1st Jan 2012 Edition

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The Abhyaas Business Bulletin for the MBA aspirant in you.

Investors lose 20 lakh crore in stocks in 2011
In a reversal of fortunes due to reasons that are manifold, at the end of the year, investors saw their wealth deteriorate by about 20 lakh crore. The bellwether indices of the Bombay Stock Exchange and the National Stock Exchange fell by around 25% touching new and historic lows over the course of last year. The BSE Sensex plunged down to 15,454.92 on December 30, against last year's close of 20,509.09 falling down by 5,054.17 points, or over 24.6 per cent. Much to the dismay of investors, the 50-share Nifty too experienced a steep fall of 1,510.30 points, or 24.62 per cent, to 4,624.30 on December 20 from last year's close. Globally, the down gradation by S&P of the United States credit rating rekindled the fears of another economic slowdown in the biggest economy in the world, causing panic and anxiety across the world. The political turmoil in the Middle East that resulted in revolution in most of the oilexporting nations invariably caused the crude oil prices to rise up, pushing Indias import expenses upwards. Also, the Euro zone crisis, with the economies of Greece and Italy crashing also affected the Indian investors in a big way. While internally, the ever-rising inflation rates, the RBIs move to increment the interest rates to counter them, fears of a looming recession, lack of reforms, the Index of Industrial Production registering a negative growth for the first time in more than two years and the rupee falling to unprecedented lows drilled holes in the pockets of investors, also causing the government to reduce the anticipated growth rate of India. While the IT stocks suffered because the slowdown in America and Europe, the shares of the telecom arena too did not look very bright with the 2G scam coming to the fore. What remains to be seen however, is if the New Year would change the sagging fortunes of investors.
How is the above mentioned loss of Rs 20 Lakh crores computed? What does Market Capitalization mean? Which Indian company has the highest market capitalization? What does it mean for the company?
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From the Editors desk:

Hello Reader, Welcome to the last edition of the Abhyaas Business Bulletin for the year 2011. In India, the overall performance of the stock market was disappointing with investors facing the wrath of the global economic slowdown. The reduced food inflation rates however, gave the common man a reason to cheer towards the end of the year. In the international arena, apart from just football, Brazil beat United Kingdom to become the sixth biggest economy in the world. Also, United States chose its words carefully in not branding China a currency manipulator, but said it needed to do lot more in terms of currency value. Apart from providing you with business events across the world, the aim of the bulletin is for you to go back and read about the articles in detail, in the process, enhancing your General Knowledge and Current affairs. Exactly why we have a few questions lined up for you at the end of each bit. Make sure you read extensively about topics being discussed to be thorough with them. You would get the answers for all these questions in Abhyaas Group Discussion and Personal Interview (AGP) programme. Wishing you a very Happy New Year! Good luck and Happy Reading! Index: Page 2: Stock Market and Indicators Page 3: National Business News Page 4: International Business News

(Ms. Sonal Jaiswal)

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Stock Markets across the World (15th December 30th December)

Macro Indicators
Bank Rate Repo Rate Reverse Repo Rate SLR CRR Exchange Rate(with USD) Inflation(WPI) % Change 6.00% 8.50% 7.50% 24.00% 6.00% 53.26 0.42%

Other Indicators
Crude Oil(NYMEX) Crude Oil(BENT) Gold Price(Indian Bullion) 98.83 $/barrel 107.4 $/barrel 2905.04 INR/gram
(As on 31st December)

Overview
Indian markets are among the worst performers this year with 25% losses. Most other major global indices lost between 10-20% in 2011. Sensex and Nifty are down by 0.24% and 0.59% respectively in the last fortnight. While Japan's Nikkei advanced by 0.64% and closed at 8455.35.82, Shanghai SSE performed worse losing 1.14% and the London's FTSE 100 Performed better and advanced by 3.43% while NASDAQ has also advanced by 1.77%. The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs of global growth slowing are likely to keep crude oil prices under pressure.
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Food inflation falls to 0.42%; lowest in 6 years

Giving some respite to the aam aadmi towards the year-end, food inflation plunged to a 6-year low of 0.42% in the week ending 17th December, according to reports released on the 29th of December. After remaining double-digit for almost two years, food inflation dropped sharply in the last one and a half months, stooping as low as 1.81% in the previous week. However, 0.42% has been the lowest level of food inflation since April, 2006. In sharp contrast, annual food inflation for the corresponding week last year stood at 15.48%. According to official data released, onions grew cheaper by 59.04 per cent year-on-year during the week ending 17th December, potato prices were down by 33.76 per cent, wheat prices also fell by 3.30 per cent; and overall, vegetables became 36.02 per cent cheaper. Enthused by the dipping inflation rates, Finance Minister Pranab Mukherjee said that if the current trend prevailed, the overall inflation rate based on Wholesale Price Index (WPI) for the current fiscal year is likely to come down to 6%. How is inflation calculated? What is WPI? How is it different from CPI? Which is a better measure of Inflation? Why? Why is Indias food inflation coming down? What could be the reasons?

ITC, to a holding company which are worth more than 32,000 crore at current prices. What is Disinvestment? Is it good or bad for an economy? Is Government of India successful in disinvestment? What are the Disinvestment targets and achievements in the past few years ?

Hero Eco acquires UK-based Ultra Motors

In a move to strengthen its presence in the global electric vehicle arena, Hero Eco acquired UK-based Ultra Motors for an undisclosed amount on 28th December, 2011. Hero Eco, a Hero Group Company, is an umbrella entity that includes Hero Electric, Hero Exports, Hero Cycles, Mediva, Winn and Hero Ecotech whose Chairman is Vijay Munjal and Managing Director is Naveen Munjal. Expansion plans of Hero Eco included investing Rs. 450 crore across businesses in the next five years and also setting up an electric vehicle facility in the USA in the next 18 months. Ultra Motors, at present has three manufacturing plants with its main one in Taiwan; has operations in the U.K., the U.S., Germany, Taiwan and China and a distribution network in 22 countries, including Switzerland, Japan and Australia. Which other companies produce electric vehicles in India and abroad? Why is electric car concept like REVA not taken up in a big way in India? Check for other acquisitions ,if any, made by Hero group in the past 5 years?

Government to go ahead with 40,000 crore disinvestment plan

The finance ministry is planning to raise the budgeted disinvestment target of 40,000 crore for this financial year by monetising the government's equity holdings in Special Undertaking of UTI (SUUTI), selling residual holdings and divesting stakes in some companies to financial institutions. However, not much headway has been made because of uncertain market conditions. So far, the government has raised only Rs 1,144 crore from stake sale in Power Finance Corporation (PFC). During the year, proposals were mooted for disinvestment of several companies, including BHEL, ONGC and SAIL, but none of them materialised. Under the new plan, which will be put up before the Cabinet, the government proposes to transfer the equity holdings of SUUTI, which include 27.02% in Axis Bank, 11.89% in Larsen & Toubro and 8.99% in
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FedEx extends $1.4 m grant to Embarq

US-based global logistics major FedEx has given a grant of $1.4 million to Embarq, a transport solutions provider to optimise city bus operations in India, Mexico and Brazil. The grant would be provided over a period of two years to Embarq, promoted by the World Resource Institute, to provide technical expertise and solutions to sustainable transportation projects that will improve the public transit system in cities of the three nations, two among which are slated to be the fastest growing economies in the world. Under the grant, Embarq India and FedEx will increase the technical capacity of city transport agencies to organise their bus systems, advising
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on areas like vehicle maintenance, procurement and technology, as well as data collection and management. What are your suggestions to Embarq India for making public transportation within cities more efficient and effective? Why did FedEx make this grant? What do you think of the size of the grant?

US complains that China not doing enough on currency value

The United States Treasury blamed China for not doing enough with regard to the value of its currency, the Yuan, and exchange rate reforms, thus putting the American dollar at a disadvantage. Though it did not call China a currency-manipulator, some US diplomats have argued that China has gained an unfair advantage and competitive edge in the global markets by keeping the Yuan low artificially to boost exports. The value of the Yuan, which Beijing manages closely, has risen by 4 percent against the dollar this year and 7.7% since China dropped a firm peg against the greenback in June 2010. However, the US Treasury did not seem very pleased with the rate and stated that the movement of the Yuan was insufficient. The Treasury said it is in Chinas interest to allow the exchange rate to continue to appreciate, both against the dollar and against the currencies of its other major trading partners. How is China able to determine its currency value? What are the different types of currency management systems? What kind of currency management does India have? Is it good or bad?

Brazil overtakes UK as the worlds sixth biggest economy

According to reports released by Centre for Economic and Business Research (CEBR), a London-based economic forecaster, Brazil has deposed the United Kingdom as the sixth largest economy in the world the first time that the UK has been overtaken by a South-American nation. The reports released in the last week of December, 2011 have substantiated an International Monetary Fund (IMF) data that was published earlier illustrating a dramatic change in global fortunes. A multitude of factors that included vast reserves of natural resources, a rapidly growing middle-class and a stable political situation that attracts investors worked in Brazils favour, which is also the biggest Latin American economy. In sharp contrast, UKs economy is plagued by problems of the Euro zone that include a national debt crisis, a prolonged economic downturn and lack of bank credit. Brazil grew at a rate of 7.5% last year but the government has slashed its growth forecast to 3.5% for the year 2011, after the economy ground to a halt in the third quarter of 2011 owing to high interest rates and the plunging Euro zone fortunes. The top five countries on the list were the United States, China, Japan, Germany and France respectively. India was placed tenth on the list, while the only other BRIC nation, Russia placed on the ninth place. Also, the forecast by the economists said that a surge of growth over the next 10 years in India and Russia will further push Britain to the eighth place. In a claim that would ring alarm bells in France, the CEBR also stated that by 2020, Britain would leapfrog France and would be the eighth largest economy in the world, one ahead of France. What is the size of Indian economy? How is it measured? India is also the 4th largest economy by PPP. What is PPP? And how is PPP is different from the above article methodology?
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B School Spotlight: MDI, Gurgaon

Management Development Institute, established in 1973 and located in Gurgaon is one of the most prestigious B-schools in India, consistently rated among the best business schools nationally. Having established its footprint worldwide, MDIs vision is to become one of the top business schools in the world. MDI is the first Indian Business School and second in Asia to be accredited by International Institution Association of MBAs (AMBA), London. MDI offers a wide variety of management programmes but its flagship programme is the Post Graduate Programme in Management (PGPM). It is one of the most coveted programmes at MDI and ranks amongst the very best across the top B-Schools in India. The short listing of candidates is done through CAT. Apart from PGPM, Post Graduate Programme in Human Resource Management, Post Graduate Programme in International Management, Fellow Programme in Management are provided by MDI.

For further info contact us at: info@abhyaas.in

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