in it. The only answer is, “nothing can be done”.

Automobile: Seeing the ELECTRIC forces of change

The auto expo 2010 was a wonderful experience for me, this was mainly because of two reasons: one that I am a mechanical engineer(with interest in automobiles), second I am studying business.

While I was moving through the stalls, Apart from enjoying I was observing the changing face of automobiles in India.

We all know about Reva, one electric vehicle which has been commercially viable. But why do you think, this has not hit the market like nano did. Well the reasons what experts provide: people are not appreciating the mileage that it provides, also people are not concerned for emissions of there vehicle. But are there any other reasons to it....yes, you see that car, it doesn't look more than a box, its top speed is limited, also it is overvalued for the benefits it provides this is mainly because of the low level of production, this I say because total electric vehicle sold in 2008-09 were just 1,10,000.

Money and Things

In this blog we will not just discuss money but we will keep it sprinkled with the spices of variety and all that is important to know. So Money and things are your way.

The weekend kept Shashi Tharror in the news this time for commenting on the Nehruvian Foreign Policy. But in a democratic country we must look beyond these incidents not as a controversy but as an Individuals point of view. Well Freedom of Speech is the basic right in the idea of Democracy.

Last week indices all over the world ended on a positive note. Indian benchmark index, the BSE Sensex closed with the gains of 0.4%. It remained amongst the lowest gainers the reason was the uncertainty surrounding the interest rates and the Indian government’s anticipated policy actions to curb the menace of inflation. The bells ringing at nine did not turn out to be so merry for the Indian stock markets. For the year the midcaps are expected to keep up the stakes rolling. Looking at the Global Markets Brazil and Japan was amongst the highest gainers this was led by positive US retail sales data. The Crude and the cold performed better than the stock markets this week giving a return of 4.3 and 4.2 respectively.

To exit or not to..

Continuining with what Ankur posted, i thought it will be more relevant to see the overall monetary and fiscal position. So i tried to delve in the issue and tried to find out what needs to be done on both the front. Loose fiscal policies are hurting the fiscal position while a tighter monetary policy might risk growth. Last week, finance secretary came out with a statement that too much of stimulus is injurious to health. This indicates the view from some quarters that it is time to withdraw the stimulus. However i feel that the withdrawal of the stimulus should be gradual and in a phased manner, in order to ensure sustained economic recovery.

Should Fiscal stimulus Continue in the Next Budget?

In the next month we will have new budget where government will try to impact fate for the next year. Recently came across an article where it was mentioned that auto mobile sector showing continuous rate of growth especially in the year 2009-10.Read in Brand Wagon by financial express, Pawan Munjal saying “The calendar year 2009 has indeed been our best ever performance”. I tried to find out why every auto company was showing growth in last two quarter.

I found out that this is basically measure taken by both governments fiscal and monetary policy. Excise duty for automobile sector cut from 12% to 8% and interest rates were low in the same period which provides adequate finance to the customer.

Then I questioned does the time has come that government should gradually cut fiscal stimulus to these sectors which are showing continuous growth rate. I think time has come because if we look at the government fiscal deficit which is as high as 6.8 per cent where as FRBM recommends it should be around 3 per cent. This figure 6.8 per cent does not include state deficit, oil and fertilizer subsidies. If we include them it will be around 11 per cent. A developing country cannot afford to have such a high amount of deficit on a continuous basis. Even though RBI had start taking its Exit route from the subsidized interest that it provided to specific sector in the time of recession.

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