September 22, 2013

Volume 9

Page 2

Companies

SMC Corporation established in Japan

in the year 1959, is the world’s largest

manufacturer of Pneumatic components

with a turnover of 325 billion Yen ($

4.05 billion). It has established global

network in all major countries of

America, Europe and Asia. The

company has technical facilities in US,

Europe, China and Japan with Key

Production facilities in China and

Singapore and local Production facilities

in US, Mexico, Brazil, India, Korea and

Australia.

The company develops a broad range of

control systems and equipment, such

as directional control valves, actuators,

and air-line equipment to support

diverse applications. The SMC group

entered the Pneumatic market in 1961

after initially specializing in sintered

metal filters and filtration elements.

Since 1961, it has engineered and

produced a wide variety of pneumatic

products for the global market. Its

product range now exceeds over 11,000

with around 620,000 variations

including air-line equipment, directional

control valves, actuators and air

preparation equipment and catering

towards various industrial fields like

Automotive, machine tools, food

processing, pharmaceutical, printing

and packaging, mining etc. The SMC

group embarked on i ts f i rs t

international operations in the year

1967 with the establishment and

capital participation of SMC Australia.

In 1970, they started manufacturing air

cylinders. By the end of 1973, the

company had established 2 factories in

Japan. It entered North American

market in 1977 with the establishment

of its subsidiary SMC USA and

subsequently SMC Germany in 1978.

The group’s main strength lied in

offering high quality products at low

cost and quick delivery and which has

made it possible to retain high market

share in Japan and compete overseas

even as it evolves into an automatic

control equipment manufacturer.

The company now has a consolidated

employee strength of 15,596 with a

capital stock of about 61 billion Yen. It

has a sales network of 55 sales offices

in major cities of Tokyo, Nagoya, Osaka

and Fukuoka. It has technical

development centers in US, Japan,

Europe and China with subsidiaries on

over 50 countries and factories in 28

countries. The company is moving into

new peripheral market products like

Detection switches, temperature control

equipment, electric actuators, vacuum

equipment, high vacuum valves,

chemical liquid valves and static

electricity elimination equipment.

SMC India, a 100% subsidiary of SMC

Japan was setup in the year 1995. The

company has 3 state of the art facilities

in Noida and Chennai. These facilities

have separate floors for manufacturing

and assembly with special CNC

machines for precision processing. SMC

India has well established and an

extensive network of branch offices and

resident engineer locations in major

cities, towns, industrial areas providing

nationwide support to its customers.

FinNiche

SMC Pneumatics

September 2013

—- By Anirban Dutta

Page 3

Companies

Wipro was established in 1945 as a

vegetable oil manufacturer in Amalner,

Maharashtra. The company then was

known as Western India Products

Limited. Its main area of business was

the production of Sunflower Vanaspati

Oil, and later on, soaps and other

consumer care products. It then

diversified into newer areas including IT

hardware and IT services and was the

first to market indigenous Personal

Computers in 1985. Wipro has evolved

into a leading global IT company, a

company which has pioneered many an

innovation in the IT services, BPO and

R&D services space. Today, it is the

world’s largest outsourced R&D services

provider, a business which continues to

remain a key differentiator for its

communication, manufacturing and

technology verticals.

The rainbow-hued sunflower, suggestive

of Wipro's initial business, indicates a

conglomerate that is innovative, large

and diversified, multi-faceted, vibrant

and Youthful. Its tagline, 'Applying

Thought', sums up the aspects of our

v is ion: Futur is t i c , innova t ive ,

intellectual, mature and powerful.

Wipro employs 145,000 employees

serving over 900 clients in 57 countries.

The company posted revenues of $6.9

billion for the financial year ended Mar

31, 2013. The total revenue and total

net income increased by 17% each from

previous year.

Wipro from Mar 31, 2013 demerged

three of its non-IT business division

into a privately held company Wipro

Enterprises. These three divisions are:

Wipro Consumer Care & Lighting:

WCCLG is a business unit of Wipro

Limited that operates in the FMCG

segment offering a wide range of

consumable commodities. Its portfolio

of lighting solutions includes products

like Smartlite CFL, LED, emergency

lights and more

Wipro Infrastructure Engineering: It

is the hydraulics business division of

Wipro Limited and has been in the

business of manufacturing hydraulic

cylinders, truck cylinders, and their

components and solutions since 1976.

Wipro GE Medical Systems Limited: It

is Wipro’s joint venture with GE

Healthcare South Asia. It is engaged in

the research and development of

advanced solutions to cater to patient

and customer needs in healthcare.

Services At WIPRO

A n a l y t i c s & I n f o r m a t i o n

Management: This service helps

customers accelerate enterprise wide

performance through smart, agile and

integrated analytical solutions and

frameworks. By bringing together the

combined expertise of Analytics,

Business Intelligence, Performance

Management and I n f o rma t i on

Management, it help customers derive

valuable insights, make informed

decisions and drive revenues by

harnessing and leveraging enterprise

information.

FinNiche

WIPRO

September 2013

—- By Bhanu Chokhani

Page 4

Companies

Consulting Services: This business

model includes implementing lean

optimization. Virtualizing non-core

operations and harnessing new

technology. It also includes structuring

4th generation partnering agreements

that operate at the highest level of trust.

Product & Engineering Services:

Wipro provides solutions for connectivity

among plant equipment, MES systems

and ERP systems to enable the smarter/

connected plant floor.

Application Services: Application

Services enables customers create

successful and adaptive businesses

through a robust business architecture,

process transformation and innovation.

This includes Cloud Computing,

Enterprise Mobility, Social Media and

Digital marketing that drives interactive

exper iences creating increased

differentiation and revenues online.

Managed Services: IT leaders need a

solution which can reliably manage

organization's IT services, provide them

regular updates, help cut IT 'run costs'

and enable them to focus more on

strategic IT change topics. ServiceNXT™

is designed to help IT leaders do exactly

this – achieve IT resiliency, be cost-

efficient and drive business alignment.

Eco Energy: Wipro provide a range of

sustainable and energy efficient

solutions such as customized clean

energy solutions for institutional clients,

energy efficiency (reduce) and renewable

energy (replace), and consulting,

implementation and managed services.

Cloud Services: This engages with

customers to holistically examine their

needs. It’s Cloud IPs, assets, solutions,

and services are then tailored to meet

organization specific requirements.

These customized programs are

delivered as quick and reliable Cloud

Services and measured on preset

success parameters.

Mobility: This could be through

creating programs to support corporate

applications, equipping your employees

with smartphones and tablets or putting

in place processes to drive customer

engagement, SCM and collaboration

with partners/suppliers.

Infrastructure Management Services:

Wipro's infrastructure management

services with its strong domain

capabilities and specialized offerings

such as IT 360™ and cloud Services

helps businesses across the globe to

transform their vision to reality.

Business Process Outsourcing:

Business Process Outsourcing (BPO) is

a strategic step for companies looking to

improve service levels, reduce costs,

streamline processes, improve process

efficiencies, and gain access to best-in-

class processes without investing in

requisite technology and skills.

Awards and Recongnition

Wipro ranks 11th in the first edition of

Interbrand's 'Best Indian Brands'

study, 2013.

Global Telecoms Business recognizes

Nokia Siemens Networks and Wipro

with the ‘Wholesale Service Innovation

Award 2013' for their unique IT R&D

Partnership Project.

American Society for Quality recognize

Wipro BPO with the Best Project with

"Organizational Impact" award.

Recognized as member of World Sector

L e a d e r i n t h e D o w J o n e s

Sustainability Index 2013-14 for the

4th consecutive year.

Wipro cited as a Leader in Sustainable

Technology Services by Independent

Analyst Firm.

Wipro, Recognized as one of the most

ethical companies by Ethisphere

Institute 2013.

FinNiche

September 2013

Page 5

Companies

Eclerx is the India’s first and only listed

KPO (knowledge process outsourcing)

company. It provides Middle and Back

office operations support to over 30

Fortune 500 companies. Known for its

industry specialized complex and core

services, is having a revenues of $100

m and workforce of 6000.

HISTORY

The company was founded by Anjan

Malik & PD Mundhra in the year 2000,

with both demarcating their leadership

profiles of leading client engagement

and developing best in class operation

capabilities. From its humble beginning

at fort office (Mumbai), Eclerx

transformed into one of global top 20

outsourcing firms within a span of 10

years. Currently has a worldwide

presence by means of its client

relationship and delivery centres.

VERTICALS

FINANCIAL SERVICES: 1. Reference

Data Management which is used for

bet te r re source u t i l i za t ion &

standardized metrics.

2. Finance & Accounting is used to

improve business function and used to

automate firm’s line functions.

3. Risk & Control focuses on controlling

operational losses due to suboptimal

internal controls.

4. Middle Office functions typically

works along with sales and trading

desk, as they require real time support

and intraday dynamics. 5. Back office

services include conf irmations,

settlements and asset servicing, which

in a nutshell means increasing

efficiency of utility benefit to customers.

SALES & MARKETING SERVICES:

1. Commerce and content is vertical

involved in handling client’s website by

means of conducting critical data

analysis and optimizing high volume

processes.

2. Analytics, insights and reporting

focuses on helping its clients keep up

the pace of handling the data by means

of rapid innovation of tools and

techniques.

CABLE & TELCO:

Agilyst Inc. US based KPO Company

was acquired and integrated as CTS

vertical for providing outsourcing to

Broadband, Cable and Telco industries

of US & UK. Its services include error

identification, customer experience

analysis & end user support.

FINANCIAL HIGHLIGHTS

Industry leading operating margins and

growth rates:

Clean and highly liquid debt free

balance sheet with a cash & cash

equivalents of Rs 2000 cr.

Name CAGR (5 years)

Revenue 35%

EBITDA 33%

PAT 32%

FinNiche

Eclerx

September 2013

—- By Ravi Teja

Page 6

Companies

THE D. E. SHAW GROUP is a global

investment and technology development

firm with more than 1,000 employees,

approximately $32 billion in investment

capital as of July 1, 2013, and offices in

North America, Europe, and Asia. The

firm has a significant presence in the

world's capital markets, investing in a

wide range of companies and financial

instruments in both developed and

developing economies.The company

manages a variety of investment funds

that make extensive use of quantitative

methods and proprietary computational

technology to support fundamental

research in the management of its

investments.

D. E. Shaw founded the firm in 1988.

While Dr. Shaw remains involved in

certain higher-level strategic decisions

affecting the investment management

businesses of the D. E. Shaw group, he

is no longer actively involved in their

day-to-day operations. The vast

majority of his time is now devoted to

his role as chief scientist of D. E. Shaw

Research LLC in which capacity he

leads an interdisciplinary research

group in the field of computational

biochemistry and personally engages in

hands-on scientific research in that

field. He also holds appointments as a

Senior Research Fellow at the Center for

C o m p u t a t i o n a l B i o l o g y a n d

Bioinformatics at Columbia University

and as an Adjunct Professor of

Biomedical Informatics at Columbia's

medical school.

An Executive Committee of five

experienced individuals, who have

worked together for almost two decades,

leads the firm. The Committee

determines overall firm policy and

strategic direction, while managing the

execution of the firm's business plan on

a daily basis. Working closely with the

Executive Committee are approximately

30 other managing directors, with an

average tenure of over a decade, who

are responsible for specific investment

and business activities of the firm.The

firm's Risk Committee is responsible for

establishing the desired risk profiles of

our investment vehicles, monitoring and

managing exposures relative to those

targets, and allocating capital and risk

among our investment strategies. The

Risk Committee consists of our Chief

Risk Officer, four members of the

Executive Committee, and two rotating

senior investment professionals.

The subsidiary in India is one of the

largest with over 600 employees and is

known as D. E. SHAW INDIA

SOFTWARE PRIVATE L IMITED

(“DESIS”). DESIS works on developing

p o w e r f u l a n d s o p h i s t i c a t e d

infrastructure for the firm and its

clients. More than 350 developers and

engineers manage the technology

systems, and the infrastructure helps

deliver extensive reporting and risk

analytics with an emphasis on

accessibility, clarity, and usefulness.

Front Office

The front office group builds systems

that support our systematic and

discretionary trading strategies. The

FinNiche

D.E. Shaw

September 2013

—- By Subhankar Halder

Page 7

Companies

group works on a variety of projects,

including real-time financial data-feed

infrastructure, high-performance

middleware, interactive trading systems,

portfolio management and workflow

tools, and quantitative analysis tools.

Middle Office

The middle office group develops

applications and platforms that enable

Front Office trading and Back Office

operations and reporting. This team

builds software to manage the firm’s

centralized transaction and reference

data, risk and valuation, liquidity and

collateral management, and compliance

for the firm.

Back Office

The back office group builds systems

that drive the post-trade workflow and

reporting to investors and regulators.

This group is aligned closely with our

Financial Operations group. The group

also develops software that performs the

firm’s portfolio accounting, calculates

and reports profit and loss from trading

activities, and produces financial

statements for funds and investors.

Enterprise

The enterprise group develops and

supports the technical infrastructure of

the firm and builds systems for activities

that are outside the trade cycle. For

example, the group has helped create

w o r k f l o w s y s t e m s , d o c u m e n t

management systems, a recruitment

management system, and a secure

enterprise search engine. These

proprietary technologies are customized

for the D. E. Shaw group's needs and

provide significant advantages over off-

the-shelf products.

Financial Operations

The financial operations group is

involved in managing the entire

spectrum of the firm's post-trade

activities. The group supports an

extensive range of mission-critical

processes; works closely with the

technology group to effect trade

execution, settlement automation, and

exception analysis; creates reports;

analyses money movement and capital

allocation; and optimizes processes.

Financial Research

The financial research group participates

in the development of the D. E. Shaw

group's investment strategies, analyses

financial data, carries out detailed

company and sector analysis, creates

and maintains large databases, and

executes special research projects.

FinNiche

September 2013

Page 8

FINANCIAL KNOWLEDGE

ARBITRAGE

Arbitrage, in its purest form, is defined as

the purchase of securities on one market

for immediate resale on another market

in order to profit from a price

discrepancy. This results in immediate

risk-free profit. In other words it is the

simultaneous purchase and sale of an

asset in order to profit from a difference

in the price. It is a trade that profits by

exploiting price differences of identical or

similar financial instruments, on different

markets or in different forms. Arbitrage

exists as a result of market inefficiencies;

it provides a mechanism to ensure prices

do not deviate substantially from fair

value for long periods of time.

Risk arbitrage (or statistical arbitrage) is

another form of arbitrage. Unlike pure

arbitrage, risk arbitrage entails risk.

Although considered "speculation," risk

arbitrage has become one of the most

popular (and retail-trader friendly) forms

of arbitrage.

Market Makers: True Arbitrage

Market makers have several advantages

over retail traders:

Far more trading capital

Generally more skill

Up-to-the-second news

Faster computers

More complex software

Access to the dealing desk

Combined, these factors make it nearly

impossible for a retail trader to take

advantage of pure arbitrage

opportunities. Market makers use

complex software that is run on top-of-the

-line computers to locate such

opportunities constantly. Once found, the

differential is typically negligible, and

requires a vast amount of capital in order

to profit--retail traders would likely get

burned by commission costs. Needless

to say, it is almost impossible for retail

traders to compete in the risk-free genre

of arbitrage.

Retail Traders: Risk Arbitrage

Despite the disadvantages in pure

arbitrage, risk arbitrage is still accessible to

most retail traders. Although this type of

arbitrage requires taking on some risk, it is

generally considered "playing the odds."

Risk Arbitrage: Takeover and Merger

Arbitrage

Takeover and merger arbitrage is

probably the most common type of

arbitrage. It typically involves locating an

undervalued company that has been

targeted by another company for a

takeover bid. This bid would bring the

company to its true, or intrinsic, value. If

the merger goes through successfully, all

those who took advantage of the

opportunity will profit handsomely;

however, if the merger falls through, the

price may drop.

The key to success in this type of

arbitrage is speed; traders who utilize this

method usually trade on Level II and

have access to streaming market news.

The second something is announced,

they try to get in on the action before

anyone else.

Risk Arbitrage: Liquidation Arbitrage

Liquidation arbitrage involves estimating

the value of the company's liquidation

assets. For example, say Company A

has a book (liquidation) value of $10/

FinNiche

TERM OF THE WEEK

September 2013

—- By Vaibhav Sanwaria

Page 9

FINANCIAL KNOWLEDGE

share and is currently trading at $7/

share. If the company decides to

liquidate, it presents an opportunity for

arbitrage.

Risk Arbitrage: Pairs Trading

Pairs trading (also known as relative-value

arbitrage) is far less common than the two

forms discussed above. This form of

arbitrage relies on a strong correlation

between two related or unrelated

securities. It is primarily used during

sideways markets as a way to profit. Given

the advancement in technology it has

become extremely difficult to profit from

mispricing in the market. Many traders

have computerized trading systems set

to monitor fluctuations in similar financial

instruments. inefficient pricing setups are

usually acted upon quickly and the

opportunity is often eliminated in a matter

of seconds.

BONDS AND DEBENTURES

A bond or debenture is a fixed income

security which is issued by a borrowing

unit under a borrowing agreement. Under

this, the borrower has to pay periodic

interest payments to the registered

holder on specific dates. The rate of

interest called the coupon rate is fixed

and is applied to the face value of the

bond to find out the periodic interest rate

amount.

TYPES OF DEBT INSTRUMENTS:

1) SECURED AND UNSECURED:

Secured debentures means having fixed

or floating charge on the assets of the

company which helps in reducing the risk

of debt investors. Unsecured debentures

are those which do not have any specific

charge or asset as security but are

otherwise secured by the general credit

of the company.

2)CONVERTIBLE AND NON-

CONVERTIBLE:

A non–convertible debenture is the

purest form of debt instrument and is

redeemed by repayment as per the terms

and conditions mentioned in the offer

document. A convertible debenture is

one whose face value or its part is

convertible into another type of securities

at the option of debenture holders.

3)ZERO INTEREST FULLY

CONVERTIBLE DEBENTURES:

Also known as Zero coupon bonds, in

this debentures are fully convertible into

equity shares at the expiry of a given

period (not exceeding 3 years) from the

date of issue. The return is available in

the form of difference between the issue

price of ZFCD and the market price of

converted shares.

As per SEBI guidelines, these are

compulsorily convertible into equity share

capital.

3) CALLABLE AND PUTABLE BONDS:

A callable bond is one when the issuer

has an option to retire or redeem the

bonds at any time after the stipulated

period. It carries additional risk for the

investors. A putable bond is one where

the holder has an option to get the bond

redeemed at any time after the stipulated

period. Putable bonds provide flexibility

to the investors.

4) FLOATING RATE BOND:

Floating rate bonds are those bonds on

which the interest rate is not fixed but tied

to some market called a benchmark like

Bank Base arte +2% . So, the return to the

holder is not fixed but depends upon the

benchmark.

FinNiche

September 2013

Page 10

FINANCIAL KNOWLEDGE

5) DEEP DISCOUNT BONDS:

A DDB is a type of zero interest bond but it

is not convertible. It has got a face value

and the issue price of the DDB is a

discounted value. The return is available in

the form of difference between the issue

price and the realizable market value.

There is no coupon rate and no interest is

repayable during the life of the DDB.

RESIDUAL INCOME

Residual Income or economic profit of a

firm is the net income of a firm less a

charge that measures stockholders

opportunity cost of capital. The rationale

for residual income is that it measures

stockholders opportunity cost of capital in

the measurement of income. This concept

of economic income is not reflected in the

traditional accounting income whereby a

firm can report positive net income but not

meet the return requirements of its equity

investors. Accounting income reflects the

cost of debt whereas residual income also

factors in the cost of equity. There are

several commercially available residual

income-based valuation models.

The underlying idea is that investors

require a rate of return from their

resources – i.e. equity – under the control

of the firm’s management, compensating

them for their opportunity cost and

accounting for the level of risk resulting.

This rate of return is the cost of equity,

and a formal equity cost must be

subtracted from net income.

Consequently, to create shareholder

value, management must generate

returns at least as great as this cost.

Thus, although a company may report a

profit on its income statement, it may

actually be economically unprofitable.

Residual Income = Et - (r x Bt-1) = (ROE -

r) x Bt-1

Et = expected EPS for year t

r = required return on equity

Bt-1 = book value of equity in year t-1

ROE = expected return on equity

The residual income valuation model

breaks the intrinsic value of a stock into

two components: (1) current book value

of equity (2) present value of expected

future residual income.

Here

Bo = current book value of equity

RI1 = Et - (r x Bt-1) = (ROE - r) x Bt-1

r = required return on equity

RI based approach is most appropriate

when a firm is not paying dividends or

exhibits an unpredictable dividend pattern,

and / or when it has negative free cash

flow many years out, but is expected to

generate positive cash flow at some point

in the future. Further, value is recognized

earlier under the RI approach, since a

large part of the stock's intrinsic value is

recognized immediately - current book

value per share - and residual income

valuations are thus less sensitive to

terminal value.

Residual income models can be used to

estimate justified price multiples. Among

the various price multiples, residual

income models are most closely related to

the price-to-book (P/B) ratio because the

justified P/B is directly related to expected

future residual income.

FinNiche

September 2013

Page 11

FINANCIAL KNOWLEDGE

CAPITAL BUDGETING

Capital budgeting is a process in which a

business determines whether projects

are worth pursuing. Oftentimes, a

prospective project's lifetime cash inflows

and outflows are assessed in order to

determine whether the returns generated

meet a sufficient target benchmark. It is

also known as "investment appraisal."

The three common capital budgeting

decision tools are

· Payback period.

· Net present value (NPV) and

· Internal rate of return (IRR)

Payback period:

The payback period is the most basic and

simple decision tool. With this method, we

are basically determining how long it will

take to pay back the initial investment that

is required to undergo a project. In order to

calculate this, you would take the total cost

of the project and divide it by how much

cash inflow you expect to receive each

year; this will give you the total number of

years or the payback period. For example,

if you are considering buying a gas station

that is selling for $100,000 and that gas

station produces cash flows of $20,000 a

year, the payback period is five years.

Payback period is probably best with

small and simple investment projects but

if the business is generating healthy

levels of cash flow that allow a project to

recoup its investment in a few short

years, the payback period can be a

highly effective and efficient way to

evaluate a project. When dealing with

mutually exclusive projects, the project

with the shorter payback period should

be selected.

Net Present Value (NPV):

The NPV decision tool is a more common

and more effective process of evaluating

a project. Performing a net present value

calculation essentially requires

calculating the difference between the

project cost (cash outflows) and cash

flows generated by that project (cash

inflows). The NPV tool is effective

because it uses discounted cash flow

analysis, where future cash flows are

discounted at a discount rate to

compensate for the uncertainty of those

future cash flows and also creates an

apples to apples comparison between

the cash flows. The difference provides

you with the net present value.

The general rule of the NPV method is

that independent projects are accepted

when NPV is positive and rejected when

NPV is negative. In the case of mutually

exclusive projects, the project with the

highest NPV should be accepted.

Internal Rate of Return (IRR):

The internal rate of return is a discount

rate that is commonly used to determine

how much of return an investor can

expect to realize from a particular project.

Strictly defined, the internal rate of return

is the discount rate that occurs when a

project is break even, or when the NPV

equals 0. Here, the decision rule is

simple: choose the project where the IRR

is higher than the cost of financing. The

greater the difference between the

financing cost and the IRR, the more

attractive the project becomes. But, the

IRR rule in mutually-exclusive projects

can be tricky. However, IRR is a highly-

effective concept that serves its purpose

in the investment decision making

process.

FinNiche

September 2013

Page 12

FINANCIAL KNOWLEDGE FinNiche

Market This Week

The Sensex continued to rule firm for the 4th consecutive week with a rise of 531 points. It

finished the week at 20,263.71 on good buying support on account of Fed’s decision to con-

tinue with stimulus. This was despite last day selling due to RBI’s decision to raise repo rate.

The RBI raised the short-term policy repo rate to 7.5 per cent from 7.25 per cent, saying in-

flation had to be lowered to more tolerable levels. To ease liquidity, the marginal standing

facility rate, at which banks borrow from the RBI, was cut to 9.5 per cent from 10.25 per cent

and the minimum daily maintenance of the cash reserve ratio was lowered to 95 per cent.

Foreign Institutional Investors continued their buying spree by investing net Rs 5,694.96 crs

during week including the provisional figure of September 20.

SENSEX Simple Moving Averages

BSE SENSEX

CNX Nifty

September 2013

Thirty Days 19009.94

Fifty Days 19282.17

Hundred Days 19298.03

Two Hundred Days 19384.99

Page 13

FINANCIAL KNOWLEDGE FinNiche

Bank Rate 9.5%

Repo Rate 7.5%

Reverse Repo Rate 6.5%

Cash Reserve Ratio 4%

Statutory Liquidity Ratio 23%

INR / 1 USD 62.23

INR / 1 Euro 84.15

INR / 100 Jap. YEN 62.56

INR / 1 Pound Sterling 99.59

Commodity Unit Rs / Unit % Change

Gold 10 grams 29912 -0.76

Silver 1 Kg 49306 -2.71

Crude Oil 1 bbl 6805 -1.64

Base Rate 9.70%-10.25%

Savings Deposit Rate 4.0%

Term Deposit Rate 8.0%-9.0%

Nifty Simple Moving Averages

Commodities

Lending / Deposit Rates

Thirty Days 5613.94

Fifty Days 5721.23

Hundred Days 5802.14

Two Hundred Days 5842.05

Key Policy Rates and Reserve Ratios

Exchange Rates

September 2013

Page 14

FINANCIAL KNOWLEDGE

RBI unexpectedly raises rates;

trims rupee support steps

Reserve Bank of India (RBI) Governor

Raghuram Rajan surprised markets on

Friday by increasing RBI’S policy repo

rate by 25 basis points (bsp) to 7.50.

While scaling back some of the

emergency measures recently put in

place to support the ailing rupee. The

reverse repo rate is adjusted to 6.5

percent from 6.25 percent. The RBI

move will make home, auto and other

loans costlier.A benchmark index of

Indian equities markets fell 449 points

Friday after the hike.

RBI also reduced the marginal standing

facility (MSF) rate to 9.50 percent,

which makes borrowing cheaper for

banks.The minimum daily maintenance

of CRR has also been reduced from 99

percent of the requirement to 95

percent effective from the fortnight

beginning Sep 21, the RBI said.

TATA, Singapore Airlines plan to

start Delhi-based airline

The TATA Group and Singapore

Airlines plan to launch a new airline

headquartered in New Delhi after

getting required approvals from

the Foreign Investment Promotion

Board (FIPB). Tata Sons will own 51

percent of the carrier and Singapore

Airlines will own the remainder. new

full-service airline will initially fly on

domestic routes and then head

overseas too.

Indian Regulatory also scans

Ranbaxy

India’s drugs regulator has sent

samples of Ranbaxy-made ones for

testing, to ensure the medicines sold by

the company in this country are safe

and efficacious. The move comes in the

wake of many facilities of Ranbaxy in

India being barred by the US Food and

Drugs Administration for supplying

medicines to the US.

Its Ranbaxy was undergoing a ‘consent

decree’ bar from the FDA and have

been under an FDA ‘import alert’ since

2008. its third and newly commissioned

facility at Mohali also got an FDA import

alert recently, for serious deviations

from good manufacturing practices.

Versace plans to find a partner by

year end

Versace, the Italian fashion house

is looking out for buyers interested in

15-20 percent minority stake by mid-

October and decide on a partner by the

end of 2013,.

The fashion house, whose glittering

gowns are worn by stars such as Lady

Gaga and Madonna, is seeking to

strengthen its balance sheet to help

fund expansion in overseas markets

such as Asia before a possible listing

further down the road.

Apple launches iPhone 5s/5c

Much awaited , apple iphone 5s and

iphone 5c were launched this week.

Apple's latest model, the futuristic 5S

handset is equipped with a fingerprint

scanner. The device, which comes in

gold, silver or "space" grey, is expected

to fly off the shelves but it is unclear

FinNiche

NEWS

September 2013

Page 15

FINANCIAL KNOWLEDGE

- and has been released at at time when

Apple faces stiffer competition than ever

before.

The 5S device, described as the "most

forward-thinking smartphone in the

world" and said to be twice as fast as its

predecessor. Both will be priced much

above Rs.30,000 in India

Blackberry could lay off up to 40%

staff; launches Z30.

BlackBerry Ltd plans to slash thousands

of jobs, could be upto 40%, by the end of

the year just as the company launches a

flagship a top-of-the-line smartphone

“Z30”, intended to revive its fortunes.

Blackberry, once dominant has

struggled in recent years to staunch

loss of market share to such rivals as

Apple Inc andSamsung Electronics Co

Ltd.

The touchscreen device will compete

against the likes of Apple Inc's iPhone

5S and Samsungs’ Galaxy S4. Its

popular BlackBerry Messenger (BBM)

instant chat application will be available

for rival iPhone and Android devices

this weekend.

FinNiche

NEWS

September 2013

FinNiche

Speculators get a bad rap. In the popu-

lar imagination they're greedy, heed-

less, and amoral, adept at price manipu-

lations and dirty tricks. In reality, they

often play a key role in making markets

run smoothly.

Quiz & Quotes

Page 16

1. An options strategy that aims to reduce (hedge) the risk associated with price

movements in the underlying asset by offsetting long and short positions.

2. A financial swap agreement based on the credit of an event.

3. Latest Joint venture of Tata is with which company.

4. The rate at which the scheduled banks could borrow funds from the RBI over-

night, against the approved government securities.

5. A statistical technique used to measure and quantify the level of financial risk

Can You Solve It?

Volume 9 Publisher : Rajat Kochar

September 2013

Wall Street is the only place that peo-

ple ride to in a Rolls Royce to get ad-

vice from those who take the subway.

-Warren Buffett

When you combine ignorance and lever-

age, you get some pretty interesting

results.

-Warren Buffett

Of the billionaires I have known, money

just brings out the basic traits in them. If

they were jerks before they had money,

they are simply jerks with a billion dollars.

FinQuiz