Professional Documents
Culture Documents
Session on Markets
1. Roles offered
3. Market macros
Agenda
4. Technical prep
- Buy - side
- Equity
- Debt, forex
1. Roles offered
1. Buy-side – Private equity, Asset Mgmt co.s
3. Market macros
Preparation
structure (1/2) 4. Technical prep
Buy-side – IB content
Debt, Forex – General know how of debt/ forex markets in India (and
abroad), understanding market mechanisms
Researching the company
Good to know +
conversation General overview of company and its businesses
filler during
PPT
European/ American origin
Exchange rates
Market macros Politics (in terms of impact on economy – farm loan waiver etc.)
Recent events (Demon, GST, Bankruptcy code, Tata, Infosys issues etc.)
Tip: Prepare a one RBI basic read up (MPC, interest rate determination, NPA issue etc.)
pager per topic and
read from that a day International economies (USA, Euro-zone, Britain, China etc.)
before (rather than
scanning a ton of
newspapers) Global events (Recent – Brexit etc. and older – 2008 crisis for e.g.)
4. Technical prep
Buy-side
Tip: Damodaran is a Recent deals – M&A, buyouts, divestments, SBI merger, cross border etc.
great source about
anything in valuation
Recent IPOs – know at least one IPO inside out
Ratio analysis
Technical prep
DCF valuation (free cash flow method)
(1/4)
Relative valuation – P/E, P/BV, EV/EBITDA
Tip: Start tracking How equity derivatives markets work, types of instruments
markets broadly
Buy side prep
Debt, Forex
Debt, forex market landscape – India and abroad, market size etc.
Why markets in India are underdeveloped (see SEBI/ RBI papers etc.)
Derivatives
Investopedia is
a good source Basic instruments – forwards, futures, options, swaps
for basics
Pay off diagrams
Fiscal Policy
Government spending
Fiscal deficit
Basics of Monetary Policy
Economy Money supply in the economy
Inflation
CPI – Focus on food and retail prices
WPI – Focus on wholesale prices and industry
Exchange Rate
Pegged vs Floating
Economic Event Inflation Interest Rates Bond Prices
Unemployment figures
Up Up Down
low
Companies report
Up Up Down
healthy earnings
Reserve Bank of India
Governor: Urjit Paterl
Interest rate cuts (What is MCLR?)
Governor Raghu Ram Rajan completed his term
Domestic consumption driven
Indian Services sector dominated
Economy Goods & Services Tax
Bankruptcy Code
NPAs issue
Industry Slowdown
Willful Defaulter
Federal Reserve Bank
Chairperson: Janet Yellen
Fed Dilemma
To raise or not to raise
USA Presidential Elections
Economy Regulations in Fin Industry
Archives:
2001 Dot Com Boom Bust
2008 Global Financial Crisis
People’s Bank of China
Exports heavy, manufacturing hub
Focus shifting to domestic consumption and services
Real Estate market bubble
China Ghost townships
Economy Archives:
2015 Market Crash
Economy Brexit
Immigration issue
The issue with PIGS nations
Greek Debt Crisis
Brazil Debt Crisis
Venezuela Government Debt Crisis
Italian Bank NPA Issues
International
Deutsche Bank situation in Germany
News
Restructuring of Government policies in Saudi Arabia
Archives:
1997 Asian Financial Crisis
The Networth Blog http://macrohappenings.wordpress.com
GST Article
Brexit (Part 1 & 2)
Monetary Policy
Union Budget 2016
Further BoJ’s negative rate decision
References http://Investopedia.com
Macro economic Policy Environment by Shyamal Roy
Options, Futures, and Other Derivatives by John C. Hull
2. Technical prep
Securities
Buy Low, Sell High
Primary and Secondary Market
Clearing House
Risk Return Trade-off
Bonds – low risk, low return
Equities – high risk, high return
Equities Exchange Traded vs OTC
Bid vs Ask
Price at which you sell vs Price at which you buy
Hedging vs Speculation
Risk mitigation vs betting
Futures
Traded through exchange, hence standardized
Options
Buyer vs Writer Belief/Call Action to Take
Not an obligation!
Buy a Call
Pay option premium Stock will go up
Write a Put
Types
Buy a Put
Call option Stock will go down
Derivatives Put option
Write a Call
Continued…
Swaps
Parties exchange financial instruments
Examples
Interest Rate Swaps
Currency Swaps
Credit Default Swaps (CDS)