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Oilseeds Ablaze

Oilseeds Ablaze Nishtar WHEN Nature proposes and Government disposes, God alone can save the poor consumer. Reports that the Political Affairs Committee of the Union Cabinet had approved proposals to fix groundnut prices and to create a buffer stock had set the oilseeds market aflame. These flames have spread on reports that the Committee's proposals have now been given a concrete shape. Oilseeds futures have been rigged further; since the beginning of November cottonseed and linseed have been marked up by Rs 11 a quintal and castor futures have risen by Rs 7. Even spot groundnut oil prices which had started declining under the pressure of increasing arrivals have turned firm and moved up by Rs 300 a tonne. What is more, December position has begun to command premium over the spot quotation.

By Controls and Buffer Stocks

By Controls and Buffer Stocks?
Nishtar THE oilseeds market has developed remarkable strength. Bulls have turned aggressive. They have not only rigged new crop contracts in linseed, castor and cottonseed to new high levels but they have also lent sizeable support to forward positions in groundnut oil. Within a week, oilseeds futures have risen by about Rs 5 a quintal, and the quotations for groundnut oil November and December deliveries have moved up by about Rs 400 a tonne. The sharp upswing has occurred amidst prospects of reasonably good supply. Cottonseed futures have been pushed up although the spot material is quoted at a discount at all the important centres. And the prices of groundnut oil

The Million Bale Discrepancy

The Million Bale 'Discrepancy' Nishtar WHAT are the cotton crop prospects for 1970-71? Not "very rosy", says- Captain Ranjit Singh, chairman of Indian Cotton Development Council. Unfortunately, the impression one gathers from the very brief account he has given of the crop is that the prospect is not only not "very rosy" but it is rather bleak. The supply of irrigation water in the canal irrigated States of Punjab, Haryana and Rajasthan was ''somewhat irregular and inadequate" at the optimum sowing time of cotton with the result that not only was there a slight shrinkage in area but more than 50 per cent of. the crop was also sown late which usually diminishes the yield, Gujarat had again the misfortune of falling victim to heavy rains and floods and the cotton crop over an area of some 75,000 hectares in the State lias been "totally destroyed" while the growth and productivity of the crop have been impaired in some more areas. In Maharashtra also excessive rains havedamaged both the irrigated and rainfed crops in several tracts and the continuous wet weather is said to have given rise to severe infestation of pests like boll-worms which are difficult to control even with the most potent chemicals available.

Whither Cotton Prices

Whither Cotton Prices?
Nishtar THE cotton market has turned remark- ably firm. Crop quotations over the past few weeks have moved up by Rs 125 to Rs 200 per candy. To mention a few varieties, Khandesh Y-l has risen from Rs 1,725 to Rs 1,875, CI-73 from Rs 1,650 to Rs 1,800, Kalyan from Rs 1,550 to Rs 1,775, and the exportable Bengal deshi (Fine) from Rs 1,060 to Rs 1,210. Current prices are a record high for this time of the season, and they are only Rs 50 to Rs 75 below the all-time high levels recorded last season.

Mockery of Ban on Forward Trading

Mockery of Ban on Forward Trading Nishtar UNDAUNTED by the hazards of space travel, the stock market continues to move higher and higher to a destination unknown. The 1969 peak has been left far behind. The current bullish fervour is reminiscent of the boom last year which attracted Government's wrath. With forward trading officially 'banned, New Delhi is in no position to point an accusing finger at speculators. But it is surprising that it should have turned a blind eye to the illicit forward trading that is going on under the in- genious 10-day settlement system. The unrestricted freedom to trade for differences had made a mockery of the ban on forward trading.

New Dimension to Old Cult

New Dimension to Old Cult Nishtar THE stock market continues to scale new peaks and there is no knowing where the new spirit of adventure will carry it. Caution has been thrown to the winds and the market is experiencing a fantastic boom. Rarely, if ever at all, have equity prices been known to rise the way they have been rising. Within a few weeks, many shares have risen by more than their full year's normal range. And there have been quite a few instances where prices have gone up by 30 to 50 per cent in a matter of days. Such steep rises are usually associated with "cornering" and "take-over" bids. But there have been no such deals recently. It is quite some time now since the market shifted its emphasis from yield consideration to growth prospects (capital appreciation). But more recently, the cult of equity has acquired an altogether new dimension

In Search of a Haven

agreement with American Can Company are hearing fruit. We have received a Letter of Intent from the Government, agreeing to the broad terms of the proposed collaboration, and we are now in the process of clarifying certain details, before concluding the matter.

Thriving on Starvation Diet

Thriving on Starvation Diet Nishtar STOCK markets have taken another bag leap forward in their journey to a destination unknown. The 1969 high has been left far behind. Where the new spirit of adventure will carry them is anybody's guess, There is no really dependable norm for evaluating equity prices. Factors, tangible and intangible which go into the making of a demand sup- ply equation are far too many and they do not easily lend themselves to analysis. It is impossible to quantify the impact of various influences at work at any given time or even over a period of time. Since sentiment knows no logic, changes in market psychology are difficult to predict.

Not to Reason Why

Not to Reason Why Nishtar STOCK markets are no longer bothered about Government permission to resume forward trading. They have found a way out. As is usual in such matters, the more speculative Dalai Street has given the lead with its ingenious 10- day settlement scheme. It should not be long before other markets fall in line. Under Bombay's scheme, one can buy or sell freely and delivery can be taken or given. All the outstanding business has to be squared up by the close of the settlement day; but if buyers and sellers can come to an understanding to keep their business alive, the market authorities are not to take any notice of it. One could say that this is no forward trading, it is pure gambling. But except for some respectability that goes with these words, there is perhaps very little to choose between gambling and speculation. It is amazing that the market authorities should have waited for more than 13 months and allowed their members to live on a starvation diet. Quite possibly' left to themselves, the market authorities would not have liked to resort to this not-so-desirable step. But they could not resist the mounting pressure from the stock exchange fraternity for resumption of forward trading. Having failed to persuade Government to lift the ban, the market authorities decided to go ahead on their own and relax the trading rules with a view to facilitate buying and selling for differences.

Backdoor Forward Trading

Backdoor Forward Trading Nishtar THE stock market no longer wears the anaemic look it has presented for a long while because of the ban on forward trading. It is beginning to pulsate with life and jobbers have reappeared on the scene. The overall trading volume gives one the impression as if forward trading has been allowed to be resumed. The ban has not been lifted but the market authorities in Bombay have considerably relaxed the trading rules. Facilities for settlement of transactions not only in cleared securities but also in select cash counters have brought about a marked increase in turnover. New Delhi cannot be unaware of "illicit" forward trading for which it itself is no less to blame. It is the inordinate delay, in lifting the more than 13- month old ban which has forced the market authorities to resort to relaxation of trading rules in order to pacify the stock exchange fraternity which had been getting increasingly restive due to lack of business. There is no reason why Government should not be able to take a decision on an issue like forward trading in shares, especially when it has been in possession of the Anjaria Committee's report for quite some time.

Scarcity-Induced Boom

Scarcity-Induced Boom Nishtar ENCOURAGING corporate news, return flow of large funds released from the recent new issues which were heavily oversubscribed, paucity of good scrips and fairly large institutional support for select counters have led to an all-round impressive rise in equity prices. And surprisingly enough, it is the slow-moving bank shares which have scored the most spectacular gains. Within a week, Bank of India rose from Rs 94 to Rs 121, Baroda from Rs 83 to Rs 103, Central from Rs 57 to Rs 75 and United Commercial from Rs 92 to Rs 115. Never before have bank shares been known to have recorded such a steep rise in so short a time. The spurt was due as much, if not more, to scarcity of offerings as to fresh support induced mainly by the proposal of Central Bank of India Ltd to merge itself with Tata Engineering and Locomotive Company; it was felt that the other residual banking companies would follow the Central's lead. One wonders whether the buying in bank shares was based on any thoughtful assessment of the possible benefits in the event of a merger. And one cannot take it for granted that the schemes of amalgamation, which might have to be referred to the Monopolies Commission, would be cleared by the Commission.

Cotton War Is On

meetings, an agreement was finally reached on 8th October, and the two factories re-opened on the 9th. The,, strike at the other two establishments was withdrawn from that date. As I have said before, the profit for the year reflects the very serious impact of these events. I would like to believe that the workmen realise that until and unless they identify themselves with the prosperity of the Company, their earnings and employment potential must necessarily be seriously affected amndin the Iong run be in jeopardy, lt is most unfortunate that West Bengal, which has suffered a severe recession in 1966 and 1967, and which should now he recovering from it as arc other parts of our country, has been unable to register anything like the industrial growth rate that many other comparable States have been able to achieve. There is virtually no capital formation and reports continue to be heard of flight of capital. This must, in a large measure, be attributed to the most unsatisfactory industrial relations climate, militant trade unionism, and the law and order problem in the State. If this declining trend in industrial investment continues, it will have the most serious repercussions not only on the economy of the State but that of the whole country. It the industrial climate improves and the law and order situation is what one normally expects in any well administered State, there is no reason why West Bengal should lag behind other parts of India in industrial growth and progress.


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