  | | April 18, 2013 | | | | | | | Weekly Facts | | | Close | Change | %Change | | BSE Sensex* | 19,016.46 | 773.9 | 4.24% | | Re/US$ | 54.21 | 0.3 | 0.59% | | Gold Rs/10g | 25,680.00 | (3,710.0) | -12.62% | | Crude ($/barrel) | 99.51 | (5.6) | -5.36% | | FD Rates (1-Yr) | 7.50% - 9.00% | Weekly change as on April 17, 2013
*BSE Sensex as on April 18, 2013 | |
Impact 
Many of you may be aware that in June 2006, Osian's-Connoisseurs of Art Private Limited, launched India's first art fund called Osian's Art Fund. With the boom in art market then, the fund managed to raise Rs 102.4 crore from from 656 investors. But a year later in 2007, the Securities and Exchange Board of India (SEBI) began a probe after noticing that Osian's was soliciting contribution in the nature of investments from the investors under the scheme of "Art Fund" with an objective to invest in the art works. In the investigation they further observed that the fund which pooled as money from investors as a Collective Investment Scheme (CIS) to invest in art, was not registered in accordance to SEBI CIS (Regulations) 1999 and issued a show-cause notice to Osian's-Connoisseurs of Art Private Limited. Osian's to this said, it had sponsored Osian Art Fund as a private trust formed under the Indian Trust Act and it had launched a 'Scheme - Contemporary -1' which involved pooling of investments from investors with the objective to generate income and capital growth from portfolio of investment and management in the art works. To this SEBI observed that that the company's activities were in the nature of CIS and therefore required a registration in accordance to SEBI CIS (Regulations) 1999. The regulator also issued an advisory in February 2008, where it stated that "Art Funds" were CIS and had advised investors against investments in such funds operating without a certificate of registration.
Now in its final order after against Osian's after a probe that continued for nearly six years, SEBI has asked Osian's Art Fund to wind-up its CIS and refund the investors' money with 10% interest within 3 months; and also said that proceedings would be initiated against Osian's and its promoters directors and other top executives for "possible offences of fraud, cheating, criminal breach of trust and misappropriation of public funds" if a winding up and repayment report is not submitted within 3 months.
We are of the view that SEBI order comes in at a time when many CIS have been floated in the past, and now the regulator intends to clamp them down in order to protect investors. In our view, the argument that Osian Art Fund was sponsored as private trust formed under the Indian Trust Act (for pooling of investments from investors with the objective to generate income and capital growth from portfolio of investment and management in the art works), does not seem acceptable and in fact depicts its nature of being a CIS.
We think that one should not get swayed by tall claims, fancy proposition and exuberance; but prima facie evaluate whether the CIS is registered under SEBI CIS (Regulations) 1999 and thereafter look into the proposition which has to offers and take decision which in accordance to asset allocation meant for you, ascertaining your risk appetite.
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Impact
The recent fall in the prices of gold may have left you perturbed and induced you to think, is gold losing its trait of being safe haven and has it lost its sheen forever now. And in this article we'll try to discover the answer whether it indeed has.
Movement of gold since beginning of 2013
Base: Rs 10,000
Data as on April 15, 2013
(Source: ACE MF, PersonalFN Research)
Looking at the above chart, one would be really shaken as price of gold has descended sharply in the month of April 2013 due to signs of economic vigour displayed by the U.S. economy and U.S. dollar too depicting strength. The year-to-date returns of precious yellow metal to are in negative as investors also becoming less risk-averse and a shift has occurred to equities (from gold) attributing to this slide in gold. To continue to read if gold has indeed lost its sheen forever, please click here.
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Impact
Many of you may be aware that menace of "insider trading" has been prevailing in the capital markets for decades now. While the capital market regulator - SEBI has regulations to keep a check on "insider trading", there have been numerous cases of front-running which have benefited the parties thereto, but left most other investors in lurch. It is noteworthy that it is not only directors of companies who have been involved in cases of insider trading, but also some of their family members, brokers and even fund managers. But to curb this menace of insider trading, SEBI is seeking suggestion from the general public - which includes you investors.
Such a move is intended to overhaul the two-decade old set of rules for insider trading in the stock market from SEBI [called as Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992] by inviting inputs from you investors to draft new regulations. The suggestions have been sought in a specific format available on the capital market regulator's website and can be sent until May 16, 2013. The decision to seek public comments has been taken by a high-level committee set up by SEBI last month to review the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.
We are of the view that, suggestions from the general public to overhaul the aforesaid regulation is intended to refine the regulation in the consultative process of reviewing the present regulations. Thus far, prominent judgements from of the Supreme Court of India, various High Courts, and the Securities Appellate Tribunal (SAT) have aided to redefine the scope of the aforesaid regulation, but the comments from the general public would also enable the capital market regulator to know investors view point thereby facilitating better provisions to curb the menace of insider trading, if not completely eradicate it.
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Impact
The WPI inflation bug for March 2013 mellowed down much beyond expectations (of 6.4% - 6.6%) to 5.96%, it being the lowest in more than three years. Thus there appeared a descending trend in the last three months, after plateauing above the 7.0% plus mark for over a year.
The drop in WPI inflation for March 2013can mainly be attributed to:
- Food inflation
- Manufacturing inflation
- Fuel & Power inflation
So, would RBI cut rates in its annual monetary policy2013-14?
The drop in WPI inflation has hardened expectation of a policy rate cut from the Reserve Bank of India (RBI) in order to reinvigorate economic growth rate - which has been slowest in a decade. But frequent upward revisions in WPI inflation and vulnerability from fuel & power inflation (due to increase in prices of diesel), may preclude RBI from cutting rates. Moreover, we think the Current Account Deficit (CAD) data at 6.7% for Q3FY13 may hold back the central bank from reducing policy rates in the annual monetary policy 2013-14 (scheduled on May 03, 2013). To read more on this and to know whether banks would reduce rates on fixed deposits, please click here.
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- If you been one of the aggrieved investor in a listed company, you may now get relief soon. As per a recent circular issued by SEBI, all listed companies are required to redress grievances of investors and inform them within 30 days of the receipt of the complaints.
Thus now stock exchanges and listed companies would have to redress your complaint within the aforesaid stipulated time and failure to meet this directive would attract penal action. It is noteworthy that details of investors' grievances relating to companies are available at the webpage of SEBI Complaint Redress System (SCORES) which was launched in June 2011 and enables you as an investor to lodge, follow up and track the status of complaints; that can be accessed through their respective user ID and password. The regulator has said the companies which are yet to get SCORES user ID and password are required to send their details in a manner specified by SEBI and obtain the same. Failure to obtain SCORES users ID and password within 30 days of issue of the issue of the circular would not only be deemed as non-redressal of investor grievances but also indicate wilful avoidance of the same.
We are of view that, vide the aforementioned circular the capital market regulator has enunciated a timeline within which the complaint should be redressed; but how justice is indeed done to the aggrieved party has to be seen carefully.
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Insider Trading: The buying or selling of a security by someone who has access to material, non-public information about the security.
Source: Investopedia
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Quote : "All intelligent investing is value investing -- acquiring more that you are paying for. You must value the business in order to value the stock." - Charlie Munger
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