Most Affordable IAS Coaching in India  

31 Aug 2024 : The Indian Express

Editorial 1 : A Hint of Hope

Context: India-China relations – latest round of talks

 

Introduction: The latest round of talks with China on easing the military stand-off in eastern Ladakh raises hopes for the long-awaited breakthrough that could end the current political stalemate in bilateral relations. 

 

Optimism in talks

  • The latest talks were constructive and forward looking as the two sides are looking to narrow down differences and find early resolution of the outstanding issues.
  • Two meetings in quick succession between External Affairs Minister S Jaishankar and China’s top diplomat, Wang Yi also gives hope in the situation.

 

Divergent Views

  • The well-known but divergent approaches of Delhi and Beijing to the negotiations reinforce the case for considerable caution in assessing the immediate prospects of a breakthrough.
  • Therefore, India must temper its optimism.
  • India insists that the state of the border will reflect the state of the bilateral relations.
  • China argues against India’s condition that settling the border stand-off must precede renewal of bilateral relations. 
    • China calls for putting the border question in its proper place and going ahead with the normalisation of the relationship. 

 

Current Situation

  • Hope arises out of the assessment that Beijing and Delhi may be inching towards a finessing of the situation that could take them to a common ground. 
  • Over the last many rounds, the two militaries have disengaged from several friction points.
  • The current focus appears to be on resolving two legacy issues that arose from earlier military crises in Depsang and Demchok in eastern Ladakh.

 

Realisation and Change in Situation

  • Beijing is recognising the costs of its military aggression — in the form of deteriorating relations with a major Asian neighbour and lost business opportunities in one of the world’s fast-growing markets.
  • Delhi, also sees problem in lack of normal engagement with Beijing, at a time when most major powers, including India’s Quad partners, are talking to China.
  • A potential deal involves China agreeing to ease the military stand-off in eastern Ladakh and India restoring political dialogue and ending the constraints on commerce with China.

 

Way Forward

  • As Government of India looks for a long-awaited closure to the current phase of tensions with Beijing, it must reach out to the Opposition parties, the foreign policy community and the public at large to explain the contours of the potential deal and make the case for it in terms of India’s national interest. 
  • Government must ensure that political polarisation and hyper-nationalism within the country do not derail a potential sensible solution with China.

    Editorial 2 : Froth and Exuberance

Context: SEBI warning on SME stocks

 

Developments in 2024

  • The Indian stock markets continue to climb upwards.
  • Since the beginning of this year, the BSE Sensex is up almost 14%.
  • Along with large companies, smaller companies are also witnessing spectacular gains.  
  • The BSE Smallcap index has risen by 30% year-to-date, while the mid cap index is up around 33%.

 

Certain Concerns

  • There have been concerns that across segments, especially in the small and midcap space, certain stocks have been trading at valuations that are difficult to justify.
    • Resourceful Automobiles, a Delhi-based company with only two showrooms and eight employees, came out with an initial public offering of Rs 11.99 crore. The issue was oversubscribed 418 times, with bids for around Rs 5,000 crore.
    • Aesthetik Engineers, the company came out with an IPO of Rs 26.47 crore that was heavily oversubscribed with bids worth Rs 18,000 crore. 
  • Since April, 108 SME IPOs have hit the market — of these, 99 listed at a premium, and in some cases, there were huge gains.

 

Threat of Price Manipulation

  • Market analysts raise questions over the heavily oversubscribed SME IPOs.
    • Are the big investors causing a frenzy in the hope of eventually dumping their shares on gullible retail investors?
  • Due to relatively smaller float available in the case of smaller companies, they are easier to manipulate.
  • SEBI said that some SME companies and/or their promoters have post-listing painted an unrealistic assessment of their operations to create a positive narrative about the company. 
    • This is meant to induce investors to buy the stocks, allowing the promoters to offload their shares at higher prices. SEBI has asked investors to be watchful.

 

Continued Vigilance and Way Forward

  • Some mutual funds had restricted flows into their small cap schemes.
  • In July, the NSE imposed a cap of 90% on the issue price of SME IPOs.
  • As millions of new investors enter the markets, the guiding objective should be to safeguard investor interests and protect the integrity of markets.