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A newsletter of popular articles on financial markets and corporate finance

E-Magazine

Volume 4, Issue 3, January 2018

Artha - January 2018

Editorial

The Union Finance Minister will present his last full budget on 1 February 2018 and the general expectation is it may be more a ‘populist’ budget. However, given the general electoral mood in the country and results of recent state elections, the present government may take some risky bets and introduce a few proposals which are required though not ‘popular’. One such area is labour reform. Such reform may help in the government’s goal of creating more jobs. Another area that people will expect the Honourable Minister to address to how to fuel economic growth. Will massive public investment and large scale disinvestment help the economy grow at above seven percent? The third area is agriculture- how to release stress in this sector and improve farm productivity.

The first article briefly introduces various Alternative Investment fund (AIF) classifications. Authors discuss various hedge fund strategies and performance of Indian hedge funds. The second article looks into the recent trends in bank stocks and argues that the performance of bank stocks is out of sync with the performance of the banking sector. The third article deals with the non-performing loans and the author shows that despite having data, systems and institutionalized mechanisms, the non-performing loan levels in India are an indication that corporate bankers rarely pay heed to early warning signs. In the fourth article, the author highlights the Indian retail investors’ participation in the equity market post January 2014. In the last piece, the author explains the Blockchain revolution in recent times.

The Market Watch section in this issue deals with the entry of Private Equity firms in the Banking sector.

You may send your comments and feedback on this issue to ashok@iimcal.ac.in

I wish you a very bright and productive New Year 2018!

Happy reading!

 

Ashok Banerjee

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From IIM Calcutta

Performance of Hedge Funds in India

Author: Ashok Banerjee and Bobbur Abhilash Chowdary ( From IIM Calcutta )

Hedge fund industry is drawing media attention in India. Recently Avendus Capital has reported as the first domestic hedge fund to have $1 billion asset under management.[1] A hedge fund is an alternative investment fund (AIF), which employs diverse or complex trading strategies and invests and trades in securities having diverse risks or complex products […]

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From IIM Calcutta

Bank Stocks: Irrational Exuberance or Government Assurance as the Ultimate Risk Manager?

Author: Partha Ray ( From IIM Calcutta )

In recent times the stock market has been performing rather spectacularly all over the world – so much so that the recently released World Economic Outlook of the IMF (released on January 22 2018) flagged “rich asset valuations” and the possibility of a “financial market correction” as a risk that could dampen growth and confidence.[1] […]

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Alumni Corner

Banks ignore early warning signs at their peril

Author: Balachandran R ( Alumni Corner )

The non-performing loan woes of public sector banks have been discussed threadbare for a while now. Private sector banks have not exactly covered themselves with glory on this front. The inspections of the Reserve Bank of India have revealed a significant divergence between their declared NPA’s and that determined to be non performing by RBI. […]

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Guest Column

The Start of Indian Retail Investor Put

Author: Deep N Mukherjee ( Guest Column )

US stock markets arguably have benefitted from the ‘Greenspan Put’ and later the ‘Bernanke Put’. The narrative being that if there was ever a stress in the economy or any economic event which would have triggered a market crisis, Greenspan(Chairman of US Federal Reserve 1987 to 2006) would cut interest rate and flush markets with […]

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Voice of America

The Magic of Blockchain

Author: Ayan Bhattacharya ( Voice of America )

In October 2008, almost out of nowhere, a mysterious figure named Satoshi Nakamoto posted a short paper on cryptographic mailing lists describing an architecture that could – the paper claimed – replace existing centrally controlled currencies. Dismissed initially by the mainstream as a nerdish fantasy, interest in crypto currencies exploded abruptly last year. All of […]

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Market Watch

Private Equity inflow: Solution to rising NPAs

Author: Amit Kumar Agrawal ( Market Watch )

Number of PE Funds participating in India   Banking system is reeling under ₹12-lakh crore worth of stressed assets (gross NPAs plus restructured advances) – 11.5% of gross advances. Global PE investors are partnering with local players to invest in the distressed assets space in India. ARCs act as debt aggregators by acquiring non-performing loans […]

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