Migration effect and portfolio benchmarking
There has been a plethora of studies on testing of market efficiency that have established that it is very difficult for professional managers to beat the market index. The ability to outperform is greater as one moves down the market capitalisation spectrum. The information flow on companies not followed by many analysts would be less, leading to pricing inefficiencies.
Are banks ready for full float?
Ever since the committee on Capital Account Convertibility (CAC) came out with its recommendations, there has been an apparently undue haste to implement them without giving due attention to the essential issues relating to the preparedness of the financial system. An appraisal of the financial services market, however, reveals that several of the conditions stipulated by the CAC panel have not yet been met.
Creating a giant among dwarfs
Hindustan Lever's acquisition of Lakme-Lever is going to create a monolith in the Rs 1,500 crore cosmetics market in India. While Lakme was already the pace-setter, the takeover has created a giant among dwarfs in the industry. Going by the aggressiveness of a company like Hind Lever, the cosmetics industry which is currently growing at 25% per annum is expected to see a boom not only in terms of growth but also in sheer size.
A novel idea
Reports indicate that the railways has decided to open up its captive telecom network to private investment. The decision, if implemented, will create a win-win situation for both the railways and the private investor. For the railways it would mean an access to a modern telecommunication system without having to shell out the money required.
Reverse braindrain
The report that one of the giant pharmaceutical MNCs is examining the option of scaling down its R&D establishment in India is bound to send shock waves through the industry. The move is apparently motivated by the need to reduce costs and concentrate on R&D activities at a few specific locations throughout the world.
The Index
The slowdown in the capital goods sector has hit ABB Ltd. ABB had grown at 37% CAGR from 1994-1996. In 1997, sales had dropped by 8.5% compared to 1996. Considering that there has been a decline in production of all major goods in the electrical industry by around 10-20%, the performance of the company is in line with industry.
