Shamed And Crippled
With Tehelka.com's spy-camera taking a heavy political toll after the damning revelations of corruption in defence deals, the beleaguered Atal Bihari Vajpayee Government will have an uphill task restoring its credibility and undoing the damage to its image.

BJP: Old Hype

Interview:
Bangaru Laxman

Jaya Jaitly:
Jhola To Purse

Opposition: On A Roll

INDIA TODAY-ORG-MARG Poll: Outraged !

Defence Establishment
: Surgery For Graft

Interview: G. Fernandes

Barak Missiles:
Off The Mark

Tehelka:
Sting Theory

Highlights Of The Findings

Rakesh Kumar Jain: Gasbag Man

Wheeling A Good Deal
The battle for BALCO degenerates into a political chess match between Chhattisgarh Chief Minister Ajit Jogi, and Union Disinvestment Minister Arun Shourie. Jogi holds most of the aces at the moment--but will he play them all when it could mean loss of investments to the state?

The New Targets
The 60,000 policemen in Kashmir are caught in a dilemma. On the one hand, they are the target of militant attacks, and, on the other, the Army sees them with suspicion. It is not just themselves, but their families that the policemen worry about as they struggle to battle militancy and falling morale.

Crisis Of Confidence While stock prices haven't recovered since the collapse of March 2, the panic has spread from Mumbai to Kolkata. Underlying the fear is a deepening fear of the Securities and Exchange Board of India's will or capacity to regulate the stockmarkets.

Escape to Victory
Down and virtually out, India create a miracle at the Eden Gardens to stun the Australians and break their winning streak.

Mixing Metaphors Music, dance, and tourism synthesise in the famed textile centre of Maheshwar to provide sustainable synergies for its growth.

ECONOMY: STOCKMARKETS

K Goes To Kolkata

The slide in stock prices and the ensuing mayhem on the bourses have once again raised doubts about SEBI's will or capacity to regulate the markets.

By V. Shankar Aiyar and Sumit Mitra

A landslide in the stock index is so commonplace these days that it is often tucked away in one corner of the front pages of financial newspapers. In the past 14 months, the 30-share Sensex has slid 13 times by over 200 points (including a 361 point fall on April 4, 2000), 16 times by more than 175 points and 19 times by more than 150 points. Each on a single day. But the March 2 drop of 176 points was different.

CHOKED: The bears trapped Parekh in a payment crisis

The uniqueness of the market's vacuum suction doesn't lie in its duration alone, though it is still holding the index leagues below its pre-budget level of 4,000-plus. The new slump has, of course, made many stocks discover how low their values may get. In one week, March 6 to March 13, HFCL, the favourite fodder of king bull Ketan Parekh, lost 54.58 per cent of its price from Rs 508 to Rs 231. Silverline, yet another K-marked stock, fell with a thud from Rs 122 to Rs 75. However, if there is a moral to the story, it does not lie in the gradient of fall in stock prices. That's just the symptom. The disease, spreading itself in the trading system, can be simply put as a conflict of interest between the stockbroker and the investor. The broker is meant to be an intermediary between the buyer and the seller. If he appropriates the role of one, it becomes a punishment for the other. The current crisis in the market is a cynical revelation of brokers first being buyers, often at the instance of big operators, and then doubling as sellers, again on cue from large players.

Nothing proves this better than a small but significant incident on March 2. Anand Rathi, president of the BSE, called up the exchange's Surveillance Department in the presence of board members and a vice-president to check on the individual positions taken by members on a few selected scrips. Such information is privileged as it can influence the prices. Calls to the department are recorded. However, neither the other directors nor the executive director or the Surveillance Department chief reported the incursion to SEBI. Nor did SEBI call for the tapes despite news reports appearing about the call.

It was only after an insider tipped SEBI Chairman D.R. Mehta that the watchdog found its bark. The recording was seized and Rathi asked to quit amidst pressure from the media and the Finance Ministry. Later on, the broker members on the BSE Board were suspended. But it was yet another knee-jerk reaction which did not address the main problem of brokers doubling as buyers or sellers.

By then, however, Parekh and his bull associates were trapped by a cartel of bears who had choked the trading terminals with ever-growing "sell" orders, particularly of HFCL shares that were assiduously nursed by Parekh. With the free-falling price, the bulls could either pay to the stock exchange the price difference between one settlement day and another, or take delivery and book the loss.

CARELESS WHISPERS: Rathi misused his office to access privileged information

The bulls, therefore, made a strategic retreat to the Calcutta Stock Exchange (CSE), where an unofficial, margin-less and high-interest financing system overshadows the official lending system by a ratio of 10:1 in value terms in a normal settlement week. Parekh's "friends" at the CSE, particularly Dinesh K. Singhania, a former director of the exchange, took long positions on HFCL with capital borrowed from unofficial sources reportedly at 30 per cent per annum (against the official rate of 11 per cent). However, the high rate of interest was not the only problem faced by Parekh's Kolkata friends. The market was gripped by the fear that Singhania and others would not be able to compensate for the fall in prices of HFCL and DSQ Software-the two Kolkata flavours-on March 15, Thursday, the pay-in day for the exchange. As CSE Executive Director Tapas Dutta explained on Wednesday, the members had gone long on 20 lakh HFCL and 14 lakh DSQ shares. The unofficial lenders, it was feared, would not open their purse-strings any longer, and the consequent payment shortfall in the exchange would cross Rs 500 crore, way beyond the capacity of the exchange in meeting the pay-out requirements of Friday. That would have created a payment crisis, involving not only brokers and lenders but also thousands of retail investors. All of them were milling round Lyons Range in Kolkata since Monday, their faces taut with anxiety, striking a contrasting note to the joyous excitement at the nearby Eden Gardens, where India beat Australia in the second cricket Test.

MetroScape
Pop Corn
"You are the best audience in the whole world," the Vengaboys tell raving crowds
in Delhi.
more...

Looking Glass

Delhi Exhibition:
Pop To Classic

Delhi Restaurant:
San Gimignano

Mumbai Accessories Store: Watches Of Switzerland

Bangalore Concert: Deep Purple

A bloody crackdown on Naxalites in the south-eastern fringes of Uttar Pradesh proves that only developmental programmes, not guns, can help fight the menace. INDIA TODAY's Special Correspondent Subhash Mishra explains why in
Despatches.