India’s first IDF likely in next 2 months: Economic Affairs Secretary

Economic affairs secretary R Gopalan, who is on a two-day visit to promote the IDF in Singapore, said the fund could be launched within the next two months, and for now the fund was going through the initial process of establishment

Singapore: Economic affairs secretary R Gopalan on Thursday said he expects India’s first Infrastructure Development Fund (IDF) in the next two months and the size of the fund is estimated at $3 billion, reports PTI.

While discussing the IDF with Singapore investors here, Mr Gopalan said that it was early to state the size of the first IDF but it could be as much as $3 billion.

Mr Gopalan, who is on a two-day visit to promote IDF here, said the fund could be launched within the next two months, and for now the fund was going through the initial process of establishment.

The decision to set up IDFs follows an announcement by finance minister Pranab Mukherjee for 2011-12, with a view to accelerating and enhancing flow of long-term debt for funding the ambitious programme of infrastructure development in the country.

The IDFs could be in the form of a mutual fund or non-banking financial company (NBFC). While the IDF-Mutual Fund would be regulated by the Securities and Exchange Board of India (SEBI), the RBI will be in-charge of the IDF-NBFC.

Mr Gopalan said once the first fund is established with Indian investors’ participation, other similar funds would be followed on with participation from foreign investors.

Mr Gopalan said the Singapore visit was an ongoing campaign to explain the concept of the fund, with other Indian government officials doing so on their regular visits to international financial centres.

On the impact of European crisis on India, he said it would not have an extreme impact on the Indian economy.

Mr Gopalan arrived Thursday morning in Singapore to promote the fund and held a series of meetings with the Monetary Authority of Singapore and Singapore-based financial institutions and banks.

He would call on deputy prime minister and finance minister Tharman Shanmugaratnam, meet with top management of the state investor Temasek Holdings and continue meeting Singapore-based financial and investments on Friday.


RBI to hike rates by another 25 bps hike on Tuesday: RBS survey

“An overwhelming majority of 67% of the respondents to the RBS poll are sure of a 25 basis points hike in the repo rate, and then the RBI will pause till March,” said RBS India managing director & head, markets, Ramit Bhasin

Mumbai: The Reserve Bank of India (RBI) is likely to go in for another round of rate hike of 0.25% when it meets on Tuesday, and then will pause till March, says a poll by the British lender RBS.

The 10th edition of RBS Clients’ Survey, which is the third this fiscal, covered 103 local market participants, including corporates, banks, insurers and mutual funds among others, reports PTI.

“...An overwhelming majority of 67% are sure of a 25 basis points (bps) hike in the repo rate, and then the RBI will pause till March,” said RBS India managing director & head, markets, Ramit Bhasin.

However, 30% of the polled expected the central bank to pause this time around. None expected any change in cash reserve ratio (CRR), which is pegged at 6% for almost two years now.

RBI governor Duvvuri Subbarao will unveil the second quarter monetary policy on 25th October; it is widely expected that he will go for yet another round of tightening.

The central bank has increased its key short-term policy rates a record 12 times since March 2010 to contain runaway inflation that has remained at elevated levels despite the government’s discomfort. Core inflation stood at 9.72% in September.

Interestingly, a majority of the industry believes that the country is near the end of the tightening cycle. They also expect the repo rates to be stable at 8.5% in December and March.

On the strength of rupee, majority of those surveyed believed the local unit was likely to trade over 50 against the dollar in the near term, given the weak fundamentals of the economy.


Is IPO price manipulation back? Two recent issues have witnessed extreme gains & losses

M and B Switchgears, which got listed today, dropped by 34%—and just about three hours later the stock jumped 200%. Two other IPOs listed yesterday—Taksheel Solutions and Flexituff International; the first closed 65% below its listing price, the other remained steady and closed 7% up. It looks like IPO manipulation is back with a vengeance

The markets have been volatile over the past few trading session, but this just does not justify the extreme swings which have characterised the movement of the prices of newly-listed shares. Just three examples: M and B Switchgears (listed today) and Taksheel Solutions & Flexituff International (both listed yesterday) indicate that price manipulation seems to be going on in the IPO (initial public offering) market.

Those who have played the IPO game are not new to this phenomenon. Moneylife has analysed three different scenarios of IPOs listed in the past two days. Two have taken the extremes and one just stayed steady. This in fact summarises the state of the IPO market. But what’s stranger is that these games are played even as the market regulator SEBI (the Securities and Exchange Board of India) and the stock exchanges just stay mum over such obvious manipulation. M and B Switchgears—which had been assigned an IPO Grade ‘2’, indicating ‘below average’ fundamentals, had been subscribed 2.35 times by retail investors. The stock which had an issue price of Rs186, listed on the Bombay Stock Exchange (BSE) today at Rs180. By afternoon, the price fell by 34% to Rs118.65. But soon after, the price began to shoot up, reaching a high of Rs356, almost double the listing price and finally closed at Rs317.55.

This has been a striking contrast to Taksheel Solutions Ltd which listed yesterday and had a similar IPO grade as the above company. Taksheel had an issue price of Rs150 and managed to list on the BSE at Rs157—and went on to hit a high of Rs185. The stock then dropped by nearly 80% to Rs38.50 and closed at Rs55.85. Both the IPOs had enormous listing-day turnover of Rs518 crore and Rs431 crore. What’s more striking is that Taksheel Solutions had been subscribed 6 times by retail investors. The stock of Taksheel, whose trading had been frozen today at the lower end of the 20% circuit filter, closed at Rs44.70, 70% below the listing price (over 19th October).

Flexituff International was another IPO which listed yesterday. The IPO, assigned a ‘Grade 3’—signifying ‘Average Fundamentals’—was less volatile than the other two IPOs mentioned above. Flexituff’s IPO, which was subscribed 1.6 times by retail investors, listed at its issue price of Rs155. The scrip hit a high of Rs186 and a low of Rs142, closing 7% up from its listing price of Rs166. The stock closed today at Rs160. In the normal course, behaviour of IPOs like these is usually not an issue. But it’s the two which have exhibited extreme volatility that are a cause for concern. The regulator needs to wake up to these facts and take corrective actions soon.




5 years ago

Its high time that SEBI be closed.


5 years ago

SEBI only talks of Investor Protection. It is more into Corporate and Promoter Protection. Even if the regulator SEBI investigates and finds something wrong, it is a well known fact that the offenders will get away with a puny fine. SEBI is determined to wipe out the Financial Advisory in the name of Investor protection with some lop sided thinking. What I feel is that there need to be a overhaul of WTM and the an enquiry in to the working of SEBI. But then who is going to bell the cat?

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