maverick
01-07-2008, 06:51 AM
Not So Nifty
17 Jun, 2008 Sucheta Dalal on cases of dubious media reports, policy bloomers and other curious trends
Not So Nifty
The market share of the Bombay Stock Exchange (BSE) is declining but its 30-share sensitive index, the Sensex, has remained extraordinarily popular and is considered the market benchmark. However, Pune-based technical analyst, Deepak Mohoni, has staked copyright claim on the word 'Sensex' which he claims is his coinage. One assumes that the coinage may lose its relevance if it is de-linked from the 30-share index; in fact, its popularity is more dependent on BSE's ability to launch and popularise Sensex-based derivatives. Since Mohoni has moved court, this is now a legal issue.
The National Stock Exchange (NSE), on the other hand, has a monopoly in the equity derivatives space, and is racing to capture leadership in the currency futures and the proposed SME market as well. Yet, its index, the Nifty, isn't half as popular as the Sensex -- even after splurging loads of money on an advertising campaign to promote it as a brand. That makes it all the more ironical that an Internet-based tip-sheeter has swiped the name SNPNIFTY, way back in May 2000 and even hosts a website at www.snpnifty. com offering stock tips on multiple platforms including phone, SMS and live chats. It calls itself a 'market leader' in stock market consultancy services, but has no information whatsoever about its promoters, although the name 'Maheshwari' turns up in an email ID under 'Contact Us'.
The NSE owns and conceives its indices through a joint venture with Crisil (Credit Rating and Information Services of India Limited) called India Index Services & Products Limited (IISL). So we asked NSE and Crisil for their reaction to SNPNIFTY. IISL's CEO, Suresh Narayan, wrote to thank us for drawing their attention to the 'misuse' of trademarks and said that they had "initiated appropriate legal measures against the concerned parties to protect our interests." The lesson is that one may launch an advertising blitzkrieg to popularise a brand but one needs market intelligence and open communication channels to protect it. Here is a tip for those who subscribe to tip-sheets: avoid websites and blogs that do not have proper ownership details under the 'About Us' tag.
Insider Action?
The biggest corporate story in recent times was the sudden sale of Ranbaxy on 11th June to Daiichi Sankyo of Japan. The stock hardly reacted at all to this bombshell and closed at Rs561. Apparently, there was no more value left to extract, even though the Sensex was up nearly 300 points that day. Now, recollect 10th June when the Sensex fell 500 points. On that day, Ranbaxy was one of a handful of stocks to buck the trend and rise by Rs35 to Rs561. In fact, the stock has been moving up steadily from 1st February, when it was at Rs359, to the current level of Rs561.
The Securities and Exchange Board of India's (SEBI) expensive Inter Market Surveillance System (IMSS) ought to be taking a close look at the interesting trajectory of the Ranbaxy scrip. The question is: has SEBI mothballed the IMSS system? It is over a month since two stocks -- KGN Industries and Sylph Technologies had grabbed media headlines with their sizzling rise on very thin trading, but we still don't know who was responsible. On asking, we find that SEBI is waiting for the BSE to submit a report on price manipulation. Does this mean that the IMSS, launched with big claims by M Damodaran, has been quietly mothballed?
Tippler Tips
While on tip-sheets, a reader has sent this interesting case pertaining to the liquor company Khoday India which produces brands such as Peter Scott. The company had a net loss of Rs5.2 crore in FY06 and a net profit of Rs11.5 crore in FY07. In late April, a report by the Atherstone Institute of Research (copy available with us) was reproduced by several web-based investor forums and Internet groups. The report projected a big turnaround in Khoday's business prospects, where increased volumes would lead to higher margins and allow the company to foray into realty development. It projected a net profit of Rs17.42 crore for FY08 and a significantly bigger jump in FY09 and FY10. It also projected a target price of Rs482 against a 52-week high-low of Rs425-Rs46.
The report apparently lured several investors to jump into the stock. When the results were finally published, the actual net profit was 50% lower -- at just Rs7.94 crore. An agitated investor writes to say that the Atherstone group deliberately misled investors. Well, we sympathise with Atherstone's clients who acted on the report, but not those who read it on the Net. After all, it was not meant for public circulation and carries a bunch of disclaimers. Those who reproduced it on investor forums and others who acted on its claims are fully responsible for the consequences. The price, while writing, was a mere Rs103.
State of the Media
In early June, an investor event conducted by www.myiris.com, held a discussion titled "How Much of the News Can You Trust" which saw a heated debate among participants from CNBC India, NDTV Profit, UTV Business and MoneyLIFE. Although most participants denied there was 'any' editorial interference in their work, public perception is that news is, indeed, compromised by management interference and corporate pressure. Things are the same in the world's leading democracy. At a National Conference for Media Reform in June, Dan Rather, former anchor of the hugely popular CBS 60 Minutes, "delivered a blistering critique" of the media. The event was hosted by Free Press.
Rather made the point that a series of mergers and acquisitions had ensured that most large news organisations were owned by a "shocking few" for whom "news is but a miniscule part of their overall business interests." It is the same in India. Apart from the owner's business interest and lack of guts, the media is also silenced (especially by government agencies), by threatening to 'block access' to important people. This is, indeed, the fastest way to silence the best journalists and is successfully used by the Indian government, regulators and large corporate houses. Once 'access' is blocked, a journalist has to work much harder to get news and face the harassment of being kept out of official events. As Rather says, "It is rare, now, to find a major news organization owned by an individual, someone who can say, in effect, 'The buck stops here'. The more likely motto now is: 'The news stops... with making bucks'."
The emphasis on the bottomline is enhanced by the need to deliver higher profits quarter-on-quarter. That is why, he says, "Political analysis (is) reduced to in-studio shouting matches between partisans armed with little more than the day's talking points. Precious time and resources wasted on so-called human-interest stories, celebrity fluff, sensationalist trials, and gossip. A proliferation of 'news you can use' that amounts to thinly-disguised press releases for the latest consumer products." If this sounds disturbingly familiar, it is because India has caught up with global trends.
Sundry Denials
· On 2nd June, Blue Dart Express told the exchanges that it is "unaware" of any move by DHL Express to make an open offer to Blue Dart shareholders. The language of the denial indicates that the report is not necessarily incorrect.
· On 5th June, Deepak Fertilisers reacted to a report that it plans to "foray into contract mining as a part of a strategic growth initiative" by claiming that it had "not reported the information to the media" and the news appears "speculative" . Not a particularly convincing denial, once again.
· On 29th May, Indiabulls Financial Services re-emphasised to the bourses that it had no plans to acquire a strategic stake in Blue Bird (India) and the media report included the denial but was still published.
17 Jun, 2008 Sucheta Dalal on cases of dubious media reports, policy bloomers and other curious trends
Not So Nifty
The market share of the Bombay Stock Exchange (BSE) is declining but its 30-share sensitive index, the Sensex, has remained extraordinarily popular and is considered the market benchmark. However, Pune-based technical analyst, Deepak Mohoni, has staked copyright claim on the word 'Sensex' which he claims is his coinage. One assumes that the coinage may lose its relevance if it is de-linked from the 30-share index; in fact, its popularity is more dependent on BSE's ability to launch and popularise Sensex-based derivatives. Since Mohoni has moved court, this is now a legal issue.
The National Stock Exchange (NSE), on the other hand, has a monopoly in the equity derivatives space, and is racing to capture leadership in the currency futures and the proposed SME market as well. Yet, its index, the Nifty, isn't half as popular as the Sensex -- even after splurging loads of money on an advertising campaign to promote it as a brand. That makes it all the more ironical that an Internet-based tip-sheeter has swiped the name SNPNIFTY, way back in May 2000 and even hosts a website at www.snpnifty. com offering stock tips on multiple platforms including phone, SMS and live chats. It calls itself a 'market leader' in stock market consultancy services, but has no information whatsoever about its promoters, although the name 'Maheshwari' turns up in an email ID under 'Contact Us'.
The NSE owns and conceives its indices through a joint venture with Crisil (Credit Rating and Information Services of India Limited) called India Index Services & Products Limited (IISL). So we asked NSE and Crisil for their reaction to SNPNIFTY. IISL's CEO, Suresh Narayan, wrote to thank us for drawing their attention to the 'misuse' of trademarks and said that they had "initiated appropriate legal measures against the concerned parties to protect our interests." The lesson is that one may launch an advertising blitzkrieg to popularise a brand but one needs market intelligence and open communication channels to protect it. Here is a tip for those who subscribe to tip-sheets: avoid websites and blogs that do not have proper ownership details under the 'About Us' tag.
Insider Action?
The biggest corporate story in recent times was the sudden sale of Ranbaxy on 11th June to Daiichi Sankyo of Japan. The stock hardly reacted at all to this bombshell and closed at Rs561. Apparently, there was no more value left to extract, even though the Sensex was up nearly 300 points that day. Now, recollect 10th June when the Sensex fell 500 points. On that day, Ranbaxy was one of a handful of stocks to buck the trend and rise by Rs35 to Rs561. In fact, the stock has been moving up steadily from 1st February, when it was at Rs359, to the current level of Rs561.
The Securities and Exchange Board of India's (SEBI) expensive Inter Market Surveillance System (IMSS) ought to be taking a close look at the interesting trajectory of the Ranbaxy scrip. The question is: has SEBI mothballed the IMSS system? It is over a month since two stocks -- KGN Industries and Sylph Technologies had grabbed media headlines with their sizzling rise on very thin trading, but we still don't know who was responsible. On asking, we find that SEBI is waiting for the BSE to submit a report on price manipulation. Does this mean that the IMSS, launched with big claims by M Damodaran, has been quietly mothballed?
Tippler Tips
While on tip-sheets, a reader has sent this interesting case pertaining to the liquor company Khoday India which produces brands such as Peter Scott. The company had a net loss of Rs5.2 crore in FY06 and a net profit of Rs11.5 crore in FY07. In late April, a report by the Atherstone Institute of Research (copy available with us) was reproduced by several web-based investor forums and Internet groups. The report projected a big turnaround in Khoday's business prospects, where increased volumes would lead to higher margins and allow the company to foray into realty development. It projected a net profit of Rs17.42 crore for FY08 and a significantly bigger jump in FY09 and FY10. It also projected a target price of Rs482 against a 52-week high-low of Rs425-Rs46.
The report apparently lured several investors to jump into the stock. When the results were finally published, the actual net profit was 50% lower -- at just Rs7.94 crore. An agitated investor writes to say that the Atherstone group deliberately misled investors. Well, we sympathise with Atherstone's clients who acted on the report, but not those who read it on the Net. After all, it was not meant for public circulation and carries a bunch of disclaimers. Those who reproduced it on investor forums and others who acted on its claims are fully responsible for the consequences. The price, while writing, was a mere Rs103.
State of the Media
In early June, an investor event conducted by www.myiris.com, held a discussion titled "How Much of the News Can You Trust" which saw a heated debate among participants from CNBC India, NDTV Profit, UTV Business and MoneyLIFE. Although most participants denied there was 'any' editorial interference in their work, public perception is that news is, indeed, compromised by management interference and corporate pressure. Things are the same in the world's leading democracy. At a National Conference for Media Reform in June, Dan Rather, former anchor of the hugely popular CBS 60 Minutes, "delivered a blistering critique" of the media. The event was hosted by Free Press.
Rather made the point that a series of mergers and acquisitions had ensured that most large news organisations were owned by a "shocking few" for whom "news is but a miniscule part of their overall business interests." It is the same in India. Apart from the owner's business interest and lack of guts, the media is also silenced (especially by government agencies), by threatening to 'block access' to important people. This is, indeed, the fastest way to silence the best journalists and is successfully used by the Indian government, regulators and large corporate houses. Once 'access' is blocked, a journalist has to work much harder to get news and face the harassment of being kept out of official events. As Rather says, "It is rare, now, to find a major news organization owned by an individual, someone who can say, in effect, 'The buck stops here'. The more likely motto now is: 'The news stops... with making bucks'."
The emphasis on the bottomline is enhanced by the need to deliver higher profits quarter-on-quarter. That is why, he says, "Political analysis (is) reduced to in-studio shouting matches between partisans armed with little more than the day's talking points. Precious time and resources wasted on so-called human-interest stories, celebrity fluff, sensationalist trials, and gossip. A proliferation of 'news you can use' that amounts to thinly-disguised press releases for the latest consumer products." If this sounds disturbingly familiar, it is because India has caught up with global trends.
Sundry Denials
· On 2nd June, Blue Dart Express told the exchanges that it is "unaware" of any move by DHL Express to make an open offer to Blue Dart shareholders. The language of the denial indicates that the report is not necessarily incorrect.
· On 5th June, Deepak Fertilisers reacted to a report that it plans to "foray into contract mining as a part of a strategic growth initiative" by claiming that it had "not reported the information to the media" and the news appears "speculative" . Not a particularly convincing denial, once again.
· On 29th May, Indiabulls Financial Services re-emphasised to the bourses that it had no plans to acquire a strategic stake in Blue Bird (India) and the media report included the denial but was still published.