The strong bear lobby (the operators who sell large quantity of shares without having actual holding and square off their positions at profit when the market is depressed due to selling pressure) has turned the Sebi's curbs to their advantage to make a daily killing. They have now begun to short sell in the opening market and squaring off before the market ends. Since Sebi's curbs apply only on overnight positions, the bear lobby has beenbypassing the restrictions and making profit every day.

For example on Monday, the Sensex fell by nearly 190 points in the morning session but recovered most of the lost ground later and the final loss was restricted to only 65 points. The same story was repeated on Tuesday also when the Sensex initially fell by 123 points but partially recovered as the loss was restricted to 41 points. This trend which started after the budget, has now gained ground. ``What was happening in three or four days earlier is now happening in one day. The big volatility has now become a daily phenomenon. The market has become more dangerous for small investors,'' said a broker, adding that investors who had remained in the market have now disappeared.

The post-budget adverse sentiments in the market had already pulled down the Sensex by nearly 1,200 points to the 3040 level and the total market value of all listed shares -- market capitalisation in the market jargon -- on the Bombay Stock Exchange (BSE) has fallen by awhopping Rs 1,62,000 crore within a period of two months. Although the Sebi tried to put the bears in their place by imposing partial ban on sales by bears, this tribe is still thriving.

Normally bears get a week's time to adjust their sales position. As per the existing weekly settlement plan, they get five days to buy the quantity -- which was earlier sold by them -- and square up their position. Now the Sebi has allowed only one day for bears to make short sales and they will have to either square up on the same day evening or take delivery of the shares. ``The earlier weekly speculation has now become a daily business. The huge volatility in share prices will not give any indication of the market trend to investors who are keen to put money in shares,'' said a fund manager.

With foreign institutional investors (FIIs) pulling out funds -- they sold shares worth $ 400 million (around Rs 1,700 crore) in May and June -- the market has to look to UTI and other domestic institutions for bail-out. They aredoing it, mostly by pushing up the Sensex. When the market falls by 120-190 points, FIs enter the scene and buy index based shares like SAIL, Tata Steel, Reliance, MTNL and Telco. This along with covering of short-sold positions by bears enable the index to stage a recovery at the end of the day.

As Sebi chairman D R Mehta and BSE president J C Parekh pointed out, sanctions, downgrading of India by global rating agencies and the fall in other Asian stock markets and currencies have come handy for bears to hammer down share prices. Once-bitten-twice-shy bulls have lost heavily and quietly made an exit. The events happening one after another put pressure on bulls who are unable to continue purchase of shares. The payment problem linked to the brokers of Harshad Mehta as added to the woes of bulls. The Sebi chairman says the restrictions imposed on bear operators are ``temporary''. ``Once the market stabilises, these curbs will be withdrawn. The safety of the market has not been affected at all. We'veintroduced the system of margins, concentration system, daily and weekly transaction limit and circuit breaker system (where only 10 per cent fluctuation is allowed in a scrip a day) for the smooth functioning of the market,'' Mehta said.

As Damani and other experts point out, the market needs more players with deep pockets. The market cannot afford to have big volatility any longer.