Yet another see-saw day, sensex crashes by 285 points
Mumbai : With wild rumours doing the rounds at the bourses, about the finance ministry probing valuations of software and dotcom businesses, the barometer BSE sensex crashed a huge 285 points – the fifth biggest point fall ever – to close at 4,372.22. There was panic enough for the finance ministry to step in and deny that it was initiating any investigations into the software companies. The S&P CNX Nifty opened at 1410, touch a high of 1421.50 only to hit a low of 1319.65, ending the day wit a loss of 73.10 points at 1333.45.

Another rumour, that banks have been liquidating stocks pledged with them for non-payment of principal amount by borrowers in time, added fuel to the raging fire. None of these rumours were substantiated.

Several scrips hit the revised 12 per cent circuit-filter, which came into effect today. These scrips included Satyam Computers, HFCL, Silverline Technologies, PentaMedia Graphics, Global Telesystems, Ranbaxy Laboratories, Wipro, Aptech and Cipla.

Of the 140 stocks traded in the forward group, there were 120 declines and only 18 gainers. Similarly at the NSE-50 there were 39 losers and only 8 gainers.
Back to News Review index page  

Crash may force Sebi to review rolling contract system
Mumbai : As a result of the steep fall in liquidity and the relatively large erosion in prices of almost all the 44 scrips included in the rolling settlement list, the Securities and Exchange Board of India (Sebi) plans to review the rolling settlement concept for Indian markets.

Although introduced at the behest of the finance ministry, which is committed to continuous reforms in the capital markets, the regulatory body is understood to have veered round to the view that the introduction of rolling settlement in select scrips and its gradual expansion has left several operators discouraged. According to analysts, Indian markets are not mature enough to undertake the rolling settlement system. This is largely because we do not have an effective stock lending system or a proper hedging mechanism, both of which are key ingredients for the rolling system to succeed. According to sources, foreign institutional investors (FIIs), domestic institutions & mutual funds, stockbrokers and investors associations have all privately requested Sebi to shelve the rolling system.

In a rolling settlement, trades outstanding at the end of the day have to be settled by making payments for purchases and deliveries for sales at the end of the settlement on the fifth working day (T+5 settlement). As opposed to this, in a weekly settlement, the transactions entered during any of the five trading days are permitted to be squared up during the same settlement period. Under the weekly carry forward system, the business in specified shares can be carried forward to the next settlement. Post-introduction, volumes in rolling counters have dwindled to a fifth of those earlier. And poor liquidity has led to more than a proportionate fall in prices.

While Sebi has so far introduced rolling settlement in 44 scrips in two instalments, it has announced addition of 122 scrips in the list effective May 8, 2000. It is unlikely that Sebi will go back on its plans for the rolling system, since, according to it, the exchanges have already prepared themselves for trades on rolling basis and closed the deals on weekly settlement basis.
Back to News Review index page  

Top corporate names team with IBM for new fund
New Delhi : In yet another instance of big names and big money coming together, several well known figures from the financial world are joining hands with IBM Global to launch a new venture fund targeted at the new economy stocks in India. The fund, most likely to be christened the India Invest Fund, is to be created out of monies raised in the US, India and the personal funds of these professionals, and will have an initial corpus of $50m.

It is said that Deepak Parekh and Deepak Satwalekar of HDFC, Uday Kotak of Kotak Mahindra, Hemendra Kothari of DSP-Merrill Lynch are among those who will be associated with the fund, which will be managed by Dhananjay Mungle, ex-president at DSP Merrill Lynch who will be chairman and Saurabh Sonthalia, director at BNP Prime Peregrine, who will be the MD.

While the fund will take equity positions in start-ups across the new age sectors, including internet infrastructure, the professionals associated with it will help in providing advice to managements. It is said current ICI chairman Ashoke Ganguly and key professionals from the US will also be associated with it in some capacity.

The fund is expected to target leading dotcom ventures in business to business category at the initial stage. It may cater to other categories too at a later stage, including services, telecom and media. IBM will have a big say in the running of the company and will bring international expertise to the company.
Back to News Review index page