panch-tattva talk…nifty goes free float

Friends,

Nifty is also going ‘free-float’(it means weights ascribed taking only the non-promoter holding into account) as is the case with Sensex. This had become necessary because those funds which replicate indices find it hard to maintain ratios due to lower availability of floating stock in case of some large cap stock which have lower free-float like in case of some of PSUs.

Inflation rate on point to point basis has gone in to negative territory on June 6th,09 (it was 11.66pc last year on this date). Do we rejoice in this development, I think not, because this also makes the ‘real rate of interest’ very high for the borrowers. If either the interest rates are not revised downwards forthwith or the inflation does not resume journey upwards to a level of around 5pc, it will be a bad omen for the business and industry and by implication the job market will be bad too.

SEBI has announced reduction in fee in case of sale/purchase of securities to Rs 10 per one crore of t/o (for debt it will be Rs 2.5 per one crore) which is half of earlier charge. Similarly, other pockets also have been given concession by SEBI in fees.

The MFs will not be allowed to keep entry loads. The distributors, therefore, have to become service oriented for they will be required to explain and please the investor for taking fee from him. In fact, in insurance sector also the companies should not be required to pay to agents from premiums, rather agents should be allowed to bill the policy takers for the services rendered.

The ‘anchor investor’ concept has been introduced, meaning that a single party can invest upto 30pc of the institutional investors quota in an IPO. In my openion, the earlier concept of underwriting the issue was a better practice and with entry of the worlds biggest merchant bankers in India, any issue size can be easily under-written.

The world’s most markets have been in trading range in last twenty four hours, only Indian markets displayed weakness. It may go up with a jerk today but that would be a stage where there would not be any comfort, in view of the impending budget. The budget excercise is going to be a real tough one due to many contradictions that have to be given room under the budget umbrella.

The ‘rights issues’ will be required to observe far lesser formalities and this will shorten time cycle and will help industry.

HariOm,
krsnaKhandelwal