May 01, 2000

Short Memories
For several years now, senior SEBI officials and market intermediaries have argued for a ban on naked short sales. Or the concept of a short seller collecting carry forward (badla) charges on short-sales, when he neither possesses the shares nor pays to borrow them. The argument was that a short seller should pay a small price for being contrarian, otherwise the process offers him a chance t take advantage of volatile situations and hammer down prices as a way of earning easy money with no investment. A powerful lobby as the BSE had ensured that the proposal was never implemented, until last week. The difference this time was the clout of a key new member of the market risk committee, who successfully played on SEBI's desperation to keep prices up.

Liquidity crunch
With stock market remaining volatile, mutual funds are not yet out of the woods. Those funds which threw caution and liquidity considerations to the wind, will see prices tumble anytime they want to sell. An investors tells us how he struggled to liquidate a mere 1400 shares of Vikas WSP, a highly recommended scrip which is found by the thousands in top mutual fund portfolios. Another talks of Padmini Polymer which has moved from Rs 5 to RS 270 and down to RS 112. An investor was willing to raise badla funds at half the price rather than risk further full on the market. Similarity Wipro, Nobody is counting Aziz Premji'ss wealth anymore after the stock has dropped to the RS 3,000 range. Premji is not complaining, but what mutual funds whose NAVs have dipped as a consequence?

Dangerous liasons
While on investment, can one ignore the new breed of dot.com stock advisors? There is this tiger who has been recommending Aftek Infosys. As someone commented on the site, Aftek was the most-recommended scrip there. When prices began to dip, the site went completely silent while investors turned hysterical. The comments section was full of demands that the site update the Aftek story and explain why prices were crashing. A couple of days ago, the comments were simply wiped out and a fresh 'buy' recommendations posted - no explanations about the fall. Incidentally, a big buyer of Aftek has been ILFS Mutual Fund. Its growth scheme portfolio has a whopping 19.2 per cent of its assets invested in Aftek. Another example is the Silverline stock. It was a favourite on yet another brokers' website until the broker fell out with the promoter. It is now splashed with sell recommendations. Doesn't market safety also mean taking a good look at investment advisors and their linkages

Breaking bureaucracy
Among the things that Hindustan Lever Chairman Keki Dadiseth prides himself on are his efforts at breaking making in HLL Whether it is bright new cafeteria, or his policy of keeping his office door always open, Dadiseth says that it helped empower people and hasten decisions. "One thing we did was to cut unnecessary debate", he says. So, if a decision had 60 per cent agreement among the managers, it was immediately carried through as long as there was a 100 per cent buy-in from the team. If less than 60 per cent agreed, it was simply dropped and no unnecessary discussions to confuse the issue. But did he always get a 100 per cent buy-in, or commitment to make things work? That was taken care of by the discipline of the HLL management machine

Desi rules the roost
At the same time that Kentucky Fried Chicken was closing down most of its outlets and giving up on selling American chicken to a nation eaters, another desi product is taking the market by story. Amul's masti dahi, launched a few weeks ago has been vanishing from shop shelves within hours after it is distributed. No fancy flavoured expensive yogurt which was launched and withdraw by Milkfood several years ago. Amul is selling plain old wholesome dahi at an unbeatable price of Rs 12 for 400 gms and that is probably why consumers are lapping it up as much

Updated weekly.

The author's e-mail address is: suchetadalal@yahoo.com

Other columnists:

Other articles by the columnist A pointless apology? Multiple remote controls Learning about technology The market is wrong The Rs 20,000 crore question Y2K = More advances MTNL's net tariffs No wealth creation please Backdoor to advice BPL, Videocon and Sterlite Who gets the SEBI jobs? The Mayor and the RBI Governer A pie in the sky? Speeding up the Special Court The dot - con Game Vanishing company case reappears Those missing VIPs Governer takes over Against what odds? CRB going dot.com? ICICISUCKS.com No The pecking order As The angel gang Deficient disclosures? India changes?