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Niveshak July 2009

Niveshak July 2009

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Published by sarvshwet
Niveshak is the monthly finance magazine of IIM Shillong, visit http://iims-niveshak.com/
Niveshak is the monthly finance magazine of IIM Shillong, visit http://iims-niveshak.com/

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Published by: sarvshwet on Aug 26, 2009
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02/01/2013

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THE INVESTOR
VOLUME 2 ISSUE 6
July 2009
Investment Banking: A flawed model Pg.6
National food security Bill Pg.22
SPECIAL\ue000EDITION

Niveshak
Volume II
ISSUE 6
July 2009

Faculty Mentor
Prof. S.S. Sarkar
Editor
Biswadeep Parida

Team Niveshak
Amit Choudhary
Nilesh Bhaiya
Sareet Mishra
Sarvesh Chowdhury
Sujal Kumar
Tripurari Prasad

All Images and artwork
are copyright of IIM
Shillong Finance Club

\u00a9Finance Club
Indian Institute
of Management, Shillong

M
ar ke ts ac ro ss th e gl ob e ar e at th ei r pe ak s si nc e th e Su b- Pr im e cr is is en-
gu lf ed th e wo rl d ec on om y la st Se pt em be r. Al th ou gh it wa s th er e fo r so me

ti me , it ma de it s pr es en ce fe lt wh en th e so ca ll ed ro ck st ar s of hi gh st re et fi na nc e, th e la st fo ur wa ll st re et in ve st me nt ba nk s, ra n fo r co ve r in th e se co nd we ek of Se p- te mb er la st ye ar . Si nc e Ma rc h th is ye ar th e bu ll ha s be en sp ot te d on mo st of th e oc ca si on s bu t be ar ha s ca pi ta li ze d on th e vo la ti li ty of th e ma rk et s on so me oc ca si on s. Si nc e th en , Bu ll ha s pu sh ed al l th e in di ce s by mo re th an 30 %. To na me a fe w, Na sd aq co mp os it e ha s mo ve d up by 48 %, Do w Jo ne s Co mp os it e In de x up by 35 %, NY SE S& P 50 0 by 40 % an d Ni kk ei by 35%. But the star performer has been our very own Bombay Stock Exchange-Sensex which has risen by more than 80% since March this year. This has been made possible by positive quarterly corporate results, positive government reports, dwindling unemploy - ment figure, and growth in Industrial indices, increased oil prices, increased government spending by all countries, favourable growth projections by banks, government & non- government agencies.

Banks like Goldman Sachs, Citibank, JP Morgan Chase which were seen chasing Federal Reserve for life support a few months back booked huge Q2 profits even after servicing debt bullets. This brought more cheer among B-Schoolers than in the market. Co rp or at e ho us es ha ve be en su cc es sf ul in ri di ng th is wa ve an d ha ve ac cu mu la te d hu ge ca pi - ta l. In di an co rp or at e wh ic h ra is ed hu ge ca pi ta l th ro ug h Gl ob al De po si to ry Re ce ip ts an d by Qu al if ie d In st it ut io na l Pl ac em en t, we re se en a fe w wa ve s ah ea d.

Al l th es e ne ws pu sh me ou t of th e li mi ts of my re al is ti c se lf . Bu t as I fl oa t in op ti - mi sm an d ta ke a lo ok be hi nd my sh ou ld er s, I se e lo ts of in st an ce s wh er e a da y of Be ar Pa ws up se t da ys of Bu ll Ru n. Wh at do es th is su gg es t? Th is sa ys th at th er e is en ou gh pe ss im is m an d vo la ti li ty in th e ma rk et ; to o hi gh fo r co mf or t. An y ha lf co ok ed re po rt of a sm al l ne ga - tive projection by any non entity on any sector has upset the whole market on many ses- sions. Macroeconomic fundamentals are projected on flowery assumptions and so are still di ce y. Th ey ha ve be en in te nt io na ll y pr oj ec te d to bo os t se nt im en ts , fi na nc ia l ma rk et s & th e ec on om y. As a re su lt mo st of th e ma rk et s ar e tr ad in g by mo re th an tw en ty ti me s th ei r Pr ic e to Ea rn in gs Ra ti o. Mo st of th e li st ed co mp an ie s ar e tr ad in g at mo re th an fi ft y ti me s th ei r Pr ic e to Ea rn in gs ra ti os . Th is in di ca te s th at ev en at su ch pe rc ei ve d lo w le ve ls , th e ma rk et is ir ra ti on al ly up si de an d wi ll sl ip on ce th e du st se tt le s an d th e sm ok e cl ea rs .

My la st ed it or ia l su gg es te d th at mu ch of In di a\u2019 s re co ve ry an d gr ow th de pe nd s up on th e Un io n Bu dg et . Th e Un io n Bu dg et wa s pa ss ed on 6t h Ju ly wi th a ne ga ti ve sh or t te rm ef fe ct on th e ma rk et s. Th e lo ng te rm ef fe ct of th is bu dg et , it s ef fe ct on va ri ou s se ct or s, it s comparison with expectations and growth parameters have been discussed in details as the co ve r st or y of th is is su e.

I am ve ry ha pp y to no te th at in ou r ne xt is su e, Ni ve sh ak wi ll ce le br at e it s fi rs t an ni - ve rs ar y. Wi th yo ur su pp or t, go od wi sh es an d co nt ri bu ti on s, Ni ve sh ak ha s su cc es sf ul ly co m- pl et ed a fu ll ci rc le ar ou nd th e su n. To ge th er we ha ve wi tn es se d th e mo st tu rb ul en t ti me of th e wo rl d of Fi na nc e an d le ar nt fr om it . We ha ve se en th e fa ll of ba nk in g st ar s, we ha ve se en ic on ic co mp an ie s tu rn in g to Ch ap te r 11 ba nk ru pt cy or me rg er s/ ac qu is it io ns fo r su rv iv al , we wi tn es se d ba nk ru pt cy de cl ar at io n by so ve re ig n st at es an d th en we sa w ec on om ie s na vi ga ti ng th ro ug h th e wo rs t of re ce ss io ns . To ma rk th e su cc es s of ou r jo ur ne y to ge th er , we sh al l ha ve a sp ec ia l an ni ve rs ar y is su e ca pt ur in g th e ro ll er co as te r ri de th at we ha ve be en th ro ug h, th e hi gh s an d lo ws of th e wo rl d ec on om y ov er th e pa st ye ar , th e mo st fe ar so me fi gh t be tw ee n th e Be ar & th e Bu ll . I in vi te yo u to co nt ri bu te ar ti cl es on an y sp ec if ic ev en t of th e la st ye ar or on \u201cT he ye ar th at wa s\u201d as a wh ol e. Ye s th at is th e th em e of ou t an ni ve rs ar y is su e. Lo ts of exciting prizes are waiting to be yours. For more information, please see the declarations pa ge or Ni ve sh ak we bs it e.

Wh at an aw es om e \u201cY ea r th at wa s\u201d .
-biswadeep Parida
(Editor- Niveshak)
Disclaimer: The views presented are the opinion/work of the individual
author and The Finance Club of IIM Shillong bears no responsibility whatsoever.
From Editor's Des
K
\u00a9The Finance Club, Indian Institute of Management, Shillong
In The News(4)
Finsight
Investment Banking -
A Flawed Model(6)
Cover Story
Budget '09(9)
The Chindia Debate
Where neighbours Spend(20)
Opinion
National Food Security Bill(22)
FinLounge
FinToon(12)
FinQ(24)
ContentS

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