Nifty, Sensex Moving Sideways Downward Bias – Monday closing report
We had mentioned in Friday’s closing report that Nifty, Sensex may give up some gains. The major indices opened high but ended flat or with minor losses. On the NSE, there were 718 advances, 1,095 declines and 347 unchanged. The trends of the major indices in the course of Monday’s trading are given in the table below:
 
 
Both the Sensex and Nifty opened slightly higher led by heavyweight like Reliance Industries (RIL) and Bharti Airtel following tariff-hike announcement of up to 40% on Sunday by the telecom companies. 
 
The Finance Ministry will recapitalise the state-run general insurance companies ahead of taking further steps in their mergers to shore up their balance sheet and solvency ratio but the amount appears to be short of the requirement. 
 
The ministry recently sought approval from the Parliament for an additional requirement of funds for recapitalisation of insurance companies of Rs2,500 crore through demand for grants. The three firms needed immediate recapitalisation of at least Rs2,000-3,000 crore each to maintain solvency ratios and reduce losses. The total requirement is up to Rs12,000 crore.
 
Mahindra and Mahindra Financial Services said the IFC, part of the World Bank Group, has anchored an investment round of $200 million in the company to create a dedicated pool for micro, small and medium enterprises (MSMEs) in low-income states. In a regulatory filing, Mahindra Finance said the IFC had invested $75 million from its own account and was mobilising $125 million as parallel loans. At least $100 million will be earmarked for women-owned MSMEs and supported by blended finance from the IFC-Goldman Sachs' Women Entrepreneurs Opportunity Facility. Mahindra Finance has committed $225 million to this pool.
 
L&T's technology services arm won a contract from global aerospace major Airbus India to manage its avionics software development, validation, verification and data analytics. "The win from Airbus reaffirms our years of expertise in the aviation space and investment in technologies," the company said.
 
A day after Yes Bank announced that it has received investment interest from a bunch of unknown and somewhat shady investors, the stock tanked 6.22% Kolte-Patil Developers has completed the second tranche payment of Rs70 crore to India Advantage Fund-III (IAF-III) and India Advantage Fund-IV (IAF-IV) managed by ICICI Venture Funds Management for the buyout of their 50% stake in KPDL's flagship township project - Life Republic. Following the buyout, KPDL'S economic interest in Life Republic will increase to 95% and the company's overall economic interest in its entire portfolio of projects will rise from ~60% to ~90%.
 
TVS Motor Company registered sales of 266,582 units in November 2019 as against sales of 319,965 units in the month of November 2018. Shifting of Diwali season to the earlier month and planned adjustment of BS IV stocks is reflecting in the sales growth difference between November 2018 and November 2019.
 
Hero MotoCorp has sold 516,775 units in November 2019, as against 610,252 units in November 2018. Out of this, the company has sold 479,200 motorcycles and 37,575 scooters in November 2019 as compared to 543,982 motorcycles and 66,270 scooters in November 2018.
 
Suven Life Sciences share price plunged 19% after the company announced top-line results of SUVN-502 (Masupirdine) Phase 2A study in patients with Moderate Alzheimer''s Disease (AD). The unique triple-therapy (Masupirdine+ Donepezil+ Memantine) design was based on efficacy results in pre-clinical cognition models in which masupirdine enhances the effects of combined treatment with Donepezil and Memantine. Masupirdine (SUVN-502) is safe and well-tolerated without significant adverse events, while triple therapy of Masupirdine (SUVN-502) with Donepezil and Memantine proof of concept phase 2 study missed its pre-specified primary endpoint. 
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
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  • How To Safeguard Yourself from Karvy-type Frauds?
    Recently, the Securities and Exchange Board of India (SEBI) found that Karvy Broking had illegally diverted nearly Rs2,000 crore of clients’ shares to its own accounts. Equity brokers have defaulted in the past as well; but this is surely one of the largest cases. Also, remember that there is never a single cockroach in the kitchen; we might have more such cases. So what should you, as investor, do to protect your interest?
     
    Best Practices
    Power of Attorney (PoA): Brokers insist on PoA which allows them to operate your demat account. This is a necessary evil. Without PoA, the trade settlement becomes highly risky for the broker. What if you do not deliver the shares you have sold? However, with PoA, brokers have a route to misuse your stocks. The PoA should be limited only to market trades and, as per the latest SEBI rules, brokers need to call you before they execute any trades on your behalf. These calls are recorded. If you receive calls from a mobile phone, do not entertain them. Also, keep a recording on your files.
     
    Delivery Instruction Slips (DIS): DIS is an alternative to PoA for trade settlement. But it is cumbersome for many in the era of Internet. There is an alternative to DIS that is also elaborated below.
     
    Download the Mobile Apps of CDSL/NSDL: Depending on where your demat account is, download and configure the app for your demat account. You would need your demat account number, PAN (permanent account number) and your date of birth, to register. The demat account has a 16-digit numeric character (in case of CDSL), whereas in case of NSDL, the demat account number starts with ‘IN’ followed by a 14-digit numeric code. An example of a demat account number with CDSL can be 01234567890987654; a demat account number with NSDL can be IN01234567890987.
     
    Verify DP Holding with Broker Holding: Once your DP app is set up, you can see your holdings in the DP account. Never forget to verify your DP holding at least once a month and crosscheck it with what you see in the broker’s holding. It will not take more than five minutes (unless you have hundreds of stocks).
     
    Verify Pledging of Your Stocks: Whenever you get the details of your stocks with the DP, also check if any stocks have been pledged without your knowledge. This can be another route to misuse your holding.
     
    Transfer the Cash: Preferably transfer the cash lying with the broker to your bank account. It does not earn anything; the cash remains idle with the broker and is open to misuse.
     
    Active vs Dormant Account: People do invest for the long term and, as they say, buy and forget. Please do not do that in India, at least. Keep your account active. If you have a sizeable holding in your account and if your account is not active, it could become the target of a rouge broker. It can happen not only with stocks but also with bank account. Yours truly is a victim of such a fraud in one of the leading banks where my wife’s dormant bank account was compromised. So be careful and keep it active, may be by way of logging into the account to verify the details/once a month trade, etc.
     
    Check Client Master: The client master has the critical information related to your address and mobile number. Keep it up-to-date and verify it from time to time.
     
    Full-service Brokers vs Discount Brokers
    I got messages from the worried investors about their holdings with discount brokers. I also read articles that discount brokers will suffer the most after the Karvy scandal and investors will move to the full-service brokers. It is important to note that Karvy was not a discount broker. It was a full-service broker. Frauds can happen anywhere. 
     
    People have recommended many full-service brokers on various social media platforms instead of discount brokers. There is nothing wrong with full-service brokers or, for that matter, with discount brokers. The choice is with the individual. 
     
    I would suggest that you go with a broker who is large in size, has execution capabilities and provides uninterrupted services with a stable platform (especially during periods of high volatility). One can also select a combination of full-service and discount brokers.
     
    Some Other Preventive Measures
    • Use CDSL’s ‘easiest’ or NSDL’s ‘speede’. These are Internet-based facilities that permit clearing members of beneficial owner (clients) to submit off-market, on-market, inter-depository and early pay-in debit instructions from their demat account.
    • When you register for easiest/speede, the broker loses the PoA over your demat account; this would mean that you cannot sell shares from your holdings using your trading platform because the broker will no longer be able to debit your shares from the demat account. You will now have the power over your demat account as a result of which you will be able to transfer shares using easiest/speede.
    • Separate your broker from the DP. For example, your DP for the holding can be a prominent broker while your broker for trading purpose could be a small/discount broker who charges less.
     
    Do these steps and best practices guarantee that fraud will not happen? No, it does not; because fraudsters are always there to find new gaps in the system. But these practices will surely help in early detection of fraud/misuse of funds/securities. If there are any new ways/gaps, they should be followed with newer practices.
     
    Trust this helps. Happy Investing
     
    About Author:
    Niteen is one of the founders of Aurum Capital, a SEBI-registered investment adviser. He can be reached on [email protected] and his Twitter handle is @niteen_india.
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    COMMENTS

    Sachin Krishna Telang

    1 week ago

    My person experience with 2 top online brokers\DPs. The online brokers do not prefer Easiest & Speed options . They do not explicitly mention but that is the case.

    I had following complaint registered with SEBI in this regards where I make my point
    SEBIE/MH19/0002472/1
    SEBIE/MH19/0002040/1 & SEBIE/MH19/0002040/2

    I was so against this idea of giving PoA and look at this Karvy issue - it proves my belief.

    krishan

    1 week ago

    I it not clear how to transfer shares from DP by using CDSL easiest. NO option is available there.


    Nakul Kumar Reddy

    1 week ago

    I will never signed to China team,
    I know their tricks well.
    I will not entertain them any more ,
    Not even given small gap to them .
    Trust me.
    Thank you

    ramchandran vishwanathan

    1 week ago

    Your instructions are not practical. There are a bunch of agreements which need to be signed when a trading & DMAT account is opened. No one reads it . Needless to say its one sided . Hope the regulator takes appropriate steps to review these agreements

    S K Nataraj

    2 weeks ago

    The DP Licence should be permanently revoked. only then it will act as a deterrent to others from indulging in such frauds.

    Nakul Kumar Reddy

    2 weeks ago

    I will do anything for u,iam ready to sign in any documents.
    I will do my bank transaction through
    Kotak Mahindra only.
    Boi account is just for shadow for a few days ,I will close that account.

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