Crisis management -SLUMP STRATEGY

The financial meltdown abroad should serve as a lesson for the investor. Save well for troubled times.


The stunning collapse of Lehman Brothers and the crisis engulfing Wall Street is having an impact across the world. There could be several more developments over the next few months that might make things more difficult. For investors, this is an important period to learn from such developments. This will ensure that they are not in a tough situation in the future.
Here are five such important lessons......

Every investment has risk: Typically, during good times, investors tend to ignore the risk element in a paper and focus only on returns.

Investors in equities stand to lose their entire money, if the company goes down. The plunging shares prices of Lehman Brothers, Freddie Mac and Fannie Mae to one dollar proves that entire market capitalisations can simply get wiped out.

Even debt market products get badly hit on account of the write-down of the debt that they hold. So, a portfolio needs to be as diversified as possible to insulate a person for such situations.

Everything is interlinked: From the price of a stock to an insurance policy, everything is linked. A fall in the price of a particular stock in Europe could mean the overseas mutual fund, where you have invested, is likely to see a fall in its net asset value (NAV). Even an insurance policy with a domestic company, which has a foreign partner, can be adversely impacted.

The latter implies you will lose your premiums as well as your cover. While such risks cannot be avoided, a portfolio that contains only domestic stocks or an insurance company may sound safe, but there is no guarantee that it will not be impacted adversely.

Diversify, the only mantra for retirement planning: The result of all the financial planning is gauged by the final corpus that you are able to create for retirement.

A sufficiently-big nest will ensure that there are adequate funds during the sunset years. Many people, even those who are in the financial sector, make the basic mistake of putting all their eggs in one basket. Many a time, employees buy shares of their own companies thinking that being an insider they are privy to the most-sensitive information. This could lead to a great risk, if suddenly something were to go wrong.

The solution again is diversification. Having exposure to local equities, international equities, debt, commodities together would be a better idea to create a sound portfolio that will weather tough times. And even within each of these areas, spread the money across investment options.

Treat your career like an investment: Most people do not pay the right amount of attention to their career or working life. Just like an investment that needs constant monitoring and analysis, there is a need to monitor the career in the same manner. Most people are shocked when they lose their jobs.

The better way is to be prepared for the worst. That will help to insulate you from any career related problem.

Also, concentration on issues like upgrading skills through training, attending conferences and seminars and networking will help to improve your career. Yes, all these cost money. However, the returns over the years are much more.

Save during good times: Most importantly, when the earnings are high, save well. Good times are not for ever. Creating a meaningful portfolio or a simple savings corpus would be of great help during bad times. Proper investments will ensure that there are reserves that can be used during emergencies. A sum of Rs 10,000 saved each month for 25 years growing at 15 per cent annually will give rise to a corpus of Rs 2.55 crore. All this money can be rather useful when the cash flow actually stops.

Ref:-
Business standard.....

Will financial crisis derail India's economy?

it is a good topic for debate so thought it will help..............

Financing India growth would not be that much of an issue Deepening financial distress in the United States has affected even the most basic financial intermediation, with US authorities currently making great efforts to restore fully functioning markets. These conditions would probably have a limited direct effect on India, but the implications for global demand could result in a moderation in exports. Moreover, heightened risk aversion could also impact pricing of assets. Being largely a domestic economy with exports including software at 17% of GDP, India is relatively insulated in comparison with most other economies. Though it is difficult to quantify the exact implications at this stage, a couple of points worth keeping are: (1) Indian IT companies have around a 30% exposure to financial services; (2) funding constraints could result in some uncertainty for the real estate sector; and (3) while direct exposure for Indian financial institutions is negligible there are a few firms which could be impacted at the margin. However, a point to note is that given the deterioration in the global and domestic macro environment seen over the year, India Inc has been adapting and innovating with a clear focus on profitability. But the adverse macro environment is having an impact on growth and expansion plans with growth estimates now in the 7%-7.5% range. Our FY09 and FY10 GDP estimates of 7.5% and 7.4% factor in single-digit investment growth from a CAGR of 17% seen during FY03 to FY08. This is basically due to the fact that investments have faced a double whammy with rising input costs on the one hand; and higher, more stringent borrowing constraints (both domestic and global) on the other. Growth would have been lower were it not for the buoyant savings, productivity gains, healthier balance sheets and the possibility of monetary easing next year. In addition, a sustained fall in commodity prices bodes well for inflation, rates and the fisc. While the impact on growth and exports can be quantified, the impact on currency and capital flows is not as clear. The reason is that despite India being a domestic-driven economy with strong macro fundamentals, in times of an increase in risk aversion, countries with twin deficits, inflation and political challenges tend to be viewed with caution. Moreover, a lot would also depend on monetary policy responses (both of the Fed and the RBI) as asset reallocation could result in inducing capital flows to those countries where interest rates are higher. The panic over the health of the US financial system has caused severe de-leveraging of balance sheets with firms and investors rushing to convert assets into cash to reduce risk and to preserve operating capital. The process is likely to continue and will impact economies/corporates who access international capital. De-leveraging and the increase in risk aversion could result in higher spreads thus increasing recourse to domestic sources of funding. However, we believe that financing the India growth story would not be that much of an issue given the buoyancy in deposits, high savings and levers available with the RBI to inject liquidity. Recent steps taken such as increasing the attractiveness of NRI deposits, and providing additional liquidity support via the LAF window to alleviate the liquidity shortage are encouraging. We believe that we could see the RBI becoming more active in the coming months. Possible measures include (1) further relaxation of norms on the capital account, both NRI and ECB guidelines, (2) a likely cut in the SLR given the continued buoyancy in both credit and deposits and consequent demand for government securities to meet statutory requirements, and (3) a possibility of keeping rates on hold given lower commodity prices and stabilising inflationary expectations. India should push ahead with hiking prices of domestic fuels India’s annual GDP growth accelerated to 9.3% in the three years to 2007-08 owing mainly to three key drivers: (1) greater impact and acknowledgement of favourable structural factors; (2) strong global cyclical growth uplift; and (3) exceptionally easy global liquidity conditions and heightened risk appetite that caused a surge in capital inflows into emerging economies, including India. The structural factors driving India’s economic rise remain well entrenched and thus safeguard the attractive medium-term outlook. However, the other two factors have reversed course, and will undoubtedly extract a price for the excesses of recent years. Growth will slow down this year and next, led by deceleration in investment spending, and some rolling over in consumption. GDP growth will moderate to a touch over 7% next year, not a bad outcome considering the global backdrop and the domestic constraints, but lower than the sustained 9% or so several businesses and investors had unrealistically assumed. The impact of the global mayhem will be transmitted via softening external demand and lower capital inflows, especially portfolio investment. The reversal in foreign capital inflows, which is already playing out, will affect local money market liquidity and the rupee. Policymakers here are well positioned to cushion the adverse impact, owing mainly to the sensible approach by the former Reserve Bank governor Y V Reddy, which also sets the stage for greater liberalisation now. The policy response in the coming months will be a reverse of what happened over the last 2-3 years when the RBI was faced with surging capital inflows, and had to hike the cash reserve ratio (CRR) and check rupee’s appreciation. Now, the worsening balance of payments will adversely affect local money market liquidity, and also put pressure on the rupee to weaken. Interest rates for non-resident Indians have already been increased, and will likely to be increased further. Also, policymakers will ease the restrictions on capital inflows to ease dollar supply, though it will now be far more expensive for firms to borrow internationally. Intervention in the foreign exchange market to check rupee’s weakness will tighten local liquidity, which in turn will set the stage for unwinding of securities issued under the market stabilisation scheme, and for cuts in CRR. Real interest rates are pretty high (ignore those who were screaming for rate cuts some time back but now argue that real rates are too low!) Expectations of lower inflation will also prompt significant reversal in interest rates. Given the local constraints and the global backdrop, last week’s quasi and temporary cut in the statutory liquidity ratio (SLR) was perhaps the only workable option, especially since the central bank cannot cut CRR just yet. Still, it also shows the ad-hocism in policymaking due to, among other things, exceptional and adverse global factors, the need to check rupee depreciation and the fiscal bleeding that is forcing banks to lend to the state oil companies. Indian policymakers cannot control global factors, but they should push ahead with increasing local prices of some fuels, so as to check the fiscal mess. The greatest challenge for policymakers will be to deflect bad advice, and there has been plenty going around in recent years. It is ironic that those who were rooting for a free-floating rupee when it was under pressure to appreciate appear to have done a convenient about-face and are now making the case for greater intervention by the RBI to prevent rupee weakness! It is worth remembering that currency flexibility is part of the solution, not part of the problem Indian growth rates should continue to attract The short answer is no, since domestic drivers of growth are robust and varied. But the element of panic and herd reactions make crises uncertain creatures. Whatever the earlier errors, policy reactions to the crisis itself have been largely correct, injecting liquidity, at a price, to prevent freezing of markets, helping institutions, such as Fanny Mae, Freddie Mac and AIG, whose collapse would have large externalities, but letting the shareholders and management suffer. Concerted action by a number of central banks to pump in liquidity is another good sign of global stakes in the financial system and a readiness to prevent its collapse. Liquidity injections need not be inflationary, they substitute for a drying up of systemic liquidity and can be withdrawn as the latter revives. Plans to help banks clean out illiquid assets and restrictions on short selling to restrict attacks on vulnerable stocks may end the uncertainty about who is next. Tackling the root cause may prevent periodic eruptions from the festering sores of the subprime crisis. Policy has to be interventionist in such a crisis to minimise contagion and collapse. Tightening regulatory loopholes that helped create excessive financial leverage must follow, but later. Since taxpayer money is going to investment banks, they must accept tighter regulation. They can only survive as regular banks. Incentives must be redesigned, current huge bonuses in good times and limited liability in bad encourage risk-taking. A premium could be paid in good times to finance the risk of future bailouts. Since Indian banks are healthy, with little exposure to the derivatives and institutions at risk, they will be all right. Fall in global commodity prices will help reduce imported inflation and allow policy to revive growth. There will be a drying of international liquidity and outflow from troubled FPIs. But Indian growth rates are one of the few bright spots in a dismal situation, and should continue to attract robust long-term investments. Excessive FPI inflows were a problem for policy in the past year. The reversal is still minor compared to past accumulations. So there should not be any hesitation to allow some reduction in forex reserves. The cost of carrying reserves and of sterilisation will be reduced. Selling the dollar when the rupee is low makes good profit for the Reserve Bank. As long as inflation is still high excessive rupee depreciation should be prevented. The liquidity withdrawn by dollar sale can be countered by unwinding MSS balances and reducing CRR. The latter will reduce bank costs, and allow domestic credit to compensate to some extent for the drying of international credit. Domestic savings are high enough to finance investment, with whatever external help remains. Sectors most at risk are those that have dealings with troubled financial companies. Some Indian professionals will loose jobs. But quick restructuring makes these losses short-lived. Talent becomes available to go into areas where it is scarce. A deeper global recession may not adversely affect the outsourcing business, despite the loss of some big clients, because of the search for cheaper alternatives. Air travel loses some of its frequent flyers but gains from lower fuel prices. There are always pluses and minuses, it is up to us to build on the pluses and provide an alternative growth pole for the world. The problem is the increasing indebtedness of the United States government. But at least in the short-term, surpluses of other countries should continue to shore it up, because of the latter’s stake in the global system. Gradual adjustment away from the dollar towards a less unipolar and therefore more robust global system will, however, continue.

Ref:- Economics times...

'Financial crisis will not impact Indian growth'

The current turmoil in the global financial markets is unlikely to have an adverse effect on India's healthy growth rate or on the huge investments it is attracting, Indian Minister of state for Commerce and Industry Ashwani Kumar has said.

Admitting the crisis might have slight impact on the functioning of the Indian economy, Kumar expressed confidence that fiscal management will insulate it to the maximum possible extent, asserting that the US and India would continue to be in a "very tight economic embrace."

The American economy is resilient and dynamic and current crisis could be just cyclic or temporary aberration, he told reporters.

Kumar, who is here to deliver a series of lectures in Harvard University, said, money flows only to countries whose economies are resilient and give higher returns, with India fulfilling both qualifications.

The Indian economy is resilient, its economic fundamentals strong and it has 400 million strong middle class with huge purchasing power, he said. Besides, India is strengthening its infrastructure at huge cost.

The Chinese economy on the other hand, Kumar stressed, has reached a saturation point, while India will continue to be one of the principal destination.

Replying to a question, he also expressed hope that the Indo-US Nuclear Deal would clear the Senate by the time Prime Minister Manmohan Singh holds summit with President George Bush on Sept 25 in Washington.

He also praised the Bush administration for its "forceful diplomacy" and time interventions at critical stages during negotiations of Nuclear Suppliers Group.

Ref:- Rediff........

The FOCUS for PLACEMENT, SUMMER TRAINING & SANGOSHTI: SELECT CORPORATE GIANTS

hello guys i am starting with the list of financial co. as well as corporate, i hope it will help........

BANKS

ABN-AMRO Bank

American Express

ANZ Grindlays Bank

Bank of America

Bank of Bahrain &

Kuwait

Bank of Nova Scotia

Bank of Punjab Ltd.

Bank of Tokyo-Mitsubishi

Banque Nationale de

Paris

Bharat Overseas Bank

Catholic Syrian Bank

Centurion Bank

Citibank N.A.

City Union Bank

Credit Lyonnais

Deutsche Bank

Dresdner Bank

Federal Bank

Fuji Bank

Global Trust Bank

HDFC Bank

Hongkong & Shanghai

Banking Corp.

ICICI Banking Corp.

IDBI Bank

INDUSIND Bank

Karnataka Bank

Karur Vysya Bank

Mashreq Bank

Nedungadi Bank

Sanwa Bank

Scotia Bank

Standard Chartered Bank

State Bank of India

Times Bank

Union Bank of Switzerland

United Western Bank

UTI Bank

INVESTMENT BANKERS

Crosby Securities

DSP Merrill Lynch

ENAMFinancialConsultants

GE Caps

ICICI Securities

IDBI Capital Market

Services

IFCI Financial Services

Jardine Fleming

J.M. Financial &

Investments

Kotak Mahindra Capital

Co.

Peregrine Capital

PNB Capital Services

SBI Capital Market

CREDIT RATING

AGENCIES

CARE

CRISIL

Duff & Phelps

ICRA

STOCK EXCHANGE &

REGULATORY BODIES

BSE

DSE

IRA

FICCI

OTCEI

NSE

SEBI

FINANCIAL INSTITUTIONS

Delhi Financial Corp.

EXIM Bank of India

GIC

HDFC

HUDCO

ICICI

IDBI

IFCI

Indl. Invt. Bank of India

IL & FS

Indian Railway Finance

Corp.

Life Insurance Corp. of

India

NABARD

NHB

PFC

Tourism Fin. Corp. of

India

UTI

CONSULTANCIES

A.F. Fergueson

Arthur Anderson

Boston Consulting Group

Chesterton Meghraj

Deloitte Haskins & Sells

Ernst & Young

Lovelock & Lewis

Mckinsey & Co.

Pricewater House Coopers

Richard Ellis

S.B. Billimoria

Sharp & Tannan

S.R. Batliboi & Co.

Tata Consultancy

Services

NBFCs

20th Century Finance

Corp.

Alpic Finance

Apple Finance

The Associates

Bajaj Auto Finance

Bajaj Capital

Birla Global Finance Ltd.

Canfin Homes

Ceat Finance

Cholamandalam Finance

Consortium Finance

Countrywide Con.

Financial Services Ltd.

Escorts Finance

First Leasing

HB Portfolio Ltd.

India Lease Dev.

Kotak Mahindra Finance

Lakshmi Gen Finance

Lazard Credit Capital

LIC Housing Finance

Motor & Gen. Finance

Nicco Uco Finance

Peerlesss

R.R. Finance

Reliance Capital &

Finance

Scotia Finance

Sundaram Finance

SBI Home Finance

Tata Finance

Zuari Leasing & Finance Co.

PSU's

BHEL

CMIE

Damodar Valley Corp

EIL

IOC

NALCO

NTPC

NHPC

Powergrid Corporation

Ltd.

ONGC

SAIL

MUTUAL FUNDS

Allianz Mutual Fund

Birla Capital AMC Ltd.

Birla Mutual Fund

BOB Mutual Fund

BOI Mutual Fund

Canbank Mutual Fund

GIC Asset Management

Indbank Mutual Fund

ITC Thread needle

JM Mutual Fund

Kothari Pioneer

Mutual Fund

LIC Mutual Fund

Morgan Stanley

PNB Mutual Fund

SBI Mutual Fund

Shriram Mutual Fund

Tata Mutual Fund

Taurus Mutual Fund

Templeton Mutual

Fund

Unit Trust of India

CORPORATES/MNCS

ABB

ACC

Adani Exports

Alfa-Laval (India)

Alsthom

Apollo Tyres

Aptech

Arvind Mills

Ashok Leyland

Asian Hotels

Asian Paints (India)

Bata

B A S F India

B S E S

Bajaj Auto

Bajaj Tempo

Ballarpur Inds

Bausch & Lomb India

Bayer (India)

Bennette & Coleman

Bharat Forge

Bharti Telecom

Birla 3M

Birla Corp.

Birla VXL

Blue Dart

Bombay Dyeing & Mfg.

Co

BPL

Britannia Industries

Burroughs Wellcome

Canon

Cadbury India

Carrier Aircon

Castrol India

Century Enka

Century Textiles & Inds

Chambal Fert. & Chemicals

CIPLA

Coats Viyella India

CocaCola

Colgate-Pamolive (India)

Crompton Greaves

Cynamid India

Dabur India

Daewoo Motors

DCM Shriram

Digital Equipments

DLF

Dr. Reddys Laboratories

Duncans Industries

E Merck (India)

East India Hotels

EID-Parry (India)

Escorts

Essar Oil

Essar Shipping

Essar Steel

Eveready Industries

Excel Industries

Exide Industries

Finolex Cables

Flex Industries

Glaxo India

Godfray Philips (I) Ltd.

Goetz India Ltd.

Goodlass Nerolac Paints

Grasim Industries

Great Eastern Shipping

Co

Gujarat Alkalies & Chem.

Gujarat Ambuja Cement

HCL

Hero Honda Motors

Hindalco Industries

Hindustan Ciba-Giegy

Hindustan Motors

Hindustan Lever

Hoechst (India)

Honda Siel

Hotel Leelaventure

Hewlett Packard

Hughes Software

Systems

ICI India

Indian Aluminium Co

Indian Hotels Co

Indian Rayon & Inds

Indian Shaving Products

Indo Gulf Fertilizers

Infosys Technologies

Ingersoll-Rand

ITC Group

JCT Electronics

JCT Limited

Jindal Iron and Steel Co

Jindal Strips

JK Corp

JK Synthetics

Kirloskar Cummins

Knoll Pharma

Kodak

KSB Pumps

L M L

Lakme

Lakshmi Machine Works

Larsen & Toubro

LNJ Bhilwara

Lupin Laboratories

M R F

Mahindra & Mahindra

Marico Industries

Morepen Laboratories

Motorola

Nagarjuna Ferts. &

Chem.

Nahar Group

Nestle India

Nicholas Piramal

NIIT

NOCIL

Novartis Industries

Orchid Chemicals

Oswal Chem. &

Ferts.

Parke-Davis (India)

Pepsico

Pfizer

Philips India

Pidilite Industries

Ponds (India)

Procter & Gamble

Ranbaxy Laboratories

Raymond Synthetics

Reliance Industries

Reliance Petroleum

Satyam Computers

S K F Bearings India

SPIC

Sterlite Ind

Sundaram Fasteners

Supreme Ind.

Tata Chemicals

Tata Donnelley

Tata Hydro-Electric

Power

Tata Infotech

Tata Power Co

Tata Tea

Tata Timken

Tata Unisys

TELCO

Thermax

TISCO

Titan Industries

Torrent Pharmaceuticals

TVS-Suzuki

United Phosphorus

Usha Ispat

Videocon Group

Voltas

Wartsila NSD

Wipro

Wockhardt

Wyeth Lederal

Zee Telefilms

Zuari Agro Chemicals