ARTH-AARTH

VOLUME NO. XI // 2021

SYNCHRONIZING
HORIZONS
EXPANDING THE
HORIZONS OF
FINANCE
 Finomina, the Finance and Investments Club of IIM Udaipur, is pleased to bring
to you the eleventh edition of its annual magazine, Arth-Aarth. Arth-Aarth is
known for providing a holistic interpretation of the current happenings of the
financial world in order to enlighten the student community on the various
issues impacting domestic as well as global financial environment. The
magazine features various researches and reports on the financial markets,
thus enforcing the theme of the annual management fest of IIM Udaipur-
“Synchronizing horizons” & Finomina’s theme is "Expanding the Horizons of
Finance".

The eleventh edition is built on the theme that encompasses shared

experiences and perceptions leading to evolving beyond existing horizons in
the rapidly changing world. The magazine covers a broad range of topics from

P effects of the Covid-19 pandemic on the value of internationalized firms, how

to reduce risk on the investment to how Covid-19 has made everyone shift

R towards digital payments. The magazine apprises our readers of current

ongoings such as Covid lockdown, stock market rally, IPO frenzy, etc.
E We would love to hear your views, send in your comments, feedback, and
F suggestions to the team at finomina@iimu.ac.in

A EDITORIAL TEAM DESIGN TEAM

C Ayush Garg
Prachi Nahata
Devanshu Jain

E
Harshita Jain
Saket
Shreya Shrishti Prajapati
Vaani Bansal
Vineeth Reddy
 FROM THE
DIRECTOR'S DESK
PROF. JANAT SHAH
DIRECTOR, IIM UDAIPUR

Dear Reader,
I am pleased to pen down the message for Arth-Aarth - the annual chronicle of
Finomina, the Finance and Investments Club of Indian Institute of Management
Udaipur.
Since our inception in 2011, IIM Udaipur has built its legacy by taking advantage of
opportunities to innovate and adopt a unique perspective in carrying out our
activities. IIMU is the youngest B-school globally to gain the AACSB accreditation
and is also on the QS 2022 Masters in Management Rankings and the Financial Times
(FT) 2021 Master in Management Ranking for the third consecutive year with a rise in
performance indicators to 28.7% in 2022 from 27.7% in 2021 rankings has been
recorded. Achieving these prestigious accreditations and rankings has helped us
grow and further our commitment to becoming a globally recognized management
school by 2030.
Our vision is to build on our proud legacy by focusing on high-quality research and
student transformation, with our core values of excellence and integrity guiding us.
With an expert faculty, a research-based ecosystem, and success in attracting the
country's best minds, we are moving closer each day in realizing this vision.
According to the methodology used by UT Dallas' Naveen Jindal School of
Management, IIM Udaipur is ranked 4th on research published in leading global
journals among Indian business schools. It is also among India's most prestigious
business schools, such as ISB, IIMA, IIMB, and IIMC.
IIMU challenges its students every day to expand their knowledge to emerge
intellectually transformed and prepared to positively impact the world of business
and society. The various student-run clubs and committees help the students to
cultivate and explore their passions and hone their skills.
Finomina, the Finance and Investments club of the Indian Institute of Management
Udaipur, is a student-run initiative that cultivates the students' interest in finance.
The club creates awareness and promotes student-industry interaction in the field of
finance. The club's main objective is to teach the passion for finance in students by
providing them with insights into various domains of the finance industry, such as
investment banking, equity research, corporate finance, retail banking, and
microfinance. To achieve this, Finomina organizes various activities such as
competitions and workshops to engage the students throughout the year. The club
also organizes seminars with distinguished industry leaders and academicians from
reputed institutions to promote student-industry interaction.
I wish to congratulate the club on their worthy endeavors. The annual magazine
reflects the club's hard work to inculcate students' interest in various horizons of
finance.
I hope you enjoy this edition and continue to partner in our efforts of Building 'U'
Together.

Regards,
Janat Shah
Director, IIM Udaipur

ii
Contents Effects of Covid-19
pandemic on the value of
internationalized firms

01
The 19th century witnessed
increasing globalization of the
world economy. After a dip in the
first half of the 20th century, this
trend revived and continued into
the 21st century...

DEPARTMENTS

Faculty Zone
Cover Story - Mergers
Sustainability linked
& Acquisitions
bonds
Alumni Zone

03
Net-zero is possibly the most
IPO Analysis - The IPO critical cog in the 'E" of ESG
(Environmental, Social, and
frenzy outlook
Governance). Net-zero comes
Portfolio Analysis from two sources – reduction in
India Inc and their IPO emissions by companies and
utilization of carbon offsets...
spree
Is Nifty Rally a Bubble
Impact of Afghanistan
Taliban issue on
Indian economy and How to reduce risk on your
financial markets investment
Imagine a scenario where the
Personalities of the

19
Indian cricket team is reeling at a
Year score of 40 for the loss of five
Fun facts wickets, chasing a target of 300
in an ODI match. The incumbent
Book Summary -
batsman tries to hit a six and
Coffee Can Investing gets out, is the batsman right to
Glimpse of the Year hit a six at such a stage of the
game...
Arth Samvaad
Crossword

The IPO frenzy outloook

So far, 2021 has been a terrific
year for Indian stock markets.
ON THE COVER The benchmark nifty 50 index

21
has risen by more than 30%,
Mergers and acquisition - Brief
beating many foreign
intro, types of mergers and
counterparts. For the first time,
acquisitions, benefits, recent
on August 31, 2021, the total
mergers...
market capitalization of BSE-
listed businesses surpassed Rs
250 lakh crore...
 FACULTY ZONE
EFFECTS OF THE COVID-19 PANDEMIC ON THE VALUE OF
INTERNATIONALIZED FIRMS

-PROF. PRATEEK SHARMA & PROF. N. VISHWANATHAN

Prof. Prateek Sharma is a part of the Finance and Accounting

domain at IIM Udaipur. He completed his PGDM in 2011 and FPM in
2015 from IIM Lucknow. Prof Prateek is currently researching
investor behavior in transactions involving cryptocurrency in
collaboration with professors from IIM Calcutta. He has also done
research about corporate capital structure and measuring
diversification gains in international multi-asset portfolios.

Prof. N. Viswanathan is a part of the Finance and Accounting

domain at IIM Udaipur. He is a Fellow of XLRI Jamshedpur (2020)
and holds PGDM from IIM Calcutta (1994). His recent publications
include Firm internationalization and long‐term impact of the
Covid‐19 pandemic, Effect of the monsoon forecast
announcement on stock returns, and A binomial decision tree to
manage yield-uncertainty in multi‐round academic admissions
processes.

The 19th century witnessed increasing globalization of the world economy. After a
dip in the first half of the 20th century, this trend revived and continued into the 21st
century. However, various indicators suggest that the global financial crisis may
have arrested this trend. Further, developments like Industry 4.0, nationalist
sentiment and populist governments have caused deglobalizing moves like
backshoring, Brexit, and the U.S.-China trade war. Coming on the back of this, the
Covid-19 pandemic caused widespread supply chain disruptions, which many believe
will further affect globalization. As Carmen Reinhart, Chief Economist of the World
Bank, put it succinctly, “the 2008-2009 crisis gave globalization a big hit, as did
Brexit, as did the US-China trade war, but Covid is taking it to a new level”.
While managers have long been aware of the increased risks of supply chain
disruption that come with globalization, long years of relative stability of supply
chains constructed around the Chinese manufacturing juggernaut may have caused
them to underweight such risks. The pandemic has made firms, as also governments,
reassess the risks in their global supply chains. They may respond by increasing
diversification in production, sourcing, and logistics, and reducing overseas assets.
This would mean significant reshoring and backshoring measures. Implementing
these revised supply chain strategies would necessarily involve one-time and
recurring costs. All of these would result in the values of internationalized firms
being substantially impacted.
However, economic data on such impacts would only be available after considerable
time has elapsed. Fortunately, we can rely on the global equity markets for early
indications of the likely value effects of such pandemic-induced supply chain
realignments. Changes in stock prices around the onset of the pandemic would
contain information on investor expectations of how various firms would be affected
by the likely supply chain restructuring.

1
Using a global sample of over 2800 firms, we studied stock returns over the period
from January to June 2020 and their relationship with certain measures of firm
internationalization. We carried out regressions of stock returns on these measures,
while controlling for standard factors known to be related to stock returns (namely,
beta, size, book-to-market, and momentum), country, and industry.

We find that firms with a high percentage of foreign assets suffered greater value
losses, which suggests that such firms are expected to incur greater costs to
restructure their supply chains and relocate assets. This result is seen across
economic regions. Interestingly, firms with a high percentage of exports showed
lower value losses. We believe that because exporting firms have greater experience
of operating in international markets, they are better placed to benefit from the
opportunities that would be presented by the impending supply chain restructuring.
Hence, the value premium they enjoy. The result is especially strong for firms from
emerging Asian economies (ex-China), which is probably a reflection of exporting
firms from such countries being positioned as sourcing alternatives to China.
However, we need to be careful to separate the long-term effects on firm value of the
above-said strategic restructuring moves from relatively short-term effects due to
demand and supply chain disruptions during the pandemic. We carried out similar
analyses after decomposing the equity values of firms into their short-term and long-
term components and found that the effects we observed are valid for the long-term
also.

2
 FACULTY ZONE
SUSTAINABILITY LINKED BONDS: NEW OPPORTUNITIES
-PROF. UTKARSH MAJMUDAR

Prof. Utkarsh Majmudar is a visiting faculty and a part of

Finance and Accounting domain at IIM Udaipur. He is a PGP of
IIM Lucknow (1988) and a Fellow of IIM Ahmedabad (1997). He
has done significant work in the area of sustainability –
conducting an annual study of the performance of companies
on corporate responsibility, working with large companies and
publishing cases on sustainability.

Net-zero is possibly the most critical cog in the 'E" of ESG (Environmental, Social,
and Governance). Net-zero comes from two sources – reduction in emissions by
companies and utilization of carbon offsets. For net-zero to work, reduction in
emissions is crucial as carbon offsets tend to be limited. To achieve net-zero targets
by 2050 requires gargantuan investment by companies globally.

Sustainability linked finance was launched in late 2019 and has taken the world by
storm. The ESG finance, of which sustainability linked finance is a part, market now
exceeds USD 1trn. Although it is a fraction of the global USD 120 trillion bond market,
its growing importance cannot be wished away. Sustainability linked finance comes
in two flavors:
(a) use of proceeds loans such as green bonds and social bonds that are earmarked
for specific projects; and
(b) the "pay for success" vehicles that comprise of sustainability linked bonds (SLBs)
and sustainability linked loans (SLLs).
In this article, I focus on sustainability-linked bonds.

What are sustainability-linked bonds?

SLBs are debt securities that are generally structured like standard "plain vanilla"
bonds. However, SLBs have some notable additional features. While setting up the
bond, the issuer agrees to a number of sustainability-related targets. These targets
are in the form of key performance indicators or KPIs. KPIs could be such as reducing
greenhouse gas emissions to a certain level, increasing usage of renewable energy to
a certain proportion, or achieving a certain 'sustainability rating' from an external
rating provider within a certain time period. The attributes of the bond will then
subsequently change according to whether those KPIs are achieved. Such changes
usually relate to the coupon of the bond, i.e., increasing the interest due on the bond
if the issuer fails to meet its KPIs in the time agreed. The step-up of coupons
currently range from 10 to 75 basis points. Another approach, though uncommon, is
that of step-down coupons as a reward and an incentive. If the issuer outperforms the
KPIs, then the coupon is reduced.

According to S&P Global Ratings, 85% of the KPIs used in sustainability-linked bonds
have been related to environmental targets such as greenhouse gas reduction,
renewable energy, and waste consumption.

3
In some cases, borrowers can use carbon offsets or charitable donations to meet
their targets.

Sustainability Linked bonds Principles 1

The ICMA (International Capital Market Association) brought out the sustainability-
linked Bonds Principles in 2020. The key elements of the principles are:

Selection of Key Performance Indicators (KPIs)

The selection of KPIs is important as KPIs that are not credible are likely to adversely
impact bond issuance as well as the bond market's credibility. The KPIs should be:

Relevant, core, and material to the issuer's overall business, and of high strategic
significance to the issuer's current and/ or future operations
Measurable or quantifiable on a consistent methodological basis
Externally verifiable
Able to be benchmarked, i.e., as much as possible using an external reference or
definitions to facilitate the assessment of the SPT's level of ambition

While setting KPIs, care should be taken that technological and regulatory changes
are accounted for.

Calibration of Sustainability Performance Targets (SPTs)

The process for calibration of one or more SPT(s) per KPI is key to the structuring of
SLBs since it will be the expression of the level of ambition the issuer is ready to
commit to. The SPTs should also be realistic. The SPTs should be ambitious, i.e.:

represent a material improvement in the respective KPIs and be beyond a

"Business as Usual" trajectory
where possible be compared to a benchmark or an external reference
be consistent with the issuers' overall strategic sustainability / ESG strategy
Be determined on a predefined timeline, set before (or concurrently with) the
issuance of the bond

Bond characteristics
The cornerstone of an SLB is that the bond's financial and/or structural
characteristics can vary depending on whether the selected KPI(s) reach (or not) the
predefined SPT(s), i.e., the SLB will need to include a financial and/or structural
impact involving trigger event(s)

Reporting
Issuers of SLBs should publish and keep readily available and easily accessible:
up-to-date information on the performance of the selected KPI(s), including
baselines where relevant
a verification assurance report relative to the SPT outlining the performance
against the SPTs and the related impact, and timing of such impact, on the bond's
financial and/or structural characteristics

4
 Any information enabling investors to monitor the level of ambition of the SPTs
(e.g., any update in the issuer's sustainability strategy or on the related KPI/ESG
governance, and more generally, any information relevant to the analysis of the
KPIs and SPTs)

Verification
Issuers should seek independent and external verification (for example limited or
reasonable assurance) of their performance level against each SPT for each KPI by a
qualified external reviewer with relevant expertise, such as an auditor or an
environmental consultant, at least once a year, and in any case for any date/period
relevant for assessing the SPT performance leading to a potential adjustment of the
SLB financial and/or structural characteristics, until after the last SPT trigger event
of the bond has been reached.
Key Features of Sustainability bonds

Source: Adapted from Sustainability-linked bonds: the new face of transition finance, White and Case,
August 14, 2020, https://www.whitecase.com/publications/alert/sustainability-linked-bonds-the-new-
face-transition-finance
2
The First Sustainability Linked Bond by Enel in 2019
Italian energy group ENEL marked the beginning of the SLB market in September
2019. Enel chose to link its bonds to the United Nations Sustainable Development
Goal (SDG) 7 to ensure access to affordable, reliable, sustainable, and modern
energy for all. ENEL set a target to increase its renewable energy installed capacity
to 55% (from 46% as of H1 2019) of total capacity by the end of 2021 while reducing
its CO2 specific emissions to 0.23 kg/ kWh equivalent by 2030 and reaching
decarbonization by 2050. On top of issuing several similar bonds in different
currencies, it also innovated by launching a sustainability-linked share buyback
program – including an SDG reward mechanism embedded in the price at which the
company purchases its own shares linked to a target KPI.
5
 3
Another Example, Another industry
In September 2020, CHANEL was the first unrated issuer to place public bonds linked
to sustainability metrics, leading the way towards a more sustainable luxury sector.
Its sustainability targets included

Decreasing CHANEL's own absolute (scope 1 and 2) emissions by 50% by 2030

(from a 2018 base year),
Reducing its supply chain and other scope 3-related greenhouse gas emissions by
10% by 2030 (from a 2018 base year), and
Shifting to 100% renewable electricity in the company's operations by 2025.

Getting the SLB wrong

Take the case of ANA Holdings' (a Japanese transportation services company) SLB
issuance4 . ANA Holdings' SPTs pertain to the environment, human rights, diversity
and inclusion, and regional revitalization.

Its KPIs included:

listing on the DJSI World and Asia Pacific indices;
listing on FTSE4Good Index;
the MSCI Jan ESG Select Leaders Index; and
a company rating of A- or above on the CDP (a company that administers carbon
disclosure ratings).

The targets are generic and dependent on listings that are external and the
company's influence.
Also, ANA's penalty for missing the SPT is to donate to charity. This is quite irregular.
It is also unfavorable to investors and unlikely to prove a material incentive to the
borrower to improve its sustainability.

Penalty for non-performance: Materiality?

Another aspect of sustainability-linked bonds is the magnitude of the penalty (higher
coupon for non-achievement of targets). As discussed earlier, the penalty varies from
10 to 75 basis points. Let us assume 25 basis points, a common penalty. The
materiality of the penalty is contingent upon the coupon rate. If the base coupon rate
is 1%, then a 25 basis points penalty is large. However, if the base coupon rate is 2%,
the 25 basis points penalty appears to be less material. Borrowers with high
sustainability and credit ratings are likely to face lower relative penalties as
compared to underperformers.

The question of targets

Issuers have the incentive to set easily achievable targets and get benefits of a lower
chance of attracting a penalty. Investors need to closely evaluate how easy it would
be for the investor to achieve the targets.

6
Greenfencing
One of the key differences between a green bond and a sustainability-linked bond is
that green bonds are the use of proceeds bonds and hence green fenced. Unlike
green bonds, sustainability-linked bonds are not greeenfenced. This lack of
greenfencing provides an opportunity for issuers to either use the money in non-
green projects or allow them to greenwash their projects. Investors must pay close
attention to the sustainability/ESG objectives to prevent "sustainability washing."
Investors should thoroughly scrutinize the KPIs to check if the KPIs are ambitious and
robust.

New structures are emerging that provide benefits of both green bonds as well as
sustainability-linked bonds. For example, NextEra Energy recently came out with a
hybrid bond that combines features of both conventional green bonds and SLBs.

Investor interest in sustainability-linked bonds has evolved within a very short period
– unprecedented in bond markets. Expectations from the bonds have also increased,
leading to product innovation. With ICMA bringing out the Sustainability Linked
Bonds Principles in 2020, the EU taxonomy for the environment being released, and
growing investors' awareness of these securities, the volume of new issuances is
likely to continue growing. SLBs are a product whose time has come. Keep watching
the space.

References:
[1] https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2020/Sustainability-
Linked-Bond-Principles-June-2020-171120.pdf
[2] Enel Press release, https://www.enel.com/content/dam/enel-common/press/en/2019-
September/SDG%20bond%20ENG%20(003).pdf and https://cib.bnpparibas/italian-energy-company-
issues-groundbreaking-sdg-linked-bond/
[3] https://cib.bnpparibas/stitching-luxury-and-science-into-the-sustainability-linked-bond-market/
[4] https://www.anahd.co.jp/group/en/pr/202105/20210519.html

7
 FACULTY ZONE
Q&A WITH PROF. AMISH DUGAR

Prof. Amish Dugar is a part of the Finance and Accounting

domain at IIM Udaipur. He is a Chartered Accountant and
Ph.D. from University of Rajasthan. His areas of expertise
are Accounting Policies and Regulations, Corporate
Governance, Taxation, Behavioral Accounting, Financial
Reporting and Financial Statement Analysis.

1. How effective will account aggregators be introduced by RBI?

The concept of account aggregator is going to revolutionize the financial information

space. However, its success depends upon a few factors. Firstly, the regulators and
participating financial institutions must walk the talk regarding the safety of data
and ensure that financial data is not misused. Secondly, the scope of financial
information being shared must expand widely to include data related to mutual
funds, pension, social security schemes, taxation, financial history (credit score) and
property declaration, etc. Only when the data related to income generation, income
utilization, and investments are available at one click, then only the true potential of
account aggregator services will be realized. Finally, as the service envisages that
the data sharing permissions will be customizable and will be under full control of
the user, the interface must enable the customization seamlessly. If the user
perceives that it is difficult to customize, the user may not continue with using the
services at all.

2. Do you feel that Covid has fast-forwarded the use of technology in the banking
sector?

Despite the outweighing adverse impact of Covid on the overall economy, there are a
few positives for the banking sector that have emanated from the crisis. The nature
of the crisis has pushed many to avoid crowded places (banks). Many people are
hesitant to touch unwanted surfaces (currency notes and ATMs). The emerging
digital payment technologies have given an option to people to avoid both above
issues. Coincidentally, the hyper-competition in the telecom sector has ensured dirt-
cheap internet availability to support the digital push. The confluence of the
aforesaid factors has hastened the acceptance of digital payments, and it has been
as contagious as the virus itself. Imagine a scenario where five street vendors are
selling farm produce side by side, and one of the vendors starts accepting payment
through a QR code-enabled digital wallet. Other vendors will be pushed to accept the
technology because of two reasons: firstly, the fear of losing out on competition, and
secondly, the feeling that if he/ she can do it, why not I. The FOMO (fear of missing
out) factor has propelled the acceptance of fintech. The exceptional user interface
that most of the fintech firms provide in their products is also a reason that the mass
public has accepted technology like fishes to water.

8
3. As covid-19 has made people shift towards digital payments, will this status quo
be maintained, or will people go back to cash transactions?

The only trajectory that I can see for digital payment transactions is northwards. The
growth rate may vary, but it is always going to be positive. Three factors are going to
push more and more Indians towards the digital payment ecosystem, namely, ease of
doing transactions, reduction in size of the parallel economy (due to effective
vigilance, reduction in effective tax rates and hassle-free processes), and finally, the
cost-effectiveness of transaction processing. I do believe that more and more people
will start forgetting their wallets at home and still be fine. Cash is going to become
more and more difficult to carry and manage.

4. Will big banks continue to develop internal systems, or will they turn to
outsource solutions from incumbents and FinTech companies for their bank
technology?

I think it is going to be more of a mixed model type of operation rather than either or
situation. The banks will outsource the core technology part to the fintech companies
or IT sourcing firms but will invest heavily in the internal oversight mechanisms and
controls. Data security laws are getting stringent day by day and so are banking
regulations that are shifting the needle of blame on banks rather than the customers.
However, outsourcing ensures a lean organization and brings in effectiveness and
efficiency in operations. Thus, banks may source technology from fintech firms but
will not shy away from monitoring and control systems that are in-house.

5. Banking has depended on legacy infrastructure for as long as we know. But as

Open Banking offers glimpses of the various use-cases for consumers and
businesses, do you think Open Banking can bring a financial revolution in India?

Open banking can bring financial revolution in India, but I am apprehensive about its
scalability and safety beyond a financially literate client base. As mentioned earlier,
the Indian fintech sector has done a mind-blowing job as far as simplicity of user
interface is concerned. The simplicity and seamlessness have drawn swathes of the
public in digital banking space. However, a large portion of Indian consumers are still
not aware about what is happening in the background. Financial Institutions sharing
consumer data (open banking), in principle, should help in micro-level customization
of product offerings to the consumers. However, aggressive use of such data may be
used to mislead customers who are not as savvy as others. I fear that if trust is not
maintained in this ecosystem, the customers will keep on relying on the legacy
banking system. I also believe that effective and pro-customer banking regulations
are a key for utilizing the full potential of open banking in India.

9
6. How much time will it take to extend the changes that are coming from the
financial sector to the unorganized sector?

I cannot give the exact timeline, but I guess it will happen sooner than later. As more
and more users are getting used to the technology and the ease that it brings, there
is going to be a universal demand for services as they are offered by the organized
sector.

7. With fintech gaining popularity, fake fintech apps will also come into the picture,
so what can be a solution to it?

Aggressive awareness campaigns along with more customer centric regulations can
mitigate the risk of customers being duped by fraudsters. A prime example being RBI
using Kaun Banega Crorepati (KBC) show to aggressively promote safe financial
practices. Mass campaigns with deep public reach can build awareness and make the
customers skeptical about fraudulent practices. The regulators and the service
providers will have to invest more than ever before in cyber security and vigilance to
maintain trust of the customers. On the lighter side, an innovative way of educating
the customers can be randomly conducting mock drills of controlled fake
transactions. I believe nothing can educate better than the experience of being
conned. Once bitten twice shy.

10
 COVER STORY
MERGERS & ACQUISITIONS - A BRIEF
Introduction
The terms mergers and acquisitions are
often used interchangeably today but
have slightly different meanings.
As the word itself suggests, mergers
mean when two different companies
come together and become one entity
going forward to run their operations and
businesses together.
Acquisitions, on the other hand, mean
when one company buys/acquires
another company, the former company
becomes the owner and runs operations
and business the way it likes. Unfriendly
or hostile takeovers in which the target
company does not want to be purchased
are always regarded as acquisitions.
Now that we have understood the basics
of mergers and acquisitions and the
differences in their meanings let’s now
understand the structures of mergers.
Horizontal Merger
Merger between two companies who are
direct competitors of one another
sharing same products lines and markets
(e.g.ArcelorMittal and Essar steel)
Vertical Merger
Merger between two companies that are
related to each other as part of the same
supply chain (e.g. an ice-cream making
company merging with a cone supplier
company)
Concentric Merger
Merger between two companies that are
essentially from different industries but
serve the same customers (e.g. A mobile
manufacturing company and an
earphones manufacturing company). It is
also called a congeneric merger.
Conglomerate Merger
Merger between two companies that
aren’t in similar lines of business (e.g. A
manufacturing company and IT company)
Product Extension Merger
Merger between two companies who are
selling different but related products
(e.g. Mobilink Telecom Inc. and
Broadcom)
Mergers can also be identified based on
the following two financing methods:
Purchase Mergers
As the word itself suggests, this type of
merger involves one corporation
purchasing another. The purchase can be
made either through cash or some debt
instrument. The sale here is taxable, and
hence the acquiring company enjoys the
tax savings/benefits. This is achieved by
writing up the acquired assets up to the
actual purchased price, and the
difference between the book price and
purchased price can depreciate annually,
thus reducing the taxes payable.
Consolidation Mergers
A brand new company is created when a
consolidation merger happens; where
two companies are brought together in
one entity. The company enjoys the same
tax advantages as in the case of
purchase mergers.
Now that we have covered mergers, let’s
talk about acquisitions and their types:
Business acquisitions
In these types of acquisitions, a company
buys a business or assets of another
company. Post the acquisition, both the
companies remain in existence. The two
categories of business acquisitions are:
11
 Slump sale - Slump sale means the
transfer of one or more assets by
paying a lump sum amount of money
without assigning values to each type
of asset
Asset sale - This type of sale assigns
values to each type of asset before
the sale takes place
Share acquisitions
In these types of acquisitions, a company
purchases shares/stake of another
company which is more than 20% of
stake generally. Share acquisitions also
have its types:
Hostile acquisition - Buying shares of
a company from its shareholders to
gain control of the company
Backflip acquisition - This is an
unusual acquisition in which the
buying company becomes a subsidiary
of the acquired company
Reverse acquisition - A private
limited company acquiring a listed
company
Friendly acquisition - When one
company buys the shares of another
company where the acquired company
is completely aware and gives
consent to the acquiring company

Benefits of Mergers and Acquisitions

Some of the key benefits of M&A have been listed down:

Diversification of Risk
The companies can add various revenue streams through the combined efforts of both
the entities. This will increase the portfolio and market share of the company and
consequently reduce the risk which the business entails.

12
Tax benefits
In case of slump sale, where the entire
entity is purchased by another entity for
a single consideration, some of the tax
benefits/attributesthat are available to
the acquired firm pass on to the
purchaser.
However, it is pertinent to note here that
the benefit of depreciation on the
goodwill generated through acquisitions
has been withdrawn by the Finance Act,
2021, and hence this may lead to a slight
increase in the costs of the mergers and
acquisitions henceforward.
Economies of Scale and Growth
Mergers and acquisitions provide greater
access to capital to the companies
involved, which leads to better
bargaining power with vendors,
distributors, etc., and enhance the
bottom line of the merged entity.
With such increased capital and better
bargaining power, the firms are able to
generally lower their costs and pass onto
the consumers the benefits of such lower
costs to an extent. Thus, M&A allows
firms to grow faster as compared to
traditional organic growth.
Synergies
One of the key benefits of mergers is the
synergies that both the acquirer and the
target firm aim to achieve. Synergies are
typically described as ‘one plus one
equaling three’: the value that comes
from two companies working together in
tandem to make something more
powerful. Synergies generally occur
when two companies with similar
businesses come together and get their
resources together into the merged
entity.
13
Recent Mergers
Zee Entertainment Enterprises Limited
(ZEEL) and Sony Pictures India (SPNI)
One of the biggest mergers of the year,
Zee Entertainment, on 24th September
2021, announced that it would be
merging with Sony Pictures India, two of
the biggest media conglomerates. The
board of directors of ZEE approved the
merger between the two companies. On
September 22nd, Zee’s board of
directors gave in-principle permission for
the execution of a non-binding term
sheet with SPNI. In addition, the two
parties will sign a non-compete
agreement. Currently, the MD and CEO of
Zee Entertainment is Punit Goenka and
would continue to be in the same position
after the merger happens for the next 5
years. As soon as the announcement was
made, the shares of ZEEL went up as
much as 40%. Under the terms that have
been finalized, Sony Pictures India will
invest Rs. 11615 crores ($1.575 billion)
and will acquire a 52.93% stake in the
merger and ZEE shareholders will be left
with the remaining 47.07% of the stake.
It is interesting to note that Zee’s
founders have only a 3.99% stake in the
company.
Invesco, an independent investment
management company headquartered in
Atlanta, United States, holds about an
18% stake in ZEEL. The investment
management company demanded an
extraordinary general meeting (EGM) as
soon as ZEE had announced the merger.
Though Invesco is not opposing the
merger with Sony, Invesco wants
changes at ZEE in light of the corporate
governance and financial irregularities
that have plagued the company and even
been flagged by India’s market regulator.
Invesco has suggested appointing six
new independent board members and
also the removal of Puneet Goenka as
CEO of ZEE. It had earlier asked for the
removal of three non-independent
directors, following which two directors
had stepped down.
ZEE, on Oct 1, 2021, had rejected
Invesco’s request for the removal of
board members. Invesco later filed a
complaint against the company in India’s
companies tribunal, where it is trying to
force ZEE to call the meeting. ZEE now
has to respond the same before 22nd
October. The founder of ZEE, Subash
Chandra Goenka, has accused Invesco of
plotting a hostile takeover.
Even though with all of the issues
mentioned above, the shareholders of
ZEE are very happy with the
announcement of the merger. It will take
approximately six to eight months for the
merger to conclude.
Walmart Acquisition of Flipkart
US retail giant bought a 77% stake in one
of India’s online e-commerce company
Flipkart for $16 billion, becoming the
world’s biggest purchase of an e-
commerce company. Of the two co-
founders of Flipkart, Sachin Bansal has
exited the company while Binny Bansal
has continued. The remaining 23% of the
stake will be held by the co-founder and
group chief executive officer Binny
Bansal, Chinese internet conglomerate
Tencent, investment firm Tiger Global
and software firm Microsoft. US market
had not responded to the acquisition well
as shares of Walmart had dropped 4%
and lost $10 billion in market
capitalization. Walmart has plans to
expand globally, leveraging the
expertise of Flipkart.
14
The talks of the acquisition had started
in early September 2016, and Walmart
initially had the intention to buy only a
minority stake in Flipkart. The deal has
pitted Walmart against Amazon in the
Indian market. Walmart also has plans to
launch an initial public offering of
Flipkart. Softbank, which had exited from
the startup in 2018, has reinvested
around $500 million in the company.
Flipkart is now valued at around $37.6
billion.
In an interesting reverse acquisition,
Flipkart bought Walmart India Pvt Ltd in
July 2020 and will launch Flipkart
wholesale which will serve as a new
digital marketplace for wholesale. This
reverse acquisition would help Flipkart
expand its market in the food and
grocery segment and also strengthen its
supply chain. Walmart India operates the
best price cash and carry business and
has 28 stores and two fulfillment
centers. This will help transfer the local
Kirana ecosystem and also grow business
for MSMEs.
Deals in the Indian finance industry
The Indian start-up ecosystem witnessed
a massive rise in M&A deals with more
than 120 deals in 2021 so far. This has
amounted to the total value of M&A
deals of more than $3.8 billion. These are
only the disclosed deals, and the value of
undisclosed deals may be much higher.
The Fintech segment has seen more than
20 deals this year. One of the major deals
in this segment has been the acquisition
of the mutual fund business of Indiabulls
by the digital investment platform,
Groww.
In May 2021, Groww entered into an
agreement with Indiabulls Housing
Finance Ltd (IBHFL) to acquire the
mutual fund business of its subsidiaries
Indiabulls Asset Management Company
Ltd (IAMCL) and Indiabulls Trustee
Company Ltd, the trustee of IAMCL, for
Rs. 175 crores.
In a release, Groww said Sebi’s recent
change in sponsorship criteria for fintech
companies had enabled it to enter into
the asset management space. Indiabulls
MF managed assets worth Rs 664 crore
for the quarter ended March 2021. In
December, Sebi had changed the
eligibility criteria for sponsoring mutual
funds by allowing entities that didn’t
fulfill the profitability criteria to set up a
mutual fund provided they had a net
worth of Rs 100 crore. Lalit Keshre, CEO
and co-founder of Groww, said, “The
regulators have also been forthcoming in
enabling new-age fintech start-ups to
enter this space and increase the reach
of mutual funds to the next 100 million
retail investors in the country.”
With this acquisition, Groww will become
one of the first fintech companies to
enter the Rs 32-trillion asset
management space.
15
This acquisition will help Groww to This has been very unusual since it is not
create newer investment products. easy to acquire a bank in India without
Taking over IBHFL’s mutual fund the acquirer being a bank itself. Neither
business will also pave the way for a of the institutions in the JV is bank.
strong revenue moat for the start-up, Centrum Financial Services is an NBFC,
which is expected to gain from the whereas BharatPe is a 3 year old digital
expense ratio charged on the mutual payments start-up.
fund products offered through the asset
management company. Groww now plans
to make mutual funds even more
accessible by making them simpler, more
transparent, and further lowering the
cost. This acquisition is also beneficial
for IBHFL because the decision to divest
interest in the retail mutual fund
business was taken to consolidate
capital and focus on building the real
estate management business through its
Alternate Investment Fund.

Another major deal has been by fintech

start-up BharatPe, through a joint
However, PMC Bank needed rescuing,
venture with Centrum Financial Services,
and the RBI knew it. Hence, in this case,
where it has taken over Punjab and
the RBI has been willing to grant a
Maharashtra Cooperative Bank (PMC
concession and granted in-principle
Bank). It plans to infuse around Rs. 1,800
approval for an SFB license. The entry
crores into PMC Bank
into the banking sector by BharatPe is
expected to significantly improve its
growth. One of the reasons is the
opportunity to gain higher margins on
loans through the lowered cost of
acquiring funds. However, a more
significant reason is that BharatPe can
gain an edge over its competitors. Due to
increased competition from players such
as Google, Amazon, Paytm etc., payments
companies do not enjoy the same kind of
valuation premiums that they earlier did.
Having a banking license can be really
The Rs. 6,500 crore fraud at PMC Bank
beneficial for BharatPe as it is not easy
has been on of the largest frauds in the
to get a banking license in India. This
country. When this fraud came to light,
increases the entry barrier for other
RBI had to step in to freeze the accounts
companies while also allowing to the
of depositors in the bank. However, 2
company to expand the range of
years later the BharatPe and Centrum
products and services that it can offer.
Financial Services JV to set up a small
finance bank (SFB) has taken over PMC
Bank to rescue it.
16
The growing number of M&A deals is a
good sign for Indian start-ups and
corporates as these deals give start-ups
a strong platform and the corporates
access to new markets. The number of
M&A transactions for the year till now is
a very strong sign for the start-up
ecosystem, and it is expected that this is
likely to continue for the rest of the year.
Cross Border Mergers and Acquisitions
Cross Border M&A basically refers to a
merger between two companies
incorporated in two different countries or
a company in Country A is acquired by
another company in Country B. Hence,
from the perspective of the flow of
investment, cross-border mergers and
acquisitions can be classified into
Inbound M&A’s and Outbound M&A’s.
Inbound M&A’s, from the context of
India, refer to cases where a foreign
company merges with or acquires a
domestic company. For example, the
acquisition of Flipkart by Walmart is a
recent example of an Inbound acquisition
wherein Walmart, a foreign company,
acquired 77% stake in Flipkart, a
domestic company.
Similarly, an Outbound M&A refers to a
case where a domestic company merges
with or acquires a foreign company. For
instance, the acquisition of Jaguar and
Land Rover by Tata in 2011 was a case of
an outbound acquisition.
There are various benefits which are
associated with cross-border M&A. A few
of them are listed below:
Geographical Diversification
Since the companies are entering into
another country through the medium of
cross-border mergers and acquisitions, it
accrues the benefit of geographical
diversification to the entities involved in
the transaction. Cross-border M&As
provide the investors with greater
opportunities to develop their business
on a larger scale, geographically or by
type of business.
Increased customer base
In cases where the buyer absorbs a major
competitor in a foreign country, it will
increase the market share of the buyer
and thus enhance its competitive
advantage over other competitors on a
global level.
Tax Planning and benefits
While this is not the primary objective for
any firm to enter into a cross-border
M&A, but such tax benefits also
sometimes accrue to the parties. Tax
havens are primarily used in such cases
to plan a merger or acquisition in such a
way that it leads to some tax benefits.
According to a research paper, it is
observed that tax havens have $2.4
trillion in M&A deal value beyond what is
predicted based on economic
fundamentals. Such acquisitions at tax
havens are generally made to avail the
tax benefits available at such places that
result in legal (tax avoidance) and illegal
(tax evasion) reduction of taxes.
17
Drawbacks of mergers and acquisitions
Although we have seen how mergers and
acquisitions can have various benefits,
they can also have certain drawbacks.
Lengthy Timelines: A typical M&A deal
takes approximately 6-8 months. This
takes a longer period if a listed company
is involved. In such cases, approval is
required from various regulators such as
Securities and Exchange Board of India
(SEBI), Competition Commission of India
(CCI), etc. which can often take months
at a time.
Transaction costs: Often, mergers can
have very high transaction costs when
compared to a straightforward share
acquisition.
Unemployment: In certain mergers and
acquisitions, the new entity might try to
reduce its operational costs by laying off
underperforming employees.
Uncertainty: There is great uncertainty
regarding mergers and acquisitions. The
two companies might not be able to
capitalise on their advantages, which can
often lead to the new entity performing
badly. There can be differences in
corporate culture, and it can be difficult
to consolidate the culture for different
companies.
Loss of brand strength: It is often
possible that the merged entity might
not enjoy the brand strength as the
companies did separately. The
consumers can often get confused
regarding the new entity, which can
often lead to loss of the brand identity.
Ayush Garg
Shreyan Mehta
Yash Rode
(IIM Udaipur)
18
 ALUMNI ZONE
HOW TO REDUCE RISK ON YOUR INVESTMENT?

Introduction 1:
Imagine a scenario where the Indian cricket team is reeling at a score of 40 for the
loss of five wickets, chasing a target of 300 in an ODI match. The incumbent batsman
tries to hit a six and gets out, is the batsman right to hit a six at such a stage of the
game? It is too risky to try that for such a small return at a crucial juncture of the
game. Many would argue, what if the risk pays off and he succeeds in hitting a six?
The probability for it to happen is very minimal, given the crucial situation. It would
have been safer to take the game deep and create a position where the risk of hitting
a six would have ensured a better return (chance of winning).

Introduction 2:
Imagine AB de Villiers trying to hit a reverse sweep to score a six, leading to no other
stroke in the game. Do you think he would have been successful? He would not have
accomplished so many runs (return) because bowlers would have devised the plan to
get him out (risk). After all, he has only one trick up his sleeve. AB de Villiers is
referred to as Mr. 360 because he can play various strokes to different ground parts.
It has increased his probability of not getting out because of the lack of capability of
the bowler to predict his next stroke. It has also improved the likelihood of his score
(return) without the risk of him getting out. It would be best to have a diverse range
of strokes to reduce your risk of departing without scoring a lot (less return). Now,
we can extend the same concept to our investment strategy.

Today let us discuss the two most essential words in investment, ‘Risk’ and ‘Return.’
Return is a profit/loss made on investment over time. Risk is the uncertainty of the
future expected returns of an investment. We always expect sky-high returns as fast
as possible without any risk. However, return and risk is always directly related to
each other. The higher the return, the higher is the risk and vice versa. But we can try
to reduce the amount of risk for a given return. As an investor, one must always
prefer an option that offers the maximum possible return for a certain amount of risk.
The amount of risk one takes differs on the risk appetite of an individual.

Let us look at the two kinds of risk in one of the most popular investment options, i.e.,
equity shares.

The diversifiable risk or unsystematic risk is defined as the uncertainty of an event

that would adversely affect a company or an industry but not the entire market
Ex: A phone manufacturer launches a new product with defects in the design
resulting in several complaints and further loss in sales, and a decrease in the stock
price of the firm.

Undiversifiable or Systematic risk is the risk associated with the whole market but
not confined to a particular firm or industry. It is highly unpredictable and difficult to
escape.
Ex: Natural disasters, economic recession, interest rate hikes, political instability,
etc. It applies to all the firms in the market.

19
The real risk in equity shares is the sum of the above two risks. We can always try to
eliminate the diversifiable risk by diversifying our portfolio. What is diversification?
A diversified portfolio comprises a mix of stocks from different industries to limit
exposure to a particular firm or industry.
Consider the above example of a phone manufacturer.

Scenario 1: Suppose John owns stocks of only that firm, then the lousy performance
of the firm leads to a negative return on his investment. In this case, John is exposed
to high residual risk, just like a player who plays only aggressive strokes.

Scenario 2: Suppose John owns uncorrelated stocks from different industries in his
portfolio. The bad performance of one stock would have been compensated by the
other stocks in his portfolio, thereby reducing the amount of risk exposure, just like a
batsman who can play a range of strokes.

Generally, a portfolio of 20-30 stocks is an ideal portfolio.

The concept of diversification can be extended to your entire portfolio of
investments by investing in different options like equity shares, bonds, mutual funds,
fixed deposits, insurance, etc., to reduce the exposure of risk to a particular
investment option.

Conclusion:
Try to choose an investment option with maximum return for a given amount of
risk
Try to reduce the total risk by diversifying your portfolio

Kishore Reddy Kalam

IIM Udaipur 2019-21
Business Analyst at Flipkart

20
 IPO ANALYSIS
THE IPO FRENZY OUTLOOK

So far, 2021 has been a terrific year for Indian stock markets. The benchmark nifty 50
index has risen by more than 30%, beating many foreign counterparts. For the first
time, on August 31, 2021, the total market capitalization of BSE-listed businesses
surpassed Rs 250 lakh crore. Foreign institutional investors appear to be bullish on
Indian equities, having made net purchases of almost Rs 51,000 crore this year.
According to a Bloomberg index, India's market capitalization has increased by 37%
this year to $3.46 trillion, representing the aggregate worth of companies with a top
listing there. India's stock market is on the verge of surpassing that of the United
Kingdom in terms of valuation, allowing it to join the global elite. India has a more
significant growth potential than other emerging markets, thanks to a thriving
technology industry that has seen a flood of startups go public this year.
Since the end of 2020, many companies have chosen to go public, owing to the impact
of the Covid-19 epidemic on business and brisk stock market activity. According to a
survey by the State Bank of India (SBI), over 14.2 million new individual investors
participated in the stock markets in 2020-21. The best-performing IPOs in 2021 are
listed below.

Nureca Limited
To help with this, Nureca has put a lot of
effort into developing a digital
environment that allows for the early
detection and control of lifestyle
disorders. The digitized climate is driven
by the shift from standalone products to
solutions incorporating smart devices,
software, and systems.

Note: The above chart shows the price movement from

listing date, i.e., Feb 25,2021 to Oct 14, 2021

Nureca Limited is a company that sells

health and wellness goods to people at
home. The company sells goods through
online channel partners like e-commerce
players, distributors, and retailers that
allow customers to track chronic
illnesses and conditions. Nureca serves
customers in India and the United States.
Nureca brings together significant
innovation, tried-and-true technologies,
and ergonomic design to empower
individuals to take charge of their health
and wellness goals. Their goods are used
Note: Market cap and P/E ratio pertains to figures on
by individuals, carers, and doctors all
the issuance
around the world. People's health
journeys must also be connected in
today's connected environment.
21
 MTAR Tech

They are a precision engineering They make vital and differentiated

solutions company that uses precision designed products with a healthy mix of
machining, assembly, testing, quality research and volume-based production,
control, and specialised fabrication customised to satisfy the specific
capabilities, some of which are requirements of their customers in the
indigenously developed and nuclear, space and defence, and clean
manufactured, to manufacture mission energy sectors.
critical precision components with close
tolerances (5-10 microns) and critical
assemblies to serve projects of high
national importance.
Customers in the nuclear, space and
defence, and sustainable energy sectors
are their primary focus. They have
endeavoured to grow continuously since
their beginning, contributing to the
Indian civilian nuclear power programme,
the Indian space programme, the Indian
defence and aerospace sector, the
worldwide defence and aerospace sector,
and the global clean energy sector.
MTAR Technologies issued 10.37 million
They've also developed import
equity shares in an initial public
alternatives over the years, such as ball
offering (IPO), which included both new
screws and water-lubricated bearings,
issuance and OFS shares in the price
that are specialised and employed in the
band of 574-575.
industries they serve.

22
 Laxmi Originals
The addition of Diketene to the
company's product line has cemented the
company's position as a leading fine and
specialty chemical maker in the country.
The company wants to position itself as a
leader in specialty intermediates and
become the preferred growth partner for
global life sciences, crop sciences, and
pigments companies in the future years.
Note: The above chart shows the price movement
from listing date, i.e., Mar 25,2021 to Oct 14, 2021

Laxmi Organics Limited has maintained a

consistent focus on innovation,
creativity, and speed since its
foundation, allowing it to meet new
difficulties and respond to new
possibilities worldwide. Laxmi Organic
Industries is a specialty chemical
company specializing in acetyl
intermediates and specialty
intermediates.
Pharmaceutical firms and ink makers
choose it as one of their preferred
partners. It has increased its capacity to Note: Market cap and P/E ratio pertains to figures on
include specialty intermediates in the the issuance.
last decade.

Nazara Tech

Nazara Technologies is a major India-

based diversified gaming and sports
media platform with offerings in
interactive gaming, eSports, and
gamified early learning ecosystems in
emerging and developed global markets
such as Africa and North America. WCC
and CarromClash in mobile games,
Kiddopia in gamified early learning,
Nodwin and Sportskeeda in eSports and
eSports media, and Halaplay
Technologies Private Limited Nazara was one of the first eSports (via
("Halaplay") and Qunami in skill-based, Nodwin) and cricket simulation (through
fantasy, and trivia games are among the Nextwave) companies to enter the Indian
company's most well-known IP. market.
23
One of the company's primary assets, The popularity of some of their games on
according to the company, is their ability the Google Play Store, like 'World
to understand local gamer behaviour Cricket Championship 2', 'Chhota Bheem
while building games and innovatingly Race,' and 'Motu Patlu Game,' reflects
using local, licenced intellectual their localised player insights.
property to promote the expansion of our The IPO of Nazara Technologies was
network of games. primarily an OFS (Offer for Sale) with an
issue size of 581 crore.

Clean Science & Tech. Ltd.

Customers range from Japan to the

United States, making Clean Science and
Technology Ltd. a genuinely worldwide
company.

Note: The above chart shows the price movement from

listing date, i.e., Jul 19,2021 to Oct 14, 2021
Incorporated in 2003 and operated as a
family-owned business, the company
develops environmentally friendly and
sustainable specialty and fine chemical
manufacturing techniques and exports to
many nations across the world. The
company spends a lot of time inventing
better catalyst systems that are Note: Market cap and P/E ratio pertains to figures on
selective and cost-effective, with the the issuance.
primary goal of devising unique and
clean procedures for its products. 24
 Zomato

Zomato’s technological platform, which Zomato obtained roughly US$16.7 million

was launched in 2010, connects from Info Edge India between 2010 and
customers, restaurant partners, and 2013, providing Info Edge India a 57.9%
delivery partners to meet their various ownership in the company. It secured an
demands. Customers use Zomato’s additional US$37 million in November
platform to find or book restaurants, 2013 from Sequoia Capital and Info Edge
read or write customer reviews, see and India. Zomato raised $60 million in a new
upload images, order food delivery, book round of fundraising in November 2014.
a table, and pay for their meals when After that Zomato raised funds from
dining out. various giants including Alibaba, Tiger
On the other hand, Zomato equip Global Management etc.
restaurant partners with industry-
specific marketing tools that enable
them to interact and gain customers in
order to develop their business while
simultaneously providing a dependable
and effective last-mile delivery service.
Hyperpure, a one-stop procurement
service, provides high-quality food and
kitchen goods to their restaurant
partners.
It also provide their delivery partners
open and flexible compensation options.
As of December 31, 2020, it has a strong Zomato went public, with a price range of
presence in 23 countries, with 131,233 Rs 72-76 per share in its first public
active food delivery restaurants, 161,637 offering. The total amount raised was
active delivery partners, and 10.7 million 9375 crores.
monthly food orders.
25
 Paras Defence and Space Technologies Ltd.

Note: The above chart shows the price movement from listing date, i.e., Feb 25,2021 to Oct 14, 2021

For Defense & Space Applications, Paras PDSTL (Paras Defence and Space
offers a comprehensive range of Technologies) made Indian stock market
Products & Solutions. They have five history by having its initial public
business verticals focused on the offering (IPO) subscribed 304 times, a
Defense & Space Sector: Defence & record for any company. It had a historic
Space Optics, Defence Electronics, debut on the stock exchanges on October
Heavy Engineering, Electromagnetic 1st, when its stock price soared 171% to
Pulse Protection Solutions, and Niche Rs 475 on the BSE, compared to its issue
Technologies. Paras Defense is active in price of Rs 175 per share.
technologies for rockets and missiles,
space and space research, naval
systems, land and armored vehicles,
electronic warfare and surveillance, and
electromagnetic shielding, to name a
few.
The company's approach is to deliver
high-quality products on time and at a
competitive price. As a result, they have
established themselves as one of the
customers' most dependable partners.
The firm is built on solid fundamentals,
impeccable business ethics, and a
customer-centric approach to become
the most significant Indian company in
the defence and space sectors. Monil Dave
Shantanu Tipare
(IIM Udaipur)

26
 PORTFOLIO ANALYSIS
EVALUATION OF PORTFOLIO

It is insufficient to invest in the best assets. Because what works for you now could
not work for you tomorrow! Investors either realize it too late or fail to notice it at all.
There is, however, a solution: analyzing or assessing your Portfolio.
Examining your Portfolio regularly will assist you in figuring out whether you're
making money or losing money. Furthermore, to reap all the benefits of profit in the
future, you must consistently nurture your Portfolio.
This article is based on how to analyze your current Portfolio in four different
methods.

1. Track your Portfolio's Performance

Compare the returns of each investment to those of other plans in the same category.
It will assist you in determining the performance of your investments. It's crucial to
emphasize, however, that apples and oranges should not be compared.
Comparing a stock to gold or a mutual fund plan to peer-to-peer lending is pointless.
Instead, you might acquire information by looking at the entire performance of your
Portfolio.
Different Methods to analyze your Portfolio

Sharpe's Ratio
The Sharpe Ratio, sometimes known as the Sharpe Index, is named after William
Sharpe, an American economist. The ratio is a typical way of evaluating an
investment's performance after adjusting for risk, allowing assets with varying risk
profiles to be compared to one another.
When utilizing the Sharpe Ratio Calculator, a higher value indicates that the Portfolio
will generate higher returns than the inherent risk, indicating a better investment.
The Sharpe Measure can evaluate a single stock or an entire diversified portfolio due
to the formula's simplicity

Limitation of Sharpe's Ratio

The Sharpe ratio assumes customarily distributed returns and uses the standard
deviation of returns in the denominator as a proxy for overall portfolio risk. It's like
rolling a pair of dice with a normal distribution of data. We know that the most
common outcome from the dice will be seven, and the least common results will be
two and twelve across a large number of rolls.
Returns in the financial markets, on the other hand, are skewed away from the
average due to a large number of unexpected price declines or surges. Furthermore,
the standard deviation presupposes that both positive and negative market
fluctuations are equally dangerous.

27
Portfolio managers can alter the Sharpe ratio to increase their perceived risk-
adjusted returns historically. This is accomplished by extending the measuring
interval. As a result, the volatility estimate will be reduced. The annualized standard
deviation of daily returns, for example, is often higher than that of weekly returns,
which is higher still than that of monthly returns.
Another method of cherry-picking data that will distort risk-adjusted returns is to
choose a period for the analysis with the best prospective Sharpe ratio rather than a
neutral look-back period.

Treynor's Measure
The Treynor Ratio is named after Jack Treynor, an American economist credited with
helping design the Capital Asset Pricing Model. The Treynor Ratio is a portfolio
performance metric that takes systematic risk into account. Unlike the Sharpe Ratio,
which adjusts Return with the Portfolio's standard deviation, it employs the Portfolio
Beta, which is a measure of systematic risk.

These ratios are a quotient of Return divided by risk and are concerned with a
portfolio's risk and return performance.

Limitation of Treynor's Measure

The Treynor ratio's backward-looking nature is one of its key flaws. In the future,
investments are likely to perform and act differently than in the past. The Treynor
ratio's correctness is heavily dependent on the usage of appropriate beta
benchmarks.
For example, if the Treynor ratio is employed to calculate a domestic large-cap
mutual fund's risk-adjusted Return, comparing the fund's beta to the Russell 2000
Small Stock index is improper.
Because large-cap equities are less volatile in general than small caps, the fund's
beta would likely be understated in comparison to this benchmark. Instead, the
Russell 1000 index, which is more representative of the large-cap world, should be
used to calculate beta.

Furthermore, there are no dimensions on which the Treynor ratio can be ranked. All
other things being equal, the larger Treynor ratio is better when comparing similar
investments, but there is no definition of how much better it is than the other
investments.
28
 Jensen's Measure
Given the portfolio's or investment's beta and the average market return, the
Jensen's measure, or Jensen's alpha, is a risk-adjusted performance metric that
represents the average return on a portfolio or investment that is above or below that
predicted by the capital asset pricing model (CAPM). Simply put, alpha is the name
given to this statistic.
An investor must look not just at the overall return of a portfolio but also at the risk
of that Portfolio to see if the investment's return compensates for the risk it takes to
examine an investment manager's performance appropriately. A reasonable investor
would select the less hazardous mutual fund if two mutual funds both have a 12
percent return. Jensen's measure is one of the methods for determining if a
portfolio's Return is appropriate for its level of risk.
If the value is positive, the Portfolio is generating higher-than-average returns. In
other words, a positive Jensen's alpha number indicates that a fund manager's stock-
picking skills have "bested the market."

2. Check Your Portfolios Allocation

Stocks, mutual funds, ETFs, gold, peer-to-peer lending, and other investment
opportunities should be well-represented in your portfolio allocation. A well-
diversified portfolio may have a better chance of generating higher long-term returns
while reducing risk.
The allocation of your Portfolio may change depending on your investment goals,
age, and risk profile. Even market changes can have an impact on the allocation of
your Portfolio.
Investors are known to adhere to this golden rule regarding stock allocation:
Subtract your age from a hundred to get at your age. Your stock allocation should
consist of whatever is left.
You would invest 70% of your capital in equities at the age of 30. However,
depending on your objectives, this may differ.

3. Identify the Fees You're Paying

Investing costs that you may have to pay include:

Cost-to-income ratio: The cost-to-income ratio is derived by dividing operating

expenses by operational income, which includes net interest income and other
sources of income.
Load on entry: The amount or cost charged to an investor when they join a plan is
known as the entry load.

29
 Exit the load: The mutual fund houses impose an exit load if investors partially or
completely depart a scheme within a defined length of time from the date of
investment.
Brokerage fees: A broker's fee for executing transactions or providing specialized
services is known as a brokerage fee.

Keep an eye on these fees because they can cut into your profits. The adage holds
here: the smaller the fees, the better.

4. Assess Your Goals

Your goals and portfolio allocation are inextricably intertwined. If it isn't, you have a
significant problem that needs to be addressed right away. Goal-based investing can
help you figure out what should stay in your Portfolio and what should be sold.
For example, investing in mutual funds to fund your MBA in the next two years is not
a good choice. Mutual funds are long-term investments that have a track record of
producing returns over five years or more.
A skilled professional can assist you in allocating your Portfolio to investment
options that are appropriate for your objectives. You'd be shooting in the dark
otherwise, hoping anything would stick.

Summary
It's critical to assess your investment portfolio if you want to meet your financial
objectives. You may rebalance your portfolio based on changing life objectives and
events with a certified professional's timely assessments and quality comments.
Most investors consider the ideal Portfolio to be a pipe dream, which is difficult to
achieve in reality. However, starting your perfect portfolio journey with a planned
investment approach that includes determining your investment goals and risk
appetite might help you get started.

Monil Dave
IIM Udaipur

30
 CALL FOR ARTICLES
INDIA INC. AND THEIR IPO SPREE
Introduction
The year 2020 had been a roller coaster
ride for the Indian stock market. Nifty, from
making a low of 7,511 points in March 2021
to reaching an all-time high of 14,024
points by the year-end, the stellar rally has
baffled many investors. The rally continues
even in 2021 as Nifty climbs to an all-time
high of over 18,000 points. The bullish
market has, in turn, contributed to the IPO
rush of this year. Despite the raging second
wave of the COVID-19 pandemic, the
primary market activities have been
constantly rising, with a steep increase in
draft prospectuses being filed with SEBI.
Merchant bankers are increasingly
capitalizing on the steep rise in IPOs. This
year, a record amount of money has been
raised by IPOs, and investor confidence has
increased in those companies who have
benefitted from the pandemic and in new-
age start-ups who have digitalized the
traditional business models (fintech, food-
tech, health-tech, etc.).
History
An IPO is an approach for companies to
raise funds from the public for a variety of
business purposes. Companies will almost
always apply for an IPO during a
bullishmarket, increasing the chances of
over-subscription of the IPO.
An over-subscription indicates ample
liquidity in a market, and a higher
demand for stocks in general, allowing
the company to command a higher
valuation.
IPO spree of 2021 is not a first-time
phenomenon. India had witnessed
similar listing surges in 2007, when over
100 companies were listed on Indian
bourses, in 2010, and 2017 when a record
amount of money was raised. In these
three years, the common characteristic
of booming primary markets was that a
huge bull run was witnessed
simultaneously. Therefore, it can be
inferred that history is just repeating
itself. The primary market (IPOs, FPOs,
and OFSs) is associated closely with the
secondary market (securities market).
Whenever the latter performs well,
companies prepare for IPOs. This can
also be explained by the fact that there
is a positive correlation of 0.66 between
the Nifty-50 PE ratio and the funds
raised in IPOs. Apart from the bullish
secondary market, the four main reasons
for the hyperactive primary market are –
quick listing gains, increased liquidity,
fear of missing out (FOMO), and an
increase in PE/VC exits via IPOs.
31
Famed for quick gains
IPOs remain a top choice for quick gains,
which everyone likes. Paras Defense Ltd.
took merely a week to more than triple
investments. Retail investors, primarily
millennials who have faced the wrath of
the pandemic in the form of salary cuts
and joblessness, have taken to the stock
market for quick money. This year, 31 out
of 44 IPOs have given listing gains.
Liquidity glut
The historically low interest rates drive
the high liquidity in the financial market
through an accommodative stance by RBI
and heightened participation of retail
investor. This has allowed the flow of
cheap funds into financial markets due to
the attractiveness of stocks as an
investment.
On average, 1.3 million new Demat
accounts have been created every month
since April 2020 – after the market
crash. This has injected a lot of liquidity
into the primary market, leading to
multiple times oversubscription on every
offer. The massive influx of FPI has also
contributed to the bull run and hence an
active primary market.
Fear of missing out on potential gains
Companies planning for an IPO in 2020
delayed their plans until 2021 due to the
pandemic and the market crash,
contributing to the elevated offerings
this year. A FOMO is fueling the
valuations as investors are ready to
invest in expensive offers, as they do not
want to miss out on any potential gains.
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An increase in PE/VC backed IPOs
Due to the bull run, PE/VC backed
companies have found it easier to seek
expensive valuations in IPOs, which has
helped PE/VCs firms maximize their exit
gains. The year 2021 has witnessed a
total of 22 PE/VC backed IPOs till
September, the highest yearly figure in
over a decade, as per an EY analysis, and
these companies are increasingly opting
for IPOs as an exit strategy.
Retail investors – An irrepressible urge
to follow the herd
According to numerous reports, in 2021,
the majority of the IPOs have been
offered at expensive valuations. This has
been evident especially in the case of
Zomato, where a loss-making entity
listed at a market capitalization of over
₹1 lakh crores, leaving behind several
companies such as Vedanta, Tata Motors,
Mahindra & Mahindra, and Indian Oil
Corporation – all profitable companies.
This has led many to speculate on the
development of a market bubble. Be it
IPOs, stocks, real estate, or flowers, the
world has seen many market/asset/
economic bubbles during its economic
history,
where investors' greed far exceeded
their fear, like the 'tulip mania in the
1600s, Tokyo real estate bubble in 1990s,
the dot-com bubble during 2000s, and
the most recent 2008 financial crisis. An
important thing to note is that in the
majority of the cases, a bubble is
followed by a dramatic crash in the price
of the security in question. A bubble
usually has five stages, starting with
displacement, where investors get
enthralled by innovative technology or
very low-interest rates. In the second
stage, there is a rise in the asset price
with all classes of investors following
the herd and buying it because of a
FOMO led by social media, TV, news,
expert opinions, etc. The third stage is
'euphoria,' where the price of the asset
skyrockets, with experts coming up with
new valuation metrics for inflated asset
price justifications. For example, during
'Tulipmania,' the first recorded market
bubble in the 1600s, the best tulips
would cost around $750,000 in today's
prices for a single piece – more than six
times greater than an average person's
annual salary at that time. During the
third stage (profit booking stage), a few
smart players book their profit.
33
Profit booking, when done by big
companies, gives a warning to the stock
market. The last stage is 'panic,' where
the asset prices reverse and fall sharply,
and investors get doubtful about the
irrationally high asset prices and are
willing to sell the asset at any price. It
must be noted that a bubble is usually
recognized only in hindsight after it has
burst.
In India's case, too, the IPO rush and the
spectacular bull run were followed by a
market crash and a sharp fall in asset
valuations. Investors have been
enthusiastic as long as the interest rates
have been low, as they have found better
returns in the financial markets. With
record retail participation, there has
been an everlasting buzz on social media,
newspapers, etc. Some experts, due to
their wide social media reach, have
created a FOMO amongst people. This
has led to herd behavior, where retail
participants are subscribing to every
other IPO. Owing to the high liquidity and
social media, even loss-making
businesses or those with weak
fundamentals or business models have
achieved a higher valuation.
Therefore, while critically evaluating the
IPO landscape, it might be evident that
the valuations have risen incredibly,
owing to a super enthusiastic retail
investor support.
The winners and losers from a heated
primary market
A surge in the number of IPOs has been a
blessing for start-ups, as PE/VCs are
pouring in money into them, as a highly
profitable exit via IPO route has become
a reality for fund houses. MSMEs have
also grasped much-needed fundings
easily from the SME IPO platform, with
the SME IPO index rising by 434% YTD
(year-to-date), compared to the
mainboard IPO index rising by just 69.5%
YTD.
On the negative side, huge issues may
damage the secondary market as it dries
out additional liquidity from it. In other
words, an exciting primary market may
result in a liquidity squeeze in the
secondary market or set off huge selloffs
by retail investors who prefer to invest in
IPOs, which might harm small investors.
For example, in an IPO which is
subscribed 50 times, a certain amount of
money will get blocked for every
subscriber to that issue, taking away
liquidity from the secondary market.
Global scenario
It's not just India, where primary markets
are booming. In fact, in H1 (first half)
2021, funds raised by IPOs exceeded
their total value in 2020 in the USA.
34
In the USA, too, driving forces of the IPO
rush are the booming secondary market,
Federal Reserve's low-interest rates, and
monetary stimulus to counter the
pandemic-induced slowdown. The
average listing day gain for US IPOs is
40.5% so far, compared with 28.2%
during the same period in 2020.
Primary markets have also remained
active Ain Nordic countries, with growing
deal sizes and main market listings and
various international investment banks
increasingly offering advisory services in
that region.
The Nordic region's IPO market has
flourished due to a thriving start-up
environment, less complex regulations, and
a large institutional and retail investor
base, making it possible for smaller
companies to seek capital easily. The total
number of IPOs in Norway, Sweden,
Finland, Denmark, and Iceland increased by
more than 260% year-over-year (YoY) so
far in 2021, as per S&P Global.
Additionally, more than 40% of European
IPOs in 2020 and 2021 have occurred in the
Nordic region. Overall, an EY report
counted 1,070 IPOs (150% increase YoY)
globally in H1 2020, raising $222 billion
(215% increase YoY) in proceeds.

Looking ahead – India's economic and regulatory space

BSE currently has a PE ratio of 31, far greater than the historical average of 20. However,
the PE ratio has eased from a high of 35 in February this year. This is attributable to an
increase in corporate earnings due to a less significant impact of 2nd wave on the
economy and pent-up demand. Going forward, robust fund inflows from the local and
foreign investors, rise in corporate earnings, increase in vaccination rates, fall in Covid-19
cases, and low costs of capital will continue to contribute to the buoyant economic
environment and the capital market.

When looking at the regulatory landscape, SEBI has recently introduced various measures
for easing the strict regulations regarding companies going public:

35
(1) rationalization of the definition of
promoter group to simplify IPO
disclosure requirements
(2) easing of disclosure requirements in
the offer documents, in respect of group
companies of the issuer company,
(3) reduction in post-IPO minimum
promoter lock-in period to 18 months
from 3 years, and excess holding from 1
year to 6 months, and
(4) reduction in holding period
requirements of venture capital fund or
alternative investment fund or foreign
venture capital from 1 year to 6 months,
from the date of acquisition of shares.
These measures will also provide relief to
promoters and early investors and make
going public easier and more viable for
them.
The new margin rules introduced by SEBI,
however, might affect liquidity
negatively. Nonetheless, the Indian IPO
pipeline continues to grow, with at least
35 companies expected to launch IPOs
during October-December, aiming to
raise ₹800 billion if the market
conditions remain positive.
Looking ahead – Global economic and
regulatory space
At the global level, a dramatic equity
market bull run in H1 2021 led to four
times the IPOs and five times the
proceeds YoY, and H2 2021 is expected
to carry forward this growth. Yet, the
year 2022 may prove challenging if the
lingering impacts of the Covid-19
pandemic continue to affect companies
in sectors most impacted by national
lockdowns – such as traditional retail,
travel, tourism, and hospitality, as it
would hamper a full global economic
recovery. Furthermore, due to the
Chinese regulatory crackdown, a
slowdown of Chinese companies listing
in the USA is expected.
Going forward, a variety of factors like
inflation and interest rates, liquidity,
vaccination rates, overall economic
recovery, geopolitical developments, and
regulatory changes will affect investor
confidence and sentiments in both
primary and secondary markets.
Prajjwal Singh
SCMS Noida
36
 CALL FOR ARTICLES
IS THE NIFTY RALLY A BUBBLE?

Introduction
The stock market is a risky game, not for the learned, but definitely for the deemed to
be learned. It's a chariot pulled by two horses, greed and fear. And when the market
jumps almost 2.5 times amidst a global crisis, the infamous horse of fear is bound to
neigh. To give perspective, while many renowned fund managers failed to "beat the
market" when it was averaging a 15% return, the same market has generated a return
of almost 70% on a YTD basis. It is quite evident that after such a brutal rally, the
hungry bears have been out of their caves waiting to catch their fish of market crash.
It is, however, utterly shocking that in this one-of-a-kind rally, the Nifty hasn't even
corrected 10% for once! This whole scenario leads everyone (yes, even those who
haven't opened a DEMAT yet) to think, Is the NIFTY really a bubble?

To be really honest, I won't be 'that guy, and hence, my viewpoint will please the bulls.
But before that, I want to showcase all the reasons that the bears keep shouting, "Buy
the puts!". The next few paragraphs can be very frightful for anyone invested in the
markets, so proceed with caution.

The RSI Theory of Bubble

Don't get scared of these weird red and green candles or the strange purple
Himalayan range (The RSI). The point that the bears put here is that as the law of
technical analysis states, "History repeats itself," in the same way, the markets will
fall as the Himalayan range is around the point where the Nifty generally tumbles
down for quite a few months. The observation is rightfully valid. However, do the bears
know that RSI can lower even if the markets consolidate in a range? Keep in mind that
a 10% correction is not a bubble, rather, it is happy investors booking their profits to
go on a vacation to Hawaii or Matheran. It completely depends on how well they
caught the wave. And a healthy correction is what's anticipated even by the bulls. So
there goes the technical theory of crash. Let's see what the bears say next.
37
The Put-Call Ratio Theory
So the above data relates to the put-call
ratio figures for the immediate two
months. This Ratio is just like the
markets, you can interpret it any way you
want. But the most basic interpretation is
if the Ratio is above 1, people are buying
more puts, meaning they are bearish.
This is with respect to volume. But when
we see the Open Interest ratio, the view
is reversed. It is then seen as people are
writing more puts, meaning they are
bullish. Well, it basically is a treat for
bears.
Nifty Crash after Dot Com Bubble Burst
They can present it any way they want. In
any case, if we take a macro view, the
Ratio for the next few expiries is quite
volatile, meaning we can't really make a
spot-on prediction on this Ratio's basis.
These two were the most used rationales
by bears in the most recent times. There
So why is the Nifty NOT a bubble? Is this
rally a genuine one considering the
COVID-19 pandemic? To answer this,
might be many others, but my rationale
against the bears would better utilize the
word count. I'll take examples of an
actual historical bubble and how the
market fared after it.
38
The Dot Com Bubble Crash lasted for two
years for Nifty, but what's important are
the years after it bottomed out. As we
can see, the market had rallied
continuously, with just a single big red
candle, that was due to a political crisis
in our country. If not for that, the
markets wouldn't even have made that
fall. If you're amazed by this chart, wait
for when you see how long the rally
lasted.
Post-Crash Rally Comparison (Dot Com
Bubble and Covid-19)
Yes, the markets tripled after the Dot
Com Bubble Crash. And the rally only
stopped due to another systemic crisis,
the Lehman Brothers collapse.
Comparing it to the current scenario, the
index has only more than doubled, so if
history has to repeat itself, it can, once
Nifty reaches 27,000, obviously, with
some healthy corrections in between.
So while others are saying that the bull
run is about to end, I put forward a view
that it has just begun. To back this
rationale, here are other indicators.
So historically, whenever a country's
GDP has transitioned from $2 trillion
towards $5 trillion, the equity markets of
that country have witnessed the most
ferocious bull runs.
To back this observation, we can observe
the data for the countries that have
already completed this transition. The
current estimated GDP of India is $2.86
trillion, meaning that our stock markets
should witness the time of their lives,
which they are. Our country started the
journey of this transition in the year 2014
when Nifty was around the level of
10,000. So even the worst-case scenario
based on the data should take Nifty to at
least 37,700, after which the fears of
inflation (US) or deflation (Japan) start to
worry the investors.
39
The P/E Ratio Angle
They are moving on to the P/E Ratio, one
of the most common ratios that hint
whether the markets are overvalued or
not. Historically, markets have
corrected/crashed whenever the P/E
Ratio of Nifty has gone above 28. It is
predictable that when it happened this
time around, people again started
fearing a crash, but let's understand the
bigger picture. As the graph suggests,
both the Nifty and P/E Ratio dipped when
Covid struck India. By August-20, when
Nifty had almost recovered the dip, the
P/E Ratio crossed 28, and the bears
started crying for a crash.
What they didn't consider was the
lockdown. So the P/E Ratio compares the
price and earnings of the stocks, and due
to lockdown, all companies' earnings
were affected drastically. So the high
P/E Ratio was a result of lower earnings
and not of higher prices! Now notice the
current trend, the Nifty hasn't stopped
rising, and the P/E Ratio is falling at a
stable pace. This is because the earnings
are starting to shoot up for companies
now that the lockdown restrictions are
almost negligible.
Nifty Realty Index
In the world of finance, Real Estate
indices and stocks are considered to be
leading indicators. Presented above is
the chart of Nifty Realty, where we can
clearly observe how it is rallying even
when Nifty is breaking its all-time-highs
every other day. This is a purely bullish
indication, which can be interpreted as
the Indian market is bullish for the
coming years, expecting higher
disposable income, lower interest rates,
and higher investments in various
investment vehicles. All these are
extremely positive signs for the stock
markets of the country witnessing them,
meaning that our market has only started
anticipating the rise, and the tide is yet
to come.
40
The FII/DII Angle
Another historical observation is that
whenever the markets hit an all-time
high, the Domestic Institutional Investors
(DIIs) generally become the net sellers
and the Foreign Institutional Investors
(FIIs) are the net buyers. This is due to
the fact that DIIs generally stay risk-
averse and book their profits whenever
markets reach a new high. However, in an
interesting turn of events, during the
current rally, where Nifty has scaled
from 15000 to 18300, the DIIs have
consistently turned out to be the net
buyers, while the FIIs have been the net
sellers. This means that the DIIs still
believe there's fuel left in the Nifty
engine to go even higher. When the DIIs
are this confident in our markets, we can
place our bets on the fact that there's
some basis for their viewpoint. But why
are the FIIs selling then? Are they not
confident in our markets?
Well, FIIs are exposed to currency risk
and their domestic issues. For example,
in the US, the markets have been very
jittery during the past few months due to
various reasons such as rising inflation,
debt issues, and so on. So their domestic
issues often lead them to liquidate their
international investments.
The Retail Investor Angle:
Quick fact: Dream11 has more users than
the total number of DEMAT accounts in
India.
Not something to be proud of, as a
nation. In India, only about 14% of the
households were invested in equity as of
September 2020. This figure is the
lowest internationally. After the Covid-19
crisis, our markets witnessed an extreme
infusion of liquidity from all the sources,
and retail investors' contribution was
considerably high.
Currently, it is not the FIIs, nor the DIIs, it
is the retail investors that are driving the
markets. The rationale behind this is that
when Nifty moved from 18000 to 18300,
both the FIIs and DIIs were net sellers, so
who was buying? The retailers. It can
turn out to be a horror ride in the short
run as the FIIs and DIIs might book their
profits, but for the medium and long
term, it is a very positive indication that
the Indian population is showing an
increased interest in equity.
Conclusion:
So this was my take on the Nifty Bubble
debate. The word "bubble" is generally
attributed to an artificially inflated asset
and Nifty, in no sense, looks "artificially
inflated." The above reasons well-justify
the bullish stance on Nifty for the
coming years. This does not mean that
the markets can't fall 10% in the short
term. A correction is well-due for Nifty,
and a 10% fall should be of no surprise to
the investors. Profit-booking and
corrections are an integral part of the
markets, and those are the times when
learned investors accumulate as much
equity as they can. If the Nifty corrects
in the short term, it would be an even
healthy sign for our markets, as the next
leg of this rally would be even more
fierce. Going by an in-depth analysis of
macro and micro factors, it would come
to me as no surprise if Nifty scales
25,000 by 2025. This number might look
unimaginable to you, but let me give you
a perspective. The markets are currently
at 18,000 levels, and there are three full
years left until 2025 commences. The
Nifty can grow at a CAGR of 11.60% and
still cross 25,000 before 2025. This is
well below the historical CAGR of 12.20%
for Nifty. So crunch the numbers, remain
invested, and proceed with information-
motivated caution.
Chinmay Soni
Nirma University
41
 CALL FOR ARTICLES
IMPACT OF AFGHANISTAN TALIBAN ISSUE ON
INDIAN ECONOMY AND FINANCIAL MARKETS
Impact of Afghanistan crisis on Indian
Trader
Taliban's takeover of Afghanistan has
affected many, including Indian and
Indian traders. The Taliban have stopped
all Indian trade. Indian traders are facing
huge losses within the import and export
business. Importing export business
courses can help you touch your trading
business.
Bilateral Markets (Trades)
• India is one of the most important trade
partners in Afghanistan. We rely on
Afghanistan for dried fruits like walnuts,
pistachios, dried almonds, figs, pine nuts,
dried apricots, and fresh fruit.
• India imports about 85% of dried fruit
from Afghanistan.
• Afghanistan imported peppers, tea,
coffee, clothing, sugar, medical
equipment, and building materials from
India. Imports from Afghanistan have
now doubled or tripled due to a shortage
of products and the arrival of the holiday
season. This has affected the domestic
market, which is why it affects the
average man's pocket. As we all know,
the demand for dried fruit in Indian
festivals is growing.
• Speaking on imports, India imports
about 60% of asafoetida from
Afghanistan. Income gains affect
domestic retailers as well as domestic
trade.
• With the suspension of trade between
the two countries, exporters may soon
need to find another way to export and
import products. Traders are already
facing huge losses in just 1-2 months.
Issues affecting Indian Trader after
Afghanistan crisis
1. Uncertain political situation
This long-standing uncertainty affects
Indian retailers. The political situation in
Afghanistan is still well known, and
therefore, no one knows the upcoming
trade rules of the country.
2. Payment by merchants
Due to the uncertainty, many shipments
are stuck, and large payments have to be
made, which could cause huge losses to
traders.
3. The recession
Within a month, the Afghan economy has
plummeted, which will be a problem for
Indian traders in the future as well. With
the closure of bilateral trade, the Indian
government and the Taliban still have to
negotiate a trade agreement.
India has had trade relations with
Afghanistan for the past 20 years, and over
the past five years, exports to India have
risen by 63%. In this crisis, Pakistan has
also played its game and denied trade
access to India and Afghanistan. Indian
exports are shipped from the port of
Karachi and loaded onto trucks to bring
Afghanistan.
Now Indian traders may soon need to find a
third-world trade. Until the Indian and
Afghan government trade begins, traders
need to find countries to export and import
the required products.
We hope that the Taliban understand the
importance of trade and economic
development through trade and will soon
share a genuine trade relationship with
India as before.
42
Afghanistan is in danger of catastrophe
as the government collapses and Taliban
troops are evacuated, rehabilitated, and
occupied largely of their own units. Apart
from political and national influence, this
dark period also brings economic
hardship and will influence those
countries that have invested heavily in
Afghanistan.
Trade relations in India will feel strained
as borders and banks are closed, and
shipments are disrupted.
India-Afghanistan Relationships
India-Afghanistan relations are historic.
In the 1980s, India was the only country
in southern Asia to host Afghanistan, but
the relationship was rejected in the
1990s due to the Afghan and Taliban civil
war.
During the US-led offensive in India,
provided intelligence assistance to
coalition forces.
In 2011, India's relations with
Afghanistan gained momentum after the
signing of a strategic partnership
agreement.
SECTOR WISE DIVISION OF INDIA'S RECONSTRUCTION AID TO AFGHANISTAN
Trade Relations (Financial Market)
According to the Chamber of Trade and
Industry, South Asia India is the largest
market for Afghan products. India
imports medicinal herbs, fruits and dried
fruits. According to the All-India Sugar
Trade Association, Afghanistan is India's
second-largest consumer of 624,000
tons of sugar.
A business that costs Rs. 1000 crore is
made annually by Afghanistan, with
exports from India including tea, coffee,
cotton, and pepper. Medical equipment,
medical parts, and fabrics are also from
here. The current crisis has led to a rapid
strike over prices for dried fruit. In India,
prices have risen by about 25-30%. This
situation will hurt traders on both sides
as the holiday season approaches. During
Diwali, the sale and consumption of dried
fruit increases.
Although India will not lose trade with
Afghanistan completely as they need our
products, the current crisis will greatly
affect trade and diminish as uncertainty
continues.
43
Indian Strategic Investment in
Afghanistan
India enjoyed a long-standing friendly
relationship with Afghanistan, and India
contributed significantly to the nation-
building process, providing much-needed
development assistance in investment
and bilateral trade.
The 2011 strategic partnership promised
to strengthen trade, economic, and
technological partnerships to enhance
trade and economic relations. The
partnership has also provided
Afghanistan with free access to India.
Taliban regime in Afghanistan has
threatened trade relations. The future of
other institutional projects is also in
doubt. The Taliban's victory threw trade
ties between the two neighboring
countries of southern Asia into a time of
uncertainty and doubt.
Trade, Import, and Export of MSMEs
In August, the Muslim Taleban came to
power in Islamic State of Afghanistan,
attacked the US-led regime in the
national capital, and overthrew it twenty
years later. Political instability within the
war-worn country coated the evening-
time path of economic recovery
conjointly meant the beating of Indian
traders and tiny businesses that are
commerce with the Islamic State of
Afghanistan for years.
The main export of the Islamic State of
Afghanistan to the Asian nation has been
edible fruit and spices. Per commerce
political economy, nuts, watermelons,
spices, spices, coffee, tea, etc. native
traders United Nations agency spoke to
money categorical online aforementioned
matters within the world was utterly
totally different from what was feared in
August.
"The concern of the traders was mostly
supported speculation. In fact, the Taleban
didn't stop their deportation or importation
into Asian nations for one day. Trade has
not been suspended as yet. And there's no
result on donations and payments.
Afghanistan's economy is eighty p.c
addicted to edible fruit, and if they stop,
however, can they're going," Amritsar is
one in every of the most important foreign
dried fruits in Asian nation from Islamic
State of Afghanistan except Old Delhi,
Mumbai, etc.
The Indian exports body Federation of
Indian Exports Organization (FIEO) noted
that whereas the Taleban suspended
exports at the start of consecutive few
days, however, resumed which any value
impact was thanks to the threat of a
shortage of products rather than any real
impact.
"Imports from the Islamic State of
Afghanistan have reached international
borders. There was no official notice on the
trade ban against the Islamic State of
Afghanistan. The matter started as a result
of Pakistan closing its borders, and the
Islamic State of Afghanistan was later
reopened. The challenge is that the Islamic
State of Afghanistan doesn't have the
resources to get hold of exports from
Asian nations. Provided that we've got an
untaxed arrangement with the Islamic
State of Afghanistan, there is also a small
increase in artifact costs if exports from
the Islamic State of Afghanistan area unit
are affected additionally.
According to a short trade conference on
India-Afghanistan trade relations
command by the Indian government,
Pakistan has denied a sleek and credible
world affiliation between Asian nation and
the Islamic State of Afghanistan over the
years.
44
However, to beat this challenge, the
Associate in Nursing Air-Freight
passageway was established in
Gregorian calendar month 2017,
connecting Asian nations and the Islamic
State of Afghanistan.
Traders have asked the govt to permit
them to load their baggage in the Islamic
State of Afghanistan for concern of
losing payments or delays. So, unless the
govt finds an answer to that, I'm unsure
that traders wouldn't be ready to solve it.
The government will guide the US on the
way to improve land acquisition.
Conclusion
The Modi government has shown that it
can "look beyond doctrine," even if it is
determined to use force in Pakistan;
building stronger relations with the
Middle East; catching Trump's idea;
recognizing the importance of Europe in
times of geopolitics to embrace the fact
that technology is a key element in
international relations, or to recreate the
status of India within Asia. "The evidence
strongly supports the idea that India has
successfully developed its own
interests" accurately "in conducting a
rigorous examination of the geopolitics
of the day." He adds, "Risk is associated
with achieving ambition."
It is time for such a desire to be tested in
Afghanistan. It means taking risks,
assessing costs, and expecting failure,
but it will also do its best to meet the
real challenges in a country that easily
signed the Treaty of Friendship with
India back in the 1950s. Facts should be
taken from what they are. That
Afghanistan is changing is a fact. That
there is even a chance for the Taliban to
return to Kabul, somehow or somehow, is
true.
Divyasri Sreera
VIT Vellore
45
 This year, the Nobel Prize in
Economic Sciences was jointly
Personalities awarded to David Card, Joshua
Angrist, and Guido Imbens for their

of the Year
insights into the labor market. They
have arrived at conclusions about
cause and effect from natural
experiments, such as the effects of
minimum wages and immigration on
the labour market. Their approach
has spread to other fields such as
social science, policy making and
visionaries, innovators and revolutionized empirical research.

leaders that changed

how we look in the world.

Joshua David Angrist, an Israeli American

economist and Ford Professor of
Economics at the Massachusetts Institute
of Technology, was awarded half of the
Nobel Memorial Prize in Economic
Sciences jointly with Guido Imbens "for
their methodological contributions to the
analysis of causal relationships."

Angrist is among the world's best

economists in various fields such as labor
economics, the economics of education,
urban economics. He deploys quasi-
experimental research designs in his work. Joshua David Angrist
For example, he uses instrumental
variables to study the impact of changes in Ford Professor of
public policies on economic and social
well-being. He also uses econometric Economics
methods to evaluate the effectiveness of
policy and programs. He is a co-founder
and co-director of MIT's School
Effectiveness & Inequality Initiative. This
initiative focuses on various areas of
importance such as school reform, labor
markets, social programs.

46
 David Edward Card, a Canadian American
labor economist, and professor of
economics at the University of California,
Berkeley, was awarded half of the 2021
Nobel Memorial Prize in Economic
Sciences

David Card has also made significant

contributions to research on immigration,
education, job training, and inequality.
Card has carried out various studies to
understand the impact of new immigrants
on the economy. His research has shown
that there is minimal or no effect on wages
David Edward Card by way of immigrant groups.

Professor of
economics

Guido Wilhelmus Imbens, a Dutch

American economist, was awarded half of
the Nobel Memorial Prize in Economic
Sciences jointly with Joshua Angrist
Imbens and fellow economists Joshua
Angrist and Alan Krueger focused on areas
where frameworks and methodologies
could be deployed to situations in everyday
life. These situations, known as natural
experiments, were used to test the
application of economic theories. More
recently, he has been working with Susan Guido Wilhelmus Imbens
Athey on testing the effects of causal
forests. These are random forests on which Economist
modifications are carried out using
machine learning methods to test
treatment effects.

Tejal Pimpley is the recipient of the Times

of India's 'Most Influential People' award
under the 'Youngest Female Entrepreneur'
category. She began her entrepreneurial
journey when she was 20 and is now the
Director of many companies, including
CISB, a renowned and leading provider of
Security & Facility Management Solutions,
Green Eco Environment & Energy Pvt Ltd,
Mudra Power & Cables Limited, and many
more. She is in charge of 7,000 employees
across all her ventures. Pimpley's future
plan is to generate employment for more
people, provide products and services of Tejal Pimpley
impeccable quality and thereby support
industrial activities. Recipient of the Times
of India Award
47
 Dr. Khan is the recipient of the Times of
India Award in the category Banking and
Finance for 2021. He is the MD of Bombay
Mercantile Co-operative Bank Ltd., which
has its presence in 10 states. Previously,
Dr. Khan was an Advocate, practicing for
around 12 years at Bombay High Court. He
was a significant voice for women and the
weaker sections of society.
To help transform the Bombay Mercantile
Co-operative Bank Ltd., he has undertaken
various reformative steps. Many popular
schemes such as the Senior Citizen
Suvidha Scheme, Zain Daily Deposit
Dr. M. Shah Alam Khan Scheme, Each One Meet One Scheme,
Scheme for Women, and Self-Help Groups
Recipient of the Times were initiated by him.

of India Award

Jane Fraser, CEO of Citigroup, is American

Banker's most powerful woman in Banking
for 2021. She runs one of the world's
biggest banks operating in more than 160
countries, with assets worth over $2.2
trillion. Before starting her position as CEO
in March 2021, Fraser made a bold move of
merging two wealth management
divisions- private bank and consumer
wealth organisation of the company into a
single division for wealth management
services. Jane Fraser
Now she is leading the company into
corporate restructuring in order to improve CEO of Citigroup
and simplify business operations, thereby
increasing profitability and generating
more returns.

Frank Seinsheimer III, M.D. is a graduate

of Walnut Hills High School, Yale
University, and Harvard Medical School. Dr.
Seinsheimer is extensively well-read in the
field of finance and investing. His latest
book, "The Qi of Personal Finance and
Investing,", released in March 2021 is his
fourth book, which contains his thoughts
and advice on personal finance and
investing. He has spent decades studying,
understanding and finally disagreeing with
the conventional approaches that form the
basis of financial decision-making. His
approach towards these topics is distinct Frank Seinsheimer III
from the generic approach followed by
other financial advisors. Finance & Investing
Expert 48
 FUN FACTS
DID YOU KNOW?

2020 saw the highest-ever public If you have $10 in your pocket and no
equity fundraising. The calendar year debts, you are wealthier than 25% of
2020 saw an all-time high fund raising Americans.
through the public equity markets at
Rs 1,77,468 crore, despite being
overshadowed by the pandemic.

SpaceX
75% of isall
reportedly partnering
ROLLS-ROYCE cars with
ever a
Canadian
manufactured are still on the roadin
startup to display ads
space
today.– that could eventually be paid
Atleast 55 profitable Fortune 500 for with Dogecoin.
companies paid $0 in U.S income taxes
for 2020

In 1997, Microsoft saved Apple from

almost certain bankruptcy by investing
Until US Federal Reserve was created 150 million dollars.
in 1908, individual banks in US could
issue their own money.
49

In 1999, Tata group wanted to sell
Tata Motors to Ford due to poor sales
where Ratan Tata was apparently
meted out a humiliating treatment.
Later, he decided not to sell and in
nine years the tables turned. The 2008
financial meltdown left Ford on the
verge of bankruptcy and Tata bought
the iconic Jaguar- Land Rover brand.
The Enron bankruptcy is one of the
most shocking financial downfalls in
US history. Overnight, 78 billion
dollars disappeared from the economy,
and 16 Enron executives went to jail.
The Infosys Technologies IPO was
undersubscribed.
The Infosys IPO that came out in June
1993 and priced its shares at Rs 95
apiece was undersubscribed.
In Somalia, there is a pirate stock
exchange where locals can invest in
pirate gangs.
The Dutch Tulipmania from (1637) is
considered the greatest asset bubble
of all time. No bubble in history has
had an object of such low utility (a
flower) sell for such a high price.
50
 BOOK SUMMARY
COFFEE CAN INVESTING

Most people invest in the usual assets: real estate, gold, mutual funds, fixed
deposits, and stock markets. All they end up making is 8 to 12 percent per annum.
What if you could make not 10 but 15 percent per annum? What if there was a way to
grow your money four to five times whilst taking half the risk compared to the overall
market? Written by Saurabh Mukherjea, this book will show you the Coffee Can
approach for making low-risk investments that generate great returns.

Investors must remember certain key pointers while investing. There must be a clear
investment plan with a specific objective. For instance, long-term life goals can be a
guiding factor. Repeated trading often results in lower returns and expenses through
transaction costs. Patience is the key to long-term wealth generation. Diversifying
your portfolio helps in optimizing risk and return potential and will provide protection
from shocks in a particular asset class. Paying high commission fees over a long
period of time can turn out to be a substantial expense. Hence choosing funds with
reasonable expense ratios is ideal. It can be tempting to invest in assets that perform
well in the short term based on their historical returns, but it might not be necessary
that they will be a long-term winner. It is futile to predict the market and almost
impossible to accurately determine the right time to enter and exit the same. One
shouldn’t overlook the inflation and tax expense while estimating the expected
returns on the investment.

Successful equity investing often hinges on answering the two most important
questions: Which stocks should I buy? For how long should I hold the stocks I bought?
According to Warren Buffett, the kind of companies he likes to invest in are
companies that have:
1. A business we understand
2. Favorable long-term economics
3. Able and trustworthy management
4. A sensible price tag
Warren Buffet’s take on the holding period is as follows, “When we own portions of
outstanding businesses with outstanding managements, our favorite holding period
is forever.”
The term coffee can portfolio refers to the times when Americans, before the
widespread advent of banks, saved their valuables in a coffee can and kept it under
the mattress. Similarly, in order for an investor to truly become rich, he needs to
make a sensibly constructed portfolio that needs to stay untouched for a long period
of time. To do so, we begin by filtering companies that have a minimum market
capitalization of Rs 100 crore, as the reliability of data on companies smaller than
this is uncertain. Then we look at companies that in the preceding decade have grown
sales each year by at least 10 percent alongside generating Return on Capital
Employed (pre-tax) of at least 15 percent. ROCE is a metric that measures how
efficiently the company is able to generate cash flow and profits from the capital in
assets that are deployed. An analysis of detailed back-testing of the Coffee Can
portfolio shows that such a portfolio beats benchmarks across all the time periods.

In the investment world, there are primarily three types of expenses that the investor
unknowingly pays for. Transaction fees: It is known as the brokerage, which is
incurred on each transaction. Annual fees: The fund manager charges an annual fee
to maintain the fund.

51
Hidden fees: In insurance products, it can be difficult to ascertain exactly what fees
is being charged. Fund expenses should not be ignored while making an investment
decision, as, given the compounding over long periods, they have the ability to drag
down the returns drastically. It makes sense to invest in passive funds or ETFs since
the outperformance of large-cap equity mutual funds is almost negligible.

Real estate is a uniquely dangerous asset class for certain reasons, as mentioned
ahead. Investment size: For purchasing a stock, there is no minimum amount that you
can begin with; while investing in real estate, it could be a few lakhs worth of capital
that one should have in order to begin investing. Liquidity: As compared to financial
assets, such as stocks and bonds, physical assets cannot be liquefied immediately.
Transaction costs: The costs incurred in buying property viz. stamp duty, registration,
and other charges exceed more than 10 percent of the property cost.
If we look at the returns generated, Indian real estate has given far lower returns
compared to equity over a long period of time. Also, real estate offers less degree of
diversification as compared to the equity asset class.

The reason why a portfolio of great small caps outperforms the broader large-cap
universe is that smaller companies have the potential to grow their profits at a higher
rate than that of large established companies, and they get discovered by investors
as they grow. This implies that investors can purchase potential multibagger small
cap stocks at a discount. Historically, small caps have outperformed large caps in
most large stock markets.

Having patience is one of the most underrated qualities that an investor could
possess. The more frequently we evaluate our portfolios, our investment horizon
tends to shorten, and we end up making losses in the market. Patience premium is
the difference between annualized returns generated by stock over any holding
period as compared to the return generated by the same stock over a one-year
holding period. A positive value of patience premium indicates that longer the
holding period, higher is the return generated for the investor.

India today presents a golden opportunity to those who have the patience to wait and
systematically generate wealth over the next two decades. While the large-cap
stocks provide a solid anchoring to the market, the mid and small-cap stocks bring in
the potential to give magnificent returns to the investor. Ultimately, investment is as
much about discipline as it is about being smart.

Essentially to summarize the key takeaways from the book: Investing for long periods
of time in high-quality portfolios with a higher weightage to high-quality small-cap
companies while ensuring that you don’t pay too much by way of fees and avoiding
investment traps like real estate and gold should lead to significant and sustainable
wealth creation.

Devanshu Jain
IIM Udaipur

52
 Glimpse of the Year

1 Budget 2021
Scrappage policy launched to scrap passenger vehicles above 15 years and
commercial vehicles above 20 years that fail fitness test, is projected to benefit
Automobile manufacturers and auto ancillaries. Government to form an ARC to
buy bad loans from state-owned banks. Large banks will benefit from increased
capital expenditure allocation. Divestment and recapitalization will help mid-
sized public-sector banks. Infrastructure and cement industries benefit from a
considerable increase in spending on infrastructure projects in India. Agriculture
financing, irrigation, and marketing of agricultural products were also
addressed in the budget. Chemical and fertilizer companies to benefit due to
bigger percentage of pending subsidies.

2 LIC IPO
Government to reduce its holding in the largest insurance company in India, LIC,
through an initial public offering (IPO). LIC is currently owned entirely by the
government. They intend to sell a 5-10 % stake in the company and raise Rs.
60000 to Rs. 75000 crores through this IPO. The exact date of the IPO is not
known. The DHRP is expected to be submitted to SEBI in the fourth quarter of
2020-21. The government has hired ten merchant bankers to manage the
massive IPO, including Goldman Sachs (India) Securities, Citigroup Global
Markets India, and Nomura Financial Advisory and Securities India.

3 NSE technical glitch

On February 24, 2021, the National Stock Exchange of India experienced a
technical issue, and trading was halted for 4 hours, from 11:40 a.m. to 3:30 p.m.,
which was the longest such interruption ever. It was found that the telecom link
failed due to the unexpected behavior of the SAN technology. During the
downtime, the exchange canceled all open equity, futures, options, and other
orders. According to Finance Minister, the government suffered a significant
financial loss due to the trade suspension. Trading resumed at 3:45 p.m., and at
the time of closing at 5:00 p.m., the Nifty had climbed around 1.9 percent.

53
4 COVID Lockdown
The second Covid-19 wave that hit India in early April 2021 had radically
changed the previously shared economic growth estimates by experts. Even
SBI, the country's largest state lender, cut its growth target for FY22. Financial
risks for consumers and small businesses increased due to the second wave of
Covid infections, putting bank profits at risk. As the country deals with the
aftermath of the Covid-19 second wave, S&P Global Ratings believes lenders
face systemic risk. In April and May, localized lockdowns caused a drop in
collection effectiveness of up to 5-15 percent for several financing companies.
According to data on jobs, income, household income, consumer mood, and
demand, the second wave has wreaked havoc on India's economy.

5 Stock market rally

The Sensex and Nifty have been surging and setting new highs. The Sensex
crossed the 60000 mark, while the Nifty crossed the 18000 mark, rallying about
30% since the start of the year. Even amid the Covid-19 issue, global markets
have been favorable, which could be one of the causes for the D-street rise. FIIs,
who were net sellers last year, have become net buyers of Indian equity. Equity
indexes may rise further due to increasing consumer demand, manufacturing in
a China Plus One, regulatory reform, and the monetary and fiscal policy
trajectory. But, few experts believe that the economy's sensitivity to a market
downturn has increased due to the steep increase in gains. The more the stock
market rises, the bigger the hazards to the economy if it corrects.

6 IPO frenzy
There is an upsurge in initial public offerings (IPOs) due to record stock prices.
This year's IPO market in India is swamped with a significant number of
offerings. 43 firms have entered the primary market since January, raising a
record amount of Rs. 75800 crores. FPIs have contributed roughly 55% of the
capital raised in IPOs in 2021 so far. 35 more firms are expected to enter the
market with a plan to raise around Rs. 80000 crores. Because of increasing
investor interest, fund managers believe that the IPO rush will bring more money
into the capital markets. Few analysts believe this will divert liquidity away from
the secondary market, limiting its upside – at least for the time being.

54
7 Fuel prices hit 100
Fuel prices in India are setting new highs every day. Both petrol and diesel have
surpassed the Rs. 100 level. Petrol and diesel prices have increased by at least
Rs 20 each since January 1, 2021. Oil prices have been firming up globally, with
Brent around $84 a barrel owing to global demand. Shortly, ONGC, Oil India, and
Reliance Industries stocks are pegged to grow by 10 to 25 percent. While rising
oil prices are terrible for India, they are suitable for some oil explorers.
Companies from paint and aviation industries such as Asian Paints, Berger
Paints, Interglobe Aviation that use crude as a vital input are expected to feel
the supply pressure.

8 Adani stocks crash

Following news that the accounts of three foreign portfolio investors (FPIs) who
possess Adani Group equities had been frozen by depository firm NSDL, shares
of Adani Group firms came under significant selling pressure. Intraday trading
saw Adani Enterprises and Adani Ports lose 25% and 19%, respectively, while
the remainder of the four group companies had their shares reach the 5% lower
trading limit after the report was revealed. The Adani Group's market value
dropped by roughly Rs 44,898 crore. However, after Adani Enterprises and
NSDL issued a statement denying media reports of action against foreign funds,
shares of the group's firms recovered some ground. Gautam Adani blamed his
company's stock price drop on careless and irresponsible media reporting.

9 Evergrande - Effect on Indian Market

Evergrande is a major real estate developer in China and is a member of the
Global 500. It owns over 1,300 projects in over 280 cities around China and
invested in several other businesses. Evergrande's debts have risen in recent
years, and its bank obligations crossed $300 billion and have over $1 trillion in
incomplete projects. About 1.5 million people are waiting for their homes to be
delivered. This could have ramifications for the worldwide demand and supply of
critical commodities. Metals, which had been soaring in India's stock markets
since the beginning of the year, plunged significantly. Experts believe that this
will only hasten the global business community's shift to a China+1 policy, which
will benefit India.

55
 ARTH SAMVAAD
THE ANNUAL FINANCE SYMPOSIUM

ArthSamvaad is the annual finance symposium of IIM Udaipur held during the annual
management fest, Solaris. It provides an opportunity for the student community to
interact and discuss with industry experts and understand the essence of financial
decision-making on the market scene. The event also includes an interactive panel
discussion chaired by club members. Arth-Samvaad 2020 was conducted on the
theme, "Ushering into New Age Investing.”

Ajay Lakhotia is currently the CEO and founder of Stockgro.

He started his career in 2000 as an entrepreneur and
revolutionized the printing and packaging industry with new
technologies. He successfully exited his business in 2008
and shifted his focus to the IT industry. He completed his
MBA from the ISB in 2009. In 2011, he joined Vertex Venture
Management, Singapore's largest venture capital firm, to
manage their investments in India. Due to his relationships
with Southeast Asian funds and his extensive knowledge of
the Indian market, he joined Fosun RZ Capital in 2016 to
head its India operations. Heading the India initiatives for
Fosun RZ Capital, he played a crucial role in shifting the
focus on FinTech and Consumer Tech. While financing
fintech companies, he realized that the Indian stock market
Ajay Lakhotia was being ignored in favor of the development of digital
payment and credit gateways such as Paytm and Razorpay.
CEO and founder He then came up with the idea of StockGro as he thought
StockGro that it is perhaps the largest consensus-based social
commerce activity.

Tushar Pradhan is currently CIO at HSBC Asset Management

(India) Pvt. Limited. He has more than 19 years of experience
in various functions throughout his career. He has an MBA in
Investment Finance and graduated from the University of
Hartford, Connecticut, USA, in 1992. He supervises a total
corpus of around USD 5 billion in multiple asset classes
across mutual funds and advisory client mandates in his
professional capacity at HSBC Global Asset Management
(India) Private Limited. Before joining HSBC Global Asset
Management, India, in June 2009, he held international
positions in the USA for several years before returning to
India. In India, he worked at HDFC Asset Management and,
most recently, AIG Global Asset Management in senior
positions in asset management. He is a well-known
spokesman who is frequently asked for his opinion on the
Tushar Pradhan
Indian stock and fixed income markets. He has been in the CIO, HSBC Asset
profession for over 22 years and has been featured on TV Management (India)
and in print media on a regular basis.
Pvt. Limited

56
C
R
O
S
S
W
O
R
D
*Answers will be posted on instagram @finomina_iimu

HINTS
ACROSS
(1).A company's ability to meet short-
term financial obligations (9)
(4).The first Fintech company in India (8)
(5).The benchmark index of Brazilian
stock market (7)
(9).Money paid to owner of copyright or
patent (7)
(10).Type of bond instrument that is not
secured by collateral (9)
(12).A preliminary prospectus is known
as (10)
(14).Privately placed common stock that
cannot be immediately resold to the
general public (6)
(15).Which organization created Micro
Irrigation Fund (MIF)? (6)
(18).Partnership between bank and
insurance companies (13)
(19).Pricing model used for risky
securities (Acronym) (6)
DOWN
(2).The fair value of an asset falls below
its book value (10)
(3).The company that was acquired by
Canadian National Railway as a part of
the largest acquisition in 2021
(Acronym) (3)
(6).The first known purchase with crypto
currency, finally giving it a value (5)
(7).India’s Chief Economic Advisor (13)
(8).Company which achieves a revenue
growth of at least 20% annually (7)
(10).This place in India has the first
floating ATM set up by SBI (7)
(11).First country to accept bitcoin as
legal tender (10)
(13).The practice by which an individual
or an institution accepts financial risk in
exchange for a fee (12)
(16).Agreements that prohibit company
insiders from selling their shares for a
set period of time (6)
(17).This company’s IPO was subscribed
the most (5)
57
 TEAM FINOMINA
SENIOR TEAM FINOMINA

Akshit Jindal Ashutosh Dekatey Atrei Mukhopadhayay Chirag Jain Diksha

Harsh Tharani Manas Mamtani Parth Patel Rajat Mohta Rishabh Sharma

Sahil Waingankar Sai Gowtham Shivam Sharma Shreya Saloni

JUNIOR TEAM FINOMINA

Ayush Garg Devanshu Jain Garveeta Yadav Harshita Jain Monil Dave

Prachi Nahata Yash Rode Saket Shantanu Tipare Shreya

Shreya Narayan Shreyan Mehta Shrishti Prajapati Vaani Bansal Vineeth Reddy
SYNCRONIZING
HORIZONS
ARTH-AARTH
VOLUME NO. XI // 2021-22