Alpha Seeker 2010

Paragana & Finomenon

Presents

Some of the most profound, insightful investments in the stock market aren't that complicated.

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
-Warren Buffett

Do you like playing with numbers?

Do you like puzzles?

Do you like to speculate?

Do you like taking calculated risks?

Do you like to compete?

Then make way for the equity analyst in you for the novice just check your SIXTH sense. Test your stock strategy, pick the right stock and watch your investments grow exponentially!!!

Feel the adrenaline rush as your stocks rise and fall. Make wise decisions and tame the game!!

Keep in mind the 4 Best Words of Investing Advice:

"Buy what you know"

Register and compete with the best minds in the Industry, B-Schools and Colleges across the globe and be part of the biggest International Competition

Registration details:

Registration Starts today

Online Event: 25th October to 5th November

Total Prizes worth Rs 30000!!!

Win Daily Cash Prize Also

For registration, visit: http://www.stockezy.com/competition/

For queries, please write to Finomenon@nmims.org or

_____________________________________________________________________________

Contact us for further details:

Tom Jose: +91 9930733234 Punit Saraf: +91 9819881223 Kamal Dugar: +91 9892261307

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Finnacle 2010 - Stock trading event

NMIMS Finomenon

&

FourStocks.com

Presents

"Finnacle 2010"

Some of the most profound, insightful investments in the stock market aren't that complicated.

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
-Warren Buffett

Do you like playing with numbers?

Do you like puzzles?

Do you like to speculate?

Do you like taking calculated risks?

Do you like to compete?

Then make way for the Virtual stock exchange. Test your stock strategy, trade online and watch your investments grow exponentially!!!

Feel the adrenaline rush as your stocks rise and fall. Make wise decisions and tame the game!!

Keep in mind the 4 Best Words of Investing Advice:

"Buy what you know"

Register and compete with the best minds in the Industry, B-Schools and Colleges across the globe and be part of the biggest International Competition

Registration details:

Registration Starts today

Online Trading: 19^th to 31^stAugust

Total Prizes worth Rs 50000!!!

Win Daily Cash Prize Also

For registration, visit: http://www.fourstocks.com/register-contest

For queries, please write to Finomenon@nmims.org or

Contact: Tom Jose: +91 9930733234 Mohit Sachdeva: +91 9768582274

Financial Term of the week - ESCROW

For the past few weeks we were mostly dealing with the capital markets section, so we thought lets shift our focus little bit towards Banking and International finance. The term which we will introduce to you is ESCROW.

ESCROW
The word derives from the old French word escroue, meaning a scrap of paper or a roll of parchment; this indicated the deed a third party held until a transaction was completed.

Simply defined, an ESCROW is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event.

example: If you intend to buy $5,000 worth of merchandise from a supplier via escrow, you and the supplier select an escrow agent, often a bank, set up an escrow account with an agreement that says, 'When I receive a satisfactory shipment from my supplier, release the money to him.' The escrow account is useful because you as buyer know that you will not pay until you have the product that you need. The supplier knows that the money exists and that he can access it by supplying the goods as ordered.

Types
1) Internet escrow
2) Banking
3) Intellectual property
4) Law
5) Real estate

Even though there are different types of escrow, the basic premise remains the same It is used to build trust & bring transparency between the players involved in the trade.

Lets now look into the inner aspects of escrow

Why do we need an escrow?
Whether you are the buyer, seller, lender, or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.

note: Be sure to choose an independent licensed escrow provider who is 100% neutral , licensed by the Department of Corporations (DOC), requiring adherence to the most stringent standards in the industry, and whose sole business is providing escrow.

How does it work?
The principals to the escrow – buyer, seller, lender, borrower – cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.
The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met, the escrow will be "closed." Each escrow, although following a similar pattern, will be different in some respects, as it deals with YOUR property and the transaction at hand.

Duties of an escrow holder
1) following the instructions given by the principals and parties to the transaction in a timely manner.
2) handling the funds and/or documents in accordance with instructions.
3) paying all bills as authorized and responding to authorized requests from the principals.
4) closing the escrow only when all terms and conditions have been met; and, distributing the funds in accordance with instructions and porviding an accounting for the same – the Closing, or Settlement Statement.

Recent news involving escrow
President Barack Obama wants BP Plc to set up an escrow account to pay the claims for damages caused by its oil spill in the Gulf of Mexico. They want to make sure the money is escrowed for the businesses and want to make sure the money is independently administered so it’s not slow-walked. BP Plc agreed to set up $20 bn escrow fund to compensate for the oil spill damages.

For more information on escrow, please follow the below links
http://www.allisonmccloskeyescrow.com/what-is-escrow.asp
http://articles.esources.co.uk/id/111/
http://en.wikipedia.org/wiki/Escrow
http://www.msnbc.msn.com/id/37725103/ns/disaster_in_the_gulf/
http://www.business-standard.com/india/news/us-wants-bp-to-setescrow-account-for-oil-spill-damages/398109/

Srikanth Reddy
MBA Core 09-11

Financial Term of the Week --- IDR

Indian Depository Receipt (IDR)

The IDR is an instrument issued by a foreign corporation in India, it is similar to ADR(American Depository Receipt) & GDR(Global Depository Receipt). In this case the depository receipt is created by an Indian depository(say National Security Depository Limited (NSDL)..), denominated in Indian Rupees, against the underlying equity shares of the issuing(foreign) company.

How does this work?

The issuer company(here a foreign company) deposits a large number of its shares with a custodian bank, against which a depository(NSDL) issues receipts. There are agreements amongst these parties taking care of legal and procedural aspects. Each receipt is represented by a fixed number of underlying shares(usually 2,4 or a fraction).

The depository banks have numerous responsibilities towards depository receipt holders and also the issuer. These receipts are then sold to investors and, on listing, these receipts behave exactly like regular stocks, their prices then depend upon market conditions.

Why do foreign companies want to go for an IDR?

There are many reasons why a foreign entity wants to raise money through IDR route

1) Against a limited number of Foreign Institutional Investors (FII's) in their local market, many more can be tapped if listed in India.

2) If the foreign company were to issue fresh stock in India for raising capital it has to comply with the stringent,cumbersome procedures of the regulatory authorities (SEBI), which is a main deterrent.

3) It is easier for the investors to trade in foreign companies in local bourses.

An IDR would have the following features:

Overseas Custodian : It is a foreign bank having branches in India and requires approval from Finance Ministry for acting as custodian and Indian depository has to be registered with SEBI.

Approvals for issue of IDRs : IDR issue will require approval from SEBI and application can be made for this purpose 90 days before the issue opening date.

Listing : These IDRs would be listed on stock exchanges in India and would be freely transferable.

Eligibility conditions for overseas companies to issue IDRs:

Capital : The overseas company intending to issue IDRs should have paid up capital and free reserve of atleast $ 100 million.
Sales turnover : It should have an average turnover of $ 500 million during the last three years.
Profits/dividend : Such company should also have earned profits in the last 5 years and should have declared dividend of at least 10% each year during this period.

Debt equity ratio : The pre-issue debt equity ratio of such company should not be more than 2:1.
Extent of issue : The issue during a particular year should not exceed 15% of the paid up capital plus free reserves.
Redemption : IDRs would not be redeemable into underlying equity shares before one year from date of issue.
Denomination : IDRs would be denominated in Indian rupees, irrespective of the denomination of underlying shares.
Benefits : In addition to other avenues, IDR is an additional investment opportunity for Indian investors for overseas investment.

Standard Chartered plc is the first company to have publicy elicited interest in making a IDR issue in India. It raised $540 mn and the IDR was priced at 104 and got listed at 106 on NSE and is currently trading at 111.9 on NSE (19th July).

for more information on IDR

http://www.bankingindiaupdate.com/idr.htm

http://en.wikipedia.org/wiki/Indian_Depository_Receipt

http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/APDIR5220709.pdf

Srikanth Reddy

MBA Core 09-11

SENSEX - The Barometer of Indian Capital Markets

When you ask a lay person what is the current state of Indian economy, we generally hear "as the market is in red (falling) for the past one week so our economy's growth is also slowing down and will be falling ", this response shows that many people view SENSEX as the indicator of Indian economy, in reality which is not the case, so this article is an attempt to unveil the reality or fact about the SENSEX and how is it calculated/computed.

The Sensex has a very important function. It is supposed to be an indicator of the stocks in the BSE (not the Indian economy) to show whether the stocks are generally going up or down. To show this accurately, the Sensex is calculated taking into consideration stock prices of 30 different BSE listed companies. It is calculated using the “free-float market capitalization” method. This is a world wide accepted method as one of the best methods for calculating a stock market index.

Please note: The method used for calculating the Sensex and the 30 companies that are taken into consideration are changed from time to time. This is done to make the Sensex an accurate index and so that it represents the BSE stocks properly.

To really understand how the Sensex is calculated, we simply need to understand what the term “free-float market capitalization” means. (As mentioned earlier, the Sensex is calculated on basis of the “free-float market capitalization” method) But, before we understand what “free-float market capitalization” means, we must understand what “market capitalization” means.

You probably think that you have never heard of the term “market capitalization” before. You have! When you are talking about “mid-cap”, “small-cap” and “large-cap” stocks, you are talking about market capitalization, Market cap or market capitalization is simply the worth of a company in terms of it’s shares. To put it in a simple way, if you were to buy all the shares of a particular company, what is the amount you would have to pay? That amount is called the “market capitalization”. To calculate the market cap of a particular company, simply multiply the “current share price” by the “number of shares issued by the company”.

Having seen what market cap is and how to find out the market cap of a particular company, let us try to understand the concept of “free-float market cap”. Many different types of investors hold the shares of a company. like the Govt. of India may hold some of the shares, some of the shares may be held by the “founders” or “directors” of the companys, some of the shares may be held by the FDI’s etc. Now, only the “open market” shares that are free for trading by anyone, are called the “free-float” shares. When we are calculating the Sensex, we are interested in these “free-float” shares.

According to the BSE, any shares that DO NOT fall under the following criteria, can be considered to be open market shares:
a) Holdings by founders/directors/ acquirers which has control element
b) Holdings by persons/ bodies with "controlling interest"
c) Government holding as promoter/acquirer
d) Holdings through the FDI Route
e) Strategic stakes by private corporate bodies/ individualsEquity held by associate/group companies (cross-holdings)
f) Equity held by employee welfare trustsLocked-in shares and shares which would not be sold in the open market in normal course.
A simple way to understand the “free-float market cap” would be the total cost of buying all the shares in the open market.

So, having understood what the “free float market cap” is, now what? How do you find out the value of the Sensex at a particular point? Well, it’s pretty simple

First: Find out the “free-float market cap” of all the 30 companies that make up the Sensex
Second: Add all the “free-float market cap’s” of all the 30 companies
Third: Make all this relative to the Sensex base. The value you get is the Sensex value.

The “third” step probably confused you. To understand it, you will need to understand “ratios and proportions” from 5th standard mathematics.
Think of it this way: Suppose, for a “free-float market cap” of Rs.100,000 Cr the Sensex value is 4000 Then, for a “free-float market cap” of Rs.150,000 Cr the Sensex value will be
(150,000 / 100,000 )* 4000 = 6000.

so the current value of Sensex is calculated based on base period of SENSEX which is 1978 - 79 and the base value is 100 index points. This is often indicated by the notation 1978 - 79 =100.

Please Note: Every time one of the 30 companies has a “stock split” or a "bonus" etc. appropriate changes are made in the “market cap” calculations.

Now, there is only one question left to be answered, which 30 companies, why those 30 companies, why no other companies?
The 30 companies that make up the Sensex are selected and reviewed from time to time by an “index committee”. This “index committee” is made up of academicians, mutual fund managers, finance journalists, independent governing board members and other participants in the financial markets.

The main criteria for selecting the 30 stocks is as follows:
1) Market capitalization: The company should have a market capitalization in the Top 100 market capitalization’s of the BSE. Also the market capitalization of each company should be more than 0.5% of the total market capitalization of the Index.
2) Trading frequency: The company to be included should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like share suspension etc.
3) Number of trades: The scrip should be among the top 150 companies listed by average number of trades per day for the last one year.
4) Industry representation: The companies should be leaders in their industry group.Listed history: The companies should have a listing history of at least one year on BSE.
5) Track record: In the opinion of the index committee, the company should have an acceptable track record.

for more information on the SENSEX
http://www.bseindia.com/about/abindices/bse30.asp

Hope this article has cleared some of the doubts/myths about the SENSEX value,
follow this space for many more informational articles.

Article Contributed by
Mohit Sachdeva
MBA Core - II year

Article Writing Contest: Details

The topics are

1. Fiscal stimulus-catalyst or road block
BANKRUPTCY, CREDIT CRUNCH, DEFLATION, FORECLOSURES and UNEMPLOYMENT

Recession has seen it all. The stimulus packages provided by various governments were deemed to be a last effort to support their respective banking structure and win back the trust of investors. Has the stimulus package been too stimulative or has it helped to put a brake on economy decline?

OR

2. Inflation or growth

Are inflation and growth inversely associated, directly associated or not associated at all? Does inflation harm economic growth or do they form a strong positive relationship? Is it better to bear inflation than risk growth?

Do inflation and growth impact each other?



The event is open for all 2nd yr and all 1st yr Finomenon members

The last date to send your entries is 9th Nov, 23:59:59 hrs.

Rules and Regulations:

1. The event is open for all 2^nd yr students and all 1^st yr Finomenon members.

2. The word limit for the article is 1500 words (750 For the topic and 750 Against the topic)

3. You have to choose any one topic and write both the views on it. (FOR AND AGAINST)

For e.g. Fiscal Stimulus : Your entry should have one part containing arguments for Fiscal Stimulus being a “Catalyst” and the other part containing arguments for “Roadblock”

4. The entries are required to be submitted in MS Word/PDF format, with 1.5 line spacing and Times New Roman font, font 12.

5. The articles should represent original work and plagiarism is highly discouraged.

6. Each article should have a cover page mentioning the name of the person, respective email id and the contact number.

7. The name of the person should not appear anywhere in the body of the paper.

8. There is no prior registration for this event. The entries adhering to the deadline will only be considered.

9. The decisions of the organizers of the contest and the panel of judges will be final.

10. The subject line of the mail and the file name should be in the following format: finomenon__

11. The contestants are required to send their entry to the following email id: finomenon.batch@gmail.com latest by 23:59:59 on 9^th Nov, 2009.

12. For any further queries, please contact

Anubhav jain anubh86@gmail.com 9766650868

Shalabh Aggarwal shalabh.aggarwal@gmail.com 9930765320

Company Snapshot i3 Consulting

About i3

i3 consulting is a business consulting firm that works with organizations to improve their performance on a sustainable basis. Founded by former McKinsey & Company employees, i3 consulting works across multiple functions, industries and geographies to generate high-impact analytics driven client solutions. The core team comprises of former Mckinsey & Co and E-value serve employees with rich experience in consulting, analytics and business research.

What We Offer

We work closely with our clients to understand the core issues they are facing and to add true value to their business. Our cross functional expertise across analytics and business research coupled with strong industry knowledge helps us deliver actionable and high impact solutions.

Client Services

Risk Management

Marketing Analytics

Finance

Strategy

Risk management

Risk Management is at the core of any organization. It has been a big differentiator between high performing and low performing organizations. Success of any risk management system lies in understanding the riskiness of the portfolio, its sources and then managing risk accordingly. Risk Management does not necessarily mean risk avoidance but means taking risks that organizations can handle effectively and where commensurate rewards are available for the risks taken.

At i3 Consulting, our Risk professionals will help organizations in three broad areas:

a) Customer life cycle management - Organizations face challenges in measuring risk of their customers throughout their life cycle. i3 Consulting has a team of professionals who work closely with the organizations to not only assess risk of customers but also develop sound acquisition and account management.

· Customer Acquisition (Rating models/credit score for customers/rating models for facility/pricing models/underwriting models/forecasted expected NPV of applicant)

· Account Management (Behaviour rating model/facility renewal rating)

· Collections( Behavioural segmentation of customers/risk segmentation of customers/predict recovery amount/segment debt consolidators)

b) Corporate strategies - One of the biggest challenges for corporates is to take decision under uncertainty. They are also faced with showing consistent business results and removing volatility from the cash flows. i3 Consulting too does not have the crystal ball that can remove uncertainty, however the team can work closely with the corporates to identify sources of uncertainty and also assess the potential outcome based on different decision making scenarios to make decision making more informed.

c) Reporting and dashboard creation - Any sound risk management system can work only if is tracked and monitored well. Key to achieving this is creating a Management Information System that captures all the necessary components from Management's perspective. Majority of the banks have a well defined MIS system and huge IT infrastructure to support it. Limitation in existing systems is lack of right metrices and framework that can ensure integrated view of the whole portfolio. i3 Consulting has a team of experienced professionals who specialize in conducting diagnostics of existing systems and can design and maintain MIS on an ongoing basis.

· Risk management dashboards

· Strategy tracking dashboards

· Campaign management dashboards

· Integrated portfolio view

Marketing Analytics

Innovative marketing actions result from great insights into the market and the customers. i3 Consulting can help clients understand the market and their customers better for developing the right market strategy.

At i3 Consulting, our specialized group of people help clients in integrating market insights, competitor actions and customer needs to:

· Create a differentiated brand strategy

· Identify opportunities to expand into new markets

· More targeted market communication strategy

· Manage product portfolios

· Develop pricing and promotions strategy

i3 Consulting delivers to its clients using the following tools:

a) Customer insights - For brand success of any company it is imperative to understand the customers. Our experienced professionals at i3 Consulting can help clients identify what are the different kind of customers that exist in the market or within the company and how to best understand their behaviour and preferences. Identifying and understanding the existing segment can help clients:

· Customize its offerings to it’s customers

· Cross sell its products

· Optimize its strategies for best results

b) Marketing Segmentation - For a client in a specific industry it is interesting to see where it is positioned in the industry at large and specifically to identify and understand it’s peer set. This helps a company to build on it’s strength and work on it’s weakness appropriately. The key to this lies in understanding your market . A correct assessment of the market gives the client a better picture of what are the different categories of players within its industry as well as which companies fall in it’s peer set. A detailed profiling of the peers and competitors can then enable the client to evaluate where it is gaining or losing compared to others

c) Tools and models to support marketing actions - i3 Consulting can also help clients analyze their performance or take strategic decision by creating user friendly models. These models can be custom created depending on the need and the business problem. The following are examples of models that can benefit a company:

· Allocation model: Retail chains often face problem in allocating their resources and deciding on the correct level of inventory. An allocation model can help them optimize allocation and decide the ideal level of inventory

· Promotional effectiveness model: A promotional effectiveness model can help clients analyze the performance of products on promotions as well as understand cannibalization effect of promotions. This helps in optimizing the products for promotion as well as plan better for future promotional campaigns.

Finance

i3 Consulting provides a broad spectrum of services to provide complete financial management Financial analysis- Quantitative analysis of accounts and financial statements, identify trends and suggest improvements Evaluate key performance metrics like EBIT, ROI and benchmark it with peers

· Capital Market Performance- Event analysis and its impact on capital markets Shareholder value management Conduct technical analysis, volatility analysis, compute risk adjusted returns etc. and suggest measures for improvement

· Valuation- Valuations using several methods as a key to provide more accurate estimate. E.g.: Adjusted market value, discounted cash flow method, comparable multiple analyses Valuations of unlisted companies and businesses

· Investment decision analysis- Preparing of business plans and financial modelling of projections Evaluation of ROIC, WACC, IRR and NPV Exit strategy reviews

· Financial Dashboard - A powerful MIS which includes key cost and revenue metrics Analysis across periods and regions for the purpose of benchmarking Automated process for enhanced accuracy and efficiency

· Primary and secondary research - Collecting and compiling data from secondary sources for the purpose of analysis Conduct primary research in cases where data from secondary sources is not available

Strategy

Corporate Strategy - i3 Consulting can help design your corporate strategy to effectively manage your portfolio of initiatives. We will work with you to shape your company’s direction by identifying synergies within the system and evaluating market opportunities.

Business Unit Strategy - i3 Consulting can diagnose the health of your business unit and recommend operational improvement measures to significantly increase shareholder value. We will provide you with world-class business insights, analytical tools and frameworks and a concrete road-map to help you make the right decisions at the right time.

Growth Strategy - At a time where growth is the new mantra for business success, i3 Consulting prides itself in being able to offer a large repertoire of skills and knowledge to help you develop a strong growth strategy.