VOLUME 2 - ISSUE MAY 2021

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The Finance and Investment Cell
Hansraj College
 MAY 2021 VOL. 3

FROM THE CONVENOR'S DESK

Ashutosh Yadav
The Finance and Investment Cell, Hansraj College is a voluntary group of
students aiming to disseminate quintessential knowledge on finance, investment
and related aspects through the conduct of its activities throughout the year.

Since its inception in 2012, the cell has traversed a great path to grow in size,
scope and shape so as to make it more engaging for its members and community.
We've diversified ourselves from activities eponymous to the name by launching
our very own in-house mentorship and consulting wing and social wing last year.

Moving ahead a successful volume 1, in the second edition of volume 2, we hope

that we can curate the best content for all our readers so as to make it not only
informative but also interesting and relatable. We promise to be unfettered in
our efforts so as to make finance easy and simple for you. With the hope that
these pieces help you enhance your knowledge, we wish that you have a pleasant
reading experience.

The FIC Editorial Board

Vipriya Anjum Sanaah Jain Tejas Agarwal

Kunal Shroff Vivek Sigchi

FINANCIAL
FI
HIGHLIGHTS
 MAY 2021 VOL. 3

Centre’s fiscal deficit at 9.2% in FY21, against

revised estimate of 9.5%

With its net tax revenue being 6% higher than the revised estimate (RE) presented in
February, the Centre managed to narrow its fiscal deficit moderately to 9.2% of the GDP
in FY21, against 9.5% budgeted (RE). This was still the highest level of deficit for the
Centre since 7.8% was reported in FY91, the year when economic liberalisation was
unleashed amid a balance of payment crisis.
Although the data released by the Controller General of Accounts on Monday put the
Centre’s fiscal deficit for FY21 at 9.3% of GDP, as against the revised nominal GDP figure
of Rs 197.45 lakh crore released by the National Statistics Office for FY21 on Monday,
fiscal deficit of Rs 18.21 lakh crore incurred by the Centre in the year is slightly lower at
9.2%.
The Centre’s non-debt capital receipts in the last financial year were 23.9% higher than
RE. The revenue expenditure was 2.5% higher than RE while capital expenditure was
3.1% less than RE. However, CAPEX in FY21 was 26.5% higher than the amount spent in
FY20. Total expenditure in FY21 stood at Rs 35.1 lakh crore, which was 1.8% higher than
RE.
“Although the government announced a stimulus package of more than 10% of GDP in
FY21 (including credit enhancement steps), actual stimulus in FY12 budget has been Rs
4.69 lakh crore or 2.4% of GDP,” said India Ratings chief economist D K Pant.
Finance minister Nirmala Sitharaman said in the last Budget speech: “We plan to
continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level
below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period. We hope
to achieve the consolidation by first, increasing the buoyancy of tax revenue through
improved compliance, and secondly, by increased receipts from monetisation of assets,
including Public Sector Enterprises and land.”
 MAY 2021 VOL. 2

RBI provides Rs 50,000-crore liquidity for

extending Covid-19 loans to healthcare

The Reserve Bank of India (RBI) on Wednesday announced immediate liquidity of Rs 50,000
crore for banks for enabling them to extend Covid loans to healthcare entities. This
liquidity window available at the repo will remain open till March 31, 2022. Under this
scheme, banks can provide fresh lending support to vaccine manufacturers, hospitals, and
also patients for treatment, among others. Banks are also being incentivized for quick
delivery of credit under the scheme through the extension of priority sector classification
up to March 31, 2022, RBI governor Shaktikanta Das said. The loans will continue to be
classified under the priority sector till repayment or maturity, whichever is earlier.
Dinesh Kumar Khara said measures will help in creating health infrastructure and will
encourage banks to create Covid books. Banks are expected to create a Covid loan book
under this scheme. Such banks will be eligible to park their surplus liquidity up to the size
of the Covid loan book under the reverse repo window at a rate that is 40 bps higher than
the reverse repo rate.
Bankers also feel that the scheme from the RBI will ease access to emergency health
services. CII president Uday Kotak said, “RBI governor has taken the financial sector battle
against Covid 2.0 head-on with a clear focus on protecting lives and livelihoods.”
SS Mallikarjuna Rao, MD, and CEO of Punjab National Bank said on-tap liquidity of Rs
50,000 crore for Covid-related health care sector along with the incentives for banks like
priority sector classification and higher interest on surplus liquidity window will ease
access to emergency health services.
Echoing the views of bankers, Rashmi Saluja, executive chairperson, Religare Enterprises,
said: “The central bank has shown a lot of foresight by announcing flow of unhindered
liquidity to the healthcare sector in order to boost production of the vaccine, Covid-
related medicines and ramp up oxygen supplies.” This special lending window of Rs 50,000
crore has been classified under priority sector lending and will ensure a steady flow of
loans to the healthcare sector, she added.
 MAY 2021 VOL. 2

VOL. 2
India launches probe against China, Thailand
and Vietnam
The commerce ministry has initiated an anti-dumping investigation against the
import of solar cells from China, Thailand, and Vietnam. The investigation was
triggered by an application by the Indian Solar Manufacturers’ Association (ISMA).
Solar cells are the basic ingredient used in the manufacturing of solar modules and
Chinese products are 15-20% cheaper than their Indian counterparts.
The notice issued by the directorate general of trade remedies said that prima facie
evidence of dumping was found against the aforementioned product of the above
countries, leading to injury to the domestic industry. Low module prices have played
a major role in bringing solar tariffs down to the current low of Rs 1.99/unit, but it
has kept the domestic solar sector relied on imports and local manufacturers have
found it difficult to sell their products.

A similar anti-dumping investigation against the import of solar cells from China,
Taiwan, and Malaysia was initiated by the government in July 2017 but was
eventually called off in March 2018 at ISMA’s request.
To boost domestic manufacturing, the Centre had imposed a 25% safeguard duty on
solar imports from China and Malaysia in July 2018 for two years, which was
extended to July 2021, at a rate of 15%.

As FE reported earlier, after the safeguard duty imposition on China and Malaysia,
solar imports had since surged from Vietnam and Thailand. Between FY18 and FY20,
imports of solar cells and modules from Vietnam and Thailand recorded a growth
rate of 800% and 5,750%, to $136 million and $117 million, respectively. Import of
Chinese products have
fallen 60% to $1.3 billion in the same period.
Overall solar imports have come down by 72% annually in April-February FY21 to
$468.5 million due to the Covid-19 restrictions, as the pace of solar capacity
addition also dwindled to 5 gigawatt (GW) in the same period, down by about 45%
annually.

From the beginning of FY23, solar module and cell imports will attract a basic
customs duty (BCD) of 40% and 25%, respectively. However, procurement of these
items from China is seen to surge significantly in the last three-quarters of FY22 as
there will be no import barriers in place after the safeguard duty regime ends in
July. The government has introduced the Rs 4,500-crore production-linked incentive
scheme for solar module manufacturing, which analysts at India Ratings said, will
push the sales of 20 GW of domestic product from the output capacity developed
under the five-year program.
As of date, the domestic cell manufacturing capacity is around 3 GW and module
making capacity is 10 GW
 MAY 2021 VOL. 2

Govt raises Rs 4,000 cr through SUUTI stake

sale in Axis Bank

Kick-starting disinvestment in FY22, the Centre raised around Rs 4,000 crore on

Thursday by selling 1.95% from the Specified Undertaking of the Unit Trust of India or
SUUTI’s holding in Axis Bank. Prior to the OFS, SUUTI held 3.45% in Axis Bank
.
SUUTI had proposed to sell up to 3.6 crore equity shares, representing 1.21% of the paid-
up equity share capital of Axis Bank. It had also retained the option to sell an additional
2.2 crore shares or 0.74% of equity share capital. The floor price for Axis Bank OFS was
set at Rs 680/share. The OFS was opened on May 19 for non-retail and May 20 for retail
and non-retail.

“Issue subscribed over 4 times of base size at a clearing price above the floor price by
non-retail investors. SUUTI has decided to exercise the greenshoe option,” department of
investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey had
tweeted on Wednesday after Day 1 of OFS.

On Day 2, the retail portion of the Axis Bank OFS managed to garner just 28.5%
subscriptions. As against 58.07 lakh shares reserved for retail investors, bids were
received for only 16.6 lakh shares, according to data provided by the exchanges.

The unsubscribed portion of the OFS will be allotted to non-retail investors. The clearing
price of Rs 701.55 was fixed for both retail and non-retail bidding of Axis Bank shares.
Shares of Axis Bank closed at Rs 705.9 on the BSE on Thursday, down 1.51% from the
closing price of the previous day.

The start of the Centre’s ambitious Rs 1.75 lakh-crore disinvestment programme for FY22
has been delayed due to the second wave of Covid-19.
 MAY 2021 VOL. 2

Elon Musk says Tesla will no longer accept bitcoin

due to fossil fuel use

Tesla has suspended customers’ use of bitcoin to purchase its vehicles, Elon Musk said on
Wednesday, citing concerns about the use of fossil fuel for bitcoin mining.

Bitcoin, the world’s biggest digital currency, fell almost 17% after the tweet to its lowest
point since the beginning of March. It recovered slightly in Asian trading but was still off
12% at $50,933 early on Thursday morning.

Musk said Tesla would not sell any bitcoin and intends to use bitcoin for transactions as
soon as mining transitions to more sustainable energy.

Tesla revealed in February it had bought $1.5bn of bitcoin, before it began accepting it as
payment for cars in March, driving a roughly 20% surge in the world’s most widely held
cryptocurrency.

“We are also looking at other cryptocurrencies that use <1% of bitcoin’s
energy/transaction,” Musk said.

Musk said in March that Tesla customers can buy its electric vehicles with bitcoin.
The digital currency is created when high-powered computers compete against other
machines to solve complex mathematical puzzles, an energy-intensive process that
currently often relies on electricity generated with fossil fuels, particularly coal.
At current rates, such bitcoin “mining” devours about the same amount of energy annually
as the Netherlands did in 2019, the latest available data from the University of Cambridge
and the International Energy Agency shows.
 MAY 2021 VOL. 2

NPCI partners with PayCore to enable RuPay

SoftPOS solutions in India

NPCI has tied up with PayCore to enable RuPay SoftPOS solutions across India enabling
merchants to accept payments at a low cost and allowing merchants to turn their NFC
enabled smartphones into POS (Point of Sale) machines to receive payments.
-
National Payments Corporation of India has tied up with PayCore – Turkey’s global payment
solutions company as one of the certified partners for RuPay SoftPOS to drive cashless
payments across the country.

The solution will allow merchants to convert their NFC-enabled smartphones into a POS
machine to accept contactless payments through RuPay SoftPOS.

The solution will be integrated into bank or aggregator acquiring systems to enable
acquiring RuPay using mobile phones enabled with NFC capability or add-ons.

Ali Kançal, CEO of PayCore commented, “We are very proud to cooperate with NPCI and
support their goal of creating a cashless digital society in India. One of our main objectives
with SoftPOS is to provide cutting-edge innovative technologies for inexpensive contactless
payment solutions globally. With PayCore’s SoftPOS solution, which enables smartphones
and tablets to be used as POS terminals without any additional devices, the investment costs
required by banks to reach over 63 million micro-, small- and medium-sized businesses will
be significantly reduced.”

Nalin Bansal, Chief of Fintechs, Corporates & New Initiatives, NPCI said, “We are excited to
work with a global player like PayCore to accelerate the growth of the digital economy
through the launch of innovative acceptance solutions within domestic as well as
international markets catering to NPCI products. The launch of RuPay SoftPoS solution is
aimed at supporting small merchants which form the backbone of our economy and is one of
many in the series of launches starting with its open-loop transit program in 2017.”
FEATURED
ARTICLES
 MAY 2021 VOL. 2

Is Silver the New Gold of 2021?

by Lavina Garodia and Aditi Garg

While there’s always some gossip and euphoria about gold across markets, it seems like
silver is closing the race by being the talk of every town. Yes, we’re talking about the
crazy silver rally that has brought a surprise for investors who were solely pro bullion.
To give context, the prices of silver are on a rise, categorically silver futures. The
prices jumped by 9% on 1st February and have been poised to rally even further. While
silver is not as popular as gold is, it is definitely a decent and smart investment given
its prestigious attributes.

So far, silver has proven to be significantly undervalued, as the sky-high gold-to-silver

ratio would suggest. But now, the question is what suddenly made silver a very
promising investment for the year 2021.

Do we owe the price rise to a strong realization amongst investors regarding the stellar
investment that silver is or is there something happening behind the curtains that we
are unaware about?

Before delving deep into the details, let’s try to understand silver futures. These are
nothing but legally bound agreements that cover the delivery of a certain quantity of
silver at an agreed-upon price in the future. This contract is standardized by the
futures exchange as to the time, quality, quantity, and place of delivery, but the price
remains variable in accordance with the market norms of demand and supply.

Right now, the prices are soaring so high that if you hold a silver contract, the value of
your contract will shoot up in the coming days since there has been a massive buying
spree by investors. But exactly which people, who are buying?

The wallstreetbets’ people. Rings any bell?

Yes, the same online investors on Reddit who stimulated a trading frenzy in the shares
of GameStop Corp. and AMC Entertainment Holdings Inc. have now shifted their focus
towards the global silver market, powering the precious metal to its biggest one-day
advance in more than a decade.

After being restricted from trading some popular stocks by brokerages given the nexus
of wall street elites and the brokerages, the members of the Reddit forum have
therefore plunged right into the silver commodity market as their next potential short-
squeeze.
Basically, a short squeeze occurs when a stock or other asset jumps sharply higher,
forcing traders who had bet that its price would fall that is the traders who short-sold
the asset, to buy it in order to forestall even greater losses. Unfortunately, their
scramble to buy, adds to the upward pressure on the stock's price.

In this particular scenario, speculations are that the wall street elites shorted silver
while the retail investors on Reddit are trying to short squeeze them similar to what
happened in the case of GameStop shares.
 MAY 2021 VOL.2

However, the people at wallstreetbets completely deny this claim and have asserted that they
have nothing to do with the surge.

They believe that this is a trap being set up by the hedge funds who are losing out on a lot of
money ever since the rise of Gamestop and therefore, are trying to compensate for their losses by
the means of convincing the gullible retail investors about the potential lucrative of silver.
Also, the fact that the silver market is a very different and huge market from that of the
beleaguered companies that caught the Reddit investors’ attention, points us in the direction of
the hedge funds because silver is a difficult market to be influenced by the relatively small group
of traders who previously spurred the stock prices of certain company’s shares like that of
Gamestop.

However irrespective of who is fiddling with the prices in the market, the fact that remains is that
whatever is happening with silver is actually beyond ordinary investment prudence and thus, the
exchange was left with no other option but to intervene in the market.
They’ve asked the people dabbling with silver futures to put up more collateral that is more money
in this case. Therefore, even if the market crashes sometime later and some investors fail to honor
their end of the contract, the collateral will help.

Also, once the collateral rises, people will automatically become wary of investing in a high-risk
market such as silver at this moment.
How sustainable the surge is or whether or not the rise in the price of silver futures will manifest
into the rise of the silver commodity is quite unpredictable at present given the uncertainty of the
market.

Meanwhile, all we can do is keep tracking the market and try to predict the future of silver
(futures).
 E S T O R S 'C
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FEBRUARY 2021 VOL.2

There are over 5000 companies listed on the Bombay Stock Exchange and
over 1600 companies listed on the National Stock Exchange. Now a common
question that may come across your mind is why do so many companies
decide to list themselves on the stock exchange?

The most prominent reason to go public is to raise funds. It is a

transformational event for an organization as it changes the way the company
goes about doing its business. A public company has access to more sources
of capital as compared to a private company.

Initial Public Offering(IPO) is one of the largest sources of capital for firms to
raise capital in the primary market. It is the company’s first offering of equity
to the public. It helps a corporation to attract a range of investors who
provide large volumes of capital to the corporation for future growth and
development.

Let us understand with a very simple example:

Company ABC has a total of 2000 shares, out of which, they decide to offer
300 shares to the public. An investor can buy 10 shares out of 300, at the
issue price decided by the company. Suppose the issue price is Rs 500 per
share, the investor would have to pay 500*10= Rs 5000 to acquire those 10
shares.
 MAY 2021 VOL.2

There are two types of IPOS:

Fixed Price Offering: Under this type, the company going public determines a fixed price
without soliciting the level of investor interest. The price is determined by evaluating
the company’s assets, liabilities, and every other financial aspect. The investors know
the share price at which the company is going to be public. The fixed price is usually
lower than the market value and hence the investors are always interested in the fixed
price issue.

Book Building Offering: Under Book Building, the company going public offers a 20%
price band on the stocks to the investors. The highest share price is known as the ‘cap
price’ and the lowest share price as the ‘floor price’. Investors can bid for the shares
with the desired price they are willing to pay TThereafter the price of the stock is fixed
after evaluating the bids.

In order to list the company’s IPO, the company has to go through some steps:
Hiring an investment bank
To start with the procedure, the company needs help from the financial experts who’ll
study the crucial financial areas and also act as intermediaries between the company
and investors.

Registering with the SEC

The company needs to register itself with the SEC with all the necessary details and
documents such as the Red Herring Prospectus, disclosing every detail that an investor
should know, etc.
Verifying by SEBI
SEBI will then go through the documents and if they find them fully abiding by the
guidelines, they will give it a green signal.
Marketing
Now the company has to massively market its IPO for two weeks before release. The
executives and employees market the IPO across the country.
Pricing of IPO
Now the company has to price their IPO by any of the two methods explained above i.e.
Fixed Pricing IPO or Book building offering.
Releasing to the public and allotting the shares
The IPO is now released to the public and it is available to them for 5 days. After that,
the shares are allotted depending on the demand

IPOs are really beneficial for the issuer company as it expands their equity base and is
also good for their prestige and goodwill. At the same time, the investors also get good
returns through these IPOs. However, complete knowledge about the financial
parameters required to invest in certain IPOs is extremely crucial in order to invest
money carefully and minimize losses.
FIN
FUN
 MAY 2021 VOL.2

Inside Job

“The most difficult subjects can be explained to the most slow-witted man if he has not formed
any idea of them already; but the simplest thing cannot be made clear to the most intelligent
man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid
before him.”
Leo Tolstoy, 1897

Charles Ferguson’s Inside Job gives a chilling account of the doomsday of the financial
world, the 2008 Financial Crisis. The documentary includes interviews of many of the
behemoths of the financial world and multiple prominent economists like Christine Lagarde,
Satyajit Das, Raghuram Rajan, Frederic Mishkin, and Glenn Hubbard, with a voiceover by
Matt Damon (almost feels like a Martian telling the horrific story of one of the worst
mistakes of Earthlings). This cinematic masterpiece slowly weaves its way from the fall of
Iceland’s economy to the lack of regulation that formed the housing bubble, its inevitable
burst, and finally to the lessons that (weren’t) learned from this catastrophe.
MAY 2021 VOL.2

The film does a great job in explaining complex terms like mortgage-backed
securities, credit default swaps, and collateralized debt obligations which play
a key role in the understanding of events that led to the crash. It brings to
light Alan Greenspan, the chairman of the Federal Reserve from 1987 to 2006,
who was a staunch proponent of the deregulation of the financial sector,
which played a major role in blowing the economic bubble (pun intended) out
of proportion. These deregulation policies allowed the banks to gamble with
the depositor’s money, push their leverage to dizzying heights and sell falsely
rated instruments to investors without any supervision.

One might wonder, why were these deregulation policies actually allowed to
pass? The film explains this perfectly by subtly giving examples of individuals
whose motive to come into the political arena was not just social welfare but
also personal gain. For example, Hank Paulson was the US treasury secretary
but also happened to be the former CEO of Goldman Sachs.

This confident film, brimming with useful information conveyed with filmy
verve, lays out in intricate but always comprehendible detail the stand that
the disaster of 2008 was anything but an accident. It takes a deep dive into
the fact that academics have “corrupted the study of economics” itself.
Renowned economists were “hired” by banks to produce reports that
supported reckless deregulation and were paid a handsome sum for the same.
The film draws an excellent analogy highlighting that this situation is similar
to one where a doctor is prescribing a drug while making 80 percent of his
personal income from the sale of the drug.

The film gives a sharp reminder that the crisis had the maximum impact on
the common man as people lost their homes and unemployment rates
skyrocketed while the perpetrators of the crash such as the CEOs of banks and
the policymakers escaped unscathed. The crimes might have been committed
on the Street but the victims were the people on the streets.

Despite all the ruckus surrounding the largest economic catastrophe, Inside
Job manages to end on a hopeful note with a voiceover:

“At enormous cost, we've avoided disaster and are recovering. But the men and
institutions that caused the crisis are still in power and that needs to change.
They will tell us that we need them and that what they do is too complicated
for us to understand. They will tell us it won't happen again. They will spend
billions fighting reform. It won't be easy. But some things are worth fighting
for."
 Editoral Team

Aarushi Agarwal Deewanshi Narula Payal Dugar

Abhishek Pandey Eesha Goyal Pooja Bahadur Mathur
Adhiraj Rao Gaurang Kanodiya Priyanka Singhal
Aditi Garg Harsh Agarwal Saanya Khunger
Aditya Kukreja Harshita Goel Sachin Reddy
Agrita Arora Japneesh Singh Arora Sanchi Chawla
Aman Vedanth Jayesh Rungta Sanjana Singh
Agarwal Lavina Garodia Simran Sadhwani
Anirudh Verma Mansha Khanna Shauryee Bhatnagar
Anuj Mittal Manuj Bengani Vaani Kaushik
Anvi Garg Mayank Kedia Vanshika Gupta
Arihant Daga Nidhi Yadav Vartika Sethi
Arihant Jain Pallav Saha Vipul Bharti
Bharat Surana

Technical Team
Jayesh Rungta Harsh Agarwal Udeshay Teotia
Khatwang Gupta
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