Re: Porn Flakes: The Story Behind 'OchocincOs'
http://www.cnbc.com/id/39503668/
This incident shows how serious a small error can lead to.
http://www.cnbc.com/id/39503668/
This incident shows how serious a small error can lead to.
Current news & Rumours in the mkt
- Thread starter praveen taneja
- Start date
The massive haemorrhage continues: Around Rs21,730 crore flows out of equity mutual funds in 14 months
Ever since the Securities and Exchange Board of India (SEBI) banned the entry load for mutual fund schemes, fund companies have been suffering from a steady haemorrhage of cash from their equity schemes. The carnage continues
The mutual fund (MF) industry continues to bleed after the Securities and Exchange Board of India (SEBI) withdrew entry loads in August 2009.
As per data released by the Association of Mutual Funds in India (AMFI) on Wednesday, Rs7,281 crore was pulled out of equity schemes, including equity-linked tax schemes, in September 2010, taking the total redemption over the past 14 months to Rs21,731 crore.
This is all the more galling for the fund industry, because mutual funds normally benefit from inflow of funds when the market is rising. The Sensex has risen 31% from 15,666.64 in August 2009 to 20,543.08 as of 6 October 2010.
The truth is that the ban on entry loads has dried up the distributors' revenues and they are now asking investors to consider Unit-linked Insurance Plans (ULIPs) and company fixed deposits (FDs) as the next best investment opportunity.
This is unfortunate because ULIPs are no better than equity funds unless they are held for a longer period while FDs are unsecured investments. But the commissions on ULIPs and FDs are extremely attractive, which is why distributors are pushing them.
Fund companies privately curse the changes SEBI has brought about in the last one year in reducing sales incentives while many distributors have gone out of the fund-selling business altogether, suddenly finding the business unviable.
The scenario has been continuously dismal for the MF industry.
In June, investors pulled out Rs1,446 crore from equity schemes. In July alone, Rs3,400 crore flowed out of the industry. Equity schemes witnessed Rs2,890 crore net outflow in August 2010, continuing the trend from the past several months.
The continuous outflow of cash can only be attributed to SEBI's order of banning entry loads and forcing fund distributors to make money by 'advising' investors.
Some say that as the markets reached new highs, equity mutual fund investors have been quick to cash in. A majority of the investors who had put their money at the peak of the markets have started pulling out money from equity schemes, say some sources in the fund industry. But this does not explain why there has been continuous outflow of funds over the past 14 months. Coincidentally, SEBI had banned entry loads on new fund sales and then followed it up with a host of measures to 'tone up' the fund industry. Obviously, none of these 'measures' are working.
But now, a clearer picture is emerging. Fund companies are staring at a bleak future. Will a sharp correction in the Sensex, which has been on a roll thanks to the influx of overseas hot money over the past few months, sound the death knell for the industry?
Ever since the Securities and Exchange Board of India (SEBI) banned the entry load for mutual fund schemes, fund companies have been suffering from a steady haemorrhage of cash from their equity schemes. The carnage continues
The mutual fund (MF) industry continues to bleed after the Securities and Exchange Board of India (SEBI) withdrew entry loads in August 2009.
As per data released by the Association of Mutual Funds in India (AMFI) on Wednesday, Rs7,281 crore was pulled out of equity schemes, including equity-linked tax schemes, in September 2010, taking the total redemption over the past 14 months to Rs21,731 crore.
This is all the more galling for the fund industry, because mutual funds normally benefit from inflow of funds when the market is rising. The Sensex has risen 31% from 15,666.64 in August 2009 to 20,543.08 as of 6 October 2010.
The truth is that the ban on entry loads has dried up the distributors' revenues and they are now asking investors to consider Unit-linked Insurance Plans (ULIPs) and company fixed deposits (FDs) as the next best investment opportunity.
This is unfortunate because ULIPs are no better than equity funds unless they are held for a longer period while FDs are unsecured investments. But the commissions on ULIPs and FDs are extremely attractive, which is why distributors are pushing them.
Fund companies privately curse the changes SEBI has brought about in the last one year in reducing sales incentives while many distributors have gone out of the fund-selling business altogether, suddenly finding the business unviable.
The scenario has been continuously dismal for the MF industry.
In June, investors pulled out Rs1,446 crore from equity schemes. In July alone, Rs3,400 crore flowed out of the industry. Equity schemes witnessed Rs2,890 crore net outflow in August 2010, continuing the trend from the past several months.
The continuous outflow of cash can only be attributed to SEBI's order of banning entry loads and forcing fund distributors to make money by 'advising' investors.
Some say that as the markets reached new highs, equity mutual fund investors have been quick to cash in. A majority of the investors who had put their money at the peak of the markets have started pulling out money from equity schemes, say some sources in the fund industry. But this does not explain why there has been continuous outflow of funds over the past 14 months. Coincidentally, SEBI had banned entry loads on new fund sales and then followed it up with a host of measures to 'tone up' the fund industry. Obviously, none of these 'measures' are working.
But now, a clearer picture is emerging. Fund companies are staring at a bleak future. Will a sharp correction in the Sensex, which has been on a roll thanks to the influx of overseas hot money over the past few months, sound the death knell for the industry?
WEEK AHEAD
Q2 results to set the tone
The Q2 September 2010 results season, which kick-starts next week, is a major near-term trigger for the market, which has risen sharply over the past few weeks on heavy buying by foreign funds. Possibility of a near-term weakness on the bourses cannot be ruled out as investors may sell some shares in the secondary market to make a room for investment in the initial public offer (IPO) of Coal India, billed as the country's largest issue ever.
The IPO of Coal India opens for bidding on 18 October 2010. The government plans to raise about Rs 15000 crore to Rs 16000 crore from divestment of 10% stake in Coal India.
Batteries maker Exide Industries starts Q2 September 2010 reporting season on Tuesday, 12 October 2010. Axis Bank, LIC Housing Finance and Rallis India are due to report Q2 results on Thursday, 14 October 2010, to be followed by IT bellwether Infosys Technologies on Friday, 15 October 2010.
Higher volumes and price hike will aid earnings growth of most auto firms in Q2 September 2010 though analysts will closely eye operating profit margins and outlook on margins in the face of rising metal prices.
Tier-I IT firms viz. Infosys, TCS, Wipro, and HCL Tech are seen reporting strong earnings growth in Q2 September 2010 as high volumes will boost operating margins. However, the IT sector faces headwind of a firm rupee in Q3 December 2010. The rupee hit a 2-year high against the dollar on Thursday, 7 October 2010.
Banks are seen reporting decent-to-strong earnings growth on the back of pick-up in credit offtake. Manufacturers of base metals are also seen reporting strong Q2 results on the back of higher metal prices. Increase in product prices will offset higher input costs for consumer staples firms in Q2 September 2010. But, cement firms will report dismal results due to a sharp fall in cement prices during the monsoon season.
Some macro data is also in focus next week. On Tuesday, 12 October 2010, the government will unveil data on industrial production for August 2010. Industrial production had jumped a robust 13.8% in July 2010. On Thursday, 14 October 2010, the government will unveil data on wholesale price index for September 2010. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.
India needs to take "drastic" action to control inflation, Reserve Bank of India deputy governor Subir Gokarn said recently. He said inflation remains well above the Reserve Bank's comfort zone. Gokarn said normalisation of monetary policy was now near completion, and further policy action would depend on upcoming data on growth and inflation.
An unavoidable consequence of runaway inflation is that drastic action by the central bank and also by the government is needed to rein it in, which is bound to disrupt growth process, Gokarn said. Food and energy price shocks have been a regular part of the economic landscape and may continue to be so in the future, Gokarn said. The next quarterly policy review by the central bank is on 2 November 2010.
Capacity constraints in the rapidly expanding economy are contributing to the sharp rise in prices, the International Monetary Fund said in its World Economic Outlook for 2010 released on 6 October 2010.
On the global front, there has been growing speculation in the markets as to whether the Federal Reserve will choose to implement another round of quantitative easing at its November 2010 meeting in order to boost the sluggish recovery.
Emerging-market equity funds received net inflows of more than $6 billion in the week to 6 October 2010, the most since late 2007, according to the latest data from global fund tracker EPFR Global.
Q2 results to set the tone
The Q2 September 2010 results season, which kick-starts next week, is a major near-term trigger for the market, which has risen sharply over the past few weeks on heavy buying by foreign funds. Possibility of a near-term weakness on the bourses cannot be ruled out as investors may sell some shares in the secondary market to make a room for investment in the initial public offer (IPO) of Coal India, billed as the country's largest issue ever.
The IPO of Coal India opens for bidding on 18 October 2010. The government plans to raise about Rs 15000 crore to Rs 16000 crore from divestment of 10% stake in Coal India.
Batteries maker Exide Industries starts Q2 September 2010 reporting season on Tuesday, 12 October 2010. Axis Bank, LIC Housing Finance and Rallis India are due to report Q2 results on Thursday, 14 October 2010, to be followed by IT bellwether Infosys Technologies on Friday, 15 October 2010.
Higher volumes and price hike will aid earnings growth of most auto firms in Q2 September 2010 though analysts will closely eye operating profit margins and outlook on margins in the face of rising metal prices.
Tier-I IT firms viz. Infosys, TCS, Wipro, and HCL Tech are seen reporting strong earnings growth in Q2 September 2010 as high volumes will boost operating margins. However, the IT sector faces headwind of a firm rupee in Q3 December 2010. The rupee hit a 2-year high against the dollar on Thursday, 7 October 2010.
Banks are seen reporting decent-to-strong earnings growth on the back of pick-up in credit offtake. Manufacturers of base metals are also seen reporting strong Q2 results on the back of higher metal prices. Increase in product prices will offset higher input costs for consumer staples firms in Q2 September 2010. But, cement firms will report dismal results due to a sharp fall in cement prices during the monsoon season.
Some macro data is also in focus next week. On Tuesday, 12 October 2010, the government will unveil data on industrial production for August 2010. Industrial production had jumped a robust 13.8% in July 2010. On Thursday, 14 October 2010, the government will unveil data on wholesale price index for September 2010. The wholesale price index, the most widely watched gauge of prices in India, rose 8.5% in August 2010.
India needs to take "drastic" action to control inflation, Reserve Bank of India deputy governor Subir Gokarn said recently. He said inflation remains well above the Reserve Bank's comfort zone. Gokarn said normalisation of monetary policy was now near completion, and further policy action would depend on upcoming data on growth and inflation.
An unavoidable consequence of runaway inflation is that drastic action by the central bank and also by the government is needed to rein it in, which is bound to disrupt growth process, Gokarn said. Food and energy price shocks have been a regular part of the economic landscape and may continue to be so in the future, Gokarn said. The next quarterly policy review by the central bank is on 2 November 2010.
Capacity constraints in the rapidly expanding economy are contributing to the sharp rise in prices, the International Monetary Fund said in its World Economic Outlook for 2010 released on 6 October 2010.
On the global front, there has been growing speculation in the markets as to whether the Federal Reserve will choose to implement another round of quantitative easing at its November 2010 meeting in order to boost the sluggish recovery.
Emerging-market equity funds received net inflows of more than $6 billion in the week to 6 October 2010, the most since late 2007, according to the latest data from global fund tracker EPFR Global.
Short-sellers on notice, breakout may fuel fresh rally
MUMBAI: The breakout of the Nifty above 6200 levels on Wednesday is expected to further discourage short-sellers , and widen the premium between Nifty October futures and the spot, according to traders tracking the derivative segment.
Nifty October futures have been trading at a 25-35-point premium to spot for sometime now, despite the market struggling for direction in the past couple of weeks. On Wednesday, the Nifty surged 2% to close at 6231.5, and many traders see this breakout as a signal that the market is set to resume its uptrend.
Heavy purchases by foreign institutional investors (FIIs) have boosted benchmark indices by 13% in less than one-and-a-half months, and brokers feel that strong liquidity flows could lift share prices even higher in the short term. Some other indicators of the derivatives market also suggest that the Nifty could move higher in the near term.
The India Volatility Index (VIX), a measure of traders’ expectation of volatility, is currently at 20%, which is towards the lower end of the 18-26% band that the index has been moving over the past three months. The volatility is expected to increase in the market in the earnings season, as companies announce their second-quarter results. Lower the VIX reading, narrower is the band that the index is likely to move in.
A range-bound market, too, spells bad news for short-sellers, since they would not be able to profit much, because of small movements.
The cost-of-carry has doubled from 6.5% to 13% over the past one month, and this is usually a very bullish indication. Cost-of-carry is the additional cost a buyer of the future contract is willing to pay to carry his derivatives position till the expiry of that contract.
“We were seeing selling in the cash market, because the cost-of-carry in the Nifty was still huge due to which the premium was on the higher side, even as the market corrected from 6225 to 6070 levels,” said Amit Gupta, head-derivatives, ICICI Securities.
Among options, good accumulation of open interest has been seen in 6300 and 6400 strike prices, indicating that traders expect the market to move higher in the coming days. However, some traders have also sold call options at these levels as they don’t expect the index to top these levels in the short run. Most of the put options are for the 6000 strike price, indicating that the writers don’t expect the index to fall below this mark.
“The Nifty will continue to trade in a range of around 6050- 6320 in the short term,” said Manoj Murlidharan, AVP-derivatives, IIFL PReMIA.
Before the rally began in September, the Nifty was trading in a narrow band, and the implied volatility (IV) — a measure of traders perception of near-term risk in the market — was languishing near a multi-year low of 14%. Many traders wrote index options, thinking that the index would continue to remain range-bound.
But the sudden surge in the market caused sizeable losses to these traders. On Wednesday, the India VIX closed at 20.5%, down 3.25% over its previous close.
“With the September expiry having seen a good VWAP (volume weighted average price) based buying and as rollovers have been in line with the previous expiry, Delta traders might go in for Delta Neutral Long Vega strategies in the short term to take cash in the result season,” says Mr Muralidharan. This means that irrespective of the direction of the market, traders will make money on the rise in volatility.
MUMBAI: The breakout of the Nifty above 6200 levels on Wednesday is expected to further discourage short-sellers , and widen the premium between Nifty October futures and the spot, according to traders tracking the derivative segment.
Nifty October futures have been trading at a 25-35-point premium to spot for sometime now, despite the market struggling for direction in the past couple of weeks. On Wednesday, the Nifty surged 2% to close at 6231.5, and many traders see this breakout as a signal that the market is set to resume its uptrend.
Heavy purchases by foreign institutional investors (FIIs) have boosted benchmark indices by 13% in less than one-and-a-half months, and brokers feel that strong liquidity flows could lift share prices even higher in the short term. Some other indicators of the derivatives market also suggest that the Nifty could move higher in the near term.
The India Volatility Index (VIX), a measure of traders’ expectation of volatility, is currently at 20%, which is towards the lower end of the 18-26% band that the index has been moving over the past three months. The volatility is expected to increase in the market in the earnings season, as companies announce their second-quarter results. Lower the VIX reading, narrower is the band that the index is likely to move in.
A range-bound market, too, spells bad news for short-sellers, since they would not be able to profit much, because of small movements.
The cost-of-carry has doubled from 6.5% to 13% over the past one month, and this is usually a very bullish indication. Cost-of-carry is the additional cost a buyer of the future contract is willing to pay to carry his derivatives position till the expiry of that contract.
“We were seeing selling in the cash market, because the cost-of-carry in the Nifty was still huge due to which the premium was on the higher side, even as the market corrected from 6225 to 6070 levels,” said Amit Gupta, head-derivatives, ICICI Securities.
Among options, good accumulation of open interest has been seen in 6300 and 6400 strike prices, indicating that traders expect the market to move higher in the coming days. However, some traders have also sold call options at these levels as they don’t expect the index to top these levels in the short run. Most of the put options are for the 6000 strike price, indicating that the writers don’t expect the index to fall below this mark.
“The Nifty will continue to trade in a range of around 6050- 6320 in the short term,” said Manoj Murlidharan, AVP-derivatives, IIFL PReMIA.
Before the rally began in September, the Nifty was trading in a narrow band, and the implied volatility (IV) — a measure of traders perception of near-term risk in the market — was languishing near a multi-year low of 14%. Many traders wrote index options, thinking that the index would continue to remain range-bound.
But the sudden surge in the market caused sizeable losses to these traders. On Wednesday, the India VIX closed at 20.5%, down 3.25% over its previous close.
“With the September expiry having seen a good VWAP (volume weighted average price) based buying and as rollovers have been in line with the previous expiry, Delta traders might go in for Delta Neutral Long Vega strategies in the short term to take cash in the result season,” says Mr Muralidharan. This means that irrespective of the direction of the market, traders will make money on the rise in volatility.
Sebi orders exit option in COAL INDIA IPO
CIL collects 2.35 trillion, Sebi orders exit optionThe Sebi took the decision because the profit and loss account of the miner, submitted to the regulator as part of CIL’s prospectus for the initial public offering, contained errors.
Mumbai: In an embarrassment to the Central government and blue-blooded investment bankers who sold the record Rs15,000 crore share sale by Coal India Ltd (CIL), the capital market regulator on Wednesday asked the company to offer an exit option to all investors, including qualified institutional bidders, until 25 October.
The Securities and Exchange Board of India, or Sebi, took the decision because the profit and loss account of the miner, submitted to the regulator as part of CIL’s prospectus for the initial public offering (IPO), contained errors.
The IPO, which closed on Thursday, was subscribed 15.2 times, attracting Rs2.35 trillion from investors.
The portion kept for institutional buyers was subscribed 25 times. The 35% earmarked for retail investors was subscribed nearly twice, according to data from the National Stock Exchange.
“Investor response across segments has been tremendous. Retail investors’ portion, which was fully subscribed overnight, saw more subscriptions. We will know the final numbers late in the night,” said Sanjay Sharma, managing director, Deutsche Equities (India) Pvt. Ltd, one of the merchant bankers to the issue.
The error in the profit and loss account was pointed out to Sebi by some individuals, disinvestment secretary Sumit Bose told Mint over the telephone.
“Sebi has asked us to issue this corrigendum and give a withdrawal option,” he said. “We are like any other issuer. So we follow what the regulator says.”
According to Bose, in the profit and loss statement for the quarter ended 30 June, an item “accretion in stock” had been mentioned as Rs31,94.5 crore instead of Rs5.4 crore, while the sum under the head “other income” should have been Rs31,94.5 crore instead of Rs5.4 crore.
The company and bankers tried to play down the error. While CIL said it was a printing error, a merchant banker involved in the issue called it a clerical error.
“A mistake is a mistake. It happens,” said A.K. Sinha, director-finance, CIL. “It happened because the documents were hurriedly printed. Last night, it came to our notice. It was an error of interchanging the stock with other income. The interchange has happened only in CIL’s stand-alone statement. It is not reflected in the consolidated numbers. There is no impact on profitability. It is not material.”
S. Subramanian, head of investment banking at Enam Securities Pvt. Ltd, another banker to the issue, said: “The withdrawal option has been given because of a small clerical error in the financial statement. The statement has interchanged other income with closing stock. This has led to some difference in numbers. We have issued a corrigendum.”
Investors who choose to withdraw their bids will get a full refund of their money.
If too many investors opt to withdraw, it could push the listing beyond the originally projected 12 days from the close of the offer.
“If there are huge withdrawals, then we may have a problem. But we don’t expect this,” said M.V. Ramnarayanan, director, Link Intime Ltd, registrar to the issue.
Disinvestment secretary Bose also said that the error was minor. “You can see it for yourself in the prospectus. I don’t think this will affect the listing timeline.” According to him, the listing is expected on 4 November.
Book running lead managers are responsible for proper due diligence of the prospectus and to ensure that there are no such errors, omissions or misstatements.
Citigroup Capital Markets India Pvt. Ltd, Kotak Mahindra Capital Co. Ltd, Enam Securities, Deutsche Equities, DSP Merrill Lynch Ltd and Morgan Stanley India Co. Pvt. Ltd are the book running lead managers for the issue.
They offered their services virtually for free as the government gives the mandate for such issues to the lowest bidder. The bankers had quoted a near-zero fee for selling the Coal India issue.
R. Balakrishnan, a Chennai-based investment adviser and columnist, said the regulator was right in forcing an exit option to be offered to investors.
“It is not right to say the error is minor and so Sebi should have been soft. It is a question of principle. These investment banks are all big names. It reflects on the quality of people they have. It shows that they are extremely careless,” he said.
According to him, ordinary investors do not have enough the time or wherewithal to do a due diligence on a company’s claims. “They have to rely on the merchant bankers. Therefore, Sebi should take strict action on the bankers for such lapses,” he said.
In the past few months, two small companies have offered exit options to investors for similar reasons. The IPO of VA Tech Wabag, a Chennai-based water and waste treatment company, which closed on 27 September, had to offer an exit option to investors as its peer group comparisons were based on incorrect numbers.
In July, Sebi had told Ahmedabad-based Aster Silicates Ltd to provide an exit option to investors because it had not disclosed some cases in which it was involved.
Murali R., a bank employee who was following the hype around Coal India IPO, said: “I got to know through a friend that there is such an exit option. But I searched for it in the Net (Internet) and looked up the TV channels. I could not find any information till late afternoon.”
The corrigendum was not on the websites of Sebi or the stock exchanges.
Although the exchanges received the corrigendum during the day, it was not seen in the websites of both the Bombay Stock Exchange and NSE until Thursday evening.
“We have received a corrigendum. Since the stock is not yet listed, it is not on the website. However, it will be seen on the IPO bidding system,” an exchange official said.
CIL collects 2.35 trillion, Sebi orders exit optionThe Sebi took the decision because the profit and loss account of the miner, submitted to the regulator as part of CIL’s prospectus for the initial public offering, contained errors.
Mumbai: In an embarrassment to the Central government and blue-blooded investment bankers who sold the record Rs15,000 crore share sale by Coal India Ltd (CIL), the capital market regulator on Wednesday asked the company to offer an exit option to all investors, including qualified institutional bidders, until 25 October.
The Securities and Exchange Board of India, or Sebi, took the decision because the profit and loss account of the miner, submitted to the regulator as part of CIL’s prospectus for the initial public offering (IPO), contained errors.
The IPO, which closed on Thursday, was subscribed 15.2 times, attracting Rs2.35 trillion from investors.
The portion kept for institutional buyers was subscribed 25 times. The 35% earmarked for retail investors was subscribed nearly twice, according to data from the National Stock Exchange.
“Investor response across segments has been tremendous. Retail investors’ portion, which was fully subscribed overnight, saw more subscriptions. We will know the final numbers late in the night,” said Sanjay Sharma, managing director, Deutsche Equities (India) Pvt. Ltd, one of the merchant bankers to the issue.
The error in the profit and loss account was pointed out to Sebi by some individuals, disinvestment secretary Sumit Bose told Mint over the telephone.
“Sebi has asked us to issue this corrigendum and give a withdrawal option,” he said. “We are like any other issuer. So we follow what the regulator says.”
According to Bose, in the profit and loss statement for the quarter ended 30 June, an item “accretion in stock” had been mentioned as Rs31,94.5 crore instead of Rs5.4 crore, while the sum under the head “other income” should have been Rs31,94.5 crore instead of Rs5.4 crore.
The company and bankers tried to play down the error. While CIL said it was a printing error, a merchant banker involved in the issue called it a clerical error.
“A mistake is a mistake. It happens,” said A.K. Sinha, director-finance, CIL. “It happened because the documents were hurriedly printed. Last night, it came to our notice. It was an error of interchanging the stock with other income. The interchange has happened only in CIL’s stand-alone statement. It is not reflected in the consolidated numbers. There is no impact on profitability. It is not material.”
S. Subramanian, head of investment banking at Enam Securities Pvt. Ltd, another banker to the issue, said: “The withdrawal option has been given because of a small clerical error in the financial statement. The statement has interchanged other income with closing stock. This has led to some difference in numbers. We have issued a corrigendum.”
Investors who choose to withdraw their bids will get a full refund of their money.
If too many investors opt to withdraw, it could push the listing beyond the originally projected 12 days from the close of the offer.
“If there are huge withdrawals, then we may have a problem. But we don’t expect this,” said M.V. Ramnarayanan, director, Link Intime Ltd, registrar to the issue.
Disinvestment secretary Bose also said that the error was minor. “You can see it for yourself in the prospectus. I don’t think this will affect the listing timeline.” According to him, the listing is expected on 4 November.
Book running lead managers are responsible for proper due diligence of the prospectus and to ensure that there are no such errors, omissions or misstatements.
Citigroup Capital Markets India Pvt. Ltd, Kotak Mahindra Capital Co. Ltd, Enam Securities, Deutsche Equities, DSP Merrill Lynch Ltd and Morgan Stanley India Co. Pvt. Ltd are the book running lead managers for the issue.
They offered their services virtually for free as the government gives the mandate for such issues to the lowest bidder. The bankers had quoted a near-zero fee for selling the Coal India issue.
R. Balakrishnan, a Chennai-based investment adviser and columnist, said the regulator was right in forcing an exit option to be offered to investors.
“It is not right to say the error is minor and so Sebi should have been soft. It is a question of principle. These investment banks are all big names. It reflects on the quality of people they have. It shows that they are extremely careless,” he said.
According to him, ordinary investors do not have enough the time or wherewithal to do a due diligence on a company’s claims. “They have to rely on the merchant bankers. Therefore, Sebi should take strict action on the bankers for such lapses,” he said.
In the past few months, two small companies have offered exit options to investors for similar reasons. The IPO of VA Tech Wabag, a Chennai-based water and waste treatment company, which closed on 27 September, had to offer an exit option to investors as its peer group comparisons were based on incorrect numbers.
In July, Sebi had told Ahmedabad-based Aster Silicates Ltd to provide an exit option to investors because it had not disclosed some cases in which it was involved.
Murali R., a bank employee who was following the hype around Coal India IPO, said: “I got to know through a friend that there is such an exit option. But I searched for it in the Net (Internet) and looked up the TV channels. I could not find any information till late afternoon.”
The corrigendum was not on the websites of Sebi or the stock exchanges.
Although the exchanges received the corrigendum during the day, it was not seen in the websites of both the Bombay Stock Exchange and NSE until Thursday evening.
“We have received a corrigendum. Since the stock is not yet listed, it is not on the website. However, it will be seen on the IPO bidding system,” an exchange official said.
Tweet to predict market sentiments
Most of us think that all that a Tweeter account can do is connect with friends a study has found out that netizens could predict market sentiments with 90 per cent accuracy by simply analysing their feeds.
Researchers at Indiana University Bloomington's School of Informatics and Computing have found that there is a correlation between the value of the Dow Jones Industrial Average (DJIA) and public sentiment after analysing more than 9.8 million tweets from 2.7 million users during 10 months in 2008.
The IU scientists said that analysis of the collective public mood derived from millions of tweets can predict the rise and fall of the DJIA up to a week in advance with a 90 per cent accuracy.
The study was carried out by Associate Professor Johan Bollen and Ph D candidate Huina Mao, who analysed the text content of the large-scale collection of Twitter feeds to measure variations in public mood.
With the help of two mood-tracking tools -- OpinionFinder and Google-Profile of Mood States (GPOMS) -- the scientists analysed the Twitter feeds and then compared them to closing stock market values.
OpinionFinder, analysed the tweets daily at a particular time to provide a positive or negative feedback about the public mood, while, GPOMS measured the mood of tweets in six dimensions: calm, alert, sure, vital, kind, and happy.
"What we found was an accuracy of 87.6 per cent in predicting the daily up and down changes in the closing values of the Dow Jones Industrial Average," Bollen said.
The researchers found the OpinionFinder positive/negative sentiment input had no effect on prediction accuracy, while the calm and the calm-happy combination of the GPOMS had the highest prediction accuracy.
"In fact, the calmness index appears to be a good predictor of whether the Dow Jones Industrial Average goes up or down between two and six days later," Bollen said.
Earlier studies had linked the performance of Indian cricket team with the country's stock market Sensex.
According to a study by Monash University the "poor" performance of India, in one day matches can significantly impact on fortunes of the Indian stock market.
Moreover, when Sachin Tendulker plays in the losing side, the loss in the stock market could be 20 per cent more.
Most of us think that all that a Tweeter account can do is connect with friends a study has found out that netizens could predict market sentiments with 90 per cent accuracy by simply analysing their feeds.
Researchers at Indiana University Bloomington's School of Informatics and Computing have found that there is a correlation between the value of the Dow Jones Industrial Average (DJIA) and public sentiment after analysing more than 9.8 million tweets from 2.7 million users during 10 months in 2008.
The IU scientists said that analysis of the collective public mood derived from millions of tweets can predict the rise and fall of the DJIA up to a week in advance with a 90 per cent accuracy.
The study was carried out by Associate Professor Johan Bollen and Ph D candidate Huina Mao, who analysed the text content of the large-scale collection of Twitter feeds to measure variations in public mood.
With the help of two mood-tracking tools -- OpinionFinder and Google-Profile of Mood States (GPOMS) -- the scientists analysed the Twitter feeds and then compared them to closing stock market values.
OpinionFinder, analysed the tweets daily at a particular time to provide a positive or negative feedback about the public mood, while, GPOMS measured the mood of tweets in six dimensions: calm, alert, sure, vital, kind, and happy.
"What we found was an accuracy of 87.6 per cent in predicting the daily up and down changes in the closing values of the Dow Jones Industrial Average," Bollen said.
The researchers found the OpinionFinder positive/negative sentiment input had no effect on prediction accuracy, while the calm and the calm-happy combination of the GPOMS had the highest prediction accuracy.
"In fact, the calmness index appears to be a good predictor of whether the Dow Jones Industrial Average goes up or down between two and six days later," Bollen said.
Earlier studies had linked the performance of Indian cricket team with the country's stock market Sensex.
According to a study by Monash University the "poor" performance of India, in one day matches can significantly impact on fortunes of the Indian stock market.
Moreover, when Sachin Tendulker plays in the losing side, the loss in the stock market could be 20 per cent more.
Sebi doubles retail investor cap to Rs 2 lakh
Market regulator Sebi today doubled the investment limit for retail investors in an initial share sale offer to Rs 2 lakh.
The board approved categorising all investors putting in up to Rs 2 lakh to buy shares through a public offer as retail investors, Sebi Chief C B Bhave told reporters here.
The Securities and Exchange Board of India (Sebi) in its draft guidelines in August had proposed to raise the ceiling for retail investors to Rs 2 lakh in public issues.
Way back in in 2005, the limit for retail investors was raised from Rs 50,000 to Rs 1,00,000 in public issues.
Sebi allows price discount for retail investors and company discount participating in initial public offers and follow-on offers.
This discount is offered to attract retail investors into the market.
Market regulator Sebi today doubled the investment limit for retail investors in an initial share sale offer to Rs 2 lakh.
The board approved categorising all investors putting in up to Rs 2 lakh to buy shares through a public offer as retail investors, Sebi Chief C B Bhave told reporters here.
The Securities and Exchange Board of India (Sebi) in its draft guidelines in August had proposed to raise the ceiling for retail investors to Rs 2 lakh in public issues.
Way back in in 2005, the limit for retail investors was raised from Rs 50,000 to Rs 1,00,000 in public issues.
Sebi allows price discount for retail investors and company discount participating in initial public offers and follow-on offers.
This discount is offered to attract retail investors into the market.
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