I have been writing that the slew of low quality offerings in the Indian market may herald a market high.But this might not be the case with the world leaders pouring money like water throught bailout packages and loan guarantees.So our testotorene fueled markets might  grind higher and higher till all the cumulative problems come to a head. Jaypee Infratech which is a real estate cum road opeartor managed to limp through its book building with just 1.24 times subscription at the very low end of its range , no doubt helped by some friendly institutions . On the other hand “unique” health story Tawalkars managed a 15% premium on listing.Let’s see how they perform in the long run, wheter Tawalkar’s really manages to leverage its “brandname” to grow at fantastic levels.

India Jaypee Infra sets IPO price at lower end – Economic Times

An IPO by Indian road-builder Jaypee Infratech, a unit of construction firm Jaiprakash Associates, raised about $502 million after the deal was priced at the bottom of its indicated range, according to sources with direct knowledge of the matter.
The company priced its offering at 102 rupees per share, against a range of 102 to 117 rupees, the sources said.

Talwalkars Better Value Fitness lists at Rs 148 on NSE - Economic Times

Shares of Talwalkars Better Value Fitness listed at Rs 147.95, premium of 15.58 per cent, against issue price of Rs 128 on the National Stock ExchangeThe Fitness chain operator raised Rs 78 crore from the primary market for setting up of additional Health Clubs and for repayment of unsecured loans.

India has  put a ban on Chinese telecom equipment manufacturers Huawei and ZTE due to security concerns.There have been reports of Internet espionage of sensitive government of India’s computers as well as some of the company’s headquarters being off limits to Indian employees.This had made the government wary putting a ban on the Chinese companies involved in communications.In a desperate attempt to placate India’s concerns Huawie’s Chinese employees are keeping Indian names.This is totally hilarious  and I don’t think will cut much ice with the authorities.Small scale Chinese handset makers which also are facing a ban in India are trying to open factories in India to circumvent these restrictions.

Huawei India execs take Indian names to be more culturally acceptable – Economic Times

Chetan Chen is into technology, Deepak Xu handles marketing, and Deepika Fang is a network systems pro. And when their company needs to reach out to the public, Rajeev Yao gets into the picture.

Welcome to the charm offensive of Huawei India, a firm that is on the radars of the Indian security establishment by virtue of its place of incorporation, the People’s Republic of China. As its top brass prepares to walk extraordinary miles to get its operations going on in one of the world’s biggest telecom markets, the Chinese equipment maker is nudging its Mandarin staff to mind their names.

Ergo, this cultural revolution with a telecom twist has Chen Tian Siang, a top consultant with Huawei India, introducing himself as Chetan Chen; Ling Yong Xu, a top management executive in its customer care division, is Deepak to his Indian colleagues; Liu Fang, a senior executive with its networks division, goes by the name ‘Deepika Fang’; Li Gin, a coordinator with Huawei India, is called ‘Rosy’; and Zhao Bing, in charge of the company’s warehouse division, is just Amit. To top it all, Huawei’s spokesperson in India, Weimin Yao, is known as ‘Rajeev’ to media colleagues here.

Huawei executives carry their Indian names even on their visiting cards. Suraj, Amit, Arvind, Ravi, Rajesh and Rajeev were some of the popular names adopted by their Chinese executives in India, says a Huawei staff.

The company reasons that since Indians find it difficult to pronounce Chinese names, the Indian nomenclature helps in daily operations. This also makes Chinese executives more culturally acceptable not just to their Indian colleagues, but also to their clients and business associates in the country.

Chinese Companies Try to Solve their India Problem – Businessweek

The government late last year took steps to stop a flood of Made-in-China phones entering the country. The phones are made by the so-called shanzhai, or bandit, manufacturers. These companies specialize in producing inexpensive, no-name phones; Indian partners often import them and slap on a local brand name. Over the past few years, Indian sales of these gray-market Chinese-made phones have soared; they accounted for 30% of the Indian market in 2009, says Flora Wu, an analyst in Beijing with consulting firm BDA China. That’s 40 million handsets, up from almost zero in 2007. Problem is, many of these shanzhai companies don’t put International Mobile Equipment Identity numbers on their phones. Given the way the terrorists who attacked Mumbai in 2008 used cell phones to communicate, having tens of millions of anonymous cell phones in the country creates a major security threat. So last year the Indian government began forcing operators to disconnect phones without IMEIs. That change – as well as the latest moves against Huawei and ZTE – may be leading some Chinese companies to rethink India. Instead of exporting from China, why not produce locally? Like the Japanese automakers that started manufacturing in the U.S. in the 1990s, thereby disarming some of their strongest nationalist critics, the Chinese might be able to win friends in India by investing in the country, creating local jobs and helping to build a local supply chain of manufacturers. One sign of possible things to come: According to the Indian newspaper the Business Standard, China Wireless Technology, a handset maker in Shenzhen, wants to open a factory in India and boost the number of Indian employees from current 200-300 to 1,000.

Investing in the Indian capital markets is fraught with dangers for the retail investors even experienced and informed ones.For the newbie investor they are a veritable minefield.Even educated Indians are woefully lacking in any sense of financial planning /investment  good practices or principles. MF agents and distributors take advantage of this situation to sell products with complete disregard to the investor interests.They are interested in selling products which get you the biggest margins. Its no wonder that you see the huge popularity of ULIPs in the Indian market because they  give the highest commissions.Even basic rules which the market regulator SEBI has laid out is disregarded by the industry . This is done because the distributors know that punishment will be very mild even if it is meted out at all.

MF agents flout SEBI rule on sub-brokers - Economic Times

Self-styled distributors, lacking basic qualifications to sell mutual fund units are advising investors as to where they should put their hard-earned money. Distributors need to pass the Amfi Advisors’ Module if they want to sell mutual fund schemes to investors.

If industry officials are to be believed, top national distributors, who sell investment products across asset classes, are not insisting on Amfi certification while appointing sub-brokers (sub-advisors or franchisees). This is more prevalent in franchisees or sub-broker offices in tier-II and tier-III cities, according to sources.

“Top distributors simply ask for a small membership fee at the time of empanelling as a sub-broker. They are not really concerned about Amfi registration or any certification. The sole criterion is how many investors you can bring into the branch,” said a fund industry source. These distributors are allowed to sell products across asset classes, from equity mutual funds to ULIPs, corporate deposits and even Nabard bonds on certain occasion.

For mutual funds, market regulator Sebi has made it mandatory for distributors to pass certification test (advisors module) and obtain registration number from Amfi. Institutions selling mutual funds have also been directed to enlist only certified advisors or product sellers. Insurance regulator IRDA also mandates advisors, including ULIP sellers, to pass the agents’ test before selling indemnity/investment products. Large-sized distributors are squarely flouting these rules while taking in sub-advisors.

The way to becoming an advisor, without taking Amfi advisors’ module test, is very simple. The aspiring advisor can just walk in to the branch of a national distributor, meet the area manager or business development head, and let them know his plan to become a mutual fund advisor. If the aspirant is well net-worked to bring in a few lakhs of rupees as investments (in mutual funds and ULIPs), branch officials collect a joining fee and hands out products to sell. If the newly-inducted sub-broker pays a higher fee, he is also allowed to use portfolio management software and product terminals owned by the distributor.

“We can only check the credentials of independent financial advisors (IFAs); it is impossible to check the certification of employees or sub-advisors empanelled with large distributors. We’ll have to go by their declaration that all advisors working for them are compliant to sell mutual funds,” said the channel head of a corporate-promoted fund house.

While fund houses are aware of this trend, they are not really worried about it. According to them, Amfi advisors’ module syllabus is outdated — sources say the syllabus was last updated in mid-2006 — and could slightly out of context, considering the large number of changes effected to mutual fund industry post-2008.

China has recently been in the news over Internet Espionage on defense and sensitive installations in India and USA. This has led to the high profile exit of Google from China.Recently a Canadian research organization revealed/alleged  how Chinese govt backed hackers had broken into Indian embassy and government computers.This has made the Indian government wary of allowing Chinese equipment suppliers into India’s communication sector.Though both ZTE and Huawei’s equipment is much cheaper compared to Nokia  Siemens,Alcatel and Ericsson , these companies face an uphill battler in India right now. With around 400 million users and 600 million to go , India is THE Telecom Market to be in from a demand point of view.Shows you how Chinese companies are disadvantaged due to their home country in different parts of the world .The Rio Tinto and Google cases reflect the increasing antagonism between China and Rest of the World.

A Setback for China’s Tech Ambitions in India – Bloomberg

Facing increased competition at home and government pressure to expand overseas, Chinese telecom equipment makers have been looking toward India. The country is already the biggest export market for China’s two leading phone gear manufacturers, Huawei Technologies and ZTE, and both companies have made India a top priority. “If [Indian] government policies are favorable,” ZTE India managing director D.K. Ghosh said on Apr. 14, “we will further scale up our investments.”

When it comes to China’s Big Two, though, India’s policies are hardly favorable. The government has sent letters to Indian phone companies saying they can’t buy equipment from Huawei, ZTE, and several other mainland companies due to security risks. In April, researchers reported that Chinese hackers had targeted Indian defense computers. And in December, India banned many Chinese cell phones, also because of security concerns, and imposed anti-dumping duties on transmission gear from Huawei and other vendors. Huawei says it’s committed to “the development of the Indian telecoms industry.” ZTE says it adheres to Indian law.

The new restrictions don’t apply only to the Chinese. An Israeli company and California-based U.T. Starcom (which does most of its manufacturing in China) were hit, too. Yet few analysts doubt that China is the main target of the restrictions. “The Indians are incredibly paranoid about China,” says David Zweig, a professor of politics at Hong Kong University of Science & Technology.

The tensions could be a problem for other Chinese tech companies. As India has grown to the world’s No. 2 cellular market in recent years, its imports of Chinese handsets have soared. Tencent, China’s top instant-messaging service, has invested in Indian Internet startups. And India is the third-largest operation (after China and the U.S.) for Alibaba.com, an online marketplace based in Hangzhou. An Alibaba spokeswoman says the company isn’t worried about the restrictions. Tencent declined to comment.

While India’s phone companies could buy equipment from Western suppliers, they would pay far more. So carriers are lobbying the government for a change—and hedging their bets, says Sanjeev Aga, managing director at Mumbai-based Idea Cellular. “A lot of companies are finding suppliers in India,” Aga says. Any resolution, though, may ultimately require talks between the two governments, says Kunal Bajaj, a partner with market research firm Analysys Mason. “There is going to be quite a bit of posturing between the two countries for some time,” he says

India has very low exposure to the current European debt crisis.The reasons for that are

  1. India’s export to GDP ratio is much lower than that of other Asian countries,so a slowdown in world trade due to European slowdown has little affect
  2. India’s financial sector has almost no linkages to the sovereign debt of the affected Club Med countries
  3. India has very few companies that are dependent on exports to Europe,can’t think of a single large cap

That said I don’t think India can remain unaffected or decoupled from the other world  markets.The reasons are that capital is globalized and I don’t think India’s relative valuation can remain too much greater than the other world markets.Also foreign capital inflows will slow if not reverse as investors choose to invest in safe haven assets.

While Indian Stock Markets have progressed a lot in terms of disclosure and regulation with  market regulator SEBI introducing numerous reforms in the last decade or so ,there is a long way to go to achieve the standards of information disclosure and corporate governance seen in the developed markets. Investing in a mid cap  and even sometimes a large cap company can be dangerous because of problems associated with  corporate governance and information disclosure.Even after fraud or malfeasance is proved , promoters and big stock market players can get away with nominal  punishment like not operating in the market for X number of years.Unless the scandal turns out to be a huge one , life goes on as usual without any punishment or prosecution. . Improvement in law enforcement will lead to a higher equity participation by the Indian public which is abysmally low by international standards.IMHO Most of the Indians prefer to invest in bank deposits because of lack of faith in the system.Here are some instances of this hazards

  1. Vanishing Companies – Small companies simply vanish from the stock market.They stop reporting results to the market and the investors have no way to exit as their stock stops trading as the exchange bans the company from trading.You are literally left holding scraps of paper
  2. Collusion between Promoters of Companies and Big Brokers – There have been many instances when promoters and big brokers manipulate the market to ratchet up the prices of stocks with no fundamentals to speak of .The instances of the “pump and dump” are too many to enumerate
  3. Accounting Scandals – While the “Satyam Scandal” is the biggest one , PWC in a recent report estimated that a very high percentage of companies resorted to accounting gimmicks.Read Satyam Computer Services scandal
  4. Incestuous Dealings between private and public companies the same group – Most of the Indian family groups have a labyrinthine maze of company holdings. Most of the dealings done between these companies are to the benefit of the promoter at the expense of minority shareholders
  5. Tax Frauds – Tax Frauds are dime  and dozen . They are frequent and don’t even raise much of an eyebrow.Get frequently entangled in the Indian judicial system for years.
  6. News Frauds – Somebody circulates a fraudulent letter through major news media.Stock price goes up ,people in the know sell out to investors who believe authoritative news media.Read  Pyramid Saimira scam: How our business media was taken for a ride