Do it yourself

The benchmark Nifty has gained more than 22% during the one month of lock down. The broader market indicator Nifty500 has also gained by similar margin. This counterintuitive trend may be perplexing many market observer. I am however not surprised by this sharp rally of past this month. In fact I believe that this rally may even extend little further in May. In my view, this is a classical bear market rally in which the stocks are distributed to a large number of non institutional participants, popularly referred to as retail investors. A significant distribution takes place in the poor quality stocks, which are usually difficult to sell if the markets are falling. As you would observe from the following table, on 14 out of 21 trading session between 23 March and 24 April, the institutional investors and insiders have been net sellers. They have sold a net amount of Rs12676cr of equity on NSE itself. The domestic institutional buy of Rs8420cr is roughly equal to the am...

"Invest in India" - Caveat de Emptor Nick Read, the chief executive officer of Vodafone Plc, sounded the alarm bell on the future of the beleaguered Indian JV of the company with AV Birla group. In an interaction with the press in London, Mr. Read said, "the company's future in India could be in doubt unless the government stopped hitting operators with higher taxes and charges." He warned, ”If you’re not a going concern, you’re moving into a liquidation scenario -- can’t get any clearer than that.” It is pertinent to note in this context that Vodafone, which owns 45% of Vodafone Idea having a 30% share in India telecom market, wants a two-year delay on spectrum payments and lower license fees and taxes. It’s also calling for the spectrum payments demanded by the court to be spread over 10 years and is asking for a waiver on interest and penalties. In my view it is a case of business decision gone wrong due to competitive intensity and p...