Regulations
NSE freak trade fiasco: SEBI rules out quick changes in error trade annulment rules

While saying that the market regulator is looking into the NSE freak trade issue very seriously, the SEBI chairman refused to use the word 'investigation'

 
Mumbai: A week after the worst crash of the National Stock Exchange (NSE), markets regulator Securities and Exchange Board of India (SEBI) on Friday said changes in the rules governing trade annulment in the event of massive erroneous trades will take some time as it does not want to rush with modifications in the existing risk management system, reports PTI.
 
"It (the rules on annulment of trades) will take some time because we want to be very cautious in whatever new structures we place. Our risk management mechanism, put in place in 2000, has by and large withstood the test of time.
 
"We don't want to tinker with it in a hurry," SEBI chairman Upendra Kumar (UK) Sinha told reporters on the sidelines of a capital markets summit (Capam) organised by FICCI.
 
However, the chairman said SEBI has set up a group to look into the issue.
 
"I have already set up a group and that group is working on various aspects and that group will also be looking into this particular aspect. But we will not be in a hurry. We will do very wide range of consultations, we will do some stress testing, technical people will be involved and then we will do it," Sinha said.
 
He was responding to a query whether the capital markets watchdog is planning to change the rules regarding annulling of erroneously trades.
 
Last Friday, an erroneous trade order placed by a broker at Emkay Global led to a massive 15.5% or 900 points crash on the Nifty 50 index of the NSE, leading to a temporary halting of trade.
 
Subsequently, the NSE had suspended the brokerage from trading till this Wednesday when it had paid up the penalties to the nation's largest bourse.
 
When asked about whether the SEBI is probing the NSE crash, he said, "We are is looking into it very seriously right now. I am not using the word 'investigation'. But there is not much I can tell you about it".
 

User

Deccan Chargers to be sold to Mumbai-based Kamla Landmarc

IPL team Deccan Chargers is set to change hands from Deccan Chronicle to Mumbai-based real estate company Kamla Landmarc for an undisclosed sum

 
Mumbai: Deccan Chargers, the troubled franchisee from Indian Premier League (IPL) is set to be sold to Mumbai-based real estate company Kamla Landmarc Real Estate Holdings for an undisclosed sum, its owner Deccan Chronicle Holdings Ltd said on Friday, reports PTI.
 
DCHL has authorised the board to sell the franchise.
 
"Pursuant to its meeting of the board of directors held on 11th October, it was resolved to authorise the board of directors to sell, transfer or dispose of the Deccan Chargers Franchise business undertaking, business division of the company to Kamla Landmarc Real Estate Holdings Pvt Ltd," DCHL said in a filing to the BSE.
 
The Ramesh C Jain-owned Kamla Landmarc owns several commercial properties in and around Mumbai and has also developed many residential properties in Mumbai, Kolhapur, Thane, Bhiwandi and Goa. At present Kamla Landmarc group has a cumulative land bank of over 15 million sqft.
 
The company said it has approved the draft memorandum of understanding placed before the Board of Directors at its 11th October meeting.
 
The company, however did not disclose the details of the financial transaction.
 
The resolution of the board has been passed subject to the approval of DCHL shareholders, it said.
 
Shares of DCHL rose 4.92% to Rs 9.60 on the BSE soon after the announcement.
 

User

Earnings: Watch out for media, consumer discretionary, pharma and banking stocks

In its Q2 earnings preview note, Nomura has come up with a list of sectors and companies to watch. It feels media, pharma and consumer will trump while banks, automobiles, mining and electrical equipment might suffer

 

As we enter the earnings season, Nomura Equity Research has come up with a list of sectors and its views of each sector, including which companies are likely to get affected. We had written in our earlier piece on their overall views on the market (http://www.moneylife.in/article/nomura-expects-september-quarter-to-be-the-weakest-one-since-2008/28993.html). Now that Nomura expects this quarter to be subdued, we highlight some of the sectors that the brokerage thinks will be affected.

 
What investors can expect from each sector 
 
Automobile: The automobile sector can be used as a proxy for the overall economy. As more people become wealthier, more people will upgrade their lifestyle by getting a vehicle or upgrading to a better one. However, Nomura expects the quarter to be weak for the sector. It expects Exide and Amara Raja Batteries to do well.
 
Agri-inputs: Agri-inputs is the derived demand of the agriculture sector. When the monsoons are good, the sector will do well, and vice versa. But poor and erratic monsoon season this year have had quite a dampening effect on the sector. Companies like United Phosphorus and Jain Irrigation are likely to be affected.
 
Banks: Banks have done well of late, with share prices going up, due to ‘positive’ policy measures by the RBI in keeping rates steady while at same time cutting CRR. However, Nomura feels that the run-up has caught up with valuations and expects a correction. Apart from this, delinquencies are a concern as bad loans turn sour at increased rates.
 
Cement: The cement sector largely depends on the overall construction and infrastructure activities. With the monsoons over, manufacturing of cement is expected to pick up as projects resume. However, the diesel price hike is expected to put a dent on margins vis-a-vis transportation of cement from plant to customers, though margins downfall is expected to be cushioned by higher realisations.
 
Construction & infrastructure: Insurance companies can now invest more in infrastructure. Whether they will do that is another story altogether. Having said this, Nomura expects sluggishness to continue even though the government has initiated reforms measures.
 
Consumer: One of the few sectors expected to do well despite economic difficulties is the consumer discretionary segment. With inflation stabilised and trending downwards, consumers are buying more soaps, eating more pizzas and such. While the spending hasn’t increased dramatically or significantly to cause cheer, it is relatively better than nothing at all. Nomura expects Jubilant Foodworks and ITC to deliver strong results while Hindustan Unilever, Marico, Colgate-Palmolive will be watched. 
 
Electrical Equipment: Much of the demand for electrical equipment depends on the health of the power sector, which is clearly in crisis. Power plants have been affected due to environmental clearances and fuel availability in the form of coal. All this has taken a toll on electrical equipment manufacturers. Even though some states have guaranteed electrical manufacturers like BHEL towards discoms, long-term prospects remain to be seen.
 
Information Technology: The face of the Indian economy is going through a bumpy time. Global economic turmoil has taken a toll on exports. It is uncertain when developed countries will come out of the recession. The woes are further compounded by a strong rupee as Bernanke’s QE3 has printed dollars. Much of the sector is dependant on external factors which makes it look fundamentally unappealing for long-term investors. Nomura expects HCL Technologies and CTS to remain stable while bearish on Infosys and Wipro.
 
Metals & Mining: This sector has been in the news of late with the government ban on mining in the state of Goa while production is yet to resume in Karnataka—two of the big iron ore areas—on charges of irregularities and corruption. The raw material for steel is iron. Tata Steel is expected to be subdued according to the Nomura report.
 
Oil & Gas: India imports oil & gas and is thus exposed to the vagaries of global oil prices, and must pay in dollars, which means it is also affected by currency movements. Nomura expects (Brent) oil to be range-bound, meaning not fluctuating wildly, at around $110 per barrel.
 
Pharmaceuticals: It used to be the darling of the Indian corporate sector, and still is. With patents of branded products expiring, generics are expected to increase. However, a lot of litigation and compliance cost is involved, which eats into the margins and brand equity (i.e. reputation). However, Nomura expects the sector to deliver strong performances this quarter. It advises investors to watch out for Dr Reddy’s, Sun Pharma and Glenmark Pharma. 
 
Power: As mentioned earlier, the power sector is expected to remain subdued on account of policy inertia. According to Nomura, JSW Energy and Adani could surprise while preferring ‘defensives’ such as Power Grid Corporation, Coal India and NTPC. It must be kept in mind that Coal India has skimped on its PPA commitments to various power and power-related firms.
 
Property: This is one sector that is saddled with too much debt and too little cash flow. The only way to revive this is to hope that the economy does revive better than expected. However, this event seems unlikely. A flailing economy means people aren’t buying much and are deferring consumption in anticipation of benign times ahead. Nomura believes Prestige can do well while has put a ‘reduce’ call on DLF.
 
Telcos: Intensive competition has almost completely eroded the margins of telecom operators. While the consumer has largely benefited, the service levels have dropped alarmingly. Already beset with the 2G scams, there are questions about 3G and 4G auctions, which has put the sector in negative light. Nomura advises to keep a watch for Bharti Airtel and its performance in Africa. Recently, price tariffs have increased which may be good for the companies but not necessarily for consumers.
 
Media: Media has been in the limelight as there’s a lot of chatter on how digitization can reform and change the industry forever. It is been seen as a good move and more people will watch quality programming at higher prices, which also might boost ad-spend. It could be a game changer. Nomura expects sales of Zee to increase
 

 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)