Indian Stock Markets

Current Issues India's capital markets February 14, 2007 Unlocking the door to future growth India’s capital markets have experienced sweeping changes since the beginning of the last decade. Its market infrastructure has advanced while India Special corporate governance has progressed faster than in many other emerging market economies. But in contrast to several developed countries and Asian economies, India’s capital markets are still shallow, implying that further reforms are needed to make India a world-class financial centre. At nearly 40% of GDP, the size of India’s government bond segment is comparable to many other emerging market economies. Its corporate bond market, however, remains small and is dwarfed by those of the United States, South Korea and Malaysia. India boasts a dynamic equity market. The sharp rise in India’s stock markets since 2003 reflects its improving macroeconomic fundamentals. However, the large size of insider holdings and the small presence of institutional investors belie these impressive figures. Innovative products such as securitised debt and fund products based on alternative assets are starting to break ground. But an enabling environment is not yet in place and there remains an overriding need to increase domestic investors’ knowledge regarding the merits and risks of capital market investing. A vibrant, well-developed capital market has been shown to facilitate investment and economic growth. We believe that persistent reforms in the sector can support India’s already impressive growth trend in the coming years. Financial deepening beckons in India Stock and bond market capitalisation (end-2005), % of GDP Author Jennifer Asuncion-Mund +49 69 910-31714 jennifer. [email  protected] com Editor Maria L. Lanzeni Technical Assistant Bettina Giesel Deutsche Bank Research Frankfurt am Main Germany Internet: www. dbresearch. com E-mail: marketing. [email  protected] com Fax: +49 69 910-31877 Managing Director Norbert Walter China Germany Brazil Argentina Mexico Indonesia 40 60 Thailand India UK 50 0 180 Korea Japan USA Bond market 150 100 200 Malaysia 0 20 80 100 Stock market 120 140 160 Sources: Federation of World Exchanges, BIS, IMF, DB Research Current Issues Introduction India's stock markets: Scaling new highs BSE index 16000 14000 12000 10000 8000 6000 4000 2000 0 90 92 94 96 98 00 02 04 06 Source: Bloomberg Improving macroeconomic fundamentals, a sizeable skilled labour force and greater integration with the world economy have increased India’s global competitiveness, placing the country on the radar screens of investors the world over. The global ratings agencies Moody’s and Fitch have awarded India investment grade ratings, indicating comparatively low sovereign risks. These positive dynamics have led to a sustained surge in India’s equity markets since 2003 (see chart 1), attracting sizeable capital from foreign investors. Net cumulative portfolio flows from 2003-2006 (bonds and equities) amounted to USD 35 bn. Moreover, India’s stock market has outperformed world indices in recent years. And, despite its increasing correlation with world markets in recent years (see chart 2), India still offers diversification in global portfolios. The bond market is dominated by government bonds. Government bond issuances, resulting from persistently high fiscal deficits, as well as specific regulatory requirements, have underpinned the supply and demand conditions in India’s debt capital markets. Nearly 90% of total domestic bonds outstanding are government issuances (i. e. Treasury bills, notes and bonds), squeezing out corporate and other marketable debt securities (see chart 3). Initiatives to lift the corporate bond market from its nascent stages have been slow to progress, leaving companies unable to realise their optimum capital structure as a result. And unlike the derivative instruments that are available for equities, those for fixed income instruments (e. g. options in interest rates) in the organised exchanges have failed to take off, limiting the price discovery in the secondary markets. We believe that India’s economic transformation is irreversible. Against this backdrop, greater efficiency in financial intermediation is required to support investment and growth, but this will require structural changes in India’s public finances and the dismantling of unwieldy regulations. The paper follows an analysis of supply (bonds, equities and derivatives) and demand conditions (household and institutional investors) in India’s capital markets. Some stylised facts regarding India’s capital market infrastructure and corporate governance are first presented, followed by an analysis of its fixed income, equity and derivatives markets. Later, the paper discusses the classes of investors in India’s markets and the constraints they face in optimising the risk/return objectives of their portfolios. Finally, some brief comments regarding the link between economic growth and capital markets reform conclude the paper. 1 Stock market still offer diversification benefits MSCI India and World Indices (USD) rolling correlation 0. 7 0. 6 0. 5 0. 4 0. 3 0. 2 0. 1 0. 0 96 98 00 02 04 06 2 Source: Datastream Government issuance leads the local bond market Domestic bonds outstanding, % of total* Corporate bonds 3% Others 4% PSU bonds** 6% State loans 15% I. Capital markets development supported by steady infrastructure reforms Government bonds 68% 3 Treasury bills 4% *As of March 2006. ** PSU = Public Sector Undertakings. Source: National Stock Exchange India’s financial market began its transformation path in the early 1990s. The banking sector witnessed sweeping changes, including the elimination of interest rate controls, reductions in reserve and 1 liquidity requirements and an overhaul in priority sector lending . Persistent efforts by the Reserve Bank of India (RBI) to put in place 1 Asian Development Bank Institute (2003). February 14, 2007 2 India's capital markets effective supervision and prudential norms since then have lifted the country closer to global standards. India embarked upon comprehensive financial reforms over a decade ago†¦ Around the same time, India’s capital markets also began to stage extensive changes. The Securities and Exchange Board of India (SEBI) was established in 1992 with a mandate to protect investors and usher improvements into the microstructure of capital markets, while the repeal of the Controller of Capital Issues (CCI) in the same year removed the administrative controls over the pricing of new equity issues. India’s financial markets also began to embrace technology. Competition in the markets increased with the establishment of the National Stock Exchange (NSE) in 1994, leading to a significant rise in the volume of transactions and to the emergence of new important instruments in financial intermediation. A. Innovations have strengthened market infrastructure †¦ heralding improvements in its market infrastructure Market infrastructure has strengthened markedly heralded by steady reforms. The government bond and equity markets have moved to 2 T+1 and T+2 rolling settlement cycles in recent years , which significantly compressed the transfer of cash and securities to the relevant counterparties, thereby reducing settlement risks. The seamless move toward shorter settlement periods has been enabled by a number of innovations. The introduction of electronic transfer of securities brought down settlement costs markedly and ushered in greater transparency, while â€Å"dematerialisation† instituted a paper-free securities market. Together, these mechanisms eliminated forgery of share certificates. Straight-through processing automated the complete workflow (i. e. front, middle and back office and general ledger) involved in the financial transaction, thus doing away with multiple data re-entry and avoiding delays and errors. On the initiative of the Reserve Bank of India and the cooperation of public and private institutions, the Clearing Corporation of India Limited (CCIL) was established in 2001 to facilitate the clearing of trades and transactions in the foreign exchange and fixed income markets, catalysed by the extensive use of information technology. Stronger legal framework needed* Government effectiveness Regulatory quality B. Good corporate governance, but overall legal framework needs improving Continuing efforts by the SEBI to upgrade the corporate governance framework have positioned India at an above-average level against other emerging market economies, according to the Institute of International Finance (IIF), the global association of financial 3 institutions . Since March 2006, listed companies have been required to submit quarterly compliance reports to the SEBI, facilitating the valuation of companies and bringing it in line with the Sarbanes-Oxley Act. Notwithstanding, enforcement remains a challenge due to a still limited number of adequately trained staff to implement the rules. Nor are companies subject to substantial fines or legal sanctions, which reduce their incentives to comply. In turn, this reflects the ongoing gaps in India’s legal system, and somewhat undermines the steps to promote India’s capital markets further. Although India does have a functional legal system, the country’s law enforcement still lags behind the more advanced economies of Hong Kong and Singapore according to the World Bank (see chart 4). This implies that efforts to raise corporate governance need to be accompanied by a stronger 2 3 Rule of law Control of corruption 0 HKG 2 IND 4 SGP 6 * The 4 governance indicators are measured in units ranging from -2. 5 to 2. 5, with higher values corresponding to better governance outcomes. Data have been rescaled to 0-5. Source: World Bank Governance Index 2005 4 National Stock Exchange Fact Book (2006). Institute of International Finance (2006). 3 February 14, 2007 Current Issues Private corporate bonds outweighed by PSU bonds Distribution of issuance*, % 100 80 60 40 20 0 2004 2005 2006 Private corporate bonds PSU bonds *As of end-March of the year. Source: National Stock Exchange legal framework to bring greater stability in its capital markets and foster investor confidence. II. A sizeable but largely skewed capital market For over a century, India’s capital markets, which consist primarily of debt and equity markets, have increasingly played a significant role in mobilising funds to meet public and private entities’ financing requirements. The advent of exchange-traded derivative instruments in 2000, such as options and futures, has enabled investors to better hedge their positions and reduce risks. 5 In total, India’s debt and equity markets were equivalent to 130% of GDP at the end of 2005. This is an impressive stride, coming from just 75% in 1995, suggesting issuers’ growing confidence in marketbased financing. However, the size of the country’s capital markets relative to the United States’, Malaysia’s and South Korea’s remains low, implying a strong catch-up process for India. A wide range of instruments for investors Market segment Issuer Government Securities Central Government Instruments Zero Coupon Bonds, Coupon Bearing Bonds, Treasury Bills, STRIPS Coupon Bearing Bonds Govt. Guaranteed Bonds, Debentures A. Debt markets shaped by the public sector India’s debt markets are divided into two segments. The government bond segment is the larger and more active of the two, with issuers comprising the central government – accounting for 90% of the total – and state governments. The Reserve Bank of India (RBI) has maintained its role as the government’s debt manager and regulator of government-issued papers. The corporate bond market represents the other segment, with Public Sector Undertakings (PSU), corporates, financial institutions and banks being the primary players. PSU bonds by far outweigh the size of private corporate bonds (see chart 5), reflecting a number of factors, foremost of which are the lists of regulatory requirements for private issues. Regulatory oversight of the segment falls under the purview of the Securities and Exchange Board of India (SEBI). Each issuer has a range of instruments available in the market (see chart 6). Since institutional investors, especially banks, have remained the primary participants in fixed income securities, India’s bond markets have predominantly been wholesale. Government bond issuances rule the roost State Governments Public Sector Bonds Government Agencies/ Statutory Bodies Public Sector Units Private Sector Bonds Corporates PSU Bonds, Debentures, Commercial Paper Debentures, Bonds, Commercial Paper, Floating Rate Bonds, Zero Coupon Bonds, Inter-Corporate Deposits Certificates of Deposits, Debentures, Bonds Banks Financial Certificates of Institutions Deposits, Bonds Source: Bombay Stock Exchange The government bond segment is the oldest and largest component of the debt market. Its size has taken off exponentially over the past decades, with the total stock of debt outstanding at roughly USD 280 4 bn as of June 2006 , increasing three and a half times since 1995. This translates to roughly 35% of GDP, in line with several large Asian economies and is not significantly lower than that of the United States (see chart 7). With growing demand from institutional investors such as insurance companies and pension funds, bonds with maturity extending to 30 years are now available, the longest in non-Japan Asia (see chart 8). 4 India’s fiscal year runs from April of the current year through March of the following year. Data are based on the BIS (2006). February 14, 2007 4 India's capital markets A sizeable government bond market % of GDP 50 2001 2005 40 30 20 10 0 Local tenors stretching out Government bond yield curves, % 12 10 8 6 4 2 0 3M 6M 1Y 2Y 3Y 5Y 10Y 15Y 20Y 30Y Indi a Malaysia Thailand Indonesia Philippines Japan South Korea Source: Bloomberg Malaysia South Korea Thailand India China USA 8 Source: BIS 7 High fiscal deficits have encouraged large public borrowings Total public deficit, % of GDP 12 10 8 6 4 2 0 2000 2002 2004 2006E The contours of the government bond market began taking shape around 1992 as a result of the government’s broad-based attempts to 5 reform the financial sector. Advances in the segment benefited from a host of reforms, such as the move toward an auction-based sale of government securities, appointment of Primary Dealers, acting as market makers, and the implementation of delivery-versus-payment (DVP), mitigating the risks associated with trading and settlement. In 1997, the establishment of the Ways and Means Committee was a landmark event as it virtually ended the automatic monetisation of government deficits. In the same year, foreign institutions were permitted to invest in government-issued securities, thus broadening the institutional investor base. Zero-coupon bonds and index bonds represent novel products in the marketplace, but have so far received only tepid response from participants. Why have government bonds dominated? Sources: Reserve Bank of India, DB Research 9 India's public debt high against its peers Average of total public debt, % GDP, 2001-2005 100 80 60 40 20 0 BBB median BB median India Public sector fiscal dynamics and government regulations largely dictate the current state of affairs. That the size of the government bond market is large is not surprising due to persistently high fiscal 6 deficits and the resulting high public sector borrowing (see chart 9). Although the total public deficit has been declining since 2003, government debt has remained high, averaging 85% of GDP over the past 5 years. This places India’s public debt considerably higher than similarly rated countries (see chart 10). Banking regulations compound the problems. Banks are mandated to invest 25% of their net demand and time liabilities (i. e. eposits) in government bonds or other approved government securities, the socalled statutory liquidity reserve (SLR). The SLR has stayed at this level since it was reduced in 1991 from 38%. But in view of the (perceived) risk-free nature of these assets – requiring less provisioning in their books – banks tend to hold an even greater percentage of government bonds in their portfolios than prescribed by 7 the SLR . Large holdings o f government bonds expose banks to 8 interest rate volatility (thus affecting banks’ income) and could impact 5 Source: Standard and Poor's 10 6 7 8 The Development of Bond market in India in http://www. iimcal. ac. in/community/FinClub/dhan/dhan1/art15-bond. pdf Rawkins, Paul (2006). The IMF put the figure at roughly 41% in 2005, well in excess of the 25% SLR (IMF Article IV report, 2005). In 2004, the Reserve Bank of India allowed for a one-off reclassification of government securities to held-to-maturity from trading or available-for-sale securities in order to mitigate the losses from rising interest rates. 5 February 14, 2007 Current Issues Credit growth is surging†¦ % yoy 40 35 30 25 20 15 10 5 0 90 92 94 96 98 00 02 04 their capital adequacy in an environment of sharply increasing interest rates. This alone calls for greater diversification of income sources (such as fee-based income) aligned with more prudent credit risk assessment. Despite the super charge growth in bank credit over the past two years (see chart 11), India’s credit-to-GDP ratio remains low in contrast to other countries in Asia, implying still low penetration of bank intermediation in the country (see chart 12). Similar restrictive regulations to the SLR exist for the insurance sector and the pension fund system, thereby preventing a large portion of their capital from being channelled to other higher-yielding investment assets, which would enhance the risk/return profile of their portfolios. Insurance companies (carrying out the business of general insurance) are mandated by the Insurance Regulatory and Development Authority (IRDA), the regulatory body for the insurance industry, to invest at least 25% of their total assets in government securities and 9 state government securities . Pension funds face slightly higher requirements, although in both cases, investment in government paper may well be above the statutory level to preserve the safety of their assets. Corporate bond market: A huge potential awaits In contrast to the government bond market, the size of the corporate bond market (i. e. corporate issuers plus financial institutions) remains 10 very shallow (see chart 13), amounting to just USD 16. 8 bn , or less than 2% of GDP at the end of June 2006. A well-developed corporate bond market would give companies greater flexibility to define their optimum capital structure. By the same token, investors would benefit from having a wider range of asset classes to diversify their fixed income investments. Within India’s corporate bond market, state-owned Public Sector Undertakings (PSUs) have persistently outstripped private corporate issuances. PSUs and private companies can raise debt capital either by private placement or public issue, with the former being the preferred method by far. The growth of private placement of debt has shown a marked increase over the past decade, rising over four-fold in fiscal year 2004/2005 to roughly USD 12. 6 bn from USD 3 bn in fiscal year 1995/1996 (see chart 14). The preference for the private placement route arises from less onerous regulatory requirements, such as the type of disclosures and registration requisites, than those 11 for public issues . Also, the considerably higher costs associated with public issuance have deterred corporates from accessing funds through this route, in addition to the fact that private debt placements can be customised in accordance with individual issuers’ needs. Corporates are not mandated to obtain and disclose credit ratings from an approved credit rating agency, although companies themselves have increasingly sought to do so in recent years. In fiscal year 2004/2005, 93% of companies that raised bonds through 12 private placements obtained credit ratings . There is a preference to raise funds with maturities between three to five years, which suggests that companies remain cautious of borrowing over the medium-term segment, and also reflects investors’ still limited demand for longer tenors. Trading, clearing and settlement practices in the corporate bond market are less developed than in the government bond segment. 9 10 11 12 Source: Reserve Bank of India 11 but financial intermediation remains low Bank credit, % of GDP 2002 2003 2004 160 140 120 100 80 60 40 20 0 China Emerging Asia Western Europe India Source: IMF 12 Corporate bond market has yet to develop % of GDP 2001 2005 1. 6 0. 7 45 40 35 30 25 20 15 10 5 0 Malaysia South Korea Thailand India China USA Source: BIS 13 The Insurance Regulatory and Development Authority (2001). Bank for International Settlements (September 2006). National Stock Exchange (20 05) National Stock Exchange (2005). February 14, 2007 6 India's capital markets Private placement towers over public issuance Bond market, USD bn 16 14 12 10 8 6 4 2 0 1995 1997 1999 2001 2003 Deals are usually conducted over the counter and are struck between counterparties. In cases wherein brokers intermediate (often by telephone), they are required to report the transaction to the exchange, which facilitates post-trade information. Corporate debt can also be traded via an electronic order book system, but this has largely been unpopular in the absence of general retail interest in 13 such securities . Moreover, the more advanced clearing and settlement infrastructure for government bonds allow repo transactions for this segment, a facility that is not accessible for corporate bonds. The large size of the government bond segment in comparison with its corporate equivalent explains its large trading activity in the secondary market, accounting for over 70% of turnover (see chart 15). By contrast, turnover in the corporate segment amounts to just 3. 6%, largely because of the limited supply owing to the preference for private placements mentioned above. In addition, large domestic institutional investors, such s pension funds and the insurance sector, are still restricted from allocating large portions of their investible funds in the corporate bond segment. Not only does this constrain the segment’s development, but it also limits investors’ ability to enhance their returns by diversifying their fixed income instruments investments. Nonetheless, the potential for the s egment to pick up is promising, judging by large corporate debt being raised in the international capital markets. And the propensities to borrow are expected to grow further, arising from companies’ reassessment of their capitalisation. Nearly 50% of their financing comes from reinvested capital, while the rest arise from external sources either by raising equity or from bank 14 and other financial institution borrowings. Shareholders’ calls for higher dividend payment and the quest to bring corporate cost of capital to optimum levels will support a rise in capital market financing in the future. At the same time, the pension fund system is moving toward defined contribution mechanism which should provide impetus to the demand for corporate bonds. Corporates seize borrowing opportunities abroad Public issues Private placements 14 Source: National Stock Exchange Government bonds remains most actively traded Turnover, % (March 2006) 3. 6 1. 6 22. 1 72. 7 Govt sec Corp bonds T-bills Others Source: National Stock Exchange 15 Indian corporates have gone on a borrowing spree abroad†¦ Corp. debt outstanding, USD bn* 12 10 8 6 4 2 0 2001 2002 2003 India 2004 2005 Malaysia China A more aggressive trend in overseas borrowing by Indian corporates has recently developed (see chart 16), fuelled by fewer listing requirements, lower cost of funding and better liquidity in the secondary markets. The trend also stands in contrast to the sovereign’s absence in the international capital markets, reflecting the government’s conservative approach to external debt management as a result of the current account crisis in 1991/1992. At the end of 2005, the total amount of bonds outstanding raised by 15 corporates abroad amounted to USD 6. 7 bn , over two and a half times its size in 2001. This represents 60% of the value of corporate issuance in local markets. To put this in perspective, if this amount of issuance had been made in the domestic capital markets, the size of India’s corporate debt market would be 2. % of GDP instead of just 1. 5% of GDP. Indian companies continued to exert their presence in the international bond markets in 2006, outpacing their Asian counterparts (see chart 17). This strong appetite coincided with the still comparatively lower international interest rates (e. g. Ranbaxy’s USD 400 m 5-year convertible bond issue fetched 5% ve rsus 7. 5% for a 13 14 15 *As of December of each year. Source: BIS 16 Bank for International Settlements (2005). Handbook of Statistics (2006), Securities and Exchange Board of India. Excluding financial institutions. 7 February 14, 2007 Current Issues 6 †¦ and there's no retreat in 2006 USD bn 3 2 1 0 -1 Q3/05 China Q4/05 Q1/06 India Q2/06 Malaysia Source: BIS similar tenor in the domestic market) . It also coincided with the better valuation by foreign investors of Indian companies, indicative of their improving global competitiveness. Structured finance offers immense potential Securitisation is an attractive growth segment in India’s debt markets. The market is still in its nascent stages, where current activities primarily occur between banks, non-bank financial institutions and asset reconstruction companies through private placements. Paving the way for a secondary market is the implementation of the proposed changes to the Securities Contracts Regulation Act, which would 17 reclassify securitised debt as true marketable securities . Nevertheless, securitisation has developed robustly in recent years. Asset-backed securities (ABS) are the predominant asset class in India’s securitised segment. This should not come as a surprise given the large component of retail loans in banks’ and non-bank financial institutions’ balance sheets. The ABS market has risen exponentially since 2002, in tune with the sharp pick up in credit growth since then (see chart 18). In 2005, India’s ABS market volume was roughly USD 5 bn, making it the fourth-largest in Asia-Pacific (see chart 19). Mortgage-backed securities (MBS) volumes are just a small fraction of the ABS market. Growth so far has been slack, explained by the absence of a secondary market and the prepayment and interest rate 18 risks arising from prepayment/repricing of the underlying loans . But the growth of commercial bank credit for housing, averaging approximately 90% since 2002, suggests that mortgage-backed securities is a segment that will take off, so long as market infrastructure and regulatory provisions are firmly grounded. Other securitised assets backed by corporate loans, receivables and toll revenues have sprung recently, indicating the promising potential of the segment. As the government embarks upon modernising its infrastructure, the need to develop the structured finance segment will become crucial. Collateralised mortgage backed securities (CMBS), collateralised loan obligations (CLO) and collateralised debt obligations (CDO), which are actively traded in the United States, are innovations awaiting the Indian market in line with a maturing economy. Permitting foreign investors in the market will play a significant role in pricing and transparency. But for now, incomplete legislative and market norms may not allow the country to fully exploit the potential of securitisation activities. 17 Securitisation is picking up†¦ USD bn Volumes in ABS Volumes in MBS 5. 0 6 5 4 3 1. 8 0. 8 0. 3 0. 0 0. 3 2003 0. 7 0. 7 2 1 0 2002 2004 2005 Source: BIS 18 †¦ with India's ABS issuance a decent fourth place in Asia USD bn Korea Japan India Australia 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 Source: BIS B. Vibrant equity markets The development of India’s equity capital markets has taken a more progressive trajectory than the bond market, largely reflecting the government’s laissez faire approach in the segment. At 90% of 19 GDP , its size is comparable to that of other emerging countries, although is still small relative to many developed markets (see chart 20). 19 16 17 18 19 Hindu Business Line (2006). Kothari, Vinod (2006) and Bank for International Settlements (2005). Bank for International Settlements (2005). Based on the capitalisation of the Bombay Stock Exchange as of December 2006. February 14, 2007 8 India's capital markets India's equity market comparable to other emerging markets Local market capitalisation, % of GDP (2005) 200 150 100 50 0 Mexico Malaysia Brazil India Thailand Korea EU Indonesia Japan China USA Source: IMF 20 Indian equity markets have been volatile Standard deviation of rolling two-year weekly returns, index in USD 6 5 4 3 2 1 0 96 98 00 02 04 06 21 MSCI India MSCI World Source: Datastream Of India’s 23 stock exchanges, equity trading is most active in the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Since the NSE’s inception in 1994, it has caught up with the BSE in terms of capitalisation but exceeded it in turnover. The BSE boasts of over 4,000 listed companies, surpassing stock exchanges in the US. This explains its slightly higher market capitalisation over the NSE, although its lower turnover implies that inefficiencies remain due to the high proportion of untraded companies. Its share of total equity turnover is just 33% compared to 66% of its rival, the NSE. The increase in the limit for foreign direct investment in the stock exchanges to 49% announced early this year is expected to lend more dynamism to the equity capital markets. The investment limit for a single investor was set at 5%. It did not take long after the new limit was announced that the New York Stock Exchange (NYSE), Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund all acquired a 5% stake in the National Stock Exchange (NSE). Increased foreign presence is expected to help the NSE to inch forward to the global markets, generate a wider customer and investor base and offer more innovative products. The Bombay Stock Exchange is also courting strategic investors. If it succeeds, this should help speed up the process of consolidating the thousands of inactive listed companies n the board. Moreover, the move will enhance its competitive strength against the NSE, which has diminished over the past decade. Higher volatility, improving performance Benchmarking the risk/return characteristics of India’s equity markets against the world average shows that India’s stock market has 20 historically been more volatile (see chart 21), while its returns have, until recently, underper formed. This should not come as a surprise as the past decade witnessed several political and economic uncertainties, undermining business and investor confidence. Only from 2006 has India’s stock market begun to outperform the world’s index as momentum to liberalise the economy gathered pace and investors began to take notice (see chart 22). Reflecting the recent sharp run-up in equity prices, India’s stock markets today rank among the most expensive in the world (see chart 23), raising concerns over a correction, especially if earnings disappoint. However, sustained economic growth combined with continued market-friendly capital market reforms should prove to be supportive factors for superior returns in the medium run. Indian equities returns: catching up MSCI total return index, 1994=100 300 250 200 150 100 50 0 94 96 98 00 02 04 06 MSCI India MSCI World Source: Datastream 22 20 Since the world index is a composite of indices and therefore, by nature, more diversified, it is expected to exhibit less volatility than the country index. 9 February 14, 2007 Current Issues Are India's equity prices stretched? Price/earnings ratio, times 30 25 20 15 10 5 0 96 98 00 02 04 06 In terms of sectoral composition in benchmark indices, India’s stock market is broad-based, putting it roughly in line with the world index (see chart 24). The higher weight of the IT sector today reflects the country’s increasing turn toward a knowledge-based economy. But this may change, with consumer discretionary and consumer staples projected to get a larger share of the pie in tandem with rising incomes and as household preferences become more discerning. The shares of financials and healthcare sectors are also expected to increase markedly as industry consolidation picks up and the door to foreign direct investment is widened. Foreign investors seize local market opportunities Reflecting India’s improving macroeconomic fundamentals, increasing corporate profitability and competitiveness, and greater integration with the world economy, foreign institutional investors’ (FIIs) participation grew steadily over the past 3 years (see chart 25). True, FII invest in local bonds and equity, but their interest has largely been on the latter. The inflow of portfolio capital continues to test new highs and in recent years has outpaced the inflow of foreign direct investment (FDI). India’s accounting standards, although still not in full convergence with international practices, combined with the quarterly reporting frequency mandated by the SEBI on listed companies, offer guidance in corporate valuation. Greater inflows are still to be expected, arising from international investors’ quest for higher returns and improved portfolio diversification, buttressed by ongoing structural changes in India’s economy and its financial markets. Sustained inflow of capital will not only bring greater liquidity in the market, but foreign presence will encourage further market transparency. Overseas listing inching up Domestic companies, both large- and small-cap, have been allowed to list abroad by way of American Depository Receipts and Global Depository Receipts (ADR, GDR) since 1992. Owing to global and local market conditions (e. g. global liquidity, stock market crashes, economic and financial crises), the amount raised through the ADR route since its inception has been quite volatile. Only in recent years have issuances picked up steadily, with the amount raised in fiscal year 2005/2006 exceeding USD 2. 5 bn, a level not seen in over 10 21 years (see chart 26). As one of the measures to allow greater capital account convertibility, the RBI has allowed two-way fungibility for Indian ADRs/GDRs. This allows holders of the instruments to cancel them with the depository and sell the underlying shares in the market. The company can then issue ADRs anew to the extent of the shares converted into local shares. This was not the case in the last decade, which limited companies’ ability to access capital abroad. Further room for improvement Impressive though the developments may be, India’s stock markets still have some room for improvement. For one, the shareholder pattern needs to be broadened, as ownership is concentrated in the 22 promoters and company insiders show an increasing presence. This implies that minority shareholders’ interest is minimal, which needs to be increased for the sake of an improved corporate governance. 21 MSCI India, USD MSCI World, USD MSCI India average for the period Source: Datastream 23 India's equity market composition is broad-based % 100% 80% 60% 40% 20% 0% MSCI India MSCI World Utilities Telecommunication services Materials IT Industrials Healthcare Financials Energy Consumer staples Consumer discretionary Source: Datastream 4 Foreign investors flock to India's capital markets 15 10 5 0 01 02 03 04 05 06E 1200 800 400 0 Foreign direct investment, USD bn (left) Portfolio investment, USD bn (left) Net new number of FIIs (right) Sources: Reserve Bank of India, Deutsche Bank Research 25 22 Four of the top 25 ADR listings as of December 2005 are Infosys Technology (USD 884 m), ICIC I Bank Ltd (USD 466 m), Satyam Computer Services Ltd (USD 323 m) and HDFC Bank Ltd (USD 300 m). Data are from Citigroup Corporation (http://wwss. citissb. com/adr/www/adr_info/YE2005_DR. pdf). Promoters include family members, relatives and close associates. February 14, 2007 10 India's capital markets ADR issuance makes a strong comeback USD bn 3. 0 2. 5 2. 0 1. 5 1. 0 0. 5 0. 0 1992 1994 1996 1998 2000 2002 2004 The presence of institutional investors in the equity market is also low, resulting from the restrictive investment guidelines set by the government for the insurance industry, banks and pension funds. Of note, while only 18% of the listed companies in the NSE are owned by retail investors, they account for an estimated 85% of the trading 23 volume, according to a recent paper by McKinsey . This suggests that retail investors tend to speculate in the stock market rather than follow a strategy of pursuing long-term benefits. A resumption in privatisation is also key to further developing India’s equity markets. Since FY 2003/2004, privatisation activities have dwindled, driven in part by the lack of political consensus to keep it on track (see chart 27). The sluggish process prevents publicly owned companies from accessing more efficient sources of funding. It also interferes with their movement toward market-disciplined processes and better corporate governance. Source: Securities and Exchange Board India 26 C. Financial derivatives march ahead While some form of financial derivatives trading in India dates back to the 1870s, exchange traded derivative instruments started only in 2000. Then, stock index futures, with the Sensex 30 and the S CNX Nifty indices as the underlying, began trading at the BSE and NSE. Since their inception, the basket of instruments has expanded and now features individual stock futures, and options for stock index and individual stocks. Among the four asset classes, single-stock futures have the lion’s share, accounting for nearly 60% of the turnover in the NSE’s derivatives segment (see chart 28). In its relatively short life span, single-stock futures are outperforming those in other global derivatives market (see chart 29). The security largely owes its success to the timing of its introduction: it came into stream shortly after â€Å"badla†, a futures-like practice which permitted traders to carry forward sizeable net positions until the next settlement period, was 24 banned. The key difference with badla is that a clearing corporation owned by the NSE guarantees the futures transaction, thereby reducing settlement risks. The derivative instruments traded in the exchanges reflect many of the features of the underlying instruments. First, as with the wholesale debt and equities segments, the NSE has steadily outpaced the BSE in terms of trading in the derivatives segment over the years. The NSE thus reflects the market’s overall activity and sentiment. 100% 80% 60% 40% 20% 0% 2001 2002 2003 2004 2005 Index futures Index options Stock futures Stock options No clear signs of commitment to privatisation INR bn 20 Privatisation proceeds Average, 1991-2005 15 10 5 0 91 93 95 97 99 01 03 05 Sources: Department of Disinvestment, Ministry of Finance 27 Stock futures most popular derivatives segment Exchange-traded derivatives, % total turnover Second, equity derivatives have developed more rapidly than their fixed income counterparts. Exchange-traded derivatives for interest rates failed to take off when introduced by the NSE in 2003, largely 25 reflecting a flawed contract design. Interest rate derivatives are primarily traded over-the-counter (OTC), and although any domestic money or debt market rate may be used as a benchmark rate, the Mumbai Interbank Offered Rate (MIBOR) and Mumbai Interbank Forward Offered Rate (MIFOR) are those that are widely used. Interest rate swaps and forward rate agreements are instruments available for managing interest rate risks, although the former is by far the preferred choice. The overnight interest swap (OIS) is estimated to trade between USD 500 million and USD 1 billion per 26 day. A survey by FitchRatings of India’s derivatives market in 2004 23 24 25 26 Source: National Stock Exchange 28 Farrell, Diana et al. (2006). Gorham, Michael et al. (2005). FitchRatings (2004). FitchRatings (interview). 11 February 14, 2007 Current Issues Single-stock futures: India is world leader World ranking in terms of volumes traded 2005 National Stock Exchange Johannesburg Stock Exchange BME Spanish Exchanges Euronext Liffe Borsa Italiana OMX Athens Stock Exchange Budapest Stock Exchange Australian Stock Exchange Warsaw Stock Exchange 1 2 3 4 5 6 7 8 9 10 2004 1 4 3 2 6 5 7 8 9 10 estimated that trading volumes at the end of the year amounted to roughly INR 30 bn, a three-fold increase from January 2004. This is expected to have picked up even further since then, spurred by sustained uncertainty over the interest rate outlook, leading market participants to hedge their exposures. Tenors up to 5 years are the most liquid in the OIS market despite the fact that the yield curve stretches out to 30 years. Fitch attributed this to the absence of counterparty lines for longer maturities and partly by the lack of risk management tools for interest rate exposures longer than 5 years. There are a number of factors, though, which mitigate the risks in OTC derivatives for interest rates. One is that the 27 majority of counterparties have ratings that are investment-grade. Another is that India as accepted International Swaps and Derivatives Association (ISDA) documentation before striking any agreement with counterparties. However, combined with banks’ and other institutional investors’ large exposures to government bonds, and the prospects of a deepening bond market in general, the need to develop exchange-traded futures and options for interest rates is evident. This will significantly reduce risks inherent in the OTC markets through centralized settleme nt, enhanced risk management and multilateral netting. Source: World Federation of Exchanges 9 Household sector the largest saver in the economy % of total savings 120 100 80 60 40 20 0 -20 2000 2001 2002 2003 2004 Households Public sector Private corporates Source: Reserve Bank of India III. Right mix of investors, but participation is still low A vibrant secondary market is characterised by the active participation of retail and institutional investors, underpinned by their longterm investment goals, with adjustments made in accordance with their short-term liquidity needs and in response to the business cycle. With a population of over 1 billion, India offers a large pool of potential investors. Indian households are by far the largest saver in the economy, constituting nearly 80% of the economy’s aggregate saving (see chart 30). Insurance companies, pension funds, mutual funds and foreign institutional investors (FIIs) form India’s institutional investor base. Combined, their assets account for about 25% of GDP (see chart 31). This represents a significant increase compared to the mid-1990s, prior to the opening up of many of the sectors, such as the insurance industry, to competition. But, to put it in perspective, the combined size of the Indian institutional investors sector amounts to less than half of US mutual fund assets alone. By and large, Indian investors tend to be conservative in their investment decisions, with a general preference for safe returns and capital preservation. As for large domestic institutional investors such as pension funds and insurance companies, their investment style has largely been the result of regulation. 30 Households are ultraconservative in their investment decisions Composition of household financial savings, % (average, 2000-2005) 9. 17. 2 12. 8 42. 0 12. 5 2. 4 Currency Deposits Shares and debentures Government securities Small savings Insurance funds Provident and pension funds Sources: Securities and Exchange Board of India, Reserve Bank of India A. Indian household investments: low risk, low return 3. 9 The lion’s share of households’ total financial savings, roughly 50%, is placed in bank deposit account s (see chart 31). The rest of the pie is 28 spread over small savings accounts , at just over 10%, and a combined 25% in insurance and pension funds. Because of these institutions’ conservative approach to investing, they appeal very strongly to households. 27 31 28 FitchRatings (2004). Small savings accounts are direct claims against the government. February 14, 2007 12 India's capital markets Over the past 5 years, households had a mere 5% of their savings invested in the stock market on average. Granted, the general aversion to riskier instruments such as equities is not only a product of the public’s preference for safe returns. India’s equity markets have experienced several candals in the past, resulting occasionally in substantial capital losses to many investors. This has essentially discouraged a considerable number of them to return to the stock markets, although in the past two years confidence has gradually regained some ground. How many households are investing in the capital markets? A joint survey by the Securities and Exchange Board of India and National Council for Applied Economics Research ( SEBI-NCAER) in March 2003 estimated that only 13 million households out of the total 177 million surveyed have investments in the capital markets. This is equivalent to a mere 7% of total Indian households. The robust economic expansion since the survey and the resulting increase in per capita GDP (see chart 32) may have widened the household investor base, but possibly not enough to considerably increase market volumes. A key ingredient to reduce households’ risk aversion is improving their understanding of long-term investment, particularly in the equity market. Regarding bonds, there is a concerted effort among the RBI and SEBI, as well as the BSE and NSE, to raise retail investors’ knowledge about the mechanics and risk/return tradeoffs of debt securities. However, the thin volumes can be expected to persist so 29 long as the government continues to provide savings schemes , which reduce incentives to invest in fixed-income instruments. India's GDP per capita steadily rising USD 900 800 700 600 500 400 300 200 100 0 00 01 02 03 04 05E 06F Sources: Institute of International Finance, Reserve Bank of India, DB Research 32 B. Institutional investors: Easing regulations will unlock capital market growth Nearly 25% of households’ total financial savings are allocated in insurance and pension funds, dominated by the government-owned Life Insurance Company of India (LIC) and the Employee Pension Fund (EPF). The LIC continues to hold a near monopoly of the industry, accounting for nearly 75% of the business, despite the opening up of the industry to private competition in 1999. Similarly, although mutual funds have been permitted to offer pension plans, a majority of the public retirement scheme remains under the control of the EPF. The guaranteed rate of return of 9% they offer is a strong incentive for investors to place their financial savings with the institution. Overall, just roughly 10% of the labour force is enrolled in a pension scheme. The rest of the workers rely on their families for support at old age or on their accumulated savings. Stringent asset allocation guidelines constrain returns Portfolio allocation decisions by the insurance and pension fund sector remain deeply regulated, requiring each to invest between 25 to 50% of total funds in government bonds or government-approved securities. Just over 85% of the LIC’s total investments are in public securities – most of which are of long-term maturities – and about 15% in private securities. Given India’s young labour force, it will take quite a number of years before a rush for redemption occurs, suggests that the LIC may not necessarily be optimising its portfolio returns. Portfolio managers’ tendency to follow a buy-and-hold strategy precludes efficient duration management and the opti- A small institutional investors sector Assets, % of GDP Insurance companies Pension funds Mutual funds Foreign institutional investors 0 5 10 15 Sources: Various domestic associations, IADB, author's estimates 33 29 Small savings schemes sponsored by the government offer guaranteed annual returns of 3. 5% to 9% (Reserve Bank of India). 13 February 14, 2007 Current Issues misation of the portfolio’s risk/return profile. At the same time, the underdeveloped corporate bond markets inhibit fixed income portfolio managers to exploit relative value across different segments. Suboptimal returns are also generated by the limited exposure allowed in the equity markets as a result of stringent regulation. Simply put, there is significant room to improve upon households’ long-term wealth creation, but this will call for the relaxation of portfolio asset allocation rules prescribed by the government. Greater private participation will encourage competition in the insurance and pension funds, bringing product innovations in the market that better match investor risk/return requirements. Creating more active markets with greater foreign presence Foreign institutional investors (FII) and mutual funds are accorded considerable leeway in their asset allocation decisions in contrast to the insurance and pension fund sectors. Because they can adjust their positions in response to changes in their liquidity needs or the economic environment, they tend to set the tone in market sentiment or influence prices despite their comparatively small size. FIIs can invest across a variety of instruments in the local markets but are subject to limits. Current regulations permit all FIIs combined to own no more than 24% of any Indian company’s total paid-up capital. Investments over the threshold are subject to the approval of the company’s Board of Directors. There are ongoing calls to raise the limit further, which remain in constant debate among the policymakers, due to their concerns about potential destabilising effects of sudden capital withdrawal. In 2004, maximum allowed FII investment in government securities, including Treasury bills, was raised to USD 2 bn from USD 1. 75 bn and in corporate bonds to USD 1. 5 bn from just USD 0. 5 bn. Hedging foreign currency exposures in the forward market is permitted. Assets under management of mutual funds have soared USD bn 70 60 50 40 30 20 10 0 09/93 09/04 09/05 09/06 Although efforts to welcome FIIs are encouraging, the total amount of investment limits accorded to them is still meagre. Easing FII controls would accelerate the deepening and broadening of the capital markets, but this would require redressing capital account regulations aimed at preserving market stability in case portfolio positions are unwound. Mutual funds are a viable long-term saving vehicle The landscape of the mutual fund industry has undergone significant changes since the establishment of the Unit Trust of India in 1964, which for decades held the monopoly. By the mid 1990s, barriers to entry were gradually dismantled, allowing domestic and foreign private institutions to enter the fray. Assets under management have grown to around USD 65 bn in September 2006 nearly 10% of GDP (see chart 34), quadrupling in value since 1993. At its current growth rate, the sector’s size will double over the next 10 years. With intense competition came the adoption of measures to improve transparency. Restrictions on investment in debt instruments and money markets were loosened. A number of different schemes 30 are now available in the market , which appeals to investors’ varying investment objectives and constraints. The listing of openended schemes allowed investors the flexibility to adjust their fund exposures, while regulations against fund managers’ use of Source: Association of Mutual Funds of India 34 30 These include assured return, balanced, floating rate, fund of funds, gilt, growth, income, liquid and money market funds. February 14, 2007 14 India's capital markets Still very low penetration of mutual funds Households' investment by type, %* 39. 2 20. 9 6. 2 44. 7 erivatives have been relaxed, allowing them to hedge their positions. Given the rapid growth of the industry in the past 3 years, can the Indian mutual fund industry be characterised as having come of age? Not when seen in the light of the low share of mutual funds in the household sector’s total investment pie (see chart 35). One promising development announced in the Budget in 2006 was the lifting of overseas investment limits by mutual funds to USD 3 bn from USD 2 bn. This will allow domestic fund managers to offer new opportunities in higher-yielding funds, such as those dedicated to emerging markets and alternative investments (e. . commodities), which are currently not available in the local market. Combined with rising per-capita income, improving awareness of capital market investing and pension fund reforms will make mutual fund investing a viable long-term investment vehicle. 27. 5 76. 2 17. 3 5. 5 UTI scheme Fixed deposits EPF/PPF Post office Others 8. 5 Mutual fund Fixed Bonds LIC IVP, NSC NCC IV. The road ahead 35 Source: Securities and Exchange Board of India Capital market liberalisation is good for GDP growth Real GDP growth per capita, % 6 5 4 3 2 1 0 -1 -2 India’s regulators have been active in seeking ways to develop the country’s financial markets, and a culture of introducing greater risk management is starting to set in. The main challenge ahead is to strengthen the political will to further ease regulations in the capital markets and the limits prescribed to market participants. India’s economy is expected to benefit enormously from the process of gradual capital market liberalisation. Empirical evidence has shown that emerging market economies that have heralded changes in their 31 financial markets experienced higher growth and investment (see chart 36). India is no exception, with per-capita GDP and domestic investment rising post-liberalisation. Economies which pursued deeper financial market reforms, and whose per-capita incomes were roughly similar to India’s prior to their liberalisation periods, not surprisingly experienced even greater rewards. Drawing from these countries’ experiences, India’s growth potential can experience a sustained pick-up if it stays on the path of reforming its capital markets. Full capital account convertibility no longer appears to be a pipe dream, going by the RBI’s reconsideration of the Tarapore 32 Committee’s roadmap to capital account liberalisation . Early in 2006, the conditions for full capital account convertibility have been re-examined against issues such as exchange rate management, prudential safeguards to monetary and financial stability and 33 implications of dollarisation in India . Although full convertibility is still not expected to occur overnight, the momentum towards that goal seems to have accelerated. Jennifer Asuncion-Mund (+49 69 910-31714, jennifer. [email  protected] com) Mexico Malaysia India Chile Investment growth per capita, % 6 4 2 0 -2 -4 Mexico Malaysia India Chile Thailand Pre-liberalisation average Post-liberalisation average Official liberalisation date: India, 11/92; Chile, 01/92; Mexico, 05/89; Malaysia, 12/88; Thailand, 09/87 Source: Federal Reserve Bank of St. Louis Thailand 31 32 36 33 Bekaert, Geert et al (2003). A committee headed by S. S. Tarapore submitted its recommendations for full capital account convertibility in 1997, shortly before the Asian financial crisis. In the event, authorities delayed the implementation of the Committee’s prescriptions, opting for calibrated measures instead. Reserve Bank of India (2006). 15 February 14, 2007 Current Issues Bibliography Bank of International Settlements. BIS Quarterly Review (various issues). Basel. Switzerland. Bekaert, Geert, Campbell R. Harvey and Christian T. Lundblad (2003). Equity Market Liberalization in Emerging Markets. Federal Reserve Bank of St. Louis. USA. Farrell, Diana, Susan Lund, Ezra Greenberg, Jaeson Rosenfeld and Fabrice Morin (2006). Accelerating India’s Growth Through Financial Sector Reform. McKinsey Global Institute. San Francisco, CA. USA. FitchRatings (2004). Fixed Income Derivatives – A Survey of the Indian Market. Mumbai. India. Gorham, Michael, Susan Thomas and Ajay Shah (2005). India: The Crouching Tiger. http://www. futuresindustry. org/downloads/fimag/india_rev. pdf Hindu Business Line (2006). SEBI Opens New Avenue for Companies to Raise Funds, http://www. thehindusbusinessline. com/2006/05/09/stories/2006050904210100. htm Institute of International Finance (2006). Corporate Governance in India: An Investor Perspective. Washington, DC. USA. The Insurance Regulatory and Development Authority (2001). IRDA Investment Amendment Regulation. Mumbai. India. International Monetary Fund. Global Financial Stability Report (various issues). Washington, DC. USA. Lee, Kyungjik and Martin Hohensee (2004). The Indian Bond Market. Deutsche Bank Global Markets. Singapore. Mohan, Rakesh (2006). Monetary Policy and Exchange Rate Frameworks: The Indian Experience. Singapore. National Stock Exchange (2005). Indian Securities Review: A Review. Mumbai. India. National Stock Exchange. NSE Factbook (various issues). Mumbai. India. Patil, R. H. (2001). Broadbasing and Deepening the Bond Market in India. Wharton University. Pennsylvania. USA. Rawkins, Paul (2006). India’s Public Finances: Do They Matter? Deutsche Bank Research. Current Issues. Frankfurt am Main. Germany. Reserve Bank of India. RBI Annual Report (various issues). Mumbai. India. Securities and Exchange Board of India. SEBI Annual Report (various issues). Mumbai. India. Sharma, V. K. and Chandan Sinha (2006). Developing Corporate Bond Markets in Asia: The Corporate Debt Market in India. Basel. Switzerland. Shirai, Sayuri (2002). Have India’s Financial Market Reforms Changed Firms’ Corporate Financing Patterns? Asian Development Bank Institute. Tokyo. Japan.  © Copyright 2007. Deutsche Bank AG, DB Research, D-60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite â€Å"Deutsche Bank Research†. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt fur Finanzdienstleistungsaufsicht. In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG London, a member of the London Stock Exchange regulated by the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Limited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. Printed by: HST Offsetdruck Schadt & Tetzlaff GbR, Dieburg ISSN Print: 1612-314X / ISSN Internet and e-mail: 1612-3158

Psychology of Homer Simpsons Essay

The Simpsons have been America’s phenomenal cartoon TV series that has a chilling resemblance to the typical family, if it would be viewed in a different angle removing the humour and exaggerations. The melodious opening song, Bart’s writing on the board, to the sofa antic just gives that tinge of spice to the expecting viewers. However, what usually catches the interest of the people is Homer. His credulous and sometimes sordid character ironically gives justice to the struggle of middle class families and perfectly depicts the role and challenges of a father who is facing the ordeals in the midst of a family crisis and his obligation as a citizen in the society.   A saying goes that the father is the home’s foundation. If that foundation would be weak, the family will collapse and disperse on the ground. He is the one that stands firm amongst difficult adversities a family faces and would be the source of their hope. Homer Simpsons heavy stature and obsession with Duff beer seems to exclude him from this description of this sturdy foundation. In Season 1, episode 3, Homer lost his job in front of his son in the Nuclear Plant. He became the common bum. He would lie on the sofa all day long, doing nothing and with a blank stare at the TV set, while Marge is working at a fast food chain on roller skates. He came to thirst for beer, since he was sober for a while due to lack of finances. With humour he searched for any kind of source for income including Bart’s piggy bank and going that low ,which wasn’t even worth it because it wasn’t even enough for one beer, he then came to a realization of what he has become. He decided on taking his own life by throwing himself in a watery grave. With a boulder around his neck he walked slowly towards the river. This action exhibited man’s reaction in time of weakness and lost of sight for ones purpose in life. However, he still managed to oil the fence upon going out, showing his compulsiveness of taking care of his own home. At the river, on the last minute he was about to throw away his life, his family came to the rescue. However, it turned out that it was Homer who would rescue them in the middle of the intersection from a speeding vehicle, and that is with a boulder hanging around his neck. The instinct of a father protecting his family came in stronger than his human weakness. Then, it dawned on him that the town needs someone to uphold safety around the place. He found his silver lining among the dark clouds. He went against even with his boss, Mr. Burns, just to be able to completely eradicate the town of danger. Mr. Burns even blackmailed Homer of giving his job back if he would just turn back on his own words about the plant’s safety. Homer almost gave in but his principles were as sturdy as his love for his family and community. Although, like water looking for its way back to the sea, Homer still got his job back and was still able to uphold his principle. He became the plant’s safety man. The seemingly ignorant and weakling personality of Homer turned out to be actually a shallow shroud that clothes his inner strength that brought hope and respect not only from his family but from his community as well. He secretly became a beacon to their hearts. He just needed that chance to bring it out of him.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Fathers have always been the icon of providing for his family. Since ancient times, these men are the ones that bring home the slaughtered meal after a dangerous and tedious hunt. Nothing has changed ever since except for the barbarism. Nowadays, the head of the families would still need to â€Å"hunt† for their income in order to provide for their pecuniary needs. Homer Simpsons is the kind of employee that slack-off during work, taking unscheduled doughnut breaks and seemingly doing his job but not actually serious about it. A provider, yes that he could be, but a good one is a dubious fact. In the first episode for season 1, a Christmas special of The Simpsons, Homer established the answer to this question. Mr. Burns joyously announced to the intercom that there is an increase in the safety of the plant but unfortunately no Holiday bonus for the mid-level workers. It saddened everyone, Homer on the other hand was still thankful because they had a â€Å"Christmas jar† that Marge has been keeping. But, little did he know that it was all spent on Bart’s surgery to remove the tattoo he just got. Upon entering the Simpsons home, he knew of the ordeal they are in. Marge had high hopes knowing that he had a Christmas bonus and Homer didn’t have the heart to break the news to his family, not with all those looks that are on tenterhooks. Homer, like our forefathers, hunted for a way to earn some extra income for his family, so that they won’t have to miss Christmas. He found one as a mall’s Santa Claus. He kept it a secret from his family in order to keep his family from worrying and his dignity as well. In a particular scene, it showed Homer going home from his Santa training exhausted and bad enough his sisters-in-law made a visit. Homer never did like them but because of his love for Marge, he still tried to be cou rteous and said his hellos. The gentleness, like any beast or man has, had been placed above the brute that he was. However, Bart discovered his clandestine accidentally but they made a bond not to speak of it. When pay day came Homer only got a measly $13. He got really disappointed but Barney asked him to try his luck on a dog race and take the chance of doubling his earnings. Homer refused for he didn’t want Bart to grow-up with that kind of values. It was Bart who encouraged his dad to take the risk because he believed that miracles happen to unfortunate kids especially in Christmastime. Thus, father and son embarked on the journey to try their luck. But fate made a twist on Bart’s little hope for miracle. The dog they made a bet on lost and so did their measly hope for their Christmas gifts. Broken hearted they went home. However , with a twist of event, the dog ironically named Santa’s little helper, was booted out by its owner and as fate smiled on both unfortunate souls, they found refuge in the arms of one another. Homer brought home the dog and it turned out to be the best Christmas they ever had. Homer indeed provided but not with mere money but with the gift of love for his family.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   A father is also a source of wisdom and guidance. He is not just the role model in a family but considered as his children’s hero. A father’s advice is treasured like nothing else and he is remembered with it even until his next life.   Homer’s clumsiness and ignorant responses are attitudes wherein a person won’t dare to ask or even take an advice from. He would even sometimes strangle Bart whenever he catches him with his smart alecks. However, that is just a part of his comic act for humour sake. On episode 2 and 5, Homer exhibited the support, love and guidance an ideal father gives in spite of his once-in-a while shallowness. He gave his children a strong arm they can run to and a shoulder they can cry on. Homer handed down his advice as carefully as our forefathers handed down their gift of wisdom to the generations next to them.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Homer Simpsons is a comical proof of what human beings are in an ironic sense. Behind the humour and funny antics is the true father figure we have all known. He merely shows that there is always two sides of the coin, it could either be our bad or our good side. Homer Simpsons simply teaches us that we should never pass judgement to people by a mere look or by the way they talk, because their works and most of all their family might attest to their greatness above all.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚      References Groening, M et.al Burkes,J. , Simon,S. (Producers). Copyright 1990. Gracie Films. Twentieth  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Century Fox Film Corp.(Distributor).

The Darwin Natural Selection and Its Relation to Science and Religion Essay

The Darwin Natural Selection and Its Relation to Science and Religion - Essay Example One of the theologians who have out rightly denied the existence of God is Charles Darwin. His theology of natural selection has raised many eyebrows in awe and in despising. Moreover many theologians have ignored and contemplated positively and negatively on his discovery. Nevertheless, it is impossible to favor Darwin and his natural selection theory when the creation itself is so complex that it demands a creator. But when it comes to Philosophers and theologians, many have stated that God and religion solely have a role to play in the creation of this universe and its beings. Let us look at Paley, Gregory, Dennett, Dawes and Kitcher we can see that they are against and in favor sometimes to the Darwin’s theory. Darwin proclaims that human beings have evolved from Apes. This is not acceptable for many of the philosophers who deeply believe in God and his creative power. Here we get to understand and analyze the theory of other thinkers with that of the Darwin. However Darwi n has propagated his idea and thoughts in such a meaningful way that many thinkers and philosophers had to agree with his theology .Still nature is so complex and human intelligence is so shockingly exquisite, the creator needs to be in backstage to maintain this universe. Paley’s Theology and Darwin’s Theory Paley is a thinker who has attempted to establish God’s existence throughout his theology. According to him if a person finds a stone on the road, he would not think twice, but if it is a watch then one would think of the creator of the watch. Why is that people never thinking about the creator of the stone? He is attempting to prove to people that nothing comes into existence accidentally. Here Paley is out rightly ignoring the â€Å" The natural selection† theory of Darwin. Paley is not only claiming the existence of God but he is further tries to describe some attributes of God.Paley points out to people the complex design of various animal specie s itself is a strong evidence of the existence and power of God. Darwin is of the opinion that mutations in the gene of Chimpanzee along the years have given rise to Homo sapiens. His theory of evolution is sensible, but if the animal species are evolved to form human beings why does those animal species till exist. Moreover, what is the reason for human not further more evolving? Human has been the same for thousands of years. Here comes in the scenario. ‘God’ who is a supreme being who creates, preserve and destructs his creation. Paley is right in mentioning that there is a creator behind stone just like a watch. In Universe nothing happens on accident, everything has a reason. It is strongly unreasonable to assume that animals changed shape and form randomly due to natural selection. Platinga and Darwin Theory Platinga is a theologian who supported Christianity and the existence of God as a ‘creator of universe’. He is against ‘naturalism’ and claims that if existence is due to mutation and nature’s selection of the best animal attribute, then our cognitive and physical senses would have been completely reliable. With these statements Platinga is going against the theory of evolution and Charles Darwin.Platinga is a believer of God and his opinion is that one does not need proof to believe in God. He stated that the existence of God is manifested to the physical senses without any evidential proof. Here Plantinga puts forward an evolutionary argument against the theory of naturalism of Darwin. The Darwin naturalism theory has no ground for supernatural processes and God.Plantinga suggests that if naturalism and evolution are true then there is a meager or low chance

Compare and Contrast the Relative Contribution of India and South East Essay

Compare and Contrast the Relative Contribution of India and South East Asia to China's Medical Tradition - Essay Example The above view can be made clear through the following fact: Chinese medical tradition has been divided into two, major, parts: ‘the Confucian school of thought and the Daoist context’ (Elm and Willich 2009, p.77). The differences between these two frameworks have been significant, a problem that influenced the development of the country’s medical tradition. Apart from the local culture and scientific development, the Chinese medical tradition has been influenced by the culture and the trends of the South East region and India. The level at which South East Asia and India affected the Chinese medical tradition is difficult to be precisely identified mostly because the views included in the literature published on this issue lead to different assumptions. In any case, it is clear that South East Asia and India influenced the Chinese medical tradition, a fact reflected in the incorporation of many substances, through India and South Eat Asia, in the country’s medical tradition. The specific issue is set under examination in this paper. Emphasis is given on the ways that various medical substances entered China through India and the South East Asia. Particular reference is made to tobacco and opium, two medical substances that have highly affected the Chinese medical tradition, as verified through the studies developed in this field. 2. China’s medical tradition as influenced by India and South East Asia 2.1 The influence of India and South East Asia on China medical tradition The medical tradition of China has been highly differentiated from those of the West; the country’s medical tradition presents also significant references to the similar frameworks of other countries in the South East region. Reference should be made, for example, to the study of Selin (1997). In accordance with the above researcher, food therapy has been a common element of medical traditions in Europe, India and Near East (Selin 1997, p.676). It is noted that in China, food therapy has been related to ‘the yinyang philosophy and the Five Phases theory’ (Selin 1997, p.676). In this context, the medical history of China has been strongly related to philosophy, a trend, which is not, developed in India and the other South East Asia countries. In accordance with a report published by the World Health Organization in 2003, the Chinese medical system has a history of around 5000 years and it is highly based on the use of plants (Singh 2011); in fact, in China more than 7000 species of plants have been identified; most of these are key elements of the country’s medical system (Singh 2011). In the study of Arnold (2000) reference is made to the contribution of India in the development of medicine and other scientific sectors of China, as also in other regions of the South East Asia. It is explained that due to the long presence of British in India, the country’s technology and scientific knowledge was benefi ted, a fact that also influenced neighboring countries, such as China (Arnold 2000). Leslie (1976) notes that the revival of traditional medical system is highly promoted in China today, a trend, which is not reported in other countries of the Near East and the South East Asia, apart from India. From this point of view, the Chinese medical history can be considered as strongly related

Strategic Marketing-Forecast and Budget Essay Example | Topics and Well Written Essays - 1000 words

Strategic Marketing-Forecast and Budget - Essay Example The portable button will reduce cases of insecurity but the current challenge is to design. Product Development and Testing Hire expertise to develop product 45 Prototype development costs: 140 Labour 240 Materials 130 Subcontracting 210 Special Purpose Equipment 300 Miscellaneous 230 Fees for lab testing 212 Field Trial costs 125 Patent Application Fees 43 Legal Fees re IP 233 Additional marketing research activity 50 Development of technical manuals 65 Development of User training manuals 210 Packaging Design 65 Travel Costs 120 Staffing Costs 230 Update business plan 50 Search for Venture Capital 210 Other related costs: 250 The product marketing and promotion programs are not captured in the product development because they are under the marketing budget. These components are not part of the development process. The development of a gadget connecting security organization with the people demands that the bodies must understand how the system operates. The role of security organ i s to develop the necessary security structure support workability of the product. The success of the whole process depends on the ability to address pertinent issues affecting the product. The trial costs must be monitored because trials are very expensive to address or handle leading to serious challenge for the product development process. ... The product is an IT related programs that must be addressed in issues of communication and the issues of security of the communication practice Market Research & Technical Feasibility costs Product Management Training $100 Other HR training costs $100 Focus Group Costs $100 Brochure Development $145 Costs gathering market intelligence $350 Product mock-up costs $230 Staffing Costs $340 Consulting Costs (idea evaluation, marketing assistance) 210 Technical Review of Product Concept 120 Legal/Professional fees 120 End-user visits 230 Other related costs: 300 New product launch support services New product development and completion do not guarantee success of the product, unless the implementation process is undertaken in a way that will encourage the target market to try out the product. Several launching programs exist, but the company needs to engage in tactical launch of new products. During the process of planning of new product launch, support is required from the top management on the dates of launch, and the facilitation required, in the process to achieve success (Sandhusen, 2000, p. 34). In order to support the tactical and the strategic launch of products, market research must be conducted so as to determine the efficiency of the method chosen for the product launch. Market testing is vital throughout the new product development process. Market testing will allow the organization to finalize the planning process of the product launch. Additionally, the feedback collection process will be efficient if the customers are allowed to give their opinion during the product launch leading to the ease of product improvement in the process

Chose one for me 1 Essay Example | Topics and Well Written Essays - 500 words

Chose one for me 1 - Essay Example The federal government is better able to keep emergency highly expensive and specialized resources. The fact is that each state only has a major emergency very rarely, and that it would be incredibly inefficient for each state to keep disaster resources. The resources would inevitably drift into unimportance during a particularly tight budget year in which a disaster has not occurred for a long period of time, and then would be neglected and cut. A disaster would then hit, demonstrating how much those resources are needed, and people would suffer. The United States can collectively keep those resources available much more efficiently because the country as a whole has to deal with emergencies much more than particular states ever would. Finally, pushing more responsibilities onto already cash-strapped states would be incredibly dangerous and irresponsible. Liberal commentators love to point to major events such as the recent hurricane Sandy as absolute proof that it would be more than impossible to limit the size of government without making drastic changes and harming people who need help. The problem is, however, that the liberals’ logic is often twisted and contorted beyond recognition. One of the biggest logical problems with liberals is their constant insistence that pushing more service provision onto the budgets of already beleaguered states would be unacceptable. The problem with this logic is that it misses the point entirely: states should be collecting a broader share of the taxes *and* giving more of the services. Obviously one without the other would be ludicrous, but pretending that transferring a lot of responsibilities to the states without also cutting federal taxes (and thus letting states charge higher taxes) is a possibility shows how broken the liberal’s argument is. They cannot even imagine shrinking the federal

Management, People and Organisations - Managing the United Kingdom Essay

Management, People and Organisations - Managing the United Kingdom National Health Service - Essay Example The management of NHS has been faced with challenges from the government, public and within its own organization. The government and public requires the organization to deliver more and build trust however provisional support not sufficient. The essay analyzes symptoms in order to recognize problems and provide alternatives solutions. It deliberates the organizational issues underlying these difficulties and suggests vicissitudes believed conducive to making a high performance organization. In addition, it explores NHS organizational administration methods, structure and culture morals from a conjectural background (MARTIN, 2005). It summarizes the prominence of managing these issues communally in an unstable atmosphere to accomplish goals. It discloses internal and external factors that encourage change in organizations. The problems faced by United Kingdom National Health Service are not unique to any organization offering service. Management requires designing and maintaining an atmosphere that individuals, working as teams, efficiently achieve selected goals. The key objective of management is to ensure things are done by the people, through generating a suitable setting in which they can attain organizational goals. The case study reveals that many clinicians have indulged in managerial duties besides their existing role, in an attempt to bring a difference. This engrossment in management can be time overwhelming and actually clashes with their professional roles. It is understandable that many of the indications which the case study proves can be directly linked to conflict of roles or better say conflict of interest. This proves lack of professionalism since each player in an organization should adhere to their duties and do them to their best. Organization should define each role of players and governing principles to ensure quality. It is evident that role issue is a major management problem for the NHS. In any specified role, there

Theodore Roosevelt and his contribution to America Research Paper

Theodore Roosevelt and his contribution to America - Research Paper Example He used these enhancements to make serious and positive changes to the US. He focused upon some of the most important questions concerning the power of the government and the individuals within a nation. Body US was experiencing heavy amount of economic growth and was being regarded as the wealthiest nation when Roosevelt replaced McKinley as president. US were leading throughout the world in the production of iron, coal steel and timber when Roosevelt came into action. During that era US even experienced growth in the rate of population and exports. The growth experienced by US was beneficial but equally disastrous as this growth brought poverty, increase in child labor, unpleasant working conditions and unequal distribution of wealth. Roosevelt was of the opinion that government should intervene and limit the freedom enjoyed by private enterprises. Due to this he started regulating private businesses by making several changes to the laws and constitution, some of these changes in laws includes: the drug act, laws regarding the safety and inspection of working conditions in industries and the Pure Food Act (D'Silva 262). Although these changes were not appreciated by the business communi ty during that time period but today the importance of these changes are recognized by the citizens of US. Roosevelt was clearly of the opinion that one aspect of the society that should be directed and supervised by the government was the economy of a country. The laws and regulations added to the constitution by the president have aided the society in bringing Private Corporations such as Enron and Microsoft to justice. During the period of 1912, he tried for the third term as president under the Progressive Political party, during this session he coined and promoted some of the various changes to constitution that were later enacted under president Franklin, these changes included the stock market regulation, minimum wage clause and the Social security clause. Roosevelt played the role of an activist not only in America but throughout the world as he promoted the role of the United States as world power. During the period of 1898 US was at war with the Spanish nations and soon co nquered them, after the war US became responsible for supervising territories such as Cuba and Puerto Rico (O'Toole 300). President Roosevelt was a part of the war as an American solider and later he supported and made the American citizens realize that US was a global power. He was even a promoter of democracy as he promoted the Marshall Plan which was enacted after his death. The legacies of the president were a gift to the world and to the future of US, he was in love with the natural beauty, he liked to experience adventures such as hiking and climbing and he was the first president of US to make the issues experienced by environment as a issue to be countered by the government. He was persuaded by the Sierra Club and the chief of the US forests to take the issue of protecting the environment to the federal level as the issue could not be countered on the state level (O'Toole 240). His love for preserving the environment and his love for nature made him create policies in order o protect the

The Spirit and Personality of Man Essay Example for Free

The Spirit and Personality of Man Essay The Spirit and Personality of Man In your opinion, how is the spirit and personality linked? Where does the idea of a spirit fit within your own theory of personality? What is the spirit of a man? Where did our personalities come from? What influences our personality? We know that our environment which includes our family, culture and communities’ influence us but what is behind our personalities? Should we think of the self as a complex chemical substance or as a spirit? We find ourselves identified with God in Genesis 1:26 (New International Version) in this book the Lord God is found speaking to other members of the Godhead and says, â€Å"Let us make mankind in our image, in our likeness, so that they may rule†, in Genesis 2:7 (NIV), he continues to tell us about our creation in the next chapter by saying, â€Å"the LORD God formed a man from the dust of the ground and breathed into his nostrils the breath of life, and the man became a living being. This tells us that our personality comes from God and that it is he that has made us and not we ourselves† Psalms 100: 3 (NIV). From a biblical standpoint of view it tells us that we come from God and that our personality is mostly spiritual since Adam had no life until God breathed into him and we likewise. When people die the body is lifeless and is returned to the ground. The Jewish, Christian and Muslim communities believe in the God of heaven (who is a Spirit, John 4:24) and that we took our personalities from him. On the flip side of that Satan worshipers believe that Satan (who is a spirit) is greater than God and they devoutly worship him and are lead by his Principalities, Power and Rulers in their everyday life. That seems to be about or close to half of the world’s population which believes that a spirit being controls their mind, will, and emotions. This informs us of where (I believe) we come from and where our personalities come from. No one, or no thing, is an island unto itself (Hoffman, 1993). Many people believe that we are sovereign unto ourselves, and that there is God’s ways (personality), my ways, and the Devils ways and that is not true. When Adam sinned against God, he gave authority over to Satan which allowed the kingdom of darkness a legal obligation to oppress, and possess me when they sin. Although we did not see happen physically nor do we see it reoccurring physically today, we see the result of the relationship between sin, personality and evil spirit. Every week or two I log on to scoan. org to watch Christian services by Prophet T. B. Joshua. Prophet T. B. Joshua is a Christian, minister, televangelist and faith healer. He is leader and founder of the ministry organization The Synagogue, Church of All Nations (SCOAN) located in Lagos, Nigeria. Most of time during his services before he begins to pray he says, â€Å"Whatever your situation is, whatever your problem is, it might be sickness, disease, cancer, bad luck; whatever your problem, a Demon is behind it†. Then when he begins to lead his congregation in prayer people who are possessed or oppressed by demons began to crawl, slither, gag, spit, and sometimes even want to fight him. What about these people’s personality causes them to behave inhumanly? I would say they are faking but I grew up around the same church environment, plus it is common to read about Demons reacting to Jesus the same way in Mark 9:14 – 20 (New International Version), the man with a deaf and dumb spirit, Mark 1:23-24, King James Version, a man with an unclean spirit in the synagogue, and the man with a legion of demons (Mark 5:15 NIV). When the man with the legion of demon had them cast out he was instantly changed from being a savage, into a man of solitude, a sound mind and peace. I do not understand how our spirit and personality actually connected but I do understand that the kingdom of heaven and the kingdom of darkness are in a war to save or destroy the spirit and personality of man. The bible says that our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms.

Hindi gk Essay Example for Free

Hindi gk Essay To acquaint students with the economic problems and solve the problems at local and national level To familiarize students with basic ideas in economics To foster an urge among students for effective participation. To prepare students to cope with stress and strain. To develop an understanding of the nations resources To develop among students a favorable attitude To help the students to understand that various sectors must develop equally. To develop among students a passion tor social Justice. To help students to acquire skills. Objectives of teaching economics at Higher Secondary Level: 1 . To acquire the knowledge of facts, terms, concepts, trends, principles, problems and processes of economics. 2. To develop understanding of trends, principles, processes, etc in economics. 3. To apply the acquired knowledge and its understanding to unfamiliar situation. 4. To acquire economic skills like drawing maps, charts, tables, diagrams, graphs, etc. 5. To evelop interest in the subject and problems related to the economic life of the people. 6. To develop desirable attitudes necessary for developing a broader outlook. ) Correlation of Economics with Commerce, Mathematics, History, Geography, Science, Languages. Meaning of correlation: 0 Technique which establishes reciprocal relationship between different subjects of the curriculum for the better and clear understanding of the subject under discussion. 0 Acc. To Raymont, No subject is ever well understood and no art is intelligently practiced, if the light which t he other studies are able to throw upon it is eliberately shut out. 0 Knowledge is one invisible whole, which cannot be divided into water tight compartments. Reasons for correlation: 0 Stability of knowledge 0 Economy of knowledge 0 Development of interest in the subject 0 Makes the burden of the curriculum light 0 Development of human and social qualities Types of Correlation: 1) Incidental Correlation: correlation between subjects occurring by chance not planned. 2) Planned Correlation: Its a deliberate attempt to correlate subjects. There are two types of planned correlation: a) Vertical Correlation- correlation of economics with various branches of economics ) Horizontal correlation- correlation of economics with other subjects c) Correlation with life. Correlation of Economics with Commerce: Main aim in Commerce is 0 to study about business, industry, trade and organization 0 study all activities beginning from production and leading up to distribution 0 study of trade, banking, export, import, book-keeping, etc All the above are closely associated with economics. Economics and commerce cannot be studied separately. They are inter-twined. Through the knowledge of commerce, it is possible to run the economy of a country more efficiently. Correlation ot Economics witn Mathematics: 0 There exists very close relationship of economics with mathematics particularly statistics. Most of the economic theories are propounded on the basis of statistical data. 0 In economics we make use of various mathematical symbols. 0 To formulate theories, Geometry and Algebra are widely used. 0 Without statistics the knowledge of economics remains incomplete. Marshall said, Statistics are the straw out of which, I like every other economist have to make b ricks. 0 To draw graphs, sketches, and tables the teacher of economics depends on mathematical knowledge. Correlation of Economics with History: 0 Both subjects are social sciences. 0 After Industrial Revolution production of quantity and quality of goods improved. Also resulted in competitive business for marketing of finished goods. Gave rise to infighting among various developed European powers which resulted in huge wars and new powers emerged. 0 First and Second World Wars were fought for economic considerations. 0 To get knowledge of various economic factors that were responsible for various historical events, we have to depend on history. 0 History tells about the economic development of various countries. When we read a particular period in history, we learn about economic conditions prevailing in that period. The beginning of medium of exchange such as gold coins and others are studied in history. Correlation of Economics with Geography: 0 In economics we study about various goods. The production is governed by various geographical factors such as nature of soil, climate. 0 Economic conditions of a country depend to a large extent on its geographical conditions. 0 India could become a great power in ancient times because of its geograp hical situation and other conditions. Agriculture, industry and other economic activities depend to a large extent on geographical factors. C] Availability of raw materials means of transport and types land (plateaus, deserts, mountains, etc) are considered in major decisions of business. 0 Certain industries and trade develop in a particular place when geographical conditions favor them. Correlation of Economics with Science: 0 Teaching is a technical Job. It requires certain qualities of head and heart. Every teacher must familiarize herself/ himself with the time honored maxims of teaching which are evolved as a result of long experience in teaching and research in ducational psychology. To explain the concept of Diminishing Marginal Utility give water to a student to drink and ask other students to observe how is urge for drinking water decreases gradually at that point of time. v) Particular to General 0 Examples and facts should be presented to students before giving them the general rules or principles. 0 Study of particular facts should lead the children themselves frame general rules and generalizations 0 Same principle adopted in inductive method of teaching 0 E. g. discuss adulteration of different products, cheating done to consumers and then teach the concept of Consumer Protection.

Female Athlete Triad: Energy, Menstruation and Bone Density

Female Athlete Triad: Energy, Menstruation and Bone Density â€Å"Define the term the Female Athlete Triad. Explain the interaction between the various elements of the triad and their effects on health and human performance† Introduction The female athlete triad refers to the interrelationships among energy availability, menstrual function, and bone mineral density (BMD), which may have clinical manifestations including eating disorders, functional hypothalamic amenorrhea, and osteoporosis (Nattiv et al. 1994). It is unfortunately a disorder which often goes unrecognised in female athletes. The female athlete triad is caused by an energy drain where there is a caloric deficitdue to the athletes energy expenditure exceeding herdietary energy intake (Nattiv et al. 1994). Whether known to the athlete or not, thislow level of energy availability causes disruption of the hypothalamic-pituitary-ovarian axis,which results in decreased gonadotropin-releasing hormone (GnRH)pulsatility and low luteinizing hormone (LH) and follicle-stimulating hormone (FSH) levels (Loucks 1990). This then leads to a decreased estrogen production which causes menstrual dysfunction. These decreased estrogen levels in turn affect calcium resorption and bone accretion, which cause decreased bone health (Gottschlich Young, 2006). The 3 components of the triad are all inter-related through physiological and psychological means as shown in Fig. 1. The common psychological pressures to repeatedly put in a performance of optimal standard and often the perceived requirement to maintain a low body mass for certain sports, result in a large amount of training. This large amount of training combined with a low energy intake, and also in addition to the stress hormones produced by psychological stress, may lead to a physiological alteration in the endocrinological control of the menstrual cycle, which may lead to the athlete becoming amenorrhoeic. The consequence of becoming amenorrhoeic through dysfunction of the hypothalamus and pituitary is that the production of oestrogen will decrease. This hormone has a major role in maintaining adequate BMD. Therefore, a hypo-oestrogenic state is associated with a low BMD and an increased risk of osteoporosis (Birch, 2005). Not all sufferers have all 3 components of the female athlete triad however. In recent years, new studies are continuing to emerge indicating that even having just1 or 2 elements of the triad significantly increases these womens long-term morbidity. In addition to this, a study by Burrows et al. (2007) has suggested that the current triad elements do not identify allwomen at risk from the syndrome,rather thatcriteria such as exercise-related menstrual alterations, disordered eating, and osteopenia may be more appropriate (Gottschlich Young, 2006). Eating disorders There is a reduced energy availability (the amount of dietary energy remaining for other body functions after exercise training such as cellular maintenance, thermogenesis, immunity, growth, reproduction, and locomotion) associated with disordered eating which is the result of an exercise energy expenditure greater than a dietary energy intake. This compensation by physiological mechanisms to reduce the amount of energy made available to these functions tends to restore energy balance in the body and promote survival, but consequently impairs health. Extreme cases of eating disorders could include anorexia nervosa and bulimia nervosa. Many athletes do not meet the strict criteria for anorexia nervosa or bulimia nervosa that are listed by the American Psychiatric Association (1994) in the Diagnostic and Statistical Manual of Mental Disorders (Fig. 2) but will however, manifest similar disordered eating behaviours as part of the triad syndrome (Hobart and Smucker, 2000). The term anorexia athletica or â€Å"disordered eating† has been used to distinguish between pathological anorexia and eating disorders associated with training and sports performance. The criteria for this include perfectionism, compulsiveness, competitiveness, high self motivation, menstrual disturbances, and at least one unhealthy method of weight control such as fasting, vomiting, and use of diet pills, laxatives, or diuretics (Birch 2005). The Diagnostic and Statistical Manual of Mental Disorders as mentioned above was reviewed by the American Psychiatric Association (2000) to include a more comprehensive classification of eating disorders not otherwise specified (EDNOS) for athletes who do not meet the criteria for anorexia nervosa or bulimia nervosa (Fig. 3). Functional hypothalamic amenorrhea Some clinical menstrual disorders are obvious to affected women such as oligomenorrhea (menstrual cycles ≠¥ 35 days) and amenorrhea (no cycles for > 90 days), but sub-clinical menstrual disorders are not, e.g. luteal deficiency and anovulation. Amenorrhea may be caused by a wide range of organic diseases, genetic abnormalities, energy deficiency, and stress. Medical tests are required to diagnose the etiology of amenorrhea so that appropriate care can be offered to sufferers of the syndrome (Manore et al. 2007). Amenorrhea that is related to athletic training and weight fluctuation is caused by changes in the hypothalamus which result in decreased levels of estrogen. Amenorrhea in the female athlete triad, according to (Hobart and Smucker, 2000), can be classified as primary or secondary: Primary amenorrhea: no spontaneous uterine bleeding in the following situations: (a) by the age of 14 years without the development of secondary sexual characteristics, or (b) by the age of 16 years with otherwise normal development. Secondary amenorrhea: the absence of menstrual bleeding in a female for (a) 6 months with primary regular menses, or (b) 12 months with previous oligomenorrhea. The type of amenorrhea caused by low energy availability associated with eating disorders is classified as functional hypothalamic amenorrhea (FHA). In FHA, ovarian function is suppressed by an abnormally slow frequency of luteinising hormone (LH) pulses in the blood. LH pulsatility is regulated in part by neurological pathways originating in specialised neurons which can sense the availability of oxidisable metabolic fuels (Wade Jones, 2004). There are many causes of menstrual disorders, many of which are not completely understood. Pulsatile release of luteinising hormone is decreased, which leads initially to luteal phase defects. In addition, women with luteal phase defects and amenorrhoea will have higher concentrations of growth hormone and cortisol and lower concentrations of leptin, insulin, and triodothyronine when compared with sedentary women. These hormones are related to metabolism, which means they are also related to nutritional and metabolic status. When these hormones indicate that energy availability is low over a period of time, the menstrual cycle will be temporarily suppressed in order to conserve energy (Birch 2005). Osteoporosis Osteoporosis, as defined by the American College of Sports Medicine (ACSM), is a disease characterized by low bone mass and microarchitectural deterioration of bone tissue, leading to enhanced skeletal fragility and increased risk of fracture (Otis et al. 1997). This is the final component of thefemale athlete triadwhich exists on a continuum from optimal bone health to osteoporosis and focuses on bone strength, which consists of BMD and bone quality. Bone quality refers to bone turnover rates (resorption versus formation, time for maturation of the new bone matrix, microarchitecture or trabeculae, bone geometry and size, etc.).The inability to measure bone quality at this time leaves one half of the equation for bone health empty and offers an explanation for why some athletes may suffer more fractures even if they have the same poor bone density as their peers. Therefore, dual energy x-ray absorptiometry (DXA) scans are used as a quantitative measure of bone health. (Gottschlich Young, 2006). The World Health Organization (WHO) has established guidelines on how to classify BMD using dual energy radiographic absortiometry (DXA). Osteoporosis is defined as BMD greater than 2.5 standard deviations below the mean of young adults. Osteopenia is defined by a BMD 1 to 2.5 standard deviations below the mean of young adults (Kanis et al. 1994). Recently however, the International Society for Clinical Densitometry (ISCD) published a statement (Lewiecki et al. 2004) that the WHOs guidelines for osteoporosis should not actually be used on healthy premenopausal females. They suggest instead that Z-scores should be used rather than T-scores for the diagnosis of osteoporosis in this particular population. According to Brunet (2005), there is an increased risk for fracture in the elderly population as well as the young in conjunction with osteoporosis. Some of the associated risk factors include: thyroid or corticosteroid medications, smoking, a low calcium diet, amenorrhea, a family history of osteoporosis, a sedentary lifestyle, and a lack of hormone replacement therapy (HRT) post menopause (Bellantoni, 1996). According to the American Academy of Orthopedic Surgeons (1991), gender can play a part with females being 8 times more likely to develop osteoporosis than males. The reason for this is a decreased baseline bone mass and also, an increased level of bone absorption associated with menopause. Treatment The clinical suspicion alone that someone is suffering from female athlete triad should be sufficient indication to start with therapeutic and preventive steps, such as a reduction in training loads, an increase in bodyweight, and improvements in diet. These clinical suspicions could be based on personal history such as previous stress fractures, or based on the presence of other factors such as amenorrhea. These steps aim at returning estrogen production to normal levels by normalizing the disturbed menstrual cycle. If this goal is not achieved, the lack of estrogens has to be treated with exogenous estrogens administration, particularly in the case of secondary amenorrhea, to ensure achievement of peak bone mass (PBM). If osteoporosis is documented, it is an additional indication for hormonal substitution. There are two ways to carry this out, and can be selected in relation to the age or to special wishes of the athletes like contraception and cycle control. Either estrogens as a part of a birth control pill or a HRT with natural estrogens and progestins. Both treatments need to consider the minimal dose of estrogens necessary for prevention of osteoporosis. In addition, sufficient intake of calcium and vitamin D may not be neglected. Regarding the long-term results of the proposed hormonal treatment, it has to be admitted that prospective results from longitudinal studies are completely lacking, and that more research is urgently needed (Roth et al. 2000). Conclusion Low energy availability with or without eating disorders, functional hypothalamic amenorrhea, and osteoporosis, alone or in combination, pose significant health risks to physically active girls and women. Prevention, recognition, and treatment of these clinical conditions should be a priority of those who work with female athletes to ensure that they maximize the benefits of regular exercise. (Nattiv et al. 1994). Prevention of the triad, or at least an early diagnosis of it, is certainly better than the cure. More efforts should be undertaken to appropriately inform physicians, athletes, coaches, officials and parents on all the different aspects of the triad. Dealing with this syndrome, according to Roth et al. (2000), may offer a chance to the female athlete the opportunity for a deeper reflection about her bodily function and the relative importance and perspective of performance and success in sports. References American Academy of Orthopedic Surgeons. Athletic training and sports medicine (1991), 2nd ed., Park Ridge (IL): American Academy of Orthopedic Surgeons. American Psychiatric Association. Diagnostic and statistical manual of mental disorders (1994), 4th ed., Washington, D.C.: American Psychiatric Association, 539-50. American Psychiatric Association. Diagnostic and statistical manual of mental disorders (2000), 4th ed., Washington, D.C.: American Psychiatric Association. Bellantoni, M.F. (1996) ‘Osteoporosis prevention and treatment, Am Fam Physician, 54(3), 986-92. Birch, K. (2005) ‘Female athlete triad, British Medical Journal, 330(7485), 244-6. Brunet, M. (2005)‘Female athlete triadClin Sports Med,24(3), 623-36, ix. Burrows, M., Shepherd, H., Bird, S., MacLeod, K., Ward, B. (2007)‘The components of the female athlete triad do not identify all physically active females at risk,J Sports Sci, 25(12), 1289-97. Gottschlich, L. M. Young, C. C. (2006) ‘Female athlete triad, Medical College of Wisconsin [online], available: http://emedicine.medscape.com/article/89260-overview [accessed 13 Dec 2009]. Hobart, J.A., Smucker, D.R. (2000) ‘The female athlete triad, Am Fam Physician, 61(11), 3357-67. Kanis, J.A., Melton, L.J., Christiansen, C., et al. (1994) ‘The diagnosis of osteoporosis, J Bone Miner Res, 9, 1137-41. Lewiecki, E.M., Watts, N.B., McClung, M.R., et al. (2004) ‘Official positions of the International Society for Clinical Densitometry, J Clinical Densitom, 89(8), 3651-5. Loucks, A.B. (1990)‘Effects of exercise training on the menstrual cycle: existence and mechanisms,Med Sci Sports Exerc, 22(3), 275-80. Manore, M.M., Kam, L.C., Loucks, A.B. (2007) ‘The female athlete triad: components, nutrition issues, and health consequences, Journal of Sports Sciences Nattiv, A., Agostini, R., Drinkwater, B., Yeager, K.K. (1994) ‘The female athlete triad. The inter-relatedness of disordered eating, amenorrhea, and osteoporosis, Clin Sports Med, 13, 405-18. Otis, C,L,, Drinkwater, B., Johnson, M. (1997) ‘ACSM position stand: the female athlete triad, Med Sci Sports Exerc, 29(5), i-ix. Roth, D., Meyer, Egli Ch., Kriemler, S., Birkhà ¤user M., Jaeger, P., Imhof, U., Mannhart, C., Seiler, R., Marti, B. (2000) ‘Female athlete triad, Schweiz. Ztschr. Sportmed. Sporttraum, 48, 119-132.