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I have a problem with too much money. I can't reinvest it fastenough, and because I reinvest it, more money comes in. Yes, therich do get richer. -Robert Kiyosaki

National Headlines On Aug 29thNSE launched currency futures for the first time in India. Interest rate derivatives may also come in India by Jan. end IDFC MF has launched of IDFC Strategic Sector (50-50) Equity Fund, an open

ended equity fund that will invest up to 50 per cent of the assets in a chosen

sector that is positioned for high returns. Fidelity Asset Management Company on Monday launched its first fixed maturity plan, the Fidelity Fixed Maturity, Series 1 - Plan A with duration of 370 daysfrom the date of allotment of units.

Fund managers expect a rebound in equities by the second quarter of calendar2009, and are accordingly framing strategies to manage portfolios while delayingnew launches.

Standard Chartered Bank is scaling down its personal loans business and hasdecided to henceforth focus on cross selling to existing customers.

Almost all commercial banks, including State Bank of India (SBI) and Punjab National Bank (PNB), have decided not to increase interest rates on educationloans.

Borrowers finding it difficult to service their loans owing to increasing interestrates and inflation, banks and financial institutions are anticipating a grimscenario of ballooning defaults. According to industry sources, of late, bad debtshave risen from 5-7% to 14-19% for some banks.

International Headlines

Lehman sought to sell up to a 50 percent stake to Chinas biggest brokerage,CITIC Securities, or Korea Development Bank.

Microsoft Corp. is buying a Munich, Germany-based Web comparison shoppingsite and its parent company for about $486 million in cash.

Canadas Precision Drilling will buy Grey Wolf in a cash and stock deal worthmore than $2 billion,, apparently ending an extended fight for control the Houstongas driller.

Japan is drawing up an economic stimulus package worth $73 billion, or eighttrillion yen, to help businesses and consumers cope with soaring fuel andcommodity prices.

Federal regulators say Merrill Lynch & Co. will buy back up to $7 billion inauction-rate securities over its role in selling the risky bonds to retail investors.

Fed Hints It Will Raise Benchmark Interest Rate: policy makers expect toeventually raise their benchmark interest rate in an effort to slow inflation.

1st Sept. 2008

Volume 2, Issue 11

..Tracking the Economy

You know you are on the road to success if you would do your job, and not be paid for it.

- Oprah Winfrey, American, Talk Show Host

Inflation12.40 % , IIP 5.2%

Issue AttractionsNationalHeadlines

1

InternationalHeadline

1

CorporateInterview

2

Students Article 3

Investors

Check/Quiz

4

CompanyReview/BuzzWords

5

Investors Check 6

15 days Movements

CHAANAKYACHAANAKYACHAANAKYACHAANAKYAWealth Incorporation - A CCIM Finance Club Initiative Presents

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Interview with Mr. Sandeep Kumar P.

We go to school to learn to work hard for money. I write books and create products that teacpeople how to have money work hard for them. - Robert Kiyosaki, American Author & Investor

Position Held : Analyst, ICICI Prudential.Q1. Sir, Can you tell us about your job profile?

Ans. I'm working with ICICI Prudential as an Analyst, my work profile includes testing th

product effectiveness and innovation in products. My job is to use primary market da

about the performance and the effectiveness of a certain product. Moreover, I maeffective use of various mathematical models in bringing out new features to the existin

products or propose a new product and conduct the pilot phase testing.

Q2. The markets lately have been extremely volatile and during this phase how have th

customers reacted to the newly introduced products?

Ans. There have not been many additions/alterations to the existing products, althoug

there have been many changes in the way they have been marketed and percepted, th

external factors are something that the products have been made to face, i.e., when wsuggest ways and means to enhance the product or a particular feature, we keep in min

the macroeconomic conditions & the necessary drifts of the economic indicators and on

then do we move forward. Being in a junior position, we work on this individually b

segregating the findings necessary and in addition to it, we pick up the study or th

suggestion that we find most suitable for an existing product in the existing environme

and than we test it against it's sustainability in the future or we implement the findings o

the products that will be available in the market later.

Q3. Sir, any suggestions or words of inspiration for the Finance Club students of Chr

University Institute of Management?

Ans. Education is the single most valuable asset which always has an increasing val

through time. It is important that one goes beyond books to identify their interests an

strengths and work on them. Thank You.

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Did you Know?

1. The re w e r e

commercial bank

colonial Ame

Borrowing was

largely from merc

who borrowed infrom Merchant

in England or

friends and f

acquaintances.

first US chartered

was the Bank of N

America in 1781.

2. In 1997, cur

speculators pan

and started selling

baht. This triggeroverall panic in

leading to the co

of the econo

leading to the

Asian Currency

This explains

Asian countries

high foreign reserv

a hedge against fu

runs.

INDIAN HOTEL

BSE- 500850,

NSE INDHOTE

CMP Rs. 76.4

TARGET PRICE: R

TATA MOTORS

BSE500570

NSETATAMOTO

CMP- Rs. 433.5

TARGET PRICE: Rs

Infosys Tech

BSE500209

NSE INFOSYSTC

CMP- Rs. 1679.6

TARGET PRICE: Rs(CMP Current Market

Stock Ratnas

The herd instinct among forecasters makes sheep look like independent thinkers., Edgar R. Fiedler,American Business Economist

Corporate BondBy : Kavitha

A Corporate Bond is a bond issued by a corporation. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issuedate.

Corporate bonds play an important role in the growth of an economy. In India Governmentbonds currently dominate the domestic bond market. They account for two-thirds of the totaloutstanding debt and 97 per cent of secondary trade. Currently, the FII limit in corporate debtstands at $1.5 billion.

A well developed bond market could supplement the banking system in meeting therequirements of the corporate sector for long term capital investment and asset creation. Itcould provide a stable source of finance; especially when the equity market is volatile andresource requirements of the corporate entities are large. In the case of India, development ofa corporate bond market has become even more crucial especially, in view of the need forraising large amount of resources for infrastructure development in the country during thenext couple of years.

Countries like Malaysia and South Korea have made reasonable progress in the developmentof corporate bond market followed by Thailand in regard to the developing Asia. Yet goingby the US or European standards the progress has been tardy; rather insignificant consideringthe actual requirements of the region, as of now. Both China and India have lagged behind indeveloping corporate bond markets.

Some of the problems with the Indian Corporate bond market are:

1. Bank financing versus bond financing - Corporates took resort to their growinginternal resources, raised resources through low cost equity taking advantage of theequity boom. Further, the bond financing, in the absence of hedging avenues, turned outbe more risky and less flexible in comparison to bank financing

2. Risk management - The derivatives markets are not well developed do enable bothissuers and investors to efficiently transfer the risks arising out of interest ratemovements. Though markets exist for interest rate swaps and interest rate futures, thenumber of participants is limited and the market is not broad and deep.

3. Stamp Duty - Stamp duty has been a source of revenue for the State governments. Duty

is levied on financial instruments both either at the time of issue or on transfer or onboth depending upon the nature of the instrument, issuer etc. These duties are perceivedto be very high and act as a deterrent to the development of the bond markets.

4. Narrow Investor base - In India, provident and pension funds have been traditionallyinvesting in Government securities for safety. Retail investors participation in tradablefixed income securities is very negligible.

5. Repo in Corporate Bonds - Repos are currently allowed only in Government securitiesthough there was a move to extend the same to corporate bonds by the RBI. Reposcertainly create liquidity to the corporate bond market.

The recent developments:

The Securities & Exchange Board of India (SEBI) is preparing a slew of major initiatives to kick startthe moribund corporate bond market. SEBI and the Reserve Bank of India (RBI) are also on the vergeof an agreement on starting repos in corporate bonds as Repos would allow investors to recycle illiquidcorporate bonds and then borrow, which in turn would improve liquidity. The introduction of repos incorporate bonds would improve liquidity. The move will improve liquidity in the market. Majorchanges are also proposed in the corporate bond market to ensure robust trading and sett lement.

Apart from simplifying the procedure for corporate bond issuances by listed firms, SEBI is alsoplanning to insist on them appointing debenture trustees. It will also mandate a transparent clearing &settlement system for such trading. Implicit in the SEBI moves is the fact that it wants over-the-counter trading to eventually move to the exchange platform. There is a move to exempt tax deductedat the source for bonds traded on the exchange platform to push for an exchange-traded corporatebond market

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4/7Time is our most precious asset, we should invest it wisely.Michael Levy, American Self H

Author and Poet

Why hedge funds may be good for Indian markets? An illustrative view

Mention below is benefits of introducing hedge funds in the Indian market. It shows how hedge funds couldimprove asset price efficiency. Besides, such funds, by virtue of their diverse investment styles, could provideinvestors an opportunity to enhance their risk-adjusted portfolio returns.

Of different genreSuppose a long-only (mutual fund) manager and a hedge fund manager both have a negative view on SBI, apositive view on HDFC Bank and a neutral view on ITC.

Long-only active managers will buy ITC in the same weight as their benchmark index, may overweight HDFCBank and may not take any exposure in SBI. There is a reason for such a strategy. Active managers strive to betheir benchmark index. But they do not take too many active bets, lest their bets go wrong. Often, active funds the benchmark index with few active bets. Importantly, such managers cannot short-sell to take advantage of thnegative view on a stock.

Hedge fund managers do not suffer from such constraint. In the above example, the hedge fund manager may

overweight HDFC Bank, short-sell SBI and not take any exposure in ITC.

Better still, to neutralize any market risk, the hedge fund manager may buy HDFC Bank and short-sell SBI in sa way that the market risk in HDFC Bank is offset by short-selling SBI. Often, neutralizing market risk on aportfolio would mean short-selling Nifty futures.

Exploiting price inefficiency

Hedge funds identify mispriced assets and exploit any price inefficiency. One way to do this is to employstatistical arbitrage.

Suppose a hedge fund manager finds that combination of one share of HDFC Bank and two short shares of SB

(1HDFC 2SBI) has a stable statistical distribution. If the spread wanders far away from its mean, a hedge fmanager would set-up this strategy with a view that the spread will tighten. Such relative-value strategies canhelp arbitrate away asset price inefficiencies in a normal market.

Besides, hedge funds employ strategies to arbitrage price differentials between the derivatives and the spot marSuppose a stock is trading at Rs 1,480 in the spot market. Assume that the hedge fund manager, based on herproprietary model, believes that the futures price should be only Rs 1,470 against its current market price ofRs. 1,510. Contd. On Page No. 6.

INVESTORS CHECK By: Diwakar Grover

Quiz:

Q.1. Type of tax-deferred trust account created by the U.S. government to assist families in fundeducational expenses for beneficiaries 18 years or younger.

Q.2. The process of consolidating swap agreements between two parties into a single agreement.

a result, instead of each swap agreement leading to a stream of individual payments by either party,

of the swaps are netted together so that only one net payment is being made to one party based

the flows of the combined swaps.

Q.3. A type of monopoly that exists as a result of the high fixed or start-up costs of operating abusiness in a particular industry. Because it is economically sensible to have certain naturalmonopolies, governments often regulate those in operation, ensuring that consumers get a fair deal.

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Buzz Word

Horizontal spread :The buying and selling of two options

at the same price but with different maturity dates.

Hard landing : A change in economic strategy to

counteract inflation which has serious results for the

population.

Forfaiting : Providing finance for exporters, where an

agent accepts a bill of exchange from an overseas

customer, he buys the bill at a discount and collects the

payments from the customer in due course.

Risk arbitrage : The business of buying shares in

companies which are likely to be taken over and so rise in price.

Book Quotes:

Never again clutter your days or nights

with so many menial and unimportant

things that you have no time to accept areal challenge when it comes along

- Og Mandino

Keep in mind that the true measure of an

individual is how he treats a person who

can do him absolutely no good.

- Ann Landers

Money won is twice as sweet as money earned., Paul Newman, American, Actor and Philanthropist

Company ReviewBy : Sukrutha

Motilal Oswal Financial Services Ltd. (MOFSL)is a well-diversified, financial servicescompany focused on wealth creation for all its customers, such as institutional and corporate clients, HNI andretail customers. Their services and product offerings include equity broking, commodity broking, distribution of thirdparty products, investment banking and venture capital management

Overview

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just two people running the show.Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based

value investing and implementation of cutting-edge technology enabled them to blossom into a 2000 member team.

Today they are a well diversified financial services firm offering a range of financial products and services such as:

>Wealth Management > Broking Distribution > Commodity Broking > Portfolio ManagementServices > Institutional Equities > Private Equity > Investment Banking Services> Principal Strategies

They have a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds,foreign institutional investors, financial institutions and corporate clients. They are headquartered in Mumbai and as of

June 30, 2008, they had a network spread over 450 cities and towns comprising 1,496 Business Locations operated incollaboration with Business Partners.

Careers at Motilal Oswal

Motilal Oswal is expanding rapidly. They are thus seeking an increasing number of new associates in all fields ofoperations ranging from research, sales and marketing to back office operations.

They aim to select the right person for the job and create a distinctive environment for people to learn, experiment, andgrow. They have a unique program supported by 4 pillars to a successful career. The four pillars are:

1. Growth Path: For Professional and Personal growth supported by a dynamic growth environment.

2. Meritocracy: the most important parameter for professional growth.

3. Leadership development: There is a huge amount of investment in terms of money, training, effort and time togroom deserving associates to assume higher level positions.

4. Empowerment and Entrepreneurship: Motilal Oswal believes in empowerment of it associates and encouragesentrepreneurship talent. Many of their Business associates, who started as a single outlet, are multi location today and haveexpanded their business many folds.

So at Motilal Oswal, one can look forward to a very successful and rewarding career.

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INVESTORS CHECK

Contd. From Page No. 4

The fund manager will short the futures contract and simultaneously buy the stock inthe spot market. The trade will be profitable as long as difference between the spotprice and the futures price is less than Rs 40.

As more hedge funds exploit such price differentials, disconnect between the spot and

derivative markets could gradually reduce. And that could attract long-term hedgers tothe market.

Higher risk-adjusted returns

Hedge funds create value for investors through their diverse investment styles. Here aresome examples.

Relative-value strategies such as fixed-income arbitrage and market-neutral style striveto back-out beta exposure and provide alpha returns. Such strategies typically carrylower volatility than government bonds but generate higher returns. They, hence, act asreturns-enhancers when combined with a bond portfolio.

The long-short investment style (such as 130 per cent long position and 30 per centshort position in equity) is a high-risk high-return strategy. The volatility of thisstrategy is lower than that of the traditional equity strategy. This strategy, hence, acts asreturn-enhancers when combined with equity portfolios.

The managed-futures investment style primarily takes exposure in commodity futures.This style acts as a risk-diversifier for an equity portfolio.

Of course, there are risks with such investments. Hedge funds typically employ highleverage. This causes a systemic risk in the event a fund folds because of highdrawdowns.

Besides, monitoring such managers is important because many of them may chargealpha fees for beta exposure.

It is not surprising that the committee has recommended that hedge fund investmentsbe offered only to those who can invest Rs 1 and above. A similar such rule exists inthe US.

Conclusion

It is important to understand that arbitraging price inefficiencies does not mean thathedge funds will prevent formation of market crashes or asset price bubbles. Hedgefund managers can be as irrational as the professional long-only managers andinvestors.

Yet, the introduction of hedge funds will be a welcome move to the Indian markets fortwo reasons such funds can provide higher risk-adjusted returns for investors andcan facilitate better asset price efficiency.

Please mail your valuable feedbacks, reviews at chaanakya.ccim@gmail.com

Quiz Answers

1. CoverdellEducationSavings Accou

- ESA

2. Bilateral Nettin

3. Natural Monop

Did you Know?

The Stock Exchin Amsterdam, Netherlands, founded in 1602dealings in prshares of the UEast India Comof the NetherlaIts the worlds ostock exchange.

The worlds commercial or uemployer is the Inrailway system, over 1.6 miregular employeeits payroll.

The first MBank on Wall S

was built in 187the former site grocery store.

Naina Lal Kidone of the honchos of HSinvestment banbusiness in Indiainstrumental in New York S

Exchange listing Wipro; in facilinationwide celp h o n e s e r vthrough a involving the and Birla families

AT&T; and n u m b e r privatisation deals

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Contributions made by :

Editing/Compiling Arihant PatawariFouzia Taranum B.

News Anoop Rajan &Ashish Poddar

Company Review, Did you know, Quotes SukruthaStock Ratnas, Quiz Laavanya

Graphs Gnana DeviInvestors Check Diwakar GroverInterview Vamsi KanagoviBook Quotes, Buzz Word Nikhil MehtaStudents Article KavithaCoordination Manish Sinha