Indian stock markets re-rated by global investors
The domestic stock market is being re-evaluated by global investors. Till the recent past there were few mutual funds in the markets and Indian equities remained undervalued undervalued due to poor demand and lack of funds.
But in the recent past the entry of a large number of foreign funds has filled that gap and helped in improvement of the overall rating for the stocks.

Also the Indian economy has swung up and its fundamentals are strengthening. As a result Indian equities are outperforming those in global markets and has there have been no technical corrections. Fuelling the rise in stock prices is the copious flow of funds from foreign investors who have finally woken up to the Indian growth story.

The rise in stock prices is virtually across the board. Almost all sectors of economy, particularly the manufacturing and cyclical, have been the biggest benefactors of this run up.

The good monsoon of 2003 translates into agriculture-led GDP recovery. The projected GDP growth for FY04 is pegged at 6.5 percent. This will lead to higher rural incomes and coupled with low interest rates should lead to a revival in sales of consumer goods. As a result companies like Hindustan Lever, ITC, Nestle, Britannia and Tata Tea should gain.

In the oil and gas sector there is a huge presence of foreign investors irrespective of the progress of PSU privatisation programme. Leading companies like ONGC and Indian Oil Corporation (IOC) have been re-rated with their stock prices rising 70 percent to 100 percent over the past three months. Other companies like BRPL, MRPL, Kochi Refineries and Chennai Petroleum too have shot up in this period.

Steel stocks are also on the rise as Steel companies have seen a handsome rise in profits as well as valuations. Most steel companies are using the upturn in steel cycle to repay expensive debt and reduce costs. Other commodities like cement, aluminium, zinc and chemicals too have done well.
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NYSE may suspend Silverline
The technology heavy Nasdaq suffered losses during last week with Cisco Systems Inc, registering lower-than-expected fourth-quarter profit. According to a Bloomberg data, the Nasdaq's weekly decline was the biggest since January 17.

However, the broader-indices, the S&P-500 and the Dow Jones Industrial Average fared better as investors seemed to prefer energy, consumer and financial companies stocks.

The S&P-500 Index lost 0.3 per cent to 977.59 and the Dow Jones Industrial Average rose 0.4 per cent to 9191.09 last week; the Nasdaq sank 4.2 per cent to 1644.03.
The domestic market was more upbeat on hopes of encouraging economic indicators. The BSE Sensex gained 1.8 per cent and the NSE S&P CNX Nifty jumped 2.25 per cent.
As for ADRs, most Indian counters closed the week in negative territory though Dr. Reddy's Lab, HDFC Bank and VSNL ended the week firmer.

The VSNL stock saw a rally on reports that it had sold its long-distance communications infrastructure to BSNL. Besides this, VSNL's report that it had acquired assets and network of an International IP-VPN solution provider in the US, Europe and Far East on June 30 catapulted it into the worldwide league of international VPN Service providers. VSNL closed the week sharply higher at $5.32 ($4.90).

Cisco's profit figures affected other Infotech counters; Infosys dropped to $51.19 ($53.80), Satyam to $10.17 ($10.5) and Wipro to $22.90 ($23.49).

The New York Stock Exchange announced that it would suspend the ADR of Silverline Technologies prior to its opening of trading on August 14. This is in view of Silverline's announcement that some of its US subsidiaries were filing for liquidation. Silverline posted (un-audited) consolidated revenues of $42.05 million for the nine-month period ended March 31, 2003. The exchange said this indicated that the company had fallen below the NYSE's continued listing standards regarding average global market capitalisation over a consecutive 30 trading-day period of not less than $50,000,000 and total stockholders' equity of not less than $50,000,000."
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US Fed accused of 'manipulating' interest rates
Washington: After one of the worst US bond market rout in a decade fingers are being pointed at the Federal Reserve with many saying that the central bank overplayed its concerns on deflation in a manipulative effort to push long-term interest rates lower to pump the economy. Some say the bank's credibility has been damaged.

There are divided opinions over the Fed's actions. Some analysts feel that the Fed acted willingly to suppress, manipulate and distort free prices though others say misplaced market bets in the rally that preceded the meltdown could be the result of an unusually open Fed debate and a complex policy message than an intention to deceive.
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Samir Arora, Alliance may contest Sebi ban
Mumbai: Samir Arora, Singapore-based fund manager of Alliance Capital, who recently exited from Alliance Capital Mutual Fund and joined Rana talwar's Sabre Capital, has denied the insider trading charges instituted against him by the Securities and Exchange of India (Sebi).

Sebi has banned Arora from the stock market till further orders on charges of insider trading and compliance inadequacies and for indulging in unfair trade practices in thwarting Alliance Capital Management's attempts to sell its Indian operations.

Arora may contest the Sebi decision along with Alliance Capital lawyers. He says he will work in conjunction with Alliance Capital's lawyers since this matter relates to decisions taken by him in the capacity as chief investment officer of Alliance Capital.

Dhawal Mehta, a research analyst based in India, is likely to take charge at Alliance in India during the transition period.
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Sebi ban on Samir Arora to hit Sabre Capital
Mumbai: Samir Arora's plans of floating a new asset management company with Rana Talwar's Sabre Capital may be delayed due the ongoing fracas with the Securities and Exchange Board of India (Sebi). Arora's new venture was slated to take off in three months.

Sebi's order on Saturday directs Arora not to buy, sell or deal in securities in any manner directly or indirectly on an immediate basis till further orders. Sebi has taken exception to the role played by Arora during the period when Alliance Capital made a bid to sell its AMC business in India at the end of last year. At the time the fund manager is said to have joined hands with Henderson Global Investors to purchase AMC.

Sebi's order says that Arora's arrangement with Henderson Global Investors for the purchase of the stake of ACM in ACAML went against his position as a fund manager. The Sebi order says Arora tried to create panic in the market with his announcement of quitting the fund as a result of which redemptions crossed Rs 1,300 crore from Alliance schemes in two months.
Thus his conduct erodes investors' confidence and is detrimental to their interests as well as the safety and integrity of the securities market. His association in the securities market in any capacity is prejudicial to the interests of investors and the safety and integrity of the securities market," the order said.

Sebi has initiated action against Arora on alleged insider trading in software maker Digital Globalsoft and non-disclosure information after crossing the 5 per cent limit in several companies.
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Madura Coats plans to reduce capital
Chennai: Madura Coats, in which foreign promoters, J.P. Coats Ltd., U.K. and Coats Plc., U.K., hold 93.52 per cent of the total equity, has called an extraordinary general meeting (EGM) for August 25 to vote on a capital reduction proposal.

The company proposes is to reduce the paid-up equity capital by repaying the public shareholders, other than the promoters. Shareholders will get a sum of Rs 40 per share against the par value of Rs 10.

Under the provisions of Section 100 of the Companies Act, a company has the right to extinguish any of its shares that is in excess of its wants.

Madura Coats claims that the extent of equity held by the public, just 6.48 per cent (as per its annual report for 2002) or Rs 3.81 crore (38.13 lakh shares) is in "excess of its wants". The company has an equity capital of Rs 58.85 crore.

The company says it has a high number of public shareholders who hold small number of shares. The capital reduction will remove this category of shareholders and reduce the related administrative cost. But shareholders say the proposal takes away the right of the public shareholders to decide whether to stay with the company or not. They say if the promoters want to acquire 100 per cent control by repaying public shareholders, they should do so at book-value as that represents my wealth as a shareholder of a delisted company.
The book-value of a Madura Coats share is at Rs 61 against the current price of Rs 40 proposed by the company for the capital reduction programme.

A leading chartered accountant in Chennai said that Madura Coats was on legal grounds.
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