Stocks swoon on rumours, sensex on a roller-coaster
Brokers at Lyons Range unite to wield the broom
Sebi clampdown on Cyberspace promoter
Gelli sticks to his guns
Pressure for probe into FIIs
Jayshree plans fresh buyback
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 6: 
Swirling rumours halted the march of the Bombay Stock Exchange (BSE) sensex which retreated from a 111-point high to finish at 3576 in a modest 10.35-point gain.

First, it was the buzz that Nirmal Bang, a lynchpin of the dreaded bear cartel, had been arrested. Then, it was the report of a downgrade for technology bellwether Infosys Technologies.

This fuelled fears that there was more trouble for the movers and shakers of the market over the week-end. The result was seen on volumes, almost anorexic in a session where many were groping for clues to crawl out of a sinking market.

The sentiment was fragile when trading started but turned bearish once the grim tidings trickled in. Pivotals beat a hasty retreat from their intra-day peaks and wiped out part of the early-session gains notched up by the sensex.

Domestic operators and investors rushed to square up their commitments after a television channel beamed the report that Jardine Fleming, a leading foreign fund, had downgraded Infosys Technologies on their buy list.

The 30-share index went through a rollercoaster after rising 111 points over Wednesday’s finish of 3565.65. It slumped to end the day at 3576.00, a modest gain of 10.76 points. Mirroring the trend, the S&P CNX nifty opened higher at 1137.55 and moved up to the day’s peak of 1171.85. Thereafter, it retreated to touch 1133.05, before closing at 1139.60, showing a small gain of 2.95 over the last finish of 1136.65.

Foreign funds were reported to be moderate buyers in the shares of cement companies, driven by hopes of excellent prospects in the light of the government’s focus on infrastructure.

The volume of business was slightly better, but still niggardly, at Rs 1107.75 crore against Wednesday’s turnover of Rs 765.09 crore. In all, 111 shares in the specified category suffered losses.

Depsite the rating rap, Infosys was the top traded share with a turnover of Rs 155.68 crore and gained Rs 95.80 to close at Rs 4008.75. Other big draws of the day included Satyam Computer (Rs 145.78 crore), Wipro (Rs 66.93 crore), Zee Telefilms (Rs 50.48 crore) and Digital Equipment (Rs 40.79 crore).

ACC jumped by Rs 4.30 at Rs 132.40, BSES by Rs 8.05 at Rs 196.35, Grasim by Rs 13.85 at Rs 270.80, and Lever by Rs 2.15 at Rs 219.95 .


Calcutta, April 6: 
Brokers, fighting to shrug off the stigma heaped on them in the recent market mayhem, have decided to take up the cudgels to clean up the Augean stables of Lyons Range.

They have started work to build up their own fact-finding team which will try to uncover the mystery behind a payment paralysis that crippled the exchange and even triggered suicides.

Over 300 brokers today united under a forum which will be given a legal shape at an extra-ordinary general meeting (EGM) that they plan to call by sending a written request to authorities in three days.

The meeting is likely to adopt a resolution on setting up of a CSE subsidiary, which will take memberships of the Bombay and National Stock Exchanges. All active brokers can get terminals of the two premier bourses in the country.

The plans will be coordinated by seven office-bearers who were selected at today’s meeting, convened by Sharad Jhunjhunwala, a former director of the exchange. “Under CSE bye-laws, a 21-day notice signed by a third of the bourse’s members is required to call an EGM. We will submit the application for it within Tuesday and the meeting should take place in the last week of this month,” he said.

The fact-finding committee, with five to six members to be chosen at the EGM, will probe the four troubled settlements, starting from number 146. “The team will carry out an independent investigation which will help the present management committee get to root of the payments crisis,” a senior broker said. It could include the three former presidents who took the initiative in resolving the payments problems a week ago.

The proposal for a subsidiary company is an attempt to the rekindle the moribund market. “We are forming the forum because we have nowhere to go in the absence of broker-directors. There has been a communication gap between brokers and the present committee which comprises only public nominees and representatives of the Securities and Exchange Board of India,” Jhunjhunwala said.

He blamed the coterie-Raj, or the nexus between a few influential brokers who enjoy the tacit support of senior officials, for the problems that have bedevilled the bourse. “They have killed the exchange only for their own benefits.”

Meanwhile, CSE has decided to introduce an on-line margin collection-system to discourage big exposures without enough funds. Executive director Tapas Datta said the arrangement, already working on the BSE and NSE, will be implemented as soon as the technology required for it is in place.

A CSE official said margins will be collected automatically from the brokers’ clearing account and would be credited to the exchange account as soon his exposure crosses limits. In case a broker has no sufficient fund, his terminal would be deactivated.


Mumbai, April 6: 
Working overtime to clean up the mess in the stock market, the Securities and Exchange Board of India (Sebi) today barred Cyberspace Ltd promoter Arvind Johari and his three broking outfits from fresh business transactions for their prima facie involvement in price rigging.

It had been alleged that Johari used his broking outfits through various front companies to ramp up the share prices of Cyberspace.

Johari’s principal broking arm, Century Consultants Ltd, is affiliated to the Bombay and National stock exchanges. A.M. Johari and A.K. Johari are broking concerns operating at Delhi and Kanpur stock exchanges respectively.

The capital market watchdog has barred Johari as an individual member, Century Consultants Ltd (CCL), A.K. Johari of Kanpur Stock Exchange and A.M. Johari of Delhi Stock Exchange from transacting fresh business following involvement in the price manipulations, Sebi sources said.

Sebi chairman D.R. Mehta confirmed that the decision was taken today.

Sebi has passed an order under section 11 of the Sebi Act based on preliminary findings of the BSE enquiry into the alleged price rigging in Cyberspace Ltd’s scrip.

The share price of Cyberspace had flared up to Rs 1,500 and was a hot favourite till the stock market bubble burst. Later the scrip fell below par. It is learnt that the stock exchanges smelt a rat few months back and started investigating Johari and his broking firms.

The Central Depository Services (India) Ltd (CDS) had temporarily suspended the depository participant terminals of CCL following investors’ complaint. According to CDS, the deactivation was solely intended to protect the investors who have opened demat accounts with the CCL.

Investors, in their complaint, had expressed concern over the non-availability of any CCL official at their main office and branches spread over the city.

The National Stock Exchange had to withheld pay-out in respect of transactions of Cyberspace Ltd for certain previous settlements pending completion of investigations for the alleged price manipulations last month.

Johari, a qualified chartered accountant, started his career as a broker. He is now believed to be absconding. There is a rumour that he has escaped to Singapore.

He is considered as a brain in the stock markets. He is believed to be the first to convert a finance company — Century Finance into Cyberspace Infosys to cash in on the information boom.

This is the second day in succession with Sebi cracking its whip on the broking firms involved in price manipulations, sources said. Yesterday the market regulator had barred Ketan Parekh’s four broking and merchant banking firms from transacting fresh business.


Hyderabad, April 6: 
Ramesh Gelli, chairman and managing director of Global Trust Bank (GTB), today defended the bank’s exposure to the capital markets and sought more freedom for lending to the sector.

Speaking to The Telegraph, GTB chairman said the capital market was a business segment just as textiles, steel or cement. However, he lamented the fact that unlike other segments, it had a totally different regulatory environment, with too many barriers to investment.

Despite the risk involved in volatile capital market investments, GTB, he pointed out, has managed to stay unscathed.

Being both a clearing bank as well as a depository participant has helped GTB keep track of the movements of securities between the broker and the exchange. All advances to brokers, Gelli said, have been based on the net settlement obligation. While the bank provides assistance for part-funding pay-ins and discounts pay-outs, the loans are of a short-term nature, not exceeding 10 to 14 days.

Citing a recent instance when the Calcutta Stock Exchange invoked guarantees in excess of Rs 75 crore, Gelli said GTB’s share was a mere Rs 5 crore.

Moreover, GTB, he said, does not maintain a large retail portfolio of loans against shares, keeping its value to just under Rs 9 crore.

The bank, Gelli added, maintains a high margin prescription, which is 50 per cent for ICE stocks, besides automatic sell powers on a 20 per cent erosion of margins.

However, the man in the eye of the storm over his association with Parekh, who also has a 4 per cent stake in GTB, denies the Big Bull was treated any differently from the bank’s other customers.

“I do not maintain any contact with Parekh, in fact, I do not even remember meeting him, other than probably in a social gathering,” Gelli said.

“GTB has no means of knowing who buys/sells shares, as the bank’s equity is in demat form. It is only upon investigation that the holdings of a particular entity are known. Through this process, we understand that companies said to be owned by Parekh, now hold less than a 2 per cent stake of GTB.”

He also denied that GTB had extended any preferential treatment, or any other advantage to Parekh or any of his companies.


Mumbai, April 6: 
The Securities and Exchange Board of India (Sebi) is under increasing pressure to snare the offenders responsible for the markets’ five-week tailspin, including the foreign ones.

However, as the unsavoury market saga unfolds, replete with its tales of price rigging and insider trading, brokers are sceptical whether the watchdog will go within sniffing distance of the foreign institutional investors (FIIs) and foreign custodians.

“Their sources of funds and other details can bring many facts to light. The way money is channelled into these accounts for investment in Indian bourses and its flight back to safe shores should be thoroughly probed,” say marketmen.

In fact, the only foreign brokerage named initially by the market regulator and clubbed along with the bear cartel was Credit Suisse First Boston.

Domestic bear cartels, however, have had no such luck. Investigations are in full swing against the firms owned by R. S. Damani, Shankar Sharma (First Global), Nirmal Bang and Ajay Kayan (C Mackertich). As of now, only Sebi inspectors can reveal whether they are probing the foreign outfits with the same tenacity as the local ones. However, till today, there were no indications that the market watchdog’s bite would be as effective as its bark against the foreign outfits. Despite the clamour for a thorough probe, if past experiences are any indication, the FIIs are not losing any sleep over this one.

Last time round, the income tax department burnt its fingers with a probe an FII’s sub-accounts based in the tax haven of Mauritius. Faced with mounting criticism that the probe violated the agreement between the two countries, the department did a meek climbdown.

Nevertheless, market circles believe that foreign investments made through preferential allotments should be investigated thoroughly. Price rigging in many scrips owe their origins to such placements. The quantities were large and the prices at which the subscriptions were made are mindboggling.

The misplaced confidence shown by the FIIs in subscribing to the preferential issues way above the market price gave a false boost to the market.


Calcutta, April 6: 
The promoters of Jayshree Tea and Industries Limited, the B.K. Birla group, have drawn up plans to buy back the firm’s shares from investors, the second time it will do so within the space of a year, as part of a drive to bolster shareholder value.

“The idea behind the move is to give more value to our shareholders,” a company official said. However, the Birlas have decided to pay much less for the shares they pick up from investors in an offer that could raise their holding in the cash-flush company close to 50 per cent.

They had forked out Rs 120 for every share bought in July-August last year. The total volume mopped up was about 10 per cent of the company’s equity and these shares were later extinguished.

The paid-up capital of the company came down to Rs 11.07 crore from Rs 12.3 crore after the buyback. Sources have indicated that the promoters’ holding after the last round of buyback stood at 44.26 per cent; financial institutions and banks currently control 26 per cent, while the balance remains with the public.

This time round, the board has pegged the maximum price which can be paid at Rs 75 in a recent proposal. An extra-ordinary general meeting (EGM) of shareholders has been convened on May 4 to take a final decision on the method to be adopted for the buyback.

The share price of the tea and plywood major is ruling around Rs 53-55 in a market hurtling downwards after a rash of rip-offs by topgun brokers. According to the company official, the buyback price of Rs 75 has been fixed after taking into account the current market situation and the scrip’s future course.

If investors respond well to the offer, the promoters’ stake in Jayshree is expected to increase to 50 per cent. At the same time, the proportion of the equity that financial institutions, banks and general public now have with them will change—because of the smaller shareholder base—after the promoters have scooped up shares through the buyback route.

The B.K. Birla group believes that the book value of Jayshree Tea, which currently stands at Rs 136, does not accurately reflect the true worth of the company, does not justify its inherent strengths, and says little about the prospects of tea business.

However, considering the liquidity of Jayshree Tea share in the stock market and the relatively high price it commands, small shareholders are likely to be upset at the fact that they have not been offered a price good enough to part with their stocks.

They could rail against the offering of a maximum price of Rs 75, saying it represents a poor deal against the Rs 120 that was given to investors who had sold their holdings less than a year ago.



Foreign Exchange

US $1	Closed	HK $1	Rs.  5.90*
UK £1	Closed	SW Fr 1	Rs. 27.00*
Euro	Closed	Sing $1	Rs. 25.35*
Yen 100	Closed	Aus $1	Rs. 22.65*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs.4290		Gold Std(10 gm)	Rs.4240
Gold 22 carat	Rs.4050		Gold 22 carat	Rs.3920
Silver bar (Kg)	Rs.7350		Silver (Kg)	Rs.7305
Silver portion	Rs.7450	        Silver portion	Rs.7310

Stock Indices

Sensex			3576.00		+10.35
BSE-100			1658.60		- 3.85
S&P CNX Nifty		1139.60		+ 2.95
Calcutta		 120.68		+ 0.73
Skindia GDR		  NA		  -

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