Stories of stock price manipulation
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Brent crude for June delivery settled $2.52 higher to $123.85 a barrel while spot gold climbed as much as 0.3% to an all-time high of $1,506.32 an ounce
The local market is likely to open higher as good earnings reports boosted markets worldwide. Wall Street closed at multi-year highs overnight on earnings optimism, defying critics who have been suggesting that a correction is due. Positive sentiments boosted investor appetite in Asia as markets in the region were in the green in early trade on Thursday. The SGX Nifty was at 5,909, up 35 points from its previous close of 5,874. Most markets across the world will be closed for trade tomorrow on account of Good Friday, making it a holiday-shortened week.
In India, the government will release the weekly food inflation data around noon. Besides, Hindustan Zinc, Jindal Steel, Nestle India, Raymond, Reliance Industries and TCS, among others will announce their quarterly numbers today.
Pinning its hopes on the government's forecast of a normal monsoon this year and taking a cue from early gains in the Asian markets, the Indian bourses opened higher yesterday. The Sensex added 122 points to its previous close, to resume trade at 19,274, and the Nifty gained 45 points to open at 5,786. The indices were range-bound in the morning session, but profit-booking led the indices to the day's lows at around 1.10pm. At their intra-day lows, the Sensex was at 19,171 and the Nifty stood at 5,760.
Taking support from positive earnings reports announced by corporates during the day, and inflows from institutional investors, the market was on a higher trajectory and closed near the day's high. The Sensex settled at 19,471 with a gain of 349 points, and the Nifty closed 111 points up at 5,852, suggesting the gains could continue for a day or two.
Markets in the US closed in the green on good corporate earnings reports. Computer chips maker Intel late on Tuesday issued a strong forecast, pushing its stock 7.8% higher. After the market close on Wednesday, Apple released earnings that topped analysts’ revenue and profit estimates. The stock surged 4.2% in after-hours trading, adding to the day's 1.4% advance.
Web portal major Yahoo! Inc jumped 4.7%, United Technologies Corp gained 4.3% after lifting the lower end of its sales forecast. Alcoa Inc and Chevron Corp added at least 1.2% as commodity prices advanced amid a weaker US dollar.
In economy news, sales of previously owned homes rose 3.7% in March to an annual rate of 5.10 million units after an upwardly revised 4.92 million unit pace in February. Sales have now risen in six of the past eight months.
The Dow surged 186.79 points (1.52%) to 12,453.54, the highest close since June 2008. The S&P 500 rose 17.74 points (1.35%) to 1,330.36, its best performance in a month and the Nasdaq gained 57.54 points (2.10%) to 2,802.51, its best percentage gain since October 2010.
Buoyed by the optimism in the US, markets in Asia were in the green in early trade on Thursday, indicating that the economic recovery on a growth trajectory. Higher commodity prices supported gains in China while technology shares aided the
Seoul Composite index.
The Shanghai Composite gained 0.37%, the Hang Seng rose 0.98%, the Jakarta Composite climbed 0.25%, the Nikkei 225 was up 0.58%, the Straits Times surged 0.85%, the Seoul Composite jumped 1.38% and the Taiwan Weighted was up 1.64. On the other hand, the KLSE Composite lost 0.03%.
In commodity news, Brent crude for June delivery settled $2.52 higher to $123.85 a barrel, after touching an intra-day high of $124.23. US June crude gained $3.17 a barrel to settle at $111.45 a barrel, the highest since 18th April, when US crude posted its steepest close of 2011 at $112.79.
Spot gold climbed as much as 0.3% to an all-time high of $1,506.32 an ounce in Singapore on Thursday. The metal has risen to a record every day since April 15. Bullion futures for June delivery traded at $1,504.30 an ounce, near a record $1,506.50.
Back home, the income tax department will soon post 10 of its officers in tax haven nations to collect information about alleged tax evasion by Indians from these countries, an official in the finance ministry said.
Concerns have been raised in the recent past over suspicion of round tripping or routing of Indians' illicit money back into the country through tax havens.
Supreme Court had directed market regulator to take a second look at the inquiry report which was previously thrown out, in an obvious attempt to hide wrong-doings
The directors of the Securities & Exchange Board of India (SEBI) will meet on 26th of April to re-consider its exoneration of the National Securities Depository Limited (NSDL) on the direction of the Supreme Court of India. Although technically the SEBI board is meeting again, there will be many new faces around the board room table this time. The directors will once again consider the report of a two-member bench of the SEBI board, whose findings against NSDL were thrown out by a previous set of board members calling them "non-est" (or void).
For starters, the meeting will be headed by the new chairman UK Sinha. The previous meeting was chaired by TV Mohandas Pai, who is still on the SEBI board. Mr Pai stepped in since the then SEBI chief, CB Bhave, had recused himself from decision-making. Mr Bhave headed NSDL when SEBI initiated action against the depository in connection with the IPO scam.
Dr Mohan Gopal (chief of the National Judicial Academy) has been replaced by VK Jairath, former principal secretary of Maharashtra. Dr Gopal also remained absent from the previous meeting as he was one of the two members of the bench, whose findings were considered null and void (or non est), giving a clean chit to NSDL and CDSL.
Similarly, the Reserve Bank of India will be represented by Anand Sinha (instead of Usha Thorat) while the Ministry of Corporate Affairs will be represented by DK Mittal (in place of R Bandyopadhyay). Most importantly, Dr K P Krishnan, joint secretary, capital markets, who dominated all decisions related to the capital market and took the lead in burying the NSDL investigation that exonerated CB Bhave, has been replaced by his successor Dr Thomas Mathew.
The only constant are the three whole-time directors (WTDs) of SEBI, of whom two, MS Sahoo and KM Abraham, are set to complete their term in a few months. They were vociferously in the Bhave/NSDL camp.
In February 2010, the SEBI board focused on technicalities to exonerate NSDL of the charge of failing to detect the massive manipulation of initial public offering (IPO) allotments by a set of operators who packed the retail quota with multiple applications. The exoneration happened at the end of a long series of dubious decisions which ran as follows:
1. Appointment of CB Bhave as SEBI chairman when there were SEBI investigations pending against the organisation he previously headed.
2. The assumption, implicit in this decision that NSDL was not even guilty of minor transgressions or carelessness.
3. Attempt to artificially "ring-fence" Mr Bhave from NSDL-related issues.
4. Appointment of a two-member board committee (comprising Dr Mohan Gopal and former RBI deputy governor V Leeladhar) to decide NSDL-related issues.
5. The mistake in assuming that NSDL will get a clean chit from the bench.
6. The attempt to bury the Gopal-Leeladhar report for several months.
7. Making the report public only after a public interest litigation was filed in the Andhra Pradesh High Court.
8. Exoneration of the rival Central Depository Services Limited (CDSL) through a one-line order, although charges against it were far more serious.
9. And finally the controversial board meeting which exonerated NSDL and refused to consider a contrary legal opinion by no less than JS Verma, former chief justice of the Supreme Court of India.
Unfortunately for SEBI, a Delhi-based NGO called Manav Adhikar filed a special leave petition before the Supreme Court, which led to a direction by the apex court (on 28th March 2011) to reconsider its decision.
Interestingly, the humiliation heaped on Dr Mohan Gopal, a man with a formidable legal knowledge (apart from heading the National Judicial Academy, he taught law at the Harvard Law School) is probably unparalleled in so-called independent government bodies.
In fact, apart from re-examining its orders, the SEBI board ought to re-examine its completely inadequate regulatory authority over NSDL. As Moneylife has pointed out, the depositories are governed by a separate statute, which is administered by SEBI, but have grown far beyond their original mandate into areas where SEBI has no jurisdiction. Consequently, much of the business is dangerously outside any supervisory or scrutiny mechanism.
With such overwhelming evidence of such biased decision-making at the highest levels on this issue, and the Supreme Court deeming it fit to reopen the issue, it remains to be seen which way the new SEBI board, under a new chairman, will tilt. Will it go for the truth or for the status-quo?
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