Sebi And The Akbar-Birbal Tales
Grapevine says that if the two recent shots fired by Sebi are anything to go by, then Madhabi Puri Buch knows a thing or two about turning the tide. Recently, she was in the eye of the storm due allegations of conflict of interest and bias for giving a free pass to the Adani Group and promoting Real-estate Investment Trusts (REITs) backed by Blackstone, where her husband was an advisor. But there are talks in New Delhi that SEBI's recent action against Adani Group and Embassy REIT Parks Management may render both these allegations toothless and brighten the chances of Buch winning an extension in March 2025. In September, SEBI issued show cause notices to four listed Adani companies including 32 related entities and members of the promoter family for alleged related party transactions and violations of minimum public shareholding norms. It also covers the group's alleged foreign conduits. On the Blackstone front, SEBI issued directions against the CEO of Embassy REIT, a trust that was backed by Blackstone. SEBI directed Embassy REIT to suspend CEO Aravind Maiya for audit related lapses during his previous engagement as a partner in another firm. SEBI watchers say after the two orders, Buch was more likely to get another extension. But an insider to the PMO quipped in a private gathering: “Boond Se Gayi, Wo Hoj Se Nahi Aati.”
"What The Drop Taketh" is lesser known among the Akbar-Birbal tales. Once Emperor Akbar was gifted a rare perfume. As he opened the bottle, a drop fell to the floor. Akbar instinctively wiped the floor with his finger and touched his nose. As he looked up, Akbar noticed a bemused Birbal with eyes mocking the Emperor for being so scrounging and petty. The next day, Akbar summoned Birbal to his bath to change his perception. He directed his attendants to fill up the bathtub (hoj) with the best of perfumes just to show Birbal that the Emperor can afford to waste as much of it as he wished. But when Akbar sought Birbal's reaction to this, quick came the immortal lines, “Jahanpanah, Jo Boond Se Gayi, Woh Hoj Se Nahi Aati" (A tub full of rare perfumes cannot retrieve what the drop took away). The Emperor's earlier instinct (that exhibited a miser) could not be undone by acts of profligacy or foolish extravagance.
Sebi had hurriedly announced the appointment of the wife of Gandhi Family loyalist Usha Thorat, late in the evening on the day of results of the national elections this year. The ruling BJP was seen falling short of majority and it was rumored that Congress Party, like in the past, would form the government with support from regional allies. When the tide turned and BJP was back in power with PM Modi at the helm, Ms Thorat quietly recused herself from the announced appointment - here the hurried appointment exposed SEBI like the Emperor's initial instinct.
Maharashtra Election Khichdi
In coalition politics, mastering seat sharing wins you half the race. Congress rank and file is sulking over the party giving away majority of Mumbai assembly seats to coalition partners Uddhav Thackeray (UBT) and Sharad Pawar. Out of the total 36 seats in Mumbai, Congress is fighting only 11 seats (compared to 25-30 seats earlier) and the perception is that only those seats (4-5) where Congress has given tickets to Muslim candidates will be won. Mumbai still has considerable slum pockets, where the Muslim population dominate the vote bank and Congress candidates like Aslam Shaikh (Malad West), AAsif Zakaria (Bandra West) and Naseem Khan (Chandivali) are most likely to win while the rest of the seats are doubtful. If this happens, Congress will cement the perception of being a Muslim party in Mumbai too. The inside grapevine is that big Congress politicians in Maharashtra want the MRCC (Mumbai Regional Congress Committee) to be merged with MPCC (Maharashtra Pradesh Congress Committee), to keep only a state level organisation. If Congress does not have too many seats in Mumbai, then the plan can be executed. Hence, Maharashtra Congress leaders are likely to have traded Mumbai seats for higher seats in the state with UBT and Pawar led NCP. Varsha Gaikwad, who recently replaced Bhai Jagtap as the MRCC chief, is said to have been helped by UBT to win Mumbai north central seat in the national elections and hence the bonhomie. But while Congress is cooking its Khichdi, BJP is certain that it can easily break the MVA (Congress-UBT SS- NCP) coalition if they fall short of majority - No prize for guessing who will shift allegiance.
Frontrunner For RBI Governor
Everybody is focused on Sebi and speculation is rife over who among the Babus in New Delhi will succeed Madhabi Puri Buch, if her extension did not come in March. While change at Sebi is far away, the chair of RBI governor is up for grabs next month. The second tenure of incumbent governor Shakti Kanta Das (SKD) is ending in December. If Das wins another extension, for which lobbying is on, he may be longest serving governor. But there are also talks that Debashish Panda, the incumbent IRDA chairman, is among the frontrunners for RBI governor post. In that case, Das may get appointment as Comptroller And Auditor General (CAG). Former SBI Chief Dinesh Khara is among the favourites for the post of Sebi chief.
Whose Shareholder Directors
A commodity exchange has shareholder directors on board. But officially nobody knows who these shareholders are representing, since they do not belong to the institutions or HNIs that hold a stake in the exchange. These shareholder directors were appointed in the AGM by majority. While everybody on the board retires and cannot be reappointed beyond a certain tenure, these shareholder directors get reappointed repeatedly and have made a permanent base. Hope SEBI has a view.
Markets Reeling Under Reliance Selling
Bonus issue of Reliance Industries or RIL turned out to be a negative event for India's stock markets since it led to margin pressure on large investors. RIL enjoys highest weightage in India's two equity benchmark indices Sensex and Nifty and most FPIs, index funds, sovereign funds and large institutional investors hold RIL in their portfolio. These large category investors had pledged RIL stocks to avail trading limits from exchanges and their clearing corporations. In October, as the ex-bonus date of RIL was near, it spread panic among large investors and traders. RIL had announced 1:1 bonus and as per rules its share price was to be halved from around Rs 3000 to around Rs 1500 (ex-bonus). Due to this, all the large investors had to either bring in more collateral in terms of shares to replace RIL or simply put up more cash to fill up the collateral gap. The bonus shares that are allocated to existing shareholders take time to list on the exchanges and only then they can be placed as margin. This event led to majority of RIL collateral related positions to be liquidated or squared-off and hence a sudden major fall in Nifty and Sensex in October. RIL share price is down 20 percent from its 52-week high on an adjusted basis and Nifty and Sensex have shed nearly 10 percent from the all-time high levels.
