The reaper finally snares the bull
Way to dusty death in Boomtown
Dilemma for US-64 investors
Second quarter growth dips to 5.3%
Farm sector looks up
Stocks sizzle in last hurrah
Foreign Exchange, Bullion, Stock Indices

Mumbai, Dec. 31: 

Several scam cases will be irrelevant

Death is the ultimate deliverance: when Harshad Mehta died in prison late last night, he had finally sprung free of the myriad cases that had been filed against him which at last count amounted to 72.

The cases pending before the Securities Appellate Tribunal and a raft of criminal cases that arose from as many as 35 criminal chargesheets will now become infructuous after his death.

The 1992 scam saw the CBI filing 73 charge sheets and 600 civil cases against the various perpetrators in the biggest securities fraud in the country that roiled markets and marred fortunes that had been built by greed � a sentiment that the Big Bull had exploited in the phenomenal bull run that finally collapsed in April 1992.

Ironically, he was banned for life from the capital markets recently and battled against the ban before the Securities Appellate Tribunal. That case will now be finally rendered irrelevant. As a senior Sebi official put it, �The ban was enforceable only during his life time.�

Legal circles say that with his death the criminal cases pending before the courts with him as the prime accused will automatically lose relevance and be struck down.

However, his nearest kith and kin who are being investigated, will have no such luck and will continue to be arraigned by the investigators.

However, the cases from 1992 onwards will see the sting going out of them as the main accused in the scam is no more.

Harshad Mehta�s life after 1992 was devoted more to attending court cases, briefing his lawyers and for awhile cooling his heels behind bars.

The cases instituted against him at various fora as diverse as Sebi, income-tax department, CBI, the Enforcement Directorate and the courts saw only one conviction by the Supreme Court in the Maruti Udyog case � where Rs 30 crore that the carmaker had parked in inter-corporate deposits with banks had been used to bankroll his fearful juggernaut that steamrolled the bear cabal. The other cases are still being investigated.

Truth to tell, the sad twist to a sordid tale of greed and fraud may even prompt the investigators to let out a sigh of relief, as the cases were meandering aimlessly with no light at the end of the tunnel.

More poignant was the scene at the hospital when the paparazzi milled round to catch that last photograph and wife Jyothi Mehta broke down and cried: �At least in death leave him alone.�

Legally, she would have some respite as the cases against him will have no leg to stand on after his death.

However, the Income Tax cases could continue as the properties in question can be attached if proven that they were ill-gotten even though the person committing the crime is dead.

Harshad was sentenced to five years rigorous imprisonment by Justice M.S. Rane in the Maruti Udyog Ltd case although the disgraced stockbroker pleaded that the money had been returned to MUL and the latter insisted that it had not lost any amount.

He had filed an appeal in the Supreme Court which is still pending.


India has a habit of putting people on a pedestal and then pulling them down. In his heyday, Big Bull Harshad Mehta, who died of a heart attack on Sunday night, was lionised by the media. He was the darling of the investor class, creating several millionaires.

He made presentations on the economy to finance ministers; he claimed to have made presents to prime ministers. Yet he was under arrest when he died, being rushed to hospital from jail when he complained of chest pains.

Mehta was a small town boy who made good, after several ventures which didn�t pan out. At one time, he ruled the stock markets. Shares would reach stratospheric heights on rumours that he was buying. Eventually, it was discovered that he was tweaking the banking system to avail of illegal sources of funds.

Harshad Mehta is not the only person to have fallen foul of the system. And like Ketan Parekh after him, the amount involved was small compared with the resources at his command.

Like Parekh, Harshad always used to say that he had enough funds to pay off all his debts. The biggest claims against him were actually from the Income-tax department and not those who he had allegedly defrauded.

It is a sorry commentary on the way the Indian stock markets are managed that every bull run eventually produces someone who falls foul of the law. In India, the broking community is starved of funds. The Reserve Bank allows only driblets, and uses every opportunity to turn off the tap.

The end result is that as more money is required in a booming market, operators have to resort to technically illegal avenues. Until the government realises that equity investment is not a speculative activity, that the stock markets are the life blood of a nation�s economy, every bull run will produce a victim. If growth cannot be achieved by legal means, scams are inevitable.

Harshad Mehta�s singular achievement has been to bring the stock markets to the front pages of daily newspapers. Dhirubhai Ambani is credited with the creation of the equity cult. But the shareholders of Reliance are passive investors.

Mehta�s biggest call to fame is that he created a class of investors who actively traded in the secondary market. They bring volumes and volatility. They make markets.

In his last days, Mehta had become resigned to his fate. He had made a comeback. But the old cases kept him hamstrung, and finally thrust him in jail.

He was a big thinker who had a vision of rescuing India from its economic morass. But, as he always used to say, any conquest needs co-operation. When he fell from his pedestal, even old friends wouldn�t give him the time of the day.

The Mehta I knew was a man of principles. But he was a man of vaunting ambitions.

Like Caesar in his prime, he was stabbed in the back. Before he was incarcerated, he was a philosopher and teacher, lecturing at a Mumbai college. His epitaph: despite his fatal flaw, he had a class of his own.


Mumbai, Dec. 31: 
The investors in Unit Trust of India, the largest mutual fund will face a Hamlet-like dilemma in the coming days as US-64, its flagship scheme, opens to market-linked prices from Tuesday.

The net asset value announced on Saturday had shocked investors and experts, when the premier fund had announced an abysmally low NAV of Rs 5.94 paise per unit. That was the unkindest cut for investors who had come into the fund in May 2001 after forking out what was in retrospect a princely sum of Rs 14.55.

While most small investors have invested in the flagship scheme with an eye on the returns, UTI is unlikely to respond. Says Dhirendra Kumar of Value Research, a premier research firm tracking mutual funds: �I do not visualise a dividend from UTI in US-64 next June.� Kumar felt that with the new priorities UTI will try to first cover the difference between the NAV and the repurchase price assured to its loyal investors.

Small investors having less than 5000 units and looking at the investment solely with the viewpoint of getting dividend, should exit. �They should exit and invest in fixed income securities instead,� he said. For the other investors who can wait should continue to do so as the sum assured by May 2003, at Rs 12 is an astounding 35 percent return on an annual basis, he said.

Analysts also declared that if UTI is indeed serious about the new resolutions it has made for itself should make the flagship scheme a very attractive proposition.

The announcement of the NAV for US-64, a major milestone in the 37-year history of the mutual fund that manages about 52 per cent of the Indian mutual fund industry�s assets, may in the coming days also erode confidence in an institution already shaken by scandals.

On Saturday, UTI declared the NAV of its flagship US-64 scheme for the first time and stunned analysts by disclosing the market value of its units at Rs 5.81 against expectations of Rs 7-8. Till July this year, UTI had sold and repurchased US-64 units at fixed prices, determined by itself and the value of the scheme was in the realm of conjecture.

The assurance of fixed returns had drawn as many as 20 million investors to the scheme. But following huge losses, UTI first suspended redemptions in US-64 units in July and then allowed partial withdrawals. From January 1, investors will be able to redeem only up to 5,000 units at a fixed rate.


New Delhi, Dec. 31: 
Even as the year 2001 flickered to an end, the economy continued to display signs of a slowdown with GDP growth in the second quarter put at just 5.3 per cent against a target of 7 per cent.

Last year during the same period, GDP had grown by 6.2 per cent. But with manufacturing sector down in the dumps, a better showing by the services just managed to keep the GDP above the 5 per cent-growth mark.

The key manufacturing sector grew by a paltry 2.3 per cent compared with 6 per cent during the same time last year, according to statistics released by the Central Statistical Organisation (CSO). �Weak demand has kept the manufacturing sector tied down,� explained Dr B.B. Bhattacharya of the Institute of Economic Growth.

In a report prepared a few weeks ago, Bhattacharya had pointed out that the most worrying factor was that the capital goods sector had been worst hit. �In August itself, capital goods production had declined by more than 12 per cent over the same month last year.�

Recession in the capital goods sector normally indicates lack of fresh investment in new productive capacity which, in turn, would translate into lower growth in coming months or years. �The negative growth in this sector could be interpreted as a signal of prolonging recession,� he admitted.

He expects economic growth to remain bumpy and overall GDP growth for the whole year to be just 5.1 per cent as against the 7 per cent target set by finance minister Yashwant Sinha.

Industrial growth would be the main culprit for the low GDP with a mere 4.4 per cent growth.

Other industrial sectors, such as, mining and quarrying, which had not registered any growth at all in the previous quarter, did show a growth of 0.6 per cent this quarter but it was way below the 3.8 per cent in the second quarter last fiscal.

The construction sector, which was supposed to pick up following a series of sops announced in the budget and other measures taken at the behest of Prime Minister Atal Bihari Vajpayee, saw growth halve from 8.4 per cent to just 4.1 per cent.


New Delhi, Dec. 31: 
The agriculture sector has recorded a sharp 3.4 per cent growth in the second quarter as against 0.5 per cent in the corresponding period last year.

The figures, which are calculated at 1993-94 prices, are part of the second quarter estimates of the GDP released by CSO.

The AFF sector (agriculture, fishing and forestry) grew to Rs 52,121 crore in the second quarter from Rs 50,428 crore in the corresponding period last year.

The figure stood at Rs 50,200 crore during the same quarter of financial year 1999-2000.

Bhattacharya said the growth in the farm sector is not as bad as made out to be. However, he said, �The next quarter is likely to be bad for the agri sector as it will reflect the impact of industrial recession in that quarter.�

He said the annual growth in the farm sector is likely to be 4.8 per cent at the end of the fiscal. He sees a 5.1 per cent growth in the economy at the end of this fiscal and a 4.4 per cent growth for industry.

Agriculture this year has been performing better than it has in the past two years, said Bhattacharya.


Mumbai, Dec. 31: 
Bidding goodbye to one of its most grim years, stock markets today ended the year 2001 on high spirits as institutional investors� active trading in both old and new economy stocks pushed the 30-share BSE sensex up by 78 points.

This brisk upswing in the index which overshadowed the negative news from low US-64 NAV, followed the easing of war fears.

Dealers added that mutual funds were also buying into various stocks to shore up their net asset values before the year-end.

The BSE benchmark 30-share index opened marginally up at 3186.82 and gradually moved to an intra-day high of 3270.68. It closed at 3262.33 as against last Friday�s close of 3184.44, a net rise of 77.89 points or 2.45 per cent. The volume was, however, low at 1498.74 crore.

Meanwhile, the BSE announced implementation of an index-based market-wide circuit breaker system. This, according to the exchange, will apply at three stages of the index movement either way at 10per cent, 15 per cent and 20 per cent.

These circuit breakers will bring about a co-ordinated trading halt in all equity and equity derivative markets

Rupee steady

The rupee finished at Rs 48.24/25 per dollar, marginally up from its previous close of 48.26 per dollar. Earlier in the day, rupee had appreciated to 48.14 after opening at Rs 48.24 to a dollar.



Foreign Exchange

US $1	Rs. 48.25	HK $1	Rs.  6.10*
UK �1	Rs. 69.92	SW Fr 1	Rs. 28.40*
Euro	Rs. 42.72	Sing $1	Rs. 25.70*
Yen 100	Rs. 36.74	Aus $1	Rs. 24.25*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4655	Gold Std(10 gm)	Rs. 4600
Gold 22 carat	Rs. 4395	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7550	Silver (Kg)	Rs. 7630
Silver portion	Rs. 7650	Silver portion	NA

Stock Indices

Sensex		3262.33		+ 77.89
BSE-100		1557.22		+ 35.25
S&P CNX Nifty	1059.05		+ 25.25
Calcutta	 108.34		+  2.18
Skindia GDR	 502.61		+  2.81

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