SRK in the BAG !..but BAG not in the BAG!

Just spotted a news headline that SRK is in the BAG…..It seems Star Actor, Shah Rukh Khan, is planning to tie up with his friends, the promoter couple of the BAG Group to provide TV Content and even possibly produce TV Shows on BAG’s new TV channels.

Hey SRK just check out what your friends, the promoter couple did a year or two ago…they purchased lakhs of shares of their own company on the BSE in the Rs 9 to Rs 11 range and a week later announced that one of the promoters of India Bulls will invest Rs 26 crores in his personal capacity in the equity of the Company by taking up a preferential allotment of Two Crore shares at Rs 13 each…. Promoters also allotted convertible warrants to themselves… I’m sure they had a good reason for doing, possibly to shore up their stake before allowing the preferential allotment … Amusingly and quite ironically, I must add, the Company had to inform the BSE about these open market purchases by promoters under Insider Trading Rules… all of these announcements are there in the public domain on the BSE website… The share price simply started zooming upwards past Rs 50 and beyond.. It ofcourse is now down to Rs 30.

Interestingly when I put this before our young generation…. young  20 to 22 year olds in three premier education institutes in Mumbai, the girls felt this was not ethical while  the boys felt there was nothing wrong but had no answer to what about those poor shareholders who sold at Rs 9 to Rs 11 not knowing about the preferential allotment and wanting just an exit after being trapped at higher prices in this company’s shares in their IPO issue. 

I had earlier advised my clients to invest in BAG Films as I was excited about their foray into Radio Channels through their subsidiary and the Institutional support of IDBI who had acquired an equity stake in the company… However on these announcements I advised  clients to exit, giving them my reasons even though I told them  that the share price would soar… all of them preferred to exit and not one has regretted that the share price actually crossed Rs 80 afterwards!

How all of this missed BSE and SEBI.. I don’t know!

Edelweiss forecasts a Nifty bounce back by 25% to 5000 this quarter

The Nifty closed at 4040 today.One of India’s leading Brokerage Houses,Edelweiss, expects a 25%  surge to 5000 by September 2008.It prefers to see the India Glass as Half Full in it’s latest India Strategy Report !

Wise or Unwise but Edelweiss has committed this forecast.

Sometime ago I had the pleasure of training their two batches of  young new recruits in the Valuation of Equity through  BSE…I asked them what “Edelweiss”meant and if the word rang any bell…Some knew that it was a rich white flower standing for purity but none knew that “Edelweiss” is a magical song from the Classic Movie “Sound of Music”…I even sang out the chorus for them….Oh! alright so even I thought at first that ” Black Eyed Peas ” were spoilt Peas !…so let’s pass it off as two generations catching upwith each other !    

SEBI investigating 3656 cases of Corporate Fraud at Stock Exchanges!

SEBI Whole Time Director Mr T C Nair revealed a startling statistic at an ASSOCHAM Conference on Corporate Fraud held recently in New Delhi

He said that SEBI was investigating 3656 cases of Corporate Fraud at Stock Exchanges.In 2007 SEBI had received 169 corporate fraud complaints,most of which related to Market Manipulation

Let’s rationally take listings on Bombay Stock Exchange as the base.With  just under 8000 securities of just under 5000 companies listed on the Bombay Stock Exchange this would  comfortably mean (even after making some allowance for overlapping) that there is a complaint of corporate fraud on stock exchanges against every second company listed !…Also looking at 2007 it would mean a fresh complaint is received every second working day by SEBI !

Mr Nair also stated that most of the frauds were taking  place by exploiting the skills acquired from information and communication technologies and therefore SEBI was planning to set up a committee of IT experts to develop some mechanism to curb such frauds

Moreover SEBI will shortly issue a directive for mandatory annual audit of all transactions by the Stock Exchange  

With such a workload and such mounting pressures like these I think one should stop using the dubious acronym for SEBI…that is stop saying SEBI stands for “Systematic Elimination of Brokers and Investors” .It may have a good reason for going slow

Think about it ! If the Exchanges were to suspend or delist all suspected Companies for Frauds committed then SEBI would have no listed companies to regulate and shareholders would be stuck with shares of such companies ! ?

Am I serious !? …Well…..?

Mr Nair,what is stopping SEBI from putting up the List and a small complaint brief of the Listed Companies under Investigation on it’s website with a user friendly Search feature?  Is not SEBI’s prime objective that of Investor Awareness and Protection ?

The potential Investor and minority shareholder has a right to all sensitive information about the company….Remember IFSL a few years ago…this company was under SEBI investigation for fradulent and accomodation profits.It had declared spectacular quarterly results stating they came from it’s new Alternative Energy Business when actually they were purely accomodation entries of stock market profits which SEBI knew about.Many top Financial Institutions and Brokerage Houses recommended this Indore Company at Rs 30 and themselves purchased lakhs of shares…a leading FII picked up lakhs of shares even on the day when SEBI issued an order against IFSL after market hours…Why could SEBI not have warned Investors of IFSL when it issued a show cause notice to the Promoters ?…by not doing so SEBI is actually abetting Insider Trading !…IFSL for a long time has been now at Rs 1 or Rs 2 to which it fell like nine pins after the order and Promoters saying they will not appeal…lower circuits for several days and no exit route for those who had purchased the shares ,which I suspect were offloaded by promoters themselves,who got away fairly scotfree while Investors lost a packet. read more

Twins Born to Angelina Jolie….US $ 20 million for first photos!

Mr and Mrs Pitt( aka Mr and Mrs Smith),Brad Pitt and Angelina Jolie have just become the proud parents (yet again ! but this time through natural birth and not through adoption) of Twins

Media Reports say that a Media House has bought the rights to print and show the first photos of the twins for a whopping US $ 20 million !..Pitts say that the proceeds will go to charity

So  the next time the Pitts want to donate all they have to do is……..ah ! you got it!

General Disclaimer

A word of caution…

Investments and trading in securities carry inherent risks that rest solely with the investor,speculator or trader. I,Gaurav A Parikh, shall, therefore,not be responsible in any way for actions based on the contents on my blog.

Scriptechgroup, its directors,including me,immediate family and other relatives,clients,associates and employees may hold long or short positions in scrips recommended for investment or disinvestment respectively or may even hold contrary positions.

A further word of caution…

Comments and Opinions that may form part of the blog  are mine and I ,Gaurav A Parikh, do  not intent in anyway to offend or defame any person,group,organisation or country.They are without malice,prejudice or bias and should be construed in the healthy spirit of constructive criticism and debate in a democratic and civilised society that we in India live in.

Despite all responses to my blogs going through an approval process before they are published on the blog,I,Gaurav A Parikh,do not hold any responsibility for the contents therein and may or may not concur with the views,advice and comments expressed in these responses.The approval filter is necessary to prevent any abuse or misuse of my Blog that would hinder my prime objective of presenting my knowledge,interpretation,viewpoint on Capital Market Issues and spreading and creating Investor Awareness on them to inspire Investors to think and act on their conviction.

I strongly recommend that the reader or viewer of my blog seek a second or even further opinion before he or she decides to act on any advice or comment on any of my blogs or it’s responses that has inspired them to act

There is always the risk that I may hold an irrational,contrarion and even incorrect view and my interpretation may hold a bias that may cloud my objectivity 

 

Hedge your Equity Portfolios this week…Critical Trust Vote on N-Deal on July 22,2008

On July 22,2008 if the UPA fails to win the trust vote on the Indo-US N-Deal in the Lok Sabha it will herald early general elections later this year and everything would then be on hold and you’ll see the Nifty and Sensex slide further…pretty quickly to.

If the UPA wins the trust vote by mustering atleast 272 votes ( looks a close possibility right now) there will be a bounce back and a sharp rally 

Good idea to hedge in your equity portfolios in the coming week,preferably by buying Nifty Puts to keep any upside open….Naked Positions should be only through safer strangle or straddle strategies unless you are a hardcore derivatives professional or a die hard addict of Derivatives…then you can carry on and gamble on going either Long or Short on Nifty Futures depending on what you assume will happen !

Cheers and Good Luck !