25.06.2008

• The expected has happened: RBI Guv hikes CRR and repo rates
• Perhaps this is the one time that the market has been able to predict correctly what Dr. Reddy would do. He hiked the repo rate and the CRR by 50 basis points each.
• Repo rate is the rate at which RBI lends money to banks. CRR (Cash Reserve Ratio) is the percentage of DTL (Demand and Time Liabilities) that the banks have to keep with the RBI in the form of cash.
• Take a look at this good graphic which says something about the impact of these measures.
• The actual name of Jinnah House is “South Court”
• Take a look at this very good piece that gives us a bit of history.
• Jinnah House was built by Md. Ali Jinnah, the father of Pakistan in Mumbai in 1936. Soon after partition the Government of India could have declared it as enemy property; but it didn’t out of respect for Jinnah.
• Jinnah’s daughter Dina Wadia and the mother of our very own Nusli Wadia, the chief of Bombay Dyeing group of industries, is now battling it out in the Mumbai High Court for regaining the property. She lives in US.
• What are inflation indexed bonds?
• Inflation-indexed bonds (also known as inflation-linked bonds or colloquially as linkers) are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment.
• The first known inflation-indexed bond was issued by the Massachusetts Bay Company in 1780.
• With inflation rising and no signs of it dissipating in the near future, senior citizens who are dependent on the fixed income they derive out of their retirement savings are the worst affected lot. If inflation indexed bonds are introduced it would mitigate their problems to a certain extent.
• Have time for some raillery?
• Read this. You will love it. Very light and enjoyable reading.
• A look at the DTH market
• DTH – Direct to home. This segment refers to those having an antenna in their homes which enables them to receive TV signals from a satellite directly.
• Of the 5-6 million DTH users in the country, Dish TV has over 3.3-million subscribers, Tata Sky has over 2.5-million DTH subscribers.
• Currently, out of 120-million TV households in India, 70 million have cable connection. By 2015, 40% of the pay TV universe (cable TV and DTH) are likely to comprise DTH users, significantly up from around 5% now, according to industry projections.
• You have heard of BPO, LPO, KPO etc. But about PPO?
• It stands for person to person offshoring. It comprises of services offshored by small-time businesses and entrepreneurs seeking operational and cost efficiency. The array of services offered ranges from online tutoring, website development, and graphic design to writing and translation services, accounting and tax preparation services and landscape design services among others.
• Experts say that revenue from the PPO segment was in excess of $250 million and that it was projected to grow over $2 billion by 2015.
• Is speculation to be blamed for the current global crude price rise?
• I excerpt for you the line of argument put forth in today’s ET editorial:
• “…the fact remains that speculative activity in oil can reportedly be done on the cheap. At the New York Mercantile Exchange (NYMEX), the premier energy futures market, the initial margin requirement to garner 1,000 barrels of crude, valued at well over $100,000, is just about $3,375! The low margin is one reason why at NYMEX and the InterContinental Exchange, average daily contracts added up to nearly 800 million barrels per day (a contract corresponds to 1,000 barrels) of oil last year. Note that the average daily global production in 2007 was only 86 million barrels. The sustained purchases of oil futures appear to have created a parallel demand for crude.”
• When sustained purchases of a commodity in futures can create parallel demand for the commodity and then drive up the prices, will the same logic not apply to our own domestic commodity markets? Were our Comrades far off the mark when they were blaming the commodity futures trading for the price rise in agriculture commodities?
• Will ban on crude futures at NYMEX and ICE bring down the crude prices globally?
• Before you jump to any conclusions on these questions, do read this editorial, which is a well written piece striking a fine balance between the arguments. It is here.
• RBI goes slow on credit derivatives
• The RBI has yet again decided to keep the introduction of credit derivatives in India. While this is understandable given the fact that the global financial power houses are still licking their wounds in the aftermath of the subprime bloodbath, I find some sane counsel in today’s ET editorial on the subject:
• “Innovation is an integral part of business, be it banking or anything else. What is important is not to frown upon it because it poses risks but to frame suitable prudential guidelines and back this with competent supervision and market intelligence so that misdeeds are promptly brought to light. In the subprime crisis, for instance, it is arguable whether the problems can be laid at the door of credit derivatives or poor supervision.”