Sebi stamp on badla ban
JPC to hear North Block men today
Open offer for 49% of Carrier Aircon
Selloff fears stalk bourses
Samsung to invest $ 45 m in Noida units
Extension to SEB fires speculation on overhaul
Buzz on cellphone directory
Foreign Exchange, Bullion, Stock Indices

 
 
SEBI STAMP ON BADLA BAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 14: 
The Securities and Exchange Board of India (Sebi) today banned badla — or carry forward trading that enables the rollover of speculative positions from one settlement to another — from July 2, and decided to replace scrip-based circuit filters with those linked to indices.

Operators, who had hoped against all odds that the system would be retained, have been given time until September 3 to square up their outstanding positions, estimated at a staggering Rs 2,000 crore in the current settlement.

However, exposures taken from May 15 will have to be liquidated by July 2, the day compulsory rolling settlement comes into effect and options — a safer and more fool-proof hedging instrument — replace deferral instruments like BLESS, ALBM, modified carry-forward system and continuous net settlement. Stock exchanges will announce a plan for phased liquidation of positions between July 2 and September 3.

The ban, which gives brokers less scope to speculate at the expense of investors and market integrity, is expected to spark a massive selloff when bourses resume trading on Tuesday. There are fears it will lead to a dramatic decline in volumes over the long term.

Announcing the measures after a three-and-a-half hour board meeting, Sebi chairman D R Mehta chairman said the transition period from July 2 to September 3 will help operators unwind their positions and get used to the new regime. The badla system, a big draw with brokers who used it to delay closing their deals, has been panned because it lent itself to over-the-top speculation.

It is believed to be at the heart of the recent troubles at the Calcutta Stock Exchange, which was forced to dip into its crisis kitty to avert a payments crisis triggered largely by a cabal of 10 rogue brokers.

Mehta said shares which are not on the list of 414 scrips slotted for mandatory rolling settlement from July will be brought under the fold from January 2. Till then, they will be traded in the uniform settlement cycle (T+5), from Mondays to Fridays.

The regulator has decided to introduce US-style circuit filters based not on the 16 per cent price swings in individual shares, but on 10 per cent intra-day fluctuation in stock market indices.

On the use of derivative products, Mehta said index futures have already been introduced while permission has been given to stock exchanges to launch index-based options. Options for individual scrips will be ushered in from July 2.

Sebi said the group on insider trading has recommended that substantial shareholders (with more than 5 per cent shares/voting rights) of listed companies must declare their stakes every time their holding increases by 2 per cent. The group also suggested that directors or officers disclose all share purchases in their company above Rs 5 lakh.

The recommendations are a mix of internal procedures and code of conduct and the creation of a code of corporate disclosure practices for listed companies. In the case of latter, companies will have to timely report shareholdings/ownership and changes in ownership, disclosure of information with special reference to analysts and institutional investors.

   

 
 
JPC TO HEAR NORTH BLOCK MEN TODAY 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, May 14: 
The joint parliamentary committee (JPC), set up to probe the recent stock market scam, started its proceedings today, deciding on the modalities and time frame of the investigation. The 30-member committee will begin its hearing tomorrow.

Finance ministry officials will be the first to appear before the JPC to explain their stand on irregularities in the capital market. The hearings are expected to be over by Friday after which the committee will despatch teams to Mumbai, Ahmedabad and Calcutta.

The JPC, headed by P. M. Tripathi of the BJP, has been given the brief to probe allegations of manipulations, insider trading and the pay order fraud that saw the sensex swinging wildly after the budget was unveiled in February. The committee is expected to have its report ready before the monsoon session of Parliament ends.

According to its terms of reference, the JPC would probe the irregularities and manipulations in the stock market “in all their ramifications in all transactions, including insider trading relating to shares, rigging of share prices and other financial instruments.”

It would enquire into the role of banks, brokers and promoters, stock exchanges, financial institutions, corporate entities and regulatory authorities and fix responsibility of persons, institutions or authorities in these transactions.

The JPC has also been asked to identify misuse, if any, and failures or inadequacies in the control and supervisory mechanism.

The role and power of various institutions like RBI and Sebi and the working of bourses would all come in for in-depth discussions during the probe. The committee would make recommendations for safeguards and improvements in the system to prevent recurrence of such failures and protect small investors.

   

 
 
OPEN OFFER FOR 49% OF CARRIER AIRCON 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 14: 
Carrier International Mauritius along with Carrier Corporation of the US and Carrier Singapore (Pte) today jointly made a open offer to acquire up to 49 per cent stake of Carrier Aircon Ltd (CAL) at a price of Rs 100 per share. At present, Carrier Corporation holds 51 per cent stake in the local subsidiary and the open offer, if subscribed fully, would lead to the de-listing of the scrip from the local bourses.

In a communication sent to the stock exchanges today, the Carrier group said it planned to acquire up to 1,14,77,583 fully paid up equity shares of Rs 10 each, representing 49 per cent of the paid up share capital of Carrier Aircon at a price of Rs 100 per share payable in cash.

The offer would open on July 2 and close on July 31.

The stock markets got the wind of the announcement and the Carrier Aircon scrip opened higher today and witnessed huge trades. While the company’s share price opened at Rs 69 (the 8 per cent upper circuit), frenzied buying in the counter saw the scrip soon hitting the 16 per cent limit at Rs 73.8, a rise of Rs 10.15 over the previous close.

Carrier Aircon has a significant share in the window A/C and mini-splits markets. Following the tough competition, the company decided to introduce new products.

   

 
 
SELLOFF FEARS STALK BOURSES 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 14: 
Bourses are bracing for a selling avalanche on Tuesday following the decision to ban carry-forward trading. There are fears indices could plummet 200-300 points in the immediate term as the dismay over the ban sinks in and operators scramble to wind down uncovered positions. The market had hoped that the regulator would implement the ban in a phased manner. Some had even thought it would back off from a move which could reduce volumes to a mole-hill.

“In the short-run, the trend is certainly bearish,” says Anup Bagchi, chief operating officer at ICICI direct.com. This is seen as an indication of just how fragile the sentiment is. Most brokers are of the opinion that 3200-3250 will be the next support level for the Bombay Stock Exchange (BSE) sensex.

“I expect the downbeat mood to persist over the next week or two, and the sensex could test 3,250. However, there are chances of a technical correction around these levels. A comforting thought could be that foreign institutional investors (FIIs) will go bottom fishing,” an equity analyst said. Experts say two events this week could influence the way bourses behave. The US Federal Reserve’s Tuesday meeting on interest rates, and an expected revamp in the Morgan Stanley Capital International index under which it will announce its weightage for Indian stocks in its portfolio.

There is a small section in the market which senses a whiff of good times for investors in Sebi’s decision to stamp out carry-forward system and deferral products. “I feel that the decision will be good for the markets in the long run,” former BSE chief M G Damani told The Telegraph. However, he said options should be introduced on bourses by July 2.

“Though the move may cause bearishness in the short term, it reduces systematic risks. In the long term, it would segregate the delivery-based deals from non-delivery ones,” Bagchi added.

Rupee slips

The rupee dipped to 46.96/97 against the dollar as banks rushed to scoop dollars at the end of a choppy session in the inter-bank forex market here today. The closing quote represented a decline of nine paise over the previous finish of 46.88.

   

 
 
SAMSUNG TO INVEST $ 45 M IN NOIDA UNITS 
 
 
FROM PALLAB BHATTACHARYA
 
Seoul, May 14: 
Samsung India Electronics Ltd will invest $ 45 million (around Rs 210 crore) by 2005 to raise the production capacity of colour televisions and colour monitors from 1 million units to 4 million.

The Indian outfit of the South Korean company has factories at Noida near Delhi.

Announcing this here today, senior vice-president of Samsung Electronics Kwang Soo Kim said the investment will be made from internal accruals and through borrowings.

Asked whether the parent company has any plan to divest its stake in its wholly-owned Indian subsidiary, Kim said, “Right now there is no plan.”

Globally, Samsung is not listed on any stock exchange. However, if it plans an initial public offer, India will be one of the first countries, Kim added.

The Indian outfit will invest $ 25 million to expand the colour monitor factory, which is set to commence commercial production in July, and $ 20 million will be spent on the colour television plant.

The company will also invest $ 5.2 million during the year to double the capacity of its research and development wing in Bangalore. Kim said Indian outfit has a very important place in the Samsung stable. It contributes around 3 per cent to Samsung Electronics’ global turnover of $ 27 billion.

Samsung India started to generate profit from the fourth year and caters to various other markets, particularly in the south Asian countries.

It registered a profit of Rs 32 crore in the year ended December 2000.

Samsung India, which has a 44 per cent market share in the colour television segment, plans to sell one million monitors this year to garner a 48 per cent market share.

   

 
 
EXTENSION TO SEB FIRES SPECULATION ON OVERHAUL 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, May 14: 
The state government’s decision to give the West Bengal State Electricity Board (WBSEB) a month’s extension has fuelled speculation about its new composition.

The board, which had a three-year term from April 1, 1998, should have bowed out on April 30, but the poll-wary state government was loath to take a risk by reconstituting it and, instead, prolonged its tenure. However, it is currently functioning without member (finance & accounts), a slot which was held by A.K. Das, who was on deputation till April 30.

The members of the board are chairman G D Gautama, J P Ghosh, member (transmission), B Mondol, member (distribution), Biswajit Das, (member, hydro), power secretary Asim Barman and finance secretary Ashok Gupta.

Gautama, who had earlier served as the managing director of West Bengal Power Development Corporation, was appointed WBSEB chief in January last year after his predecessor, Badal Sengupta resigned from the board in December 1999 along with S.K. Roy, member (distribution) and B.R. Biswas, member (transmission). “The board has been given a month’s extension. The government will decide who will be the next chairman,” Gautama said.

The board has several achievements to its credit, including, proper revenue collection system, checked pilferage, introduced compulsory metering, streamlined management, set up a public grievance redressal system at the district level and a satcom project which helps it monitor revenues.

   

 
 
BUZZ ON CELLPHONE DIRECTORY 
 
 
FROM M RAJENDRAN
 
New Delhi, May 14: 
The Telecom Commission has asked the Telecom Regulatory Authority of India (Trai) to direct private cellular operators to publish directories which should be distributed free to the subscribers.

Private basic fixed line operators will also be asked to print telephone directories annually and post the same on their website. The website will have to be updated at least once a week.

While such telephone directories may also be allowed to print advertisements and Yellow Pages, Trai will fix the rates for the same.

The Commission recommends, “Charges for additional information/specific printing on the request of subscriber may be kept at par with Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited.”

“Private operators, both basic and cellular, have not fulfiled this vital part of the licence agreement. Since 1999 we have been asking them to publish the directory and they have been offering excuses. We may suggest stringent measures, if they fail to give a reasonable explanation,” sources in Trai said.

Even the government-owned MTNL has been unable to fulfil the licence obligation to print the directory annually.

Since 1999, when the issue first came up before the regulator, Cellular Operators Association of India said that its subscribers do not wish their phone numbers to be listed in a directory.

Cellular companies have always claimed that 70 per cent of the customers do not want their cellular phone numbers to be available publicly as they have to pay for all the incoming calls received.

The argument may not be repeated this time since tariff on incoming calls have come down to as low as 50 paise.

Meanwhile, the empowered committee of Telecom Commission had proposed that all operators, including, basic fixed line, cellular mobile, paging and other value added service providers could send information to one operator.

This operator will be allowed to disseminate information like cellular or basic fixed line number or the details of a particular service, based on the rules and regulations fixed by the regulator.

The cost of maintaining this service is to be borne proportionately by all the operators. However, the proposal remained on paper and never seriously considered either by the government or the operators.

“We are aware of this proposal, but the government has to take the initiative. We will give suggestion for developing the necessary logistics,” said sources in Trai.

Cell operators’ plea

The cellular operators today asked department of telecommunication to refer the contentious limited mobility issue back to the telecom regulator.

In written communications to DoT secretary Shyamal Ghosh and Trai chairman M.S. Verma, the Cellular Operators Association of India (COAI) said that the matter needed to be referred to the regulator keeping in line with recommendations of GoT-IT, the unaddressed issue of level playing field, and the offers made by companies for radio spectrum.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.97	HK $1	Rs. 5.95*
UK £1	Rs. 66.61	SW Fr 1	Rs.26.45*
Euro	Rs. 41.08	Sing $1	Rs.25.50*
Yen 100	Rs. 38.15	Aus $1	Rs.24.05*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs.4450		Gold Std(10 gm)	Rs.4370
Gold 22 carat	Rs.4200		Gold 22 carat	Rs.4040
Silver bar (Kg)	Rs.7325		Silver (Kg)	Rs.7350
Silver portion	Rs.7425		Silver portion	Rs.7355

Stock Indices

Sensex		3568.93		+  9.16
BSE-100		1718.26		+  2.11
S&P CNX Nifty	1140.80		+  0.30
Calcutta	 120.42		-  0.17
Skindia GDR	 645.91		-  3.64
   
 

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