3rd April 2004: The Reserve Bank of India has decided to issue Market Stabilization Bonds (MSBs) next week in order to phase out the Rs. 6500 crores gap in the money market. These bonds will be in nature of government securities (also known as Gilts) worth Rs. 5000 crores to be sold on 6th April, 04. They will be the 6.18% '05 bonds to be reissued through a multiple-price auction. The government will sell Rs.1500 crores worth Treasury Bills on April 7, 04. It will also hold a regular auction of treasury bills worth Rs. 500 crores and will sell 18000 crores worth of MSBs. Since the RBI's intervention in the Foreign Exchange Market has resulted in excess rupee liquidity, the market stabilization scheme is brought up to provide a platform to correct this deficit. The government will thus sell bonds and T-bills for upto Rs. 35500 crores in the first quarter upto June 30 leading to the issue of Rs. 60000 crores worth MSBs. The rupee touched a 47-week closing high of 43.65/70 on Wednesday and ended on Friday at 43.73/74 per dollar. The interest received on these MSB's will form a part of the government’s deficit. The bonds and T-bills issued under the scheme would have the same features as the Statutory Liquidity Ratio (SLR) instruments. These MSB's will be eligible for Statutory Liquidity Ratio, repo and Liquidity Adjustment Facility (LAF). This is a scheme, which is outside the regular borrowing of the government.

22nd March 2004: Equity diversified funds have been the best performers among all categories beating the sensex by a huge margin. It has been argued that the long-run investment in equities always reaps good and above average returns. It is not possible for an individual investor to do his own stock picking and dream of making extraordinary returns. The reason being that retail investors don’t have the luxury of spending hours on researching stocks and constantly keeping track of them. This is why investments in mutual funds are advisable. It relieves the investor of taking a call on the markets and keeping track of investments on a daily basis. But before leaving the responsibility of handling your money to the fund manager, the investor needs to decide on a mutual fund category and then zero in on a scheme from that category. The three broad MF categories are equity, debt and liquid. And within these categories there are balanced funds, hybrid equity-oriented funds, hybrid debt-oriented funds, etc. Each category represents a different degree of risk and it is up to the individual to evaluate his or her risk appetite and then decide on a category. Another important factor that will influence this decision is the returns that the particular category has given over time. We take a look at the equity-diversified category, which has outperformed the sensex as well as all other mutual fund categories over different time periods. The study of performance of the equity diversified category vis-a-vis the sensex over different periods we see that this category has outperformed the sensex over the 1-month, 3-month, 6-month, 1-year and 5-year time periods. It is quite clear that the category has out-performed almost all the indices in the long run. However, investors should not be taken in by just the high returns that this category has delivered in the past. Investors should be ready to face volatility and a drastic fall in returns when the markets turn choppy, as witnessed over the past one month. The equity markets bled and this had a direct effect on the returns of equity-oriented funds. Investors should consider short-term returns before investing or disinvesting for that matter, they should keep in mind that equity markets are volatile and investments in this category should be done with a long-term view.

The Multi Commodity Exchange (MCX) will be the first exchange-traded steel futures in the world. Though there are organized exchanges trading in other industrial commodities such as aluminium, copper etc but no contracts where there for steel. The London Metals Exchange (LME) failed to introduce a steel futures contract, which they were trying for the last three years. The steel market volatility has made the length of the bilateral contracts shrinking. Earlier it was possible to have 6-7 months contract but now due to rapid increase in steel prices it’s not possible to have contracts more than 2-3 months. The lack of organized market place also harms the interests both the buyers and the sellers. At present about Rs 75,000 crore of steel is traded annually in the cash market. MCX expects the steel futures market to be 10 times more at Rs 750,000 crore. A future contract is a forward contract, but one which is traded an exchange. The steel industry worldwide operates through similar bilateral forward contracts between buyers and sellers. The parties remain anonymous, while the exchange acts as counter party to both the buyer and seller. A steel futures contract would thus enables a user of steel – for example, an auto manufacturer- to know in advance the price he has to pay for his raw material (steel) at a future date. At the same time, a steel producer can lock in the price he receives for his production, before the product is out of the factory. For steel producers and buyers, the main concern is how the exchange will evolve a standardized futures product for a metal that is not strictly a commodity.

8th March 2004: Cyber Media, India’s oldest information technology related publishing group, is planning an initial public offering (IPO) some time in May. Mr. Pradeep Gupta, chairman and managing director of the group confirmed the development and stated that in a week or so, they would be ready to talk about the issue size and other details. Cyber Media is a Rs.60 crores group that was set up in 1982. Cyber Media is entitled to obtain foreign direct investment (FDI) of up to 74 percent in view of being a technical publication and had been known to be looking for a foreign equity partner. It also filed an application with the information and broadcasting ministry seeking its consent to publish an Indian edition of the international business magazine, Business Week. It publishes nine IT print titles, including Data Quest and PC Quest and manages their websites. It also operates an IT portal – Cyber India Online with a strategic investment from Intel Capital and India’s oldest IT market research company IDC (India), an affiliate of IDC World Wide. Cyber Media also has IT Expositions Company Cyber Expo, which organises events such as IT.COM and NASSCOM-ICT; Cyber Multimedia, publishers and distributors of CD ROMs and Cyber TV that produces IT programs for television. The group also runs a training school offering content management services across various media platforms for young professionals. It is called the School of Convergence.

4th March 2004: Sun Pharma, the domestic pharma company, is planning to enter into the biotech space and is likely to focus on products that are on the high end of the biotech spectrum. The company may collaborate with outside companies for biotechnology. The company has already bid for the state-owned pharma company Hindustan Antibiotics Limited (HAL) and is awaiting a decision on it. HAL is a pioneer in penicillin manufacturing in the country and also produces a range of biologicals like antibiotics and erythropoeitin, in addition to antituberculosis drugs, anti-bacteria, analgestics, cardiac drugs and vitamins. Sun Pharma is likely to focus more on high-end biotech products like monoclonal antibodies, an area that many leading companies are currently working on. Sun’s bid is to acquire all the existing businesses and infrastructure of HAL. HAL is currently in BIFR (Board for Financial and Industrial Reconstruction). Mr. Dilip Sanghvi, Sun Pharma’s chairman and MD said that the company would go ahead with its biotech plans irrespective of the outcome of the HAL bid. He further stated that the company also plans to use biotech as a research tool and are trying to build their ability in areas like gene expression.