What: Not the man, but what fund managers like him have taken a sudden fancy to: Contra funds, which are about investing in turnaround stocks that the market hasn't yet recognised

How it works: Instead of chasing high-priced stocks for short-term gains (say, six to eight months), these funds, says Anand Shah of Kotak's Contra Mutual Funds, adopt a "bottom-up" approach to identify fundamentally strong companies that are on the mend and could deliver strong performance in three to five years

Novelty factor: Contra funds aren't brand new; SBI Mutual Fund launched one during the bull run in 1999-2000, and others like DSP Merrill Lynch, Kotak and Chola followed suit. As you can see, fund managers like to talk contra when the stock market is overheated

Performance: Kotak Contra Fund returned 18.3 per cent in the last three months, compared to Sensex's 22.13 per cent and Nifty's 22.84 per cent. But as Shah says, contra fund managers "need some more time to prove our mettle"

-Ashish Gupta

The Kamasutra Bug

What: A new computer virus that struck networks, including India's, on February 3.

How it works: The virus comes hidden in an email message and piggybacks on popular file attachments such as .pdf, .doc, and .zip, and can spread rapidly through the network once the attachment in it is clicked open.

Damage: Also called Nymex, MyWife and Blackmail, the Kamasutra virus fortunately did not do much damage, although it is estimated to have hit more than 80,000 computers in India. "We received just five calls in India, that too for advisories on how to keep a network safe in case of any attack," says Karthik Shahani, Country Manager, McAfee, a computer security solutions firm. McAfee had prepared patch for its anti-virus serum over a month ago and, according to Shahani, everyone seems to have updated their software to keep out this virus.

Safety: Computer viruses keep hitting networks every now and then (MyDoom spread like wildfire across India in July 2004, forcing companies like Infosys to partly shut down their network for a day), and the only defence is to be wary of suspicious-looking email.

-Rahul Sachitanand

Commodity Chaos

Teething trouble: On the NCDEX

The imperfections in India's nascent commodities markets became painfully evident last fortnight after a fiasco was averted on the National Commodity & Derivatives Exchange (NCDEX), where some officials arbitrarily decided on January 19 to change the settlement price for urad and chana from the usual spot price to an average of the previous five days' spot prices. The Forward Market Commission (FMC), which is the commodity market regulator, quickly stepped in and reversed the formula, but not before there was a major panic on the market. "No changes that have a financial implication for the market participants can be made without the regulator's approval, so the FMC should have been consulted," says an official at FMC.

On their part, NCDEX officials say that "the change in settlement price was done purely to stop the manipulation happening in the two commodities (urad and chana) by a small lobby of traders in Mumbai that was ramping up prices in the spot market ahead of the contract expiry". Between January 12 and 19, the spread between the settlement contract of January and February also surged by 100 per cent to Rs 400 per quintal from Rs 202 per quintal. There were similar problems in the case of chana. Root cause of the problem: There's no one market for spot price. NCDEX gathers data from various mandis before arriving at a single spot price for a commodity.

-Mahesh Nayak

P-WATCH
A bird's eye view of what's hot and what's not on the government's policy radar.

RBI ISSUES GUIDELINE FOR SECURITISATION OF LOANS

The new prudential norms set by the Reserve Bank of India (RBI) for securitisation of standard assets by commercial banks haven't exactly brought any smiles to the faces of bankers. Securitisation is the practice of selling loans-home loans, car loans, personal loans and even corporate loans-by banks, non-banking financial companies and financial institutions to special purpose vehicles (SPVs) in return for immediate cash payments. Securitisation frees capital for further use and provides liquidity to banks. Rajesh Mokashi, Executive Director at rating agency care, says: "RBI's move will make the market more robust." The size of the Indian retail securitisation market is about Rs 8,000-10,000 crore.

-Anand Adhikari

NEW INCENTIVES LIKELY FOR OIL EXPLORATION

India's bid to attract global majors to its oil exploration and production (E&P) sector has never really been the booming success the government always hoped it would be. Now, the Ministry of Petroleum and Natural Gas, which is planning to offer 55 blocks, the largest number ever, under the sixth round of the New Exploration and Licensing Policy (NELP) by February-end, has decided to get real. It has demanded that the government accord infrastructure status for E&P companies-this will provide them a 10-year tax holiday-exempt them from the service tax net, rationalise the sales tax (or value added tax, where applicable) on natural gas and exempt them from paying customs duty on capital goods imports. These measures, the oil ministry believes will not only lure new players into the country, but also ensure greater investment by the existing players. The Finance Ministry is studying the proposal and will shortly take a decision on the matter.

-Ashish Gupta

GOVERNMENT TO IMPORT WHEAT

After a gap of almost six years, India will import wheat-about five lakh tonnes-to curb rising prices, especially in the south. The public sector State Trading Corporation is expected to source the wheat within the next two months and sell it in the open market. The government's wheat stocks of 47 lakh tonne (as on February 1) can keep the public distribution system and other welfare schemes supplied till March-end, by when the imports are expected to reach India. The wheat will land in the southern ports of Chennai, Kakinada, Tuticorin and Visakhapatnam and will be sold primarily in Kerala and Karnataka where prices are ruling at a high at Rs 1,100-1,200 per quintal.

-Ashish Gupta

NEW PLANS FOR WATER TRANSPORT

The country has nearly 14, 500 km of navigable waterways. The government has decided to develop this hitherto neglected sector. The Ministry of Shipping, Road Transport and Highways will shortly unveil a Rs 300-crore programme to set up three National Waterways that will criss-cross the country. It will also announce tax breaks to lure private investment and participation in this sector.

-Ashish Gupta

DIN

The ministry of company affairs has made it mandatory for all company directors to have a Director Identification Number (DIN). The project, which will go live across the country by April 24, 2006, makes it mandatory for directors who sign documents that are filed under the Companies Act to procure Digital Signature Certificates (DSCs) as essential pre-requisites for e-filing. Details are available on a new website www.mca.gov.in. The project is aimed at enabling business and corporate stakeholders to have simple, hassle-free interaction on compliance matters.

-Kumarkaushalam