Wednesday’s Market Preview: Soft-to-flat opening on the cards

The Indian market is likely to witness a soft-to-flat opening on weak global cues. The US markets closed almost unchanged on Tuesday amid reports that the US Securities and Exchange Commission (SEC) has issued notices to hedge funds and other investment firms in its probe against insider trading. Markets in Asia were mixed in early trade tracking Wall Street that closed flat and on concerns about the pace of the global economic recovery. The SGX Nifty was down 35.50 points to 5,984.50 from its Tuesday’s close of 6,020.

The market opened flat yesterday, tracking the Asian markets which were weak in early trade. Financial stocks traded lower as banks announced hikes in deposit rates, which will put pressure on their interest margins. Selling in heavy-weights also contributed to the indices trading lower. Southward movement continued with the indices touching their day's low in noon trade. Recovery attempts were thwarted by bouts of profit-taking keeping the market in the red and ensuring a steady close for the third straight day. The Sensex settled 46.67 points (0.23%) lower at 19,934.64, below its psychological level. The Nifty closed at 5,976.55, a fall of 15.70 points (0.26%) over its previous close.

The US markets witnessed a lacklustre close on Tuesday following news that the US SEC has sent over a dozen of notices to hedge funds and other financial institutions to probe insider trading and on concerns that the extension of tax cuts could widen the budget deficit. Meanwhile, credit borrowing rose by $3.38 billion in October after increasing a revised $1.23 billion in September, the Federal Reserve said in Washington. Non-revolving loans rose for a third month as federal government education-related lending jumped an unadjusted $31.8 billion.

The Dow shed 3.03 points (0.03%) to 11,359.16. The S&P 500 rose 0.63 points (0.05%) to 1,223.75. The Nasdaq added 3.57 points (0.14%) to 2,598.49.

Markets in Asia were mixed in early trade on Wednesday taking cues from its US peers that ended flat overnight. Worries that China will hike interest rates over the weekend also cut risk appetite. Japanese core machinery orders in October fell to a seasonally-adjusted 1.4% on-month, lower than analysts’ estimates, suggesting that demand might not rise as expected.

The Shanghai Composite declined 0.20%, the Hang Seng fell 0.42%, the Straits Times shed 0.08%, the Seoul Composite was down 0.07% and the Taiwan Weighted lost 0.09%. On the other hand, the Jakarta Composite gained 0.64%, the KLSE Composite rose 0.41% and the Nikkei 225 was up 0.69% in early trade. The SGX Nifty was down 35.50 points to 5,984.50 from its Tuesday’s close of 6,020.

The levy of prepayment penalty by banks on home loans is not against competition laws, the Competition Commission of India has ruled.

Hearing a complaint filed by one Neeraj Malhotra against such charge levied by Deutsche Post Bank Home Finance Ltd, a majority decision given by four members of the Commission on 2nd December said that banks and housing finance companies have not violated Section 3 and 4 relating to anti-competitive practices and abuse of dominant position.


SEBI makes unusual call against broker

Finding stock broker Deepak Jhunjhunwala guilty of indulging in price rigging and manipulation in Twenty First Century (India), market regulator bars him from taking up any new assignment for a month; will not clarify what this means

In an unusual order against a stock broker, the Securities and Exchange Board of India (SEBI) has banned broker Deepak Jhunjhunwala from taking up "any new assignment" for a period of one month for indulging in price rigging and manipulation of shares of Twenty First Century (India) Limited (TFC).

The SEBI investigation has found that Mr Jhunjhunwala had indulged in various cross-deals while trading for his clients, which created artificial volume and price rise in the scrip of TFC. However, the market regulator has failed to clarify the meaning of "new assignment" in its order. After all, Jhunjhunwala seems to run a brokerage business and does not appear to be an employer or a consultant.

Normally, a broker found guilty of stock price manipulation and other such unfair trade practices is banned from undertaking any trading activity for a certain period of time. However, this order to abstain from undertaking any new assignment is a rare and confusing call from the regulator. Moneylife sent an email query to SEBI seeking clarification on the matter, but received no reply till the time of writing.

SEBI conducted investigations regarding buying, selling and dealing in the shares of TFC from November 2001 to April 2002. SEBI investigations revealed that there was a significant rise in both the price and volume of the scrip of TFC during this period. It was trading at Rs2.50 in November 2001 and went up to Rs53 on 12 January 2002, a massive jump of about 2000% in two months! Subsequently, the price came down to Rs3.50 on 30 April 2002. SEBI found that the rise in price of the stock was not supported by any improvement in the fundamentals or any corporate action by TFC.

The investigation further revealed that the trading was concentrated between top 10 brokers who had the scrip. Data provided by CSE, revealed that the trades were structured in nature and the brokers trading in the scrip were engaged in cross-deals for their clients. These cross-deals were about 90% to 97% of the total trades entered by these brokers, among them Deepak Jhunjhunwala.

Based on these findings, SEBI initiated inquiry proceedings against Deepak Jhunjunwala under regulation 5(1) of the inquiry regulations, through an order on 11 March 2008. The inquiry officer submitted his report recommending a prohibition to take up any new assignment for a period of one month to Mr Jhunjhunwala for violating the provisions of regulation 4(a) and (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. The broker apparently admitted to having encouraged the sale and purchase of securities with the object of generating brokerage.

Looking at the facts and circumstances of the case, SEBI found that "Mr Jhunjhunwala had dealt in the scrip of TFC in a manner detrimental to interest of investors. Such acts may threaten the market integrity and orderly development of the market and call for regulatory intervention to protect the interest of investors."



Sushil Maheshwari

6 years ago

The rigging of TFC happened a decade back in 2001-02. Sebi investigation took almost 10 years to find the manipulation. What about the small investors who had probably lost their money in this scip due to the price rigging. Will SEBI compensate the loosers or ask the broker to compensate them. If not what is the purpose of putting a ban for a month.

Tatas was biggest beneficiary of telecom policy: MP

New Delhi: Rajya Sabha Member of Parliament (MP) and former telecom entrepreneur Rajeev Chandrasekhar has questioned the spectrum issues raised by Tata Group supremo Ratan Tata while reminding him that his group company was a major beneficiary of the same, reports PTI.

Accusing Tatas of adopting double standards, he said in an open letter to Tata that “By virtue of dual technology—according to the CAG—your company has caused a loss to the exchequer to the tune of about Rs19,074.8 crore.”

Tata had recently said that old GSM operators were holding excess spectrum free of cost and had demanded a full fledged enquiry into allotment process from 1999 onwards when the new telecom policy came into effect.

Mr Chandrasekhar said Tata Group was one of the major beneficiaries of recent telecom policy by getting GSM spectrum out of turn while 343 applicants are still waiting.

Tatas reacted sharply to the open letter and said it was surprisingly devoid of facts and was meant to sensationalise matters. None of the issues are based on facts as they exist on the ground.

“Tata Teleservices Ltd has always followed government policy and regulations and has applied for any service only after the government has allowed the same,” Tatas said in a statement.

In fact, Mr Chandrasekhar said that TRAI had recommended on 11 May, 2010, that no more UASL licence with bundled spectrum can be given. This means that these 343 applications will never be processed and will never see spectrum.

The Tatas put in their dual technology applications three weeks after the 575 applications for second generation (2G) were received out of which 122 were given licences, 110 rejected and 343 were kept in abeyance, he said.

“You (Tata) will accept that this seems to be a case of arriving late, forming a new queue, jumping the priority and accusing others of getting priority on spectrum allocation and meets your point of out-of-turn allocation of spectrum.

“I am sure the 373 applicants who were rejected for no fault of theirs, will agree—while the Tata Group has sold its equity for billions of dollars to NTT Docomo based on its out-of-turn GSM allocation on dual technology policy,” he said.

As also on hoarding of spectrum by old GSM operators, a charge labelled by Ratan Tata, Mr Chandrasekhar said that TTSL perhaps holds more spectrum (combined CDMA and GSM) than any other operators and still serves least number of subscribers.

In response, Tatas said TTSL applied for dual-technology only after it was announced and was the first and only legitimate applicant, but still the company is yet to get spectrum in Delhi and 39 other key districts in nine telecom circles.

The company even followed the policy of WLL in letter and spirit, and shifted to Unified Access Service Licence (UASL) only after the policy was announced by the government, TTSL statement added.


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