First thing that will strike you in 2010

Thu, 31 Dec Pre-Open

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Most likely, Monday, January 4th 2010 is when you would have recovered from the new year celebrations and the weekend that follows. It will also be the day when Indian stock markets first open at 9 am. The leading association of brokers, Association of National Exchanges Members of India (ANMI), has made a last ditch attempt to stick to the current timings. But the stock exchanges have reiterated that markets would open 55 minutes earlier. Given the keen competition, they are vying to garner as much volumes for themselves as possible.

ANMI believes the new timings should be put on hold given the state of banking channels. It is also likely to increase the stress on manpower and increase transaction costs. In fact, it has conducted surveys wherein 62% of the brokers feel that the new timings should be deferred. Interestingly, banks will have to modify their working hours for the success of new working hours of the exchanges. How that is received by their employee unions will be interesting to see.

We believe long term investors do not need to lose sleep over the entire episode. Too much attention is paid to market pyrotechnics anyways. The time could be better spent understanding the long term economics of businesses and also in ironing out one's behavioral flaws.

All public sector banks to feature on exchanges
Speaking of stock exchanges and banks, United Bank of India (UBI) and Punjab & Sind Bank (PSB) are the only two public sector banks which are not yet listed on the stock exchanges. Not for very long though. As per a leading business daily, Kolkata based UBI has filed a draft red herring prospectus for an initial public offering (IPO). This will bring down the government's stake to 84.2%.

The IPO will mop up resource to the tune of Rs 3.5 to Rs 4 bn. It will be launched in late January or early February 2010. The bank will also look at a follow-on-public offering (FPO) at a later stage to raise more capital. PSB has also sought government approval for its proposed IPO. It plans to come out with the issue in April. Its size is likely to be Rs 5 bn.

In our view, this exercise will help capitalise the banks without borrowing at high rates and give the entities an opportunity to enhance their capital adequacy ratios. It will also help them expand their operations and compete with their private sector peers.