View
237
Download
2
Category
Tags:
Preview:
DESCRIPTION
Time before SEBI was most frightening for the investors, today investors are unaware of the kind of advantages they have.... in those days market manupulation was rampant, new issue were black- marketed... companies held back investor's refundable money earn interest.... Research article by BFSI expert Sunil Prabhakar
Citation preview
Vol. XIII, Issue IV May 2012 50
4/2012
Catch us also on
MAY
201
2
CONSUMER24 VOICE
APR
IL 2
012
CONSUMER24 VOICE
Due to high inflation and rise in
interest rate investors have
less money at their disposal,
today people are reluctant to invest
in stock market. Major reforms
appear unlikely, because of political
compulsions. There is no trigger to
boost the investment climate. As
many as six companies that made
their debut on BSE recently are trading
well below their issue price, resulting
in significant negative returns for
the investors. According to analysis
done by Consumer VOICE Finance
Unit, based on data available with the
Bombay Stock Exchange, all the six
companies, including gold financing
firm Muthoot Finance and Kishore
Biyani's Future Ventures India, which
hit the secondary market in 2011-12
are attracting negative returns in the
range of 10-70 per cent.
On the basis of market analysts we
are of the view that the companies
listed during the year are trading way
below their issue price because of
one simple reason - the aggressive
pricing issue. Today companies are
greedily unmindful of leaving some
appreciation in the hand of investor
and they are marketing the issue at
maximum price, resulting in killing the
market itself. Today the sluggishness
we witness is only due to these greedy
promoters.
Both, the Government and the
Securities Exchange Board of India
are watchful and concerned about
these trends Two major objective
of SEBI is to protect the interest of
investors in securities and to promote
the development of the securities
market.
In this year’s budget the Finance
Minister has announced plenty of
measures to boost the investment in
stock market, and one of the options
the government has adopted, is
giving tax incentive. Rajiv Gandhi
Equity Savings Scheme under which
new investors, whose annual income
is below Rs 10 lakh, will be allowed
deduction from taxable income of
50% on investment of up to Rs
50,000, made directly in equities. The
scheme will have a lock-in period of
three years. The tax benefit under
the new scheme could be higher than
other similar equity schemes available
to investors, which will help drive retail
participation and push up delivery-
Share Market : Consumers be attentive
and selective
Share Market!! It is a public market where stocks, mutual funds, bonds etc. are sold. Stock market, Mutual fund market etc. all comes under Share Market. Primarily Share Market refers to stock market. Buy buying a stock of a particular company you got ownership of that company to the extent of your investment. In other words the company shared its ownership with you. Due to this reason it is called Share Market.
Finance Special
http://young.consumer-blog.blogspot.com/
MAY
2012
CONSUMER VOICE 25
MA
MAY
Y
2020202012121212
CCCCCCCCCCOOOOOOOOOOONNNNNNNNNSSSSSSSSSSUUUUUUUUUUMMMMMMMMMMMMMMEEEEEEEEERRRRRRRRRR VVVVVVVVOOOOOOOOIIIIIICCCCCCCCCEEEEEEEEE 2222225555555
based trading in the future. However,
it will take some time before smaller
players make a strong comeback to
the market, which also depends on
economic and political developments
in the country.
In his Budget for 2012-13, finance
minister Pranab Mukherjee also
announced 20% cut in cash
deliveries which is a positive attempt
towards encouraging investment
and discouraging speculation in the
market. A relaxation in the STT rates
from the existing 0.125% on delivery-
based turnover in the cash market,
to 0.10%. At the new rate, STT of Rs
10,000 will be charged on every Rs 1
crore of turnovers in the cash market.
The rates for other transactions,
including non-delivery based equity,
mutual funds, futures and options -
are left unchanged.
The proposed reduction in STT will
marginally bring down transaction
costs for investors. At present, the
cost of delivery based cash market
transaction worth Rs 1 crore includes
STT of Rs 12,500, stamp duty of Rs
1,000, Sebi fees of Rs 10, exchange
charges ranging from Rs 225 to
Rs 350 and a 10.3% service tax on
exchange charges, both on purchases
and sales.
Gone are the days when people had
to stand for long hour in queues to
get application forms of companies
like Colgate, Reliance, TATA, ITC, and
many others, for share allotment in
new issue of shares. This was an era
prior to the establishment of Securities
and Exchange Board of India April 12,
1992. At that time new issues were
few, hence got heavily oversubscribed
and allotment was like a lottery.
Prior to 1992 no company could bring
new issue without the approval of
finance ministry, even the premium
charged decided by controller of capital
issue in ministry of finance. Today, the
open liberal – environment norms are
based on disclosure; investors are
expected to be informed.
However in those days market
manipulation was rampant, new
issue forms were black-marketed,
basis of allotment favored those
who corrupted the system, and
small investors always receive step
motherly treatment. Companies held
back investor’s refundable money to
earn interest. Most of the complaints
to the companies fell on deaf ears.
Brokerage cost of buying and selling
was extremely high. In case of
purchase, investors always paid
highest cost of the day, whereas while
selling they were paid the lowest rate
of the day. When the seller gives the
share certificate in physical form
(a paper certificate) to the broker so
that through settlement it goes to
the buyer, he has to wait for almost 6
months for the settlement to happen.
Even then various excuses are given
to show the transfer deed as bad
delivery, hence instead of getting
back sale proceeds he receives his
share back as bad delivery. Further
when his sold shares are auctioned on
his account, some time he can suffer
20% to 100% loss.
Time before SEBI was most frightening
for the investors, Today investors are
unaware of the kind of advantages
they have compared to investors,
even a decade back. Investors are
advised to have a fresh look before
investing in initial public offering of
the company. Today they should first
see the grade which is mandatory and
understand it.
These are explained below (as given
by a credit rating agency):
IPO grade 1 Poor fundamentals
IPO grade 2 Below Average funda-
mentals
IPO grade 3 Average fundamentals
IPO grade 4 Above average funda-
mentals
IPO grade 5 Strong fundamentals any
grade the best grade
The best part is, SEBI has made these
credit rating which are extremely
complex, simpler by converting from
AA+ to B- to simple 1 to 5. Here 1 is
lowest and 5 is highest grade. Hence
investors can apply to those new
issues which receive Grade 5 rating.
Additionally IPO related to grading
requires inclusion of ratings of other
products/instruments, and their
performance for more clarity. Because
Credit Rating Agencies registered with
SEBI should also carry out rating of
other securities and include any kind
of borrowing/ equity participation
under any other regulator and the
same may also be mentioned in draft
prospectus.
Further, in order to understand
performance over a period, all
Ratings by any CRA registered with
SEBI for same company, issued in
previous year and up-to the time of
filing of offer document; should be
required to be made part of offer
document. As multiple grading of an
IPO is permissible, different grades
mentioned under DIP Guidelines
create confusion in the mind of
investors. The suggested comparative
chart clarifies why Second Grading
is required by issuer may provide
transparency.
Under Schedule XXVIII contents of
the advertisement to be issued in
terms of clause 8.3.5.4 the grading
Finance Special
http://www.linkedin.com/pub/consumer-voice/33/a85/849
as prescribed by SEBI is not included,
it requires a re look and should be
included. In 'debt instruments' more
complex rating is still being mentioned,
the same should be changed and
made simpler, as in case of equity.
Unproductive investment in gold,
in place of stock market is of great
concern, Govt on it's part in the recent
budget has used taxation to make our
economy less gold centric, Reserve
Bank of India recently become very
strict with gold companies in order to
regulate selling gold- related product,
investment schemes and loan schemes
and stipulated various guidelines on
KYC and margins. VOICE takes this
opportunity to alert about danger of
over investment in gold.
Recently people have been
observed using SEBI's name to
collect money from people in the
name of investment in gold, where
promise is made to give gold in
future. An advertisements by one
Gold ornament company which is
collecting money from general public
and promising two installments as
their contribution ( mis- representing
in place of interest), also using
SEBI’s name “proposing to make a
public issue of shares and has filed
a draft offer document with SEBI’.
This may give false hope of safety of
investment and legitimize the illegal
scheme.
We caution our readers that this kind
of gold investment/deposit schemes
to lure common people to part with
funds have no sanction from SEBI.
We have taken up advocacy on this
issue with SEBI and expect action on
part of SEBI, so that people are not
misled.
Sunil Prabhakar
Handy Tips
How to Clean Your LCD Monitor/Laptop
TAKE : A soft lint free cotton cloth (microfiber cloth works best).
Distilled Water. Isopropyl Alcohol or white vinegar (if there are oil stains)
A bottle (atomizer bottle works best)
If it is just dust you are getting rid of, distilled water would be sufficient. If there are fingerprints on the screen or
some oily stains, then use a solution of distilled water and isopropyl alcohol. Note that you should NEVER clean
off the screen with a dry cloth, because the surface of the screen can get scratched .
If you are going to need Isopropyl Alcohol, you should make a solution consisting of equal amounts of distilled
water and isopropyl alcohol.
Put this solution (or just distilled water if that is the case) into an atomizer bottle.
Spray the contents of the atomizer bottle onto the soft lint free cloth, DO NOT spray directly on the screen, make
sure that you are holding the cloth away from laptop when spraying. A damp cloth is what we are looking for,
we don’t need to soak it in the solution.
Gently wipe the screen with the cloth. Horizontal and vertical movements work best,
What you should not do
Never use cleansing agents like window cleaners, soap solutions etc. These contain chemicals that can harm the
screen. In particular you should avoid anything that contains the likes of ammonia, acetone, toluene or ethyl
alcohol.
Don’t spray directly on the screen. If you can’t find an atomizer bottle, you can pour some liquid onto the cloth
just make sure it is not soaking wet. Again do all this away from the laptop
Do not use tissue papers, newspaper or shower towels to clean the screen. You can easily scratch the screen
with these.
Don’t use tap water, it always contains some dissolved salts that can harm the screen.
Don’t clean while the laptop/computer is powered on. Don’t put too much pressure on the screen while cleaning.
Doing so can permanently damage the screen.
Finance Special
http://twitter.com/#!/consumervoice1
MAY
201
2
CONSUMER26 VOICE
Recommended