Friends,
The Satyam case is going to put Indian managements on toes now, the govt will have to now bring a law enabling class action suits by shareholders like in USA. The best provision (preventive in nature) under this law would be to allow special audit if supported by not less one per cent of share holders other than promoters who would also bear cost. This type of audit can be had for upto past three years at any time without giving any reasons. Once a group has got it done the report should be published for benefit of all and if any time in future the same period is required to be covered by such any audit it should have support of not less that five per cent shareholders. There is a further need to split powers between CEO and CFO who would remain answerable to the board and Chairman. For frauds in a company , there should double penalty for each of the persons guilty if there are more than one person involved.
There was a press conference held by Satyam this evening which was presided by Ram Mynampati who happens to be a board member too. He has taken charge of the company after the approval of three member board including himself. He seemed to know he was talking but hardly gave further factual information as he said that the matter has come to his knowledge and rest of the fire-fighting team of ten senior people. Surprising is , however, the fact that company has yet not filed a complaint with police. The govt also in fact directed the police to nab Raju for if he has done what he made public he should not be allowed time to conceal/ transfer his assets and money. It was nice to know that the new team has people who were in fact in-charge of the different business activities of the company. The financial crunch seemed to be there but also any impression was given that resources necessary for conduct of business can be arranged. The new team has talked to customers and associates and also the employees. It now seems that a new ‘Satyam’ may emerge which may become more strong after resting and recouping for while after the sudden pshychological jolt because it was business as usual for a long time even without the book cash which in any case was not there for a long long time. The assets, the employees , the customers and the incharge of operations are all there and would have more commitment. It seems that if it is proved that the wrong doing began and eneded at the level of Raju the CEO and the complicity of only one or two more individuals may be there.
The intention of Raju seemed to transfer his own assets to Satyam through merger but he was stopped intrack. If he is willing and does trasfers funds/assets belonging to him to ‘Satyam’ even now , I think he should be helped by compounding his criminal responsibility.So , there seems to light at the other end of tunnel , only the non-imaginative govt. officials involved in the process may spoil the chances of survival/revival.
There are reports that some class action suit against ‘Satyam’ has been started in USA where the biggest sufferers initiate action and rest join. The NSE and BSE have pushed ‘Satyam’ out of Nifty and Sensex.
Price waterhouse , the auditors of the company have said that they carried out the audit as is wont and was supported by evidence. The ‘Satyam’ investigation will reveal many new angles and will enable plugging the loop-holes further.
We should study the Enrons case in USA and do likewise to give relief to the affected. As I told earlier that gains in ‘Satyam’ share trading on bourses should be asked back to be kept in a seperate account till the time the investigations are complete.
The US markets were down yesterday along with European markets , can’t say if Indian development affected the sentiments. Today Indian market remained closed on account of ‘Muhharram’. It is ridiculous to keep markets on account of any religious ground , the markets should only close for declared national holidays which may be not more than two or three.
As for the market movement in future, I think this will be forgotten too quickly because I have reason to believe that smart money is aggressively buying stocks. This confirmed by the fact the 50D WMA for Nifty stands at 2907 against 50D SMA at 2868. The 100D WMA at 3118 against 100D SMA of 3456 suggests that in period prior to last 50 and aggressive selling was undertaken while higher WMA for 50D suggests that aggressive buying is being resorted to.
Just for record that 200D WMA equals 3194/SMA equals 2460, 1500D WMA equals 3617/SMA 2918, 1000D WMA equals 4095/SMA 3627, 500D WMA equals 4344/SMA 4442 and 200D WMA equals 3626/SMA 4035. A close study of these will reveal why and when the markets were bullish or bearish. By observing these figures we know that the bullish fervour remained between 2001 and mdiddle of 2007 and thereafter signs of bearish times were visible. If there is continuous maintenance of higher short term WMA than the SMA , we may take it that the markets will remain bullish.
HariOm,
krsnaKhandelwal
