Top business schools like IIM-B, IIM-C and FMS add muscle to finance labs

Top business schools like Indian Institute of Management (IIM)-Bangalore, IIM-Calcutta and Faculty of Management Studies (FMS) Delhi are putting in place massive investments for expanding and setting up finance laboratories to aid research, enhance students’ proficiency in financial markets and assist them in placements. The finance labs at campuses are equipped with Bloomberg terminals and other national and international databases that provide real-time information on government securities, equity markets and capital structures.

IIM-Bangalore has allocated Rs. 10 million for an extension of its existing facility, which is expected to provide students access to 50 terminals and data from Bloomberg, Newswire 18, CMI, and CRSB early next year. The institute is serious about expanding the existing facility as these databases give students access to large amounts of empirical data for research and projects, says professor Sankarshan Basu, chairperson, career development services at the institute.

“This also benefits students looking at a career in the banking and financial services industry as the companies expect them to be familiar with such databases. Accessing them earlier makes them industry-ready from day one,” he adds.

This month, FMS opened its financial laboratory at an investment of Rs. 4 million. It is equipped with 12 Bloomberg terminals. These will help students in improving the standard and level of detail in their final-year dissertations and their term assignments, case studies and research with faculty members, besides assisting them at the time of placements.

“Most finance professionals work on Bloomberg terminals regularly, and being familiar with the scope and operations of such databases will boost a prospective recruits’ candidature,” says Nitesh Goyal, head of the finance society. Summer placements will begin at FMS next month. About 26% of the class of 210 in the 2012-14 batch found internships in the BFSI sector.

IIM-Calcutta too plans to replace its existing makeshift financial research and trading lab with a 4,000 sq-ft centre which will be accessible to students and faculty members from November this year. “The centre will function like the labs in overseas B-schools, providing students access to live national and international databases, fundamentals and other banking and non-banking data,” says professor Ashok Banerjee, Dean of New Initiatives and External Relations.

At XLRI, the primary purpose of putting in place such databases stemmed from placements. “Companies expect students to be familiar with such systems,” says HK Pradhan, professor of finance and economics and coordinator of the financial market centre at XLRI.

Source: The Economic Times, September 27, 2013

Bombay Stock Exchange to train millions in financial skills

There is hope for skilled manpower-starved banks, financial services’ firms and insurance companies. The Bombay Stock Exchange (BSE) says it will train 6.5 million people in the next 10 years to work in the BFSI (banking, financial services and insurance) sector, the largest employer in the Indian private sector.

BSE has been brought in by the National Skill Development Corporation (NSDC), a public-private partnership created by the Ministry of Finance in 2008, for the job. The pilot project, to include developing a complete work programme, is to begin next month.

NSDC is to extend a grant of Rs. 5 crore (Rs. 50 million) for the first three years to BSE for creating a pilot programme, said sources. BSE would set up at least 200 accredited training centres across the country. Each would train 3,250 people every year. The project will be carried out by BSE’s training institute, which till now had been conducting certified courses in capital market studies.

According to a recent estimate by the Indian Banks’ Association (IBA), public sector banks alone require at least 400,000 new employees in the next two years. For example, Bank of Baroda is looking to recruit 5,000 employees during the current financial year. India’s largest lender, State Bank of India, which hired 20,000 people last year, is planning to hire 10,000 more this year. Union Bank of India plans to hire 4,000 people.

Says a member of the Institute of Banking Personnel Selection (IBPS), “At present, public sector bank employees’ number almost a million but a large chunk of them will retire in the next two years.” Last year, IBPS facilitated the recruitment of 48,000 employees in PSBs.

Madhu Kannan, CEO and Managing Director of BSE, said: “It is one of the most important social causes. The BFSI sector severely lacks skilled workers and there is a vacancy at every level. We will invite other exchanges, depositories, banks and insurance companies to work together and also invest money, if need be.”

So far, NSDC has approved 36 projects, involving 30 companies and six sector skill councils (SSCs). It has committed funding of Rs. 1,016 crore (Rs. 10.16 billion) since February 2010 to train five million people. NSDC has identified 20 sectors to train 150 million people by 2022. The six sector skill councils are in the automotive segment, energy, retail, private security; media, entertainment and animation; and information technology and IT-enabled services. The SCCs are to create clear definition of qualifications required to perform a given job and to move into advanced positions.

Source: Business Standard, June 29, 2011

Indian Mutual Funds dominate world top-100 stock funds in Q2

Fifty one India-focused funds were among the world’s top 100 performing stock funds in the quarter to June as domestic shares leapt by nearly half, recording their biggest surge in 17 years, data from fund tracker Lipper showed. They are led by those investing in shares of infrastructure firms, a favoured theme in Asia’s third largest economy after the Congress-lead coalition won a strong mandate in April-May polls raising hopes for higher spending on roads, ports and bridges.

The Lipper’s list of 29,942 world stock funds with a track record of at least a quarter showed India funds recording an average 50.45 per cent jump in their net values in three months to June as compared to just over 18 per cent gain for the fund group. India funds were led by Naya Bharat Property Company fund, domiciled in the Isle of Man, which gave a return of nearly 135 per cent, followed by JM Core 11 Fund, a concentrated 11-stock portfolio, which rose more than 100 per cent.

“Stocks in India were spurred on by a steady diet of positive macro data and the strong victory of the incumbent Congress party in national elections mid-May” said Rajeev Baddepudi, a senior research analyst for ASEAN at Lipper.

Indian shares surged 49.3 per cent during April-June, the fastest in Asia after Vietnam, on signs of economic recovery and hopes for market-friendly policies by the re-elected Congress-lead government. The gain was the biggest rise for the benchmark in any quarter since it soared 124.5 per cent in January-March in 1992 when Manmohan Singh, the then finance minister, kicked off reforms to open up the economy.

Infrastructure: Hopes are high that Manmohan Singh, currently in his second-term as prime minister, would further open up the economy to foreign investment and remove policy bottlenecks. This has led to sharper surge in shares of infrastructure firms, with capital goods stocks rising nearly twice as fast as the benchmark index in June quarter, lifting portfolio gains for funds primarily investing in the sector. For instance, all top five Indian funds part of the Lipper’s top-100 list are infrastructure or property funds. Fund houses JM Financial Asset Management and Sundaram BNP Paribas Mutual Fund have four funds each in the list, while Benchmark, India’s passive fund manager, DBS Cholamandalam, SBI Funds Management and Taurus Mutual Fund had three schemes each.

Source: The Economic Times, July 3, 2009

Indian stocks emerge best performers globally in 5-years period: Economic Survey

A sharp meltdown during the last year notwithstanding, Indian stock market has emerged as the best performer among its global peers for a time-frame of five years with a return of over 65 per cent for investors, according to India’s Economic Survey of 2008-09.

In the five-year period ending December 2008, the Indian stock market benchmark Sensex posted a positive return of 65.2 per cent, the Survey showed, even as a number of global markets such as Japan, Malaysia and Taiwan, posted negative returns.

The second best five-year return of 43.7 per cent was given by China, followed by 35.5 per cent in Indonesia and 25.6 per cent in South Korea, the pre-budget survey said.

This is the first time that the Indian stock market has posted a better return than any other markets from 2003-end levels. Even at the end of 2007, when Indian markets gave a record high return of 247.4 per cent over 2003-end level, it was lower than 296.8 per cent return in Indonesia.

In 2006 as well, the returns given by the country’s benchmark index Sensex of 136.1 per cent was second to Indonesia’s 161 per cent, the data compiled by the survey showed. In 2005, Indian stocks were behind South Korea (69.7 per cent) and Indonesia (68.1 per cent).

“The cumulative change in global indices at end-December 2008 over end-2003 level is in sharp contrast to the earlier years,” the Economic Survey tabled on July 2, 2009 in Parliament stated.

Source: Press Trust of India

Circuit Breaker System of Indian Stock Market

On May 18, 2009, trading on India’s Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) was halted for the full day as the markets hit the 20 per cent circuit breaker after they reopened at 11:55 am. The Sensex zoomed 2,110 points to 14,284 while the Nifty touched 4,323, up 651 points. This is for the first time that trading was halted for the full day on the BSE and NSE and also the biggest ever single-day gains. The markets hit the upper circuit within minutes after opening and then trade had to be halted for two hours till 11:55 am. When trading resumed, it hit the circuit breaker again.

The obvious reason for the stock market rally was the near-decisive mandate for the Congress-led United Progressive Alliance (UPA) in the recently concluded parliamentary elections. With the Left parties not part of the almost clear mandate for UPA, the bull run reflected the jubilation for a stable government that would take more steps to restore the India growth story again.

The extraordinary single day rise in Sensex also brought the system of “circuit breaker” to the fore. Friends and relatives started asking what is a circuit breaker and how the system works.

The system of circuit breakers was introduced by the Securities & Exchange Board of India (SEBI) through a circular on June 28, 2001. These circuit breakers apply if either the Sensex or Nifty move up or down by 10 per cent, 15 per cent and 20 per cent during the day. The circuit breakers bring about a coordinated halt in trading in all equity and derivative markets nationwide with the intention to cool down the market. The movement of 10 per cent and more is considered exceptional as SEBI’s analysis of the movements of BSE Sensex in over 16 years between January 1984 and May 2001 showed that the Sensex moved by 10 per cent either way only five times.

The BSE implements on a quarterly basis the index based market wide circuit breaker system, which is applicable at three stages of the index movement either way at 10 per cent, 15 per cent and 20 per cent. This circuit breaker brings about a coordinated trading halt in all equity and equity derivative markets nationwide. The market wide circuit breakers would be triggered by movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier. In case of a 10% movement of either of these indices, there would be a 1-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1:00 p.m. but before 2:30 p.m., there will be a trading halt for 1½ hour. In case the movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and the market will continue trading. In case of a 15% movement of either index, there will be a 2-hour market halt if the movement takes place before 1:00 p.m. If the 15% trigger is reached on or after 1:00 p.m. but before 2:00 p.m., there will be a 1 hour halt. If the 15% trigger is reached on or after 2:00 p.m. the trading will halt for the remainder of the day. In case of a 20% movement of the index, the trading will be halted for the remainder of the day.

The percentages are calculated on the closing index value of the quarter. These percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of Sensex). At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter. On March 31, 2009, the last trading day of the quarter, Sensex closed at 9708.50 points. The absolute points of Sensex variation (over the previous day’s closing Sensex) which would trigger market wide circuit breaker for any day in the quarter between April 1, 2009 and June 30, 2009 would be as follows: (+/-) 10% means 975 equivalent points; (+/-) 15% means 1450 equivalent points; and (+/-) 20% means 1950 equivalent points.

There have been very few instances of markets coming to halt on triggering of circuit breakers ever since the system was introduced in June 2001, according to data available with the exchanges. The first time the trading was stopped because of circuit breakers was on May 17, 2004 when trading had to be halted twice in the day. Subsequently, trading was halted on circuit breakers on May 22, 2006, October 17, 2007 and January 22, 2008. On all these occasions, the circuit breakers were applied on the downward movement of the indices unlike on May 18, 2009, when the circuit breaker was applied on the upward movement of the Sensex and Nifty.
Source: Press Trust of India & NDTV