Stocks
Sensex at its lowest level since Chidambaram announced his reform measures last September

BSE Sensex today hit lowest levels since the finance minister announced his reform measures on the 14th September 2012. What exactly happened between September 2012 and now?

Today the Bombay Stock Exchange’s (BSE) 30-share Sensex hit a low of 18173. On 14 September 2012 when finance minister P Chidambaram announced his big bang reforms, the Sensex stood at 18,464. The reform measures included reduction in diesel subsidies, allowing foreign direct investment (FDI). These announcements were welcomed by many, including foreign institutional investors (FIIs). Believing the finance minister, they pumped in a lot of money into the markets taking it to new high in January 2013. However, since then markets have tumbled to below 14 September 2012 level, wiping out all the gains accrued since then.
 

Take a look at the chart below:
 

The BSE Sensex started at 18,464 on 14 September 2012, when P Chidambaram announced a slew of so- called economic reforms. Some of these measures include 51% foreign direct investment (FDI) in multi-brand retail, hiking diesel prices and putting a cap on the supply of subsidised LPG cylinders to households. The market obviously reacted very positively in the following months after announcement and soon breached 20,000. Some of the biggest investors were foreign institutional investors (FIIs).
 

Eventually, on 25 January 2013, the market reached its peak at 20,103. It had moved up 8.8% within just over four months. However, over next two and half months the markets wiped off those gains completely. The second half of the graph clearly shows this.
 

Just when Chidambaram introduced the slew of economic reforms, the most excited were foreign institution investors (FIIs). They played a key role in pushing the markets higher and higher by pumping in cheap foreign money. FIIs poured as much as $8.4 billion into Indian equities in the third quarter and much of it into banking and financial sectors, hoping that the reforms and low interest rates (which RBI would soon cut) would be key catalysts. Analysts from foreign investment banks were pumped up as well. For instance, leading brokerage firm Goldman Sachs pegged Indian growth to touch 6.5% in 2013 and further to 7.2% in 2014. Many foreign investors were expecting India’s economy to pick up on the back of such economic reforms.
 

However, at the same time, domestic institution investors (DIIs) were moving in the opposite direction. They were bearish and selling equities. Several times, they turned out to be correct, according to an analysis undertaken by Moneylife. In fact, DIIs were betting very selectively, selling as much as $3.5 billion worth of equities during the December 2012 quarter. It is not surprising because DIIs know more about Indian economy (and reform measures) than foreigners.
 

The BSE Sensex peaked in January in the hope that the RBI will cut rates aggressively. As inflation moderated, the Reserve Bank of India (RBI) cut rates a bit. Meanwhile, prior to the Budget, the finance minister and his entourage went on a global tour, trying to sell the India story to investors. He went to Hong Kong and Singapore to assure and pressed for the case of investing in India when he told them that India’s fiscal deficit would be brought down to 3% in 2016-17. However, the Budget proved to be a dampener and many, including FIIs and DIIs, were left disappointed. The markets crashed by more than 1.50% on the day of the budget. We had written in detail about this in the Fortnightly Column, ‘An affair to forget’.
 

Foreign brokers and investors were losing patience and they realized that the budget was aimed at the vast electorate instead of economic reforms. There was no mention of big reforms in the Budget as initiated earlier in September 2012. We had written a piece on this.  Soon, investment banks were trimming forecasts. Nomura cut India’s GDP forecast to 5.6% , while Moody’s has stated that if India grows over 7% without economic reforms, inflation will be a big concern.
 

“Some government policymakers, most notably RBI governor D Subbarao, have begun pushing for a return to double-digit growth. This is wildly optimistic and, without significant structural reform, a dangerous view to take,” Moody’s Analytics, an arm of ratings agency Moody’s, said.
 

Finally, once again, the Indian reality of more talk and less action, policy paralysis and deeply vested interests, asserted themselves. The market merely reflects this.  (read An India Reality)  . We are not surprised. We have pointed several times ever since the market started getting euphoric beyond a Sensex level of 19,500. (Read Reality strikes and High Risk Low Reward ) This should be an object lesson to investors who make investments decisions based on a government that cannot put through anything other than cosmetic changes.

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COMMENTS

ashwin bahl

4 years ago

Did we expect last minute miracles from PC, after sleeping for 9 years this knee jerk reforms do not instil any confidence!

Sadanand Patwardhan

4 years ago

FII are fickle minded in pursuit of lucre and don't have any stakes in local economy save except their returns. US stock markets are booming so that gives better arbitrage to FII to move funds there. Let us not waste breath on Stock prices, which have lost any connect with reality.

Please read ***Dystopia: Rise of DJIA and Greenspan's Utopia.*** at
http://searchlight-is-on.blogspot.in/201... for more

Sadanand

Sanjay Dutt exploring option of review petition

The Supreme Court had on 21st March upheld Sanjay Dutt’s conviction under Arms Act and sentenced him to five years in jail of which he has already served 18 months

Bollywood actor Sanjay Dutt, ordered by the Supreme Court to complete his five years sentence for complicity in the 1993 Mumbai blasts, is exploring the option of filing a review petition against the judgement, sources close to him said today.

 

The Supreme Court had on 21st March upheld Sanjay Dutt’s conviction under Arms Act and sentenced him to five years in jail of which he has already served 18 months.

 

In keeping with the order to surrender within four weeks, he has to give himself up before the designated TADA court by 18th April.

 

The actor has the option of filing a review petition and, in the event of failing to get relief, he can file a curative petition, the sources said.

 

While review petition comes up before the same bench which heard his appeal against the trial court’s order sentencing him to prison, the curative petition is heard by a larger bench.

 

Though the actor can also seek pardon from the state governor, he has gone on record to say he would not.

 

Amid a growing clamour for his clemency, Sanjay Dutt, 53, had told the media on 28th March that he would not apply for pardon.

 

“There are many other people who deserve pardon. I want to tell with folded hands to the media, the honourable citizens of the country, that when I am not going for pardon then there can be no debate about it,” Sanjay Dutt, who repeatedly broke down during his interaction with the press, said.

 

Governor K Sankaranarayanan had earlier this month sent over 60 representations and petitions received by him from various individuals and organisations, both seeking and opposing clemency for Dutt, to the state home department.

 

These petitions included those from PCI chief Markandey Katju and expelled Samajwadi Party leader Amar Singh.

 

Meanwhile, racing against time, the actor has set up a dubbing studio at his home and is trying to finish all pending projects.

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Subrata Roy continues his tirade against SEBI after personal appearance

The Sahara group chief and three others made a personal appearance before SEBI. However, Mr Roy continued his tirade saying that the market regulator was more worried about his personal assets than refunding the money to investors of Sahara

 
Sahara group chief Subrata Roy and three other top executives on Wednesday made a personal appearance before market regulator Securities and Exchange Board of India (SEBI). However, after meeting with SEBI officials, the Sahara group chief once again alleged that the market regulator was more interested in knowing his personal assets than refunding money to its investors.
 
Speaking to media persons after the meeting, Mr Roy said, “My personal assets appear to have troubled SEBI. I was asked about my personal assets and I told them that I have declared all my assets.” 
 
While expressing concern over the delay in refund by SEBI, the Sahara group chief accused the market regulator of not having taken any steps for months to return the money to those investors who have not been refunded yet.
 
The market regulator sought information about their personal assets and investments in a case involving refund of Rs24,000 crore to over three crore investors of Sahara group companies.
 
SEBI, on 26th March had issued the summons to Mr Roy, and three directors Vandana Bhargava, Ashok Roy Choudhary and Ravi Shankar Dubey and wants to ascertain details of their personal assets as well as assets and investments of the Sahara group companies. 
 
During the meeting today, which lasted for about an hour, the market regulator had also asked, Mr Roy and three other directors about the assets and investments of Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL). SEBI also asked them to produce original title deeds of all assets and investments of the two Sahara group companies. 
 
The Sahara group claimed that it had already returned a bulk of the total Rs24,000 crore to investors directly and its total outstanding liability was less than Rs5,120 crore given to SEBI towards investor refund.
 
In its summons, SEBI has threatened to settle ex-parte the terms of proclamation of sale of their and the companies’ assets, in case, the Sahara executives decide not to appear before it.
 
Earlier, on 13th February, SEBI passed two separate orders, together running into 160 pages, directing attachment of properties and freezing of accounts. It had said that in furtherance to a Supreme Court order directing refund of investors’ money collected by the two Sahara group companies, it ordered “attachment of all moveable and immoveable properties, bank accounts and demat accounts of these two companies and that of its promoters and directors Subrata Roy, Vandana Bhargava, Ashok Roy Choudhary and Ravi Shankar Dubey”.
 
It was after the Supreme Court said that the regulator was free to freeze the accounts and attach properties if the Sahara firms were not complying with the apex court’s earlier orders of August 2012 towards refund of investors’ money totalling over Rs24,000 crore.
 
The assets ordered to be attached included those related to the group’s Aamby Valley resort town near Pune, other real estate assets in Delhi, Mumbai and at other places across the country, shares, mutual funds and various other investments.
 
Passing the attachment orders, SEBI said that the two companies had raised Rs6,380 crore and Rs19,400 crore, respectively from bondholders and “various illegalities” were committed in raising of these funds.
 
On various occasions, the Sahara group had accused SEBI and its top officials, including UK Sinha of not providing an opportunity for a meeting to present its points of view.
 
Last week too, Sahara in a statement had accused SEBI chief UK Sinha of not providing it an opportunity since last one year. Sahara said that “rich men’s SEBI do not understand, recognise poor Investors”. 
 
Meanwhile, three independent members of the Sahara group have resigned from the boards of various group companies. This includes, Amitabha Ghosh, former deputy governor of Reserve Bank of India (RBI), S Mohan, retired judge from the Supreme Court and AC Mukherhee, former chairman of New India Assurance Company.
 
Mr Ghosh was on the board of Sahara Life and Sahara Prime City, besides being on the Board of Trustees of Sahara Mutual Fund. Mr Mukherjee was an independent director on the board of Sahara Life, while Mr Mohan was an independent member on the Board of Trustees of Sahara Mutual Fund.
 

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COMMENTS

CA PRADEEP AGARWAL

4 years ago

What is bugging Mr Roy, incase clean, action will speak itself, and not words, wrong words if spoken can land him in trouble.

skp

4 years ago

Sahara must be sued for Financial criminal offence and CBI should now probe the case. SEBI should refund the deposited amount to identified investors.Why unnecessary delay??

Rakesh

4 years ago

How much money does this guy has?
He can control everything, no one has yet to take any action against him. SEBI is behind him since last few months.
All corrupt people.

manoharlalsharma

4 years ago

Where are 100d's of listed compnise?diapeared with 1000n'ts crores.this prob only mean that person who do not wan't support illegal wants of politicos.

Arun Mehta

4 years ago

Saharsshri has bowled a googly at SEBI declaring a mere asset of 3 Crs.

Arun Mehta

4 years ago

The true disciple of "Bharat Mataa" has finally been forced to give due recognition to SEBI by his gracious presence before SEBI along with his Co-Directors.At this stage one can only imagine as to what could have transpired.For one thing is sure one can expect a new series of full page Press ad to put forth his side of the story to the denizens/subjects of "Bharat Mataa"

REPLY

sachchidanand

In Reply to Arun Mehta 4 years ago

it is horrendous even to think that the biggest sponsor of sports , Sahara, is made to sweat out at SEBI office ! I am sure the sports in India will suffer greatly, if Sahara stops spending on sports. BCCI must be nervous & all sports bodies must be shievering !

Arun Mehta

4 years ago

The true disciple of "Bharat Mataa" has finally been forced to give due recognition to SEBI by his gracious presence before SEBI along with his Co-Directors.At this stage one can only imagine as to what could have transpired.For one thing is sure one can expect a new series of full page Press ad to put forth his side of the story to the denizens/subjects of "Bharat Mataa"

Vaibhav Dhoka

4 years ago

Is SAHARA chiefs accusation CONTEMPT of SC order?

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