Stocks
Nifty, Sensex may record more gains – Wednesday closing report
We had mentioned in Tuesday’s closing report that Nifty, Sensex might rally a bit. The major indices of the Indian stock markets soared based on positive global cues. The trading volumes on the NSE were however, moderate despite the strong rally. The trends of the major indices in the course of Wednesday’s trading are given in the table below:
 
 
Positive global cues, coupled with value buying, surged the Indian equity markets on Wednesday. Consequently, the key indices made healthy gains during the late-afternoon trading session, as buying was witnessed in banks, capital goods, automobile, information technology (IT) and oil and gas stocks. Initially on Wednesday, the key indices opened on a higher note, in-sync with their Asian peers, which rose on the back of positive macro-economic data from the US which showed signs of a healthy economic recovery. Besides, higher crude oil prices, positive European indices and a stable rupee restored investors' confidence.  In addition, value buying at key levels and predictions of better-than-expected monsoon rains supported prices. Morgan Stanley also upgraded India to overweight from equal weight adding the positive sentiment for our market. There has been a worldwide stock market rally on Tuesday-Wednesday beginning with the US markets on Tuesday.
 
Eurozone finance ministers on Wednesday agreed to extend further bailout loans to Greece as well as debt relief, in what they called a "major breakthrough". After talks that ended late Tuesday night in Brussels, the 19 eurozone ministers - known as the Eurogroup, agreed to unlock 10.3 billion euros ($11 billion) in new loans, BBC reported. "We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme," Eurogroup President Jeroen Dijsselbloem told reporters early on Wednesday. The move came after the Greek parliament on Sunday approved another round of spending cuts and tax increases demanded by international creditors. The ministers also said debt relief would be eventually offered to Greece.
 
Automobile wheel maker Wheels India Ltd. closed last fiscal with net profit of Rs.39.99 crore, the company said on Wednesday. In a statement here, Wheels India said it has logged 34% growth for the year ended March 31, 2016, as against Rs.29.74 crore posted for the fiscal 2014-15. Revenues for the year ended March 31, 2016, went up marginally to Rs.2,018 crore as compared to Rs.1,982 crore registered in the previous year, despite the deflationary effect of low commodity prices. "Our revenue growth was driven by the strong recovery in the CV (commercial vehicle) sector, as replacement demand driven by operational efficiencies of higher tonnage vehicles, imminent regulatory changes and some core industry activity drove growth in the CV market," Srivats Ram, managing director, was quoted as saying in the statement. The board of Wheels India has recommended a final dividend of Rs.5.50 per share (previous year Rs.4.50 per share). The company’s share closed at Rs1,001.95, up 10.91% on the BSE.
 
IT firm Tech Mahindra on Tuesday said it posted a 93% rise in its standalone quarterly net profit for the quarter ending 31 March 2016, at Rs.829.54 crore compared to Rs.429 crore clocked in the corresponding quarter of last year. According to the audited standalone financial results posted on the Bombay Stock Exchange (BSE), Tech Mahindra's total income in Q4 was of Rs.5,604.63 against Rs.4,664.6 crore in the year ago quarter. The company posted an annual standalone net profit of Rs.3,220 crore in 2015-16 as against Rs.2,256.23 in the last fiscal. On a consolidated basis, quarterly profit rose from Rs.472 crore clocked in Q4 2014-15 to Rs.897 crore in the analysed quarter, while consolidated annual profit rose to Rs.3,118 crore in 2015-16 from Rs.2,627.6 in the last fiscal. The company’s share closed at Rs528.55, up 10.29% on the BSE.
 
Pharmaceutical major Cipla Ltd on Tuesday reported 68.9% decline in its net profit to Rs.81 crore in the quarter ended 31 March 2016 as compared to Rs.260 crore in the year-ago period. In the quarter under review, company's income from operations however grew by 5.6% to Rs3,267 crore, up from Rs.3,093 crore in the corresponding period last year. Its EBITDA declined 56.9% in the January-March quarter to Rs.219 crore, down from Rs.508 crore in the same quarter last year. Domestic sales increased by 15.9% to Rs.1,258 crore during fourth quarter of 2015-16 from Rs.1,086 crore in same quarter last year, the company said in a release. Cipla’s exports of formulations rose 3.2% to Rs. 1,744 crore during March quarter in FY16 from Rs.1,690 crore during same quarter of 2014-15 (FY15). The third-largest pharmaceutical company with a market share of 5.3% posted a net profit of Rs.1,506 crore in 2015-16 up 27.5% from Rs.1,181 crore in 2014-15. The company’s share closed at Rs470.30, down 4.97% on the BSE.
 
Bharti Airtel and Videocon Telecommunications on Tuesday announced that they have concluded the spectrum purchase deal in six circles for Rs.4,428 crore. Bharti Airtel and Videocon Telecommunications have entered into a definitive agreement on March 17, wherein, Airtel proposed to acquire, for an aggregate consideration of Rs.4,428 crore, the rights to use 2x5 MHz spectrum in the 1800 MHz band allotted to Videocon by the government for six circles -- Bihar, Gujarat, Haryana, Madhya Pradesh, UP (East) and UP (West), the two said in a joint statement. Airtel shares closed at Rs351.45, up 1.80% on the BSE. 
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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‘It has not been a great week for oatmeal!’
The Quaker Oats Company (a subsidiary of food and beverage giant PepsiCo), has also made a rather embarrassing gaffe on the trademark enforcement front,  on the heels of a recall for its Quaker Quinoa Granola Bars. And unfortunately, demand letters are far more difficult to recall.
 
Evidently, an in-house trademark attorney at Quaker Oats recently discovered a Christmas tree farm in Visalia, California using the (rather odd) name “Quaker Oats Christmas Tree Farm.” The attorney sent a somewhat perfunctory template demand letter to the farm, citing Quaker Oats’ various registrations for the QUAKER trademark:
 
It was therefore quite a surprise to discover that you are operating a business under the name “Quaker Oats Christmas Tree Farm.” Your use of our trademark is likely to mislead consumers into believing that your business is associated with the Quaker Oats Company. It is also likely to weaken our very strong trademark. In light of the foregoing, we hereby demand that you immediately stop all use of the “Quaker Oats” name. [. . .] While we would like to settle this matter amicably, we will take all steps which are necessary and appropriate to protect our name.
 
Seems reasonable enough. Diligent enforcement is, after all, an essential facet of a robust trademark portfolio. But there are two problems here: first, the farm in question is owned and operated by people of the Quaker faith. And second, the farm’s actual name is the Quaker Oaks Christmas Tree Farm, a “sustainable agriculture and environmental education centre in the Kaweah Delta of California.”
 
And as tends to occur when big companies send flimsy demand letters, things went public fairly quickly. The Religious Society of Friends (Quakers) in Irvine, California soon posted the letter, along with its truly entertaining response.
 
My breakfast this morning—rolled oats by the way—was interrupted by the arrival of your letter via FedEx, which was delivered to us despite the fact that you have misspelled our company name which is Quaker OAKS Christmas Tree Farm. Our farm was so named because religious services were held outdoors on this farm under a great oak tree until about ten years ago when we were able to move into our new Meetinghouse on another corner of our farm.
 
Our business is 100% owned and operated by Quakers. I suspect that your firm employs considerably fewer, if any, Quakers. We trace our Quaker ancestors back 320 years and they were mostly farmers, but I don’t know how many of them grew oats for your company. My guess is that you may be selling far more Lutheran oats, Methodist oats, or maybe atheist oats. Could your company be guilty of product source misrepresentation?
 
When it comes to enforcement, I’m quite certain Quaker Oats has a lot on its plate (pardon the pun), but here’s another reminder to wield the power of a demand letter with caution, and to always double-check the details of a potential infringer’s use.
 
(Bapoo Malcolm is an Advocate at the Bombay High Court and a former national cycling champion. He is practises civil and criminal law, documentation and arbitration, family court matters, real estate redevelopment matters and testamentary work)

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‘Fair practices code adopted by banks is observed more in breach than in practice’ over a year after it was issued
Well over a year after the Reserve bank of India (RBI) notified the Charter of consumer services, very little has changed. The code remains toothless, yet the RBI only talks about its issuance, nearly a year and half after it was formally announced. 
 
 “Very often, RBI has found that the fair practices code adopted by banks / financial institutions is observed more in breach than in practice. In view of the growing complexities of the financial transactions and financial markets, RBI, therefore, felt a need to clearly define the role and responsibility of financial services providers, especially in relation to consumer protection and the framing of the Charter of Customer Rights was a logical step in that direction”, said SS Mundra, RBI Deputy Governor, while addressing a gathering at the Banking Codes and Standards Board of India (BCSBI) this week.
 
He addressed another overdue issue, when he said, "RBI is already examining whether to issue regulatory direction with regard to limiting the liability of customers on fraudulent transactions arising out of frauds and electronic banking transactions". He admitted that with the increase in online transactions, there has been a rise in complaints related to electronic banking transactions, unauthorised fund transfers, fraudulent withdrawals from ATMs using duplicate cards and phishing e-mails, among others.  "It is imperative to have a robust mechanism to prevent incidents of frauds in mobile Net banking and the electronic fund transfer so as to retain customers' confidence in these delivery channels," he said. 
 
At the same time, raising customer awareness for safe usage of these channels should be an important item on the agenda of the banks, he said. "... if customers don't get confidence in the channels and decide to abstain from them, then it can have only two outcome - either customer would migrate or customer would come back to the traditional channel which would mean higher operating cost for the banking system," he argued.
 
Mundra criticised the banks for totally ignoring or rather knowingly violating the 'Right to Suitability' enshrined in the RBI's Charter of Customer Rights in an attempt to mis-sell products to customers. Under the Rights to Suitability Charter, the products offered by the banks should be appropriate to the needs of the customer and based on an assessment of their financial circumstances and understanding. "RBI is seized of this issue and may take a strict action, including heavy penalties, if the banking industry continues to follow such unethical and unaccepted practices of mis-selling of third-party products," Mundra warned. He advised banks to put in place a system of periodic inspections of the sale of third-party products by either own staffs or by direct selling agents (DSAs).
 
The RBI is also planning to augment the number of its banking ombudsmen offices in the near future, Mundra said.
 
In conclusion, Mundra said that as the competition intensifies with the licensing of more new banks, only those entities which provide better customer service and experience would survive. Various research studies have shown that customers are willing to pay for quality service and would transact with the institutions which provide better services. Some of us might have heard that customers choose to move to another bank in case if he/she was dissatisfied with the services received at the present. With the implementation of a unified KYC (Know Your Customer), account number portability, would come into the realms of possibility. With the introduction of unified payments interface, a customer can be identified with his unique “virtual address” mapped to his mobile phone linked to the bank account number. With this information available centrally at the NPCI, the portability of the account would merely need a change in linkage to an account in another bank at the backend. Banks must, therefore, build structure and processes that aim at providing quality and efficient services or else face the prospects of a customer silently walking away without causing any inconvenience to him/ her and loss of business to the bank. This is the warning to all banks and bank staff, as customers have begun to value service from banks.
 

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COMMENTS

Jagdish Manghnani

12 months ago

Very good if implemented in the right sprit

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