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

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Oddly Happier

Oddly Happier THE stock market, which felt happy over the Supreme Court's verdict invalidating the take-over of the 14 major Indian banks, is even more happy with the 'nationalisation of these banks. And not without good reasons. The initial reaction of the market was in the nature of psychological satisfaction that Government had to cut a sorry figure; it never had any doubts about banks being renationalised. The market is happier because Government has not allowed itself to be pressurised into nationalising the entire banking industry and because the compensation fixed is more generous than what most observers had been inclined to expect. The compensation is substantially higher than the break-up value of the shares of the individual banks and exceeds even the highest prices recorded in the 1969 boom when the market rose to its highest level for many years. The sudden spurt in New India Assurance shares, which has been the outstanding feature of last week's trading, has been induced essentially by expectations of generous compensation in the event of nationalisation of general insurance. There is substance in the argument that the funds released by payment of interim compensation amounting to 75 per cent of the paidup capital of the 14 nationalised banks would seek reinvestment on the stock exchange, thereby imparting a measure of steadiness; but the implications of this can be easily exaggerated.

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