76458219 Global Finanacial Crisis Impact on Indian Stock Market

8/13/2019 76458219 Global Finanacial Crisis Impact on Indian Stock Market

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Global Economical Crisis-Impact on Indian Stock Markets

1.1 INTRODUCTION

Global Financial Crisis of 2008

The global financial crisis of 200 is a ma!or ongoing financial crisis" the #orst of its

kind since the Great $epression% &

It became prominentl' (isible in September 200 #ith the fail)re" merger or conser(ator

ship of se(eral large *nited States-based financial firms% The )nderl'ing ca)ses leading

to the crisis had been reported in b)siness !o)rnals for man' months before September"

#ith commentar' abo)t the financial stabilit' of leading *S and E)ropean in(estment

banks" ins)rance firms and mortgage banks conse+)ent to the s)b-prime mortgage crisis%

,eginning #ith fail)res of large financial instit)tions in the *nited States" it rapidl'

e(ol(ed into a global crisis res)lting in a n)mber of E)ropean banks fail)res and declines

in (ario)s stock inde.es" and significant red)ctions in the market-(al)e of e+)ities /stock

and commodities #orld#ide% The crisis has led to a li+)idit' problem and the de-

le(eraging of financial instit)tions especiall' in the *nited States and E)rope" #hich

f)rther accelerated the li+)idit' crisis% 1orld political leaders and national ministers of

finance and central bank directors ha(e coordinated their efforts to red)ce fears" b)t the

crisis is ongoing and contin)es to change" e(ol(ing at the close of ctober 200 into a

c)rrenc' crisis #ith in(estors transferring (ast capital reso)rces into stronger c)rrencies

s)ch as the 3en" the $ollar and the S#iss 4ranc" leading man' emergent economies to

seek aid from the International Monetar' 4)nd% The crisis has roots in the s)b-prime

mortgage crisis and is an ac)te phase of the financial crisis of 2005-200%

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Sub-Prim !or"#a# Crisis

S)b-prime" as the #ord s)ggests" is an'thing that is not prime% In the s)b-prime crisis

conte.t" it simpl' means lending mone' to s)b-prime borro#ers" i%e%" lending to people

#ith lo# or poor credit #orthiness% M)ch tho)ght and energ' has alread' been spent in

the literat)re in )nderstanding the ca)ses of the s)b-prime crisis%

To p)t it (er' simpl'" the s)b-prime crisis #as ca)sed beca)se the lending norms in the

*S8 #ere (er' la.% It is !oked abo)t in the academic circles that an' man #ho #as not

on a respirator #as gi(en a loan #itho)t an' regard to his or her credit-#orthiness% This

#as bro)ght abo)t b' the 9spend 'o)rself o)t of the post dotcom b)st recession9 polic'

of the 8merican go(ernment at that time%

The +)estion is #hether the 8merican crisis has seen its #orst" or #ill it deepen: The *S

4ederal ;eser(e ,oard has c)t the interest rates b' a steep 0%5< percent on =an)ar' 22"

200>% There is an e.pectation that the *S econom' #ill stabili?e as a &res)lt% 1ill s)ch

meas)res s)cceed: It is )nlikel'% The' still do not remo(e the basic #eakness of the

8merican econom'%

The firs"#eakness is in the ser(ice sector% @re(io)sl' the *S #as leading in soft#are

prod)ction and ne# designs" etc% This s)premac' is no# being challenged b' Indian

companies like TCS" Infos's and 1ipro% Man' leading companies are transferring their

research departments to India beca)se #ages are lo# here% Similar trends can be seen in

man' areas like clinical trials" translation" architect)ral designing" tele-marketing" and

p)blishing and printing% This #eakness can onl' marginall' be managed from

de(al)ation of the dollar% It is rooted more in the morib)nd nat)re of the *S ed)cation

s'stem%

The scon$so)rce of #eakness is in the a)to-loans and credit cards% 8nother crisis" like

that in the s)b-prime ho)sing sector" is in the making% The present tro)bles started here%

The *S 4ederal ;eser(e ,oard enco)raged people to take loans to b)' ho)ses% The

conse+)ent demand from the ho)sing sector kept the *S econom' ch)gging for abo)t

three 'ears% ,)t the borro#ers co)ld not repa' their ho)sing loans beca)se of decline in

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salaries and #ages d)e to international competition% The loans #ent into defa)lt% ,anks

sei?ed the ho)ses" b)t had to sell them at m)ch lo#er prices" and had to book h)ge losses%

8 similar crisis is in the making in the a)to-loans sector% Car ma!ors are e.tending loans

to borro#ers% The loans backed b' sec)rit' of an a)tomobile are considered safe" m)ch

like the s)b-prime ho)sing #as considered safe% The borro#ers are likel' to defa)lt on

these a)to-loans and also credit cards !)st as the' did on ho)sing loans%

The "%ir$so)rce of #eakness is high oil prices% 8mericans lo(e big and fast cars% The'

ha(e to import h)ge +)antities of oil to keep them r)nning% This is a big drain on the

8merican econom' especiall' in (ie# of the rising oil prices% The 8merican econom' is

more energ' intensi(e than" sa'" India% The' cons)me more oil per dollar of income

generated% Conse+)entl'" high oil prices ha(e a greater negati(e impact on that econom'%The ad(erse impact on India is red)ced for another reason% The oil-rich 8rab co)ntries

are making grand pro!ects like hotels on artificial islands% The manpo#er for these

pro!ects is s)pplied in large meas)re b' India% These #orkers send remittances back

home% Th)s" part of the mone' spent b' the #orld in b)'ing 8rab oil flo#s to India% The

negati(e impact of high oil prices is partl' cancelled b' remittances for India b)t not for

8merica%

The four"%so)rce of #eakness is the e.pendit)re that co)ntr' has taken )pon itself b'

acting as the global policeman% The *S is inc)rring h)ge e.pendit)res in #ars in Ira+ and

8fghanistan% There seems to be no end to these in sight%

Global Rs&onss

n September A


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foreign-c)rrenc' interbank market the same da'% ,ank of =apan p)mped B 2>% ,illion

into the financial s'stem on September A5" 200" and the ;eser(e ,ank of 8)stralia

added B %< ,illion the same da'% The E)ropean Central ,ank in!ected B >>% ,illion in

a one-da' mone'-market a)ction% The ,ank of England p)mped in B D ,illion%

8ltogether" central banks thro)gho)t the #orld added more than B 200 ,illion from the

beginning of the #eek to September A5" 200%

US Rs&onss

The 4ederal ;eser(e" Treas)r'" and Sec)rities and E.change Commission took se(eral

steps on September A> to inter(ene in the crisis% To stop the potential r)n on mone'

market m)t)al f)nds" the Treas)r' also anno)nced on September A> a ne# B


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The interlinkage thro)gh capital flo#s is trick'% There is an o)tflo# of capital from India

in the short r)n as the 8merican econom' sinks" b)t there is greater inflo# to#ards India

in the long term%

Global ,anks inc)r losses as tro)bles of the 8merican econom' deepen% 7oans gi(en b'

them to 8merican home-o#ners are not repaid% The' ha(e to resort to sale of shares in

the Indian markets to raise mone' to meet these losses in the *S% The decline in &Indian

share markets in the last t#o #eeks started #ith s)ch a sell off b' foreign banks%

The Go(ernment of India is concerned that global black mone' is being in(ested in

Indian share markets% The recent clamp-do#n on @romissor' 6otes #as made to pre(ent

s)ch inflo#s% The

Im&ac" of "% Crisis on In$ia

1hile the o(erall polic' approach has been able to mitigate the potential impact of the

t)rmoil on domestic financial markets and the econom'" #ith the increasing integration

of the Indian econom' and its financial markets #ith rest of the #orld" there is

recognition that the co)ntr' does face some do#nside risks from these international

de(elopments% The risks arise mainl' from the potential re(ersal of capital flo#s on a

s)stained medi)m-term basis from the pro!ected slo#-do#n of the global econom'"

partic)larl' in ad(anced economies" and from some elements of potential financial

contagion% In India" the ad(erse effects ha(e so far been mainl' in the e+)it' markets

beca)se of re(ersal of portfolio e+)it' flo#s" and the concomitant effects on the domestic

fore. market and li+)idit' conditions% The macro effects ha(e so far been m)ted d)e to

the o(erall strength of domestic demand" the health' balance sheets of the Indian

corporate sector" and the predominant domestic financing of in(estment%

8s might be e.pected" the main impact of the global financial t)rmoil in India has

emanated from the significant change e.perienced in the capital acco)nt in 200-0> so

far" relati(e to the pre(io)s 'ear /Table 1% Total net capital flo#s fell from *S B A5%

,illion in 8pril-=)ne 2005 to *S B A%2 ,illion in 8pril-=)ne 200% 6onetheless" capital

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flo#s are e.pected to be more than s)fficient to co(er the c)rrent acco)nt deficit this 'ear

as #ell%

1hile 4oreign $irect In(estment /4$I inflo#s ha(e contin)ed to e.hibit accelerated

gro#th /*S B AD%5 ,illion d)ring 8pril-8)g)st 200 as compared #ith *S B %< ,illion

in the corresponding period of 2005" portfolio in(estments b' 4oreign &Instit)tional

In(estors /4IIs #itnessed a net o)tflo# of abo)t *S B D% ,illion in 8pril-September

200 as compared #ith a net inflo# of *S B A /,ase A>>->A00

/*S B A ;s% D%A2 in September 200D to AA


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Trn$s in Ca&i"al Flo(s

US ) !illion

Com&onn" Prio$ 200*-08 2008-0+

4oreign $irect In(estment to India 8pril - 8)g)st ">0 A"0

4oreign E.change ;eser(es /End-@eriod September 2D" 200 25"5D2 2>A"A>

,$ata on 4IIS presented in this table represent inflo#s into the co)ntr' and" th)s" ma'

differ from data relating to net in(estment in stock e.changes b' 4IIs%

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1.2 RS'RC !TODO/OG

Sam&l Si

T%r sc"ors

T%r in ac% Sc"or

Sam&lin# Tc%ni3u

Sim&l Ran$om Sam&lin#

'nal4sis

Tc%nical anal4sis T%rou#% "% Tabls an$ Gra&%s

Da"a

Scon$ar4 $a"a from 01-01-200+ "o 01-02-200+

In"r&r"a"ion

Prcn"a# of c%an# of ac% com&an4 an$ r&rsn"s "% '5ra# of c%an#

"o "% (%ol sc"or mo5mn" of sc"or.

Sc"orial mo5mn" s%o(s (%"%r "% sc"or is &osi"i5 or n#a"i5 .'n$ "%

sc"or s%o( im&ac" on In$ian S"oc6 !ar6".



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1.7 /imi"a"ions

Sam&l Si is "%r sc"ors %ic% ma4 no" b abl "o s%o( "%a" ac" &ic"ur

of "% mar6".

9 "oo6 "%r com&an4:s in ac% (%ic% ma4 no" b abl s%o( "%a" ac"

&ic"ur of "% sc"or

Tim &rio$ of sc"or is for "%ir"4 $a4s (%ic% is "o fin$ ou" "% mar6"

mo5mn"

T% fun$amn"al n(s an$ com&an4 rsul"s ma4 s%o(s "% im&ac" on "%

s"u$4 $urin# "% s"u$4 &rio$.

Sub &rim crisis in s"ill s%o(in# i"s im&ac" on "% mar6" on f( sc"or

ma;ori"4



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2.1 CO!P'N PROFI/

A world of intelligent investing

E(er since its inception in A>>" 6et#orth Stock ,roking 7imited /6S,7

has so)ght to pro(ide premi)m financial ser(ices and information" so that

the po#er of in(estment is (ested #ith the client% 1e e+)ip those #ho in(est#ith )s to make intelligent in(estment decisions" pro(iding them #ith the

fle.ibilit' to either tap into o)r e.tensi(e kno#ledge and e.pertise" or make

their o#n decisions% 6S,7 made its deb)t into the financial #orld b'

ser(icing Instit)tional clients" and pro(ed its high scalabilit' of operations

b' gro#ing e.ponentiall' o(er a short period of time% 6o#" po#ered b' a

top-notch research team and a net#ork of e.perts" #e pro(ide an arra' of

retail broking ser(ices across the globe - spanning India" Middle East"

E)rope and 8merica% C)rrentl'" #e are a $epositor' participant at Central

$epositor' Ser(ices India /C$S7 and aim to become one at 6ational

Sec)rities $epositor' /6S$7 b' the end of this +)arter% )r strong s)pport"

technolog'-dri(en operations and b)siness )nits of research" distrib)tion and

ad(isor' coalesce to pro(ide 'o) #ith a one-stop sol)tion to cater to all 'o)r

broking and in(estment needs% )r c)stomers ha(e been participating in the

booming commodities markets #ith o)r membership at the M)lti

Commodit' E.change of India /MCJ and 6ational Commodit' K

$eri(ati(es E.change /6C$EJ thro)gh 6et#orth Stock%Com 7td%

6et 1orth Stock ,roking 7imitedAD
http://www.networthstock.com/index.aspx


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6S,7 is a member of the 6ational Stock E.change of India 7td /6SE

and the ,omba' Stock E.change 7td /,SE on the Capital Market and

$eri(ati(es /4)t)res K ptions segment % It is also a listed compan' at

the ,SE%

Corporate o(er(ie#

L 6et#orth is a listed entit' on the ,SE since A>>

L The compan' is professionall' managed #ith e.perience of o(er a

decade in broking and ad(isor' ser(ices

L 6et#orth is a member of ,SE" 6SE" MCJ" 6C$EJ" 8M4I" C$S7L C)rrent net#ork in India #ith 2


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2.2INFR'STRUCTUR

L 8 corporate office and di(isional offices in C,$ of M)mbai #hich

ho)ses state-of-the-art dealing room" research #ing K management

and back offices%

L 8ll of 2


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2.7 PRODUCTS 'ND SR


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T% N"(or"% connc"i5i"4 (i"% 2=> branc%s an$ #ro(in#


1 0 7 b r a n c h e s

2A


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N"(or"% Rsarc% Pro$uc"s

L In$ia Dail4 No"s ? Market Insight for the da'

L !ar6" !usin# ? 1hatNs Fot and 1hatNs not PPP

L @ullion Trac6r & 8nal'sis of trends in Gold K Sil(er

L conom4 Puls & Monthl' o(er(ie# of macro factors

L Com&an4-S&cific R&or"s ? $etailed f)ndamental report

s)bse+)ent to plant (isit K management meet

L Pr-Auar"r Rsul" Pr5i(s ? ;es)lt pre(ie# of companies )nder

co(erage

L Rsul" U&$a" & @ost res)lt re(ie# of companies )nder co(erage

L S"oc6 S"anc - Management isit 6ote

L T%m-@as$ R&or"s ?,)dget 8nal'sis" $i(idend

NS@/ - Ob;c"i5s of "% Com&an4

To increase its in(estors all o(er the co)ntr'

To pro(ide better ser(ices to their clients

To maintain good relation #ith the clients

Increasing the profits of the compan'

To lead their transactions )nder the control 8ct of Sec)rities E.change ,oard ofIndia A>>2



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NS@/ - Pro$uc" B Sr5ic &ro$uc$

Fere the prod)ct means ser(ice relate to the compan' the compan' ,rokerage Ser(ices%Its has spreaded across o(er the co)ntr' #ith e.perienced and e.perti?ed in the

,rokerage ser(ices rendered b' the ,rokers in their ,ranches to their In(estors%

NS@/ ? !ar6" Rsarc%Q

Market research is one of important Methodolog' for finding the problem and make

anal'?e and interpret and sol(e the problem% In e(er' area it has sharing the contrib)tion

to#ards s)ccessing the pro!ects R problems%

In the 6S,7 compan' has also adopted this techni+)e b' ;esearch anal'sts to these

brokers )tili?es and )nderstands their researches then the' #ill mo(ing in a right path%

The research anal'sts anal'ses the compan' performance and #hat are the compan'Ns

stocks are mo(ing #h' the compan'Ns scrips prices are fl)ct)ating and #hat are the

effects for this sit)ations )nder the circ)mstances% Then the compan' s)ccessf)ll'operating their acti(ities prod)ce of good operating ;es)lts%

NS@/ ? O&ra"in# Rsul"s

The perating ;es)lts of the 6S,7 compan' is satisfactor' compare to its competitors

are India ,)lls" 6et#orth Stock ,roking ltd" India info line etc%" The' are gi(ing +)alit'

ser(ices to their clients and impro(ing their retained gains% Thro)gh this the' are

creating ne# clients thro)gh adopting different strategies for attracting the clientsto#ards its b)siness then its f)t)re glorio)s%



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NS@/ ? Fu"ur Ou"loo6

Its f)t)re #ill be Glorio)s beca)se it has recentl' la)nches ne# ser(ice to

e.pand its b)siness i%e%" 6S,7 - I6S*;86CE it tie )ps #ith other ins)rance companies

like ;eliance ins)rance and ,a!a! life ins)rance to gather the c)stomers to#ards their

compan' to other ins)rance companies the' #ill gain the profit like the compan' 6S,7

planned for the f)t)re make its fr)itf)l

%



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In$ian scnario

The se(enth largest and second most pop)lar co)ntr' in the #orld" India has long been

considered a co)ntr' of )nreali?ed potential% 8 ne# spirit of economic freedom is no#

stirring in the co)ntr'" bringing s#eeping changes in its #ake% 8 series of ambitio)s

economic reforms aimed at dereg)lating the co)ntr' and stim)lating foreign in(estment

has mo(ed India firml' into the front ranks of the rapidl' gro#ing 8sia @acific region

and )nleashed the latent strengths of a comple. and rapidl' changing nation%

Indias process of economic reform is firml' rooted in a political consens)s that spans her

di(erse political parties% Indias democrac' is a kno#n and stable factor" #hich has taken

deep roots o(er nearl' half a cent)r'% Importantl'" India has no f)ndamental conflict

bet#een its political and economic s'stems% Its political instit)tions ha(e fostered an

open societ' #ith strong collecti(e and indi(id)al rights and an en(ironment s)pporti(e

of free economic enterprise%

Indias time tested instit)tions offer foreign in(estors a transparent en(ironment that

g)arantees the sec)rit' of their long term in(estments% These incl)de a free and (ibrant

press" a !)diciar' #hich can and does o(err)le the go(ernment" a sophisticated legal and

acco)nting s'stem and a )ser friendl' intellect)al infrastr)ct)re% Indias d'namic and

highl' competiti(e pri(ate sector has long been the backbone of its economic acti(it'% It

acco)nts for o(er 5


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#hich )ltimatel' creates fle.ibilit' that might bail them o)t in diffic)lties% ne ma!or

#a' of red)cing the e.pos)re to risk is b' entering into financial deri(ati(es% ;isk

management is an integral part of the financial ser(ice ind)str'Q and d)e to globali?ation

the Indian financial market #ill see an increase in the prod)cts in this categor'%

The changing scenario has forged a change in the Indian sec)rit' market% 8lso certain

market imperfections operati(e in the market called for change% 8 ma!orit' of

organi?ations and indi(id)als face financial risk d)e to changes in the stock market"

prices" interest rates and e.change rates ha(ing great significance on the financial

so)ndness%

;isk taking is the core competence of entreprene)rial spiritQ #itho)t embracing risks a

b)siness can not reap re#ards% ;isk and ret)rn are the t#o sides of a coinQ #hile risk

taking is kno#n for ages" the emergence of risk management as a speciali?ed field is a

fairl' recent phenomenon% ;isk management is an integral part of the financial ser(ice

ind)str'% 4)nd managers" merchant bankers" brokers and portfolio managers" are all

e.posed to (ario)s t'pes of risks% ne of the most important risks is price risk%

In toda'Ns era in(estor in(est their f)nds after basic anal'sis% The basic f)nction of

financial market is to facilitate the transfer of f)nds from s)rpl)s sectors that is from

/lenders to deficit sectors /borro#ers% If #e look at the financial c'cle then #e can sa'

that ho)seholds make their sa(ings" #hich is pro(ided to ind)strial sectors" #hich earn

profit and finall' this profit #ill go to the ho)seholds in the form of interest and di(idend%

Indian 4inancial S'stem is made-)p of 2 t'pes of markets i%e% Capital Market K Mone'

market%

C'PIT'/ !'RT ISTOR

The histor' of the Indian capital markets and the stock market" in partic)lar can be traced

back to ADA #hen the 8merican Ci(il 1ar began% The opening of the S)e? Canal d)ring

the AD0s led to a tremendo)s increase in e.ports to the *nited ingdom and *nited

States% Se(eral companies #ere formed d)ring this period and man' banks came to the

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fore to handle the finances relating to these trades% 1ith man' of these registered )nder

the ,ritish Companies 8ct" the Stock E.change" M)mbai" came into e.istence in A5


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stock% Indian in(estors" #ho applied for these shares" enco)ntered a real lotter' beca)se

those #ere the da's #hen the CCI decided the price at #hich the shares co)ld be iss)ed%

There #as no free pricing and their form)la #as (er' conser(ati(e%

The ne.t big boom and mass participation b' retail in(estors happened in A>0" #ith the

entr' of Mr% $hir)bhai 8mbani% $hir)bhai can be said to be the father of modern capital

markets% The ;eliance p)blic iss)e and s)bse+)ent iss)es on (ario)s ;eliance companies

generated h)ge interest% The general p)blic #as so )nfamiliar #ith share certificates that

$hir)bhai is r)mo)red to ha(e distrib)ted them to ed)cate people%

Mr% %@% SinghNs fiscal b)dget in A> #as pathbreaking for it started the era of

liberali?ation% The remo(al of estate d)t' and red)ction of ta.es led to a s#ell in the ne#

iss)e market and there #as a del)ge of companies in A>>A and this led to a res)rgence of

interest in the capital markets" onl' to be p)nct)red b' the Farshad Mehta scam in A>>2%

The mid-A>>0s sa# a rise in leasing compan' shares" and h)ndreds of companies" mainl'

listed in G)!arat" and got listed in the ,SE% The end- A>>0s sa# the emergence of etan

@arekh and the information" comm)nication and entertainment companies came into the

limelight% This period also coincided #ith the dotcom b)bble in the *S" #ith soft#are

companies being the most fa(o)red stocks% There #as a melt do#n in soft#are stock in

earl' 2000% Mr% @ Chidambaram contin)ed the liberali?ation and reform process" opening

)p of the companies" lifting ta.es on long-term gains and introd)cing short-term t)rno(er

ta.% The markets ha(e reco(ered since then and #e ha(e #itnessed a s)stained rall' that

has taken the inde. o(er A000%

Se(eral s'stemic changes ha(e taken place d)ring the short histor' of modern capital

markets% The setting )p >2 #as a

landmark de(elopment% It got its act together" obtained the re+)isite po#ers and became

effecti(e in earl' 2000% The setting )p of the 6ational Stock E.change in A>" the

introd)ction of online trading in A>>


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markets o(er the last fe# 'ears that has made the markets attracti(e to foreign

instit)tional in(estors%

This histor' sho#s )s that retail in(estors are 'et to pla' a s)bstantial role in the market

as long-term in(estors% ;etail participation in India is (er' limited considering the o(erall

sa(ings of ho)seholds% In(estors #ho hold shares in limited companies and m)t)al f)nd

)nits are abo)t 20-0 million% Those #ho participated in secondar' markets are 2-

million%

Capital markets #ill change completel' if the' gro# be'ond the cities and stock

e.change centers reach the Indian (illages% ,oth SE,I and retail participants sho)ld be

acti(e in spreading market #isdom and empo#ering in(estors in planning their finances

and )nderstanding the markets%

7.2 C'PIT'/ !'RT

Sec)rities market ma' be classified is b' the t'pes of sec)rities bo)ght and sold there%

The broadest classification is based )pon #hether the sec)rities are ne# iss)es or are

alread' o)tstanding and o#ned b' in(estors% 6o# #e see follo#ing chart for

)nderstanding market t'pes%

6et 1orth Stock ,roking 7imited2>

Ca&i"al !ar6"

Primar4 !ar6" Scon$ar4 !ar6"


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,)'ing and selling inters in )nlisted stocks are matched not thro)gh the a)ction process

on the floor of an e.change b)t thro)gh negotiated bidding" o(er a massi(e net#ork of

telephone and telet'pe #ires that link tho)sand of sec)rities firms here and abroad%

!ON !'RT

The mone' market has 2 components-The organi?ed K )norgani?ed% The organi?ed

market is dominated b' commercial banks% T% o"%r ma;or&ar"ici&an"s ar R@I

/IC GIC an$ UTI.The main f)nction of it is that of borro#ing K lending of short term

f)nds% n the other hand )norgani?ed mone' market consists of indigeno)s bankers K

mone' lenders% This sector is contin)o)sl' pro(iding finance for trade as #ell as personal

cons)mption%

DRI


26/99


more #illing to accept them% 4rom a market-oriented perspecti(e" deri(ati(es offer the

free trading of financial risks%

ND FOR DRI


27/99


INFOR!'TION F/O9 IN DRI


28/99


ne of the important f)nctions of the f)t)res market is to pro(ide hedging facilities to

hedge price risk% This market also pro(ides scope to spec)lators d)e to lo# transaction

cost and le(erage% This paper tests #hether f)t)resN trading is going to#ards hedging

price risk or to#ards f)lfilling the spec)lati(e desires of sophisticated traders%

,eing traded in the *S for o(er A00 'ears commodit' f)t)res are still )nidentified long

term assets% This ma' be d)e to the inflict difference of commodit' f)t)res #ith that of

corporate sec)rities s)ch as stocks" bonds and other con(entional assets #here" in(estors

bear the risk d)ring recession period #here as in(estors in commodit' f)t)res are

compensated for bearing short-term price fl)ct)ations% The research paper 4acts and

4antasies abo)t Commodit' 4)t)res tries to address some commonl' raised +)estions

like f)t)re risk and ret)rn on in(estments% The +)estions are being addressed #ith respect

to the asset class as a #hole" rather than indi(id)al commodit' f)t)res%

.1G/O@'/ CONO!



29/99


1e sho)ld consider that #e are in a recession and #e need to #ait for the 6ational ,oard

of Economic ;esearch /6,E; to opine on #hether #e ha(e t#o consec)ti(e +)arters of

decline in the Gross $omestic @rod)ct /G$@" b)t that #ill not happen for )p to a 'ear

after the fact% Fere are some of the economic factors that lead me to this concl)sionQ

A% The !obs o)tlook is detracting% 4or 4ebr)ar' the go(ernment reported that the econom'

lost D"000 !obs% 8ct)all'" the pri(ate sector lost A0A"000" meaning that go(ernment

hiring contin)es to increase% $)e to the #a' the go(ernment co)nts the impact of births

and deaths" this factor s)pposedl' added AO d)e to a sharp contraction in the

total n)mber of people looking for #ork% This is not a good sign%

Generall'" emplo'ment is a lagging indicator and is is highl' )n)s)al to see t#o months

in a ro# of !ob losses and not e.perience a recession% 3es" that is rightU !obs fell in

=an)ar' as #ell%

2% The *%S% dollar hit ne# lo#s against the basket of nineteen c)rrencies" trading as lo#

as 52%D% The dollars #eakness is one of the reasons #e are seeing the price of most

commodities climb higher" since it takes more dollars to b)' s)ch commodities as oil% 8

falling dollar is considered good for an' companies that e.ports from the *%S% as their

goods and ser(ices are less e.pensi(e each time the *%S% $ollar falls% n the other hand"

a falling *%S% dollar depreciates the (al)e of the *%S% go(ernment" so in(estors and

co)ntries that are holding this debt ma' sell part of their holdings to find higher ret)rns%

If this happens it tends to raise interest rates on this debt" #hich can ca)se the *%S% to

e.perience higher inflation and raises the cost of o)r o#n debt% The best scenario is

stabilit' in the *%S% dollar #hich allo#s in(estors to ha(e more confidence in their

holdings%

% il is trading aro)nd BA0< a barrel% 8s mentioned part of this high price is d)e to the

falling *%S% $ollar" as oil is priced in that c)rrenc'% @art is d)e to concern that ene)?ela"

Ec)ador and Col)mbia #ill escalate the c)rrent saber rattling and act)all' go to #ar% It



30/99


looks like this risk is no# o(er as the presidents of the co)ntries in(ol(ed ha(e backed

a#a' from their threats and no# seem to #ant to a(oid f)rther confrontation% ,)t s)ch is

the stor' of oil% There seems to be ne# problems poking its head )p all o(er the #orld

#hen there are large reser(oirs of oil%

There are >> of companies that comprise this gro)p% 8nd as Tom said" In the casino

b)siness" the' #o)ld be kno#n as #hales% The #hales can and do mo(e the market%

Then the' mo(e on to the ne.t thing that interests them and the market gets back to

normal%

% The inde. of 7eading Economic Indicators /7EI contin)es to pl)nge" and is not far

a#a' from le(els last seen in 200A% S)ch a drop b' the 7EI has al#a's been accompanied

b' a recession% *%S% leading inde. decreased 0%A percent #hich is the fo)rth straight

month of declines%


31/99


no# seeing% I s)spect #e #ill see an e(en lo#er forecast in the release of the min)tes

from their ne.t meeting in March%

f f)rther concern is the )p#ard trend in inflation as meas)red b' the Core @CE no#

pro!ected to be 2%0 to 2%2 )p from A%5 to A%>% 4irst" this is no# abo(e the 4eds o#n target

for inflation #hich is belie(ed to be belo# 2%0% Second" #ith the =an)ar' Cons)mer @rice

Inde. reports in at %O tells )s that inflation is rising not falling% Fo#e(er" the 4ed

e.pects inflation to fall f)rther later in 200% @erhaps this is beca)se the econom' #ill be

m)ch #eaker than it is no#" #hich #ill ca)se do#n#ard press)re on prices" helping to

red)ce inflation% This is )s)all' #hat happens d)ring a recession% If so" then that means

the' reall' e.pect m)ch slo#er gro#th% 8n interesting conflict in their forecasts%

If #e see f)rther rate c)ts" and man' anal'sts belie(e there #ill be" then it is a sign the

4ed is e(en more #orried abo)t economic gro#th and not as #orried abo)t inflation%

Moreo(er" do not e.pect the 4ed to predict #e are in or abo)t to enter a recession% 4irst"

the markets are likel' to react m)ch more negati(el' to s)ch an anno)ncement and the

4ed #o)ld not #ant to take the blame% Second" e(en tho)gh the 4ed is an independent

agenc' it still m)st report to the Congress% The 4ed needs to keep its independence" so it

is (er' )nlikel' to forecast the econom' is going into a recession% If the' did so" man' in

congress #o)ld #ant to take a#a' some of their po#er" thinking the elected

representati(es co)ld do better% Talk abo)t o)t of the fr'ing pan and into the fire" or ho#

to make a bad sit)ation #orse%

/oo6in# for "% @o""om

The bear market started #ith the problems in the mortgage ind)str' that are spilling o(er

into other parts of the credit arena% ,anks and in(estment firms m)st ha(e the necessar'

li+)idit' to meet their margins calls and pro(ide s)fficient capital to remain a going

b)siness% 8s a res)lt" in(estors keep tr'ing to determine if the problems in the mortgage

b)siness #ill end an' time soon%



32/99


8s of 6o(ember" ho)sing #as do#n %O% It is certainl' #orse no#" b)t that is a place to

start for this disc)ssion% The +)estion is" ho# m)ch f)rther do#n can it go: Goldman #as

the firm that sa# the problems in the mortgage b)siness coming and managed to short

some of the market" th)s a(oiding the hit to earnings that other financial firms

enco)ntered% 8ccording to Goldman if there is no recession" the ho)sing market #ill fall

b' AO of the mortgages #ill be backed b'

negati(e e+)it'%

This means the financial crisis #e are no# e.periencing has more to go% There are going

too be more )nhapp' s)rprises coming from the financial sector as this problem #orks



33/99


thro)gh the s'stem% eep in mind that more defa)lts on these loans ca)se the banks and

other o#ners of these credits to e.perience losses that m)st be #ritten off% These #rite

offs ca)se the instit)tions to either sell off their good loans or sell additional e+)it' to

meet the minimal capital re+)irements% ,)t no one #ants to b)' these loans" since the'

are ha(ing the same problem% It creates a (icio)s c'cle that brings do#n the good firms

along #ith the bad% It also makes borro#ing more diffic)lt as rates climb e(en for the

firms #ith the best of credit% The recent implosion b' ,ear Stearns is !)st one e.ample%

The 4ed sees this" #hich is #h' the' are pro(iding B200 billion in emergenc' credit and

backing the bail o)t of the ,ear Stearns in(estors% ,)t so far that hasnt fi.ed the

problem% I s)spect that #e #ill see more fail)res that #ill then ca)se them to b)' more of

these sec)rities to get them off the books of these firms% In the mean time the econom'#ill s)ffer e(en more%

6et 1orth Stock ,roking 7imited>


34/99


.2 INDI'N CONO!

STOC !'RTS IN INDI'

5olu"ion an$ s"ruc"ur

India is one of the oldest stock markets in the #orld #ith a strong presence of domestic

and local intermediation% It #as the e.tent of the indigeno)s e+)it' broking ind)str' in

India that led to the formation of the 6ati(e Share ,rokers 8ssociation in A5< #hich

later came to be kno#n as ,omba' Stock E.change /,SE% 8s earl' as in AD" there

#ere more than A"000 brokers in M)mbai trading in stocks% Figh premi)ms #ere also not

something ne#% 8t the height of the stock market boom in the AD0s" follo#ing the

8merican Ci(il 1ar #hich led to the formation of a large n)mber of !oint stock

cottonRginning mills that stirred the e+)it' c)lt)re later booming into #hat #as then

called share mania" share prices reached stratospheric le(els% ,omba' at that time

en!o'ed the distinction of being kno#n as a ma!or financial centre in the 8sia region

ha(ing head+)arters of A banks" 20 ins)rance companies and D2 !oint stock companies%

Stock markets in India s)rged once again follo#ing the introd)ction of a #ide range of

economic reforms" #ith liberalisation of financial markets as one of the central themes%

,)o'ed b' greater freedom and fle.ibilit'" stock markets in India sho#ed gro#th in thelast one and half decades% $espite ma!or setbacks in the earl' A>>0s and 2000s that led to

e.tensi(e in(estigations into the stock markets b' the =oint @arliamentar' Committees"

stock markets in India contin)ed to sho# rob)st gro#th%

Some of the f)ndamental changes that f)elled rapid pace of market gro#th and at the

same time bro)ght in orderliness in the manner and the cond)ct of the operations are a

large n)mber of reforms that e+)ipped Indian markets #ith the best of the processes and

practices that incl)ded abolition of open o)tcr' and introd)ction of electronic trading

/secondar' markets" allo#ing foreign o#nership /foreign instit)tional in(estment of

shares" permitting Indian companies to raise capital from abroad /8$;sRG$;s"

e.pansion in the prod)ct range /e+)itiesRderi(ati(esRdebt" book b)ilding process and

transparenc' in I@ iss)ance /primar' markets" T2 settlement c'cle /pa'ments and



35/99


settlements" depositories for share c)stod' /demateriali?ation of shares go(ernance of

the stock e.changes /dem)t)ali?ation and corporatisation of stock e.changes and

internet trading /e-broking% These changes res)lted in dramatic gro#th of the stock

markets in India as #ell as the e+)it' broking firms% The broking ind)str' is emerging as

a rapidl' gro#ing segment in Indian finance" in terms of b)siness gro#th" distrib)tion

and net#ork and enterprise (al)e%

Indian stocks markets ha(e an e.tensi(e market infrastr)ct)re in terms of a large n)mber

of instit)tions and intermediaries%



36/99




37/99


In$ia in Global !ar6"s

The stat)re and significance of India is gro#ing in the #orld capital markets% India is not

onl' attracting greater interest from #orld markets" b)t is also ass)ming increasing

importance in global finance%

a.India is a ma;or rci&in"of foreign instit)tional flo#s amongst the emerging

markets% Since the opening )p of domestic stock markets to foreign in(estors" c)m)lati(e

net 4II in(estments reached *SB D5 bn b' 6o( 05

b.Indian companies are reg)larl' co(ered b' global and regional in(estment banking

research

c.India is ma;or $s"ina"ionof pri(ate e+)it' flo#s into the emerging markets

$.India #as host to the ann)al meetingsRconference of the 1orld 4ederation of

E.changes /200


38/99


Rcn" &olic4 Ini"ia"i5s

Se(eral polic' inno(ations #ere e(ident in the 'ear 2005% 8 fe# of the important ones

pertaining to primar' and secondar' markets" foreign in(estors" m)t)al f)nds and stock

e.changes are s)mmari?ed belo#%

A% 8n Integrated Market S)r(eillance S'stem /IMSS that monitors across stock

e.changes /6SER,SE and market segments /cash and deri(ati(es aimed to enhance

efficac' of s)r(eillance f)nction became operational #ith effect from $ec A" 200D

2% 7isted companies are no# re+)ired to maintain a minim)m le(el of p)blic share

holding at 2


39/99


5% Stock e.changes #ere ad(ised to )pdate the applicable 8; margin rates at least fi(e

times in a da'U b' taking the closing price of the pre(io)s da'" at the start of trading and

the prices at AA%00 am" A2%0 am" 2%00 pm" and at the end of the trading session

% 8s a part of strengthening 3C /no# 3o)r Client" @ermanent 8cco)nt 6)mber

/@86 #as made mandator' for all the entitiesRpersons ha(ing transactions in cash

market% @86 #as made mandator' for all categories of $emat acco)nt holders

>% $epositor' @articipants #ere ad(ised to s)bmit tariffRcharge str)ct)re to the respecti(e

depositories e(er' 'ear

A0% SE,I appro(ed and notified the Corporatisation and $em)t)alisation Schemes of A>

stock e.changes

AA% SE,I comm)nicated the polic' of the Go(ernment of India in regard to foreign

in(estments in stock e.changes" depositories and clearing corporations #here b'Q

/a 4oreign in(estment )p to >O #ill be allo#ed in these companies #ith a separate 4$I

cap of 2DO and 4II cap of 2O

/b 4$I #ill be allo#ed #ith specific prior appro(al of 4oreign In(estment @romotion

,oard

/c 4IIs #ill be allo#ed onl' thro)gh p)rchases in the secondar' marketsU

/d 4II shall not seek and #ill not get representation in the ,oard of $irectors

/e 6o foreign in(estor" incl)ding persons in acting in concert" #ill hold more than fi(e

percent of the e+)it' in these companies

A2% M)t)al f)nd tr)stees are re+)ired to certif' that the scheme appro(ed b' them is a

ne# prod)ct and is not a minor modification of an e.isting schemeRprod)ct

A% SE,I M)t)al 4)nd reg)lations #ere amended so as to permit the la)nch of Capital

@rotection riented schemes



40/99


41/99


6SE d)ring the first eight months of 430 reached ;s 225 bn in 00 iss)es as compared to ;s > bn in

iss)es sho#ing a gro#th of A5O d)ring the same period last 'ear% $)ring this period"

amo)nt raised from I@s increased from ;s A


42/99


,' =an 200" 2< bn shares #ere )nder demateriali?ed form #ith the 6ational Sec)rities

$epositor' 7td and 2 bn shares #ith Central $epositor' Ser(ices 7td% Shares of abo)t

5"000 companies are )nder demateriali?ation% The market capitali?ation of shares )nder

demateriali?ation rose from ;s "5D> bn in 8pr 2005 to ;s D"D>A bn in 6o( 2005%

There are abo)t 5"000 $@ locations in the co)ntr'% 6S$7 holds > million depositor'

acco)nts #ith a geographical co(erage of 5>2 cities and to#ns%

!ar6" In"rm$iaris

The n)mber of stock brokers registered #ith Sec)rities and E.change ,oard of India

sho#ed a net increase of A0 from >"< in 430D to >" in 4305% There #ere 2D

additions and AD0" Inter-

Connected Stock E.change />20A% The proportion of corporate members

at 6SE #as at >2O and at ,SE at 5DO% The n)mber of s)b brokers registered d)ring

4305 rose from 2"5> in 430D to 25" to 5 d)ring the period% The fees charged of market intermediaries

b' the reg)lator rose from ;s


43/99


n)mber of member brokers% 1hile the share of top sec)rities in the total t)rno(er is

declining o(er the 'ears" the share of top brokers in trading (ol)mes is increasing% 4or

instance in 430A" the top A0 sec)rities acco)nted for 50O of the t)rno(er in ,SE #hich

grad)all' fell to 2O in 4305% Similarl' in 6SE" the top A0 sec)rities acco)nted for 5O

of the (ol)me in 430A" #hich came do#n to 2O in 4305% The top A00 sec)rities no#

acco)nt for 5AO of the trading (ol)me in ,SE and O in 6SE% The top A0 members of

,SE" #ho acco)nted for AO of the t)rno(er in cash segment in 430A" sa# their share

climbing to 2O in 4305% In 6SE" the share of top members rose from AO to 2


44/99


India has a (ast domestic market of 00 million strong middle class pop)lation ha(ing a

s)bstantial p)rchasing po#er and another 500 million people #hose capacit' to p)rchase

is grad)all' increasing% ,eing a (ibrant democrac' #ith a large democratic set)p together

#ith a broad based legal frame#ork incl)ding arbitration and an independent !)dicial

s'stem co)pled #ith a (ast net#ork of bank branches" financial instit)tions and #ell-

organi?ed capital and mone' markets makes India a fa(orable destination for 4$I and

6;I in(estments% The co)ntr' also has a h)ge net#ork of technical and management

instit)tions of highest international standards for de(elopment of e.cellent h)man

reso)rces% India has a record of meeting its international financial obligations as per

sched)le and has ne(er been a defa)lter% The co)ntr' has a strong English lang)age base

for b)siness p)rposes %The strong and (ibrant small-scale sector is again good for

establishing strategic alliances #ith the foreign co)nterparts% Strategic location of the

co)ntr' for the third #orld markets partic)larl' for the rapidl' gro#ing So)th and So)th

East 8sian co)ntries together #ith a s)pporti(e infra str)ct)re base helps in generating a

health' en(ironment for 4$I inflo# into the co)ntr'%

8 recent international agenc' report has predicted that the Indian econom' #ill become

one of the #orldNs largest b' 200Ns the boom

time of the Indian econom' is no# po)ring in torrents like the Indian monsoonal rains%

1ith a G$@ gro#th rate of per cent since 200 starting #ith a rebo)nd in the Indian

agric)lt)re initiall' b)t no# follo#ed #ith a boom in man)fact)ring and ser(ice

ind)stries similar to that of China%

In the last co)ple of months there has been a series of anno)ncements of big in(estments

b' big foreign and 6;I companies% ,ill Gates in his recent (isit to India has anno)nced

that the Microsoft #ill in(est aro)nd B A%5 billion o(er the ne.t fo)r 'ears in India% Intel

the largest comp)ter chips compan' of the #orld has decided to in(est o(er B A billion in

India% CISC has anno)nced plans to spend B A%A billion o(er the ne.t - 'ears in India%

4or Microsoft India is emerging as a big market to e.ploit as Microsoft doesnNt ha(e

m)ch in stake in China% ,)'ing of shares to the t)ne of B A%< ,illion in ,harti-Tele

(ent)res b' odaphone is another big 4$I inflo# into the co)ntr'% To be a gen)ine

competitor of China in 4$I" India sho)ld aim to an ann)al gro#th rate of A0 percent



45/99


#hich the Indian @rime Minister $r Manmohan Singh has also rightl' pointed o)t

recentl'% So far India has not attracted more then B - ,illion ann)all' #hen compared

to 4$I inflo#s of B A & 6o(ember 2002 is A


46/99


If a comparati(e anal'sis of the Indian and Chinese econom' is done some interesting

comparison emerges thro)gh India lags behind China in man' areas a lot needs to be

done if India has to catch )p #ith China% IndiaNs total pop)lation is A0 billionU ChinaNs

is A252 billion% IndiaNs labor force is


47/99




48/99


Dalin# (i"% "% Im&ac" of "% Global Financial Crisis

l5n Poin" '#n$a for In$ian conom4 4 Issus

$omestic li+)idit' shortage

E.change rate (olatilit' and red)ction in access to foreign c)rrenc' f)nds& Inade+)ate

credit a(ailabilit' and slo#do#n in demand

$ecline in b)siness and in(estor confidence and optimism

i#%li#%"s of Rcommn$a"ionsCr$i" Flo( H Im&"us "o Gro("%

Establishment of a corp)s for lending to SMEs

Speed' release of go(ernment f)nds for (ario)s pro!ects to ens)re timel'

implementation and generation of economic acti(it'

4ast tracking of all infrastr)ct)re pro!ects to sp)r in(estments and gro#th thro)gh inter-

sectoral linkages

Doms"ic /i3ui$i"4 H In"rs" Ra"s

4)rther red)ction in repo rate b' at least


49/99


50/99


The gro#th moment)m has clearl' changed gears from cons)mption-led gro#th to being

an In(estment-led gro#th since 200A-02% The gro#th rate of in(estment peaked in 200-

0< and has slo#ed do#n in recent 'ears% It ho#e(er" contin)es to be m)ch abo(e the

gro#th of cons)mption% *nlike the cons)mption slo#do#n" #hich has been hit b' the

tight monetar' polic' of the ;,I" there #ere little signs )ntil recentl' that in(estment has

been dented significantl'% The increase in the deplo'ment of incremental credit to capital

goods in 2005-0 also points to#ards the contin)ation of strong in(estment trends in the

econom'%

In recent months tentati(e signs of slo#do#n in in(estment acti(it' ha(e emerged% In

=an)ar' 200" the capital goods sector clocked a disappointing 2%A per cent gro#th - the

lo#est for nearl' si. 'ears% 1hile a blip in gro#th of capital goods sector for one month

is too earl' to represent a do#nt)rn in in(estment" it is a ca)se of #orr' - more so" if

cons)mption side is alread' reeling )nder a do#nt)rn d)e to high interest rates pre(ailing

in the econom'%

4)rther anal'sis done on the trend gro#th rate of G$@ and gross fi.ed capital formation

/G4C4 also thro#s )p some interesting insights first" both G$@ and G4C4 ha(e been

gro#ing at the rate #hich is belo# their respecti(e trend (al)es at %< and AD% percent%

Second" the b)siness c'cles of G$@ and in(estment had been pro-c'clical )ntil 200-0

ho#e(er" since then the pattern of gro#th has been different% In(estment gre# rapidl'

and m)ch abo(e its long r)n trend for co)ple of 'ears #hen G$@ #as in fact gro#ing

belo# its trend% 1h' has in(estment t)rned co)nter-c'clical in recent 'ears:

The impro(ement in in(estment has been dri(en b' a significant increase in the pri(ate

corporate sectors in(estment #hich has do)bled as a share of G$@ in a matter of fo)r

'ears - from D%D per cent in 200-0 to A%< per cent in 200D-05% (er the same period"

go(ernment in(estment increased from D% per cent of G$@ to 5% percent% 1hat did

pri(ate in(estment gro# rapidl' compared to G$@ after 200A-02 and e.perience a

relati(e slo#do#n in its gro#th in recent 'ears #hen the G$@ gro#th #as at all time



51/99


high: To find ans#ers to the discerning +)estions raised abo(e regarding the in(estment

gro#th o(erriding the G$@ gro#th" one needs to probe the fiscal side of the stor'% 8t the

beginning of the reform process in A>>A" fiscal imbalance #as identified as the root ca)se

of the balance of pa'ments crisis and domestic inflation% The fiscal consolidation" #hich

follo#ed in response" ho#e(er failed to s)stain itself as it lacked a stat)tor' mandate and

the re+)ired instit)tional s)pport% The enactment of the 4iscal ;esponsibilit' and ,)dget

Management 8ct /4;,M8" 200" ho#e(er" pro(ided the re+)ired mandate and lent

credibilit' to the fiscal reforms process of the go(ernment% The fiscal deficit of the centre

as a proportion of G$@ has come do#n from per cent in 2002-0 to %A per cent in

2005-0 and is f)rther estimated to decline to 2%< per cent in 200-0% Similarl'" the

re(en)e deficit also declined from % per cent in 2002-0 to A% per cent in 2005-0 and

is estimated to decline to A%0 per cent b' the ne.t 'ear% The fiscal performance of the state

go(ernments has also sho#n considerable impro(ement" post 4;,M8%

@ri(ate sector sa(ings and in(estment decisions are affected b' the fiscal consolidation

steps )ndertaken b' the go(ernment both in response to specific re(en)e and o)tla's

meas)res and also as a res)lt of the impro(ed economic o)tlook that res)lts from the

impro(ed fiscal consolidation% The grad)al red)ction in both the fiscal and re(en)e

deficit mandated )nder the 4;,M b' the central go(ernment has impro(ed its credibilit'

in the regard that it is serio)s eno)gh to c)rtail non-de(elopmental e.pendit)re and

instead spend in sectors like infrastr)ct)re and ind)strial sector #hich are tho)ght to be

gro#th stim)lating sectors% E(en mere e.pectations abo)t f)t)re fiscal consolidation can

lead to increased confidence of the pri(ate sector% There ma' also be positi(e #ealth

effects associated #ith act)al or e.pected lo#er interest rates and perceptions as to

red)ced f)t)re ta. liabilities%

4iscal consolidation #ill enhance gro#th prospects b' red)cing risk premia as the

go(ernment balance sheet impro(es" and thereb' freeing more reso)rces for pri(ate

in(estment at relati(el' lo#er market interest rates% 8lso" it is kno#n that #here the fiscal

consolidation is large and part of a broader ad!)stment and reform agenda" as in the case



52/99


of India" it is more likel' to be percei(ed b' the pri(ate sector as a credible go(ernment

commitment and re(i(e pri(ate sector confidence%

ne more trend #hich has been +)ite clear and res)lted o)t of the fiscal consolidation

efforts of the go(ernment has been the impro(ement in the p)blic sa(ings% The sa(ings

rate of the o(erall p)blic sector has impro(ed from -2%0 per cent of G$@ in 200A-02 to

%2 per cent of G$@ in 200D-05" the t)rnaro)nd of


53/99


sa(ings #hich #o)ld lea(e more ho)sehold sa(ings to be transferred to the pri(ate

corporate sector for in(estment% In the immediate f)t)re" ho#e(er" #e co)ld see a period

of relati(el' #eak in(estment demand #ith firms concentrating on impro(ing efficienc'

and optimall' )tili?ing e.isting capacit'%

Conclusion

The ongoing fiscal consolidation effort has reass)red the pri(ate sector abo)t the

go(ernmentNs commitment to impro(e the health of the econom'% Since 200-0" an

increase in p)blic sa(ings and a s)bse+)ent drop in p)blic sector financing needs from

pri(ate sa(ings increased the +)antit' of reso)rces and lo#ered the cost of in(estment for

the corporate sector% It has contrib)ted to impro(ing o(erall b)siness confidence%

S)stained fiscal consolidation" especiall' (ia red)ction in re(en)e e.pendit)re" #o)ld

help maintain b)siness confidence as economic gro#th slo#s do#n% In this scenario an'

slo#do#n in in(estment acti(it' co)ld be relati(el' short-li(ed%

In$us"rial Pro$uc"ion

This is the third consec)ti(e month in #hich ind)strial prod)ction data has been

disappointing% This is clearl' a sign of gro#th slo#do#n% The o(erall ind)strial

prod)ction slipped to %2 per cent gro#th

as compared to A2%A per cent for the same period a 'ear ago% Mining sho#ing a marginal

do#nt)rn clocked a gro#th of %D per cent for the period 8pril-=an)ar' 2005- 0 as



54/99


against % per cent for the same period last 'ear% Gro#th in electricit' also declined to

D% per cent in 8pril-=an)ar' 2005-0 from 5%D per cent in 8pril-=an)ar' 200D-05% 8

glance at the )se-based classification s)ggests that deceleration in ind)strial gro#th is

most prono)nced in the cons)mer d)rable sector as it recorded a negati(e gro#th of %A

per cent in =an)ar' 200%

Fo#e(er" #hat is more distressing and disappointing is the 2%A per cent gro#th clocked

b' the capital goods sector% It ma' be #orth#hile to point o)t that despite the dismal

performance of rate sensiti(e cons)mer d)rable sectorU it is the s)stained do)ble-digit

gro#th of capital goods sector that #as keeping the sentiments positi(e abo)t the f)t)re

prospect of ind)strial gro#th% 1hile a blip in the gro#th of capital goods sector for one

month is too earl' to represent a do#nt)rn in in(estment" it is definitel' a ca)se for

concern- more so" if cons)mption side is alread' reeling )nder a do#nt)rn%

8t 2-digit classification" o)t of A5 ind)stries onl' t#o ind)stries namel' #ood K #ood

prod)cts and machiner' K e+)ipment recorded negati(e gro#th in =an)ar' 200 as

compared to !)st one ind)str' - !)te K fibre te.tiles in =an)ar' 2005% Fo#e(er" #hat is

more striking abo)t the gro#th pattern of ind)stries at 2-digit le(el is #ide (ariation in

gro#th across ind)stries in =an)ar' 200% Some of the ind)str' categories that recorded

(er' high gro#th in =an)ar' 200 are - !)te K fibre te.tiles" leather K leather prod)cts

basic chemicals K chemical prod)cts and metal prod)cts and parts% 8s noted abo(e" the

main disappointment of =an)ar' 200 has been the capital goods sector and therfore it is

not a s)rprise to see that #hile machiner' K e+)ipment clocked negati(e gro#th"

transport e+)ipments and parts clocked a paltr' A%< per cent gro#th- the t#o ke'

constit)ents of the capital goods sector%

Infla"ion

The tight monetar' polic' b' the ;,I has managed to contain the headline inflation

/meas)red in terms of the 1@I to 2%>5 per cent for the #eek ended ctober 25" 2005 b)t

mainl' on acco)nt of a larger base% 4or the first time in fi(e 'ears" a le(el of belo# per

cent #as attained% Inflation has been r)ling belo# per cent since 8)g)st A" 2005 after

6et 1orth Stock ,roking 7imitedD0


55/99


to)ching D%D> per cent earlier in 2005% It #as r)ling at % per cent as on =an)ar'


56/99


So far the go(ernment has been keeping the f)el prices in India artificiall' lo#er than the

prices #orld o(er" in a bid to help the aam aadmi% The go(ernment is considering a

combination of meas)res to contain the impact of rising cr)de oil prices% The' are

namel'U red)ction in the e.cise d)t'" enhanced oil bonds and a marginal hike in retail

prices of petrol and diesel%

Inflation in India in 200 #ill depend m)ch on ho# the food prices beha(e globall' and

ho# m)ch of the increase in oil prices #ill be passed on to the cons)mers% 8lso" rising

s)bsidies in food" fertili?ers and petrole)m are a ma!or concern and needs to be

addressed% Thirdl'" India imports 50 per cent of its cr)de oil re+)irements%

There are 'et concerns on the demand-s)ppl' mismatch pertaining to agric)lt)re-based

items% It is also e.pected that the go(ernment might go in for imports of some of the

6et 1orth Stock ,roking 7imitedD2


57/99


agric)lt)ral commodities in case there is a shortfall especiall' in the case of #heat% The

7ondon-based International Grains Co)ncil has made a preliminar' forecast for global

#heat o)tp)t at D< million tonnes for 200-0>" )p o(er 0 million tonnes from 2005-0%

nl' if this happens #o)ld there be a respite from high prices% Similarl'" the 1orld

8gric)lt)ral S)ppl' and $emand Estimates /18S$E report released b' the *%S

$epartment of 8gric)lt)re /*S$8 states that the in(entor' of #heat for 2005-0 are

pro!ected lo#er b' 2 million b)shels in $ecember 2005" reflecting higher e.pected

domestic offtake and e.ports% This implies higher demand and hence hardening prices%

Global oilseeds stocks are also e.pected to decline b' almost 2< per cent d)ring 2005-0

to %AD and then

mo(ed back do#n at the end of the trading session% The stock market fallo)t on =an)ar'

A5-A" 200 on acco)nt of 4IIs dra#ing o)t dollars has ca)sed the r)pee to depreciate"

and settle at >% (ers)s the greenback as on =an)ar' 2A" 200% The r)pee s)stained at

>%> on =an)ar' A" 200" mainl' on acco)nt of contin)ed inflo#s" despite some

do#n#ard press)re of ref)nds for ;eliance @o#er I@%

The for#ard premia has remained positi(e thro)gho)t not nearing the 0 le(el impl'ing

that the sentiments are to#ards a #eakening r)pee and conse+)entl' a strengthening

dollar% n =an)ar' A5-A" 200" the ;,I inter(ened in the fore. market thro)gh s#ap

transactions" #ith the first leg being a spot transaction /b)' and the other being a

6et 1orth Stock ,roking 7imitedD


58/99


for#ard transaction /sell% The reason for carr'ing s#ap trades #as to postpone inf)sion

of r)pee li+)idit' into the s'stem% This p)shed )p the D-month and A-'ear for#ard premia

abo(e 2 per cent%

The rapid gro#th in t)rno(er in the foreign e.change market #as s)stained b' large

s)rpl)s conditions in the spot market as a(erage dail' t)rno(er increased to B


59/99


The de(elopment of a corporate bond market in India has lagged behind as compared to

other financial market segments o#ing to man' str)ct)ral factors /8nne.)re % 1hile

primar' iss)ances ha(e been significant" most of these #ere acco)nted for b' p)blic

sector financial instit)tions and #ere iss)ed on a pri(ate placement basis to instit)tional

in(estors% The total pri(ate placements amo)nted for the period =an)ar'& $ecember 2005

amo)nted to ;s% A"A52%>0 billion% The secondar' market lacks market li+)idit'% The total

(ol)mes for =an)ar' 2005 - =an)ar' 200 #as ;s% A"002%D> billion% ;,I is also

considering allo#ing market repos in corporate bonds as one of the steps to deepen the

market /in accordance #ith recommendations b' the $eepak @arekh Committee%

@)blic Sector banks are e.pected to s#amp the domestic financial markets #ith bonds

o(er the ne.t fo)r months in order to b)ild )p their Tier II Capital" as part of the ,asel II

compliance% Some of the banks that ha(e +)e)ed )p are State ,ank of India" ,ank of

India" *nion ,ank of India" i!a'a ,ank" *C ,ank and $ena ,ank% ne of the first in

the +)e)e is ,ank of ,aroda #hich raised ;s%


60/99


5%>>O 20A5 of ;s% D0 billion and %O 20D of ;s% 0 billion for the first time in the

6e# 3ear%

Fea(' (ol)mes #ere #itnessed on =an)ar' A" 200 to the t)ne of ;s% 2>%< billion"

#hich res)lted in a massi(e fall in 'ields% The 'ield on the A0-'ear benchmark bond #as5% per cent /on =an)ar' 2" 200%

,)t" on =an)ar' 2" 200" the 'ields bo)nced back to 5%< per cent on e.pectations that

the ;,I #o)ld c)t rates in its +)arterl' Monetar' ;e(ie# @olic' anno)ncement% n

=an)ar' 2>" 200" the 'ields !)mped to 5%


61/99


=an)ar' 0" 200" #ith total (ol)mes being ;s%%>< billion% Markets opened #ith 'ields

ho(ering aro)nd 5% and D"25%0 points" respecti(el'% The

Sense. made a ne# record on =an A0" 200 b' to)ching 2A"20D%55 points% ,)t it lost 5A%>

points and


62/99


8part from bank credit" the corporate sector contin)ed to meet its f)nding re+)irements

from non-bank so)rces especiall' the capital markets% ;eso)rces raised thro)gh domestic

e+)it' iss)ances from 8pril & $ecember 200 #as ;s%A">50 million" #hich #as 0 per

cent higher than the corresponding period of the pre(io)s 'ear% Mobilisation in the form

of e+)it' iss)ances thro)gh 8merican depositor' receipts /8$;s and global depositor'

receipts /G$;s for the same period #as ;s%AA">0 million" #hich #as per cent

higher than the pre(io)s 'ear% In a mo(e to deepen the secondar' market" the go(ernment

has allo#ed all tr)sts to in(est in the stock market as #ell as the debt market%

SE,I has permitted short-selling to all classes of in(estors incl)ding s)b-acco)nts of

4IIs% Short selling occ)rs #hen in(estors sell stocks that the' do not o#n at the time of

transaction% SE,I proposes to introd)ce the Sec)rities 7ending K ,orro#ing /S7,

scheme along #ith short selling% ,orro#ing of e+)it' shares b' 4IIs #ill onl' be for the

p)rpose of deli(er' into short sale%

6et 1orth Stock ,roking 7imitedD


63/99


SU@ PRI! TOR

,anks in the *S pro(ided loans to people for p)rchasing homes.

,et#een A>0 and 2000 the *S econom' #itnessed a prolonged b)ll market

#hich sa# an appreciation of ho)sing assets% Fence in this king of a sit)ation the

banks #ere not too #orried abo)t the loans handed o)t as the appreciation of the

mortgaged propert' #as good eno)gh to hedge them against an' defa)lt%

8s the loans increased" the banks b)ndled them as sec)rities in order to spread the

loans and mitigate their risks%

The banks managed to get 888 certification from rating agencies for these

sec)rities% ;ating agencies based on the gro#th potential fo the )nderl'ing assets

#ent along #ith the banks #itho)t a thoro)gh credit check of the constit)ents of

the sec)rities%

Th)s these high rated papers got distrib)ted to (ario)s in(estors in the market%

In(estment banks themsel(es #ere one set of acti(e in(estors in these papers%

Since the )nderl'ing assets #ere appreciating 'ear on 'ear" the' #ere l)red into

making more in(estments in these papers%

The' e(en borro#ed to f)nd these in(estments since it #as looking (er' h)nk'

dor' all the #a'% 8fter all inflation #as )nder check" interest rates #re attracti(e

and hence loans #ere cheap% 7e(eraging made immense sense to the participants%

6et 1orth Stock ,roking 7imitedD>


64/99


The s)b-prime sec)rities #ere )sed as collateral for the f)nds borro#ed%

The price of the sec)rities soared on the back of increasing demand aided b' the

li+)idit' gl)t%

The appreciating sec)rities attracted more b)'ers ca)sing f)rther price

appreciation%

E(er' thing looked fine till the gro#th in ho)sing started to slo# do#n and the

s)b prime nat)re of the loans got e.posed% nce borro#ers sa# the ho)se prices

declining defa)lts on these loans started%

,' the time sanit' da#ned" it #as too late% The mess stared at the lenders of

ho)sing loan% 8 large n)mber of borro#ers #ere of s)b-prime nat)re incapable of

pa'ing back their loans% This co)pled #ith falling asset (al)e spelt problems for

the financial s'stem%

The sec)rities #hich essentiall' mirrored these assets like#ise lost (al)e%

The highl' le(eraged in(estment banks holding on the large +)antities of s)b

prime sec)rities tried to redeem themsel(es b' li+)idating them in order settle

their debt o)tstanding%

This )n#inding triggered a f)rther price collapse of the sec)rities making it

diffic)lt for the in(estment banks to reali?e eno)gh from their sale of sec)rities toenable them to meet their debt obligations%



65/99


NJT STR'TGIS

n =an)ar' 2>" 200" the IM4 has do#ngraded its global gro#th pro!ections at %A per

cent in 200 from %> per cent in 2005" mainl' on acco)nt of lo#er gro#th pro!ections of

the ad(anced economies% 1hile the Indian econom' has beg)n its !o)rne' on the gro#th

path" there are +)estions being raised on the pace of this !o)rne': If G$@ gro#th #o)ldmoderate to % per cent as is being ascertained b' different +)arters" this indicates

that gro#th in the remaining t#o +)arters #o)ld decline to -%D per cent% This is

s)bstantiall' lo#er than performance of the first t#o +)arters% This ma' be attrib)ted to

decline in e.ports" decline in domestic demand" #hich is interestingl' co)pled #ith a

resilient gro#th in in(estment demand% 1hile economic theor' /8nne.)re I endorses the

(ie# that in(estment demand creates domestic demand" its practical implication remains

to be seen% ,)t" c)rrentl' the pict)re is l)ll as the latest man)fact)ring data has !)st been

released% $omestic li+)idit' remains strong b)t there are fe# takers at the c)rrent interest

rates%

n =an)ar' 0" 200" 4ederal ;eser(e once again c)t the federal f)nds rate b'


66/99


press)res in the econom' despite the press)res of global softening of rates% 8t the same

time" it has not r)led o)t the Wreadiness to act if t)rb)lence in global markets threatened

gro#th and financial stabilit'N%

I!P'CT OF @UDGT ON


67/99


GR'PIC'/ RPRSNT'TION OF DFC

Close Price

0

200

400

600

800

1000

1200

2-Ja

n-09

6-Ja

n-09

9-Ja

n-09

13-Jan

-09

15-Jan

-09

19-Jan

-09

21-Jan

-09

23-Jan

-09

28-Jan

-09

30-Jan

-09

From "% abo5 #ra&% an$ "abl ( can conclu$ "%a" "% DFC @an6 %as n$$ u&

(i"% n#a"i5 from 1017.*="o +2=.> an$ "%is s%o(s a n#a"i5 im&ac" on "% o5rall

Fr"ilrs sc"ors .



68/99


ISTORIC'/ D'T' OF ID@I @'N

Series DatePrev

CloseOpenPrice

HighPrice

LowPrice

LastPrice

ClosePrice

EQ 1-Jan-09 67.7 69 70 67.5 69.55 69.7

EQ 2-Jan-09 69.7 71 73.25 69.35 72.3 72.15

EQ 5-Jan-09 72.15 74 74.4 71 72.7 72.55EQ 6-Jan-09 72.55 72.65 73.95 69.2 71.75 71.45

EQ 7-Jan-09 71.45 72 72.35 62 65.85 66.5

EQ 9-Jan-09 66.5 64 68.1 63 65.3 64.65

EQ

12-Jan-

09 64.65 64 65.3 60.2 61.6 61.5

EQ

13-Jan-

09 61.5 63 64.9 60 62 61.25

EQ

14-Jan-

09 61.25 62.45 63.8 60.6 62.4 62

EQ

15-Jan-

09 62 60.5 61.75 58 59.2 59.25

EQ

16-Jan-

09 59.25 60 60.5 58.75 60 59.9

EQ

19-Jan-

09 59.9 59.95 60.85 59 60 60.4

EQ

20-Jan-

09 60.4 58.7 59.5 58.05 58.4 58.3

EQ

21-Jan-

09 58.3 58.3 58.3 56.05 56.3 56.3

EQ

22-Jan-

09 56.3 56.8 58 54.6 55.25 55.4

EQ

23-Jan-

09 55.4 56.9 56.9 50.6 54.05 53.7

EQ

27-Jan-

09 53.7 55 56.7 54.1 55.5 55.45

EQ

28-Jan-

09 55.45 56.25 56.9 55.45 56.45 56.35

EQ

29-Jan-

09 56.35 57.7 57.8 55.65 57 56.7

EQ30-Jan-

09 56.7 55.2 57.75 54.05 56.85 57.15



69/99


GR'PIC'/ RPRSNT'TION OF ID@I @'N

C lo se P ri

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

2-Jan

-09

6-Jan

-09

9-Jan

-09

13-Jan

-09

15-Jan

-09

19-Jan

-09

21-Jan

-09

23-Jan

-09

28-Jan

-09

30-Jan

-09

From "% abo5 #ra&% an$ "abl ( can conclu$ "%a" "% ID@I @an6 %as n$$ u&

(i"% n#a"i5 from >+.*"o =*.1= an$ "%is s%o(s a n#a"i5 im&ac" on "% o5rall

Fr"ilrs sc"ors .



70/99


ISTORIC'/ D'T' OF ICICI @'N

Series DatePrev

CloseOpenPrice

HighPrice

LowPrice

LastPrice

ClosePrice

EQ 1-Jan-09 448.1 450 466.95 450 465 464.15

EQ 2-Jan-09 464.15 465 479.8 462.25 472.55 471.25

EQ 5-Jan-09 471.25 475.5 504 474.15 500.9 499.9EQ 6-Jan-09 499.9 480 530.7 480 526 523.45

EQ 7-Jan-09 523.45 528 538.6 454.05 462.5 467.85

EQ 9-Jan-09 467.85 458.7 483 441 445.8 456.6

EQ

12-Jan-

09 456.6 440 463.3 428.2 442 438

EQ

13-Jan-

09 438 435 448.4 418.05 428.85 425.45

EQ

14-Jan-

09 425.45 428.65 451 428.65 443.35 441.1

EQ

15-Jan-

09 441.1 429 429 398.3 410.55 408.65

EQ

16-Jan-

09 408.65 415 427.7 408.65 420.4 423.75

EQ

19-Jan-

09 423.75 425 444.4 408.5 412.35 412.6

EQ

20-Jan-

09 412.6 403 407.8 390.25 395.8 396.3

EQ

21-Jan-

09 396.3 389.7 389.7 360 366.6 369.35

EQ

22-Jan-

09 369.35 381.95 385.9 358.75 380.05 378.05

EQ

23-Jan-

09 378.05 331.55 391 331.55 365.9 363.85

EQ

27-Jan-

09 363.85 372.95 389 359.1 380 381.1

EQ

28-Jan-

09 381.1 386.95 412.5 382.45 410.9 408.05

EQ

29-Jan-

09 408.05 430 433.7 402.6 404 410.1

EQ30-Jan-

09 410.1 402 418.9 395 415.25 416.25

6et 1orth Stock ,roking 7imited5D


71/99


GR'PIC'/ RPRSNT'TION OF ICICI

Close Price

0

100

200

300

400

500

600

2-Jan-

09

6-Jan-

09

9-Jan-

09

13-Jan

-09

15-Jan

-09

19-Jan

-09

21-Jan

-09

23-Jan

-09

28-Jan

-09

30-Jan

-09

From "% abo5 #ra&% an$ "abl ( can conclu$ "%a" "% ICICI @an6 %as n$$ u&

(i"% n#a"i5 from >.1="o 1>.2= an$ "%is s%o(s a n#a"i5 im&ac" on "% o5rall

Fr"ilrs sc"ors .



72/99


'

2 ID@I >1.=7

7 ICICI 2*.*+

0

200

400

600

800

1000

HDFC IDBI ICICI

!"#$"



73/99


C'NG IN K OF TR CO!P'NIS

S.NO CO!P'N N'! C'NG IN K

1 DFC -+.=2

2 ID@I -21.+=

7 ICICI -11.=

CH%$" I% &

HDFC

IDBI

ICICI

6et 1orth Stock ,roking 7imited5>


74/99


@'NING --- NGTIDA%

,ank deposits sho)ld be bro)ght )nder section 0 7 for income ta.

ded)ctions%

;ela.ation in lock in period for sa(ings )Rs 0C from


75/99


8llo# another ro)nd of ;S and more po#er to attract s)itable talent in @S*

banks%

Im&ac"

;eimb)rsement b' the go(ernment for loan #ai(er of farmers of ;s%D0"000 #ill be in

'ears ha(e a ne)tral impact on @S* banks as the' #ill be able to #rite off these loans K

sho# a cleaner balance sheet in 200>% ,)t" @S* banks are e.pected to face press)re on

their net interest margins )ntil the s)bsid' for #ai(er of agric)lt)ral loans and one timesettlement of loans is released from the go(ernment% The cost of adding more r)ral

ho)seholds in their r)ral branches ma' increase the operating cost for the @S* banks%

1hereas" banks that recei(e di(idend from their s)bsidiaries #ill benefit from the set off

of di(idend distrib)tion ta. K the creation of f)nd in 68,8;$" SI$,I K 6F, and

#ithdra#n of ,CTT are the fa(orable steps% Fo#e(er" no meas)res #ere taken to compl'

#ith ,asel II g)idelines as @S* banks need h)ge cheap capital b)t stringent restrictions

on 4IIR4$I participation K str)ct)ral h)rdles like restrictions on capital a(ailabilit' /d)e

to high go(ernment o#nership" restrictions on credit deplo'ment and restricti(e labo)r

la#s" #eak corporate go(ernance ha(e impaired the abilit' of p)blic sector banks%



76/99


=.2 C!NT SCTOR

1.ISTORIC'/ D'T' OF '!@UL' C!NT

Series DatePrev

CloseOpenPrice

HighPrice

LowPrice

LastPrice

ClosePrice

EQ 1-Jan-09 70.05 70.25 71.7 69.8 70.55 70.75EQ 2-Jan-09 70.75 71.75 72 67.85 69.5 69.1

EQ 5-Jan-09 69.1 70.5 71.6 68.25 70.05 70.1

EQ 6-Jan-09 70.1 70.5 78.4 69.1 77.3 76.4

EQ 7-Jan-09 76.4 78.65 79.2 71 72.35 72.2

EQ 9-Jan-09 72.2 71 74.5 69 72.9 72.65

EQ

12-Jan-

09 72.65 72 73.75 67.1 69.5 69.35

EQ

13-Jan-

09 69.35 68.8 71.65 68 71.65 70.5

EQ

14-Jan-

09 70.5 71 72.45 70.05 71.8 71.95

EQ

15-Jan-

09 71.95 70 70.55 68 69 69.1

EQ16-Jan-

09 69.1 69.9 71.9 69 71 70.75

EQ

19-Jan-

09 70.75 71.75 74 70.1 73.95 73.3

EQ

20-Jan-

09 73.3 73.5 73.5 69 69.05 69.6

EQ

21-Jan-

09 69.6 68.1 71.75 68.1 70.9 70.6

EQ

22-Jan-

09 70.6 71 71.8 68.6 69.35 70.05

EQ

23-Jan-

09 70.05 69.85 69.9 65.1 67.4 66.1

EQ

27-Jan-

09 66.1 66.75 72 66.75 69.3 69.6

EQ

28-Jan-

09 69.6 70.1 72 69.55 70.8 70.75

EQ

29-Jan-

09 70.75 71.5 72.4 67.1 67.75 67.9

EQ

30-Jan-

09 67.9 68.4 71.45 66.5 70.6 70.85



77/99


GR'PIC'/ RPRSNT'TION OF '!@UL' C!NT

Close Price

60

62

64

66

68

70

72

7476

78

2-Ja

n-09

6-Ja

n-09

9-Ja

n-09

13-Jan

-09

15-Jan

-09

19-Jan

-09

21-Jan

-09

23-Jan

-09

28-Jan

-09

30-Jan

-09

From "% abo5 #ra&% an$ "abl ( can conclu$ "%a" "% 'mbu;a Cmn" %as

n$$ u& (i"% n#a"i5 from *0.*="o *0.8= an$ "%is s%o(s a n#a"i5 im&ac" on "%

o5rall Fr"ilrs sc"ors .



78/99


2% FIST;IC87 $8T8 4 $ECC86 CEME6T

Series DatePrev

CloseOpenPrice

HighPrice

LowPrice

LastPrice

ClosePrice

EQ 1-Jan-09 126.1 148.8 148.8 126 146.9 144.95

EQ 2-Jan-09 144.95 135 149.9 131 138.1 138.25

EQ 5-Jan-09 138.25 132 144.75 127.35 141.9 140.75

EQ 6-Jan-09 140.75 139.5 147.35 137 142.5 144.45

EQ 7-Jan-09 144.45 140.25 140.25 140 140 140

EQ 9-Jan-09 140 138.5 138.5 138.5 138.5 138.5

EQ

12-Jan-

09 138.5 131.6 131.6 131.6 131.6 131.6

EQ

13-Jan-

09 131.6 132 132.95 126 132.95 132.95

EQ

14-Jan-

09 132.95 131 132 131 132 132

EQ

15-Jan-

09 132 131.9 131.9 131.9 131.9 131.9

EQ

20-Jan-

09 131.9 131 131 131 131 131

EQ21-Jan-

09 131 135.7 137.55 130.5 130.5 130.9

EQ

22-Jan-

09 130.9 125.4 131 125.4 127.5 127.5

EQ

23-Jan-

09 127.5 122 132 122 131.9 132

EQ

27-Jan-

09 132 130 135.95 130 135.95 135.95

EQ

28-Jan-

09 135.95 130.2 139.9 130.2 138 138.95

EQ

29-Jan-

09 138.95 132.05 140 132.05 140 140

EQ

30-Jan-

09 140 133.05 133.05 133.05 133.05 133.05



79/99


GR'PIC'/ RPRSNT'TION OF DCC'N C!NT

Close Price

115

120

125

130

135

140

145

150

2-Jan-09

6-Jan-09

9-Jan-09

13-Ja

n-09

1

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