Media shares Balaji Telefilms and Mukta Arts will be traded on a trade-to-trade basis from August 20 on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Both these exchanges have informed members that all transactions in these two shares will have to be settled on a trade-to-trade basis or must result in delivery of shares from August 20.
Market sources said the exchanges had moved in to arrest excessive speculation in these stocks.
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At close, Balaji Telefilms was down eight per cent at Rs 196.40 with a volume of 45.24 lakh shares on BSE and 58.99 lakh shares on NSE.
Mukta Arts met with the similar fate, down eight per cent at Rs 96.70 with a combined volume of 47 lakh of BSE and NSE.
Trade-to-trade settlement means that one party to a deal must necessarily settle with the other party, and thus will not be allowed the benefits of netting within the T+5 settlement period.
However, the exchanges have permitted intra-day squaring off, as it is done for rolling settlement stocks. The exchange's action against these two stocks follows the runaway bout of speculation, with average volumes rising manifold.
In Balaji Telefilms, for instance, the combined volumes on the two exchanges zoomed from one lakh shares on July 23 to 52.86 lakh shares on July 26. The volume remained at around 50-75 lakh shares per day between July 26 and August 8.
In fact, the traded volumes surpassed even the paid up capital of the company indicating that shares were being rolled over several times in the course of a day.
On August 9, the combined volumes jumped to 1.69 times of equity capital of company followed by 1.44 times of equity on August 10. On August 13, the volume was marginally down to 0.95 times of company's equity.
Ditto with Mukta Arts. The combined volume jumped from 40,000 shares on July 23 to 30.70 lakh shares on July 26. The shares traded on day-to-day basis range between 30-50 lakh shares till August 8. The volumes increased on August 9 to 48.86 lakh shares and further to 55.74 lakh shares on August 10. The combined volumes in Mukta Arts aggregated at 1.4 times of the company's equity cap in last three days.