Category: Economy, Markets and Macro Views

CBI has chargesheeted former SBI fund managers for shaking hands with Big Bull turned scamster Ketan Parekh for buying Padmini Technologies Stock from Triumph International by means of off-market purchase. (Greedy promoters had changed the name of Padmini Polymers to Padmini Technologies). The whole scam resulted in a net loss of Rs60 crores to SBI Mutual fund investors.

Ketan Parekh’s Triumph International made a presentation before the SBI MF Investment Committee for a preferential allotment of Padmini Technologies shares. Based on this presentation team member Sonia Sharma prepared a research report which was biased. Sonia didn’t verify the debt and other financial parameters of the Padmini Tech/Polymers. Sonia misused her position and this report formed the basis for all investment decisions.

The investment committee then met to discuss the investment proposal. The offer was rejected by the board headed by then MD Niyamatullah. The Evil, Sandeep Sabharwal filed a fresh notice in favour of accepting the offer allegedly without any proper reason. This time it was accepetd by the board.

CBI alleges that Sabharwal fraudulently approved the proposal for purchase of the shares.It further says that the Former SBI MF Head, Niyamatullah, fraudulently approved the proposal for investment of shares of Padmini Technologies on the basis of a research report and discussion sheet that had been prepared to cause wrongful gains.

Rajat Jain then was CIO and Head of the investment team. The chargesheet alleges that all proposals were routed through Mr. Jain. Ajay Bodke, who at that time was a Fund Manager, also allegedly put up a proposal for purchase of the shares for three different schemes of SBI MF. PR Upadhyay has also been charged with joining the conspiracy. He was the VP at the time and a member of the Investment Committee.

What to do now ?
Business Standard reports that, Sandip Sabharwal now with Lotus AMC has resigned. So one thing is for sure, Lotus hired Sandip without looking into his background. Stanchart and PNB which should have sacked their managers, Ajay Bodke and Rajat Jain, have issued statements that they, are not under pressure to resign. They are scamsters potential scamsters. Investors, how safe is your money in the hands of Stanchart and PNB funds with such shady fund managers managing your hard earned money ??? If I were to make a decision as an investor, I would redeem the schemes that are directly under Ajay Bodke or Rajat Jain.

Concluding Remarks:
I would personally not invest and AVOID all schemes of SBI Mutual Fund(including Magnum fund), PNB Fund and Stanchart Fund until the respective AMCs clean up their house. I would also avoid Lotus AMC.

Remember how Morgan Stanley analyst came on CNBC TV 18 and announced that Indian stock market is headed towards a bear phase ? And today we are back at 11,500 levels. I had advised not to panic during the fall.

This time Morgan’s Gora bhai, JP Morgan has downgraded India. I am glad if you have ignored his words, if not just do it 😉 We saw a rock solid quarter ending June-06 and what makes him downgrade India ? Remember, India’s sovereign rating was upgraded by Fitch just few days ago ? OK. I am sure you are totally confused now.

This is quite common in the western markets. One FII downgrades while the other upgrades. Don’t take it too seriously. Play your own game, it is as simple as that. What has happened in the past few years is we have seen the Indian market and economy mature and its depth has increased such that it is no more dependent on Big Bull like Harshad Mehta or Ketan Parekh. Institutions from around the world are betting Billions of dollars on India’s growth story. Don’t get distracted by downgrade or upgrade. Believe in value investing, you will make a fortune in 10 years 🙂 You don’t have to have a Stanford or IIM MBA.

Check the status of IPO allotment if you have applied for GMR Infrastructure or for Tech Mahindra on Karvy’s website.

Just FYI, Intime Spectrum is another company where IPO status of some other companies are available. In future depending on who the registrars are you can check out.

World Famous speculator, George Soros is busy mopping up stocks on Dalal Street of companies operating in the Indian Realty and Infrastructure sector through his Quantum Funds.

George Soros through his Quantum fund has invested in the following Indian companies,

• Unitech – Rs200 crores
• GMR Infrastructure – Rs70 crores
• Anant Raj Industries Ltd – 1% equity at Rs680/Share from secondary market. Confirmed by Amit Sarin, Director Anant Raj Industries Ltd (ARIL).

Here are some facts about the Indian Real Estate Sector. Note that George has a history of making money within a short time. George Soros is not an investor but a speculator. He doesn’t care if the country’s economy will collapse and is willing to go to any extent to protect his investments.

George should have read my article about RBI’s concern over real estate bubble in India. I have no faith in any of the companies George on BUYINg, so if you like to speculate little bit, please go ahead 🙂

Time to remind all the investors not to get caught with the frenzy of rising stock markets and I really hope they have some eggs in SIP to drink their cup of tea after retirment sip by sip ;-). Discpline is a must.

Read my earlier post on SIP Investments. The markets were at peak in March-06 and hence the returns mentioned in that report were quite exuberent and its not worth expecting so much though if you get it, you can have a blast.

For quarter ending June-30th, the sensex was at 10,300, reasonable level. Here is the performance of my favorite funds, (check out they all now have ValuResearch ratings of 5, except Top-200).

• HDFC Equity Fund Growth
• HDFC Top 200 Fund growth
• HDFC Long term Advantage Fund Growth
• HDFC tax Saver Fund Growth

Lets look at the difference in SIP returns(all compounded) since inception when the sensex was at 12,000 and whe it was at 10,000.

HDFC Equity Fund 41.04% 34.15%
HDFC Top-200 35.44 % 31.78%
HDFC LongTerm Advantage 63.45% 52.91%
HDFC Tax Saver 50.07% 44.75%

Equity and Top 200 have history of 10+ years while the other two have 5+ years.

Questions, comments and critics are welcome. Happy investing.

Indian media reports that Warburg Pincus has picked up 9% stake in Amtek Auto. Its not just that. One of Indian Mutual Funds, HDFC has been buying Amtek Auto since April-2006. We are not sure when Warburg Pincus started buying into this stock but we know they own 9% stake in the company. Warburg is the same Venture capital firm which invested $300 million in Bharti-Airtel and made a cool $1.5Billion 🙂

HDFC currently holds around 8-9% stake in Amtek Auto under various funds from Equity to MIP to balanced. With Sensex being at 11,000, I would advise to BUY just 30% of your capacity around Rs290 levels in Amtek Auto and then add on to it.

Disclosure: I am doing the same thing as I am writing here 🙂