Markets seems to have affect positively on the

Markets are at record high and are keeping the investors in a frenzywhile the exuberance in global equity markets is having its rub-off effect onthe Indian markets as well. On the other hand the liquidity driven rally inglobal markets is showing no signs of retracement yet. The political decisionmaking and will power combined with turmoil in some states seems to have affectpositively on the investment market as it rallies high. Among the sectoralindices in India , BSE Bankex was the best performer with 3% gain, Fast movingconsumer goods – FMCG the worst performer down by 4.2%.

Broader markets alongwith benchmark indices were seen trading with a positive bias as sensex gaining0.7% and nifty gaining nothing less than 1% these are positive signs forgrowing economy like India and this in turn attracts investments and encouragesinvestors. This research also centres on assessment of uncertainty ,contingency and there after management of fiscal risk.

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Any economy is prone tocredit risk and market risk primarily while secondary risks like forex risk ,liquidity risk, inflation risk, votality risk and shape risk may also damagethe pecuniary reserves of a firm. Desideratumto offset potential or substantial losses/gains that may be incurred by anorganization.  KEYWORDS –  Market, Risk, Management,Finance. INTRODUCTION Financialrisk incorporates different type of risk pertaining to financial transactionsthat include firm loans in possibility of default.

The downside peril offinancial risk is always uncertain and unwanted by any firm because it accountsfor loss and debt. Even the best trading house across the globe can incur losswith improper risk management. Risk management can be limiting and trade lotsize, hedging, trading only during certain hours or days, or knowing whento take losses. On the investment side , The US GDP data was below estimates ,but it has not had major impact on global equity markets, even as the globalGDP growth outlook remains positive. Abundant liquidity in the system aided bysolid corporate earnings growth in the US is expected to keep markets in goodshape. Apart from Federal Reserve maintaining status quo on interest rate fornow amid depreciating dollar and lower inflation , strong domestic cues keptthe market optimism intact.

The output of core sectors in India slowed down to0.4% in June with infra sector slowing down to 19 month low . Moreover , betterthan expected corporate results despite GST implementation have restrainedcorrection in the markets so far. As of now the broader markets are lackingmomentum and the daily moves are driven by handful of stocks that trigger newsbased extreme upside momentum.

The markets are hitting highs , but the stocksare highly volatile hence the investors should maintain targets and stop lossesstrictly and act accordingly. Investors can add smaller quantities at every dipin the stocks that have hit their peaks along with the markets. OBJECTIVESl  To study the current trends going in market to takedecisive steps on investment management strategy , detailed by latest caseconclusion.l  To explore the areas associated with risk in firmsand its control by taking effective measures , supported by case study.Here in this research paper , themethod adopted to conduct the study was extensive research approach. Sostarting with the investment front we can say that investors must revisit thelong-term investment thesis and make sure it remains intact. If it doesn’t orif the investment thesis has been fulfilled , one should then sell theinvestment and put the proceeds to work elsewhere.

That can happen in less thana year. A stock is said to under perform if it gives a return that is worsethan an index or the overall stock market. Under performing stocks duringbroader market uptrend are generally not good bets for long positions.Investors who are holding such stocks need to look a bit closely as to whythese are under performing and take a call on whether they should exit thestock.Diversification good forportfolio’s health – study on Virinchi Information Technology firm.Virinchi healthcare a 100%subsidiary of Virinchi Information Technology , expanded its footprint intohealth care sector by setting up a 600 bed super specialty hospital in theupmarket Banjara Hills in Hyderabad at an investment of rupees 300 crore.

Thecompany has raised rupees 70 crore from Canara Bank- led consortium of lenders, while the remaining funds for the project were raised internally. Theconcentrated efforts and investments made to move up the value chain in itschosen market augurs well for the stock. Virinchi is witnessing significanttraction from its existing customers and is able to generate healthy new leadsin the same market. On the financial front Virinchi Limited’s revenue increased53.

9% to rupees 38.76 crore in Q4FY17, as compared to the same period in theprevious fiscal. The company’s PBIDT too increased 144.76% to rupees 5.14 crorein Q4FY17 on a yearly basis.On an annual basis the company’srevenue increased by 39% to rupees 137.

15 crore in FY17 from rupees 98.64 crorein the previous fiscal. The company’s PBIDT (Profit before interest, depreciation and tax) stood atrupees 21.28 crore in FY17, an increase of 158.56% from rupees 8.

23 crore inthe previous fiscal. The firm’s net profit stood at rupees 11.42 crore up overby 173% in FY17 from rupees 4.18 crore in FY16. RESULT – Whenvalued , the share price of Virinchi Limited is trading at a PE multiple of9.94x as against it peers such as NIIT Technologies – 13.24x, PolarisConsulting & Services – 15.46x .

the company’s ROE stood at 13.10% and ROAat 6.12% in FY17, while its total debt to equity ratio stood at 0.89x in FY17.This can be termed as result of diversifying the investment for portfolio’sbetter performance.  FinancialRisk Management Systematic risk is thefundamental economic risk deep-rooted in the system that cannot be diversifiedaway. According to financial theory, systematic prospect is the only risk forwhich equity investors are rewarded.

To reduce the risk of an adverse pricemovement is through the use of order management and with descendant. Ordermanagement strategies, such as stop-loss orders, can be sparked to avoid excesslosses.A case study on Financial RiskManagement in BMW – Bayerische Motoren Werke.With the increasing effectiveness ofinternationalization, multinational firms face challenge of sustaining in themarket with their earlier allure .Therefore BMW continuously improves its riskmanagement system in order to become intimate with the respective country,industry and product risks and to ensure compliance with their sustainabilitystandards.

BMW took a two-angled approach to manage its foreign exchangeexposure.  1.    Natural hedge –  In this approach it would develop ways tospend money in the same currency as where sales were taking place, meaningrevenues would also be in the local currency.  2.    Financial hedge – To reducefinancial loss and manage the risk factor BMW set up regional treasury centresin the US, the UK and Singapore. Implementation of the natural hedge strategy was implemented in two ways. Thefirst involved establishing factories in the markets where it sold itsproducts; the second involved making more purchases denominated in thecurrencies of its main markets.

BMW now has production facilities for cars and components in13 countries. In 2000, its overseas production volume accounted for 20 per centof the total. By 2011, it had risen to 44 per cent. BMW had become one of thefirst premium carmakers from overseas to set up a plant in the US in mid 1990s.In 2008, BMW announced it was investing $750m to expand its Spartanburg plantin the US. The company advanced its purchasing in US dollars generally,especially in the NAFTA ( North American Free Trade Agreement ) region. Itsoffice in Mexico City made $ 615m of purchases of Mexican auto parts in 2009.

A jointventure with Brilliance China Automotive was set up in China, where half theBMW cars for sale in the country are now manufactured. At the end of 2010, BMW announcedit would invest 1.8billion rupees in its production plant in Chennai, India,and increase production capacity in India from 6,000 to 10,000 units.Meanwhile, the overseas regional treasury centres were instructed to analyzethe exchange rate exposure in their regions on a weekly basis and report it toa group treasurer, part of the group finance operation, in Munich. The grouptreasurer team then consolidates risk figures globally and recommends actionsto mitigate foreign exchange risk.  RESULT – By manufacturing into foreignmarkets the company not only reduces its foreign exchange exposure but alsobenefits from being close to its customers. In addition, sourcing partsoverseas, and therefore closer to its foreign markets, also helps to divergesupply chain risks.  CONCLUSIONThe profit from investment management firms aredirectly linked to the way in which market behaves.

This means that thecompany’s profits depend on market valuations and the scenarios and factorsinfluencing the market. There could be a major decline in asset prices with thefall in the firm’s revenue, especially if the price fall is greater compared tocompany costs. So overall to sum up the investment management practices we cansay that In  some corporate finance, investment managementis  ensures that a company’s tangible andintangible assets are maintained, accounted for, and  to utilizetheir highest and best possible use.While onthe other hand the risk management explores the range of risks thatorganizations may be exposed to. Many companies have not only managedthemselves to the main financial risks but also to the other risks which mayindirectly impact on the finances of organizations – such as operational,reputational and legal and regulatory risk. There is, however, no ‘one sizefits all’ way of implementing financial risk management. Instead the processmust be modified to fit the size, complexity, industry competition andenvironmental uncertainty facing the organization.

Firms may have smallexposures to the individual risks, but when these are aggregated they may have,in total, substantial financial and non-financial risks that require carefulmanagement. Here in this research paper , themethod adopted to conduct the study was extensive research approach. Sostarting with the investment front we can say that investors must revisit thelong-term investment thesis and make sure it remains intact. If it doesn’t orif the investment thesis has been fulfilled , one should then sell theinvestment and put the proceeds to work elsewhere. That can happen in less thana year. A stock is said to under perform if it gives a return that is worsethan an index or the overall stock market.

Under performing stocks duringbroader market uptrend are generally not good bets for long positions.Investors who are holding such stocks need to look a bit closely as to whythese are under performing and take a call on whether they should exit thestock.Diversification good forportfolio’s health – study on Virinchi Information Technology firm.Virinchi healthcare a 100%subsidiary of Virinchi Information Technology , expanded its footprint intohealth care sector by setting up a 600 bed super specialty hospital in theupmarket Banjara Hills in Hyderabad at an investment of rupees 300 crore. Thecompany has raised rupees 70 crore from Canara Bank- led consortium of lenders, while the remaining funds for the project were raised internally.

Theconcentrated efforts and investments made to move up the value chain in itschosen market augurs well for the stock. Virinchi is witnessing significanttraction from its existing customers and is able to generate healthy new leadsin the same market. On the financial front Virinchi Limited’s revenue increased53.9% to rupees 38.76 crore in Q4FY17, as compared to the same period in theprevious fiscal.

The company’s PBIDT too increased 144.76% to rupees 5.14 crorein Q4FY17 on a yearly basis.

On an annual basis the company’srevenue increased by 39% to rupees 137.15 crore in FY17 from rupees 98.64 crorein the previous fiscal. The company’s PBIDT (Profit before interest, depreciation and tax) stood atrupees 21.28 crore in FY17, an increase of 158.56% from rupees 8.23 crore inthe previous fiscal.

The firm’s net profit stood at rupees 11.42 crore up overby 173% in FY17 from rupees 4.18 crore in FY16. RESULT – Whenvalued , the share price of Virinchi Limited is trading at a PE multiple of9.

94x as against it peers such as NIIT Technologies – 13.24x, PolarisConsulting & Services – 15.46x .

the company’s ROE stood at 13.10% and ROAat 6.12% in FY17, while its total debt to equity ratio stood at 0.89x in FY17.

This can be termed as result of diversifying the investment for portfolio’sbetter performance.  FinancialRisk Management Systematic risk is thefundamental economic risk deep-rooted in the system that cannot be diversifiedaway. According to financial theory, systematic prospect is the only risk forwhich equity investors are rewarded. To reduce the risk of an adverse pricemovement is through the use of order management and with descendant. Ordermanagement strategies, such as stop-loss orders, can be sparked to avoid excesslosses.A case study on Financial RiskManagement in BMW – Bayerische Motoren Werke.

With the increasing effectiveness ofinternationalization, multinational firms face challenge of sustaining in themarket with their earlier allure .Therefore BMW continuously improves its riskmanagement system in order to become intimate with the respective country,industry and product risks and to ensure compliance with their sustainabilitystandards. BMW took a two-angled approach to manage its foreign exchangeexposure.  1.

    Natural hedge –  In this approach it would develop ways tospend money in the same currency as where sales were taking place, meaningrevenues would also be in the local currency.  2.    Financial hedge – To reducefinancial loss and manage the risk factor BMW set up regional treasury centresin the US, the UK and Singapore. Implementation of the natural hedge strategy was implemented in two ways. Thefirst involved establishing factories in the markets where it sold itsproducts; the second involved making more purchases denominated in thecurrencies of its main markets. BMW now has production facilities for cars and components in13 countries. In 2000, its overseas production volume accounted for 20 per centof the total.

By 2011, it had risen to 44 per cent. BMW had become one of thefirst premium carmakers from overseas to set up a plant in the US in mid 1990s.In 2008, BMW announced it was investing $750m to expand its Spartanburg plantin the US. The company advanced its purchasing in US dollars generally,especially in the NAFTA ( North American Free Trade Agreement ) region. Itsoffice in Mexico City made $ 615m of purchases of Mexican auto parts in 2009. A jointventure with Brilliance China Automotive was set up in China, where half theBMW cars for sale in the country are now manufactured. At the end of 2010, BMW announcedit would invest 1.

8billion rupees in its production plant in Chennai, India,and increase production capacity in India from 6,000 to 10,000 units.Meanwhile, the overseas regional treasury centres were instructed to analyzethe exchange rate exposure in their regions on a weekly basis and report it toa group treasurer, part of the group finance operation, in Munich. The grouptreasurer team then consolidates risk figures globally and recommends actionsto mitigate foreign exchange risk.  RESULT – By manufacturing into foreignmarkets the company not only reduces its foreign exchange exposure but alsobenefits from being close to its customers. In addition, sourcing partsoverseas, and therefore closer to its foreign markets, also helps to divergesupply chain risks.

 CONCLUSIONThe profit from investment management firms aredirectly linked to the way in which market behaves. This means that thecompany’s profits depend on market valuations and the scenarios and factorsinfluencing the market. There could be a major decline in asset prices with thefall in the firm’s revenue, especially if the price fall is greater compared tocompany costs. So overall to sum up the investment management practices we cansay that In  some corporate finance, investment managementis  ensures that a company’s tangible andintangible assets are maintained, accounted for, and  to utilizetheir highest and best possible use.While onthe other hand the risk management explores the range of risks thatorganizations may be exposed to. Many companies have not only managedthemselves to the main financial risks but also to the other risks which mayindirectly impact on the finances of organizations – such as operational,reputational and legal and regulatory risk.

There is, however, no ‘one sizefits all’ way of implementing financial risk management. Instead the processmust be modified to fit the size, complexity, industry competition andenvironmental uncertainty facing the organization. Firms may have smallexposures to the individual risks, but when these are aggregated they may have,in total, substantial financial and non-financial risks that require carefulmanagement.

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