Stocks decline on weak global cues

Sensex sheds 84 points, Nifty loses 23 points due to profit-booking

Share prices ended lower on Friday on profit-booking amid weak global cues. The BSE Sensex declined 84 points to close at 17,102 while the NSE Nifty closed 23 points lower at 5,109.

Earlier, Asia’s key benchmark indices in Singapore, Hong Kong and Taiwan fell by 0.25%-0.59%, whereas the indices in China, Indonesia, Japan and South Korea rose by 0.45%-1.61%. 

In the US market on Thursday, the Dow Jones Industrial Average closed 87 points lower while the Nasdaq Composite and the S&P 500 declined 12 points and 9 points, respectively, on concerns about the implication of Bank of America selling over $19 billion worth of common equivalent securities. The market was also bogged down by weakness in the services sector. According to the Institute for Supply Management’s reading, the services index came in at 47.1, indicating a degree of contraction.

In the Indian market on Friday, index-heavyweight Reliance Industries (RIL) was down 1%. Towards the end of trading hours, there were reports that Reliance Exploration and Production DMCC (REP), a wholly-owned subsidiary of Reliance Industries, and Ecopetrol SA have signed farm-out agreements, effective from 23 November 2009, for Borojo North Block 42 and Borojo South Block 43 in Colombia, subject to approval by the Colombian national upstream regulator ANH. As per the agreements, Ecopetrol will acquire a 20% stake in the blocks while REP will retain the balance stake and operatorship of these blocks. The two deepwater blocks cover an area of around 8,000 sqkm in water depths ranging from 60 to 1,500 metres.

Reliance Infrastructure was up 1% after the firm won a road project worth Rs1,725 crore in Maharashtra from the National Highways Authority of India.
Fedders Lloyd Corporation shot up 5% after a consortium of the company received an order worth Rs120 crore.

Unichem Laboratories surged 7%, after the company’s wholly-owned unit, Niche Generics, received marketing authorisation for Anastrozloe tablets in a number of markets within the European Union.

Bilpower Ltd was up 14% after it announced that its subsidiary, Tarapur Transformers, will launch an initial public offer (IPO) of 85,00,000 equity shares though a 100% book-building process.

Navin Fluorine International was up 6% on reports that the company has received 5 lakh carbon credits from the UN, valued at 7 million euros.

Gujarat Fluorochemicals gained 4% on reports that the company is likely to bag 1.5 million carbon credits, valued at 18 million  euros, in mid-December.
SRF is likely to bag 9.5 lakh carbon credits, valued at 12.6 million euros. The stock jumped 3%.

During trading hours, finance minister Pranab Mukherjee told Parliament that the government has no intention of using the proceeds of stake sales in state-run firms to cut its fiscal deficit, but would use them to fund social support programmes.
According to World Bank president Robert Zoellick, India could return to a higher growth trajectory of 8%-9 % in two years, but it needs to invest more in infrastructure for sustaining such growth. He also said that excess liquidity in the global markets is a matter of concern as it was pushing up agricultural commodity prices.

According to an RBI survey of professional forecasters, wholesale price inflation is expected to average 5.8% in fiscal year 2010-11. Based on the government’s budget estimates, India’s gross fiscal deficit at the end of the current fiscal will reach 10.2% of gross domestic product, RBI deputy governor Usha Thorat said.
Meanwhile, the UPA government cleared the introduction of the State Bank of India (Amendment) Bill. The Bill seeks to bring the government’s holding in the country’s largest public sector bank down to 51% from 59%. Under the present laws, the government’s stake in SBI cannot fall below 55 %.

However, the Cabinet has deferred a decision on the controversial Pension Fund Regulatory and Development Authority Bill (PFRDA). Although the Bill was listed in the agenda paper of the meeting, it was not discussed and is likely to be taken up in the next Cabinet meeting. The proposed legislation seeks to bring foreign direct investment (FDI) into the sector by allowing foreign players to hold up to a 26% stake in Indian pension fund companies. It will also permit pension funds to deploy a part of their corpus abroad in approved instruments.
 — Swapnil Suvarna

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    Computerised CAT gets extension for a day

    The CAT 2009 has been extended to accommodate, within this year's testing period, all the registered candidates to whom the test has yet to be delivered as scheduled

    The first computer-based Common Admission Test (CAT), which has been disrupted by virus attacks, was toady extended by a day till 8th December.

    The entrance for admission to Indian Institutes of Managements (IIMs) will now spread over 11 days instead of 10 days as earlier scheduled by Prometric, the American firm conducting the test through computers. The test was scheduled to run in a staggered manner for 10 days from 28th November to 7th December.

    Meanwhile, convener of the computerised Common Admission Test (CAT) Satish Deodhar on Friday said the test for entry into the IIM was “running smoothly” after initial glitches and there were no reasons to scrap it.

    "As a convener, my duty is to ensure that each and every student who had applied for CAT does not face any difficulty in appearing for it," Mr Deodhar, who teaches at IIM-Ahmedabad told PTI.

    "As of now, I have been asked by the IIMs to reschedule it for students who were affected by glitches and make sure that it goes on smoothly," he said.

    He said the directors of all the IIMs can only collectively take a decision on CAT. "Therefore, there is no reason for computerised CAT to be scrapped. The tests should be conducted as planned."

    Except for two testing labs which remained closed, tests across the country were running smoothly, he said.

    Prometric, the American firm conducting the test, had said the initial glitches were due to virus attacks and hardware problems.

    Mr Deodhar said Prometric has set up a help desk with over 60 phone lines to cater to students whose tests have been rescheduled.

    "They (Prometric) have also increased the number of personnel to answer students’ queries," he said.

    IIM-Ahmedabad director Samir Barua has assured that all registered students will be able to take the computer-based test and, if required, the test schedule would be extended by a couple of days.

    More than 8,000 students were affected by glitches, primarily caused by virus attacks, during the first couple of days. For the affected students, the test is being rescheduled at centres with spare capacity.

    The computer-based test had been marred by technical glitches from the very first day on Saturday. Students faced problems with the computers at the exam centres in Delhi, Mumbai, Pune, Chennai, Bengaluru, Kolkata and Bhopal.

    This year, 2.41 lakh students will be taking CAT for entry into the IIMs and other premier management institutes.
    — Yogesh Sapkale

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    Investor Interest   Exclusive
    TeleCanor’s private investor cries foul

    Wealthy private investor Hemant Gupta alleges misuse of his funds by TeleCanor Global; the company on its part claims malicious propaganda is being spread by Mr Gupta to manipulate its stock price

    ‘Buy today’. This was the emphatic recommendation made by private investor Hemant Gupta with regard to Victory Projects Ltd (now renamed as TeleCanor Global Ltd) in February this year. He believed the company was on ‘the threshold of takeoff’ and that its scrip provided ‘huge upside’ potential, making a robust case for investing in the Hyderabad-based payment gateway service provider. Markets were in turmoil then, with shares trading at ridiculously low levels. Mr Gupta suggested buying the scrip immediately, even hinting that it may provide a phenomenal 50% return within a couple of weeks. Several months since then, Mr Gupta is now making an even stronger case for avoiding the company, making serious allegations of cheating against the promoter through a strongly worded article trying to expose the promoter’s alleged shenanigans.

    In what appears to be another investor-promoter relationship turning sour, Hemant Gupta has accused the promoter, Maruti Ram, of conning him to increase stake in the company. He has accused Mr Ram of siphoning off his money for self-serving purposes. The company on its part claims that Mr Gupta has tried to manipulate the share price of the company by unleashing malicious propaganda. The company has said that it may also consider filing a defamation case against Mr Gupta. However, Mr Gupta has vehemently denied receiving any notice from the company regarding the same.

    In his tell-all article in Informed Investor, Mr Gupta revealed that he had pumped funds into the company in 2008 when it barely had resources to make salary payments to its employees. “An investment banker introduced me to the promoter. That time, the company had no business and no money to pay even the salaries (of its employees). I liked the concept of payment gateway as it had good potential,” said Mr Gupta. However, more than a year has passed and the company has apparently made no headway in the payment gateway business.

    Mr Gupta claims that the company Board had decided to issue 7.84 lakh equity shares and 12 lakh warrants in his favour, a resolution to which effect was passed on 22nd June 2009. He had made a payment of Rs1.26 crore towards the same. He now alleges that the company neither issued any shares and warrants nor refunded his money—it instead used the money for the company’s business.
    As per SEBI guidelines, an investor is supposed to pay application money within 15 days of passing the resolution; however since the company needed funds urgently to fund its payment gateway business, Mr Gupta made initial payment towards the application much earlier than the stipulated period.

    Mr Gupta has also alleged that the promoter has siphoned off Rs60.27 lakh by way of salary. The promoter’s wife, who is also the director of the company, has taken Rs47.92 lakh as office rent. He has also alleged that the company has used various tactics to increase its share price. The company apparently attempted to convert his 4.5 lakh warrants into equity shares, but was forced to cancel the same on Mr Gupta’s refusal.

    Mr Gupta also mentions in his article that TeleCanor had called a Board meeting to declare interim dividend, despite having no bank balance to refund his money or any funds to kick-start the payment gateway project. The company’s only purpose, Mr Gupta said, was to jack up share prices by misleading the investors. The Board has since announced its decision to skip interim dividend ‘since it is prudent to complete the ongoing project before such a resolve’.

    Mr Gupta’s shareholding in TeleCanor was at 3.98% as on September 2008 and declined to 3.34% as on March 2009. On March 2009 he offloaded 0.04% shares in the company and subsequently increased it to 5.96% on June 2009, according to data available on the BSE website. His current holding in the company is 1 million warrants and around 5% share bought from the secondary market.

    Mr Gupta’s negative stance marks a distinct U-turn from the time he talked so highly about the company. His rationale at that time sounded almost irrefutable. Financial projections appeared rosy. His main points of contention were the enormous land value and huge potential of the proposed TeleCanor Suite. The suitable location of the company’s land, he had said, would add immense value as it had been declared a Petrochem Hub. As regards TeleCanor’s product, he had stated, “TeleCanor is a unique product which has huge potential. If the company is successful in marketing the same and grabs a few prestigious clients, it can get multi-bagger valuations.” 

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    9 years ago

    Kindly inform about the BALCO stake sale case that has gone against Vedanta.

    What could be the impact of this arbetrarial decision.

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