Regulate, before the big swindle

It was about time, but regulation always follows two steps behind. We needed the Bombay Stock Exchange brokers to create a completely opaque system of trading where the average person had no chance of knowing the price before Securities Exchange Board of India (Sebi) was born to regulate the market and National Stock Exchange was created as a competitor. We needed a Harshad Mehta to know that some loopholes in banking needed to be plugged before the securities trading infrastructure exploded in our faces. We needed Rupalben for Sebi to partially fix the IPO market and be confident enough to say that it won’t happen again. And so on.
Thankfully, a major scam hasn’t broken out so far, but as everyone in the financial community knows, the weakest link in the financial services chain today is the distributor, who in the 10 square feet of space between him and the client, is wreaking financial havoc. Distribution is the last mile in the delivery of financial services to households and this mile is full of potholes.

Opinion in The Indian Express, June 22, 2007

Sensex is hungry but it needs to look beyond earnings to feed itself

The results season has begun and the first signals are not encouraging. The tech and auto bell wethers, Infosys and Bajaj Auto, fell short of market expectations, signalling perhaps more disappointments going forward. And still, the market seems to be behaving as though it has drunk a new energy drink.
Up 2 per cent over the week, 4 per cent over the fortnight, 9 per cent over the month and 68 per cent over the year, the Sensex at 15,273 is hungry, no doubt. What it needs to satiate this hunger is earnings. The rupee rise has reduced the index’s prey — IT stocks and exporters are going to be losing flesh. That leaves telecom, commodities and increasingly real estate.

Opinion in The Indian Express, July 14, 2007

Cheques and IPOs

Initially I thought it applied only to small and upcoming builders — essentially, brokers who having ridden the high velocity of real estate transactions, churning a 2 per cent commission on Rs 50 lakh plus deals every other day for three years in a row, had turned builders. Their entire income in cash, there was not much they could do to grow. So, from buying small plots and building four cubby holes, their enterprises have grown into brands. Since the medium of transaction was cash, their businesses were relegated to the unaccounted backwaters of the economy. Statistically, they are out of the 6.1 per cent share that housing commands in India’s trillion-dollar economy. But Indian economic governance is soft on “livelihood” issues — a person with no education, no skills, no capital could only rely on enterprise for sustenance and the booming real estate sector provided that aplenty and towards whom the state turned a blind eye.

Opinion in The Indian Express, June 13, 2007

Is India’s largest IPO going to change the Sensex stakes?

Post-issue, the DLF stock is by all indications, set to join the Sensex. Its cousin Unitech (trading around Rs 550), is unlikely to be left behind. Their combined weight in the Sensex is expected to be around 2.27 per cent. This is based on the current price of Unitech and the higher of DLF’s Rs 550 price band.
The number could be higher - given the relative fundamentals of the two companies, I expect DLF to settle at a higher price. Comparing valuations, DLF’s price-earnings multiple, given its quality of land banks, the expanse of business and brand value, should come at a 20-25 per cent premium over Unitech’s, but we await the market for ‘price discovery’.

Opinion in The Indian Express, June 09, 2007

This circular is going to kill mutual funds. Really?

Fourteen CEOs of mutual funds. In one room. All dressed in the sharpest pin stripes --- blue-grey and nothing else. But the heads of companies that manage thousands of crores of rupees are all hanging as if there will be no tomorrow. And, if the rather late reaction to Securities and Exchange Board of India’s (Sebi) circular of April 27, 2007 is any indication, they actually believe that there isn’t any tomorrow for an industry that has just crossed the $100-billion mark. They’re probably right in the short term and definitely wrong in the long term.

Opinion in The Indian Express, July 07, 2007

Not an elitist growth this, there are beneficiaries galore

Just 60 basis points short of the 10 per cent mark, the Indian growth juggernaut, at 9.4 per cent in 2006-07 compared to 9 per cent in the previous year, refuses to even pause for breath as it touches the trillion-dollar mark, the 12th country to do so. Powered by the predictable services and not-so-predictable manufacturing, it is Indian enterprise that is converting opportunities into growth, growth into profits, profits into wealth.

Opinion in The Indian Express, June 07, 2007

Spiritual partnership

Between the unrelenting deification of Sonia Gandhi and the merciless death fatwahs on Salman Rushdie lies neither adoration nor hatred, only illiteracy --- or Ignorance. If it were adoration, the petty politicians would have done it through deeds rather than posters. If it was the head of Rushdie the Muslim extremist leaders had wanted, there are easier ways of getting it than making a bold and preposterous pronouncement. Both, I believe, are simply making crude attempts at getting their 15 seconds of fame.

Opinion in The Indian Express, July 01, 2007