Different Strokes

Have money will buyThe record trading turnover shows how little industry associations understand the basic trading cycles which have deve...

Have money will buy

The record trading turnover shows how little industry associations understand the basic trading cycles which have developed with the entry of foreign institutional investors FIIs. FIIs spend a load of money on research, but as a group there is a lemming like quality to their investment. At year end they sell, book profits and worry about individual bonuses, no matter how healthy the economy or the number of seminars held by industry associations to revive the market they do this even when there is redemption pressure on their funds overseas. At the beginning of the year their fresh allocations have to be invested quickly. So they are under pressure to buy because they have the funds and this is restricted to blue chips and a few glamour scrips they cannot afford to be out of, even when their research says no. Indian operators and speculators are fully aware of this trend. So they whip up a buying frenzy every new year by front running FIIs and warehousing stock that they aresure to pick. Often they even do deals with FIIs and know exactly which stock to warehouse. If only the government was smart enough to cash in on the spiraling prices to disinvest PSU stocks.

Way to go FIs

The financial institutions FIs have done well in refusing to be cowed down by the Tata reputation and by individual investors at the shareholder meeting. The preferential offer was bad news for ACC and the firm stock market price vindicates their stand. The price at last close is up to a hefty Rs 1,186.50 as compared to around Rs 900 when the rights/preferential issue was announced. Having demonstrated that they can stick to their guns, FIs need to learn another lesson. To depute the right people on company boards or brief them adequately so that they argue their stand convincingly and do not cut a sorry figure before investors. Most of all they need to ensure that their representatives do not mouth inanities by suggesting that an issue blocked by them at a general body meeting isstill open for discussion 8212; that only vitiates the purpose of a shareholder meeting.

A tip from Nani

In fact, the FIs could take a tip from the great Nani Palkhivala on conducting themselves. In 1987-88, ACC was the centre of a controversy with different sections of the Tata empire 8212; Tata Chemicals, Nusli Wadia and Shapoorji Pallonji Mistry trying to gain control over it. The packed general body meeting saw several shareholders making angry speeches. Then Chairman Palkhivala rose to speak. The packed hall listened with pin drop silence to his skillfully and persuasive oratory. There was thunderous applause and half the audience simply walked away after the speech. Several questions remained unanswered, but even those who had asked them did not wait the eminent jurist simply persuaded them that he was in charge, all was well with the company and the details did not matter.

Strict or lenient?

Brokers on the Mumbai stock exchanges were very amused at a news item which said that SEBI hadsuspended stock brokers Shrenik Shah for four months. Now Shrenik Shah, as it happens, has already been declared a defaulter by both exchanges 8212; the BSE as well as the NSE. This means that Shah8217;s career on both stock exchanges was over and out when SEBI suspended him. Does this mean that the regulator is softer then the self regulatory bourses, or is it a simple case of tangled wires and mis-communication?

Tailpiece

Chief Vigilance Commissioner N.Vittal who is a great one for pithy sayings had this new twist to the old one which goes 8212; India has no sick industrialists there is only sick industry. The industrialists, he says, get sick only when they get raided by CBI 8212; then they promptly get themselves admitted to hospital.