SEBI asks firms to disclose details of utilisation of warrants

“In order to enhance disclosure requirements, listed entities have been mandated to disclose utilisation of funds raised upon conversion/exercise of warrants issued along with public or rights issue of specified securities,” SEBI said in a circular

Mumbai: In order to bring more transparency to capital markets, the Securities and Exchange Board of India (SEBI) on Wednesday said listed firms will have to disclose details regarding utilisation of funds raised through warrants, reports PTI.

“In order to enhance disclosure requirements, listed entities have been mandated to disclose utilisation of funds raised upon conversion/exercise of warrants issued along with public or rights issue of specified securities,” SEBI said in a circular.

It said the new rule, a part of its amendments to the equity listing agreement, will take effect immediately.

Experts said the amendment will bring more confidence and transparency in the instrument of warrants.

A warrant is the right, but not the obligation, to buy or sell a certain quantity of an underlying instrument at an agreed-upon price.

“The SEBI circular has directed that companies disclose details regarding the usage of funds raised through warrants.

The regulator is trying to monitor the reason for which companies raise the warrants and ensure that they are used for proper reason.

“This will elevate the credibility of the instrument,” SMC Global Securities strategist and head of research Jagannadham Thunuguntla said.

The regulator had in the last few days brought a number of changes in its listing norms.

Earlier this month, it notified the Institutional Placement Programme (IPP) guidelines that will allow companies to reduce promoter shareholding through private placement.

As per the new norms for IPP of shares, the companies would even be allowed to issue fresh equity to institutional investors to dilute stake of promoters.

It also permitted promoters of top 100 companies to quickly dilute their shares through a separate window on the Bombay Stock Exchange and the National Stock Exchange which has to be completed within a day.

Besides, on Tuesday SEBI modified norms for share buyback through the tender offer route under which companies will have to reserve 15% of the offer for small shareholders.

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Finance ministry may drop proposal to dissolve SUUTI

The finance ministry had earlier proposed to dissolve the SUUTI and set up a new entity to buy government equity in PSUs from funds raised by pledging the existing assets of the SUUTI. The proposal, however, may be shelved in view of the SEBI guidelines for dilution of promoter stake by way of auction and private placement

New Delhi: The finance ministry is planning to drop the proposal to dissolve the Specified Undertaking of UTI (SUUTI), in view of the recent Securities and Exchange Board of India (SEBI) guidelines opening other windows for selling government equity in PSUs to meet the disinvestment target of Rs40,000 crore this fiscal, reports PTI.

“We will take final decision (whether to dissolve SUUTI or not) within a week,” a top finance ministry official told PTI.

The ministry had earlier proposed to dissolve the SUUTI and set up a new entity to buy government equity in public sector undertakings from funds raised by pledging the existing assets of the SUUTI.

The new entity, it was estimated, could have raised at around Rs50,000 crore by pledging the assets of SUUTI.

The proposal, however, may be shelved in view of the SEBI guidelines for dilution of promoter stake by way of auction and private placement. These norms will help the government to offload its equity in the PSUs.

“Now the government also has option to raise money by selling shares in state-run firms through a new auction method approved recently by the SEBI,” the official said, adding that this has necessitated a rethink.

Although the government has a target of rising Rs40,000 crore during 2011-12 through disinvestment, it had so far mopped up only Rs1,145 crore through sale of its equity in Power Finance Corporation (PFC).

Hard pressed for funds, the government has been looking for alternate ways to raise resources to bridge the fiscal deficit which is expected to exceed the budget estimate of 4.6% of the gross domestic product (GDP).

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Will the market rally for a sixth week in a row?

Can the current market momentum sustain and end positively this week. History says its highly probable

Sometimes it is hard to predict whether the current momentum will continue or not. Markets are prone to random movements. However, historical patterns offers us interesting odds at times.

We extracted and studied the Sensex weekly data over the past 22 years, from 1990 till 2012, and mapped key momentum periods, where Sensex rallied for five weeks continuously, without a correction. We wanted to know if the momentum would carry over to the sixth week as well. Over the past 22 years, we had noticed that Sensex had continuous rallies lasting five weeks 31 times (over non-overlapping periods). What has been the outcome on the sixth week? We find out that 21 times out of the 31 time, the sixth week was positive as well.

We’re currently in the midst of a fairly big momentum rally, having seen Sensex rise 11.08% over the last five weeks, from 15848 on 7 January 2012. As we are in the middle of the sixth week, we see that the current level of Sensex is 17707 as of 8 February 2012, which is 0.59% higher than last week’s close. The average returns of all the positive sixth week occurrences has been 2.31%, with minimum being 0.21% and maximum being 9.78%.

With two more days to go, what are the odds that the current momentum will sustain? We noticed that 16 times of the last 20 such occurrences did we witness the sixth week being positive.

Despite global turmoil and uncertainty in Europe, the markets have rallied. Will this week defy negative sentiment and close positively? If the current study is anything to go by, perhaps there is a chance that it could happen. Keep your fingers crossed.

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COMMENTS

PCChacko

5 years ago

Since 2007 the share market is highly volatiles and many have lost lot of money .They have limited exit options.One reson for this volatility is the crel pricing of IPOs and FPOs which has given bvery negative return 0ut of 120 issues 98 issues have given negatie return ranging from 5 to 95% Middle class and small investors lost intrest in stock market. If they want to return there must be stable market with proper control of SEBI Fin.Min and stock exchages and disciplined Merchant Bankers and Brokers Now it appearsthat the market will cross 20000 sensex weithin three months.

pravsemilo

5 years ago

Have some of the comments been deleted / edited here?

I saw Vivek posting a URL in his comment which is not longer there!

Also there was a comment having some tradingpsot.com URL (can't remember the domain name exactly)??

Kranthi

5 years ago

Let me know, when the markets correct. I like to invest in the mutual funds.

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