life in financial markets: oversmart citibank, icici bank....

Citibank's extra-brilliant and massively-remunerated top management and young, savvy, highly-qualified senior managers, went for a bailout to the US government agencies with a begging bowl in one hand and a gun in the other. "Please please give us aid or else I will shoot you!" is perhaps what the sophisticated goons of the financial world told the sophisticated puppets of the regulatory/government world! Read here and also read the comments section there (one guy writes "At this point the mindless debt addicted bailout bulls are a menace to society. Stock bugs want to do their thing on the taxpayer's dime. That is their only argument now and they have no shame. At this point anyone who promotes a "stimulus package", i.e. more debt, should be pelted with rotten fruit..")
Meanwhile, here in India, the securities market regulator, Securities and Exchange Board of India, has finished preliminary investigations into ICICI Bank's ludicrous allegations of its stock being hammered down. I had written about the witch-hunt against sellers (short or tall!) on 29 October.
Sebi has found nothing unusual in the trading in ICICI Bank. I give Sebi's full press release of 20 Nov '08 below. All this leaves an egg on ICICI Bank's face. The other cry baby, Unitech and their promoters Chandras, also better learn a valuable lesson and that is to stop crying when the going is tough particularly when you were never humble when the going was terrific.

Sebi's press release:
www.sebi.gov.in/press/2008/2008266.html
PR No.266/2008

Trading in the shares of ICICI Bank Ltd.

· In the backdrop of a global crisis in the financial sector and amidst liquidity fears, the share prices of several leading financial services companies across markets suffered a sharp decline. Rumours of financial trouble have caused a run on the banks in some overseas jurisdictions. The main spillovers have occurred in financial markets, reflecting the relative integration of such markets in the global financial system. In India, since January 2008 there has been decline in shares prices across sectors.
· ICICI Bank had vide letter dated September 17, 2008 made a complaint to SEBI alleging that “a malicious rumour is being spread to the effect that some of the top management have been selling ICICI Bank shares for the last few days”. The price of the shares of ICICI witnessed a fall of 12.5% from Rs. 640 on 15/09/08 to Rs. 560.30 on 17/09/08.
· ICICI Bank, on September 16, 2008 disclosed to the public through a press release about ICICI Bank UK PLC exposure to Lehman Brothers i.e. “ICICI Bank UK PLC is holding investment of Euro 57 million ($80 million) in senior bonds of Lehman Brothers Inc. ICICI Bank UK PLC already holds a provision of about US$ 12 million against investment in these bonds. Considering a 50% recovery estimate, the additional provision required would be about US$ 28 million”. On September 17, 2008, ICICI Bank Ltd informed the exchanges that "A malicious rumor is being spread to the effect that some of the top management has been selling ICICI Bank shares for the last few days. These rumors are baseless and irresponsible, and no shares have been sold by members of the top management of the Bank during the current year. ICICI Bank is taking up this matter with regulatory authorities for necessary action against those responsible for the rumors".
· The shareholding pattern of ICICI Bank for the quarter ended on June 30, 2008, shows that around 68% of the shares were held by FIIs/Foreign entities (ADR). Similarly figures for the next quarter that ended on September 30, 2008, show that around 65% of the shares of ICICI Bank were held by FIIs/ Foreign entities (ADR) Rest of the shares by Indian Public including institutions. FIIs have reduced their holding in ICICI Bank between the quarter that ended on June 30 and Sep 30, 2008 by around 3%. The underlying shares against ADR held by Global Custodian also show a fall of around 20.5 million shares during the period representing Jan 1, 2008 to Sep 30, 2008 indicating an increase in the shares available in the Indian Market.
· It is seen that the prices of ICICI Bank fell by 49.52% from Rs.720.45 on September 8, 2008 to Rs. 363.65 on October 10, 2008. During the same period, prices of ADRs of ICICI Bank saw a fall of 53.25% from Rs.717.77 on September 8, 2008 to Rs.335.55 on October 10, 2008. The prices of ADR has fallen more than the shares of ICICI Bank in Indian market. During this period NIFTY and SENSEX witnessed a fall of 26.82% and 27.3% respectively.

Trading pattern of the shares of ICICI bank was analyzed for the period September 8, 2008 to October 10, 2008:

1. The client category-wise breakup of turnover in the shares of ICICI Bank in the cash market shows that FIIs accounted for 23.57% and 18.61% of the value of shares sold and bought respectively whereas rest of the investors accounted for 76.5% and 81.4% of the value of shares sold and bought respectively.
   

2. Top 20 investors in ICICI Bank both on net buy and sell basis in the cash market shows that majority of them were FIIs (Net Buy: FIIs-14, MF-4, DII-1, Others-1) (Net Sell – FIIs -17, MF – 2, Others-1)
   

3. None of the major seller were observed to be placing orders successively at lower price
   

4. There was no pattern observed regarding placement of successive orders at lower price by sellers to hammer down the price.
   

5. There was no pattern observed of booking intraday profits by major clients or brokers during this period.

By and large, the trading patterns are consistent with the shareholding pattern of ICICI with predominant holdings by FIIs, the general buying and selling behaviour by FIIs and the broad movements of the market during this period. While SEBI continues its surveillance of the stock exchange trading in various securities, SEBI did not find evidence of manipulative trading in the ICICI Bank shares during the period referred to above.

Mumbai
November 20, 2008

life in financial markets&journalism: update to 'witchhunt against sellers' post

This is an update to my 29 October 2008 post on the witchhunt being carried out against sellers in the stock market:
In my 29 Oct post I wrote about elements in corporate India using some of the top media editors to plug their agenda. I just came to know that one of the Chandra brothers of Unitech is using 1/2/3 top editors through their obnoxiously close connection with a notorious PR agency (that handles accounts of the several companies of largest corporate group in India, and is now pitching for Unitech's account or already got Unitech's account) to pressurise Sebi to haul up the imaginary short sellers. Unitech, a real estate company, is in deep shit with regard to its finances. A large chunk of its properties are currently lying mortgaged with Indiabulls. There is much more going on in these connections. Its very very ugly. Its a shame on Indian media as well, particularly on these top editors who are batting for Unitech shamelessly.

life in financial markets: when government manipulates equity markets

Its a ridiculous drama being enacted by the champions of capitalism. India's finance minister, P. Chidambaram was telling television news reporters today that the foreign institutional investors (FIIs) are being directed to reverse their short-sales positions. Such a step should be an anathema to free markets but when were the financial markers were every truly from cronyism. Even C.B.Bhave, who otherwise is calm and collected, is unable to resist pressure from above and comes down heavily on FIIs lending stock to each other through private contracts.

I would like to say this to market participants, investors, regulators as well as media editors/correspondents covering markets:

When the market shoots up rapidly, as it was during 2005-07, there was no clamour from you for a ban on long purchases or reversal of long purchase positions. But when the markets are going down rapidly, as it is this month, you want to ban short sales or ask for it to be reversed? You can't have it both ways. If that does make you a hypocrite then nothing much else will! It is also government-sponsored manipulation of the markets. Who will regulate the regulators?

Earlier it was the banks and companies in distress that were being shamelessly bailed out by governments and cronyists. Now, they want to bail out the equity markets.