Current Developments in Economy

Dr. V. Aditya Srinivas

Insurance Sector (8/6/11)

3 companies have seen 3 CEO change

in 8 years. ICICI,Bajaj, Aviva 14 life insurance companies have less than 1 % market share Out of 23 private companies only 8 have turned profitable Only ICICI and SBI Life have 10 % market share

Insurance
IRDA has increased lock in period from 3

to 5 years for ULIP Reduction in charges also creating problems Break Even has increased from 8-9 years to 10-12years

Insurance Market Share

ICICI 6.3 %
SBI Life 6.0 % HDFC life 3.2 %

Bajaj Allianz 2.8 %

Reliance Life 2.4 % Birla Sunlife 1.7 %

Max New York 1.6 %

Tata AIG 1.10 %

FM Meets FII (8/6/11)

Finance Minister had a close door

meeting with 30 FIIs He assured him about long term growth impact of India

Indian Economy Challenges(9/6/11)

GDP forecast reduced to 7.8 %
Revenue collection becoming challenge

as corporate profitability goes down Fiscal Deficit target of 4.6% difficult to achieve Disinvestment target of Rs. 40,000 crore difficult to achieve as stock market in downtrend

Interest Rate problem

RBI had since 2010 raised repo and

reverse repo rates ten times to 7.5% and 6.5%, respectively, to control high inflation mainly due to high fuel and commodity prices. Repo is the rate at which banks borrow money from RBI. Reverse repo is the rate at which banks lend to RBI.

Direct Tax vs GDP Growth % (9/6/11)

Year
2007-08 2008-09

2009-10
2010-11

GDP 9.3 6.8 8.0 8.5

Direct Taxes 34.7 8.1 14.9 19.3

US Economy Gloomy (9/6/11)

India has invested $ 39 billion in US

Treasuries as on March 31, 2011. US has deficit of $ 1.4 Trillion this fiscal year. QE 1 US had injected $ 1 Trillion into US Economy QE 2 US had injected $ 600 billion into US Economy Unemployment rate at 9.1 %

European Zone Problems

International lenders who bailed out Greece last

year with a 110 billion euro (USD 160 billion) loan GDP to shrink by 3.8% this year and start growing in 2012
Greece's economy shrank far more than

expected at the start of 2011, signaling a second wave of austerity measures prescribed by the EU and IMF will pile even more pain on a fractious society

NIM for PSU Bank (9/6/11)

Year
92-95 05-06 06-07 07-08 08-09

NIM 2.72 2.85 2.55 2.15 2.10

Private sector banks it is as high as 4 to 5%

Market Valuation (P.E) (9/6/11)

India Sensex at 14.85
China Sanghai at 12.73 Brazil Boveszpa at 10.04

Russia RTS

at 6.74

Mutual Funds Industry

Collection in 2010 in NFO less by 57 %

from 2009 Only 40 % of AUM is of Equity base and 60 % is of debt AUM in 2004 was Rs. 1,50,000 crore which went to Rs. 8,00,000 crore in 2007 but then reduced to 6,00,000 in 2008-09 41 Mutual Funds are there in India currently with more than 1000 schemes

IIP (10/6/11)
Index of Industrial production (IIP) for the

month of April grew at 4.4% - less as compared to growth of 7.3% in previous month, as per old series. As per new series, which have 45% more items than old series, IIP grew at 6.3%.

Indirect Tax Increases (13/6/11)

Exercise duty collection, indication of

factory production rose 38.4 % to Rs. 11,500 crores Revenue from Customs rose 37 % to Rs. 25,176 crores Service tax mop up was 27.6 % higher at 7,722 crores.

Financial Inclusion (13/6/11)

Govt and RBI has target to cover 73000

villages having population of more than 2000 by March 2012. The target is that each of them should have bank account Direct cash Subsidy can be transferred to these accounts. Cost of opening an account and maintaining it is Rs. 65

Financial Inclusion (13/6/11)

Less than 20 % of such accounts is

active even after one year of opening. Currently only 45 % of population has access to bank account Low ratio of one bank branch per 16000 people

QIP Investment Back Fire (14/6/11)

A QIP helps a listed company to rise

capital in the domestic market via equity hares, fully and partly convertible debentures to a buyer of is choice. SEBI instituted the guidelines for this relatively new financing avenue on May 8, 2006 to reduce dependence on foreign capital.

Worst Performing QIPs

QIP Date QIP Price Aksh optifibre Sep 20 Kiri Industry Nov 598 C&C Const Apr 244 Ansal Proper Oct 90

Price 6.7 219 92 41

Best Performing QIP

QIP Date QIP Price Exide Indus March 108 Tata Motors Oct 764 Shoppers Stop Oct 325 Godrej consu July 345

Price 156 1013 440 438

Inflation Rises (15/6/11)

Inflation rises to 9.06 % from 8.66 % for

May 2011 This has again increased the scope for Interest rate rise by RBI Rise in interest rates slows down the Economy as cost of capital goes up

Interest Rates in India

Bank Rate at 6 %
Repo rate is at 8.5 % Reverse Repo is at 7.5 %

SLR is at 24 %
CRR is at 6 %

World Interest Rates

USA 0.25 %
Japan 0 % Bank of England 1 %

Europe 1.5 %
Australia 2% China 3.3 % India average 9 to 10 %

China Ups Reserve Ratio by 50 bps (15/6/11)

Inflation in China is at 5.5 % which is 34 months

high It has increase its RRR (Reserve Ratio Requirement) to 21.5 % China one year lending rate is 6.6% and deposit rate is 3.3%
Hardening of interest rates by China bring down

the commodities prices since it is largest consumer of commodities

Greece Credit lowest in world (15/6/11)

S & P has lowered the rating of Greece

which makes it lowest in the world It is lower than Pakistan and Ecuador since both these were out of international markets since 2009 Greece was given first bailout package of $ 158 billion

Economy finds it tough (16/6/11)

6.3 % IIP in April 2011 compared to 8.8

% in March 2010 Q4 GDP rose only 7.8 % compared with 8.3 % in third quarter 0.4 % Investment Growth in Q4 as against 20 % year earlier 32 % drop in net FDI inflow in 2010 44 % drop in gross FDI inflow in 2010

Broking Industry facing tough times (16/6/11)

Company
India Info line Edelweiss Capital

Kotak Securities
Indiabulls securities AdityaBirla Money

Geojit BNP Paribas

% chg NP -8.99 1.68 -30.05 -43.86 -166.56 -38.52

Types of PMS (20/6/11)

Fundamental PMS (Multi cap )
Value Investing PMS (long term horizon

with small and mid cap stocks) Quantitative PMS (purely mathematical calculations) Event Driven PMS (Event base stocks with short term focus) Mutual Fund PMS (Invest in different schemes of Mutual funds)

Gold Ever Rising Demand (21/6/11)

Gold has given return of 160 % in last 5

years Nifty has given return of 83 % in last 5 years Central Banks globally have become net buyers of Gold in 2010 in last 21 years In 2010, Central Banks bought 76 tonnes of gold

Gold Ever Rising Demand (21/6/11)

In 2011, first 6 months saw Central

Banks buying 129 tonnes of gold In 2005 central banks sold gold worth 674 tonnes China Forex Reserve has only 1.8 % of its in gold of $ 3 Trillion forex reserve World average is 11 % China has to buy 6000 tonnes to reach global average

Gold cont .
Japan gold reserve stands 3.2 % of its

total forex reserve of $ 1.14 trillion India gold reserve is at 8.2 % of $ 300 billion of forex reserve Supply of gold for last 20 years has increased only by 0.7 % annual rate.

Why turnaround in Gold

Over years, Central Banks have had major

portion of their reserves in US dollar Gold is considered as Store of Wealth US economy weakening More printing of US dollars leads to depreciation in its value Gold cannot be printed or mined fast, value of currencies is sinking against gold

Gold as % of Forex Reserves

Country
Singapore Taiwan

India
Japan China

Gold Tonnes 127 424 558 765 1054

% Res 2.4 4.7 8.2 3.2 1.6

Gold Supply Tight

South Africa which produced about 1000

tonnes in 1970 now produced less than 200 tonnes in 2010 Very few large gold mines are expected to come up Over next five years, only seven gold mines that are capable of producing more than 500 kilo ozones ( 1 0z = 31.1 grams)

International Fund (22/6/11)

An international fund is a fund that can

invest in companies located anywhere outside its investors country of residence

Feeder funds is one that invest through

another fund called the master fund. Its usually launched to beef up the asset base of the master fund

Performance of International Fund

Funds

1 Year Return Fidelity Global Real Asset 19.48 DSPBR World Energy 19.19 DWS Global Agri Fund 18.78 DSPBR world Mining 18.41 Birla Commodity Equities 16.97 Mirae Asset China Advantage 14.15 Principal Global Opportunity 13.91

PE Investors Eye India (23/6/11)

Private equity investors are sitting on cash to

the tune of $20 billion to enter India $70-75 bn of private equity (PE) and venture capital investment in India by 2015. about $22 bn is required for follow-up funding of 660 current PE-funded companies. Then, about 2,000 companies in the IT and IT-enabled services sectors, manufacturing, engineering, construction and healthcare are expected to attract close to $30 bn in new PE and VC investments over the next four years

PE Investors Eye India (23/6/11)

The total investment by private equity

investors over the last six years is estimated at $50 bn through 1,600 deals PE investments have grown from $2 bn in 2005 to $19 bn in 2007. Thereafter, investment value fell to around $6.2 bn in 2010, registering a compounded annual growth rate of 25% over the past six years.

PE Investors Eye India (23/6/11)

The real estate and property

development sector clocked 203 deals worth $13 bn of the total of $50 bn PE investment over the past six years.

FCCB Creates problem for Corp India (27/6/11)

Rs. 16000 crore convertible bonds sold by top

500 companies come for repayment by march 2012 Rs.31500 crores worth of bonds due for redemption by March 2013 48% price discount for conversion of Assam company 86% discount to conversion price of RCom 50 % discount to conversion price of Suzlon

ULIP Sales fall hurt companies (27/6/11)

LIC new business fall by 8 %
Private life insurers fall by 23 % ICICI fell by 29 %

HDFC fall by 27 %
Reliance life fell by 52 % Bajaj fell by 42 %

GDP and Capital Investment Correlate (29/6/11)

Year
2005-06 2006-07

2007-08
2008-09 2009-10

2010-1

GDP 9.5 % 9.7 % 9.2% 6.7% 7.4 % 8.8%

% Capital Contri 55 56 72 -10 55 40

GDP and Capital Investment Correlate (29/6/11)

Higher GDP Growth requires strong

Capital Investments by Corporate sector Currently due to high interest rates, the capital investment plans have been put on hold by corporate sector

NBFC under RBI Scanner (29/6/11)

Around 12630 NBFC are registered with

RBI as on June 30, 2010 There are 228 deposit taking NBFC 212 NBFC have CAR of 12 % but RBI wants it to 15 % by March 2012 Banks Credit to NBFC rose 55.7 % in April 2011 from 15 % year ago.

China holds Treasury in US (1/7/11)

China holds atleast $ 1.1 trillion

investment in US Treasury bills China accounts for 26 % of total investment in US Treasuries If china pulls out this investments then interest rates in US could go up fast

Young Working Population by 2040 15 to 59 years (1/7/11)

2010
2015 2020

2025
2030 2035

2040

61.8 62.5 63.1 63.5 63.9 63.9 63.4

1980 1985 1990 1995 2000 2005

54.6 55.3 55.9 57.2 58.6 60.4

Economy on firm ground (1/7/11)

Core Sector grows 5.4 % in May vs 4.6

% April 8 sector as compared to earlier 6 sectors Now core sector has 38 % weight age in IIP index as compared to 26 % earlier

Indian consumption story to grow 14 % next 3 years (5/7/11)

Consumer durables, automobiles,

personal care, food have maximum growth potential in indian markets

MNC controls Indian markets

MNC

Global Sales %india Rank india Suzuki $23.6 Billion 23.3 1 Nokia $58.1 Billion 11 1 Unilever $58.7 billion 6.6 1 LG $49.4 billion 5.9 1 Samsung $135.8 billion 2.5 2 Mcdonal $24.1 billion 0.37 1

PE Investment Rise, Exist Lag (9/7/11)

January to June 2011 saw Private Equity

deals with $ 5.8 billion Total deals in this period 211 In 2010 there were 154 deals during same period (37 % rise) Deal values have increased by 34 % compared to same period in 2010 Infrastructure sector had 23 % highest share of total PE funds flowing in

Mutual Sitting on Cash % of AUM (15/7/11)

ICICI Prudential Advisor
ING Optimix Global Commo Sahara Super 20 Axis Midcap HSBC Midcap Equity IDFC Premier Equity

28.8 18.6 17.9 15.4 13.2 12.9

Funds need to keep 5 % of AUM as cash to

meet day to day redemptions units

US Consumption down (18/7/11)

US Consumption in last 14 quarters have gone

up only 0.5 % This is from 2008 starting Pre 2008 crisis the consumption was 4 % average for last 12 years That means Q3 again in Question mark ? Increase debt limit to $ 14.3 trillion Asian economies have $ 3 trillion in US treasuries.

ARCIL Under stress from Large Lenders

Name
ICICI SBI

IDBI
PNB

Rs. Crores 9000 3000 2000 1000

Buying 15 year mortgage assets,

overstepping ceiling of 8 year asset

Banks aggressive for SIP (22/7/11)

SBI Bank targets 25 lakh SIP till March

2012 Axis Bank targets 5 lakh SIP till March 2012

Overall MF industry from April 2012 to

June 2012 had 7 lakh folio closing down No support from Distributors

India in World Trade (22/7/11)

India is among top 20 in exports of

goods India is among top 10 in service exports Our contribution in world GDP up from 4.6 % in 2000 to 5.4% in 2010 India share in world exports in 2000 was 0.7 % and now in 2010 it is 1.7 %

Indian Corporate Results (1/8/11) June quarter

612 companies so far declared results
Sales up 23.5 % vs 18 % PBDIT up 19.4 % vs 12.5 %

Net Profit 13 % vs 19 %
Interest outgo 19.4 % vs 7.7 %

High interest rates killing Net Profit.

US Debt Default (2/8/11)

To raise the current limit of borrowing of

$ 14.3 trillion by further $ 2.4 trillion To cut spending by $ 2.4 trillion in next 10 years Initial cut spending by $ 917 billion and and another $1.5 trillion by year end India holds $ 41 billion in Treasury bonds

World job cuts (2/8/11)

HSBC to cut 30,000 jobs by 2013. Cost

to revenue ratio touched 57.5 % which is more than standard of 48 % to 52 %. China PMI reduces from 50.7 as compared to 50.9 in June. This index is made by HSBC India PMI reduces to 53.6 in July from 55.3 in June which is 20 month low

Finance Companies to tap bonds from retail investors (2/8/11)

Religare, muthoot and india Infoline to

raise Rs. 5000 with average interest of around 12. 5 %

Retail Credit Growth (3/8/11)

Retail loan grows at 17 % in June 2011

vs 6.6% in june 2010 Total value Rs. 6,95,000 crores Home loans account for 3.7 % (Rs. 3,58,000 crores) vs 2 % year ago Auto loans lowest in 2 years Maruti 26 % Hyundai 11 % Auto sales leading indicator of demand in the economy

Banks in BRIC in Risk

Brazil financial shares have lost as consumer

defaults hit 12 month high in june and borrowing cost climbs to 46 % China bank stocks at lowest level since 2006 Bank of moscow needed the biggest bailout in Russia history last month after racking up 5.4 Billion dollars of unsecured bad loans China faces risk that 30 % of total loans may go for default

Telecom in worst shape (4/8/11)

Average Revenue Per User (ARPU) has

fallen 12 % in India from Rs. 216 to Rs. 190 Bharti Airtel made loss for 6th straight quarter Africa also made loss of Rs. 302 crore

Debt as % of GDP (4/8/11)

Russia 9 %
China 17 % South Korea 29 %

Ireland 114 % Portugal 100 % US 100 %

World Average 69 %
India 64 % Japan 229 %

Greece 152 %
Italy 120 %

US Economy Downgrade(12/8/11)
US has been down graded from AAA

rating to AA by Standard and Poor which sent shock waves across the globe France and UK may also lose its AAA rating since the debt there is also very high Equities market around world lost $ 5.4 trillion since the downgrade

US Mess
Unemployment in 2010 9.6 % while in

2011 9.10 % Inflation CPI 1.6% in 2010 and 3.6 % in 2011 GDP 2.9 % in 2010 and 1.40 % in 2011

Broking firms smell cash in NCD (12/8/11)

Companies like Indiainfoline, Religare

and muthoot finance are to raise Rs. 3500 crores This would fetch brokers commission of Rs. 45 to 50 crores as their fees.

Sovereign Wealth Fund(12/8/11)

UAE investment authority $ 627 billion
Norway/Govt Pension fund $512 billion China/SAFE Investment Co $ 347 billion

China/China Investment Corp $ 332

billion

Car sales in China (12/8/11)

1.01 million is number of passenger cars

sold in China in July

Insurance Penetration
World average life insurance 4.5 %
India average 4 % Non life penetration only 0.6 %

Euro Zone Data (18/8/11)

17.5 % India exports to European Union

in 2010 -11 4 % share in FDI inflows from Germany and France in total inflows between April 2000 and May 2011

Real GDP and Fiscal Deficit (Source IMF and year 2010)

Real GDP Fiscal Deficit World 5% 5.5 % Euro Area 1.7 6.1 USA 2.8 10.3 Emerging Eco 7.3 3.7 Japan 3.9 9.6 UK 1.3 10.2 India 8.2 6.8

Real GDP and Fiscal Deficit (Source IMF and year 2010)

Ireland France Spain Portugal Belgium Germany

Italy
Greece

Real GDP -1 % 1.5 -0.1 1.4 2.0 3.5 1.3 -4.5

Fiscal Deficit 32.2 7.1 9.2 7.3 4.6 3.3 4.5 9.6

Primary Deficit (18/8/11)

Ireland

29.7 France 4.8 Spain 7.8 Portugal 4.6 Belgium 1.3 Germany 1.1 Italy 0.2 Greece 3.2

SBI CAR falls (22/8/11)

Tier I Total

2008-09 2009-10 2010-11 9.38 9.45 7.77 14.25 13.39 11.98

9,155 17,071

Provisioning 8,794 Rs crore

Tier I capital is 8 %

Take out Financing (24/8/11)

Take out financing is a procedure under

which the loans made by banks to infrastructure firms are sold to other institutions so that banks recover their funds ahead of the payment schedule under the loan agreement. IIFCL (India Infrastructure Finance Company Limited) has target of Rs. 10,000 crores for Fy 12

Banks in Take out financing in FY 12

Union Bank

Rs. 1500 crores Central Bank Rs. 1300 crores IDBI bank Rs. 600 crores PNB Rs. 180 crores ________________________________ Banks lending to infrastructure sector Power Rs.2,92,342 crores Telecom Rs.94,319 Roads Rs. 99,038

GDP of 34 countries of OECD 24/8/11

Year
Q4 2009 Q1 2010

Q2 2010
Q3 2010 Q4 2010

Q1 2011
Q2 2011

GDP -0.9 2.5 3.3 3.3 3.0 2.4 1.6

Million job but no takers (25/8/11)

Defense 1,88,224
Faculty and Researchers Police force 5,30,580

17,739

Field Investigators 1,300

Doctor and medical staff 1,78,801 National Rural and Health Mission

1,48,361 Income tax department 16,331

Capital Goods stock Bargain Hunting (25/8/11)

Company
ABB BHEL BEML

Bharat Elec
Crompton L&T Siemens Thermax

Current PE 145 14 12 14 12 24 32 15

5 year Avg PE 43 29 18 16 20.9 23.6 33.1 32.2

Gross NPA Sector Wise (25/8/11)

Unsecured and student loans
MSME loans Auto loans

Agri loans
Asset Finance Home loans Corporate & Institutional Loan against security

4.96 4.24 4.01 3.74 3.26 2.23 1.52 0.30

Japan downgraded from Aa2 to Aa3 (25/8/11)

Moody has downgraded Japan economy
Real GDP June 2011

Mar 2011
Dec 2010 Sept 2010

-1.0 % -1.0 % 2.1 % 5.0 %

Japan to fight rising yen (25/8/11)

Govt to release Forex Reserve to Japan

Bank for International Cooperation (JBIC) for funding to aid exporters Japan has $ 1.1 trillion in forex reserves

Gold loses its Sheen (26/8/11)

Chicago Mercantile Exchange raised its

margin after gold reached $1910 ounce Minimum cash deposit to trade gold rise 27 % ti $ 9450 Maintenance margin increased to $ 7000 from $ 5500 Shangai gold exchange also raised the margins

Countries Contribution in World GDP (%) (29/8/11)

USA
China Japan

Germany
France UK India Canada

23.1 9.3 8.7 5.2 4.1 3.6 2.7 2.5

Russia Italy Others

2.3 3.3 35.1

LIC and IIFCL to join (29/8/11)

Infrastrcture in 12th five year plan $ 1 trillion

required The propose venture will allow LIC and IIFCL to buy out 40 % of bank loan with each taking 20 % exposure This releases banks fund and removes risk from banks This method is different from take out finance where only IIFCL is involved IIFCL has Rs. 8000 idle cash to buy bank loans

RBI opens window for New banks (30/8/11)

Paid up capital Rs. 500 crores
Listing within 2 years 25 % banks branches in rural areas for

financial inclusion No foreign entity/NRI can hold more than 5% 10 year successful business track record Sound credential and integrity

RBI opens window for New banks (30/8/11)

Total foreing holding cannot cross 49 %
Broking and Real estate companies

mostly out of race RBI to have last and final decision

KS Oil Commodity Death (30/8/11)

KS oil market cap Rs. 2600 crore last

year now only Rs. 406 crore Company may become take over target Started in 1985 by Ramesh Garg from local farm to plantations in South East Asia Edelwiss sold shares of Garg as he could not pay margin

KS Oil Commodity Death (30/8/11)

Mastard seeds prices went up 19 % from

October and December 2009 March 2010 when crop arrived prices crashed 30 % to Rs. 24,400 per tonne. An then fell to Rs. 23,700 per ton.

KS Oil Commodity Death (30/8/11)

March 11

March 10

Ch(%) Net sales 4681 4091 14.41 PBDIT 534 462 15.52 Tax Provi 65 40 64.44 PAT 176 212 16.67 His ownership has fall from 16 % to 8 %

Suzlon Turnaround (30/8/11)

June 2011 it got profit of Rs. 60 crores

vs loss of Rs. 900 crores in June 10 quarter Order book of Rs. 29000 crores 62 % of order book is from RE Power books

Suzlon Turnaround (30/8/11)

Suzlon ready to buy 5 % remaining stake

in RE Power for Rs. 398 crores Suzlon gave -27 % return while sensex 12 % Total debt at Rs. 12,500 crores Cash balance of Rs. 3000 crores

Usha Throat Recommendations NBFC Tighter Rules (30/8/11)

Higher capital adquacy norms at 12 %
New NBFC should have Minimum asset

size of Rs. 50 crores It should not be from Real estate and capital market company In June 2011, banks exposure to NBFC is Rs. 1,69,000 crores which is 50 % of its total lending which is risky

Top 10 NBFC (Asset wise Rs. crore) (30/8/11)

Shriram Transport M&M Finance Sundaram Finance Cholamandalam Shriram City Bajaj Finance SREI Infra Manapuram Finance Magma Fincorp First Leasing

24,786 12,165 11,479 9,017 8,539 8,066 7,482 7,577 5,130 1,297

Gold imports surge (5/9/11)

Gold Imports was 458 tonnes in 2009

but increased to 918 tonnes in 2010 Household financial saving as % of GDP was 12.1 % in 2009-10 but decreased to 9.7 % in 2010-2011

Gold Imports double in last five years for India (5/9/11)

Year
2006-07 2007-08

2008-09
2009-10 2010-11

$ billion 14.47 16.60 20.43 28.81 33.95

% of GDP 1.5 1.4 1.6 2.1 2.0

US Unemployment more Serious (7/9/11)

Unemployment in US was 6 % in 2007

when the crisis had started Currently it is 9.8 % which is more than earlier which is more dangerous

Ethanol Production (7/9/11)

Ethanol is produced from Molases which

is by product of sugar cane when it is crushed. Companies want Rs. 35 per litre Govt willing to pay Rs. 27 per liter Cost of production was earlier Rs. 20 per litre

Indian Investors invest huge abroad (7/9/11)

Corporate investment abroad is $5.5

billion as compared to $ 2.98 billion year ago. Individuals invested $ 64 million overseas as compared $ 62 million year ago

PMI shows clear slow down

Indian PMI falls to 53.8 from 58.2 in

August China PMI falls to 50.6 shows contraction is on way 17 Member EURO zone also PMI at two year low at 51.5

IIP falls (13/9/11) and Inflation soars

IIP data falls from 6.6 % to 3.3% which

shows severe slowdown in the economy Inflation went up to 9.78 % from 9.22% which is again very risky
Both the indicators would show the

slowdown in the economy

Mantra for Success(9/9/11)

Ambition is a must have, but dont let it

hurt those around you Adil Zainulbhai MD McKinsey India There is no need to hide your failure but you do need to flaunt what you have learnt from it Harsh mariwala MD marico Intellect is good but combine with HUMILITY and You have unbeatable combination Nitin Paranjpe CEO HUL

Mantra for Success (9/9/11)

Generalist are OK, but leaders do need

to have a clearly defined area of extraordinary COMPETENCE Pramod Bhasin VC Genpact Think SOCIETY and not just business Kalpana Morparia CEO JP Morgan India

India to topple Japan as 3rd largest economy (20/9/11)

Japan GDP $ 4.31 trillion
India has reached $ 4.06 trillion This is as per PPP (Purchasing power

parity theory) which uses crude measure of purchasing one burger at any place in the world. In rupee terms India still is only $ 1 trillion economy

US to tax Rich persons (20/9/11)

Warren Buffet Income $ 46 million
Tax rate at 17.7 %

His Secretary Income $ 60,000

Tax Rate 30 %

SEBI for MF NFO (20/9/11)

For NFO Equity schemes the minimum

amount Rs. 10 crores For non Equity funds, the minimum amount is now Rs. 20 crores

Real PE Factor for any firm is People (20/9/11)

People is the only PE factor capable of

creating value for itself and unleashing value from the other factor Key No. 1 Unique value proposition and market competitive total reward package to get best talent Key no 2 Build flexible culture with nonnegotiable ethical values

Real PE Factor for any firm is People (20/9/11)

Key No.3 Give customers desired value

for money Key No.4 Short term focus should not eat away long term profits

Position of womens in Corporate world (21/9/11)

Nandeni Sethuraman Head Marketing

Bharti Walmart jointed sep 2011 Geetu Varma Head, food, HUL, Sep 2011 Anjali Mohanty, Head, Global Transaction Banking, Deutsche Bank, Sep 2011 Anupama Ahluwalia, Head, Marketing, Coca Cola India, June 2011

BRIC Statistics (21/9/11)

Country
China

India
Russia Brazil

Current Account Deficit 2010 2011 5.3 4 -2.6 -2.8 4.8 4.5 -2.3 -2.3

Currency Position vs Dollar Dec 2010 to Sep 2011(21/9/11)

Currency
India Vietnamese Dong

Taiwan Dollar
Hong kong dollar Japanese Yen

Newzealand Dollar
Australian Dollar

Apprec/Deprec -6.2 -6.4 -1.6 -0.3 5.9 5.2 0.6

India Fiscal Deficit worrying (21/9/11)

April July 2011 fiscal deficit is Rs.

2,28,000 crores which is already 55 % of Rs.4,12,000 crores budgeted for year Last year same period it was Rs.90,900 crores only FII have withdrawn $ 1.2 Billion in August and in 2011 net investment is only $ 4.4 billion as compared to $21.8 billion last year.

Short term rates in BRIC (21/9/11)

Country
China India

Russia
Brazil

Rates (%) 3.22 8.25 8.25 12

Euro Nations debt (26/9/11)

Debt to GDP Ratio (%)
Greece Germany

France
UK

144.0 78.7 83.5 76.5

Italy debt is higher than the combined of

Portugal, Ireland,Spain

STT may Cut (27/9/11)

STT introduced in 2004
Earlier was 0.15 % then reduced to

0.125 % on both buyer and seller for delivery base trade 0.025 % for intraday and applicable only to sellers

BRICS to take on Developed 5 (3/10/11)

% contribution to world GDP in 1995 of

developed countries was 44.6% which is now 31.6 % in 2015 while BRICS increased from 15.8 % to 30.3 % in 2015 BRICS now account for 16 % of global exports almost 3 folds rise in last 15 years

BRICS to take on Developed 5 (3/10/11)

In 1995 % contribution to world exports

of developed countries reduced from 40.5 % to 27.8% in 2010 and those of BRICS increased from 6.5 % to 16.3 % % contribution to Global Portfolio Equity flows in 1995 63.3% reduced to 27.4 % for Developed countries while for BRICS it increased from 5.8 % to 14.6%

FDI inflows ($ billion)

Year
2006-07 2007-08

2008-09
2009-10 2010-11

2011-12(April-Aug)

$ billion 22.8 34.8 37.8 37.8 27.0 17.4

Indian companies sit on Cash Pile (17/10/11)

Company
Coal India Reliance Ind.

ONGC
NTPC SAIL

Tata Steel

FY08 20961 4474 25055 15360 13933 4231

FY11 45862 30192 28688 17859 17747 10892

GDP and Inflation (24/10/11)

Governor

Time Inflation Venkitaraman 90-92 12.7 C Rangaranjan92-97 6.6 Bimal Jalan 97-2003 4.7 YV Reddy 2003-08 5.9 D Subbarao 2008 7.2

GDP 3.9 6.3 5.7 8.5 7.8

NFO Euphoria turns into Gloom (All funds launched in 2006 Rs. Crores (24/10/2011)

Fund

NFO Collection Reliance Equity 5790 SBI Blue-chip 2850 UTI leadership 2025 SBI One India 1854 UTI Contra 1145 Tatacapitalbuilder 268 LIC Nomura Vision253

Current AUM 1215 752 667 523 165 109 48

World PMI decreases in October 2011 (2/11/2011)

Country
China US

UK
India

PMI Sep 51.2 51.6 50.8 50.4

PMI Oct 50.4 50.8 47.4 52.0

Power Sector Loans sticky (2/11/2011)

Total lending to sector Rs.4,80,000 crores
Loans at Risk Rs. 56,000 crores Banks SBI ICICI Axis Bank PNB

Union Bank

Exposure 36,914 37,223 17,110 6,706 11,902

Indian Corporate Earnings down (21/11/2011)

Sales up 14.3 % lowest in 7 quarters
Operating profit up 4 % lowest in last 2

years Net profit down by 34.9% biggest fall in 8 quarters Operating margins14 1.% lowest in 10 quarter

World In MESS(24/11/2011)
China PMI to 48
US Economy to have 2 % GDP in 2012

as compared to 2.5 % earlier. Germany banks fail in Bond Auction Out of $ 8 billion, 6 billion funded by Central bank other banks gave only $ 3 billion US fails to cut deficit of $ 2.2 trillion

Indian Economy Troubled

High inflation around 10 %
Rupee Depreciating 52.18 New Pension scheme has violated

investment norms (Corpus of Rs. 9500 crores) of 26 lakh govt employees

Real Effective Exchange Rate (REER) (Reading above 100 indicates over valued vice versa

36 basket April 11 104.94 May 103.03 June 103.82 July 104.94 Aug 102.93 Sep 100.13 Oct 11 NA

6 basket 116.48 115.46 115.21 116.83 114.64 111.46 106.65

Retail loans (7/12/2011)

Retails loans portfolio
ICICI bank

40 % HDFC bank 50 % Axis bank 21 % Axis bank plans to increase to 30 % Current retail loan book at Rs.29,300 crores

Jim O Neill founder of BRIC word (7/12/2011)

India should not raise people hope

about FDI and then in week say We are only joking India inability to raise its share of global FDI is very disappointing

Rating of EuroZOne (7/12/2011)

Country

Outlook Austria AAA ve Solvenia AA -ve France AAA ve Slovakia A+ -ve Finland AAA-ve Malta A -ve Germany AAA-ve Italy A -ve Netherland AAA ve Ireland BBB+ -ve Luxemberg AAA ve Cyprus BBB+ -ve Belgium AA ve Portugal BBB- -ve Greece Cc -ve Rating below BBB- are considered as JUNK

Subsidy Shoots up (8/12/2011)

Fertilizer subsidy to shoot up target by

Rs. 40,000 crores Food Subsidy pegged at Rs.60,753 crores will also overshoot Total subsidy could be around Rs. 1,00,000 crores which would widen fiscal deficit by 5.7 % of GDP.

Global Carbon Emissions rise

Global 5.9 %
China 10.4 % Brazil 11.6 % South korea 9.2 %

India 9.4 %
USA 4.0 % 9.14 billion tonnes of total Co2 pumped into air 510 million was extra, largest % rise since 2003 US is world second largest emitter of

greenhouse gases after China

Trade deficit with China (9/12/2011)

Total Bilateral trade of india with china is

$ 63 billion in 2010-2011 India imports from China $ 43 billion Currently 26 % of total imports from China Next five years Chinese imports could touch 75 % Risky for india as we have strained relationship

PSU Banks on hiring spree (9/12/2011)

Allahbad Bank

2200 Bank of baroda 4000 Bank of maharashtra 1870 PNB 10500 Uco Bank 2100 Union Bank 10000

Food inflation falls (9/12/2011)

Food inflation at 6.6% from 19.1 on

1.1.2011 Food articles have 14.3 % weightage in wholesale price index

Gold Loans soar to Rs.55000 crores (13/12/2011)

Year

Loans against gold (Rs. Crores) FY02 2500 FY07 12000 FY09 25000 FY10 37500 FY11 50000 FY12 55000 Interest rates on gold at 12% to 24 % while personal loans it is 36%

Rupee impact on Economic (14/12/2011)

Rupee slides negates 11 % decline in

crude prices Imports $352 billion to get costlier Government subsidy bill to rise further Interest cost to go up further with foreign borrowing

% change in currency of major countries(14/12/2011)

Country
India Euro

Japan
Brazil China

Russia
Malaysia

% change vs Dollar -21 % -9 % -1 % -18% + 1% -15% -8%

Losses of Sensex & Nifty (13/12/2011)

Sensex -21.5 %
Nifty -24 % RIL

-28.5 % Infosys -21.5 %

Consumption to GDP (12/12/2011)

Consumption to GDP of China is 33 %
Consumption to GDP USA is 70 % Consumption to GDP india is 60 %

Foreign Borrowings hurting (Rs crores)

Foreign currency loan total loan Rel com 20351 34896 IOC 18074 73296 Tata Steel 14464 28716 HPCL 13687 31253 BPCL 10698 24734 NTPC 9334 47461 AbanOffshore 8258 13425

IT sector creates more jobs (26/12/2011)

Company

FY06 TCS 111407 Infosys 44658 Wipro 53742 Tata Steel 38182 HDFC Bank 14878 Tata Motors 22349 SBI 198774

FY11 Net add 198614 87207 130820 86162 122385 68643 81251 43069 55752 40874 53151 30802 222933 24159

Services vs manufacturing (26/12/2011)

Only 12% of total jobs are created by

manufacturing sector Proportion of service sector jobs in total headcount rose to 46.5% in FY11 from 41.8% in FY06

Tata Steel Strength (29/12/2011)

Tata steel contributes $ 27 billion to total Tata

of $ 83 billion Tata steel has operations in 26 countries spread across 5 continents 67% of tata steel revenue is international 2005 Tata steel acquired South East Asia based Natsteel 2007 Tata steel acquired Corus worth $ 12.2 billion along with 41000 Non Indian workers

BSE NSE cash volume crashes (3/1/2012)

Period 16-31 Dec
2007 2008

2009
2010 2011

Volume 26239 14263 17246 15034 9911

IPO in mess (3/1/2012)

39 firms raised Rs. 14021 crores in 2011
In 2010, firms raised Rs.69,112 crores

Borrowing cost rise for G7 (4/1/12) ($ billion)

The maturing debt burden of G7 and

BRIC has balloned by $200 billion in 2012 Japan 3000 Brazil 169 US 2783 UK 165 Italy 428 China 121 France 367 India 57 Germany 285 Russia 13 Canada 211

Ageing BRICs to limit world grwoth to 4.3 % this decade (4/1/12)

46% increase in people aged 65 + in

BRIC by 2020 61 Million decrease in age group 15-24 years by 2030 in China China factory output to be hit hard BRIC account for 25 % for world GDP

Forex losses looms large (5/1/12)

Company

Forex loss Renuka sugar 464 Ranbaxy lab 498 JSW Energy 78 Tata Power 717 Usha martin 120 Essar oil 469

% of PBT 203 150 81 70 70 69

Cash market volumes on BSE and NSE (5/1/12)

Year
2006 2007

2008
2009 2010

2011

BSE 969860 1414723 1324051 1273964 1193205 693317

NSE 1916227 3093928 3188510 3812031 3657521 2762867

Total 2886087 4508705 4512562 5085996 4850726 3456185

Sebi fines Rs.60 lakhs on Ranbaxy Ex-Independent Director for insider trading
Solrex had invested Rs. 200 crores in

Orchid Chemicals. V K kaul and his wife Bala kaul knew this information and purchased shares between March 31,2008 and April 11,2008. In June 2010, SEBI had fined Rs. 1 crore Manmohan shetty, former MD of Adlabs for selling shares.

Govt to come with Auction of shares (5/1/12)

Company
Hindustan Copper MMTC

HMT
National Fertiliser RCF

STCI

Govt holding 99.59 99.33 98.88 97.64 92.50 91.02

ECB cash averts funding crisis in Europe (6/1/12)

ECB has given banks $636 billion of

three year loans Two year Italian yields are down 50 bps Belgian notes also down by 22 bps

Trading volumes drop 34 % worst in world (6/1/12 Mint)

Country
US

China
Japan Uk

Canada
France

Avg Daily trading (Million shares) 12468 173218 48902 2260 381 160

%ch in last 3 years -26.3 45.7 33.2 5.2 -19.3 11.1

Trading volumes drop 34 % worst in world (6/1/12 Mint)

Country

Avg Daily trading (Million shares) Germany 539 Brazil 11317 Australia 2523 Switzerland 57 India 872 South Korea 3537

%ch in last 3 years 16.8 -20.2 14.5 -17.6 -34.4 -27.2

Asset class returns (6/1/12) Mint

Nifty -24.62%
Cash 3.79 % (Saving Bank ) Debt 8.24 %

Gold 31.72 %

KFA turns NPA (6/1/12) Mint

KFA total debt Rs. 6000 crores

Banks loan includes

SBI Rs. 1457 Crores IDBI Rs. 727 Crores PNB Rs. 710 Crores Bank of India Rs. 575 Crores Bank of Baroda Rs. 537 crores. KFA reported net loss Rs. 469 crores for july

sept 2011 quarter.

US Auto makers post best annual sales since 2008 (6/1/12) (Million units)
Company
GM Chrysler

Ford
Honda Toyota

Nissan
Hyundai

Sales in US 2.5 1.4 2.1 1.15 1.7 1.04 0.6

% chg YOY 13 26 11 -6.80 -6.70 15 20

Key factors for poor markets

In 2010, FII put in record $ 29 billion
In 2011, FII net sellers to tune of $ 380

million Sep

Jobless rates in EU (9/1/12)

Company
Austria Germany

Crez Rup
Sweden UK

Italy
France

% unemployment 4.0 5.5 6.7 7.4 8.3 8.6 9.8

Jobless rates in EU (9/1/12)

Company
Poland Hungary

Ireland
Greece Spain

% unemployment 10.0 10.7 14.6 18.8 22.9

US Economy improving (9/1/12)

US share in global exports rising from

low of 8 % in 2008. FDI inflow in US have picked and are currently 1.5 % of US GDP compared to mere 0.5 % share in 2002 US current account deficit has reduced from 7 % of GDP at height of US consumption boom in 2007 to 3 % now.

US Economy improving (9/1/12)

For China pay and benefits between

2005 and 2010 rose 19 % annually for average factory worked in China while cost of employing US labour increased by only 4 %. BCG estimates that by 2015 manufacturing in US will be just as economical as China for many goods made for North America consumers

US Economy improving (9/1/12)

US has become self sufficient energy

from low of 68 % in 2005 to now 78 % in overall energy requirement Between 1991 and 2001, greenback appreciated by more than 30% on trade weighted and inflation adjusted basis.

Valuation of Stock Exchanges (10/1/12)

Chicago Mercantile Exchange valued at $ 16.30

billion NYSE Euro next is $ 6.8 billion Singapore Exchange valued at $ 6.6 billion Johannesburg Stock is valued at Rand 6.2 billion London stock Exchange valued at 2.2 billion pound NSE $ 3.5 billion but BSE less than $ 1 billion

New Investments at 5 year low (11/1/12)

Year

Govt Invest Pvt lnvest 2010 7.39 11.49 2011 4.43 6.03
% chg

Total 18.88 10.46

-44.57

-40.04

-47.79

%Decline in 2011 vs 2010 (11/1/12)

Approvals

% Decline CCEA 47.62 CCI 59.26 Ports 90.91 Roads 54.05 6 lane highways 30.28 Communication & It 66.67

FCCB Bomb ticking (17/1/12)

Indian corporate have to repay $ 7 billion

worth of FCCB on March 2013. Rcom ($ 925 million) Orchid chemical ($ 175 million) JSW Steel ($ 274 million) Sterling Biotech ($ 250 million)

Slowing Economy (17/1/12)

Period
Sep 2010 Dec 2010

March 2011
June 2011 Sep 2011

GDP% 8.9 8.4 7.8 7.7 6.9

Indian will do well (18/1/12)

Real GDP per person change from 2007

to 2012 (forecast) % is that Indian will be better off than their counterparts in Britain, US, France and Japan. For India the rise is 34 % while for China is 50 %

US spends on Credit Cards (18/1/12)

In Nov 2011, Americans spend $ 5.6

billion on Credit Cards Debt Total credit card debt in the country now stands at $ 798 billion

Insurance Claim Settlement (18/1/12)

Company

Ratio % LIC 97.03 HDFC 95.41 Birla 94.66 ICICI 94.61 ING Vysya 90.49 Overall Pvt 86.05 Sector

Claim pending % 1.46 0.61 0.35 2.25 5.19 5.01

Non core Biz come to Brokers Aid (18/1/12)

Distribtuion & Wealth Mgt (Rs.Crore)
2007-08 2008-09

2009-10
2010-11

1510 1340 1280 1590

Non core Biz come to Brokers Aid (18/1/12)

Profit from fees basedbusiness(Rs.crore)
2007-08 2008-09

2009-10
2010-11 2011-12E

2012-13E

3070 670 2190 1670 400-450 500-550

UN says India to shine in 2012(18/1/12)(GDP %)

Country

2011 2012 2013 India 7.6 7.7 7.9 China 9.3 8.7 8.5 EU 1.6 0.7 1.7 USA 1.7 1.5 2.0 World 2.8 2.6 3.2 Even in worst case scenario India GDP to be 6.7 in 2012 and 6.9 in 2013

Life Insurance Premium falls first time in decade (18/1/12)

Year
06-07 07-08

08-09
09-10 10-11

11-12

Pre (Rs.Crore) % fall or gain 61354 98.84 78502 27.95 69364 -11.64 81690 17.77 82294 0.74 62428(Apr-Nov)

HNI Portfolio (19/1/12)

Asia Pacific reports from Merrill Lynch

and Capgemini HNI wealth in india grew by 22% in 2009-10 India HNI population grew from 1.27 lakh to 1.53 lakh

HNI Portfolio (19/1/12)

HNI Portfolio
Cash Equities

Real Estate
Fixed Income Cash/deposits

% of assets 6 36 23 26 9

Alternative asset

Implied volatility & Nifty(19/1/12)

Year
Dec 2008 Jan 09 Dec 09 Jan 10 Dec 10 Jan 11

Dec 11
Jan 12

Nifty 10.3 -5.23 1.54 -6.69 2.91 -10.58 -6.33 7.13

IV -22 1.84 -8.29 10.53 -13.75 37.79 8.35 -17.87

Reliance Buy Back (19/1/12)

SEBI guidelines allows companies to

buy back shares upto 10 % of paid up capital and reserves without shareholders approval. With shareholders approval 25 % In 2005 RIL announced buy back of Rs. 3000 crores but actually bought only Rs. 150 crre

Reliance Buy Back (19/1/12)

Current laws ensure that company

spends atleast 25 % of announced offer size that too within 35-45 days RIL has cash balance of Rs.61490 crores as on Sep 30, 2011

Mutual funds deals (20/1/12)

Natrix Global Asset Mgmt bought 25 %

in IDFC MF for 5.5% of its AUM in Dec 2010 Japan Normura bought a stake in LIC MF for about 2.5 % T Row acquired 26% strategic stake in UTI AMC for 3.6%of AUM in 2010 IDFC bough Stancharts for 5.7 % of AUM in 2009

Mutual funds deals (20/1/12)

Eton Park capital paid 13 % of AUM for 5

% stake in Reliance Mutual fund in 2007 Nippon life Buys 26 % in Reliance capital for Rs. 1450 crore valuing 6.8% of AUM largest ever MF deal by foreign firm

AUM of top 5 MF (20/1/12)(Rs.Crores)

Mutual Funds
HDFC mutual fund Reliance mutual fund

ICICI Prudential
Birla Sun Life UTI Mutual Fund

AUM 88628 82305 69367 60377 57817

Real Estate on Hiring Spree (23/1/12)

985 milion square feet of residential

space is due for delivery between 2011 & 2013 In 2008-10 the delivery was only of 522 million square feet. 20% rise in total number of new hiring

Kuwait Investment Authority (KIA) gives $ 1 billion to 5 fund houses (23/1/12)

KIA has given $ 1 billion to 5 local

Mutual funds in India Birla Sun Life Mutual Fund DSP Black Rock ICICI Prudential Canara Robeco Mutual Fund Franklin Templeton Each MF has been allocated $ 200 million

FII control Sensex(24/1/12)

Country

FII $ million India -358 Taiwan -9074 Japan -323 Korea -8584 Thailand -167 Indonesia 2950 Philipines 1329

% chg index -24.64 -20.61 -17.34 -10.98 -0.72 3.19 4.06

Stocks Responsible for Sensex Crash (24/1/12)

Company Points fall
RIL LNT

ICICI
SBI Tata Steel

BHEL
Hindalco

-858 -699 -691 -445 -266 -253 -228

%chg FII Holding -0.59 -2.76 -4.49 -5.48 -3.13 -1.76 -3.25

Stocks Responsible for Sensex Crash (24/1/12)

Company Points fall

%chg FII Holding Sterlite Ind -192 -1.79 Tata Motors -188 -0.08 Jindal Steel -143 -2.47 15 stocks accounted for 85 % fall in Sensex. As on Dec 2011 india has 3000 actively traded shares while Korea 1816, Taiwan 824, Thailand 545 and Indonesia 440.

Large buyback by Global Energy majors from 2007 to 2010 (24.1.12)

Company
Exxon mobil Conoco Phillips

Chevron
BP Shell

BASF
RIL

Backbuy($ billion) 100 19 13.5 9.6 7.9 3.5 2.1

Consumption story (30/1/12)(million units)

Particulars Total
TV 2wheeler

Fridge
Washer Car

PC
AC

122 42.5 39.7 14.2 5.6 5.4 2.8

Urban% 47 51 68 82 73 84 93

Rural% 53 49 32 18 27 16 7

FDI flows rise (30/1/12)

FDI flows from january 2011 to Nov 2011

increased by 25 % Brazil saw rise of 48 % Total FDI in india $ 50 billion FDI created 2.16 lakhs jobs Technology had maximum 146 projects and growth of 51 % in value of FDI

Infra companies had huge debt (30/1/12)

From 2007 to 2011debt increased
GMR

6.7 times BGR Energy 5.4 times IVRCL 5.4 times GVK 3.59 times Jaypee Infratech 31 times