TOPIC PAGE NO.

MARKET WATCH 1

PICK OF THE MONTH 2

RUPEE AND ITS CURRENT SCENARIO 3

OFFSHORE DERIVATIVES 4

BRAND EQUITY 5

WHAT’S GOING TO BE YOUR MODE OF PAYMENT? 6

NEW TELECOM POLICY-2012 7

SECTORIAL REVIEW 8

ENTER ,IKEA! ATITHI DEVO BHAVA. 11

BUDGET REVIEW 12

JARGON BUSTER 14

Prof. SURESHA B.

PRANOY SAMUEL

VIDYA JAIN

EDITORS

ADITI VARSHA DAVIDSON

KOMAL L.

RASHMI N.

ZUBIN SHERIFF

CHIEF EDITOR

Dr. JAIN MATHEW

HEAD OF DEPARTMENT, MANAGEMENT STUDIES

ACADEMIC COORDINATOR

CREATIVE TEAM

EDITORIAL TEAM

Company High Low Last

Price

Prv

Close Change % Gain

BHEL 221.30 216.10 220.55 215.00 5.55 2.58

Jaiprakash

Asso 72.75 70.35 72.70 71.35 1.35 1.89

DLF 189.80 184.90 189.75 186.45 3.30 1.77

ONGC 277.55 270.75 277.20 272.55 4.65 1.71

Tata Power 94.15 91.60 94.00 92.55 1.45 1.57

Company High Low Last

Price

Prv

Close Change % Loss

Reliance 734.00 711.60 715.85 737.40 -21.55 -2.92

ACC 1264.95 1238.05 1242.05 1271.20 -29.15 -2.29

Ambuja

Cements 174.40 170.60 171.80 175.75 -3.95 -2.25

TCS 1252.00 1223.75 1225.35 1252.80 -27.45 -2.19

Cairn India 330.35 323.60 326.85 334.00 -7.15 -2.14

Karnataka Bank Limited is a private sector banking institution. The Reserve Bank of

India has designated Karnataka Bank as an A1+-class scheduled commercial bank.

The bank now has a national presence with a network of some

503 branches across 20 states and 2 Union territories. It has over

5844 employees and 4.84 million customers, including farmers

and artisans in villages and small towns throughout the country. Its

shares are entirely privately owned by some 86,868 shareholders.

For the fiscal year ending 31 March 2011, the total interest earned was Rs 2370.84 crores.

The total income for the bank was Rs 2662.60 crores and the expenditure, Rs 2307.31

crores, thereby yielding a profit of Rs 204.61 crores.

Stock can be bought in Karnataka Bank for a short term horizon. It

is can be seen from the charts of the stock that in February, it

peaked at Rs 112. The stock was on a medium-term downtrend

until it found support around Rs 72 in late May this year.

Subsequently, it reversed direction triggered by positive

divergence in daily relative strength index. Over the last two

weeks, the stock has been on a short-term uptrend.

One can observe that there is an increase in volumes during advance sessions of the

stock's current up move. The daily RSI is featuring in the bullish zone and weekly RSI is

inching higher in the neutral region. The daily moving average convergence divergence

indicator is moving upwards in line with the stock price and is likely to enter the positive

territory strengthening the upward momentum. The short-term forecast on the stock is

bullish. One can expect its on-going up move to continue and touch price target of Rs

89.5 or Rs 92 in the ensuing trading sessions. Traders with short-term perspective can buy

the stock with stop-loss at Rs 84.

Source: Business Line

The rupee has reached 57.12 asof22nd June 2012. The markets

and industry had expected RBI to reduce the base points by

25base points. The government and the RBI are at crossroads

where RBI’s main concern is to curb inflation where as the

government wants to concentrate on growth.

Oil has been the biggest problem for India over the past

two-three years or so. With oil prices correcting, automatically

the macros of the Indian economy start to look up. If the oil

remains at these levels then it will make the task of the

government as well as the RBI much easier, given that it has

an effect on inflation, interest rates, fiscal deficit and a lot of

other interrelated variables.

The main reason for the outperformance today for the market is the fact that Brent

crude has also corrected. Also, the gap between WPI and Brent has come down from

about USD 15 per barrel, where it was about couple of weeks ago, to about USD 10-11

per barrel or so. So, these are very important positives for the country. The market is

gradually reflecting it.

At this point of time, the only major problem remains

the rupee. Despite the correction in oil prices, which

will have a favorable effect on trade deficit, the

rupee continues to drift lower and it's again touched

an all time low. That's the only problem area for the

market at this point of time.

Crude and rupee are countering each other where crude is correcting, but rupee is

depreciating. Although FIIs observe that the fundamentals are improving because of

declining crude prices, but then their dollar returns are getting impacted because of

depreciation of the rupee.

The real trigger for the market could be when the new finance minister takes over and

what exactly the policies that he/she is going to follow and what the approach is going

to be towards the managing the subsidies. Now that the task has been made a little bit

easier, maybe it's the right time to decontrol diesel prices. These are important cues

which the market is looking forward to.

Meera Alexander

Offshore derivatives instruments (ODIs) are investment vehicles used by overseas

investors for an exposure in Indian equities or equity derivatives. These investors are not

registered with SEBI, either because they do not want to, or due to regulatory restrictions.

These investors approach a foreign institutional investor (FII), who

is already registered with SEBI. The FII makes purchases on behalf

of those investors and the FII's affiliate issues them ODIs. The

underlying asset for the ODI could be either stocks or equity

derivatives like Nifty futures.

Participatory Notes (PN) are one of the categories of ODIs. At a

basic level, the underlying asset class could be stocks, and

returns would be directly related to the appreciation in prices of

those stocks. Returns could be linked to the appreciation in Nifty

over a given time frame and could be even linked to a

combination of change in Nifty and a basket of stocks.

Although participatory notes have their advantages, there are fears that they are being

used as a vehicle by promoters, market operators and politicians to repatriate

illegitimate funds parked abroad. Quite a few promoters are said to be using this route

to ramp up their stocks. Then there is also a concern that terrorist organizations could be

channeling money through ODIs and using profits to fund their nefarious activities. Then

there are concerns that too much money flowing into the derivatives segment through

the Promissory-Note route is adding to volatility, not to mention the pressure on the

currency.

It can be summarized that if SEBI’s proposals on promissory notes are implemented, the

short term inflows could be affected, but it could bring about positive results in the long

term. As of now SEBI has been encouraging FII’s to enter our stock market by registering

themselves and not by way of promissory notes.

If more overseas players register with SEBI, it will be easy for the regulator to keep tabs on

the fund flow into the market.

Pranoy Samuel

“Brand value is very much like an onion. It has layers and a core. The core is the user who

will stick with you until the very end”-Edwin Artzt.

In earlier times a value of the firm was attached only to its tangible

assets and these included manufacturing assets, land and buildings

or financial assets such as receivables and investments they would

be valued at cost or outstanding value as shown in the balance

sheet. The market was aware of intangibles, but their specific value

remained unclear and was not specifically quantified. This does not

mean that management failed to recognize the importance of

intangibles. Brands, technology, patents and employees were

always at the heart of corporate success, but rarely explicitly

valued. Their value was subsumed in the overall asset value.

The concept of brand equity has a lot of layers attached to it it’s not only the value

attached to a brand but it’s also bridges the gap between marketing and finance and

marketing. Brand Equity also shows the currently favoured item of the customer which will

in turn mean that this particular item is most likely to generate cash flow in the near future.

Loyalty is intangible, yet incredibly valuable, since over time it builds great brand equity.

Brand Equity goes right to the value of every company. In fact, brand equity is sometimes

the most decisive factor in assessing company value.

"A brand or corporate image is not something that can be seen, touched, tasted,

defined or measured. Intangible and abstract, it exists solely as an idea in the mind. Yet it

is often a company's most precious asset...in a world of parity products and services,

nothing can tilt things more dramatically in your favour."

This leads to the isolation of the portion of “super profits” generated by the brand. It is

argued that the brand is central to a firm’s ability to earn these profits and that it exerts

an influence on the resources and capabilities that are directly responsible for a firm’s

success. No other intangible has the same linear link between the market which is the

source of a company’s revenues, and the wealth the company creates for its

shareholders.

Komal Lalit

Conventional use of credit and debit cards will not come down with the upcoming rage

of mobile payment methods which will gain momentum in the next two months.

Payment options have seen major variations in the past few years. In 2001, cash did not

lose its utility and had a usage rate of around 80% in Asia. Although it has seen a decline

to 60% in 2011.The non-cash payment market has expanded with the card payment

market growing to become the third largest in the world. A strong electronic payment

market system has been built on demands for updated technology, globalization and

customer preferences for safety and spontaneity.

A few trends that are expected to frame the payment market in the coming years,

enumerated under:

Contactless payment cards: Usual metro cards which are used for

fare collection. These are based on the concept of near field

communication. This is a short-range, high-frequency wireless commu-

nication technology, which enables the exchange of data between

devices at a distance of about 10 cm. These cards only need to be

waved near a card reader and even swiping is avoided for customer

convenience. The Indian Railways have adopted the concept as well.

According to a data monitor report on payment cards in India, which was published in

January this year, contactless payments represent a $216.5 billion market in the country,

with convenience stores offering the biggest opportunity for such payments. Contactless

payments are being done through mobile phones using the nfc technology and

contactless chips. The phone is placed near the card reader to initiate to payment.

In India, Citibank launched a 26-week pilot for mobile contactless payment in Bangalore

in July 2009, partnering with Vodafone and Nokia. Despite the success of the program,

the adoption of this payment mode has been slow as the readers and chip-enabled

mobile handsets are not being produced on a mass scale.

Aditi Davidson

The government has cleared New Telecom Policy which focuses on:

i) Free Pan India Roaming

ii) Inter Circle Mobile Portability

iii) Minimum Broadband seed @ 2 MBPS

The first two aspects may take some time but under the third

aspect of NTP will come under with immediate effect. With the

new policy getting approved, telecom licenses have been

delinked from spectrum which was earlier bundled with the

licenses.

The NTP 2012 will allow operators to provide services based on

any technology by using airwaves and will not restrict them to

use it for particular service using any specific frequency band.

At present, there are frequencies which are specifically used

for providing GSM or CDMA services as per the permit given to

the companies.

NTP 2012 is a replacement of 13 year old telecom policy which

focuses on technology usage. Personally speaking NTP was nor

a need or nor a necessity at this current period where country

is facing many other important problems like depreciating

rupee, increasing fuel prices, low employment, negative IIP

etc. these issue should have been addressed or should be

addressed immediately. But this NTP will play a role only

directed towards telecom sector, failing to address the issues

of the common man.

Karthekeya Singh

Research shows that the Education sector is the upcoming sector as far as jobs and

opportunities are concerned for the coming quarter.

Elaborating the current hiring scenario of the sector, the tremendous growth in

education sector can be easily and efficiently measured by a number of vacancies

published in any job supplement or portal in comparison to other sectors.

Firstly, Playschool/ preschool/kindergarten market in urban locations is a critical area in

the education segment, which is often ignored or underplayed. This newly-formed and

fast moving market has provided employment opportunities to fresh graduates,

especially women, with 0 to 2 years of experience with decent remuneration packages.

Relating this movement to the 'Brain Gain' phenomenon, owing to the boom in higher

education segment, experienced educationists settled in foreign land are willingly

relocating back to India. This trend shift is a result of attractive pay packages and

reputed profiles offered by private education institutions and universities.

Industry experts echoed that as disposable income will rise in Indian households, a major

share of their expenditure will go to the education sector.

In India higher education covers all the post-secondary education

in different subjects such as humanities, commerce, medical,

engineering and technology. Most of the universities offer

multi-disciplinary courses.

However, there are some which are confined to a particular

discipline for e.g. technology and medical. Universities differ in terms

of their academic, administrative and financial arrangements. The

country is dominated by state universities, which are 251 in number

while a majority share of colleges in India are private unaided

institutions.

The number of universities has increased by around 13% in 2007-08, as compared to the

last year. Colleges in India witnessed a growth of over 14% in 2007-08 on a year on year

basis. Private unaided colleges form a significant part of the total number of colleges in

India and are growing rapidly in number.

Out of 20,667 colleges, 2,166 colleges are explicitly for women.

Besides these colleges, the country also has around 7,000

technical education institutions. By 2015, India is expected to

witness a sizeable reduction in the lowest income earning

section of the society, which will be replaced by a much larger

urban middle class, creating a favorable market for the

education sector.

Education is the second largest expenditure for the middle class. Economic growth is

expected to drive household income among the middle class. These factors – willingness

to spend on education and the rise in purchasing power will allow the growing middle

class to bid for an education from public institutes.

Every year a large fraction of Indian students spend large sums of on a foreign

education due to the letter system of education. Some trends relating to import of

education are as follows:

An Indian spends USD 4bn annually on higher education abroad 71% are pursuing

postgraduate courses in engineering and management.

Australia is a popular destination for vocational training and course in hospitality.

U.K.’s popularity is due to the variety of one-year degrees on offer.

China and Russia are emerging as favored destination for medical education.

Traditionally dominated by the public sector, the higher education market in India is

being driven by private sector participation, with several high quality private institutes

setting standards and pioneering growth. The expenditure on higher education in India is

estimated to be USD 6.5bn in

2008.

Private institutions have been focusing on the area of professional courses like

engineering and medicine as well as post graduate courses like MBA. Private set-ups

account for 50% of the total medical seats and 80% of the engineering seats available in

students in India.

There is a certain lack of transparency of government regulatory, policy and funding

frameworks. Domestic laws and regulations are administered in an unfair manner.

Subsidies are not made known in a clear and transparent manner. Tax treatment which

discriminates against foreign suppliers. Foreign partners are treated less favorably than

other providers.

GATS define service trade as occurring via four modes of supply all of which are relevant

to education:

Consumption Abroad: Movement of students from one country to another for higher

education (foreign students in US universities).

Commercial Presence: Establishment of local branch campuses or subsidiaries by foreign

universities in other countries, course offerings by domestic private colleges leading to

degrees at foreign universities, twinning arrangements, franchising.

Movement of Natural Persons: Temporary movement of teachers, lecturers, and

education personnel to provide education services overseas.

The principal barriers to trade in higher education services as regards cross-border supply

(mode 1: e.g. distance delivery or e-education; virtual universities) are the following:

1)Inappropriate restrictions on electronic transmission of course materials.

2)Economic needs test on suppliers of the services in question.

3)Lack of opportunity to qualify as degree granting institution.

4)Requirement to use local partners, with at the same time a barrier against entering into

and exiting from Joint ventures with local or non-local partners on a voluntary basis.

5)Excessive fees/taxes imposed on licensing or royalty payments.

6)Measures that restrict the entry and temporary stay of students, such as visa

requirements and costs, foreign currency and exchange controls.

Swedish retailer IKEA, the world's largest furniture maker, is

opening up in India, marking a crucial step for the Indian

government whose policy flip flops related to foreign investment

have damaged market confidence.

The company, known for huge stores selling flat pack furniture

and accessories, said it would invest 1.5 billion euro's to open 25

stores in Asia's third-largest economy after initially balking at

India's sourcing requirements.

IKEA's plans, announced by the Indian government after a

meeting between the company's CEO and India's trade minister

in Russia, could give a boost to the embattled government of

Manmohan Singh, which was forced in December to backtrack

on plans to allow in foreign supermarket operators.

While the government removed foreign investment caps in single

-brand retail in January, it imposed a condition that foreign

retailers source 30% from local small and mid-sized enterprises,

dampening the enthusiasm of retailers for the plan.

India's Commerce Ministry said IKEA will initially invest 600 million

euro's and a further sum of up to 900 million, and these

investment estimates have been drawn up based on their

experience in countries like China and Russia.

Industry officials, however, said that the Swedish firm's entry will

not really shake things for the domestic market given the number

of stores it plans and the period of investment. It's not going to

shake up the entire domestic market but it will set a benchmark

model for others to follow in India's nascent furniture and home

products market.

Bidyuth Mukerjee

Tax reforms :

Direct Taxes Code (DTC) to be finalized for enactment during

2011-12. DTC proposed to be effective from April 1, 2012. Areas of

divergence with States on proposed Goods and Services Tax

(GST) have been narrowed. As a step towards roll out of GST,

Constitution Amendment Bill proposed to be introduced in this

session of Parliament. Significant progress in establishing GST

Network (GSTN), which will serve as IT infrastructure for

introduction of GST.

Micro Small and Medium Enterprises :

Rs.5,000 crore to be provided to SIDBI for refinancing

incremental lending by banks to these enterprises.

Rs.3,000 crore to be provided to NABARD to provide

support to handloom weaver cooperative societies

which have become financially unviable due to

non-repayment of debt by handloom weavers facing

economic stress.

Exports :

Of 23 suggestions made by Task Force on Transaction Cost,

constituted by the Department of Commerce, 21

suggestions already implemented. Action will be taken on

the remaining two suggestions. Transaction Cost of Rs.2,100

crore will thus be mitigated.

Self assessment to be introduced in Customs to modernize

the Customs administration.

Proposal to introduce scheme for refund of taxes paid on

services used for export of goods on the lines of Duty

Drawback. Jodhpur to be included for the development of

a handicraft mega cluster.

Skill Development :

Additional Rs. 500 crore proposed to be provided for National Skill Development Fund

during the next year.

IT Initiatives:

Various IT initiatives taken for efficient tax administration. These include e-filing and

e-payment of taxes, adoption of ‘Sevottam’ concept by CBEC and CBDT, web based

facility for tax payers to track the resolution of refunds and credit for pre-paid taxes and

augmentation of processing capacity. Under Mission mode projects, funds released to

31 projects received from States/UTs for computerization of Commercial taxes. This will

allow States to align with roll out of GST.

Manufacturing Sector :

Basic Custom Duty reduced for various items to encourage domestic value addition

vis-à-vis imports, to remove duty inversion and anomalies and to provide a level playing

field to the domestic industry.

Service Tax :

Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit between

present regime and its GST successor.

Foreign Direct Investment :

Discussions underway to further liberalize the FDI policy.

Interest Subvention :

Existing interest subvention scheme on short term farm loans at 7% interest to continue.

3% Interest subvention to farmers who re-pay in time.

Direct & Corporate Taxes :

Increase in the rate of Minimum Alternative Tax (MAT) from the current rate of 18% to

18.5% of book profits. Minimum Alternative Tax (MAT) on developers in SEZs to be levied.

Reduction in the current surcharge to 5% from 7.5% on domestic companies.

Indirect Taxes :

Customs duties

Peak rate of Custom Duty retained at its current level ie.10%

Basic Customs duty on Raw Silk (not thrown) reduced from 30 to 5 per cent.

Basic Customs duty reduced from 5% to 2.5% on certain Textile intermediates.

Reduce basic Customs duty on certain specified inputs for manufacture of certain

technical fibre and yarn from 7.5% to 5% .

Central Excise duties

Central Excise Duty to be maintained at standard rate of 10 per cent.

Reduction in number of exemptions in Central Excise rate structure.

Nominal Central Excise Duty of 1% being imposed on 130 items entering in the tax net.

Survivor Bond

A type of bond whose future coupons are based on the percentage of a stated

population group who are still alive - the survivors, in other words - on the future coupon

payment dates. Survivor bonds are used by annuity providers and pension plan

managers to hedge aggregate longevity risk.

Poop and Scoop

A highly illegal practice occurring mainly on the internet. A small group of informed

people attempt to push down a stock by spreading false information and rumors. If they

are successful, they can purchase the stock at bargain prices.

Daisy Chain

A group of unscrupulous investors who, practicing a kind of fictitious trading or wash

selling, artificially inflate the price of a security so that they sell it at a profit. Price

manipulation is typically very difficult in stocks with heavy volumes, so the stocks with low

liquidity are much more susceptible to daisy chains.

Scalping

A trading strategy that attempts to make many profits on small price changes. Traders

who implement this strategy will place anywhere from 10 to a couple hundred trades in

a single day in the belief that small moves in stock price are easier to catch than large

ones.

Reverse Morris Trust

A tax-avoidance strategy, in which a corporation wanting to dispose of unwanted

asstes can do so while avoiding taxes or any gains from these assets. The

shareholders control over 50% of the voting right and economic value in the

unrelated company, the Revers Morris Trust is complete .

1)Which bank merged with ICICI Bank in 2001?

2)Corporations that grow through buying other corporations are growing via which

of the strategies?

3)Leveraged buyouts (LBOs) almost always involve?

4)The costs of resolving the conflicts of interest among the stakeholders in a firm are

called?

5)The tagline of Economic Times is ?