An I for an I

It is not often that you meet a head of state, rarer still to meet a head of state who is an elder statesman with wisdom and special insights. So it was a rare privilege this week to meet Shimon Peres, the Israeli president, along with a CII team that was in Tel Aviv and Jerusalem to continue a CEOs' dialogue. Peres' mind ranged far and wide. Agriculture is technology-intensive, he said, which is why 100,000 cows in Israel produce as much milk as 4 million cows in Ethiopia. "We have increased milk yield 30-40 times," he explained. Slipping smoothly to another field, he said "making spare parts for the human body" is the science of the future. He meant stem cell research, of course, and added that Israel is trying to be a leader in the field, having recently replaced a damaged heart muscle by using cells taken from the skin.

Switching subjects again, he got more adventurous. "Why not make the army into a university?" All young Israelis have to serve their time in the army, but Peres said only one in seven soldiers is a fighting man, the rest are in what he called services. "We give them housing, a salary, other facilities—so why not educate them while they are in uniform? Normally, it takes 1,300 hours of study to get a degree. If you do it properly, it can be done in 650 hours." And, of course, he touched on oil and energy, pointing out that the sun was a more reliable, long-term source of energy than hydrocarbons, and that Israel was investing a lot of money in solar energy research.

The sub-text to these and many other stimulating thoughts was that Israel seeks to become an R&D-intensive country, with cutting-edge technology in a variety of fields. "We are only 8 million people, you are more than a billion. We can't possibly produce to feed your market…how many shoes can we make, and how many people to make those shoes? Better for us to do the research and create the technologies that you can use in your production system." Peres was echoing what the CEOs had already discussed, that Israeli technology and Indian production were a perfect match. At dinner the previous night, a former Israeli chief of staff who now heads a water company talked of his company desalinating water at a cost of no more than 3 paise per litre. Then there was the recycling of urban sewage—which his company "bought" and then recycled. Once all the plants under construction come on stream, a third of Israel's total water consumption will be recycled, and the country will actually be recharging its aquifers. It is easy to see the application of these and other technologies (as in drip irrigation and solar energy) in India.

It is not widely known outside Israel as to just how much the country has become a research-intensive and technology-oriented country—and not just in defence technology (the country is now the second-most important source of defence supplies for India). A single Technion university has 15,000 tech students, perhaps more than all our IITs put together.

Doing business for Israel and India (I to I) is easy because there is enormous goodwill for India in the country, not least because India has no history of anti-Semitism—one reason why tens of thousands of Israelis come holidaying to India every year. The Slumdog Millionaire book, for instance, has sold over 100,000 copies in its Hebrew translation, perhaps more than it has sold in India! All of Amitav Ghosh's books, Arundhati Roy's masterpiece, Adiga's White Tiger, all have a ready and large market. Israelis have discovered India. It is time Indians discovered Israel.

by T N NINAN(chief editor Business Standard)

how rain is affecting industrial growth!

All the indusries are directly dependent on the agriculture sector. Because of delay in monsoon agriculture sector is surviving a lot. This inturn affecting all the indstries connected to it. Prices of grains, vegetables & fruits going high day-by-day. because of this people are not spending on other things which again leads to defficiency in demand and lowers the IIP.

but in opposite of this we can see a growth in cement and coal industry by 10.6% & 9.7% respectively. This could be attributed to the weak monsoon which resulted in a delay in maintenance shutdowns.

So we can conclude that during weak monsoon investors can get good returns by investing in coal and cement companies.

NSE launches interest rate futures, trades Rs 267 cr on day 1

The National Stock Exchange (NSE) which launched interest rate futures (IRF) on Monday, registered a trade volume of Rs 267.31 crore on Day 1, the NSE said in a statement in Mumbai.

Trading in interest rate futures was earlier inaugurated by Finance Secretary Ashok Chawla, in the presence of SEBI Chairman C B Bhave and RBI Deputy Governor, Shyamala Gopinath.

Interest rate futures on NSE are based on a notional ten year GOI bond, bearing a notional 7 per cent interest rate coupon payable half-yearly. The tradable lot size is Rs 2 lakh.

Market participants responded enthusiastically to the product launch on the first day. In around five hours of trading time available after inauguration, 1,475 trades were recorded resulting in 14,559 contracts being traded at a total value of Rs 267.31 crore, the NSE said.

Out of the two quarterly contracts available for trading, December 2009 was the most active with 13,789 contracts being traded. The bid-ask spread was observed to be around one tick i.e. quarter paisa most of the time, it said.

Nearly 638 members have registered for this new products out of which 21 are banks. The contribution by banks in the total gross volume was 32.48 per cent. Amongst banks, Union Bank of India was most active bank.

State Bank of India was the first PSU bank to trade, while Central Bank of India has executed the single largest trade.

In the domestic private bank category, HDFC Bank executed the first trade. Bank of America, IDBI Bank and Axis Bank also actively participated, the NSE said.

"After launching currency futures last year and interest rate futures today, we want to see how to introduce more and more products on the exchange traded platform and settled through central clearing entity which gives settlement gurantee," Securities and Exchange Board of India (SEBI) Chiarman, C B Bhave, said after the launch of interest rate futures in Mumbai.

Finance Secretary, Ashok Chawla, said that volumes were not the only thing. The manner in which the market develops is very important, he said.

Banks and FIIs can also participate in interest rate futures within the regulatory framework, Chawla said, adding that this is expected to give a push to this product.

Interest rate futures will be useful to those who have a view on the future interest rates and would like to benefit from interest rate movements. It is also expected to help those who have large a portfolio of GoI securities and would like to hedge against losses from interest rate movements, the NSE said.

Banks, primary dealers, mutual funds, insurance companies, corporate houses, financial institutions and member-brokers will be eligible to participate in IRF trading on the exchange.

The members registered with SEBI for trading in currency/equity derivatives segments are eligible to trade in interest rate derivatives, subject to the trading/clearing member having a net worth of Rs 1 crore and Rs 10 crore, respectively.

Interest rate futures are the most widely-traded derivatives instrument in the world and it also has a huge opportunity in India. Interest rate risk is the uncertainty in the movement of interest rates which have never been constant in the past and presumably not remain constant in the future as well.

The volatility of interest rates has increased manifold in the last couple of years. The annualised volatility of yield of 10-year benchmark Government of India Securities for the calender year 2008 has been 17.40 per cent compared to 8.51 per cent in 2007.