Another great article by the Great Khali

yuvrajjj · #1 17th October 2007, 08:22 PM

RD Burman composed most suitable songs for Indian stock markets, when he did not even know what “stock” is. His memorable song – “Chingari koi bhadke, to sawan aag bujaye; Sawan jo aag lagaye, to use kaun bujaye”

SEBI was supposed to monitor the Indian Stock market, not money market. If there is more dollar inflow which causes the Rupee to rise, it was not SEBI problem. By deciding to control money flow in the form restrictions on P-Notes, SEBI overstepped its authority and caused billions of rupees of marketcap wiped out in just under 10 minutes.

India has not attracted even US$ 25 Billions of foreign money as yet, and China has been attracting over US$ 100 to 150 billions per year for over 7 to 8 years in a row. Still, China never complained about the inward money flow, and on the contrary was encouraging more and more spreading its success stories.

And look at our Finance Minister who said

QUOTE Finance Minister P Chidambaram said on Wednesday proposals to moderate portfolio investment by foreign investors were part of a series of steps to moderate capital inflows.
UNQUOTE –
Source Economic Times Stock curbs to moderate capital inflows: FM
17 Oct, 2007, 1105 hrs IST, AGENCIES

When the whole world wants to invest in India, the Government is acting just opposite.

Reason, higher money flow causes Rupee to rise (and Ministers’ holding overseas in Swiss banks go down in value Rupee terms). The primary concern of FM and RBI is to cause the rupee weaker. What for?

Oil is trading at US$ 87. Higher rupee means less cost for gas, energy, power etc which lowers the cost and increase the productivity. However, both RBI and FM go on talking about effect on exports and forget the beneficial effect on imports.

India never saw lower gas/petrol prices. Even when the oil prices dropped to US$ 9/barrel, India never saw prices below Rs 29/litre. No one complains about their rising currency, except third world countries like India. Euro rose from $0.84 to $ 1.43 now or over 70%, yet they never complained. For them, oil prices did not hurt them that much because of rising currency. So also applied to GBP and Canadian dollar which came to parity to be followed by Aussie dollar which is in nineties and soon reach to parity.

India has debt of over US$ 120 Billions. When Rupee was at 48, the debt was Rs 576,000 crores (Equivalent of US$ 120 Billions@48). Now that when the Rupee is at 39.35, the same debt in Indian Rupee terms is 474,000 Crores or about Rs 100,000 crores cheaper or US$ 25 Billions equivalent.

If India has to earn Rs 100,000 crores out of exports, and presuming that profit margin on exports is 10%, it will have to clock the exports of 1,000,000 crores. Does India has capacity to export that much? Does it have that much resource or exportable commodity or manufacturing capacity?

Rupee should have been around Rs 31 if RBI had stopped intervening in the money market? Where is the free money market? If there is a demand for stocks, the stocks rises; similarly if there is a demand of Rupee, it should rise as well in free market. Why RBI’s intervention?

When Rupee was at 48, Thai Baht was 54 – today Rs at just 39 whereas Thai Baht is 31 – Tell me which is stronger economy – Thailand or India? Which is fancied more – Bangkok or Bombay?

RBI intervened number of times, and has bought over US$ 60 Billions in last 2 years in off market transactions. It has lost about 14% on average due to Rupee’s rise or about US$ 9 Billions or about Rs 36000 crores in such sterilization operation.

RBI is one of the most destructive and inefficient financial institution in India. It also defrauded in collusion with SEBI, NSE and BSE in case Global Trust Bank, when there were foreign investors to invest over Rs 1500 crores, and gave away entire bank to Oriental Bank free. All shareholders of GTB got nothing. OBC recovered over Rs 900 crores in just under one year – where that money has gone – why GTB shareholders were not compensated. As per the original scheme on GTB, there was 12 years period for distribution of assets – if that was the case, why did SEBI asked all depositories to write off the GTB shares from books?

GTB’s main assets were shares which have gone up nearly 4 times, which would have made the stock Rs 300 at least. Considering 120 crores of shares outstanding, the total loss to investors is 120 x 300 = Rs 36,000 crores. These investors’ losses were all caused by RBI and SEBI when they should have been protectorate.

I have no hesitation to say that only Crooks and Scoundrels are manning and managing the affairs of RBI and SEBI and they are still given “elated status”. When will the investors and general public learn what is right and wrong for them?

rkkarnani · #2 17th October 2007, 08:26 PM

The TRUTH!!!!! Good article.

prabhjeetrana · #3 17th October 2007, 08:29 PM

Yes SEBI has robbed us small investors, i hope i had some informers in Finance Ministry, i hope this is not the end of Bull Run of last 4 yrs. Infact i think a 5000-6000 fall in sensex will take the froth from the market whatever has been left today and then small birds like us can make their nests again

Jason Bourne · #4 17th October 2007, 08:30 PM

Dude, I think the SEBI has done the right thing by curbing inflows. This actually only creates a bubble in the Indian Markets. The Market has gone up only because of the FII inflow. Just imagine what would happen if there was a massive sell-off by foreign investors. This would cause the markets to crash bigtime. This was high time the SEBI intervened.
JB

karthickdoss · #5 17th October 2007, 09:04 PM

Jason and Yuvrajj,
Both are correct and wrong. Sorry for being so blunt. But, let me make it quick..capital inflow to India is very good and signals strong economy..but how is it coming?? PNs are used by terrorists and illegal money is flowing into indian market thro' PNs.Do we need to allow this ? allow illegal groups and actvities to grow?? This is like stabbing ourselves ..So, what SEBI and RBI doing are right moves to make capital inflows easier and more transparent...
Second, allowing FII to enter Indian market at will and plunder the market , making millions of traders and investors lose their shirts is not fair... a cap is needed but what is the cap is a debatable question..
Allowing the rupee rise is good for the economy;but, how much is the question..think of exporters..can a developing country like us survive without exports or oil imports..am not saying rupee should be allowed to fall but govt(read rbi, sebi) shud help exporters competitive and strike a balance in USD/Re.. See what china does to keep Yuan in place though they import oil more than India.. It is not a easy balance to strike but doable..Govt shud and will do...I feel re shud be allowed to appreciate more..exporters had enuf honeymoon and time for real action..
i am not experienced but there should be prudence in trading or investing...i lost 20k today and right now watching the rain and lightening and thunders (in Bangalore) thinking about what a day i just had...
There are no mistakes in this world except not learning from the mistakes.

uasish · #6 17th October 2007, 10:18 PM

karthikdoss,

I sympathise with you.I also lost 34k in single day that too in cash mkt on the 1st occassion of exchange freeze in my life.
Nothing is lost all this money will come back.

Asish

darsh_goswami · #7 18th October 2007, 03:08 AM

Quote:

Originally Posted by uasish

karthikdoss,

I sympathise with you.I also lost 34k in single day that too in cash mkt on the 1st occassion of exchange freeze in my life.
Nothing is lost all this money will come back.

Asish

AshishDa,..
For the 3rd time i'm witnessing the freeze in market. And it always happened not becoz of the investors , but becoz of dirty politics.
First, when government changed from Bjp to Con66g.
Second, when FM said something wrong related to Fii inflows in 2006.
This is third time.

Never lost money in such falls coz market always gives u a small sign to exit. If u can not then one can not help u out.

Im agree with yuvraaj .. about Rupee apriciation.. but one must not forget the story of monkey and the businessman and the villagers ( somebody has posted here in the past , )

Indian economy can grow on its own. Even if There is not much of FII inflows. Markets reacting bullish ( it should not be one sided ).

Will post more but laters.
Regards,..
Darsh

uasish · #8 18th October 2007, 05:16 AM

darsh goswami,

Your this statement is true.

"If u can not then one can not help u out."

Actually nobody did help me out,mkt only helped me out .

Asish

scorpio155 · #9 18th October 2007, 05:44 AM

Great article - can you give the source of the article or you worte this. It was a great read thanks

munde_77 · #10 18th October 2007, 09:00 AM

Quote:

Originally Posted by yuvrajjj

RD Burman composed most suitable songs for Indian stock markets, when he did not even know what “stock” is. His memorable song – “Chingari koi bhadke, to sawan aag bujaye; Sawan jo aag lagaye, to use kaun bujaye”

SEBI was supposed to monitor the Indian Stock market, not money market. If there is more dollar inflow which causes the Rupee to rise, it was not SEBI problem. By deciding to control money flow in the form restrictions on P-Notes, SEBI overstepped its authority and caused billions of rupees of marketcap wiped out in just under 10 minutes.

India has not attracted even US$ 25 Billions of foreign money as yet, and China has been attracting over US$ 100 to 150 billions per year for over 7 to 8 years in a row. Still, China never complained about the inward money flow, and on the contrary was encouraging more and more spreading its success stories.

And look at our Finance Minister who said

QUOTE Finance Minister P Chidambaram said on Wednesday proposals to moderate portfolio investment by foreign investors were part of a series of steps to moderate capital inflows.
UNQUOTE –
Source Economic Times Stock curbs to moderate capital inflows: FM
17 Oct, 2007, 1105 hrs IST, AGENCIES

When the whole world wants to invest in India, the Government is acting just opposite.

Reason, higher money flow causes Rupee to rise (and Ministers’ holding overseas in Swiss banks go down in value Rupee terms). The primary concern of FM and RBI is to cause the rupee weaker. What for?

Oil is trading at US$ 87. Higher rupee means less cost for gas, energy, power etc which lowers the cost and increase the productivity. However, both RBI and FM go on talking about effect on exports and forget the beneficial effect on imports.

India never saw lower gas/petrol prices. Even when the oil prices dropped to US$ 9/barrel, India never saw prices below Rs 29/litre. No one complains about their rising currency, except third world countries like India. Euro rose from $0.84 to $ 1.43 now or over 70%, yet they never complained. For them, oil prices did not hurt them that much because of rising currency. So also applied to GBP and Canadian dollar which came to parity to be followed by Aussie dollar which is in nineties and soon reach to parity.

India has debt of over US$ 120 Billions. When Rupee was at 48, the debt was Rs 576,000 crores (Equivalent of US$ 120 Billions@48). Now that when the Rupee is at 39.35, the same debt in Indian Rupee terms is 474,000 Crores or about Rs 100,000 crores cheaper or US$ 25 Billions equivalent.

If India has to earn Rs 100,000 crores out of exports, and presuming that profit margin on exports is 10%, it will have to clock the exports of 1,000,000 crores. Does India has capacity to export that much? Does it have that much resource or exportable commodity or manufacturing capacity?

Rupee should have been around Rs 31 if RBI had stopped intervening in the money market? Where is the free money market? If there is a demand for stocks, the stocks rises; similarly if there is a demand of Rupee, it should rise as well in free market. Why RBI’s intervention?

When Rupee was at 48, Thai Baht was 54 – today Rs at just 39 whereas Thai Baht is 31 – Tell me which is stronger economy – Thailand or India? Which is fancied more – Bangkok or Bombay?

RBI intervened number of times, and has bought over US$ 60 Billions in last 2 years in off market transactions. It has lost about 14% on average due to Rupee’s rise or about US$ 9 Billions or about Rs 36000 crores in such sterilization operation.

RBI is one of the most destructive and inefficient financial institution in India. It also defrauded in collusion with SEBI, NSE and BSE in case Global Trust Bank, when there were foreign investors to invest over Rs 1500 crores, and gave away entire bank to Oriental Bank free. All shareholders of GTB got nothing. OBC recovered over Rs 900 crores in just under one year – where that money has gone – why GTB shareholders were not compensated. As per the original scheme on GTB, there was 12 years period for distribution of assets – if that was the case, why did SEBI asked all depositories to write off the GTB shares from books?

GTB’s main assets were shares which have gone up nearly 4 times, which would have made the stock Rs 300 at least. Considering 120 crores of shares outstanding, the total loss to investors is 120 x 300 = Rs 36,000 crores. These investors’ losses were all caused by RBI and SEBI when they should have been protectorate.

I have no hesitation to say that only Crooks and Scoundrels are manning and managing the affairs of RBI and SEBI and they are still given “elated status”. When will the investors and general public learn what is right and wrong for them?

Very good article..................gr8..................