Movement of SENSEX - Feb.

2004
6100.00

6000.00

5900.00

5800.00

5700.00

5600.00

5500.00

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2
T Review
Cumulative Gross Annual Issuance of Equity
(In billions of U.S. dollars)
The surge in emerging market equity prices since April has
triggered a sharp pickup in primary market activity, with
50 the fourth quarter of 2003 far surpassing levels recorded
prior to the bursting of the high-tech bubble. The
distribution of issuance across regions exhibited a noticeable
40
difference. After lying dormant for the better part of the
year, Asia’s equity market erupted with new stock issues
2000
30 from a wide array of companies in the final months of the
2003
year. Firms in China and Hong Kong SAR were particularly
active, issuing $8 billion in the fourth quarter. The China
20 Life IPO was noteworthy. At $3.46 billion, it was the largest
1999

2001
IPO worldwide for 2003 and was 25 times oversubscribed.
In Southeast Asia, Indonesian issuers were active, with stakes
2004 10
sold in Bank Mandiri, Bank Rakyat Indonesia, and PGN.
2002
1998 Thailand’s government successfully divested stakes in Krung
0 Thai Bank and Thai Airways. By contrast, issuance in Latin
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
America remained low, notwithstanding $540 million in
issuance by Mexico’s Cemex. New equity issuance was also limited in EMEA, where activity was dominated by the Central European
telecom sector and a $300 million American Depository Receipt (ADR) issue by Russia’s Norilsk Nickel. Amid ongoing inflows by
international equity investors, there is no sign of the deal flow drying up. In particular, issuance by Asian companies continued at a fast
pace in the first few weeks of the year, and several large deals are in the pipeline for the remainder of the year. In India, the primary
market is no different from the global trend. And the major chunk of the primary issuance had come from the PSUs. The current issue
highlights the recent surge in the primary market on the global level as well as of India in particular. Different issues about the primary
market got reflected through the articles. At the same time the article talking about the operational efficiency in the application process
of the primary market, gives an added flavour to the issue.

Statement about the ownership and other particulars about the newspaper entitled The Stock Exchange Review. As required to be
published in the first issue of every year after the last day of February.
FORM IV (See Rule 8)
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Nationality : Indian
Address : Ghandinagar, Worli, Mumbai
4. Publisher’s Name : The Stock Exchange, Mumbai
Nationality : Indian
Address : P.J.Towers, Dalal Street, Fort, Mumbai
5. Editor’s Name : Dr. Bandi Ram Prasad
Nationality : Indian
Address : P.J.Towers, 24th floor, The Stock Exchange, Mumbai,
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And Address of Owners : Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai
I, Dr.Bandi Ram Prasad hereby declare that the Particulars given above are true the best of my knowledge and belief.

Sd/-
Date: 28th February 2004 Signature of Publisher

3
Domestic Economy
Domestic Economy 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 (proj.)
Gross Domestic Product (% change yoy) 6.5 6.1 4.4 5.6 4.3 8.2
Value added in Agriculture (% change yoy) 6.2 0.3 -0.4 5.7 -5.2 10.7
Industry 3.7 4.8 6.6 3.3 6.4 6.1
Services 8.3 10.1 5.6 6.8 7.1 8.3
Exports $ mn 33211 36760 44147 43708 52370 58900
Imports $mn 42379 49799 50056 51261 61445 75000
Money supply (M3) % change yoy 19.4 14.6 16.8 14.2 15.0 14.0
WPI (% change yoy) 5.9 3.3 7.1 3.7 3.4 5.0
Capital Issues (Rs. bn) 437 663 492 458 408.1 -
Equity (Rs. bn) 117 249 142 62 73.9 -
Debt (Rs. bn) 320 410 348 395 334 -
GDRs/ADRs $mn a70 822 480 495 131 -
FDI $mn 2480 2167 4029 6131 4660 -
Portfolio flows $mn -68 3024 2760 2020 979 -
NRI deposits $mn 960 1540 2317 2754 2808 -
ECB $mn 4367 333 3737 -1576 -1698 -
Total Foreign Capital Flows $mn (net) 8042 10184 9992 10573 12638 -
Aggregate deposits (SCBs) (% change yoy) 19.3 19.3 16.2 11.5 16.1 -
Non-food credit (% change yoy) 13.0 21.9 14.1 13.3 26.9 -
Gross Fiscal Deficit (% of GDP) 6.5 5.4 5.6 6.1 5.9 4.8
Monthly Indicators
Particulars Jan03 Feb03 Mar03 Apr03 May03 Jun03 Jul03 Aug03 Sep03 Oct03 Nov 03 Dec 03 Jan 03
IIP 6.7 6.9 5.8 4.3 6.0 5.7 5.9 5.2 7.1 5.4 7.4 6.2
Exports (% change yoy) 8.7 12.9 14.6 8.1 12.8 10.9 5.7 4.1 16.0 5.0 13.8 42.7 8.7
Imports (% change yoy) 23.9 17.8 24.5 38.7 7.9 38.6 17.0 15.4 16.3 23.4 26.5 45.0 18.1
Forex reserves $bn 69.9 69.1 71.1 74.3 77.9 78.2 81.2 82.6 85.6 88.7 92.1 96.5 100.8
Non-food credit 27.2 27.8 26.2 26.3 16.4 16.2 15.5 15.2 14.1 16.9 16.0 16.2 16.6
WPI 4.1 5.4 6.0 6.6 6.5 5.3 4.6 3.9 4.6 5.1 5.4 5.6 6.2
Trade Balance $mn -638 -441 -776 -1527 -1106 -1613 -1016 -1055 -932 -2025 -1924 -1722 -1464
Markets
Particulars Feb-03 Mar-03 Apr-03 May-03 June 03 July 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 03
Govt. borrowings (Rs. bn) 124.43 28.9 84.9 154.4 300.2 154.4 261.4 -310 60 45.1 2.5 153.2
Agg. deposits (% change yoy) 17.76 16.06 16.22 11.48 12.17 11.82 11.51 11.81 11.78 11.60 12.63 13.73 14.17
Bank credit (% change yoy) 23.32 23.0 22.62 13.32 12.95 11.70 11.49 10.70 12.91 12.14 12.76 13.87 14.14
Public Issues (Rs. cr) 424.59 350.00 0.00 0.00 993.34 388.00 394.16 531.99 665.50 192.0 537.7 834.44 3782.01
Rights Issues (Rs. cr) 79.66 29.52 1.96 0.00 0.00 0.00 0.00 164.86 80.89 7.71 98.02 110.86 34.43
Private Placements (Rs. cr) 2161.63 3299.56 586.53 1232.29 2008.07 3770.9 2845 2253.2 1037.79 421.3 1066.3 3593.10 4203.69
Overseas Floatations (Rs. cr) 0.00 72.50 0.00 0.00 75.00 0.00 0.00 0.00 1426.6 362.3 27.31 61.33 0.0
Assets under management MFs. (Rs. cr) 87190 79464 89238 98124 104762 112841 121040 121778 126726 132366 140093 145372 145657
Corporate Debt Floatations (Rs.cr) 2122 3630 565 1225 1933 3664 3063 2147 1415 415 1328 4063 4166
Rates, Ratios, Returns
Jan 04 Feb 03 Jan 04 Feb 03 Jan 04 Feb 03
Bank Rate 6.0 6.0 CRR 4.50 4.50 PE Ratio : SENSEX 19.39 18.71
Savings bank rate 3.5 3.5 SLR 25 25 Price to Book Value 3.65 3.52
Term deposit rate 5.00-6.00 5.00-6.00 Credit Deposit Ratio 55.23 55.39 Dividend Yield 1.73 1.79
PLR 10.50-11.00 10.50-11.00 Re/US$ 45.37 45.17
Call Money rate 4.50 4.40 Re/Euro 57.21 57.08 PE Ratio : NIFTY 21.04 20.32
91 day T-Bills 4.33 Re/Yen 0.4260 0.4236 Price to Book Value 4.10 3.99
CDs 3.75-6.00 3.92-5.06 Premium on Forward Markets(3mUS$) 1.28 0.39 Dividend Yield 1.45 1.49
CPs 4.70-5.75 4.60-7.50 Avg. Yield on Govt. securities (10 yrs) 6.14 6.12
International Economy February
Particulars Austrl UK France Germany Italy Japan US Euro China Malay Korea Taiwan Mexico Brazil S.Africa Russia
GDP 4.0 2.8 0.6 0.2 0.1 3.4 4.3 0.6 9.9 6.4 2.3 5.2 2.0 -0.1 1.5 5.7
Interest Rates 5.48 4.22 - - - 0.03 0.99 2.05 - 3.03 3.94 1.05 6.59 16.27 8.15 14.00
Consumer Prices 2.4 1.3 1.8 0.9 2.3 -0.3 1.7 1.6 2.1 0.9 3.3 0.6 4.2 6.7 0.2 10.8
PLR(%) - 3.75 - 2.5 - 1.375 4.25 - - - - - - - - -
Forex reserves ($bn) - - - - - - - - 403 43.5 162.1 224.8 59.2 53.3 6.4 80.2
Currency Units/$ 1.29 0.55 0.79 0.79 0.79 106 - 0.79 8.28 3.80 1172 33.3 10.9 2.88 6.93 28.5
Year ago 1.69 0.61 0.92 0.92 0.92 118 - 0.92 8.28 3.80 1166 34.6 11.0 3.64 8.60 31.8
Stock Index current 3372.5 4492.2 3725.4 4018.16 20778.0 11041.9 10583.9 4116.7 879.2 883.42 6750.5 9991.8 21755.0 10895.8 670.1
A month ago 3283.6 4390.7 3638.4 4058.6 20561.0 10783.6 10488.1 929.41 3923.7 818.94 848.50 6375.38 9428.77 21851.4 10849.3 611.1
Year high 3398.2 4540.1 3785.4 4151.83 20989.0 11361.5 10737.7 930.79 4225.2 894.45 899.21 6975.3 10157.1 24349.8 11155.9 688.7
Year Low 2673.3 3287.0 2403.04 2202.96 15125.0 7607.88 7524.06 580.84 3118.5 619.22 515.24 4139.50 5745.66 9994.89 7361.15 336.08
Record high 3440.0 6930.2 6922.3 8064.97 - 38915.9 11722.9 - - 1314.16 1138.75 5451.80 8319.67 18951.5 - -
PE ratio 17.8 16.5 16.9 12.7 16.5 40.5 22.4 - 17.8 16.9 19.2 22.5 15.9 9.1 12.2 8.8
Sources: Center for Monitoring Indian Economy, The Stock Exchange, Mumbai, Reserve Bank of India, Financial Times, The Asian Wall Street Journal, The Economist, London. 1. Closing rates; 2. Last auction rates
of 91 TBs.; 3. Forecasts of GDP Growth by The Economist; 4. Short term interest rates; 5. Stock market indices ; Australia: All Ordinaries; Brazil: Bovespa; China: Shanghai B: France: CAC40; Germany: XETRA Dax;
Italy: Mibtel General; Japan: Nikkie 225; Britain: FTSE.100; United States: Dow Jones Industrials; Malaysia: KLSE Comp; Mexico: IPC; Russia: RTS; South Africa: JSE All Share; South Korea: KoreaCmpEx; Taiwan:
WeightedPr. Latest data available for the month; 6. Year 2003.
4

4
 PORTFOLIO
New Issuance Market as a percentage of GDP
3 The New Issuance Market (NIM) expressed as
a percentage of GDP shows a steep rise in the
initial years of the post liberisation. The growth
2.5 observed during the first half of the 90s mostly
attributed to the financial liberisation of the
2 economy. Capital market reforms like abolition
of the office of Controller of Capital Issues (CCI),
1.5 constitution of SEBI under the new Security
and Regulation Act and relaxation in pricing of
capital issues played an important role in such
1 an upsurge. Higher investments in New Issuance
Markets occurred during this phase due to
0.5 inability of the commercial banks to meet private
corporate needs. Capital formation by private
0 corporate firms increased from Rs. 2800 cr. in
1989-90 to Rs. 22,750 cr. in 1993-94.
%

CURRENT NEWS COMMENT

China’s rules governing voluntary pension funds will allow some of the funds These alleged cures of the protectionists
to be directly invested in the stock market. Under the rules, companies and would make matters worse rather than
employees can set aside upto one-sixth of an employee’s annual salary from better. They would do little to create jobs,
the previous year in a voluntary pension fund. and if foreigners were to retaliate we
would surely lose jobs. Beside enhancing
The World Trade Organisation has estimated a growth in the world trade of
education, we need to further open
goods by 7.5 percent as compared to 4.5 percent last year.
markets here and abroad to allow our
SEBI has decided to accept bank guarantees of banks having credit rating workers to compete effectively in the global
from a RBI recognised credit rating agency or a reputed foreign credit rating market place.
agency, towards the liquid assets of a member.
Remarks by Alan Greenspan,
The Reserve Bank of India said that foreign institutional investors were allowed Chairman, Federal Reserve,
to purchase equity shares and convertible debentures of SSI up to 49% of the on outsourcing at the Boston
company’s paid-up capital. College Finance Conference, 2004
BSE NEWS

Mr Sulaiman Moh’d Al-Rashidi, Dy. Director General, Muscat Securities Market (left), in conversation with Shri Rajnikant Patel (centre),
5
Chief Operating Officer and Shri S. B. Patankar (right), Chief Technology Officer, The Stock Exchange, Mumbai, during his visit.

5
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6
 London Stock Exchange steps up activity in China with regional
office
The London Stock Exchange will open a regional office in China
as part of its strategy for attracting listings from this country, which
is one of the international exchange’s key target markets. The new
office, the Exchange’s first in the Asia- Pacific region, will be based
in Hong Kong. The Exchange is building its ties with the Shanghai
and Shenzhen Stock Exchanges, two increasingly important
bourses in the region. The London Stock Exchange will target
large privatization deals and other medium to large companies in
China. The Exchange will also continue to promote dual listings
in London and Hong Kong through a single prospectus.
Australian Stock Exchange implements new regulatory regime
and introduces new group structure
The Australian Stock Exchange completed its transition to the
Financial Services Reform Act (FSRA) regime with the grant of
various market operator licences for the Exchange, and other
different clearing and settlement facility licences for the Australian
Clearing House (ACH) and the ASX Settlement and Transfer
Corporation (ASTC). As well as ensuring the compliance with the
new regulatory regime, the Exchange has used the opportunity
presented by the Financial Services Reform Act (FSRA) to
streamline and improve its group structure from which trading,
clearing and settlement services are offered. With this change, the
Australian Stock Exchange is moving from a product-based
structure to a functionally based structure.
Colombo Stock Exchange signs MOU with 3 other regional
bourses
The Colombo Stock Exchange (CSE) entered into a Memorandum
of Understanding (MOU) with the Karachi, Lahore and Islamabad
Stock Exchanges. The Colombo Stock Exchange has already
signed a MOU with the Mumbai Stock Exchange. The MOU is
expected to promote mutual assistance between the parties involved
to enhance cooperation for development of the securities market
and to encourage cooperation between the Exchanges in areas of
information sharing, training & education, technological
development, new product development and cross border listings.
SEBI asks depositories to halt transfer-cum-demat scheme
SEBI has asked both the depositories NSDL & CDSL to
discontinue the facility of transfer cum demat. In a communication
to the depositories the capital market regulator said that this facility
is no longer relevant and can be withdrawn without causing any
undue inconvenience or delays to the investors.
RBI terms for NBFCs insurance agency business
The Reserve Bank of India announced that non-banking finance
companies (NBFCs) registered with it might take up insurance
agency business on a fee basis and without risk participation,
without its approval. (i) The NBFCs should obtain requisite
permission from the Insurance Regulatory Development Authority
(IRDA) and comply with the IRDA regulations for acting as
‘composite corporate agent’ with insurance companies. (ii) They
should not adopt any restrictive practice of forcing its customers
to go in only for a particular insurance company in respect of assets
financed by them. (iii) As the participation by a NBFC customer
in insurance products is purely on a voluntary basis, it should be
stated in all publicity material distributed by it in a prominent
7
way. (iv) The premium should be paid by the insured directly to
the insurance company without routing through the NBFC. (v)
The risks, if any, involved in insurance agency should not get
transferred to the business of NBFC.
Easier norms on banks ESOP, IPO funding
In a significant move, the Reserve Bank of India (RBI) said banks
are free to use their discretion while extending bank finance to
employees for purchasing shares of their own company either
under employee stock options (Esop) or initial public offerings
(IPO). All such loans should be treated as banks’ exposure to
capital market within the overall ceiling of five per cent of banks’
total outstanding advances as on March 31, of the previous year.
As per the extant instructions, bank finance to assist employees to
buy shares of their own company under the employees quota is
restricted to Rs.50,000 or six months salary of the employee,
whichever is less. The assistance is also limited to 90% of the
purchase price of the shares.
FIIs can issue PNs to entities supervised by regulatory bodies
The Securities and Exchange Board of India clarified that foreign
institutional investors (FIIs) can issue Participatory Notes (PNs) to
entities that are regulated by either a central bank, securities
commission or a stock exchange. According to the circular issued by
SEBI, offshore derivatives instruments (or PNs) can be issued to an
entity that is regulated, authorised or supervised by a central bank
or any other similar body provided that the entity must not only be
authorised but also be regulated by these regulatory bodies. PNs
can also be issued to an entity regulated, authorised or supervised
by a securities or futures commission, securities or futures authority.
Any entity that is a member of securities or futures exchanges or
other similar self-regulatory securities or futures authority or
commission within any country, state or territory provided that
these organisations are ultimately accountable to the respective
securities or financial market regulators can also invest in the Indian
equity market through PNs. PNs can also be issued to individuals or
entities like fund, trust, collective investment schemes, investment
company or limited partnership whose investment advisory function
is managed by any of the regulated entities.
SEBI revises norms for derivative contracts
SEBI has said stock exchanges can reduce the lot size of derivative
contracts exceeding Rs.0.2 million. The market regulator said for
derivative contracts having a contract size or value of Rs.0.4 million
and above, the lot size/multiplier should be reduced to half the
existing lot size/multiplier. For derivative contracts that have a
contract size/value of Rs.0.8 million and above, the lot size should
be reduced to a fourth of the existing lot size. Similarly, where the
contract size of the derivative contracts is less than Rs.0.2 million,
for the sake of standardization, the existing lot size should be
increased to bring the contract size to Rs.0.2 million, SEBI said in
a release. The increase shall be carried out by increasing the lot size
by multiples of 2. To facilitate these measures, the stipulation that
the lot size should be in multiples of 100 stands revoked. SEBI
has also decided that the lot size of contracts that have fallen below
Rs.0.2 million should be brought back to the stipulated amount.
It also specified that for stock-based derivative contracts, the lot
size shall be in multiples of 100 and the fractions, if any, shall be
rounded off to the next higher multiple of 100. SER
 GLOBAL COMEBACK OF
THE IPOS Feature Cover
The IPO boom is part of a global phenomenon. Demand for on other shares. Recently stockmarkets have faded a little from
equities, backed by a surge of new mutual-fund money in America their recent highs.
in January alone, has been rising in part because investors can find The Indian Primary Market
few other attractive bets. The demand for new shares is easily
It was early-mid 1990s when sector-specific IPOs dominated.
matched by supply from venture capitalists and private-equity
Cement and steel in 1991-93, floriculture, aquaculture and financial
firms, sitting on a hoard of investments made in the previous wave
services between 1993 and 1995 and the ICE (IT, Communication
of optimism that they have been waiting for years to unload.
and Entertainment) boom of 1999-2000. But the present primary
Governments are also keen to sell stakes and raise money. At the
market has entirely changed.
present pace, perhaps $75
Offering shares in public sector companies at a discount to citizenry is On the regulatory context, the
billion worth of IPOs could
market has become more
be launched this year. In the not a unique idea. In the OECD countries, the first tranche of public
efficient and safer. In the
US, for instance, 21 IPOs sector shares were often sold at an attractive discount to the public to
process side, book-building,
have raised $ 5.1 billion facilitate price discovery and improve prospects for subsequent tranches.
where investors bid for shares
during the period 1 January- IPOs are considered the most transparent mode of government
divestment. Besides privatisation, public issues help in developing the has replaced the fixed price
21 February 2004 as against
equities markets by creating broad share owning class. They also improve regime. And as for the quality
just three that raised $ 209
corporate governance in companies that are listed for the first time. The of the issues, PSUs and well-
million during the
problem in using this method in emerging markets is that retail investors known companies across the
comparable period last year.
industries has replaced the fly-
Last year, only $45 billion was do not have the deep pockets to subscribe. In Eastern Europe and
by-night operators. The first
raised in IPOs worldwide, the Russia the government has used Vouchers. Under the communist system,
ten months of the last fiscal
least in over a decade. In the workers effectively owned the assets via the state and this imposed
notions of “fairness” in the privatisation process. Under a voucher scheme, witnessed 15 public issues,
America 29 companies have
individuals are given rights to acquire assets by using vouchers, which raising only Rs.2516 crores.
raised a total of over $6 billion
are distributed freely. One example of privatisation gone badly was in Significantly, most of this
this year, compared with three
the former Czechoslovakia, which decided to privatise all state-owned amount has been raised by
deals producing less than
companies at once. Citizens were issued vouchers, which could be established PSUs, which
$300m by the same point in
brought in a sense of safety and
2003. Japan has already seen exchanged for shares of public sector companies. Baffled by the choices
encouraged investor
40 new issues in 2004. The most residents ended up selling their entitlements to fund managers
participation. But the present
boom extends to emerging with private investors cornering most of the public sector companies.
fiscal gave a healthy start with
economies, especially in Asia.
big PSU issues followed by sufficiently large issues of established
In China, Semiconductor Manufacturing Internationa
companies. At the same time, SEBI has made the entry norms more
Corporation came to market and raised around $1.8 billion.
stringent to maintain the quality of the issues. SER
Investors in China seem remarkably unworried about questions of
property rights and whether they will be able to get their money
out. Year Number of Issues Amount (Rs. Cr.)
It is yet to see, whether big deals by fairly established firms inspire 1989-90 186 2522
a string of new companies to offer shares to the public. Possibly,
but in the United States at least, it is harder than in 1999 for a 1990-91 140 1450
firm to make its stockmarket debut. New auditing requirements 1991-92 195 1400
inspired by the Sarbanes-Oxley Act have doubled the cost of
preparing a firm’s books for the public, premiums for directors, 1992-93 526 5651
and officers insurance, which companies buy to protect their top 1993-94 765 10824
staff from shareholder lawsuits, have soared. By one estimate, a
new firm in America needs around $100m in sales to make an 1994-95 1350 13312
IPO worhtwhile, compared with $50 m a few years ago. Until 1995-96 1423 8882
European regulations are also tightened, Europe, alongside
emerging markets may be a more fertile place for offerings. In the 1996-97 740 4671
wake of the dotcom bust, one might expect investors to scrutinise
1997-98 58 1132
IPOs much more closely than before. Yet many recent issues have
been handsomely oversubscribed, and the first-day “pops” in share 1998-99 22 504
prices are high. This suggests that even today fund managers are
1999-00 56 2975
buying on the basis of faith as much as analysis.
As Jay Ritter, a professor at the University of Florida, points out, 2000-01 115 2479
enthusiasm for IPOs has always been strongly correlated with 2001-02 6 1082
market peaks, measured by the ratio of capitalisation to the book
values of companies and by price-earnings ratios. More over, for 2002-03 6 1039
the past two decades long-turm returns from IPOs bought on
2003-04 23 20000
their first day of trading have been persistently lower than those
8
 RECENT IPO BOOM
Jayesh Shroff
Fund Manager, BoB AMC
It’s spring time and still it’s raining. Surprised by the paradox!!
Well it’s spring time at the stock markets and it’s raining IPOs in
capital market. In a span of just under two months we have more
than ten high profile issues hitting the market. The collective
amount to be raised by them is expected to be staggering Rs.
20,000 crores. Since it’s probably for the first time in the history
of Indian capital markets that such huge sum of money is being
raised in such a short span of time, the issue warrants detailed
review. Before going to the core issue of IPO boom let’s analyse the
reasons for sudden spurt in IPO activity in Indian capital markets.
The Indian stock market had never had it so good. The benchmark
BSE Sensex has gained almost 100% from its lows in just under a
year’s time. What are the factors that contributed to such a sharp
rise in the stock prices in India?
• The turnaround in sales and profitability reported by
corporates across industry spectrum making the valuations
very attractive
• Very well distributed monsoon across the country
• Accelerated reforms and infrastructure development in the
country
• Sharp fall in interest rates leading people to shift some part of
their assets from debt to equity
• Under ownership of stocks as an asset class in India; household
savings in equities was only about 2% in 2002
• Spurt in stock markets across the globe
• Huge inflow of FII money in Indian stocks
• Opening of global opportunities for Indian companies
The economy itself has shown tremendous buoyancy in last one
year. The so-called hindu rate of growth of 4-5% is behind us and
we are witnessing GDP growing at more than 7%. The business
confidence index is at its highest in last decade. All these factors
indicate enormous growth potential that exists in India.
Opportunities in large infrastructure projects and new businesses,
hitherto unknown to Indians are now visible. For all this to
materialize will require huge amount of money to be invested in
these businesses. While part of it will come through debt funding
a substantial part will also be raised through equity route. And
that’s where the IPO boom is coming from.
Now let’s look at the companies that have lined up equity issues.
Of the total number of issues lined up few are offer for sale and
not IPOs. An offer for sale is sale of equity stake by an existing
stakeholder to the public. The Government of India in its interim
budget has set a target of containing fiscal deficit below 4.8% of
GDP. They have also reiterated their target of disinvestments
9
receipts at Rs. 14,000 crores. And thus to achieve this targets it has
lined up offer for sale of ONGC, Gail, IPCL, IBP, CMC and
Dredging Corporation.
Normally Rs. 20,000 odd crores to be raised under two months
would have generated lot of skepticism about success of many of
the issues. However, this time around the companies may find it
easier to sail through. There are two main reasons for such a belief;
first – all the offer for sale lined up are existing listed companies
and second - the recent history of successful IPOs over past 12
months. Investors have made handsome gains in some of the recent
IPOs.
While the past experience of profiteering from an equity issue is
impressive if one goes back little further in history, the record is
not so impressive. Investors have got stuck with paper that is no
longer saleable in the market.
With limited resources and so many companies up for grabs what
should investor be looking for? The first thing that an investor
wants is an offer that is priced cheap. But unlike a bear market
most companies in a bull market will not offer their stocks cheap.
They will try to price it as near to its fair value as possible. So
amongst host of equity offerings how will you select the companies
for investment?
First – Think Long term. Invest in companies where you think
the business can profitably sustain over a long period of
time.
Second – Look for companies / sectors where business
environment is undergoing a major transition and the
company is set to ride the wave of transition
Third – Invest in sound management
This list can go much longer but what I’m trying to emphasis is
that these are the basic rules; it’s like pain management for equity
investment.
India as an economy is at an inflexion point of growth. Over the
next few years we are going to witness a massive change in demand
and consumption pattern in India. This will lead to emergence of
new industries, products and services and in turn open plethora
of opportunities within the economy in general and stock market
in particular. With such vibrancy in stock markets, the IPO market
will also explode. There will be genuine companies offering equity
and there will be fly by night companies. In such a situation,
investors should look for sound investment principles, amongst
quality and price always chase quality and buy businesses that
look exciting and valuations will follow. SER
 PRIMARY MARKET REVIEW
Jignesh Shah
Strategist, Ask Raymond James Securities
After having run up 73% in 2003, the year 2004 may create a
record of sorts in the history of the Indian primary market. The
Government’s decision to divest itself of its residual stake in six
already privatized companies; the corporate sector’s need for funds
to expand; and private investors looking for exit options have led
to hectic activity in the primary market.
The market then turned nervous. Earlier too, the Government
had divested its stake in PSUs, but such nervousness had not been
seen. What could be the reason? Simple. The size of these issues
is significant – the supply of paper is on the higher side, compared
to appetite for it. With GDP as of March 2003 at Rs.24,696bn,
at 8% growth the FY2004 addition is likely to be about
Rs.2,000bn. Compared to that, IPOs and divestments are about
Rs.300bn, nearly 15% of the addition to GDP. The Rs.300bn in
funds will be mobilized to a large extent from the home market,
not from overseas. Had the funds come through ADRs and GDRs,
they’d have boosted the economy, bringing in fresh liquidity.
Because of the unexciting secondary market in the last three years,
the Indian capital market has not seen so many IPOs. In the past
six years, only Rs.102bn were mobilized through public issues of
stock. Specifically, in 2001, fifteen issues raised Rs.3.92bn; in
2002, six drew in Rs.19.8bn and, in 2003, fifteen issues raked in
Rs.21.7bn.
As over-subscription in recent IPOs by a few times occurred and
they were listed at a robust premium, institutions and retail investors
jumped onto the bandwagon. The response of small investors to
IPO has increased as a follow up to the gains they made as can be
seen in following examples:
Name of company IPO Listing % Gain CMP - (Rs.) % Gain
Price (Rs.) Price (Rs.) (30 Jan 2004)
Maruti Udyog 125 158.40 26.7 432.60 246
Bharati Telecom 45 55 22.2 134.85 200
Indraprastha Gas 48 120 150 99.45 107
TV Today 95 210 121 147.20 55
In the year 2004, besides the divestment by the Government of
India in already listed companies, a large number of companies
will come to the capital market for the first time. A few such large
corporations and sectors which aren’t yet listed are: NTPC - the
largest government-owned power-generation corporation, TCS
(Tata Consultancy Services)- the largest private-sector software
development company, the aviation sector – the international
AirIndia and the domestic Indian Airlines; Jet Airways - the largest
private-sector airlines, Sony TV and NDTV - television
broadcasters; Daksh e-services - BPO company; Reliance Infocomm
- telecom company, etc. Positively, investor interest in different
sectors will also be sparked. This will pull in institutional
participation in Indian markets. With these IPOs, these and others
like them will enormously raise market capitalization.
In the short term, supply is probably higher compared to appetite
for paper. In the long term, though, price will reflect the
10
underlying fundamentals and valuations. In 1977 when the then
Government compelled MNCs to divest their holdings and list
on the bourses a few (IBM, Cocoa Cola) quit India; others (Levers,
Colgate, P&G) listed. Investors made big money in subscribing
to these fundamentally strong companies. The same will happen
this time too – investors in India will make money, if the Indian
economy continues at its scorching pace.
Generally, a good run in secondary markets leads to an IPO craze.
For, when demand for new paper rises speedily, promoters (in
order to expand capacity, build a market, put in new systems)
rush to raise equity from the public (Raising equity is apparently
less expensive; in reality it is not.) This eventually leads to many
inefficient companies entering the primary market – and investors
burning their fingers. As happened in the technology bull-run of
2000.
This time, good money has been poured into emerging markets,
specifically China. This led to the boom in China’s IPO market in
the second half of last year. Giants like PICC Property & Casualty
Co. (China’s largest non-life insurer, which raised $696mn, was
oversubscribed 50 times and listed at a 50% premium to the IPO
price), AviChina Industry & Technology Co. (a mini-car and
helicopter maker, $248mn), China Resources Power Holdings
Co. (an electric power company, $350mn), China Life Insurance
Co. (the country’s largest life insurer, $3bn), Great Wall
Automobile Holding Co. (Chinese truck and sport utility vehicle
maker, $196mn). Since the 50% premium listing of PICC
Property, sentiment towards IPOs changed. So much so that
China Life, the next IPO, had to print 2.2 million application
forms for retail buyers and another 400,000 for brokerages, or
enough for one in three residents of the southern Chinese territory.
In Asia in general, and in China particularly, the rapid turnaround
in investor attitude toward IPOs stems from the surging liquidity
brought about by record-low interest rates, rising optimism about
the economic growth and a healthier appetite for emerging-market
risk.
In all, IPO price is crucial. The 2003 bull-run in India was led by
FIIs, which invested around Rs.304.6bn ($6.6bn) in equity. This
run had then been utilised by retail investors to move out of those
stocks in which they had been stuck for the past so many years. In
the current IPO mania, if stocks are offered at a steep discount to
core value, there are sufficient chances that investors will make
money – and the equity cult among retail investors, which has
withered, might once again surge. Since most IPOs floated in the
recent past have returned phenomenal gains, investors are tempted
to invest in IPOs with a view to selling off their stocks immediately
on listing.But then, this comes with an inherent risk. Between an
issue closing and its listing, market sentiment could change – and
stock might not always list at a premium. In fact, if the market
turns unfavorable, the listing price could even be lower than the
issue price. Needless to say, IPO or no IPO, the quality of a company,
its management prowess, business potential and valuation will
remain driving factors for eventual shareholder reward. SER
 INCREASING OPERATIONAL
EFFICIENCY OF IPO APPLICATION
PROCESS -AN INVESTOR PERSPECTIVE
Nandamohan Shenoy
Head - Investment Advisory Services Operations
BNP Paribas
Last three months, the Indian Capital Market witnessed a slew of
IPOs. As a retail investor one had to spend a lot of time and energy
in filling up the mammoth forms every third day. This trend is
bound to continue with more IPO’s planned in the Financial Year
2004-2005.At this juncture it is difficult to say whether Stock
Market is shining or not but definitely the printing industry related
to IPO’s are shining.
In the present days when a depository account is mandatory for
applying for an IPO account, one is at a loss to understand as to
why there is huge data redundancy in the entire systems this one
way of creating employment generation and more business to
registrar?
The printed matter for IPO comes in two parts. One is the disclosure
data as is mandated by SEBI and the second one is the application
form. The focus of this article is to how the drudgery of filling the
application form be obviated.
Some websites like ICICI direct gives the investor the facility to
apply online. Even if one uses this route the BackOffice of the said
brokerage firm has to fill up the application form on behalf of the
customer, sign the form as a power of attorney holder attach a
copy of the customer’s power of attorney and submit the same to
the syndicate member. The famous law of Physics that energy can
neither be created nor destroyed holds good for the Indian IPOs
as well.
The whole system can be made very efficient by reducing the
entire paperwork, which can be brought down by ninety percent.
The unique identification of the investor, in the age of depository,
is the Depository Participant ID (DPID) and the Client ID of the
investor. The IPO application form will contain the bare minimum
data in addition to the two key fields mentioned above viz. Broker/
code /sub broker code, investor name, quantity, price and cheque
details. This form need not be more than half the size of A4 paper
and should look like a DP Account transfer instruction.
This proposal was mooted to some NSDL /CDSL officials who
had expressed the apprehension that if the client id is mentioned
wrongly the registrars will find it difficult to mail back the original
cheque or the refund order.at this juncture five different solutions
come to one’s mind.
The first solution is to write the address of the investor on the
reverse of the form, which is optional, and not mandatory. This
obviously not the best solution
The second solution is the real time solution. The Collecting bank
will punch in the two key fields DP id and client id and the DP id
& client ID will be validated with the NSDL/CDSL data base.
However for this to happen one needs to be linked to NSDL/
CDSL on a real time basis. With the browser based technology
and services similar to Sped E.NSDL/CDSL and think of giving
login id & passwords to the collecting bankers
The third solution is the batch mode with NSDL/CDSL before
depositing the cheque for clearing. The data captured will be sent
in a batch mode to NSDL/CDSL, which will validate the data
and send a response file to the registrar. Currently such offline
mode is happening in the MAPIN project as well as TIN (Tax
information Network) for TDS (Tax deducted at source.).In case
of TIN database NSDL gives a report for TDS wherein it clearly
states the accounts where the PAN is missing. In addition the
address of the proposed investor can be mentioned on the reverse
of the cheque. The cheque should be deposited only on
confirmation from the NSDL file.
The fourth solution is similar to the existing account transfer
instruction. The Depository participant should issue special
booklets to investor pre stamped with the client id and DP id.
This IPO instruction booklet will be used by the proposed investor
and will be common across all the issues. This will be the simplest
of solutions. However the broking fraternity will not agree, as
there is every chance the customer will forget to mention the
broker/sub broker code on the instruction. The prerequisite for
the same is the allotment of ISIN as a part of the IPO process by
the SEBI as well as NSDL/CDSL
The fifth solution is too early a solution. With the MAPIN database
being used for UIN. The bid capturing process in NSE/BSE system
also should capture the UIN of the customer .At EOD of the
exchange the IPO file can be downloaded and the cheque and the
report along with simplified client instructions can flow to the
registrar. The pre requisite for the same is the availability of the
MAPIN data base by the exchange and its inter linkage to the
NEAT/BOLT system.
The second phase of refund order is also a paper intensive one. One
is at a loss to understand as to why the ECS route cannot be adopted
in lines with the dividend warrant route. This will also reduce the
investor’s time of going to the bank and depositing the cheques.
To conclude one needs to gear up all the machinery to improve
the efficiency of IPO processing from the investor as well as the
back office perspective. SER

Unified Market Clearing and Settlement System

A giant settlement and clearing corporation, which will clear and settle transactions in all the markets - stock, commodity, bonds and foreign
exchange - is in the works. The umbrella corporation will also have a huge settlement guarantee fund. All the settlement or trade guarantee
funds of various exchanges may be merged for this purpose. At the moment, Clearing Corporation of India Ltd (CCIL) is the umbrella
organisation for clearing trades in the government securities and foreign exchange markets. In the stockmarket, National Securities Depository
Ltd (NSDL) and Central Depository of Securities Ltd (CDSL) clear the transactions. If the new corporation is set up, CCIL, NSDL and CDSL
will have to be merged. The new project is the outcome of the World Bank’s efforts at putting in place a unified market clearing and settlement
system. The Bank is exploring ways to merge all other settlement guarantee funds - National Securities Clearing Corporation Ltd (NSCCL), a
wholly owned subsidiary of the National Stock Exchange (NSE), the Trade Guarantee Fund of the Bombay Stock Exchange (BSE) and funds
belonging to regional exchanges. The new settlement guarantee fund will cover the cash and futures segments of the equities, commodities,
bonds and foreign exchange markets if the World Bank project is implemented.

11
 A RETROSPECTIVE OF
THE GLOBAL MARKET
S. Ramesh
Co-Head, Advisory Group
Kotak Mahindra Capital Compnay

GLOBAL
• Global markets began 2003 on a bearish note, amidst the Iraqi
Focus Market
increased by 33% over the past 1 year from the lows in March
2003
• Since the beginning of 2003, there have been dramatic gains
War, SARS outbreak in Asia, terrorism threats, poor earnings
in the economy, corporate profits and the prices of corporate
visibility and discouraging economic data. March 11 2003
securities. For example, in the third quarter, real GDP grew
saw most global markets reach new lows before recovery set in.
8.2%, S&P operating profits rose about 35% and share prices
• Since May there was considerable rally in the global markets
moved higher
and many of the negatives that had held back equities in the
• The second phase of the equity bull market will likely be driven
past couple of years were beginning to fade, e.g. the economic
by the performance of the underlying corporations. Most US
downturn, the stock market crash, corporate balance sheet
companies currently enjoy strong balance sheets and large cash
adjustments, oil price hikes, international tension, SARS.
positions as corporate borrowing costs have fallen.
• Liquidity improved significantly in the equity markets, with
clear signs of bond-to-equity shifts occurring for both foreign EUROPE
and local investors through the second half of 2003 • The Euroland economy contracted in the second quarter of
170 2003. Inspite of this, between March and May 2003, broad
US Asia ex Japan based EU indices increased by 20% due to a significant
160
Japan Europe
150
reduction in risk aversion, rather than expectation of a strong
economic rebound
In d e x e d P r i c e

140
• The second phase of growth in equity indices was characterized
130
by early signs of economic recovery - a steeper yield curve,
120
improved confidence surveys, a pick-up in industrial
110 production and corporate outlook
100 • During February – March 2004, there has been notable
90 softening of economic data – bond markets have rallied and
equities have weakened
Daily From 11-Mar-2003 to 19-Mar 2004 • The recent setback in investors’ risk appetite and growth
expectations has triggered a rotation from cyclicals and growth
• Global and regional equities had produced a strong start to sectors towards defensives
2004 with most indices showing positive returns till January. • The most obvious risk for the European market is a sharp rise
However equity markets have pulled back more recently in the Euro that caps economic growth. Another notable risk is
primarily on concerns that global growth momentum is a weaker than expected economic growth
peaking.
190
• The economic recovery is gathering pace and seems likely to be
180
the first synchronized recovery since the early 1980s. The Asia 170
Pacific region offers great upside potential on the back of 160 DAX
sustainable earnings growth coupled with attractive valuations 150
140 CAC 40
US 130
FTSE 100
• In early 2003, investors expressed intense worries on many 120
110
issues ranging from the Iraq conflict to deflation. These concerns
100
began to lift before June 2003, as did risk aversion in both 90
equities and corporate bonds.
• In combination with this and with clear evidence of economic
Daily From 11-Mar-2003 to 22-Mar 2004
and profit recovery, the Dow Jones Industrial Average has
SOUTH AFRICA
180
S&P 500 DOW Jones • The FTSE / JSE All Share Index has increased by 10% year-
170
NASDAQ to-date, with the 52-week high at 10,310 and the 52-week
160
150
low at 7,361.
• After three years of falling values and given the optimism
140
130 surrounding the global economic recovery and improving
120 corporate profitability, the FTSE-JSE all share index gained
110 49% in dollar terms driven by an appreciating rand as
100
compared to MSCI world index which was up only 34%.
90 • There were 426 companies listed on the JSE in 2003 compared
with more than 668 at the end of 1999. However, the market
capitalization of US$236 billion has not changed as the top
Daily From 11-Mar-2003 to 22-Mar 2004

12
 ALSI (DAILY) 180
11178.600 KOSPI TWSE
10061.160 170
10761.150 STI Hang Seng
10561.150 160
10361.150
10161.150 150
9961.150
9761.150 140
9561.150
9361.150 130
9161.150
9961.150 120
8701.150
0561.150 110
8361.150
8161.150 100
7961.150
7761.150 90
7561.150
7361.150
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2003 2004 Daily From 11-Mar-2003 to 22-Mar-2004

160 stocks accounted for 99% of the exchange’s capitalization, • The principal risks to the anticipate upside, apart from event
and the JSE remains the 17th-largest bourse in the world risks, are :(1) economic growth in the US and China; (2) US
• The exchange rate of the Rand appreciated by 19% in the last monetary policy; and (3) the US dollar
12 months
• In the recent budget announcement, the Government has INDIA
allowed foreign companies to list on the JSE • Till end-April, Indian markets had under performed most global
ARGENTINA markets; however, the Sensex has risen by close to 90% since
then, thus outperforming all the major global indices. The Sensex
• After four years of recession, Argentina’s economy grew 8.4 closed above 6,000 for the first time in history in Jan-04.
percent in 2003, according to preliminary government • Turnover has picked up in the last 6 months, and the average
statistics. Forecasts call for growth of 6.9 percent in 2004 daily turnover currently stands at US$ 1.5 bn in the cash
• The stock market index moved within the range of 561 and market and US$ 2.0 bn in the derivatives market
1275 during the year to date • Valuations are still compelling, with the Sensex forward P/E
• Argentina is facing its second economic progress report as part currently at 15x, having only recently recovered from a 10-
of a review of a three-year $13.3 billion loan package arranged year low
with the IMF in the wake of its 2001-2002 economic collapse • Improved corporate profitability, a weakness in the dollar and
1300 good monsoons have driven the positive sentiment among
both retail and institutional investors
1200
• The robust growth in the economy is expected to continue,
1100 with GDP growth of over 8% expected in FY04 and close to
1000 6% in FY05
900 • This strong up trend is being led by significant FII inflows
and increased appetite for equities in retail investors
800
— The net FII inflow in 2003, at US$ 6.6 bn, is the highest in
700 the last 10 years and second only to Korea and Taiwan in ex-
600 Japan Asia
500
• Institutional participation as a proportion of total market
A M J J A S O N D 2004 F M turnover has increased to 15% for 2003 compared to less than
9% in 2000. SER
ASIA 200
• Since April 2003, there has been an upturn in the global BSE Sensex MSCI EMF S&P 500

markets fuelled by diminishing concerns over SARS, a 180 Nikkei 225 Hang Seng

weakening dollar, improving economic data and liquidity 160

• After a strong start in 2004, Asian equity markets have pulled
N o rm a liz e d

back primarily on concerns that global growth momentum is 140

peaking. The five key reasons for recent weak performance in
120
calendar 2004 are global risk reversion, concerns over global growth
prospects, political shocks, seasonality and new equity supply. 100
• Key investment themes arising from current performance as
80
well as structural, demand and cyclical factors are in banking,
steel, autos and the travel sectors.
FIIs Mutual Funds 1,482
1500 1,355
1200
836
(U S $ m n )

900 724 698

600 548 502 527
451 409
300 185 257 187 206
79 86 90 88
7 13 16 15 42 13
0
(84) (37) (42) (63) (43) (118)
(300) Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04

13
Index Based market wide circuit breaker for the Quarter 1st April 2004 to 30th June 2004
The BSE implements on a quarterly basis the index based market wide circuit breaker system. The system is applicable at three stages
of the index movement either way at 10%, 15% and 20%. These circuit breakers will bring about a coordinated trading halt in all
equity and equity derivatives markets nationwide. The market wide circuit breakers would be triggered by movement of either SENSEX
or the NSE S&P, Nifty whichever is breached earlier.
BSE to Shift BSE 100 index to Free Float methodology
BSE in continuation of its policy to gradually shift to the free float methodology , has shifted the BSE 100 index to the free float
methodology. The free float factor for ONGC has been revised from 0.05 to 0.15 (W.E.F. 5th April) after the successful completion of
the ONGC IPO. In order to make indices more qualitative and inline with world standards, the BSE has pioneered the concept of
globally accepted “Free Float Methodology” in index construction in India by launching the TMT benchmark “BSE Tech Index” in
July 2001 and Bankex in June 2003.
BSE and FISE ( Federation of Indian Stock Exchanges ) jointly submit a proposal for formation of BSE IndoNext for shares of small
and medium capital companies
Shares of small and medium capital companies which are listed only on various Regional Stock Exchanges ( RSE ) do not have a
liquidity as many RSE’s have either nil or negligible turnover , hence investors are unable to find exit route and companies are unable
to raise fresh capital from the capital markets for expansion , working capital requirements etc . BSE has taken steps to solve these
problems jointly with FISE by submitting a proposal to SEBI for formation of IndoNext for shares of small and medium capital
companies .This major capital market initative would enable members of RSE and participating RSE’s to trade the shares of companies
with paid up capital upto 20 crores listed and traded on BSE and participating RSE’s to be traded in a national market through a single
book order system on the BSE BOLT system in BSE. SER

NEW RELEASE

DIRECTORY OF
MEMBERS
2004

14
 BSE
Beta, R2,Volatility and Returns of SENSEX scrips for one year period (March 2003 - February 2004 )
I
Code Name Beta Co-efficient of Daily Returns Weights as Free Float Adj.
Values determination Volatility (1 year) on 31/01/ Factor
(R2) (%) (%) 2004 (%) 30/01/2004
500410 A.C.C. 1.29 0.94 2.51 68.65 1.30 0.90
500490 BAJAJ AUTO 0.66 0.95 2.06 75.58 2.09 0.70
532454 BHARTI TELE 0.71 0.91 3.39 429.07 1.72 0.20
500103 BHEL 1.07 0.96 2.44 176.55 1.62 0.35
500087 CIPLA LTD. 0.52 0.95 2.15 55.43 1.40 0.60
500124 DR.REDDY’S 0.63 0.85 2.34 41.41 2.31 0.75
500300 GRASIM IND. 0.97 0.98 2.40 206.38 2.55 0.80
500425 GUJ.AMB.CEM 0.98 0.95 2.19 91.50 1.09 0.70
500010 HDFC 0.41 0.98 2.32 62.64 3.89 0.80
500180 HDFC BANK 0.47 0.94 1.87 49.91 2.77 0.80
500182 HERO HONDA 1.03 0.95 2.75 120.95 1.60 0.50
500696 HIND.LEVER 0.91 0.76 1.94 2.90 6.23 0.50
500104 HIND.PETRO 0.75 0.75 2.40 45.06 2.51 0.50
500440 HINDALCO 0.80 0.96 2.13 112.80 3.00 0.80
532174 ICICI BANK 0.89 0.97 2.54 81.93 5.44 1.00
500209 INFOSYS TECH 1.39 0.81 3.23 18.39 8.21 0.75
500875 ITC LTD. 0.61 0.94 1.69 69.30 6.19 0.70
500510 LARSEN & TOU 0.99 0.97 2.25 181.32 4.10 0.90
500108 MAHA.TELE 0.81 0.76 2.41 35.57 1.26 0.45
500312 ONGC CORPN 1.14 0.91 2.69 91.01 1.66 0.05
500359 RANBAXY LAB. 0.68 0.83 1.74 53.23 3.97 0.70
500325 RELIANCE 1.14 0.99 1.94 88.69 13.84 0.55
500390 RELIANCE ENERGY 1.17 0.93 2.72 224.10 1.66 0.50
500376 SATYAM COM 1.83 0.91 3.49 37.29 2.86 0.90
500112 STATE BANK 1.11 0.92 2.13 104.83 4.50 0.45
500570 TATA MOTORS 1.37 0.97 2.58 212.98 3.56 0.65
500400 TATA POWER 1.21 0.93 2.50 185.39 1.61 0.70
500470 TATA STEEL 1.39 0.99 2.57 186.28 3.86 0.75
507685 WIPRO LTD. 1.59 0.69 3.05 -0.73 2.20 0.20
505537 ZEE TELE. 1.38 0.90 3.56 58.45 0.98 0.55
Beta = Co-variance(SENSEX, Stock)/ Variance(SENSEX)
R2 = (Correlation)2
Avg. Daily Volatility = One standard deviation of daily returns of individual stock price for last one year
Returns = % variation in the stock price over last one year
Sectoral Weights in SENSEX as on Feb. 27, 2004
Correlation of SENSEX with Transport
Telecom Capital Goods
INDEX 1 Month 3 Months 6 Months 1 Year 3%
Equipments
7% 2%
Diversified
(Feb 04) (Dec 03-Feb 04) (Sep 03-Feb 04) (Mar 03-Feb 04) 7%
Power
Finance
BSE-100 0.987 0.979 0.993 0.998 3%
17%

BSE-TECk 0.941 0.851 0.977 0.976 Oil & Gas

18%

MSCIINDIAINDEX 0.994 0.992 0.999 0.999

NIFTY 0.996 0.991 0.999 0.999
FMCG
12%
NASDAQ 0.683 0.789 0.900 0.935
DOW JONES 0.660 0.852 0.955 0.942 Metal Products
& Mining
S&P500 0.570 0.797 0.940 0.919 7%

FTSE 100 -0.380 0.605 0.877 0.865 Media & Healthcare

Publishing 8%
I.T Housing
1%
NIKKEI -0.394 0.674 0.137 0.858 13% Related 2%

15
 Key
1
Statistics
i)
Particular
Turnover
Specified Shares (A Group) (Cr. Rs.)
of The Stock Exchange, Mumbai
Nov-03

39889.90
Dec-03

44343.39
Jan-04

57937.14
Feb-04

47752.22
Feb-03

21399.34
Feb-02

24632.52
ii) B1 Group Securities (Cr. Rs.) 4614.14 9093.37 6810.49 3317.68 1921.87 3585.98
iii) B2 Group Securities (Cr. Rs.) 426.01 722.06 576.41 271.00 133.02 346.38
iv) F - Group Securities (Debt) (Cr. Rs.) 28.87 13.49 26.91 9.57 4.73 3.76
v) G - Group Securities (Cr. Rs.) 0.00 0.00 0.02 0.01 0.31
vi) T Group Securities (Cr. Rs.) 0.00 570.80 238.77 99.14 - -
vii) Z- Group Securities (Cr. Rs.) 70.27 72.43 30.63 13.90 1.67 2.92
2 Total Turnover (i - vi) (Cr. Rs.) 45029.19 54815.54 65620.37 51463.52 23460.94 28571.56
(Bn. Rs.) 450.29 548.16 656.20 514.64 234.61 285.72
(USD Bn.) 9.89 12.02 14.44 11.37 4.92 5.87
Cumulative from Jan (Cr. Rs.) 45029.19 99844.73 65620.37 117083.89 54359.06 67740.56
(Bn. Rs.) 450.29 998.45 656.20 1170.84 543.59 677.41
(USD Bn.) 9.89 21.90 14.44 25.80 11.39 13.91
3 Average Daily Turnover (Cr. Rs.)
i) Specified Shares (A Group) 1994.50 2015.61 2758.91 2513.27 1126.28 1231.63
ii) B1 Group Securities 230.71 413.34 324.31 174.61 101.15 179.30
iii) B2 Group Securities 21.30 32.82 27.45 14.26 7.00 17.32
iv) F - Group Securities 1.44 0.61 1.28 0.50 0.25 0.19
v) G - Group Securities 0.00 0.00 0.00 0.00 0.02
vi) T- Group Securities - 25.95 11.37 5.22 - -
vii) Z- Group Securities 3.51 3.29 1.46 0.73 0.09 0.15
4 Total Average Daily Turnover (i to vi) (Cr. Rs.) 2251.46 2491.62 3124.78 2708.61 1234.79 1428.58
(Bn. Rs.) 22.51 24.92 31.25 27.09 12.35 14.29
(USD Bn.) 0.49 0.55 0.69 0.60 0.26 0.29
Cumulative from Jan (Cr. Rs.) 2251.46 4538.40 3124.78 5833.39 1294.26 1575.36
5 Turnover for the month (Cr. Rs.)
High 3206.84 3219.55 4134.61 3176.52 2018.51 2126.83
Low **722.09 2078.22 2124.46 2265.70 968.72 1056.00
6 No. of Shares Traded (in Crs)
i) A Group (Total) 182.25 196.16 221.26 160.94 101.77 124.90
ii) B1 Group (Total) 116.36 187.02 149.09 59.72 31.20 35.27
iii) B2 Group (Total) 19.68 38.04 36.05 14.57 10.22 22.62
iv) T- Group Securities - 37.38 17.51 5.10 -
v) Z- Group Securities 10.40 14.78 6.80 3.06 0.14 0.37
Total Shares Traded (i to v) 328.69 473.38 430.71 243.39 143.33 183.16
vi) No. of Debentures traded (in Crs) 3.22 0.17 2.73 0.08 0.0200 0.0024
vii) G Group 0.00 0.00 0.00 0.00 0.0000
7 V-SAT Turnover (incl. in item no 2) (Cr. Rs.) 19790.12 22984.58 25610.12 22907.56 9214.73 16524.00
8 No. of Trades (in ‘000s) 17564.00 23286.00 22346.00 15793.00 9533.26 12146.85
Cumulative from Jan 17564.00 40850.00 22346.00 38139.00 22552.65 26528.57
9 Deliveries (Monthly)
a) No. of Shares
i) Specified Shares (A Group) 41.90 56.37 54.18 33.44 25.46 32.06
ii) B1 Group Securities 48.28 86.51 62.74 27.40 12.18 14.26
iii) B2 Group Securities 9.86 22.81 24.59 10.44 6.84 13.16
iv) G Group Securities 0.00 0.00 0.00 0.00 0.00
v) T Group Securities 0.00 48.87 19.24 5.39
vi) Z Group Securities 0.00 11.74 7.47 3.17
Total No. of Shares (in Crs) 100.04 226.30 168.22 79.84 44.48 59.48
Cumulative from Jan 100.04 326.34 168.22 248.06 105.26 111.81
b) Value
i) Specified Shares (A Group) 8812.43 11293.11 13934.84 9493.35 4364.10 5608.10
ii) B1 Group Securities 2032.80 4169.39 2730.86 1325.65 443.37 921.66
iii) B2 Group Securities 207.20 418.85 364.68 176.40 63.55 119.34
iv) G Group Securities 0.00 0.00 0.02 0.01 0.29
v) T Group Securities 0.00 771.67 258.33 110.00
vi) Z Group Securities 0.00 44.33 36.45 15.09
b) Value (Cr. Rs.) 11052.43 16697.35 17325.18 11120.50 4871.31 6649.10
Cumulative from Jan 11052.43 27749.78 17325.18 28445.68 10707.60 13341.54
10 Debenture Deliveries (Monthly)
a) No. of Debentures (in Crs) 0.00 0.00 0.00 0.00 0.00 0.00
Cumulative from Jan 0.00 0.00 0.00 0.00 0.00 0.01
b) Value (Cr. Rs.) 0.00 0.01 0.00 0.00 0.00 0.00
Cumulative from Jan 0.00 0.01 0.00 0.00 0.00 3.36
11 Market Capitalisation (Estimated)
i) A Group (Cr. Rs.) 911386.00 1076265.70 1029361.88 1024620.93 520966 448638
ii) B1 Group (Cr. Rs.) 114346.00 141101.19 125974.27 123086.92 69872 117293
iii) B2 Group (Cr. Rs.) 15618.17 20890.86 18741.50 17648.10 12639 24212
iv) T Group (Cr. Rs.) 0.00 12652.28 10796.38 10625.35
v) Z Group (Cr. Rs.) 24503.00 22450.99 21980.39 20240.15 16396 6574
BSE (i-v) (Cr. Rs.) 1065853.17 1273361.02 1206854.42 1196221.45 619873 596716

16
 Particular Nov-03 Dec-03 Jan-04 Feb-04 Feb-03 Feb-02
(Bn. Rs.) 10658.53 12733.61 12068.54 11962.21 6198.73 5967.16
(USD Bn.) 234.15 279.32 265.50 264.24 129.87 122.55
12 No. of Trading Days 20 22 21 19 19 20
Cumulative from Jan 20 42 21 40 42 43
13 No. of Companies Listed
Newly Listed 2 4 2 11 0 2
Delisted 0 1 93 43 4 0
Total 2 5 -86 -118 5647 5798
14 Newly listed securities of existing companies 41 40 65 73 36 41
Cumulative from Jan 41 81 65 138 85 103
15 Capital Listed During the Month
- Existing Companies (Cr. Rs.) 578.47 988.64 1770.53 51166.36 689.39 784.96
- Newly Listed Companies (Cr. Rs.) 18.98 197.17 39.47 134.97 0 2043.37
Total (Cr. Rs.) 597.45 1185.81 1810.00 51301.33 689.39 2828.33
(Bn. Rs.) 5.97 11.86 18.10 513.01 6.8939 28.2833
(USD Bn.) 0.13 0.26 0.40 11.33 0.14443537 0.580885
16 Amount offered thro’ equity (prospectus)
a) Total No. of Issues 1 2 2 2 1 0
b) Par Amount (Cr. Rs.) 40.00 10.00 4.85 103.98 3.2 0
c) No. of Issues (premium) 1 2 1 2 1 0
d) Premium Amount (Cr. Rs.) 152.00 141.00 426.91 145.90 38.46 0
e) Total amount (b+d) 192.00 151.00 431.76 249.88 41.66 0
17 Amount offered thro’ other instruments
(Prospectus)
f) Total No. of Issues 0 0 0 0 1 2
g) Amount (Cr. Rs.) 0.00 0.00 0.00 0.00 400 850
18 Total amount offered thro’ prospectus
Total No. of Issues (a+f) 1 2 2 2 2 2
Amount (e+g) (Cr. Rs.) 192.00 151.00 431.76 249.88 441.66 850
19 Amount offered thro’ equity by existing
listed companies
a) Total No. of Issues 2 0 0 3 1 1
b) Par amount (Cr. Rs.) 11.97 0.00 0.00 69.02 15.60 3.12
c) No. of Issues (premium) 1 0 0 3 0 0
d) Premium Amount (Cr. Rs.) 73.58 0.00 0.00 1512.50 0 0
e) Total amount (b+d) 85.55 0.00 0.00 1581.51 15.6 3.12
20 Amount offered thro’ other instruments
by existing listed companies
f) Total No. of Issues 0 2 1 0 0 1
g) Amount (Cr.Rs.) (Cr. Rs.) 0.00 400.00 400.00 0.00 0 46.8
21 Total amt offered by existing listed companies
Total No. of Issues (a+f) 2 2 1 3 1 2
Amount (e+g) (Cr. Rs.) 85.55 400.00 400.00 1581.51 15.6 49.92
22 Total amount offered thro’ all offer
documents (XVIII+XXI)
Total No. of Issues 3 4 3 5 3 4
Cumulative from Jan 3 7 3 8 4 7
Amount (Cr. Rs.) 277.55 551.00 831.76 1831.39 457.26 899.92
Cumulative from Jan (Cr. Rs.) 277.55 828.55 831.76 2663.15 857.26 2366.26
(Bn. Rs.) 2.78 8.29 8.32 26.63 8.5726 23.6626
(USD Bn.) 0.06 0.18 0.18 0.59 0.17960612 0.485985
23 BSE Sensitive Index (30 Scrips) (1978-79=100)
High 5097.84 5838.96 6194.11 6035.80 3322.17 3712.74
Low 4771.23 5131.54 5593.74 5567.12 3223.41 3311.73
Average 4951.10 5424.67 5954.15 5826.74 3278.85 3528.58
Closing (Month End) 5044.82 5838.96 5695.67 5667.51 3283.66 3562.31
24 BSE TECK Index (2nd April 2001=1000)
High 1145.16 1302.89 1416.11 1301.17 861.64 1008.57
Low 1063.03 1146.04 1193.32 1150.29 805.51 926.37
Average 1100.68 1218.77 1301.23 1234.03 831.649 974.7515
Closing (Month End) 1145.16 1302.89 1219.06 1198.72 833.03 926.43
25 BSE 100 Index (1983-84=100)
High 2603.65 3074.87 3297.19 3128.32 1641.99 1788.54
Low 2454.93 2643.01 2878.90 2855.71 1590.58 1602.61
Average 2543.09 2813.58 3142.23 3003.89 1622.58 1711.43
Closing (Month End) 2594.34 3074.87 2946.14 2923.99 1628.72 1707.72
26 BSE 200 Index (1989-90 = 100)
High 645.01 766.31 818.17 775.10 391.44 404.34
Low 610.01 658.54 714.62 707.23 379.38 353.84
Average 630.82 702.79 780.30 744.32 387.01 383.67
Closing (Month End) 644.99 766.31 731.05 725.66 389.27 384.64
27 The Dollex-200 (1989-90 = 100)
High 237.11 279.73 299.11 284.93 136.6 138.03
Low 222.18 239.49 262.06 259.93 131.97 121.39
Average 230.78 256.65 285.78 273.72 134.98 131.18
Closing (Month End) 233.75 279.73 268.62 266.94 135.95 131.2
28 BSE 500 Index (1989-90=100)
High 1991.74 2366.36 2517.28 2379.96 1168.97 1191.81
Low 1880.02 2033.24 2191.35 2167.36 1131.18 1043.2
Average 1939.57 2175.98 2400.75 2283.64 1155.57 1130.96

17
 Particular Nov-03 Dec-03 Jan-04 Feb-04 Feb-03 Feb-02
Closing (Month End) 1991.74 2366.36 2246.83 2228.41 1161.63 1132.98
29 P/E Ratio (Month Averages)
BSE SENSEX based scrips (30) 16.28 17.30 19.39 18.71 14.22 17.28
BSE 100 Index based scrips (100) 14.27 15.12 16.90 16.19 12.06 14.67
30 Price to Book Value (Month Averages)
BSE SENSEX based scrips (30) 2.99 3.26 3.65 3.52 2.22 2.53
BSE 100 Index based scrips (100) 2.69 2.93 3.27 3.13 1.81 1.78
31 Dividend Yield % (Month Averages)
BSE SENSEX based scrips (30) 2.05 1.94 1.73 1.79 2.2 1.88
BSE 100 Index based scrips (100) 2.52 2.40 2.14 2.25 2.98 2.33
32 No. of Registered FIIs + 515 517 527 534 500 488
33 FIIs Purchases in
Secondary market in BSE (Cr. Rs.) 2447 4357 4216 3640 1323 2486.76
Cumulative from Jan (Cr. Rs.) 2447 6804 4216 7856 2908 4369.76
(Bn. Rs.) 24.47 68.04 42.16 78.56 29.08 43.6976
(USD Bn.) 0.54 1.49 0.93 1.74 0.60926042 0.897466
34 FIIs Sales in Secondary market in BSE (Cr. Rs.) 1695 2774 3784 2926 1122 1729.28
Cumulative from Jan (Cr. Rs) 1695 4469 3784 6710 2419 3477.28
(Bn. Rs.) 16.95 44.69 37.84 67.10 24.19 34.7728
(USD Bn.) 0.37 0.98 0.83 1.48 0.50680913 0.714167
35 Net FIIs Investments in
Secondary market in BSE (Cr. Rs.) 752 1583 432 714 201 757.48
Cumulative from Jan (Cr.Rs) 752 2335 432 1146 489 892.48
(Bn. Rs.) 7.52 23.35 4.32 11.46 4.89 8.9248
(USD Bn.) 0.17 0.51 0.10 0.25 0.10245129 0.183298
36 FIIs Purchases in Secondary
market (Equity) (All-India) + (Cr. Rs.) 9947 14027 16830 14952 3235 5291
Cumulative from Jan (Cr. Rs.) 9947 23974 16830 31782 8308.4 10214
(Bn. Rs. ) 99.47 239.74 168.30 317.82 83.084 102.14
(USD Bn.) 2.19 5.26 3.70 7.02 1.74070815 2.097761
37 FIIs Sales in Secondary market (Equity)
(All-India)+ (Cr. Rs.) 6647 7866 13654 12555 2855 3324
Cumulative from Jan (Cr. Rs.) 6647 14513 13654 26209 7041.3 7824.4
(Bn. Rs.) 66.47 145.13 136.54 262.09 70.413 78.244
(USD Bn.) 1.46 3.18 3.00 5.79 1.4752357 1.606983
38 Net FIIs Investments in Secondary
Market (Equity) (All-India)+ (Cr. Rs.) 3300 6161 3177 2397 379.1 1966.3
Cumulative from Jan (Cr.Rs.) 3300 9461 3177 5574 1267.1 2389.6
(Bn. Rs.) 33.00 94.61 31.77 55.74 12.671 23.896
(USD Bn.) 0.73 2.08 0.70 1.23 0.26547245 0.490778
39 FIIs Purchases in Secondary
market (Debt) (All-India)+ (Cr. Rs.) 1177 890 822 1010 236 526
Cumulative from Jan (Cr. Rs.) 1177 2066 822 1832 476.8 1048.3
(Bn. Rs. ) 11.77 20.66 8.22 18.32 4.768 10.483
(USD Bn.) 0.26 0.45 0.18 0.40 0.09989524 0.215301
40 FIIs Sales in Secondary market (Debt)
(All-India)+ (Cr. Rs.) 738 669 129 734 187 155
Cumulative from Jan (Cr. Rs.) 738 1407 129 863 330 401.7
(Bn. Rs.) 7.38 14.07 1.29 8.63 3.3 4.017
(USD Bn.) 0.16 0.31 0.03 0.19 0.06913891 0.082502
41 Net FIIs Investments in Secondary
market (Debt) (All-India)+ (Cr. Rs.) 438 221 693 276 49.5 370.5
Cumulative from Jan (Cr. Rs.) 438 659 693 969 146.8 646.6
(Bn. Rs.) 4.38 6.59 6.93 9.69 1.468 6.466
(USD Bn.) 0.10 0.14 0.15 0.21 0.03075634 0.132799
42 Capital raised through Euro Issues
No. of Issues * 1 1 1 0 0 0
Cumulative from Jan 1 2 1 1 1 0
Amount Raised (Cr. Rs.) 362.31 27.31 61.33 0.00 0 0
Cumulative from Jan (Cr. Rs.) 362.31 389.62 61.33 61.33 71.65 0
(Bn. Rs.) 3.62 3.90 0.61 0.61 0.7165 0
(Source - CMIE) (USD Bn.) 0.08 0.09 0.01 0.01 0.01501152 0
43 Members 712 712 715 720 712 711
Individuals 208 207 207 206 212 215
Corporate (Unlimited Liability)Clause (4) A 0 0 0 0 2
of Securities Contracts (Regulation) Rules, 1957

Indian Companies 484 485 488 494 480 472

Foreign Institutional Investors 20 20 20 20 20 22
Financial Corporations 0 0 0 0 0 0

44 Dollar Re. Exchange Rate (I USD - Rs.) 45.5200 45.5880 45.4557 45.2700 47.73 48.69

45 Scrips Listed 7353 7368 7305 7185 7355 7296

Conversion Table : 1Billion = 100 Crore l 1 Crore = 10 Million l 1 Million = 10 Lakh l 1 Lakh = 100 Thousand
+ FII data except those pertaining to BSE sourced from SEBI
***MAHURAT TRADING **SATURDAY TRADING

18
@

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