Brokers may be allowed to obtain banks funds for clients
Mumbai: A Securities and Exchange Board of India committee has suggested a more market-friendly margin trading system where brokers act as facilitators of funds from banks and non-banking finance companies to their clients for buying stocks. In the present system, banks fund brokers for margin trading but they cannot on-lend it to their clients and due to this the margin trading did not take off in India.

The SEBI's secondary advisory market committee headed by Dr R H Patil, chairman, Clearing Corporation of India, said brokers would bring borrowers (clients) to the lenders (banks and NBFCs) and borrowing would not be reflected in the balance sheet of the broker. For margin trading, the existing risk containment measures will continue. According to the committee this model can be launched immediately since it does not require any legal amendments. Brokers financing their clients directly for margin trading are also favoured by the committee. However, it feels that this model can be introduced only after making legal changes.
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Retail investors favour equities as bank rates fall
Mumbai: The bullish trend in stock prices and the fall in interest rates have attracted a large number of small investors to the secondary market, brokers were quoted as saying. There has been an increase in the number of new broking and demat accounts from small investors. Anup Bagchi, chief operating officer, ICICIDirect.com, said: "There has been a steady rise in the new accounts, but the activity level (trading) has increased sharply by 60-70 per cent in the last two months". He said ICICIDirect has seen increase in the e-broking accounts by 30,000 since April this year.

Manish Shah, head (retail), Motilal Oswal Securities, said: "There has been increase in volume by 100 per cent and some new investors has also entered the equity market". The main factor for the return of the investors into the equity market is the falling interest rates in banks. Several other brokers too see falling interest rate as a key factor for this.
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FIIs raise stake in bank stocks
Mumbai: Banking stocks are seen as the favourites among FIIs during the April-June quarter this year. FIIs have bought major bank stocks including Union Bank, Canara Bank, Punjab National Bank, Vysya Bank and J&K Bank. This was mentioned in an analysis of the shareholding pattern of 30 banking stocks for the quarter ending June 2003 vis-à-vis the quarter ending March 2003. As many as 12 banks, including PSBs and Private Banks, have witnessed rise in the FII holdings.

State-owned Union Bank saw its FII holdings increase from 3.9 per cent in the March to 13 per cent in June. FII holdings in the privately held Vysya Bank also rose from 4.5 per cent to 11 per cent. Other banks that registered sharp increase in the FII holdings include Oriental Bank of Commerce, IndusInd Bank, Bank of Baroda, HDFC Bank and ICICI Bank. All these stocks have gained ground since January on the back of upward revision in their valuations.
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RBI to help check rupee rise
Mumbai: The rupee moved up by a mere single paise on Tuesday despite good dollar inflows. The appreciation was marred by the Reserve Bank of India's intervention in the market. The domestic currency closed at 45.83/84 against the dollar as compared to Monday's close of 45.84/85. There were good dollar inflows on account of FII and exporter receivables amounting to $70-80 million and there was some usual demand for the greenback.

The RBI was seen in the market buying dollars at 45.83 levels, said a dealer in a state-run bank. The rupee opened at 45.8650/8800, touched an intra-day high of 45.8275, and an intra-day low of 45.8800. In the forwards market, the six months premium closed at 2.10 per cent (2.08 per cent) and the one-year at 1.91 per cent (1.85 per cent).
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