Chief Minister Vilas Rao Deshmukh is reportedly surprised at industry’s silence after Mumbai’s worst-ever deluge. If he were seriously interested, Deshmukh would find that unlike politicians, business and industry is quietly going about the task of cleaning up the mess, helping traumatised employees who are shattered by their July 26, experience and are also doing their best to help those in need. Companies such as Pantaloon, Wockhardt, Pfizer and other leading corporate players are going out of their way to make medicine, linen and provisions available to NGOs, even while they struggle to bring their Mumbai businesses back on track. All the pharmaceutical companies with warehouses at Bhiwandi had three feet of standing water, destroying crucial stocks. Even Pantaloon’s Big Bazaar had a part of its godown at Reay Road inundated with water. Barista was still serving its aromatic coffees, but its food shelves were bare for nearly 10 days since the Taj flight kitchen, located at the worst-affected area near the airport, suffered a serious sewtback. But it isn’t industry’s silence that is worrying the Chief Minister. It is their refusal to rush to the CM with relief funds, in exchange for favours. In fact, when a leading business association put together funds to help Mumbaikars, a top financial expert who contributed Rs 50,000 in his personal capacity had only one condition — the money must be directly distributed to the affected people and not given to government. The decision is being proved right everyday, as the media reports the obscene partisanship and corruption in the distribution of government aid.
Bull vs bear
Statistics suggest that Foreign Institutional Investors (FIIs) control over three-fourth of the floating stock in the Indian market, but nobody knows how much of that comprises shady Indian money on a round-trip back from a overseas tax haven. Similarly, leading stock indices have soared for 13 weeks in a row, but the big picture hides some brazen cases of price rigging as well as intense bull-bear tussles. The market grapevine says that one such struggle is on in Tata Steel counter after a large financial house pressed heavy sales in the cash and derivatives segment expecting the price to crack. Consequently, the scrip had dropped to Rs 335 on July 1, down from over Rs 450 around mid-March. Since then however, relentless buying by a bull syndicate, led by a known scamster, has pushed the price back to Rs 390 in an attempt to corner the bears. Market operators are watching with interest to see if the bears are trapped into an off-market settlement or the regulator breaks up the tussle by launching an investigation. The same goes for Syndicate Bank, whose shares are being manipulated by the same dubious bull operators. Their involvement began with the bank’s follow-up public offering but then the share had been moving in a narrow band with an average around Rs 55 for nearly five months until July 7. It then rose 60 per cent in single month to cross Rs 81 without any major change in its fundamentals. The large trading volumes obfuscate the trail. While manipulation of small scrips is remains rife, these two cases will test whether the regulator is even capable of frightening off the operators.
Telecom customers in Mumbai are hard-pressed to decide who offers better service. Until July 26, consumer message boards were inundated with complaints against private telecom providers such as Tata Indicom and Reliance. Consumers of both companies complain about unresponsive call centres, incompetent technicians and billing problems. They were beginning to advise people to stick to public sector landline operators. Then came the deluge. Lakhs of fixed line phones across the city were dead for nearly 10 days. On July 26, even Orange and BPL services went on the blink for several crucial hours and remain erratic even today. The surprise was that Tata Teleservices’ and Reliance’s CDMA phones worked the best. Clearly, a reliable phone connection these days is purely a matter of chance.
The deluge on July 26, washed out the news of an important development in India’s debt market. The Reserve Bank of India (RBI) quietly kicked off its anonymous, order-matched Negotiated Dealing System (NDS) for government securities that week. The NDS, which was to have started last September, was held up at the intervention of the Finance Ministry and finally decided in RBI’s favour. This phase of the NDS is a big move forward from the phone market for gilts. Its only flaw is that it has turned into an exclusive domain for banks and financial institutions approved by the RBI and thereby eliminates brokers. It also seems to bypass the provisions of the Securities Contract Regulation Act. Only time will tell whether it is a good move to create a market without brokers, but until then, a leading debt market broker says, ‘‘40 per cent of my business was washed out this week by the NDS’’.