Young Investor

Markets in a minute

ADARSH GOPALAKRISHNAN | Updated on July 30, 2011

market in a minute (08 03 2011).JPG

Yet another RBI rate hike, quarterly results yielding a mixed bag , continued posturing in the US over raising the debt ceiling and global investors wait with bated breath over the direction of the Chinese economy - the newsroom was as hectic as ever! Here's some of the buzz:

Prarthana: The market loves me? It loves me not? Or does it love me? The BSE Sensex did not show much love this week and was down about three per cent. With the RBI raising interest rates yet again, I wonder how long it will take for the economy to show results to please our central bankers. The industry, especially the exporters, seems to be raising a hue and cry over the RBI's hawkish actions.

Vedant: But there's some pretty progressive news coming from the SEBI camp which has decided to up what it takes for a company to make an open offer. Companies and investors alike can take up to 25 per cent stake without triggering a requisite open offer for a further 20 per cent held by public investors. Of course, now, crossing the 25 per cent number would mean acquirersneed to offer to buy 26 per cent from the public. And this could potentially be giving the acquirer a controlling stake.

Prarthana: The boys at SEBI also decided to give the mutual fund industry an early - albeit small - Diwali gift. The latter finally found some reason to cheer after a trying year for them. SEBI is going to allow them to charge Rs 100 on transactions with new investors. While it may not hark back to the glory days when MF players and distributors took their merry bites out of the investors' initial capital, it could allow them to foot a small part of the transaction cost of acquiring new customers.

Vedant: The MF distributors I am sure will be queuing up to the SEBI office asking they be next in line for a sweetheart deal. But moving on to other topics – and boy, has this been hogging the headlines! Anti-corruption watchdog Lokayukta really did have its way with Yedurappa. In a sweet twist, former enemies the Reddy brothers and Yedurappa are now bound by the holy bond of illegal mining.

Prarthana: The corporate angle arguably left an extensive trail of destruction with Gautam Adani's Adani Enterprises, Adani Power and Mundra Port shedding 20, 11 and 10 per cent each for the week! Some of the Adani group companies are alleged to have been involved in the illegal mining scam, as has India's newly minted largest steel maker JSW Steel.

Vedant: In fact, JSW Steel's stock has been in quite a rut over the last few months and the Lokayukta allegations of bribery have pushed the stock down even more. It fell 11 per cent through the week! I wonder if this is an opportunity to buy into these new-gen biggies for cheap.

Prarthana: I guess that depends on how hard the proverbial sludge sticks to the companies in question. The next few months will tell us how sensitive investors are to these tarnishes. After the headlines and hoopla dies down I wonder if they would embrace the allegations as business-as-usual practices in India.

Published on July 30, 2011

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