A Brief Overview of Indian Financial Markets

This post is meant to give overview of Indian Financial Markets. 

The actors in Indian Financial Market include Regulators, Stock Exchanges, Commodities Exchanges and the Depositories.

The regulators include:

1) Securities and exchange board of India (SEBI) that governs the Equity markets and Depositories.

2) Forward Market Commision (FMC) that governs Commodities markets.

3) Reserve Bank of India (RBI) that governs Banks and Fixed Income Money Markets.

The three regulatory bodies don’t interfere in one anothers area , though the regulatory frame work of SEBI and RBI overlap to some extent.

The two stock exchanges in India, governed SEBI, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), contribute almost 99.9% turnover in the market. Other exchanges like Delhi Stock Exchange don’t have significant turnover and are almost dead.

The Depositories takes care of the share certificates in Demateralized(DEMAT) form . The two depositories in Indian market are:

1) National Securities Depositories Limited (NSDL)

2) Central Depositories Services Limited(CDSL)

These depositories also hold Commodities in DEMAT form. The Commodities Market is governed by Forward Market Commission(FMC).

The two prominent Commodities exchanges in India are

1) Multi Commodity Exchange (MCX)

2) National Commodities & Derivatives Exchange (NCDEX)

Reverve Bank of India (RBI) govern banks and money markets in India . The trading platform for money markets is Negotiated Dealing System (NDS).

Trading in money markets is dominated by Institutional players and thus retail investors can participate only through Liquid Mutual funds.

Hidden Treasure – Damodaran Website

I am writing this post for benefit of those Equity Analysts  who are unaware or Prof Aswath Damodaran and the treasures hidden in his website.

Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. Professor Damodaran is best known as author of several widely used academic texts on Valuation, Corporate Finance, and Investment Management.

You can watch to all his lectures through his website. (For this you should follow the link “Webcasts” at the bottom left of the website – http://pages.stern.nyu.edu/~adamodar/). But one need to have broadband connection as there will be streaming of video files that require high speed.

Also he has made all his books Public by publishing them on his Website

In case you find the site useful, drop a mail of appreciation to Mr Damodaran at adamodar@stern.nyu.edu

Nokia (NOK), An Outperformer: Report From Cowen And Company

1st Dec 2009 –

A recent report by Cowen and Company has expressed bullish signs on Nokia (NYSE: NOK). In the report, Cowen is quite confident on Nokia’s continuing low-cost leadership. According to the firm, Nokia’s Management is expected to provide industry volume guidance for the next financial year in the analysts meet to be held tomorrow.

It is to be noted that Nokia shares have been range-bound of late as the company has struggled to update and articulate the strategy of its core businesses.

It is expected that the management will focus upon impact of a top-down re-organization and advancing its mobile software plan in the analysts meet. An updated Nokia’s organization chart can be expected in place delineating reporting structures shortly.

It is to be noted that Cowen has estimated Nokia’s market share at 35.6 % compared to consensus of 37.6%. However, the EPS of Cowen is line with the consensus at 0.19 euros.

Analysts (Matthew Hoffman and Bryan Prohm)

Dollar Trading 14-year Low On Yen

27 November 2009 –

The dollar tumbled to its lowest in 14 years (since July 1995) against the yen on Thursday. The currency strengthened 0.5 percent to the dollar, to 86.89 in morning trade in London, Bloomberg data showed.

Traders said the dollar’s fall against the yen was driven by US rather than Japanese factors, and Japanese Government Officials said that the central bank was not thinking of intervening in the currency market at this point.

A stronger yen is a headache for Japan’s new Democratic party government, as it makes exports less competitive, threatening to derail a fragile economic recovery.

While the yen has actually risen only 3.8 per cent against the dollar this year, there are widespread concerns among manufacturers, that unless the yen’s rise was restricted, the economy would be”damaged”.

Many companies that had issued bonds or raised loans in yen to take advantage of low interest rates in Japan, would face the brunt of appreciating Yen.

Anthony Bolton Returns To Fund Management

26th November 2009 -

Anthony Bolton, arguably the most successful investors in Europe of his generation and certainly most famous fund manager in UK, has decided to get back to work just two years after stepping down from a glittering fund management career.

Bolton made his fame as shrewd manager of Fidelity’s top-performing Special Situations fund, earning an average annual return of 19.5%, compared to 13.5% for the FTSE All-Share index.

Bolton is relocating to Hong Kong and will manage a fund focused on China. Writing to Financial Times, Mr Bolton revealed that a recent tour of China had rekindled his desire to manage money. Bolten says, ‘I have become increasingly excited by the prospect of managing a portfolio investing in the tremendous growth potential of China.

Many Investors like Bolton are choosing to move to Asia to be close to what they see as a growing investment opportunity, especially compared with heavily indebted Western economies.

Dubai Default Worries Investors, Market Jitters

26th Nov 2009 –

Europe’s main stock markets dropped by more than 1 per cent in early trading on Friday, caused by worries about the threat of a debt default from Dubai.

London’s benchmark FTSE 100 index fell 1.06 per cent to 5,152.86 points while Frankfurt’s DAX 30 shed 1.32 per cent to 5,540.34 points. Dow component Exxon Mobil (NYSE: XOM) shares fell 1.9 percent to $74.99 before the bell.

The markets lost confidence from the news that Gulf emirate’s public investment company, carrying $59 billion of liabilities, will delay repayment on much of its debt.

Dubai is one of seven city states that make up the United Arab Emirates, along with Abu Dhabi. On Wednesday, it announced that it intends to request a “standstill” for at least six months on the maturing debt of Dubai World, its largest and most-indebted state-run holding.

Standard and Poor’s (S&P) estimated last month that Dubai state-related companies are due to repay some 50 billion dollars in debt over the next three years, which represent 70 per cent of the emirate’s gross domestic product.