Disclaimer: The views presented are the opinion/work of the individual author and The Finance Club of IIM Shillong bearsno responsibility whatsoever.
FROM EDITOR’S DESK
NiveshakVolume IIISSUE 8September 2009
Prof. S.S Sarkar
Amit Choudhary Nilesh BhaiyaSareet MishraSujal Kumar
Dilpreet S. GandhiSaurav K. Bagchi
Bhavya AggarwalSarvesh Chowdhury Swarnabha MukherjeeTripurari Prasad All images, design andartwork are copyright of IIM Shillong Finance Club
©Finance ClubIndian Instituteof Management, Shillong
Dear Readers,The global financial system is reminiscing the fall of Lehman Brothers, theevent of September 15, 2008, that shook the world economy and sparked theworst financial crisis in generations. A year after, world is slowly but surely com-ing out of its tremor. The markets across the globe are continuously scaling new heights every week, backed with strong fundamentals from all the sectors. Hencewith some level of confidence we can say the financial systems around the worldhave stabilized and the economy recovery is on its way. Whether this has beenpossible due to the resilience of economies and financial markets or the prudenceof policymakers who responded to the crisis with massive macroeconomic stimulusand other measures to prop up their domestic financial system is already a burningtopic of discussion.The Asian and European market is on upward trend which has been termedas “Cautiously Bullish”, is now waiting for the second quarter results of the corpo-rate. The market sentiments and expectation across the globe has been positive forlast three months, with almost all markets giving positive returns. The revival of USmarket and numerous signs recovery like positive home sales for the first time since2007 and the growing of order book of manufacturing sectors have brought somecheers to the Wall Street. But the glaring fact which needs to be pointed is that theworld is still looking up to US to pull the global economy from the crisis. China onthe other hand is showing signs of recovering from the present crisis with the fund-ing from government and bank lending. Today, China is one of the fastest growingeconomy of the world. We have covered this question whether China is the nexteconomic superpower of the world and will overtake US is highlighted in this issue.India’s GDP growth for the first quarter of 2009 stood at 6.1%. This exceedsthe consensus estimates and an improvement from the last quarter growth whichwas 5.8%. Hence given the global downturn these figures have brought somecheers to the investors in the Dalal Street and also to the policymakers of the coun-try. But the fiscal deficit at 6.8% of GDP is hot topic of discussion among policymak-ers and economist. It’s not that only India is facing its worst fiscal deficit in pastdecade, most of the countries across the globe are facing the problem of hugefiscal deficit. US fiscal deficit stood 12.3% of its GDP. Our cover story is in line withthese issues and gives a perspective whether to worry about fiscal deficit and whatimplication it will have on the recovery from the current crisis.We have also covered the topic of rising prices and falling inflation whichhave been making news every week. The basic of inflation calculation in India andthe comparison of CPI and WPI method have been outlined. This issue also featuresthe prospects of credit default swaps in India. An inside look into the Build Americabonds have also been covered in this issue.I am glad to mention that this is the beginning of second year of Niveshak journey and would thank all our well wishers for their support for making the An-niversary issue a huge success. We will constantly try to scale new heights. Now inthe outset of the recovery of the world economy it’s even more important to trackthe global cues and be informed. Economists and experts across the global havealready stated that it may be ‘V’ or ‘W’ or even square root shape recovery. So it’sthe time to keep a watch on the Bull and Bear fight in the global market and sup-port the Bull to win the race. In the last we would like to thank Mr. Geert Linnebank,ex- Editor in Chief of the Reuters group for inaugurating our anniversary issue on24th August.Stay Invested for the good times ahead.