Sucheta Dalal :Bull run confounds? (23 Nov 2003)
Sucheta Dalal

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Bull run confounds? (23 Nov 2003)  

Although the bulls continue to predict a $15 billion investment in the Indian market next year, the stock market is in no mood to listen. For all of this week, the Sensex remained in correction mode, shedding nearly 500 points from a peak of 5,135. Foreign Institutional Investors (FIIs) who had been pumping an average of Rs 300 crore net into Indian stocks everyday are also booking profits. For all of last week, FIIs were net sellers and they could continue to book profits until year-end. Meanwhile, the bears are coming out of hibernation. Last week, prices tumbled on rumours that the National Stock Exchange (NSE) had levied ad-hoc margins on concentrated positions. It later turned out that a few clearing brokers had created the panic by telling their brokers that the NSE was ‘expected’ to levy additional margins across the board. By the time, the NSE heard the rumours and forced brokers to clarify the situation, the panic had forced a considerable amount of selling. As it turned out, only a couple of operators and a handful of trading members were asked to pay up additional margins as a part of the routine risk assessment by the NSE. But the bears made a killing.

DSQ’s loss somebody’s gain

A few months ago, we wrote about how Christopher Byron of the New York Post had exposed Dinesh Dalmia’s attempt to takeover Aegis Communications Group, a beleaguered but large call centre in the US with clients such as AT &T, American Express and Qwest Communications. But once Dalmia’s involvement with AllServe became known, the deal with Aegis seems to have fizzled out, especially because nobody had a clue about AllServe’s true ownership and its multiple mirror companies. Aegis itself has been a notorious company, known for its employees secretly selling confidential client data. It is interesting that Aegis should have swapped one controversial potential owner with another, both from India.

ICAI’s travails

For a long time now, the Institute of Chartered Accountants of India (ICAI) has been entangled in a series of allegations against its president R.Bhupaty about a training academy he runs at Chennai as well as his travel expenditure. Although Bhupaty remains the ICAI president, the allegations have split the professional body down the middle. Bhupaty has a filed a couple of defamation cases against V. Venkatasivakumar who runs another CA training academy in Chennai, but this too is seen as an attempt to silence criticism. What is most astonishing about the entire episode is the stunning silence of the Department of Company Affairs (DCA). Despite demands from various members and past presidents, there has been no independent investigation into the charges, nor has the DCA bothered to defend Bhupaty, if it is convinced about his innocence. Meanwhile, ICAI’s reputation as an independent, self-regulatory, professional institution continues to take a beating. It is probably time for the Finance Minister to take cognisance of ICAI’s functioning and DCA’s inaction.

Effective email

Email is the fastest and most direct way for investors to reach out to regulators and newspapers and lodge their grievances and express their views. But email is just as easy to delete, so here are a few tips for using it effectively. Email messages written to register complaints must be formal and correctly addressed to the concerned person, with details about the exact grievance and should have a short (repeat short), summary of the main issues with contact details of the sender. Do not assume that the sender will reply by email, so make sure to include a snail mail address and telephone number if possible. Secondly, extreme short hand and abbreviations are a no-no for anyone but your close friends, while long-winded messages and whining complaints are equally repugnant, however agitated you may be. Thirdly, too many investors send legitimate complaints addressed to the Prime Minister or President of India, with copies to the Finance Minister, half a dozen regulators and a dozen newspapers. If the idea is to frighten people into action, it doesn’t work that way. Everybody assumes that someone else has been frightened. As for the media, do remember that journalists are seldom excited about something that is not an exclusive. Then there are people, who in the midst of an ongoing complaint-dialogue with a company, decide to involve the media or the regulators by copying their messages to them. More often than not, such email is deleted. If you don’t have the time to provide a summary, nobody else has the time to wade through correspondence about your problem either. Finally, to those who are desperately trying to recover money from defunct companies —if your messages are not answered, it is often because there is no answer. Some bad investments just have to be written off.

-- Sucheta Dalal