life in general: look up! far far up!

There is so much vastness in our universe. There is so much happening out there in space, far far away from our Mother Earth, that should at the very least make us acknowledge it.

Below are (just two of many) pics (original link1 and link2) taken by Hubble space telescope, followed by their description (taken from here and here) in recent years. I just love watching these photos every now and then.

Here they are (click on them to see them enlarged & clear):

1]


The 'Ghost Head Nebula' is one of a chain of star-forming regions lying south of the 30 Doradus nebula in the Large Magellanic Cloud. Two bright regions (the 'eyes of the ghost'), named A1 (left) and A2 (right), are very hot, glowing 'blobs' of hydrogen and oxygen. The bubble in A1 is produced by the hot, intense radiation and powerful stellar wind from a single massive star. A2 has a more complex appearance due to the presence of more dust, and it contains several hidden, massive stars. The massive stars in A1 and A2 must have formed within the last 10 000 years since their natal gas shrouds are not yet disrupted by the powerful radiation of the newly born stars.
Credit: ESA, NASA & Mohammad Heydari-Malayeri (Observatoire de Paris, France)

2]

The Advanced Camera for Surveys (ACS) aboard the NASA/ESA Hubble Space Telescope has used a natural 'zoom lens' in space to boost its view of the distant universe. Besides offering an unprecedented and dramatic new view of the cosmos, the results promise to shed light on galaxy evolution and dark matter in space. Hubble peered straight through the center of one of the most massive galaxy clusters known, called Abell 1689.

For this observation, Hubble had to gaze at the distant cluster, located 2.2 billion light-years away, for more than 13 hours. The gravity of the cluster's trillion stars " plus dark matter " acts as a 2-million-light-year-wide 'lens' in space. This 'gravitational lens' bends and magnifies the light of galaxies located far behind it, distorting their shapes and creating multiple images of individual galaxies. Credit: NASA, N. B

enitez (JHU), T. Broadhurst (The Hebrew University), H. Ford (JHU), M. Clampin(STScI), G. Hartig (STScI), G. Illingworth (UCO/Lick Observatory), the ACS Science Team and ESA

life in financial markets: self-inflicted powerlessness

Since the last 10-12 years, as I have been covering the financial markets as a journalist, I have noticed that stock exchanges and depositories do not use the full force of their rules, regulations and bye-laws to reduce incidences of fraud or serious negligence by their member brokers and depository participants (the intermediaries).

There is a mix of two reasons -- one, their own lack of willingness and two, the capital market regulator's (Securities and Exchange Board of India's) un-spoken arrangement with them that they pass on suspect cases to itself and it will take action. The second factor leads to a monopolisation of regulatory power and that, according to me, is not good. Sebi is not at all an efficient and honest regulator. More often that not, it goes after the small fish or the wrong ones! The big ones and the real brainchild behind fraud and scams are very very rarely caught.

Anyway, I wrote something (in the magazine I presently write for) on New York Stock Exchange's recent against its brokerage firm, Citigroup Global and compared that with the Indian scenario. Here it is:

Revelation

When the New York Stock Exchange, on 7 October, transparently levied hefty fines on three of its member-broker firms, including Citigroup Global Markets, for market rules violations it was an implicit message to its Indian counterparts to get similarly transparent and tough.

Citigroup paid a consent term amount of $150,000 to NYSE for violating the cut-off time restrictions on 'market on close' orders and 'limit on close' orders several times during 2007 and this year.

The National Stock Exchange and the Bombay Stock Exchange have never made public any penal action taken against any of their broker-members for rules violations. The Securities and Exchange Board of India (Sebi) does take such action but under consent orders filed by intermediaries to settle these cases, Sebi does not disclose the details of the violations.

No details of violations such as date or dates and trades are revealed in Sebi's consent orders using which market intermediaries are able to hide their spurious actions under the carpet. A leaf from NYSE's book is, therefore, worth taking.

life in general & financial markets: dangerous hypocrisies of capitalists

Any human violence is harmful. But violence can be of two types -- one, physical that injures humans and properties and two, the silent, subtle manipulation of state of affairs that brings about loss of human rights and dignity for the victims.

Acts of Naxals in India can be deemed to be the first type and the acts of Indian central government (particularly P. Chidambaram, Manmohan Singh, Kamal Nath, Montek Singh Ahluwalia) and state governments (of Orissa, Jharkhand, West Bengal, Gujarat, Maharasthra, Goa, Haryana, Madhya Pradesh, Chattisgarh, Assam, Arunachal Pradesh etc) is of the second type with an element of physical intimidation of the first type.

The recent violence by Naxals is deplorable. Also deplorable is the fact that the Indian government is going after Naxals purely because of pressure from companies such as L N Mittal's Sterlite/Vedanta, Korea's Posco, Tatas, other multi-nationals etc to make it easy for them to set up projects (that violate all basic human rights conditions and ecological norms) in remote areas to dig, mine or set up large factories. Chidambaram is clearly a corporate crony and that is exactly why he was made the Home Minister in the last government and again when the same government came into power this March.

Development is just an excuse to grab land for companies who will then make electricity, goods etc which will be consumed in urban India and other countries. Such capitalists are an insult to true capitalism that says that governments should not interfere in the free play of property rights and competition in trade. Why then do companies worldwide manipulate governments to seek tax favours and other cruel interventions against poor people living in remote areas?

Why aren't the property rights of these poor & un-influential, whether individual or collective (of a community or a tribe) respected by industrialists, politicians and civil-service-bureaucrats? Their machinations and double-standards disgust me completely. As a journalist, I know, for a fact, that they also manipulate very senior editors in the media (print, TV and internet) to carry forward their ugly agenda. The affluent citizenry, in the meanwhile, continue to remain steeped in their excessive consumerism.

Tehelka's Shoma Chaudhury has written an insightful piece on the issue of Naxalite violence in a recent issue of Tehelka. Below are some excerpts from it:

Here goes:

From Tehelka Magazine, Vol 6, Issue 39, Dated October 03, 2009

...Over this past year, the Home Ministry has been planning a major armed offensive against the Naxals, particularly in Chhattisgarh. According to reports, the plan involves stationing around 75,000 troops in the heartland of India — including special CRPF commandos, the ITBP and the BSF. Scattered newspaper accounts have spoken of forces being withdrawn from Jammu and Kashmir and the Northeast; there is also talk of bringing in the feared Rashtriya Rifles — a battalion created specially for counter-insurgency work — and the purchase of bomb trucks, bomb blankets, bomb baskets, and sophisticated new weaponry. Minister Chidambaram has also said that if necessity dictates, he will bring in the special forces of the army.

The decision to launch such a massive armed operation on home ground — due to start this November — should have triggered animated political, civil society and media debate. But Operation Green Hunt — as the offensive is being termed — has been gathering force in almost complete silence. Prime Minister Manmohan Singh and Home Minister Chidambaram have variously called Naxals — or “Maoists” — “the gravest threat to India’s internal security.” Perhaps a military offensive against them is the answer, but is it the only answer? Is it the best answer? Will it provide a solution? Who will be impacted by this offensive? What will be its repercussions? Who are we really declaring war on? What are we declaring war on? Are we going into this with eyes wide open? Is there anything we should have learned from the seemingly irreparable psychological mess in Kashmir and the Northeast? These are the questions a democratic society should be asking. One can perhaps understand the well-heeled turning their back on such bleak issues. But with such a significant operation looming on the horizon, what can excuse the complete absence of debate from national political parties?

But silence, perhaps, is only the lesser worry. A few days ago, the government announced an ad blitzkrieg as part of its psychological offensive. “Naxals are nothing but coldblooded murderers” the ad screamed across all major news dailies. The visual showed a series of men, women and children brutally killed by Naxals.
......

AT THE heart of the Naxal riddle, there are three primary questions: Who is a Naxal? What is one’s position on violence as a tool of struggle? And why is Naxalism on the rise across the country?

As Kobad Ghandy proves, a Naxal ideologue, commander or politburo leader can come from any milieu. The disempowered dalits of Andhra Pradesh, the destitute tribals of Chhattisgarh, the middle-class intellectuals of Bengal or the privileged rich of Bombay. These “informed revolutionaries” function at two levels. At a political level, they do not believe in parliamentary democracy (where they see power still concentrated in the hands of the feudal upper class) and their long-term objective is to seize State power for the people through armed struggle. In this, they threaten the sovereignity of the Indian State and many humanist thinkers, including men like K Balagopal of the Human Rights Forum, who was part of brokering peace talks between the government and Naxals in Andhra Pradesh in 2004, believe the State is within its rights to confront them. “The Maoists themselves would not tolerate such a challenge if they came to power,” says he. Balagopal is also critical of Naxal leaders creating “liberated zones” where the Indian State cannot function. “If they claim to be the voice of the people, can they pursue a political agenda that injures people — either by their actions or the repercussions they invite? Does the current tribal generation of Chhattisgarh want to sacrifice itself for a utopian future that may never come?”

It is true that in this prolonged ideological war, many Naxal attacks like the horrific one on the Ranibodli police station two years ago and the more recent one in Rajnandgaon embrace brutal tactics and almost fetishise violence. Even if these attacks are against an oppressive and corrupt police, it is a nobrainer to condemn them and say one is opposed to this violence. Or that their perpetrators should be punished.

But like dozens of other intellectuals, Balagopal points out that it is suicidal to focus only on this ideological war or resort to extrajudicial means alone to quell it. Can Naxalism really be wiped out by brute counter force? If that were so, Siddhartha Shankar Ray’s crackdown in Bengal in the 70s should have nailed it for all time. But the fact is, while stories of their own coercions are true, Naxal leaders enjoy wide support because they also espouse social-economic causes and empower people that the Indian State has ignored — criminally — for 60 years. Most Naxal cadres, therefore, are not “informed revolutionaries” fighting a conceptual war: they are beleagured tribals and dalits fighting local battles for basic survival and rights. Bela Bhatia, an activist, says she met a mazdoor in Bihar who was part of the cadre. “You can call me a Naxal or whatever you want,” he said. “I have picked up the gun to get my three kilos of annaj.”

The point is, should the Indian State be declaring armed war on its most despairing people? Is there no other way to empower them and wean them away from the gun and the seduction of the ‘informed revolutionary’? When Arnab Goswami evoked the 15 dead CPM members in Bengal last week, he forgot to mention that, according to newspaper reports (since no TV channel bothered to send teams there to find out) a 10,000-strong crowd of tribals had descended on the CPM office which was stockpiling arms in Inayatpur, near Lalgarh. When his panelists tried to draw his attention to this, he scathingly dubbed all 10,000 tribals as Maoists. Should “Operation Green Hunt” then stamp all 10,000 out? And if 10,000 Maoists had attacked an office, is it possible that only 15 people would have died? What is the real truth about the attack on the CPM office last week? And why was the superintendent of police, visiting a day later, unable to find any bodies? And why were the central paramilitary forces stationed there unable to prevent any of it?

.......


As Himanshu Kumar, a Gandhian and the only human rights activist on ground zero in faraway Dantewada where Operation Green Hunt is to be launched, says, “We can all be agreed on the premise that Naxalism is a problem, but why are these poor people attracted to a politics that will end in death? Have we created such a heinous system that death is more attractive than the deprivations and humiliations this system doles out? If that is so, why should I defend this system? All that these people want is food, health care, school, clothes and their legitimate right over their land. Yet, instead of weaning them away by strengthening the democratic process, if we are going to run our democracy only on the strength of weapons, I fear we are entering a dangerous and irrepairable state. We are headed for civil war.” Men like Himanshu should know. For 17 years, he has functioned like an ICU on the edges of a wounded society, providing education and health care, painstakingly drawing tribals into the electoral and constitutional process. The government, loath to undertake the trouble, has been happy to outsource its functions to him. Yet now, it is deaf to his wisdoms.

.....

In 2006, the Planning Commission asked an expert committee for a report on development challenges in “extremist affected areas.” The committee comprised senior officers like former UP police chief Prakash Singh; former intelligence head, Ajit Doval; senior bureaucrats like B. Bandopadhyay, EAS Sarma, SR Sankaran and BD Sharma; and activists like Bela Bhatia and K Balagopal. The report submitted in October 2008 had some visionary analysis and recommendations.

“The main support for the Naxalite movement,” it said, “comes from dalits and adivasi tribals”: the element of water: the infinite constituency in which Naxal leaders swim. Dalits and adivasis comprise a staggering one fourth of India’s population, yet are disproportionately destitute and low on the Human Development Index scale. Worse, they suffer the most humiliation and indignity: the proverbial insult on injury. The report is an exhaustive anthology of the causes for rural discontent and violence — recording meticulous data and case studies — but at the heart of its argument, it places the “structural violence implicit in our social and economic system” as the key explanation for Naxalite violence. Slamming the neoliberal directional shift in government policies, it urges a “development centric” rather than “security centric” approach to the Naxal problem.

Curiously, three years earlier in 2005, human rights lawyer Kannabiran had written a letter to Dr Manmohan Singh reminding him of his own report as a Planning Commission Member in 1982 and one written by Pranab Mukherjee in 2002 that had come to the same conclusion. As Bela Bhatia says, “With all this insight and understanding already with them, it is completely mystifying why they should go against their own intuition and recommendation and take a security-centric route. Actually,” she adds, “it is not mystifying. It only makes the character of the Indian State more clear.”

This ‘character’ gets even more depressing when you know that barely a week ago, on 15 September, Arjun Sengupta, former economic adviser to Prime Minister Indira Gandhi also wrote that “Naxalism is a cry that must be heard”. Responding to Dr Manmohan Singh’s admission that despite the State’s best efforts to contain the “Naxal menace”, violence was still on the rise, Sengupta wrote powerfully, “It is important to understand why this is so and in what sense Naxalite violence is different from other violent outbursts. Although it has always expressed itself as a breach of law and order with violence, murder, extortion and acts of heinous crimes, it may not be prudent to think of every protest movement of the disaffected people as a simple issue of law and order violation, and calling for its brutal suppression. This form of extremism, indeed, goes beyond law and order, fanning some deep-seated grievance. We must try to resolve those problems first, as otherwise the violence will remain insurmountable.”
image

(Way back in 1996, Justice MN Rao of the Andhra Pradesh High Court had also remarked in a judgment, “While left wing extremism is viewed as a problem by the administration, it is increasingly being perceived as a solution to their problems by the alienated masses.” Why is this so? That’s a question every self-styled jingoistic nationalist must ask themselves.)

As Sengupta reminds the prime minister, he is right to fear that Naxal violence will raise its head again and again, because at its heart is the deeper structural violence that our democratic Republic refuses to address: a violence that forces 77 percent of Indians to live on less than Rs 20 a day while 5 percent enjoy lives that border on obscene excess.

Structural violence: that’s an imaginative vacuum. For most urban Indians, the lives of tribals and dalits has no meaning, no face, no flesh. Our books no longer write of it, our films no longer evoke it, our journalists no longer cover it. It’s not just the poverty; it’s bumping into a face of the Indian State you have never seen before: brutal, illegal, rapine, pimped out to serve the interests of a few. Unless one travels into the silent smoky hole in the heart of this country — the remote jungles of Chhattisgarh, Orissa, Jharkhand, Andhra Pradesh; the desolate corners of Uttar Pradesh and Bihar and Rajasthan, one cannot feel the dread of this question: How will Operation Green Hunt solve this? You might stealth-march a mythic army of COBRA commandoes into this imaginative vacuum, but how will that dissolve the “two categories of human beings” our nation has created? Operation Green Hunt may kill several hundred ‘informed revolutionaries’ and several thousand of the despairing poor who have taken up arms, but how will it address the birth of new anger — anger born out of bombing an old wound?

.....


ONE OF the key architects of Operation Green Hunt, Home secretary Gopal Pillai sits in a giant office in powerful North Block. At first meeting, he doesn’t seem the average cynic you expect Indian bureaucrats to be. An amiable, thoughtful man, he says he’s seen long years of service in the Northeast and knows what a security-centric approach can do to a people, how it can trigger a world of smoke and mirrors where nothing is what it seems and everyone is chasing someone’s shadow. He seems open and ready to listen. More, he is full of surprisingly honest admissions: Manipur is a society in collective depression, he says. Yes, raising the Salwa Judum in Chhattisgarh (which human rights activists have been crying hoarse about) was wrong; yes, the Naxals have often taken up causes and done work that the government should have. But, he adds, their violent disruptions are a real deterrence for governance. You have no argument with that.

According to him, then, Operation Green Hunt is being planned as a kind of “area domination”. “We want to take back control of the land; but we will only fire if we are fired against,” says he. “Lalgarh is the model; we want no collateral damage. Our real success will be in restoring civil administration in this area. PDS, mobile medical vans, stronger police chowkis, schools – that’s our goal.” You feel eager to believe him.
MANMOHAN SINGH AND PRANAB MUKHERJEE HAVE BOTH HEADED REPORTS URGING DEVELOPMENT CENTRIC APPROACHES TO NAXALISM

Part of the problem of administering the tribal villages in the jungles of Chhattisgarh is that they are lonely and farflung; also few in the district or political administration know the tribal languages. Operation Green Hunt has been long in the planning. Battalions of CRPF men and para-military forces across the country are being given crash courses for the impending operation. The Centre has sanctioned 20 new schools in jungle warfare; invited crores worth of bids for military equipment. Is there a similar hot-foot programme for training, sensitising and incentivising the civil administration? you ask. Has he invited civil society activists in the region for their inputs? Mr Pillai has a sudden shocked moment of self-recognition. No, he admits, and scribbles “training” and “dialogue” on a yellow notepad.

There is a month to go before Operation Green Hunt is launched. A familiar despair sprouts: the gap between stated intention and action. And miles of paper and good advice gathering dust in the Planning Commission.
image

TODAY, THE biggest riddle for anybody concerned about a just and equal world is the dilemma of violence as a tool of political struggle. When the government shows such poor intention, when it is completely deaf to peaceful people’s movements like the Bhopal gas victims’, or the tribal resistance to bauxite mining in Niyamgirhi, or the Narmada Andolan, is one justified in asking the poor to defang themselves, unless one is willing to step out of one’s comfort zone and share their lives of helpless status quo?

Should one distinguish between Naxal violence and spontaneous rural violence? Yet, in a democratic society, how can violence of any kind be condoned? Where does that leave democratic practice?

Despite these internal tussles, contrary to what Arnab Goswami asserts, almost the entire human rights community is agreed that not only is Naxal violence to be condemned, but subdued. Increased and international access to weaponry has led to escalating violence. As Prakash Singh, a widely respected retired police chief, says, “The Naxals used to move in dalams [cells] of 20. That’s gone up to a 100. They have sophisticated weapons and their attacks have become more brutal. We have to show that such armed insurrection will not be tolerated.”
NAXALS ARE OFTEN GUILTY OF BRUTAL VIOLENCE. THEIR STRUGGLE TO SEIZE STATE POWER THREATENS INDIA’S SOVEREIGNTY

The disagreements arise over strategy and efficacy. A top security expert who wishes not to be named but is generally considered a hawk, for instance, has serious doubts over Operation Green Hunt. Ironically, he voices the anxiety of a wide range of human rights activists. “To attempt this kind of an action by police forces against your own land and people is a dangerous trap,” says he. “We usually reserve such operations for hostile territory. The police is supposed to go after particular individuals – say, Ram Lal, a criminal. But in an operation of this kind, you don’t even know who Ram Lal is, it is very difficult to know who he is or get accurate intelligence on his movements. You might end up killing Ram Lal’s relatives or his whole village. And if you don’t hold inquests, you’ll never know who you killed.”

Kashmir and the Northeast are bleeding, painful reminders: once paramilitary forces or the army moves in, you can never really withdraw. No bureaucrat or military strategist or powerful minister can control the vicious logic of paranoia, fake killings, genuine mistakes and revenge that sets in. When friend and family can be an informer, everyone is an enemy.

Already, this helpless cycle has started to turn in Chhattisgarh. Last week, in the first of its assaults, a company of 100 COBRA commandos set off to destroy an alleged Naxal arms factory in Chintagufa area. They were caught in Naxal fire. Seven COBRAs were killed. In turn, they claimed to have killed nine Naxals (whose bodies they say they have) and many more they claim the Naxals dragged away. The government has tried to pass this off as a big triumph. But the deadly smoke and mirrors game has already begun. Villagers claim the COBRAs made no kills and had dragged innocents out of villages to tot some up, among them an old man and woman. Chhattisgarh DGP Vishwaranjan does not help matters by refusing to answer questions: “I don’t have any details,” he says. An odd answer for a DGP. Plus, there’s the wound of six COBRAs dead in the first sortee.

As Operation Green Hunt kicks into top gear, all these problems will magnify. The hallucinations of the impregnable forest. Extremists who disappear, leaving villagers to bear the brunt of the commandos’ ire. Paranoia within and without, revenge and, as in the Salwa Judum, innocent tribals caught between the fury of the Naxals and the fury of the State.
TODAY, THE BIGGEST RIDDLE FOR ANYONE CONCERNED ABOUT A JUST WORLD IS THE DILEMMA OF VIOLENCE AS A TOOL OF POLITICAL STRUGGLE

Pressure will create equal and opposite counter pressure. Prime Minister Manmohan Singh can’t seem to grasp this simple physical equation. The impact of the Salwa Judum was to drive more tribals into the arms of Naxals. Operation Green Hunt promises to set the place on fire. When Binayak Sen spoke against the Salwa Judum, he was jailed. Now, when Himanshu Kumar is warning about impending civil war, no one is listening.
image

“Not commandos. Send in health workers and schoolteachers protected by the CRPF,” pleads he. “Show the tribals hope and they will choose life over death.” But the weight of his voice does not sway even a mote of dust in the corridors of the Home Ministry.

THERE IS one final silent piece in the escalating Naxal violence that has gripped the country: neo-liberal land grab and tribal rights. It is no coincidence that a majority of the Naxal leadership today is from Andhra Pradesh. According to journalist N Venugopal, the roots of this go back to the Telengana Movement of 1946-51, which was abruptly withdrawn by the Communist Party. In the Andhra Second Five-Year Plan (1956), 60 lakh acres of surplus land was identified. Yet by the time the Land Ceiling Act was passed in 1973, and enough concessions had been made to rich landowners, the State said only 17 lakh acres of surplus land was available, and it distributed only four. Land, livelihood and liberation was the clarion call then. Still driven by that unfulfilled aspiration, most leaders today are from the families of the ‘46 – ’51 movement.
‘THIS OPERATION IS A DANGEROUS TRAP,’ SAYS A SECURITY HAWK. ‘YOU ARE LOOKING FOR RAM LAL, YOU’LL END UP KILLING HIS RELATIVES’

EAS Sarma, former Commissioner of Tribal Welfare and former secretary, Expenditure and Economic Affairs, unlocks the real heart of the matter. “I am totally against violence of any kind and a firm believer in democratic process,” says he. “But Left extremism is a secondary issue. How many tribals even know there is a government? Their only experience of the State is the police, contractors, and real estate goons. Besides, the Fifth Schedule of the Constitution grants tribals complete rights over their traditional land and forests and prohibits private companies from mining on their land. This constitutional schedule was upheld by the Samatha judgement of the Supreme Court (1997). If successive governments lived by the spirit of the Constitution and this judgment, tribal discontent would automatically recede.”

Mr Sarma is probably right. Human rights activists have long argued that the real intention of the Salwa Judum in Chhattisgarh was to capture tribal land — brimming-rich with minerals — and hand it over to private companies. The fact that 600 tribal villages have been evacuated in the last few years gives credence to this theory. If tribals no longer live on that land, the inconvenient Fifth Schedule of the Constitution will not apply.

Given that the Supreme Court directed that the Salwa Judum was to be dismantled, perhaps, Operation Green Hunt is the second lap. In any case, whether for ill-intention, poor execution, or unplanned collateral damage, there is much to fear in the impending operation.

In the meantime, we would all do well to read the Fifth Schedule of the Constitution.

WRITER’S EMAIL
shoma@tehelka.com
From Tehelka Magazine, Vol 6, Issue 39, Dated October 03, 2009

lic -- the elephant every one wants to...

The story goes about six blind men and an elephant. Each one inspects a different part of the elephant and comes to different conclusions on the kind of animal it is. The big picture isn't discernable in the case of a mammoth animal that the elephant is.

The story of the largest domestic institutional investor in the country, the Life Insurance Corporation of India (LIC), and the participants in the Indian securities market is similar. LIC means different things to different people.

Number crunching brings out some of the different insights being sought after by different people. Here goes some interesting analytics on LIC (kindly click on the images below to see them clear and enlarged):

life in financial markets: takeover norms' double whammy for investors

It is is not the first time that I have come across an incidence of a clever twisting of logic, or a cunning interpretation of law, by an appellate authority that hears appeals to orders passed by a enforcement authority. To make it worse, the law enforcement authority itself attempts to keep specific provisions of the law ambiguous enough to allow for discretion by their officials.

I noticed this recently in the financial marketplace with regard to Indian securities market regulator, Securities and Exchange Board of India (Sebi) and the securities market appellate body, Securities Appellate Tribunal (SAT). SAT was hearing an appeal (among many it hears every day/week/month) by Tata Tea against a July 2007 Sebi order, invoking its Sebi (Substantial Acquisition of Shares and Takeovers), in the matter of Tata Tea's acquistion of a company called 'Mount Everest Mineral Water.'

SAT ruled in favour of Tata Tea on 15 September. You can read the order uploaded here [it is not possible to link to the order on Sebi's user-unfriendly (deliberately, in my view, to deter easy research into its activities) website].

SAT gave the benefit of doubt to Tata Tea thereby ruling against investors' interest. At the same time, it upheld Sebi's right of discretion in the matter under dispute. Giving discretionary powers to Sebi, particularly where a concise elaboration of conditions can take out the need for such discretion, is not healthy.

Anyway, I recently wrote about the matter in the magazine I presently work for. Here is what I wrote:

Discreet

Even as the Securities and Exchange Board of India (Sebi) has set up a committee to entirely review its takeover norms, pending tussles between companies and Sebi's norms continue.

Problem areas in Sebi's takeover norms were yet again highlighted in a recent verdict by Securities Appellate Tribunal (SAT) on an appeal by Tata Tea against a Sebi order that it add Rs 9.64 to the Rs 140 per share 20% stake-acquiring open offer made to shareholders of Mount Everest Mineral Water (MMEM) in July 2007. This was due to non-compete payment by Tata Tea to MMEM's promoters.

SAT accepted that Sebi had discretionary powers to decide on the genuinesness of all contentions of non-compete payments and, if not, add it to the offer price in an open offer. But it ruled in favour of Tata Tea stating its non-compete payment was proper.

Discretionary powers need to be replaced with objective criteria. For instance, Sebi can fix a lower than the presently-allowed limit of 25% of non-compete fee to the acquisition amount above which acquiring company has to pay the same to target company's shareholders.

life in general & financial markets: (part 1) excessive-consumerism-driven ugly mining

As consumers, we desire and consumer various products. A large number of these products' manufacturing process involves using of materials that come from mining of ores of iron, bauxite, aluminum and other metals.

Excessive consumerism therefore causes excessive mining. Excessive mining is ugly. It causes untold misery to local, remote people in India, Indonesia, China, African continent and other places.

More often that not, governments of these countries give land and mining rights at extremely cheap prices to mining companies. For instance, this happanes in India in bauxite mining in Orissa state.

I am hoping to sustain a series of posts on this issue. This post is part 1 and covers the country of Congo in Africa.

This recent newsreport the problems caused by mining in Congo:

DRC report denounces bad practices in mining

By Adia Tshipuku (AFP) – 1 day ago

KINSHASA — A report for the senate in the Democratic Republic of Congo shows that the mining sector is riddled with fraud, incorrect figures and bad management that costs hundreds of millions of dollar a year.

"No state service ... is up to date to give reliable figures" on the "number of operators in the mining sector, their quality and the quantity of products exported," said the report, passed by the senate on Saturday and made available to AFP.

Products exported under inaccurate names and the underestimation of weight are aspects of the industry where "statistics fail to tell the whole story," according to the document, which noted how one mineral export of 33 tonnes was recorded "as 3.3 tonnes, at the whim of an official."

The state "lost more than 450 million dollars in 2008," according to the president of the Senate commission of enquiry, David Mutamba, who added that this figure was based only on available statistics.

But mineral production in the DR Congo -- which has 34 percent of world reserves of cobalt, 10 percent of copper and plentiful supplies of gold, diamonds and uranium -- should cover more than half the country's budget receipts, according to the senators.

The report blames bad management at the top level of government, stating that the ministries of mining and finance charge much too little for mining concessions, "in flagrant violation of the constitution and the law, to the detriment of the public treasury."

Senate investigators found that "80 percent of mineral ores are fraudulently exported" in the eastern provinces of the DR Congo, where rebels and armed groups are active.

In the diamond-rich central Kasai Occidental province, local authorities "stand by powerless during unprecedented pillage by numerous national mining exploiters or by foreigners guarded by uniformed men."

The lack of equipment, run-down infrastructure and poor rates of pay for civil servants and mining industry employees all help to explain why the mining sector is a mess.

The report gives the example of the directorate of mines in Kinshasa, which is responsible for statistics, but only has a "single, antiquated computer with a very low capacity." There are also no archives.

The Senate team recommends a revision of the mining code of 2002, since some of its clauses are judged "inefficient," like the "disorganised distribution of mining rights across the territory."

A total of 4,542 mining concessions were granted to 642 companies according to a count in November 2008, but "numerous operators exploit our mineral resources without abiding by the demands of the mining code," the report said.

"The services of the state know this situation, but they give the impression of being determined not to remedy the excessive growth, which is surrealistic in a state that wants to be modern."

"Even if we revise the code, we'll get the same results," said opposition senator Ramazani Baya, who stated that the management of the mining sector was "calamitous."

Senators Henri-Thomas Lokondo and Denis Engunda regretted that the Senate commission did not "give the names of the bad managers, nor those of the operators involved ... and even less (proposed) sanctions."

The pair made recommendations that will be added to the report.

Copyright © 2009 AFP. All rights reserved

life in financial markets: good future for options

Equity derivatives has its utility for long-term/short-term investors, day/week traders/speculators & arbitrageurs.

Derivatives involves futures and options. Which among the two are better -- futures or options? If you are 100% confident of a price movement in a particular, either up or down, direction then futures are better. If you are somewhat confident but fear a potential opposite movement then buying options is better. Buying and selling options are different from buying and selling futures. The latter is similar to buying and selling shares from the cash market.

Options, when bought, give the buyer a right but not an obligation, to buy (as in a Call option) or sell (as in a Put option) the underlying. The buyer pays a premium, determined and traded in the exchange, which he never gets back, no matter what. When sold, options oblige the seller to sell (as in a Call option) or buy (as in a Put option) if the buyer exercises the option. The seller receives the premium that is her's for keeps.

So, buying options entail keeping all profits and limiting the maximum loss to the amount of premium paid in buying the option. Selling options entail taking unlimited risk of loss and getting to keep a maximum profit of the amount of premium received in selling the option.

So, why will anyone sell options? Generally, sellers of options do not sell options only to take a view on the movement of the underlying. Their option sale is a part of a strategy (strangle, calender spread, and many more) that involves another/multiple trade/s in cash market, futures or other tenure/strike price options contract.

There is perhaps only one condition under which you could have just an option sale and nothing else. Say, you are looking at Nifty 29Oct09 Call Options prices right now (11 am) and you see if you sell it you will get around Rs 175. The underlying Nifty is quoting at 4907 in the spot market right now. On selling this call, you will lose money if Nifty stays above 4900 on any date before 29 October when you want to square off or on 29 October, expiry date, when the trade is automatically squared off. You will gain if Nifty stays below 4900. Now, you could have sold Nifty 29Oct09 futures at 4907 instead of selling a Call option. But if Nifty is at, say, 4850, on expiry or on any day when you want to square off. You profit only Rs 50 whereas you have already profited Rs 175 by selling the Call option. The flip side is that if Nifty falls to, say, 4600, then a sold futures trade would profit Rs 300 whereas your maximum profit in the Call option sale is Rs 175.

Also, if Nifty goes up to, say, 5000 then the futures trade would have given you a net loss of Rs 100, whereas in your Call option sale trade you have lost Rs 100 in the option trade but you have already received Rs 175 as premium when you sold the Call option. So, while your profits are limited to the premium you received in your Call options sale trade your losses, though unlimited, are also less by the premium amount. In Futures sale trade you gain unlimited but the quantum of your unlimited potential loss is more as compared to the loss in Call options sale.

Anyway, I spotted a trend in Indian equity derivatives market where trading turnover in in options trades are rising to match that in futures trades. I wrote about it last month in the magazine I work for currently.

Here it is:

Refuge option

For the first time ever, options trading in equity derivatives is playing a prominent role compared to futures.The risk appetite of investors in domestic and global equity markets might have gone up with regard to making investments in the cash market from a short-term, or long-term, perspective. But the unprecedented intra-day volatility in the domestic equity market is causing those investors and traders who play the equity derivatives market on an intra-day, or inter-day weekly, basis to tweak their investing style so far.

They are increasingly dabbling in options trades on the National Stock Exchange (NSE), particularly options on the S&P CNX Nifty. From 1 July to 18 August, the options' traded value (notional) has crossed that of the futures on NSE's derivatives trading segment a higher number of times, 9 out of 35 trading sessions, than ever before.

Since their advent, the Indian equity derivatives market's trading trends has deviated from those in overseas developed derivatives markets where options trading dominates. For many years, the futures on Nifty and stocks traded much more than options on Nifty and stocks. "This began changing, and one saw trading volume in options rise rapidly, after the markets crashed during 2008 and investors' risk appetite came down sharply," says Sandeep Nayak, senior vice-president and head of private client group at Kotak Securities, a NSE-cum-BSE broker.

Aggregated for financial year, 2008-09, options trades contributed to a healthy 35.9% of all equity derivatives trades on the NSE. The current financial year's aggregate figures so far, till 17 August, has seen options' contribution to total has become even healthier at 42.2%.

Day traders, ultra short-term investors and foreign institutional investors (FIIs) are driving the change from futures to options. "Earlier, a typical day trader client of ours would trade in 20 Nifty futures contracts in the derivatives segment, but now the same guy is trading in 15 Nifty options contracts and just 5 Nifty futures contracts," says Mrugank Sanghvi, a dealer in Jagvin Investments, a NSE broker.

(click on image below to see it enlarged & clear)

The FIIs who, unlike domestic institutional investors, are allowed to speculate freely in equity derivatives, are doing alike. In recent months, of the total trades in equity derivatives, FIIs' trades make up for between 10 and 20 per cent on an average.

As per FIIs' derivatives trading data, released by the Securities and Exchange Board of India, for the first time, FIIs' aggregate trades (sum of purchases and sales) in options in August, upto the 17th, were more than their trades in futures, amounting to 56% of their total derivatives trading value. In June and July, their options trades' proportion was 41% and 49% respectively.

More than 90% of options trades are taking place in index options, primarily in Nifty options, and the balance in stock options. In futures trades, the spoils are shared roughly equally by index futures and stock futures. "The high liquidity in Nifty options is a major attracting factor for traders," says Sanghvi. "This was earlier limited only to Nifty futures and futures in select stocks."

The shift in trader preferences from futures to options, according to Kotak's Nayak, is on account of convenient trading strategies in options and synthetic stop loss trades through a combination of options and futures. The high volatility in Nifty was resulting in top loss trades (stops) in naked Nifty futures positions get triggered too often. The stops do not get triggered when done through a synthetic stop using options.

"When it comes to FIIs, we are seeing some of them sell call or put options of various strike prices and buy or sell futures to make it a delta neutral position," says Nayak. Traders, including FIIs, with views are getting hit by new information much more often in the recent weeks' dynamically shifting undercurrents in the stock market. Options contracts, therefore, acts a refuge for such times.

Whether the new trend will sustain or not is not certain, given the propensity for most brokerage firms to give to their retail investor clients recommendations on derivatives strategies involving only stock and Nifty futures. "But the phenomenon of high options trading volume is here to stay," says Nayak. Investors will be glad if Nayak is right.

life in general: india needs to face china with courage

I would prefer not to look at human relations from the prism of nation-states. But given the unfortunate state of reality on Mother Earth that we have nation-states I have little choice but to succumb to the fact that militaries would be required to defend the borders and lands of nation-states.

In this context, last week, tensions have risen along India-China border. The media have been forthright in reporting on China's more-than-normal military incursions and firings on Indian soil (read here and here). But Indian governmental spokespersons and military spokespersons have been shamelessly playing it down by potraying it as a routine thing and not to be bothered about. The same, however, if were to be happening along India-Pakistan border strong words would already have been used by them.

In this newsreport, India's Chief of Army Staff, General Deepak Kapoor, claims Chinese military exercises are not signficant enough to be concerned about and that media is unfair in writing about the incidents (the newsreport stated 'The General dismissed media perception that the Chinese incursions were a sign of muscle-flexing by Beijing. “I do not share that at all... that is why I say at times the press has not been fair in reporting this very accurately,” he said.).

This is sad but not unexpected. With regard to China, India always has been weak-kneed. The religious zealots that would raise a hue and cry at every single opportunity against Pakistan go silent when it comes to Chinese malfeasance.

I do not think that the people of China are against the people of India or vice-versa. But China's government and military can never, I repeat never, be relied upon to be fair. Not that India has treated the people of its states on the north-eastern part like Arunachal Pradesh, Mizoram, etc with respect. On the contrary, several Indian central governments have been least concered with obscene violations of human rights in those states by Indian security forces.

But China can't be relied upon to maintain peace. Absolutely not. It is well known that it claims Arunachal Pradesh to be Chinese territory. As and when it wants to fight a war against India for whatever reasons it will use Arunachal as the starting point.

I have culled out from wikimapia the section of the India-China border and marked the hotspots. See the image below (click on it to see it enlarged & clear).

life in general: citizens in zimbabwe denied basic rights

About last two years Zimbabwe (in Africa, in the southern part) been off and on reported up by conventional media guys. The situation there however warrants some attention from us.

Here is a Human Rights Watch press release issued recently:

SADC: Press Zimbabwe to Implement Rights Reforms
Southern African Leaders Should Urge End to Politically Motivated Abuses
August 31, 2009
Southern African leaders should stop looking at Zimbabwe through rose-colored glasses. The region's leaders need to press Zimbabwe openly and publicly for human rights reforms to prevent the country from backsliding into state-sponsored violence and chaos.
Georgette Gagnon, Africa director
(Johannesburg) - Southern African leaders should press Zimbabwe's power-sharing government to end ongoing human rights violations and to implement legal reforms, Human Rights Watch said in a report released today. Heads of state from members of the Southern African Development Community (SADC) are holding a summit meeting in Kinshasa, Democratic Republic of Congo, on September 7 and 8, 2009.
The 20-page report, "False Dawn: The Zimbabwe Power-Sharing Government's Failure to Deliver Human Rights Improvements," highlights the transitional government's lack of progress in rights reforms in the six months since it was created. The former ruling party, Zimbabwe Africa National Union - Patriotic Front (ZANU-PF), has demonstrated a lack of political will to effect change and wields more power than the Movement for Democratic Change (MDC), the former opposition party and now a partner in government. Police, state prosecutors, and court officials aligned to ZANU-PF conduct politically motivated prosecutions of MDC legislators and activists, and fail to ensure justice for victims of abuses or to hold perpetrators of human rights violations to account.
"Southern African leaders should stop looking at Zimbabwe through rose-colored glasses," said Georgette Gagnon, Africa director at Human Rights Watch. "The region's leaders need to press Zimbabwe openly and publicly for human rights reforms to prevent the country from backsliding into state-sponsored violence and chaos."
At the summit meeting, heads of state are expected to assess Zimbabwe's compliance with a number of rulings by the SADC Tribunal on illegal land seizures in Zimbabwe. President Jacob Zuma of South Africa, the organization's current chairman, is also expected to brief leaders on the progress made by Zimbabwe's power-sharing government, which has been in place since February. The government was created by a SADC-brokered September 2008 agreement, which followed a period when ZANU-PF and its allies unleashed a campaign of violence to prevent an MDC electoral win.
In its new report, Human Rights Watch urged Southern African leaders to extract concrete commitments on human rights from the government of Zimbabwe and to tie them to specific benchmarks for progress within a clear time frame. The summit meeting's participants were also urged to raise concerns about Zimbabwe's failure to enact basic institutional and legislative reforms that would guarantee the rule of law as well as fundamental rights for Zimbabweans.
"SADC leaders should stand with the people of Zimbabwe by calling for urgent reforms to address the country's political and human rights crisis," said Gagnon. "Without these necessary changes, Zimbabwe's inclusive government will continue to be built on sand."

life in financial markets: how currencies are faring against the US dollar

I have just done some quick number crunching on the interplay between different currencies against the US dollar from 2006 onwards.

See the graph image below (click on it to see it clear and enlarged).

During the last 3 years, the Indian rupee has depreciated against the US dollar when many others have appreciated against the US dollar. What story does it tell? Anyone?