It’s been quite a weak week gone by….the Sensex shook 5% opening at 19841 last Monday but shaking in some shock down to 18955 on Friday…it has recovered to 19400 close as this week opens…..Looking beyond the Sensex shows that the shakedown has been more intense in the Mid cap and Low Cap Areas

IFCI has dropped to Rs 57 levels and IDBI Bank from Rs 200 ! to below Rs 160…both nearer Consolidated Book Value for this year….these price points offer lower risk Opportunities unless ofcourse scams unfold here too !

….what is also spooking the markets,apart from Korean War fears, is the CBI confirming a sense,long suspected by all of us really, that there have been huge sinster gameplans at work on the Exchanges…..collusions between Promoters,Bankers,Merchant Bankers,Politicians,Brokers,Fund Managers and  sadly even certain Print and Broadcasting Media…..to hype Companies and  rig up share prices to facilitate QIPs at high Prices with Fund Managers being paid off for participating in the QIPs…..it is alleged that even Exit Prices and Time Periods for this were pre decided….this would necessarily involve the need for Market Price manipulation…..where Loan has to be arranged it would involve Corruption…bribing those who can make decisions to deploy their Employers Huge Funds

CBI has made high level ‘Listed’ arrests…CEO of LIC Housing Finance….DGM of Bank of India and Independent Director of Central Bank of India,DGM of Punjab National Bank,Secretary (Investments) of LIC,CMD of listed Finance Intermediary, Money Matters Financial Services Ltd….the stink of corruption is polluting the markets….bribes being paid to Finance Heads of Listed Institutions through a Listed Financial Intermediary to faciliate Loans and QIP of Equity of hundreds of crores to Listed Corporates,especially Real Estate Companies….being ‘Listed’ seems to be the key….often manipulating the share price pays for the Corruption……..who suffers here ?….those primary market institutions and those secondary market  suckers who unknowing of this gameplan invested in the Share at an inflated price….if the situation is that of Loan Outstanding…it will probably remain outstanding till declared Non Perfoming and quietly written off after a few years !…and civil court cases takes years ! 

Maybe SEBI should report to the CBI !……..Because more often than not even this IPO High Obscene and Vulgar Pricing is a Scam of Sorts…though SEBI may argue it’s not their job to comment on Valuation and Pricing…and market forces will decide the success of the IPO…..but the truth is that most Investors are not educated enough to understand the Difference between Value and Price…and with no Protection now that the CCI Formula for Pricing the Premium gave the Promoters and Merchant Bankers will create Hype and milk Investors…we all know the Reliance Power IPO Debacle…probably only Mukesh Ambani did not invest in this !…Kishore Biyani’s Future Capital,Tanti’s Suzlon were nothing but IPO Loot Pricing….Adani Group is simply another story ! …of Satyam is now well known !

Market in the same Breath wants to continue the uptrend but also awaits baitedly another Scam being revealed !…..that’s causing the Volatility and daily Tug of War….Sentiment clearly has been hit and hurt and Uptrend Momentum affected….Valuations that had probably run a little ahead of Fundamentals are now reversing….this will provide Investment Opportunities like IFCI and IDBI Bank as observed above

Many Business Barons’ Cloak of Respectability needs to be uncovered by revealing How their Monies were and are being made…their network umbrella involves all   …politicians,brokers,bureaucrats,bankers,underworld,media,judges……..Corruption,Insider Trading,Outright Fradulent and Unethical Practices…..are all their Middle Names….my issue is nothing personal….simply that Investors need to be protected and the sanctity of markets be maintained !…..this can only be done by proactive and reactive quick and strong and fair regulation and strong punishment that acts as strong deterrent…….. it’s frustrating to see this unholy nexus first kill the Investors and then attend their Funeral too ! ……. no wonder only a tiny miniscule 2% of our National Savings are Invested in Equity…….but these CBI raids and arrests do show that what goes round does come round too !…..but sadly the deed is done and Investors have already been bled before strong action is taken !   

On the Positive side….Have Selective Conviction….Go for Growth Scrips at these significant declines

As if on Cue I’m getting calls to advise what to be Buying into now !…rather than advise on “should we be selling ?” 

Earlier this Month Coal India gave us some lovely Diwali Cheer….Next Month let’s hope MOIL will give us some Christmas Cheers !….Cheers !

It can’t be just a coincidence that this is my Blog Post No 420 !

Austral Coke came out with it’s controversial IPO in August 2008 in the price band Rs 164-Rs 196 for a FV Rs 10 share…The price was fixed at Rs 196 and it got listed on BSE on September 4,2008 rising to Rs 309,before closing at Rs 225…On October 28,2008 it dived below Rs 60 and since then has recovered to touch a high of Rs 570 last month before reacting ex split and post SEBI ban to Rs 48 today

The Company recently sub-divided the share into FV Rs 1 and it closed at Rs 48 today after SEBI banned it from raising capital…following disclosure by the Income Tax Authorities of Fradulent transactions of over Rs 1000 crs !

SEBI should have investigated it more last year before permitting the Company to raise Capital through an IPO.I had blogged this controversial IPO on August 8,2008 commenting that SEBI should have then itself verified claims of the Company on it’s capacities that were contested by Gujarat NRE Coke

Austral Coke went on to raise Capital in the IPO and it has now been also accused of diverting the proceeds too.

SEBI needs to get real serious about it’s prime objective of Investor Protection without fear or favour and probe Insider Trading more stringently

Expect the share price to fall further from Rs 48…if it does not then you know it’s being supported artificially by the company

If you hold the share,I would strongly advice you to sell as Promoters’ credibility continues to be suspect..and regulatory and tax authorities will continue to have Austral Coke under a heavy scanner…….and if you are an IPO allottee you’re already sitting on over 100% long term  gains….Take them

I was just wondering…..Currently there is so much volatility in all markets,be it Equity or Commodities…due to earnings uncertainties,anxieties about health of global economy and Financial Systems

Most Experts are advising to think Long Term…Naturally…3 Years + atleast

Then why is it that we have Derivative Contracts structured only for a maximum of Three Months… for Long Term,we need to roll them over and over and over and over again ?

It’s time that we introduce Long Term Option Contracts…This will enable me to take a call on the Markets or a particular Stock or Commodity for a period of One Year and more by investing merely a fraction of what I would have to now in Spot

For example If I felt the Markets would improve in the next two years,I could buy a Nifty Call at Strike price of 2750 (Current Level) that expires in 2011 at a Premium of ,let’s say,Rs 225…Assuming Contract lot is 50,the contract Value is Rs 137500 and I would have to pay Rs 11250 as premium…That is my Cost….I now have the right,but no obligation, to exercise this Call

So if ,let’s say,Nifty moves up and is at 4000,somewhere in mid 2010,I can square of my contract and sell the Call,at a premium of let’s say,Rs 1025 and profit by Rs 800 which aggregates to Rs 40000 on the contract…a return of 356 % in a year or so !

The above is a hypothetical example and it can be argued that Option Premiums may quote at much higher % levels in this volatility…The Nifty Call of Strike 2750 may not be quoted at 225…but more at 500 perhaps or even more !…that’s an 18% premium !   

Chicago Board Options Exchange (CBOE) has a registered product on these lines and they have trademarked it as LEAPS.It stands for Long Term Equity Anticipation Securities…This product is available in the form of Calls and Puts for 450 common stocks and Ten Indices and the Expiration Date can extend upto 39 months…In fact CBOE even has the VIX or the Volatility Index Options which is the market estimate of expected volatility and is which is computed from realtime  S & P 500 Index Option Bid/Ask quotes  

I believe the SEBI Advisory Committee for Derivatives has already suggested the introduction of Long Term Derivative Contracts…Why the delay in the Suggestion being adopted for Implementation ? The Operations Framework by Exchanges is already in place for Futures and Options so this should facilitate the Introduction of Long Term Expiration Contracts fairly easily  

With increasing Number of Big Players and with varied and extremes views held among them about where our markets are headed,there should be enough interest generated to create some volume in long term expiry date Options

I would definitely buy a Nifty Call for 2011….I can’t…Best I can do is keep on rolling over monthly,bimonthly or trimonthly calls at NSE

In 2007 Goldman Sachs arranged a private US $ 4.5 Billion Premium Deal between Warren Buffet’s Berkshire Hathaway and others…Warren Buffet has sold puts and got the Premium of US $ 4.5 Billion by betting that four indices (S & P 500 and three Foreign Indices) will be at higher levels after varied periods ranging from 15 years and beyond from those in 2007 when this bet was made…(Search on my blog for more details of this deal)…Since then the markets have halved and ordinarily Warren Buffett would have been subjected to Mark to Market Margins as he was a writer or seller of the Put…Remember the Buyer has only the cost of the Premium to bear

So anybody willing to bet against me for just a Two Year Period !?..I’m willing to buy their Call or even willing to Sell them a Put.I’m holding a bullish long term view for 2011 and hold a view that the Sensex and Nifty levels would be higher in 2011 than their current levels of 8900 and 2750 respectively today !    

Rolta was Rs 105 yesterday and this morning it fell suddenly by 7 % initially and then in a quick swoop sunk further to 50% of yesterday’s closing

Rolta Promoter,K K Singh, came first at around 2 pm on NDTV Profit and declared he had no clue why this fall has taken place…he squashed all rumours of UK Business Selloff,Resignation of Auditors,Selling by Lender of Shares Pledged by an associate Company,Manipulation of Accounts,Big Selling by FIIs ….Share Price recovered but was yet below Rs 75 and  35 % lower than yesterday’s closing of Rs 105..Then Mr Singh appeared on CNBC 18 and repeated yet again he was completely lost as to why this fall has taken place and blamed market fragility…He said that his inquiries had revealed that no major shareholder had sold…..yet the combines Volumes on BSE and NSE is 80% of the Free float with nearly Eight Crore Shares being traded Market reacted well on this and Rolta recovered to the Rs 85….It’s a clear indication that more Traders watch CNBC 18 than NDTV Profit !

So if you are a die hard addict of Intra-day trading then you must watch NDTV Profit first…any interesting trading opportunity may arise when Management or Promoter of the Company are chased to explain,deny or confirm company related developement or rumour..take this trading opportunity and then await the same person coming on later on CNBC to repeat what he or she has already said on NDTV Profit…sure way of making money !…..For example you could have purchased Rolta at Rs 72 to Rs 75 after K K Singh came on NDTV Profit at around 2 pm today and denied all rumours that were floating around to explain the Rolta Price crashing by over 40% to dive below Rs 60….Half and hour later,after he appeared on CNBC 18 and repeated himself,the share price of Rolta moved fast by 15% to Rs 85…you could have sold off,pocketing a cool Rs 10 per share atleast inside an hour of Intra Day Trading

Somebody is playing Big Games in Rolta on our Bourses and Rolta Promoter,K K Singh says he does not know !

SEBI has got to get to the bottom of this !..last Month’s Game Lever was Pyramid Saimira…Today’s is Rolta !

Our Markets are fast behaving like a ‘Matka’ Operation !….and in such sensitive and touchy markets,where one believes everything or nothing !,a Market Operator can initiate and float Rumours and get away with Raping the Share Price !

Exchange Authorities and SEBI needs to catch the Share Price Rapist or Gang Rapists fast to maintain market sanctity and credibility…They have been responsible for this combined turnover of over Rs 1000 crs in Rolta today in the Spot and Derivative Markets

Sad State of Affairs really ! 

Is our Government and the Regulatory Authorities,RBI and SEBI working for the FIIs !?…at our expense…surely looks like it !

Just Look at some of the SEBI released figures on outstanding position of shares lent by FIIs for selling…the aggregate outstanding Participatory Note based lending position as on October 8,2008 was Rs 6493 crs across 224 stocks if you assign Prices as of this date

However the shorting  build up began even earlier…before October…The Sensex itself opened in October at 13056 and has been down hill since then…This would mean that the real value of Short sells by FIIs is over Rs 10000 crs…closer to US $ 3 Billion…some of this position may yet be open…which means short covering will lead to pull back rallies like we saw on Friday

Clearly on short covering,some of it yet remains to be done,the Profits have been in excess of US $ One Billion !…It’s an October Orchestration,facilitated by SEBI, which one can be awestruck and marvel in scale but shame at in it’s immorality,unethicality and even illegality 

I’ve taken the October 27,2008 Sensex Closing Low of 8510 to make a point  to show the extent of the Gains made on Short Covering   

If You recall that RBI had a year ago made a startling revelation that most of the FII Inflows ,75% of them, were actually Hot Money

Now with SEBI yet going soft on Participatory Notes,although it had imposed restrictions under moral pressure,  it yet allows anybody,even those Indians,with concealed loot in Swiss Banks,to play India through Registered FIIs,without the need to have their identity disclosed

FII’s have even perfected the misuse of such PNs to capitalise on lax Indian laws and regulation…Shares Held by Them in one Sub Account under PN are lend to another to sell…The Borrower later buys these shares back at lower rates,as in these times,from the Indian Markets and returns them to the Lender…making a cool difference without actually owning the shares and paying just the rental for them or possibly a part of the profits made…and moreover these gains are not subject to or hardly subject to taxes as the entities reside in tax havens

So FIIs are allowed

• this lending Operations through PN Routes
• Tax Free Gains

Indian Investors do not have the benefit to either…and have to face the reality of a Capitulated Indian market that shrinks their portfolio Value significantly..Oh ! they can hedge using Futures and Options,but are subject to Margins and Taxes on Derivative Gains

So why has the Government and SEBI allowing all of this ?

The Answer stares at you in the Face…..In all Likelihood the ultimate beneficiaries of the FII Sub accounts and PN Notes are Indian Industrialists,Politicians,Bureacrats and Brokers themselves who are simply rotating some of their ill gotten wealth stored in Swiss banks…with the tax free status adding insult to injury to Indian Retail Investors…Checkout an earlier Blog of October 15,2008,  which comments on the Swiss Bank Association Report of 2006 revealing that Indians had stashed away US $ 1456 Billion in their Banks,the highest from any nation

With such blatant mischief,misuse,manipulation and  malfeasance  It is therefore not surprising that someone has the guts to take the Union Government,RBI and SEBI to court

The Kerala High Court has admitted the petition of Trueway Financial Services Pvt Ltd,a Thrissur based authorised share dealer, and has issued notices to the Union Government,RBI and SEBI to explain why a December 2007 circular was issued in ‘unholy’ haste by RBI which went against the SEBI Guidelines and policies framed by the Central Government.Foreign Investments were protected at the cost of the Small and Retail Investor.       

Where Money is…there will be Stink !