VOL 3.20

JAN 16

Graphs And RatesNewsCarbon CreditStudent ArticleDid You Know Commodities ArticleQuiz & Crossword

12367810

1

RepoReverse RepoCall rateInflation (as on 14th Jan)Forex Reserve (as on 8th Jan)91day T-BillIIPGS 2019

4.75%3.25%2.10-3.35%7.31% $283.521 billion3.8061%11.7%, 7.6423-7.6950%

45

45.4

45.8

46.2

46.6

47

47.4

30-Dec-10 5-Jan-10 8-Jan-10 13-Jan-10

Rs/$

Rs/$

15000

15300

15600

15900

16200

16500

30-Dec 05-Jan 08-Jan 13-Jan

Gold(per 10 gram)

Gold(per 10 gram)

66

70

74

78

82

86

90

30-Dec 05-Jan 08-Jan 13-Jan

Oil(per bbl)

Oil(per bbl)

8000000

11500000

15000000

18500000

22000000

25500000

29000000

5050

5100

5150

5200

5250

5300

30-Dec 05-Jan 08-Jan 13-Jan

future ratesopen interest

4,800.00

5,000.00

5,200.00

5,400.00

5,600.00

16800

17100

17400

17700

18000

30-Dec-10 5-Jan-10 8-Jan-10 13-Jan-10

sensex nifty

The Walt Disney Co acquired Marvel Entertainment in a $4.24 billion •

deal.

Aviva has bought River Road, a Louisville-based equity manager for an •

undisclosed amount.

Royal Bank of Scotland Group, Britain’s biggest government-controlled •

bank, agreed to sell part of its fund management unit to Aberdeen Asset

Management for £84.7 million.

GlaxoSmithKline is likely to get £1-billion revenue boost in 2010, as gov-•

ernments stockpile swine flu medicines designed to combat a possible

pandemic.

Google’s venture capital arm, Google Ventures, is bringing more partners •

as it expands on the its investments made since the last financial year.

BSE and NSE has started to function at new timing of 9 a.m to 3.30 p.m •

from January 4.

Wipro to float $1b sponsored ADR offering.•

Ashok Leyland unveils its new range of truck named U-Truck.•

Delhi hosted the 10th India auto-expo from Jan 5-11.•

Tata Motors eye launching Nano car in U.S by the end 2011.•

Harley-Davidson signs ICICI Bank ink MoU for banking services for its •

launch and operations in India.

Bangalore based CRM company Talisma Corporation Pvt.Ltd and HCL •

technologies enter into a strategic partnership.

Bharti buys 70% stake in Abu Dhabi based Warid Telecom. •

Bahrain’s Gbcorp takes 11% stake in Batelco’s S Tel.•

2

Carbon Credit Action or Distraction ??

Carbon credits. Man-made climate change advocates call them a way to make your green peace with the environment. Sceptics say they’re a sop for wealthy, guilt-ridden greenies at best - and potentially fraudulent, at worst.

No matter what you think, these credits are probably here to stay. This article would give you an insight about this hottest topic in this new market and what green investors should consider. Paying for Pollution

Sometimes known as carbon “offsets”, carbon credits are financial mechanisms that enable buyers to pay a third party to remove a quantity of carbon (in the form of a greenhouse gas) equivalent to what the buyer emits - in essence, neutralizing their own emissions.

Carbon credits are a burgeoning envi-ronmental and economic trend, particu-larly in the business world. In the U.S., carbon offset volumes, as measured by metric tonnage, grew by 100% from 2005 to 2006, and is expected to double again in 2010. An October 2006 study by the Conference Board reported that 75% of companies polled said they were “actively computing” their carbon footprints, while only 15% of the companies surveyed were actively engaged in carbon trading and 40% were considering it.

The Carbon Trading Markets

By and large, there are two types of carbon credit markets, one operating overseas and the other emerging in the United States.

Cap and Trade

In 1997, the U.S. Senate voted 97-0 to reject the Kyoto Protocol, which sets limits on the amount of greenhouse gases a country could release into the environment. Coun-tries that did pass the Kyoto treaty now have set caps on greenhouse gas emissions. If a country emits less greenhouse gases than the cap calls for, it receives carbon credits that it can turn around and sell on worldwide carbon exchanges. If the country exceeds the Kyoto caps, it must buy credits to offset its extra energy use. The price of the carbon credits is set by the market.

3

By Nitin Mishra

Elective Carbon Credits

The U.S. has a voluntary carbon credit market, where companies and some individu-als can buy carbon credits as offsets to the amount of energy they use. Thus, a well-travelled executive can offset the use of his gas-guzzling private jet by buying enough carbon credits to cover the environmental cost of the greenhouse gases emitted from his airborne travels, effectively making his impact on the environment negligible.

The Case for Carbon Credits

Simplicity

By paying a third party to remove a quantity of carbon from the environment, consum-ers can, in theory, achieve carbon “neutrality”

Awareness

The very existence of the carbon offset market, its fast rate of growth and the amount of media attention the market has received, has raised the visibility of the climate change issue. In a politically-charged environment, carbon trading is the most promi-nent agent of change on the global warming landscape. Corporations are leading the charge. Companies like Expedia (NASDAQ:EXPE), Orbitz (NYSE:OWW), HSBC Bank (NYSE:HBC) and Google (Nasdaq:GOOG) all have carbon trading programs up and running. Many more are in the pipeline.

It’s Good Business??

In the corporate sector, where most of the carbon trading activity is taking place, carbon offsets can be an attractive option, both fiscally and socially. Through efforts to better manage their greenhouse gas emissions, corporations can be rewarded by reduced costs through energy efficiency, superior brand positioning and public relations through carbon neutrality, and energized employees who support climate change initiatives.

The Case Against Carbon Credits

No Measurement Benchmarks

One issue that has yet to be resolved in the carbon offset world is benchmarking, or es-tablishing a certification or monitoring process that quantifies the real value of carbon trading programs. International standards bodies like the United Nations and global warming advocacy groups are trying to set up a system in which carbon credit buyers know that their investments are producing measurable results. For now, there is no uniform way to see that carbon credit companies are doing what they promise.

Distraction - Or Worse?

On one hand, the increased visibility of climate change as an issue is a boon to car-bon credit supporters. On the other, it could also be a serious distraction - or even an impediment - to fighting global warming. If consumers surmise that they can pollute all

4

they want, and have their polluting ways “forgiven” through carbon offsets, emissions could become a larger problem.

Carbon Sham

One major concern that has come out of car-bon credits, especially on the elective side, is the advent of carbon scams in which carbon credits are sold but no carbon reducing ac-tion is actually made. While increased regu-lation in this area will help, it is the ultimate responsibility of the purchaser to ensure that what is being promised is actually delivered.

Carbon Credits - Guidelines

The environmental group Clean Air Cool Planet has published a A Consumer’s Guide to Retail Carbon Offset Providers. Inside, the group lists key questions potential carbon credit buyers should ask a carbon credit provider:

• Do your offsets result from specific projects?

• Do you use an objective standard to ensure the additionality and quality of the offsets you sell?

• How do you demonstrate that the projects in your portfolio would not have happened without the greenhouse gas offset market?

• Have your offsets been validated against a third-party standard by a credible source?

• Do you sell offsets that will actually accrue in the future? If so, how long into the future, and can you explain why you need to “forward sell” the offsets?

• Can you demonstrate that your offsets are not sold to multiple buyers?

• What are you doing to educate your buyers about climate change and the need for climate change policy? Conclusion

While many experts agree that putting a price on the cost of carbon is good, the need for having consumers and corporations trade potentially harmful environmental prac-tices for carbon offsets is debatable. However, whichever side you are on, carbon cred-its offer a way in which individuals and businesses can reduce their footprint on the environment

5

Owning a home is a keystone of wealth... both financial affluence and emotional security. Suze Orman

The safe way to double your money is to fold it over once and put it in your pocket. Frank Hubbard

This Is All It Takes.........To Read A Mutual Fund

A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool their money together with a predetermined investment ob-jective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns.

How to read a Mutual Fund

COLUMNS 1 & 2: 52-WEEK HIGH AND LOW - These show the highest and lowest prices the mutual fund has experienced over the previous 52 weeks (one year). This typically does not include the previous day’s price.

COLUMN 3: FUND NAME - This column lists the name of the mutual fund. The com-pany that manages the fund is written above in bold type.

COLUMN 4: FUND SPECIFICS - Different letters and symbols have various meanings. For example, “N” means no load, “F” is front end load, and “B” means the fund has both front and back-end fees. For other symbols see the legend in the newspaper in which you found the table.

COLUMN 5: DOLLAR CHANGE -This states the dollar change in the price of the mu-tual fund from the previous day’s trading.

6

By Rony & Jwala, I MBA

COLUMN 6: % CHANGE - This states the percentage change in the price of the mutual fund from the previous day’s trading.

COLUMN 7: WEEK HIGH - This is the highest price the fund traded at during the past week.

COLUMN 8: WEEK LOW - This is the lowest price the fund traded at during the past week.

COLUMN 9: CLOSE - The last price at which the fund was traded is shown in this col-umn.

COLUMN 10: WEEK’S DOLLAR CHANGE - This represents the dollar change in the price of the mutual fund from the previous week.

COLUMN 11: WEEK’S % CHANGE - This shows the percentage change in the price of the mutual fund from the previous week.

Did You Know

1. IDBI Bank has approached the government to rejig its capital structure, as it feared falling below the Reserve Bank of India (RBI)-prescribed Tier-I capital adequacy ratio (CAR) of 6 per cent. According to the bank’s calculations, the Tier-I CAR, estimated at 6.83 per cent at the end of September 2009, would fall to 5.65 per cent during the next financial year, and to 5 per cent in 2011-12. RBI has prescribed Tier-I CAR of 6 per cent, while the overall CAR has to be upwards of 9 per cent. Overall, the bank’s CAR was 11.9 per cent, slightly below the government’s comfort level of 12 per cent. The bank has approached the government seeking Rs 15,000 crore to bolster its capital position. Against the demand, the government is expected to provide Rs 6,000-7,000 crore by way of equity. But the finance ministry, which had initiated a recapitalisation exercise in 2008, is unlikely to provide capital until the next financial year.

2. Standard Chartered Bank (SCB) has selected Equitrak from Vitech Systems Group as a new transfer agency solution. SCB will use Equitrak for investor servicing activities associated with its multi-market fund services business in Asia. Equitrak will be used by SCB for both its traditional and alternative clients covering shareholder registration, subscription and redemption processing, valuation maintenance, compliance monitor-ing, reporting and in a very high volume environment.

3. ICICI Bank, one of India’s largest private sector banks, has invested Rs 250 crore in the Lavasa Corporation, which is a subsidiary of engineering and construction major Hindustan Construction Company (HCC). In a statement sent to the Bombay Stock Ex-change (BSE), HCC informed that ICICI Bank has made the investment in the form of convertible debentures. In the past Axis Bank, Bank of India, Allahabad Bank, Indusind Bank, Andhra Bank and United Bank of India had collectively invested Rs 600 crore in Lavasa using the same instrument.

7

Continued from previous issue…

Why trade in Commodity ETFs???

The primary motivation for trading in Commodity ETFs is the simplicity of the trades. If you want to invest in a commodity, you would have to make individual purchases of commodity fu-tures or invest in commodity-related companies. Then there is the deci-sion of which futures or companies to choose. And even if you decide to invest in a commodity index, there is still the challenge of purchasing all the equities in the index basket in or-der to target a certain price. Commis-sions and complexities make it hard to achieve investing goals.

In the case of a commodity ETF you make one trade at one price and save on com-missions. The commodity ETF is already bundled ahead of time. With one trade, you have instant exposure to the price and performance. They also serve as a means of portfolio diversification or of increasing market exposure. Including ETFs in an invest-ment stratagem will help in the following ways:

1. Risk Management: Portfolios that have exposure to certain market sectors can purchase or short sell an ETF in that particular sector to hedge against risk. Investors can thus counter risk by taking the opposite position with the correlating ETF.

2. International Exposure: Investors can gain exposure to international markets that show potential growth with the purchase of a foreign ETF that follows the index for a particular country. In some cases international exposure can be gained by including foreign currency ETFs in a portfolio.

3. Industry Exposure: For certain industries that show potential growth, an investor can purchase Industry ETFs that follow the indexes for those particular market sec-tors.

4. Cash Flow Utilization: During periods of excess cash flow, surplus cash can be put to use by purchasing a short-term ETF, and make use of the opportunity to earn a potential return. During periods of cash flow deficit, ETFs can be easily liquefied with one single trade.

Commodity ETFsBy Andrea Simento

8

5. Price Discrepancy: Due to volatile market conditions, such as currency and inter-est rates, there may be price differences among an Index and its derivative contracts. If calculated correctly, the buy or sell of an ETF can take advantage of the arbitrage op-portunity due to the price discrepancy.

6. Market Analysis: After conducting a thorough analysis, an investor can utilize vari-ous ETF trading strategies to take advantage of certain forecasts. For example, if an analyst has confidence in the overall market, but is bearish on a particular sector, a combination of ETFs can help take advantage of this information. He can purchase an ETF that tracks the broad market while selling an ETF in the particular sector that will underperform.

ETF Trading Strategies

• For stabilizing gold investments in a portfolio, sell a gold ETF in one trade and reduce the downside gold risk. • An energy ETF can be used to hedge to downside risk for both industry and for-eign investments. If you are long on a lot of energy stocks, sell an energy ETF to hedge the downside risk. • If you have foreign investments in a country where coal is a major source of in-come, it would be another opportunity to sell a coal ETF to protect downside risk. • There is the option of purchasing an inverse commodity ETF which emulates the price of a commodity index in the opposite direction. Inverse ETFs are good if you want to sell a commodity, but can’t short ETFs due to margin or account restrictions. • If you don’t want to close your commodity ETF positions, but want some short-term exposure or protection, trading ETF options can be a good strategy.

Once you have a good understanding of how commodities and commodity ETFs inter-act, you can start including commodity ETFs in your investing arsenal. Not that there aren’t some disadvantages when trading ETFs, but if you understand how they work, commodity ETFs could be a valuable asset for your portfolio.

4. The Securities and Exchange Board of India (SEBI) made it compulsory to have in-ternal audits for credit rating agencies (CRAs). The internal audit to be conducted on a half-yearly basis by chartered accountants, and will cover all aspects of CRA operations and procedures, including investor grievance redressal mechanism.

5. The Reserve Bank of India will announce rules for the Strips trading (Separate Trading of Registered interest and Principal of Securities) in government debt. It is the process of separating principal and interest payments on bonds to turn them into zero-interest securities. The purpose of implementation is to increase the depth of the debt market and enable banks to manage their portfolio risks better.

Did You Know

9

Quiz

Across

1. A volatility based ‘envelope’ indicator that measures the movement of stocks in relation to an upper and lower moving-aver-age band.4. A seller of either call or put options who profits from the premium for which the options are sold. Synonymous with option writer.5. finance secretary of India.6. A protection-based transfer of assets from one destination to another, usually through the use of offshore accounting7. An insurance policy which aims to pro-tect business owners and employees when they are found to be at fault for a specific event such as misjudgment.

Down

2. An adjustment to the return on an investment that accounts for the element of risk.3. A situation where inflation pushes income into higher tax brackets.

10

1. Aditya Birla collaborated with which foreign com-pany to roll out an insurance scheme?

2. Which bank offers a virtual temporary credit card for online purchases called NetSafe?

3. What is the national currency of Malaysia?

4. In Mutual Fund terminology, what is a SIP?

5. What is a coin with a minting error called?

Crossword

I’d like to live as a poor man with lots of money. Pablo Picasso

Budget: a mathematical confirmation of your suspicions. A.A. Latimer

Answers

Cross word Quiz

1. SunLife

2. HDFC

3. Ringgit

4. Systematic Investment Plan

5. FIDO

Team

Archana Kushwah Co-ordinator

Nitin Mishra Investors check

Ravi M R Debate

Andrea Simento Commodities Market

Ramya

& Supreetha Student Article & Scam

Gyanesh Shroff, Editor

Manesh Paul Mani Jr. Co-ordinator

Dorin Jane Quiz & Did You Know

Mantri Ankit Atul Quotes & BuzzWords

Pottim Sahiti Reddy Crosswords

Vipul Jain Graph, Rates

Amutha Priya D News

Bhargav K Compiling and design

11