ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Trading in Public Sector Bonds

Trading in Public Sector Bonds Jairaj Kapadia A KEY recommendation by the Nadkarni committee which submitted its report to the Reserve Bank of India last week on trading procedures for public sector undertakings' bonds is likely to prove embarrassing to the RBI. The recommendation is about repurchase of the bonds for which the committee has desired the practice of ready forward transactions to continue, The RBI banned this practice as it commenced investigation in the stock-securities-banks scam. However, the committee has stated that a ban on the so-called REPO transactions would be counterproductive, as they serve a useful purpose as a money market instrument and The Week's Companies facilitate liquidity of banks and bulk investors in PSU bonds in the short run.

Constraints on Housing Finance

Constraints on Housing Finance Jairaj Kapadia BOTH the approvals and disbursements of loans for housing by the Housing Development Finance Corporation registered declines during the year ended March 31,1992. The amount of loans approved which was Rs 813.78 crore during 1990-91 declined to Rs 711.86 crore during 1991-92. Loan disbursements amounted to less at Rs 627.78 crore compared to Rs 668.50 crore previously.

Still Wanting for OTC Exchange

Still Wanting for OTC Exchange THE month of May roiled by, June ended and July has started already, but the proposed OverThe-Counter (OTC) market in securities of companies not listed on the stock exchanges is still nowhere near coming. It had been said by no other than the chief executive of the Over-The-Counter Exchange of India, Ravi Mohan, way back in March, that the OTC market would finally become operational in May But that was not to be as was observed in these columns (April 4). Let alone May, the position is the same in July and a report just published now puts off the OTC market's start to August.

Bonanza for Unit-Holders

Bonanza for Unit-Holders Jairaj Kapadia THERE have been several unsavoury upshots of the multicrore securities scam involving bankers and brokers. But there has been also one pleasant outcome

Contaminated Securities

'Contaminated' Securities Jairaj Kapadia IT was much ado about nothing, the Unit Thist of India refusing deliveries of shares in the names of the suspects in the securities scam. Following that trading was suspended by brokers on the Bombay Stock Exchange for 15 days from June 10 to June 25 with their counterparts on the other major stock exchanges also refraining from transacting business. The UTI objecting to the share deliveries and ordering the Stockholding Corporation of India, handling institutional investments, to refuse acceptance as *bad deliveries' threw the market out of gear. The stock exchanges maintained that the shares delivered were in order and the brokers did not budge in the matter. The Securities and Exchange Board of India and its chairman, G V Ramakrishna, who has looked ever eager to safeguard the interests of common investors, also did The Week's Companies nothing in this situation. The SEBI chair man first declared that the market must go on with trading and subsequently expressed an opinion against the UTI's assuming an adverse stance on the share deliveries.

Weak Secondary Market for Equity Issues Abroad

Weak Secondary Market for Equity Issues Abroad Jairaj Kapadia BOTH the overseas, growth funds of the Unit Trust of India and also the State Bank of India and the Global Depository Receipts of Reliance industries have recorded gaping discounts on the international markets in recent days. But not all of them have suffered not for tbc reason mentioned in some reports

Fears of Corporate Downturn Belied

Fears of Corporate Downturn Belied Jairaj Kapadia CORPORATE results are belying fears of an adverse turn in the performance of companies. The results for the year 1990-91 were good. For 1991-92 as the companies have started declaring their results, they have turned out to be still more positive. And this not because the fears of an adverse turn were unfounded, but despite that. Which, it may be claimed with some justification, not only shows the resilience of the corporate sector, but, what is more important, demonstrates the business acumen of the managements of companies in the private sector.

ASIAN PAINTS-Difficult Market Conditions

Finance Companies Bear the Brunt Jairaj Kapadia NOT until the reports of the investigation into batiks' securities scandal are out will speculation about it die down. Estimates of the amount involved have varied vastly from the figure of Rs 622 crore of State Bank of India to start with to Rs 2,000 crore in no time and now to as much as Rs 5,000 crore. Speculation has thrived with tfic Reserve Bank of India ordering Bank of Karad into liquidation and put- ring Metropolitan Co-operative Bank in Bombay on hold due to these two banks' apparently irretrievable involvement in the business. The mist may clear to some extent with the RBI making public the report of its investigation which as the Hie Week's Companies finance minister said during his recent visit to Bombay the RBI would be doing very shortly, Meanwhile, the stock market, which took a body blow as the CBI was asked by the government to investigate Harshad Mehta's involvement, has started showing signs of levelling after a sharp decline in share prices. The sensitive share price index of the Bombay stock exchange, which in two days, April 28 and 29. had caved in from 4,467.32 to 3,674.41 and was down still further at 2,963.49 on May 28, was seen to be levelling at around 3,000. And while scrips of all description suffered as prices declined all round, in relative terms (Rs lakh) finance company shares fared far worse. These shares had been running ahead of the others in the bull, market after the budget following the concessions announced for equity investments and the permission to the private sector to establish mutual funds. But as the banks' securities scandal affected the financial sector, finance company shares have moved more rapidly in the reverse gear.

Finance Companies Bear the Brunt

Finance Companies Bear the Brunt Jairaj Kapadia NOT until the reports of the investigation into batiks' securities scandal are out will speculation about it die down. Estimates of the amount involved have varied vastly from the figure of Rs 622 crore of State Bank of India to start with to Rs 2,000 crore in no time and now to as much as Rs 5,000 crore. Speculation has thrived with tfic Reserve Bank of India ordering Bank of Karad into liquidation and put- ring Metropolitan Co-operative Bank in Bombay on hold due to these two banks' apparently irretrievable involvement in the business. The mist may clear to some extent with the RBI making public the report of its investigation which as the Hie Week's Companies finance minister said during his recent visit to Bombay the RBI would be doing very shortly, Meanwhile, the stock market, which took a body blow as the CBI was asked by the government to investigate Harshad Mehta's involvement, has started showing signs of levelling after a sharp decline in share prices. The sensitive share price index of the Bombay stock exchange, which in two days, April 28 and 29. had caved in from 4,467.32 to 3,674.41 and was down still further at 2,963.49 on May 28, was seen to be levelling at around 3,000. And while scrips of all description suffered as prices declined all round, in relative terms (Rs lakh) finance company shares fared far worse. These shares had been running ahead of the others in the bull, market after the budget following the concessions announced for equity investments and the permission to the private sector to establish mutual funds. But as the banks' securities scandal affected the financial sector, finance company shares have moved more rapidly in the reverse gear.

Steel Decontrol Misplaced Fears

Steel Decontrol: Misplaced Fears Jairaj Kapadia ARE steel producers at fault in announcing, as has been said 'without a notice', a price hike of some 20 per cent from the week started May 18? With that, it is argued, the producers have more than made up for the four-month long abstinence they observed after steel was decontrolled this year, When steel was decontrolled on January 17, the producers were said to have agreed with the government not to resort to a price rise immediately. Did steel producers have a choice not to take recourse to raising prices? This is the moot point. Both Tata Iron and Steel in the private The Week's Companies sector and Steel Authority of India in the public sector have announced their increases, the former by Rs 1,800 per tonne (an average of 18 per cent for its products) and the latter by Rs 1,600 per tonne (15 per cent average), SAIL followed TISCO within just one day, while Rashtriya Ispat Nigam (Vizag Steel) is expected to follow suit.

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