• OCTOBER 29, 2008

Diwali gifting

What did you gift this Diwali?
A box of sweets or a stock of ABB? A bar of chocolate or a stock of IDFC? It sounded very tempting indeed when someone asked this question yesterday! It occurred to be such a novel idea of gifting something that your relatives and friends would be able to treasure for a long time to come, and which would also grow in value!

The new accounting year as per the Hindu calendar, which began yesterday, signaled a lot of optimism and hope amongst investors. Given the enticing valuations at the current levels, we see no reason why the same should not sustain. This is of course barring the outflow of foreign money that is yet to be sucked out from the markets. Nevertheless, this should not deter long term investors from making their own portfolios more robust and adopting new gifting ideas. What say?

Rate cut expectations fuel Asian stocks
Mirroring the US stockmarkets, which saw the Dow Jones rise by as much as 11%, major Asian indices are currently trading higher with gains ranging between 1% and 5%. The Nikkei is trading 7% higher currently. The buoyancy is seemingly prompted by expectations that more rate cuts by the central banks are on the anvil. Whether this will put an end to the weakness prevailing in the markets is hard to say given that most of the economies are facing a slowdown in growth. While governments guaranteeing bank deposits and injecting money into the financial system to ease the liquidity crunch have led to stockmarkets rallying, this optimism has not lasted for long as losses from mortgage related investments mounted to a mind boggling US$ 680 bn. Meanwhile, while the Bank of Japan is expected to cut its benchmark rate by a quarter percentage point, the US Fed is expected to announce its decision today.

Promoters take the cake
In the mayhem that is eroding value from the companies that they have toiled for years to build, the promoters finally have a say. The Securities & Exchange Board of India (SEBI), the country's capital market regulator, has raised the limit to which promoter-holding in a company can be increased through the so-called 'creeping acquisition'. As per the guideline, promoters and stakeholders holding 55% or more can accumulate stakes in their companies by as much as 5% a year, if their holding is less than 75%. The regulator also eased rules related to share buybacks. It allowed promoters to raise their stake by 5% a year after a buyback without seeking exemption under SEBI's takeover guidelines. The guidance comes as a welcome relief to promoters and majority stakeholders in companies that have despite their strong fundamentals, lost considerable market value in the past few months.

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