Indian shares crash tracking global meltdown

MUMBAI (Thomson Financial) - Indian shares closed lower as indices crashed in late trading on Monday, tracking the meltdown in global markets and other Asian markets.

Asian shares extended their losses as the Wall Street slumped Friday over concerns of inflation accelerating in the US, which could make it difficult for the US Federal reserve cut rates further.

'The markets are down due to meltdown in global markets. Indian markets can't be decoupled from the happenings around the globe,' Rajiv Sampat, director of Mumbai-based Parag Parikh Financial Advisory Services Ltd said.

The Bombay Stock Exchange's (BSE) benchmark 30-stock Sensex fell 769.48 points, or 3.84 pct, to 19261.35, its second-biggest points fall in a single day, while the National Stock Exchange's S&P CNX Nifty, which registered its biggest points fall in a day, dipped 4.27 pct at 5,789.20 points.

With the year end festival season round the corner, FIIs turned sellers and investors locked in profits across all sectors, which added to today's fall, Sampat added.

Contrary to the dealers' forecasts in the morning, the mid-cap and small-cap shares tumbled too. The BSE's midcap index was down 3.87 pct at 9,105.58 points, while the smallcap index fell 2.91 pct to 11,840.02 points.

An analyst at a hedge fund, however, said, 'It (the fall) is a temporary action and midcaps are likely to do well even in the coming days as this phase passes. Shares of sugar companies are likely to outperform the markets in the medium term, but auto companies are likely to come under pressure.'

Among the biggest losers today were, Housing Development Finance Corp (HDFC) which fell 5.93 pct to close at 2877.55 and state-owned Bharat Heavy Electricals Ltd which dipped 5.32 pct to 2425.25.

Small-, mid-caps go bullish

Small- and mid-cap stocks are shining on the bourses compared with large-cap scrips by posting a higher price appreciation and cornering a bigger share in turnover on both BSE and NSE.

The BSE Small-Cap Index (up 34 per cent) and the BSE Mid-Cap Index (up 28 per cent) have outperformed the Sensex (up 16 per cent) in the last two-and-a-half months, while the NSE Junior Nifty (up 25.4 per cent) and the NSE Mid-Cap Index (up 30.2 per cent) have beaten the S&P CNX Nifty (up 20.4 per cent) during the same period.

The frenzied buying in small- and mid-cap stocks is also reflected in the turnover, which has gone up substantially during the period.

The small- and mid-cap stocks (non-A group), which accounted for 38 per cent share in the total turnover of BSE prior to October 2007, account for 53 per cent now.

On NSE, the share in turnover of small- and mid-cap stocks has increased from 49.3 per cent to 64.4 per cent in the same period.

According to Siddhartha Bhamre, a derivatives and equity analyst at Angel Broking, FIIs are inactive and not buying large-cap stocks on account of their stretched valuation and also because of many lucrative large-cap public offerings in the last three months.

Meanwhile, retail and high networth individuals (HNIs) are buying small- and mid-cap stocks instead of going in for large-cap stocks.

The retail and HNI investors are buying small-cap stocks such as those of Hotel Leela, Tata Teleservices and Ashok Leyland instead of going for Reliance Industries, Larsen & Toubro, Bharti or Reliance Communication. Traders and operators are buying and selling small- and mid-cap stocks on account of positive cost of carry for derivatives contracts.

Stock broker Shailesh Bhatia said FIIs had achieved the upper limit of investment in most of the large-cap stocks and hence could not buy more such stocks.

The retail participation was seen in momentum stocks, though not for delivery, but for intra-day selling, said Bhatia.

Stocks traded under the B group were the largest gainers on BSE. Their market share more than doubled from 3.27 per cent in October to 8.68 per cent in December. During the same period, the market share of the B1 group stocks increased from 29.30 per cent to 39.37 per cent.

The market price of 234 non-A group stocks went up by over 100 per cent in the last two-and-a-half months and the price of 559 stocks appreciated between 50 per cent and 100 per cent.

Of the 2,682 actively traded non-A group stocks, the daily average turnover of 53 per cent or 1,441 stocks more than doubled and the average of 235 stocks rose in the range 50 per cent to 100 per cent.

HOT STOCKS for 17-12-07

STATISTICS :

Global markets today are under pressure can see almost all indices down by 1% and more. Chances of our market fowwloing the same path can see noticed. Opening will be flat to negative due to global pressure. Nifty is rangebound and volatile can trade @ 5995 - 6080 levels, can see buying coming in second session, markets will tend to recover, Market is still stock specfic, one can watch out for the below mentioned picks for today and coming days.

INTRADAY :

IFCI : buy for a tgt of 124+, sl @ 107

EDELWEISS : buy for a tgt of 1530+, sl @ 1445

DELIVERY :

NIIT TECH : buy for a tgt of 310+, time frame is 1 month

HFCL : buy for a tgt of 65+, time frame is 1 month

FUTURES :

IFCI : buy for a tgt of 124+

SATYAM : buy for a tgt of 450 , go for jan expiry

MOSERBAER : sell for a tgt of 285, sl @ 297

RPL : buy for a tgt of 230+

EDELWEISS : buy for a tgt of 1530+ , sl @ 1450

BHARTI : buy for a tgt of 980+, sl @ 935

OPTIONS :

EDELWEISS : buy call 1500 for a tgt of 90+, sl@ 40

EDELWEISS : buy call 1560 for a tgt of 55+, sl @ 16

NIFTY : buy call 600 below 145 for a tgt of 180 , sl @ 120

RCOM : buy call 740 for a tgt of 50+, sl @ 25

Securities in ban period for trade date December 17, 2007- F&O segment

The derivative contracts in the below mentioned securities have crossed 95% of the market-wide position limit and are currently in the ban period. It is hereby informed that all clients/ members shall trade in the derivative contracts of said securities only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action in accordance with the Circular No. NSCC/F&O/C&S/365 dated August 26, 2004.

Sr. No.	Symbol
1	ADLABSFILM
2	ALOKTEXT
3	BONGAIREFN
4	ESSAROIL
5	GITANJALI
6	GMRINFRA
7	HOTELEELA
8	MRPL
9	NAGARFERT
10	NEYVELILIG
11	POWERGRID
12	RAJESHEXPO
13	TTML

SEBI panel suggests compensation for retail investors

MUMBAI: This could well signal a new beginning in the country’s financial sector in terms of compensating investors who have been defrauded.

Thousands of retail investors in the primary market could be in line to be compensated monetarily for potential losses suffered by them due to manipulation in the initial public offering (IPO) allotment process of 21 companies two years ago.

A SEBI-mandated committee has recommended that individual investors who were short-changed in IPOs between 2003 and 2005 be compensated in monetary terms. The Justice Wadhwa committee has worked out a compensation of Rs 92 crore for investors who had applied for shares in the retail category in 21 IPOs in 2005-06.

This is based on the closing price on the listing day for all these IPOs, which include IDFC, Jet Airways and Suzlon.
In essence, investors who lost out in these IPOs should be paid the difference between the offer price and the closing price on the listing day, the committee has said in its report, according to sources. This is reckoned to be the unjust gain made by scamsters who cornered shares meant for individual investors.

Sources said the report has recommended that the first to be compensated should be retail investors who failed to get any allotment, followed by those who were allotted fewer shares than they had applied for. Orders to disgorge ill-gotten gains are common in the US, the world’s largest financial market.

Finance Minister P Chidambaram had said last year that he wanted to send out a strong signal to those attempting to defraud investors by compensating them for the losses they had incurred. He had told SEBI to work out a mechanism to ensure this.

The SEBI board will now have to consider the Wadhwa committee’s recommendations and then take suitable action. This would mean going back to old records with market intermediaries and identifying thousands of investors, which can be a cumbersome exercise.

In almost all 21 IPOs, the shares were listed at a premium to the offer price. The compensation can be paid out by selling securities worth over Rs 140 crore of those operators involved in the IPO scam which have been frozen in their depository accounts based on an order issued by SEBI.

The 2005-06 scam featured a clutch of operators who put in thousands of fictitious applications in several IPOs in the retail category of a small value. After allotment, these operators transferred the shares to another set of players, who in turn transferred them to financiers who had provided the funds for investing in the IPOs.

These shares were then sold on the first day of listing, landing them a windfall, the price difference between the IPO price and the listing price. Thousands of bank accounts and demat accounts were opened in the names of fictitious entities, which SEBI investigators unearthed in 2006 after checking over 100 IPOs.

During the probe, it came to light that key operators had cornered shares representing 0.52% of the total number of shares allotted to the retail investors in the Jet Airways IPO. In the Suzlon offering, 3.74% of shares were allotted to operators using over 21,000 different accounts while in the NTPC issue, the operators used 12,853 accounts to corner 1.30 % of the total number of shares allotted to investors.