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In January 2008, lakhs of investors across the country became familiar with the phrase “grey market premium”. After all, the decision to buy into the Reliance Power lPO for many investors was based on this premium. While few understand what this grey market is all about and even fewer actually trade in it, it became the sole basis of investing for lakhs of investors. Not just retail but even for smart HNIs, who borrowed money to scalp this premium on listing.

The grey market thrives in cities like Ahmedabad, Rajkot, Jaipur and Delhi. While there’s nothing “official” about grey market trades, they are generally honoured and defaults, if any, are rare. So operators by the name of Kali, Muno, Jindal, Karwaji and Gulshan (possibly fictitious) will take orders of minimum lots of 500 shares and settlement is done in cash. It’s so easy for anyone to get access to this market that it baffles me why the authorities have not been able to clamp down on it. Wouldn’t the RBI have clamped down on an illegal entity accepting public deposits running into hundreds of crores?

So how big is this grey market? Actual figures are hard to come by but according to sources, the total quantum of trade on Reliance Power in the last few weeks has touched 1 crore shares. That may be a small fraction of the issue size but not insubstantial in itself. What worries me is the scope for manipulation and misleading investors. Without any aspersions on any promoter as such, ask yourself this simple question. If a grey market premium started influencing public consciousness in a manner that had a direct bearing on the level of oversubscription and subsequent listing, would it not be in the interests of a promoter to lay out say 1-2 per cent of the issue size in trying to keep the grey market premium hot and going? So this grey market premium which people mistake as a truly credible and “market determined” price may actually be nothing like it.

Also, going by the Reliance Power experience, grey market prices are notoriously fickle. When the Nifty corrected 20% last month, the premium on this lPO tanked nearly 70% from 450 + to 140. The result: HNI’s who had expected a listing above 900 are now praying for 600 for a “no loss” exit. Here are some bitter truths about the grey market then: it’s illegal, unreliable, and shallow possibly rigged and swings wildly with market conditions. Don’t use it, don’t trust it, certainly don’t use it as a benchmark for buying into an lPO. In the world of money, grey and black aren’t good colours, stick to white.

The recent controversy involving the Sikh clergy puts the community in the throes of yet another crisis. With the enactment of the Gurdwara Act, in 1925, the management of the historical Sikh shrines was placed in the hands of the Shiromani Gurdwara Parbandhak Committee (SGPC). In order to bring about uniformity in the Sikh way of life, the SGPC approved the Rehat Maryada (guide) in 1945. The Maryada stated that the four seats of religious authority were the Akal Takht in Amritsar, Patna Sahib in Patna (Bihar), Kesgarh Sahib in Anandpur and Hazur Sahib in Nanded (Maharashtra).

Damdama Sahib near Bathinda was also given the recognition of a Takht in 1962.

The Maryada also stated that all decisions regarding the fundamental principles of the faith and affecting the whole community called the Gurmattas (decisions on religious of re-issues) would be binding upon all Sikhs. It of also held that appeals against all decisions could be made to the Akal Takht. But public spat and squabbling during the last fortnight by various jathedars, who were supposed to provide the lead on religious matters, not only shows them in poor light but reflects poorly on the SGPC, which provides secretarial support, besides having a hand in the appointment of some of the clergymen.

Though the matters came to a head only recently, trouble between the jathedars was brewing for some months. Ever since the jathedar of Takht Patna Sahib, Iqbal Singh, returned from his visit abroad last year, the issue relating to collection of money during his visit had been a bone of contention between him and the management, whose president; Mohinder Singh Romana is seen to be close to the Chief Minister, Parkash Singh Badal, and also some SGPC functionaries.

However, when Iqbal Singh was not called for the proposed meeting of the jathedars on February 5 to discuss the issue relating to charges of moral turpitude against an SGPC official, he decided to flex his muscles. On January 16, he issued a Hukamnama (Edict or Commandment) rejecting the new Sikh almanac, Nanakshahi calendar, which was adopted by the SGPC about four years ago. He also ordained certain changes in the daily religious prayers undertaken by the Sikhs.

The Akal Takht Jathedar, Joginder Singh Vedanti, announced the annulment of the edict of Patna Sahib Takht last week. However, Iqbal Singh continues to be defiant, even challenging the supremacy of the Akal Takht jathedar and claiming supremacy of the Takht in Patna (birthplace of Guru Gobind Singh). The ongoing standoff will be the main point of discussion in the proposed February 5 meeting of the jathedars. But since Iqbal Singh has not been invited, the matter is unlikely to be resolved. The continuing spat is bound to further erode the credibility of the Sikh clergy which unfortunately has been unable to keep pace with the changing times. Though the clergy men still enjoy reverence of the elderly Sikhs, they are becoming increasingly irrelevant among the younger lot.

The Patna Sahib jathedar precipitated the matters by openly defying the Akal Takht jathedar, which was deplorable. However, he raised some valid points. For example, the changes that he had suggested in daily Sikh prayers were reportedly ordered by the Akal Takht itself in 1985, but never followed up. Similarly, though the Nanakshahi calendar was implemented in 2003 after much debate, it was implemented without taking the concurrence of the two Takhts outside Punjab (Patna and Nanded), which, it appears, created problems for them. In fact, even in Punjab, there were problems in its implementation for the first few months when the Congress Government was in power. It is in the interest of the community at large that the Akal Takht jathedar rises above petty differences and tries to resolve the issue by inviting Iqbal Singh to the February 5 conclave.

On the issue of the Nanakshahi calendar, the Akal Takht could constitute a committee of scholars to discuss the issue afresh after taking into consideration all the difficulties that have been experienced since it was adopted. The intention behind the change was to bring about uniformity in most of the functions relating to the lives of the Sikh Gurus and some other important events. While the earlier Vikrami Samvat calendar was based on the variables of the lunar system, the Nanakshahi almanac (which starts with the month of Chet on March 14) is based on the solar system. But the adaptation does not appear to be complete as the SGPC took care to conform to the dates of national festivals, including Diwali and Holi. On the face of it, there is nothing wrong in bringing about a change (even the Christians undertook calendar reforms in 1582 and 1752). But, the question that needs to be asked by the proposed committee is: has it helped in any way? Moreover, what are the difficulties being faced by outside Takhts and others by its implementation? Should there be further changes in line with the Christian or Vikrami calendars?

The recent crisis calls for a complete revamp of not just the SGPC but also the institution of the Sikh clergy. Just as the command of the Shiromani Akali Dal has moved to the next generation with the election of Sukhbir Singh Badal as the party president, there is need to bring younger Sikhs to the forefront of SGPC. Its existing leadership, steeped in fossilised thinking, has failed even in its basic mission of propagating the religion, as a result of which deras and sects have proliferated in the past few years.

Since the president of the Takht Sahib Management announced “suspension” of the Jathedar of the Takht, it shows how helpless the clergymen could be - should they lose the confidence of managements. In the past the jathedars of Akal Takht have faced similar ignominy from SGPC more than once. In fact, the Sikh Gurdwaras Act, 1925, makes no mention of the office of jathedar (term used is “head ministers” of Takhts). In case the institution of jathedar is to be given primacy; it should not only be given statutory recognition but also the system of appointment, role and removal of jathedars should be specified. Moreover, care should be taken that these in no way in conflict with the functioning of the nation state. Similarly; while it may be acceptable for jathedars to issue Gurmattas, the Sikh community needs to ponder if given their wisdom (now on public display), they have any authority to issue Hukamnamas, which by religious connotation ought to be the will of the Guru.

Like a good batsman who keeps an eye on the field positions, Yaga Venugopal Reddy played a defensive stroke; avoiding a tit-for-tat interest rate cut after the US Fed slashed its benchmark rate by 0.75 percentage points last week. With his eyes on domestic monetary and economic developments, particularly an inflation rate which has not yet ,absorbed high global oil prices, he kept both interest rates and cash ratios unchanged. In that masterly inaction, he left room for future cuts as well as sufficient liquidity for businesses to take loans and pursue growth.

He left it to cash-flush commercial banks to play their own game in cutting rates. RBI has kept its target of containing headline inflation rate based on wholesale prices below 5 per cent, and seeing a moderated growth to 8.5 per cent, it decided to watch global uncertainties pan out. “In balancing between growth and price stability, we are reinforcing the stance on price stability as growth is on the expected lines,” Reddy told reporters. “Inflation is apparently comfortable. There is some suppression of inflation because the pass through of oil prices has not happened. The consumer· price index is also at 6 per cent.”  However, he hinted that overall economic growth rate may still be at 8.5 for fiscal 2009. “We have not done detailed work on that. The rate can be same as now despite a possible global slowdown,” he said.

Talking about the slowdown in the industrial sector Reddy said an independent analysis would be done on how to improve credit availability to the employment-intensive sectors. “It should be possible for the banks to be more proactive in extending credit,” Reddy said adding that there is enough liquidity in the system. At the same time RBI wishes the balance between savings and investments in India should not be disturbed.

It came and went and nothing changed. The stock market’s reaction was quite interesting. It sold off for exactly two minutes and then stabilised. The fact that Dr. Reddy chose not to slash rates should:
a) have not come as a surprise and
b) did not warrant a meaningful sell off.

In fact, I would even think traders were waiting for the short dip to go long. The market recognises that rates will ease; whether it’s April or July is a matter of debate. Also, whether the Reserve Bank of India (RBI) signals a rate easing or not through the repo, the Market will nudge rates down. I wouldn’t be surprised at all if deposit and lending rates start easing materially by the first quarter of 2008-09, regardless of what the RBI does. The monetary policy was never going to be the major trigger for either a durable breakout or a complete panic breakdown.

One by one, the triggers are getting out of the way. Technicals have eased considerably with the cut in futures positions. It will ease further as the Reliance power refunds start hitting bank accounts on Friday. The monetary policy is behind us. Now for the outcome of the US Fed meeting and beyond that, the Union budget. The Fed, in it’s populist mould, will probably cut 50 basis points again and that may lead to a temporary revival in global equity sentiment. If, with that spurt, the Nifty can effect a breakout above the 5500 zone, maybe trading sentiment will improve. It’s tough to make a reasonable guess on where this market will be four weeks from now.

I am a bit lost. One could as easily argue for a breakout in February as a retest of 4500 if the global situation deteriorates. I gather most analysts are confused which is why the consensus call is a range between 5000 and 5500. Let’s get past the Fed meeting and we can revisit the scenarios. Till then it may be wise to sit on your hands.

Scientists and engineers in the Heavy Water Board (HWB), Department of Atomic Energy (DAE) have every reason to be proud. They fulfilled the dreams of Dr. Homi Bhabha whose death anniversary was on January 24. The Board exported heavy water to South Korea seven times and once to China. Last year, HWB supplied 4,400 kg of high quality, nuclear grade heavy water to Spectra Gases Inc. USA. HWB is emerging as a major exporter of this commercially important strategic material.

A peep into history is in order. In a note on the organisation of atomic energy research in India, sent to Jawaharlal Nehru on April 26, 1948, Dr Homi Bhabha wanted that the government “should explore immediately the possibility of utilizing the cheap hydroelectric power in India for manufacturing heavy water on the one hand to our own requirements in a pile and on the other for sale to other countries”. He desired that the government should come to an agreement with the Governments or atomic energy agencies of one or more countries such as Great Britain, France and Norway. “….that was the quickest and the most desirable way to develop atomic energy in India“ he argued.

Why did he bracket Norway with France and Great Britain? He knew that Norway had the know how to produce heavy water, an essential raw material to produce atomic energy. In 1942, Norway was producing 1.5 tons of heavy water annually at its Rjukan plant. (Smart Norwegian saboteurs damaged the plant in 1943; they did not want Germans to get any advantage. The old hydro power station and plant have been preserved as the monument of Norway’s heavy water industry.)

The “factory should be set up for the purpose under the Defence Ministry and put under the- same security measures as the armaments factories of that Ministry”. Bhabha drove home the strategic importance of heavy water. He wanted that “the heavy water produced should be at the disposal of the Atomic Energy Commission for use or sale”. Bhabha wanted to thwart a possible future turf war with the army!

At the second meeting of the Board of Research on Atomic Energy held in Bombay on 9th and 10th April 1948, Bhabha secured approval for three resolutions; one of which recommended that the government should investigate the feasibility of producing heavy water in India. In the note enclosing the resolutions, Bhabha proposed to Nehru the setting up of a three Member Atomic Energy Commission directly under the Prime Minister as “the present Board….. …cannot be entrusted with this work since it is an advisory body…composed of 28 members including officials, scientists and industrialists”. “Secret matters cannot be dealt with under this organisation”, Bhabha asserted.

In 1954, Dr Bhabha convinced Nehru about setting up a fertilizer cum heavy water plant at Nangal. He argued that cheap electric power (1.35 paisa per kilowatt-hr, revised later to 6 paisa per kilowatt-hr!) will be available from the Bhakra-Nangal Hydel Project.

Nangal plant produced the first drop of heavy water on August 9, 1962. Nangal plant was the largest plant of this type in the world. Bhabha waited for over 14 years (from April 1948 to August 1962) to realize his dream to produce heavy water indigenously, The Heavy Water Board executed the first export order to South Korea in May 1998, just under 36 years later.

Dr. Bhabha were alive today, he would have congratulated the board for its achievements. He might have also expressed his dissatisfaction, as it took too long to fulfill his dream. HWB faced many trials and tribulations (the difficulties in operating heavy water plants with fertilizer factories, power scarcity, export controls, poor national industrial infrastructure among others) in mastering a technology known only to a handful of advanced countries.

HWS has an impressive list of achievements, including energy conservation measures, maintenance of high capacity factors for the plants and product diversification among others. The board kept the Nuclear Power Corporation of India Limited in good humour by supplying heavy water to the pressurised heavy water reactors in the country.

Overall, the board lives up to the expectations of Dr Bhabha, the architect of nuclear India.