Stock appreciation rights

       Stock appreciation rights generally provide an employee with a cash payment based on the increase in the value of a number of shares over a specific period of time. Stock appreciation rights do not have a settlement date. The employees have the flexibility to decide the time for exercising them, of course within a time frame, on the expiry of which the right would lapse. In effect, stock appreciation right schemes provide a form of deferred cash compensation, which is contingent upon financial performance of the company.

        In the case of stock appreciation rights, what the assessee actually receives is a kind of cash bonus, which is in the nature of deferred wages and which is contingent upon the company doing well in financial terms. There is no need, as in the case of stock options, in converting the benefit into monetary terms because what is received by the assessee is itself in monetary terms.

        As the redemption amount is dependent on the market price of shares, which can move in any direction at any time, the income arises only when the stock appreciation rights are redeemed.

Phew !!!

Atlast a sustained dip in the bizzare inflationary trends....

Now for the third week in a row , there has been a dip in the inflation though it is indeed a marginal decline. Inflation once again declined by 0.2 percentage points to settle at 12.1 per cent in the week ended August 30, down from the previous week's 12.34 per cent. This downtrend has been on for three weeks now.

Analysts, however, believe the current decline in inflation is more a statistical anomaly than anything else. While the rate of inflation has certainly gone down, the wholesale price index, the primary index used to measure headline inflation in India, rose 0.2 per cent, a rise pretty much at par with what the country has been witnessing over the past several weeks.

What awaits India is anybody's guess right now !!!

Record high !!!... UP UP & Away !!! INFLATION hits 13 yr high~#$%&^--12.44% now

     India's annual inflation topped 12 percent for the first time in 13 years in late July, and analysts said it was yet to peak and the Reserve Bank of India (RBI) was not done with monetary tightening.

     The wholesale price index, India's most widely watched price measure, rose 12.01 pct in the 12 months to July 26, above the previous week's 11.98 percent and the highest since the current series became available in 1995.

    Now it has crossed  a whoppnig 12.44 %

     " We are looking at inflation peaking around 13.5-14 percent by around January," said Indranil Pan, chief economist at Kotak Mahindra Bank.

    "But the index movement seems to have normalised as there is no significant difference from market expectations."

    Authorities say lower crude prices and the impact of monsoon rains should moderate domestic prices in a few months and inflation should hover at 8.0-9.0 percent by the end of the 2008/09 financial year.

    The government also revised up the inflation reading for the week ending May 31 to 9.32 percent from 8.75 percent, following a pattern of sizeable revisions this year.

STOCK MARKET INDEX

               A stock market index is a method of measuring a stock market as a whole. The market can be Canadian stocks, American stocks, Bio-tech stocks, small-cap stocks, growth stocks, or any other market of interest. Many indices are compiled by news or financial services firms and are used to benchmark the performance of portfolios such as mutual funds.

Types of indices

        Stock market indexes may be classed in many ways. A broad-base index represents the performance of a whole stock market — and by proxy, reflects investor sentiment on the state of the economy. The most regularly quoted market indexes are broad-base indexes comprised of the stocks of large companies listed on a nation's largest stock exchanges, such as the American Dow Jones Industrial Average and S&P 500 Index, the British FTSE 100, the French CAC 40, the German DAX, the Japanese Nikkei 225, the Indian Sensex, the Australian All Ordinaries and the Hong Kong Hang Seng Index.

        The concept may be extended well beyond an exchange. The Dow Jones Wilshire 5000 Total Stock Market Index, as its name implies, represents the stocks of nearly every publicly traded company in the United States, including all U.S. stocks traded on the New York Stock Exchange (but not ADRs) and most traded on the NASDAQ and American Stock Exchange. Russell Investment Group added to the family of indexes by launching the Russell Global Index.

Weighting

        An index may also be classified according to the method used to determine its price. In a Price-weighted index such as the Dow Jones Industrial Average and the NYSE ARCA Tech 100 Index, the price of each component stock is the only consideration when determining the value of the index. Thus, price movement of even a single security will heavily influence the value of the index even though the dollar shift is less significant in a relatively highly valued issue, and moreover ignoring the relative size of the company as a whole. In contrast, a market-value weighted or capitalization-weighted index such as the Hang Seng Index factors in the size of the company. Thus, a relatively small shift in the price of a large company will heavily influence the value of the index. In a market-share weighted index, price is weighted relative to the number of shares, rather than their total value.

Critique of Capitalization-Weighting

        The use of capitalization-weighted indexes is often justified by the central conclusion of modern portfolio theory that the optimal investment strategy for any investor is to hold the market portfolio, the capitalization-weighted portfolio of all assets. However, empirical tests conclude that market indexes are not efficient. This can be explained by the fact that these indexes do not include all assets or by the fact that the theory does not hold. The practical conclusion is that using capitalization-weighted portfolios is not necessarily the optimal method.

        As a consequence, capitalization weighting has been subject to severe criticism , pointing out that the mechanics of capitalization weighting lead to trend-following strategies that provide an inefficient risk-return trade-off.

     

Indexes and passive investment management

        There has been an accelerating trend in recent decades to create passively managed mutual funds that are based on market indices, known as index funds. Advocates claim that index funds routinely beat a large majority of actively managed mutual funds; one study claimed that over time, the average actively managed fund has returned 1.8% less than the S&P 500 index - a result nearly equal to the average expense ratio of mutual funds (fund expenses are a drag on the funds' return by exactly that ratio). Since index funds attempt to replicate the holdings of an index, they obviate the need for — and thus many costs of — the research entailed in active management, and have a lower "churn" rate (the turnover of securities which lose fund managers' favor and are sold, with the attendant cost of commissions and capital gains taxes).

Ethical stock market indices 

        A notable specialised index type is those for ethical investing indexes that include only those companies satisfying ecological or social criteria, e.g. those of The Calvert Group, KLD, FTSE4Good Index, Dow Jones Sustainability Index and Wilderhill Clean Energy Index.

         Another important trend is strict mechanical criteria for inclusion and exclusion to prevent market manipulation, e.g. in Canada when Nortel was permitted to rise to over 50% of the TSE 300 index value. Ethical indices have a particular interest in mechanical criteria, seeking to avoid accusations of ideological bias in selection, and have pioneered techniques for inclusion and exclusion of stocks based on complex criteria. Another means of mechanical selection is mark-to-future methods that exploit scenarios produced by multiple analysts weighted according to probability, to determine which stocks have become too risky to hold in the index of concern.

Environmental stock market indices

        An environmental stock market index aims to provide a quantitative measure of the environmental damage caused by the companies in an index. Indices of this nature face much the same criticism as Ethical indices do — that the 'score' given is partially subjective.

        However, whereas 'ethical' issues (for example, does a company use a sweatshop) are largely subjective and difficult to score, an environmental impact is often quantifiable through scientific methods. So it is broadly possible to assign a 'score' to (say) the damage caused by a tonne of mercury dumped into a local river. It is harder to develop a scoring method that can compare different types of pollutant — for example does one hundred tonnes of carbon dioxide emitted to the air cause more or less damage (via climate change) than one tonne of mercury dumped in a river (and poisoning all the fish).

        Generally, most environmental economists attempting to create an environmental index would attempt to quantify damage in monetary terms. So one tonne of carbon dioxide might cause $100 worth of damage, whereas one tonne of mercury might cause $50,000 (as it is highly toxic). Companies can therefore be given an 'environmental impact' score, based on the cost they impose on the environment. Quantification of damage in this nature is extremely difficult, as pollutants tend to be market externalities and so have no easily measurable cost by definition.

INFLATION...27yr HIGH tht too in JAPAN - worlds 2nd best economy !!!

Japan's annual wholesale price inflation beat market expectations in June to hit a fresh 27-year high on surging oil and commodity prices, adding gloom to firms suffering from dwindling profit margins. 

Wholesale price increases in Japan have accelerated in recent months but companies have found it hard to pass on rising costs to consumers, keeping annual core inflation relatively low at 1.5 per cent. 

Rising costs have made the Bank of Japan (BOJ) more wary about the risk of an economic slowdown than inflationary pressures, reinforcing the market view that the central bank will sit tight on interest rates for a while. 

Wholesale prices, as measured by the corporate goods price index (CGPI), rose 5.6 per cent in June from a year earlier, above a market consensus forecast for a 5.3 per cent rise, BOJ data showed. 

That followed a revised 4.8 per cent rise in May, and marked the biggest jump since a 5.7 per cent rise in February 1981, when Japan was reeling from the aftermath of the second oil shock. 

The rise was led by higher prices of oil and coal products, iron and steel, and processed foods, while import prices jumped 30.3 per cent on a contract currency basis to mark the fastest rise in 28 years, a BOJ official said. 

PASSING ON HAS BEEN MINIMAL

The central bank has blamed rising raw material costs for a slowdown in the world's No.2 economy, which is in its longest growth cycle in the postwar era but faces downside risks. 

The BOJ's quarterly tankan corporate survey showed last week that confidence among big Japanese manufacturers sank to a five-year low in June, hit hard by higher commodity price hurting bottom lines amid worries about a global slowdown. 

No rate move is expected when the BOJ's policy board meets on July 14-15, with many market players expecting the central bank to stand pat on policy at least for the rest of this year. 

A monthly survey by the Economic Planning Association -- an affiliate of the Cabinet Office -- showed about 60 per cent of 36 economists polled expected the BOJ to wait at least until June 2009 to raise rates, while only one bet on a hike this year. 

Domestic raw materials prices rose 18.4 per cent to hit a 28-year high, compared with a 3.2 per cent rise in domestic final consumer goods prices -- watched by economists as they loosely track consumer prices -- which hit the fastest pace in 27 years. 


"Whether companies pass on rising costs more to consumers will largely depend on the strength of the Japanese economy." 

A spike in crude and other raw material prices has inflated Japan's import bills, weighing on the current account surplus, as the country imports the bulk of oil and commodities it needs. 

Separate government data showed that the current account surplus shrank 5.9 per cent in May from a year earlier, against a 9.7 per cent fall expected by economists but marking the third straight month of declines mainly due to a narrowing of the income surplus. 

Japan's economy logged solid growth for a second straight quarter in January-March thanks largely to robust exports, but economists polled by Reuters expected the economy to have shrunk 0.1 per cent in April-June. 

Economists in the planning association survey said the economy probably contracted by an annual clip of 0.74 per cent in the second quarter, with annualised growth expected to stay below 2 per cent until the final quarter of 2009.

FEILD MARSHALL SAM MANECKSHAW passes away ... Nation loses her bravest soldier

                                 
        Field Marshal Sam Hormusji Framji Jamshedji Manekshaw, MC, ("Sam Bahadur") (born April 3, 1914) was an Indian Army officer. In a long career spanning nearly four decades, Manekshaw rose to be the 8th Chief of Staff of the Indian Army in 1969 and under his command, Indian forces concluded a victorious campaign during the Indo-Pakistani War of 1971.
Sam Manekshaw is the first of only two Indian military officers to hold the highest rank of Field Marshal of the Indian Army (The other being Field Marshal K M Cariappa). His distinguished ilitary career has spanned four decades and through five wars, including World War II.

         Field Marshal Sam Hormusji Framji Jamshedji Manekshaw, whose military victory in the 1971 Indo-Pak war led to the creation of Bangladesh, died in Military Hospital in Wellington, Tamil Nadu late Thursday night. He was 94.
         Manekshaw had developed "acute bronchopneumonia with associated complications" and was placed under intensive care four days ago after his condition became serious.

Early life and education

        Manekshaw was born in Amritsar, Punjab to Parsi parents who immigrated to the Punjab from the small town of valsad on the Gujarat coast. After completing his schooling in Amritsar and Sherwood College (Nainital), he joined the first batch of 40 cadets at the Indian Military Academy, Dehradun on 1 October 1932. He passed out of the IMA in December 1934 and was commissioned as a Second Lieutenant in the Indian Army. He held several regimental assignments and was first attached to the Royal Scots and later to the 4/12 Frontier Force Regiment.

Military career

        Manekshaw's military career spanned four decades, from the British era and World War II, to the three wars against China and Pakistan after India's independence in 1947.

World War II

        During World War II, Manekshaw saw action in the Burma campaign on Sittang River as a Captain with the 4/12 Frontier Force Regiment and has the rare distinction of being honoured for his bravery on the battle front itself. During World War II, he was leading a counter-offensive against the invading Japanese Army in Burma. During the course of the offensive he was hit by a burst of LMG bullets and was severely wounded in the stomach. Major General D.T. Cowan spotted Manekshaw holding on to life and was aware of his valour in face of stiff resistance from the Japanese. Fearing the worst, Major General Cowan quickly pinned his own Military Cross ribbon on to Manekshaw saying, "A dead person cannot be awarded a Military Cross."
        Having recovered from those near-fatal wounds in Burma, Manekshaw went for a course at Staff College, Quetta and later also served there as an instructor before being sent to join 12 Frontier Force Rifles in Burma under General (later Field Marshal) Slim's 14th Army. He was once again involved in a fierce battle with the Japanese, and was wounded for a second time. Towards the close of World War II, Manekshaw was sent as Staff Officer to General Daisy in Indo-China where, after the Japanese surrender, he helped rehabilitate over 10,000 POWs. He, then, went on a six-month lecture tour to Australia in 1946, and after his return served as a First Grade Staff Officer in the Military Operations Directorate.
        Manekshaw showed acumen for planning and administration while handling the issues related to Partition in 1947, and later put to use his battle skills during the 1947-48 Jammu & Kashmir Operations. After command of an Infantry Brigade, he was posted as the Commandant of the Infantry School and also became the Colonel of 8 Gorkha Rifles (which became his new regimental home, since his original parent regiment The 12th Frontier Force Regiment went on to join the new Pakistan Army at partition ) and 61 Cavalry. He commanded a Division in Jammu & Kashmir and a Corps in the North East, with a tenure as Commandant of Defence Services Staff College (DSSC) in between. As GOC-in-C Eastern Command, he handled the tricky problem of insurgency in Nagaland and the grateful nation honoured him with a Padma Bhushan in 1968. He enjoyed his retired life in Coonoor,The Nilgiris.

                 
Manekshaw(Centre) with Lt General Sartaj Singh, GOC 15 Corps, shares a joke with a jawan.

Army Chief: The War of 1971 - A soldiers' General and man behind Bangladesh's birth

        Manekshaw became the 8th Chief of Army Staff when he succeeded General Kumaramangalam on 7 June 1969. His years of military experience were soon put to the test as thousands of refugees from the erstwhile East Pakistan started crossing over to India as a result of oppression from West Pakistan. The volatile situation erupted into a full-scale war in December 1971.
        During this Indo-Pakistani War of 1971, Manekshaw showed uncommon ability to motivate the forces, coupling it with a mature war strategy. The war ended with Pakistan's unconditional surrender, and the formation of Bangladesh. More than 45,000 Pakistani soldiers and 45,000 civilian personnel were taken as POWs. He masterminded the rout of the Pakistan Army in one of the quickest victories in the recent military history. This led to the Shimla Agreement which opened the door to the creation of the nation of Bangladesh as separate from Pakistan.


Honour and Retirement
       
                                       

        For his distinguished service to the country, the President of India awarded him a Padma Vibhushan in 1972 and conferred upon him the rank of Field Marshal on 1 January 1973. Manekshaw became the first of the only two Indian Army Generals to be awarded this prestigious honorary rank; the other being the late Field Marshal Kodandera Madappa Cariappa. Manekshaw retired a fortnight later (although technically Field Marshals of the Indian Army never retire because the rank is conferred for life), on 15 January 1973, after completing nearly four decades of military service.
        Following his retirement from the Indian Army, Manekshaw has successfully served as a director of numerous companies.

IMF- INTERNATIONAL MONETARY FUND

The International Monetary Fund (IMF) is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments. It also offers financial and technical assistance to its members, making it an international lender of last resort. Its headquarters are located in Washington, D.C., USA.

                                            

The International Monetary Fund was created in 1944[1], with a goal to stabilize exchange rates and supervise the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. (Condon, 2007)

The IMF describes itself as "an organization of 185 countries (Montenegro being the 185th, as of January 18, 2007), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". With the exception of North Korea, Cuba, Andorra, Monaco, Liechtenstein, Tuvalu, and Nauru, all UN member states participate directly in the IMF. Most are represented by other member states on a 24-member Executive Board but all member countries belong to the IMF's Board of Governors.

HISTORY

The International Monetary Fund was formally created in July 1944 during the United Nations Monetary and Financial Conference. The representatives of 45 governments met in the Mount Washington Hotel in the area of Bretton Woods, New Hampshire, United States of America, with the delegates to the conference agreeing on a framework for international economic cooperation.The IMF was formally organized on December 27, 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1944

From the end of World War II until the late-1970s, the capitalist world experienced unprecedented growth in real incomes. (Since then, the integration of China and Eastern and Central Europe into the capitalist system has added substantially to the growth of the system.) Within the capitalist system, the benefits of growth have not flowed equally to all (either within or among nations) but overall there has been an increase in prosperity that contrasts starkly with the conditions within capitalist countries during the interwar period. The lack of a recurring global depression is probably due to improvements in the conduct of international economic policies that have encouraged the growth of international trade and helped smooth the economic cycle of boom and bust.

                                               MEMBERSHIP

Any country may apply for membership to the IMF. The application will be considered first by the IMF's Executive Board. After its consideration, the Executive Board will submit a report to the Board of Governors of the IMF with recommendations in the form of a "Membership Resolution." These recommendations cover the amount of quota in the IMF, the form of payment of the subscription, and other customary terms and conditions of membership. After the Board of Governors has adopted the "Membership Resolution," the applicant state needs to take the legal steps required under its own law to enable it to sign the IMF's Articles of Agreement and to fulfil the obligations of IMF membership. Similarly, any member country can withdraw from the Fund, although that is rare. For example, in April 2007, the president of Ecuador Rafael Correa announced the expulsion of the World Bank representative in the country. A few days later, at the end of April, Venezuelan president Hugo Chavez announced that the country would withdraw from the IMF and the World Bank. Chavez dubbed both organizations as “the tools of the empire” that “serve the interests of the North”. As of April 2008, both countries remain as members of both organizations. Venezuela was forced to back down because a withdrawal would have triggered default clauses in the country's sovereign bonds.

The IMF is for the most part controlled by the major Western Powers, with voting rights on the Executive board based on a quota derived from the relative size of a country in the global economy. Critics claim that the board rarely votes and passes issues contradicting the will of the US or Europeans, which combined represent the largest bloc of shareholders in the Fund. On the other hand, Executive Directors that represent emerging and developing countries have many times strongly defended the group of nations in their constituency.