Volumes fall 50% on short sale ban

Volumes fall 50% on short sale ban
ENS ECONOMIC BUREAU

MUMBAI, MAR 8: The Securities and Exchange Board of India (Sebi) decision to ban short sales with effect from Thursday in a bid to stem the slide in the market has led to a fall in the turnover by over 50 per cent. Moreover, even after the market regulator's move, volatility on the bourses continued unabated.

The bourses once again witnessed intra-day volatility of about 100 point at the Bombay Stock Exchange (BSE) while at the National Stock Exchange (NSE) the volatality was much under controll and as a direct fallout of various measures announced by the market regulator trading turnover at both the exchanges took a dip by close to 50 per cent.

The combined turnover of the Bombay and National Stock Exchange was barely Rs 5,000 crore on Thursday in comparison to an average daily turnover of around Rs 10,000 crore.

The turnover in six actively traded counters plummeted significantly on the Bombay Stock Exchange. The turnover of Satyam went down by 69.09 per cent from Rs 606.44 crore on Wednesday to Rs 187.46 crore on Thursday followed by HFCL which recorded a 61.62 per cent erosion in turnover from Rs 568.57 croreRs 218.22 crore. The turnover of Zee Telefilm dipped by 59.65 per cent from Rs 395.27 crore to Rs 159.48 crore. The turnover of Reliance, Global and HLL went down by 57.13, 30.06 and 53.39 per cent respectively.

The benchmark Sensex opened sharply higher at 4089.93 and surged ahead to reach the day's high of 4108.03 as Sebi's directive of short sales was implemented by the bourses with immediate effect and operators were forced to create the long positions before going short in these counters. However, during the fag end of the day market witnessed heavy bear hammering and shaved off all the gains to reach an intra-day low of 4016.71, before closing in the positive territory with a gain of 10.05 points at 4056.94. However, S&P CNX Nifty, the benchmark index of NSE moved in a narrow band of almost 30 points and closed the day with a marginal gain of 2.35 points at 1292.85.

The measures announced by the Sebi had its positive impact during the morning session but during the close of the session reports about CSE badla trade trickled into the market and that led to bear hammering which shaved off earlier gains off the sensex and the sentiment too was shattered, said the dealers.

Sebi officials defended the short sale ban saying "it was needed to stabilise the market in the present circumstances." However, several investors were critical of the move. "It has created imbalance in the market. Sebi did not ban long purchases when Sensex was booming last year," said an analyst.