After witnessing upheavals in the stock markets for the second week in-a-row, the Securities & Exchange Board of India (Sebi) decided to step in and imposed margins on short sales. This move has resulted in some sanity on the bourses.
Though experts differ on the wisdom of the method adopted by the capital markets regulator to prop up the trend, most of the stock brokers cheered the move.
The falling indices, which according to sources was a result of bear-hammering, took its toll on the settlements also.
Also Read
The sentiment took a turn for the worse on fears of a payment crisis looming despite an assurance from Bombay Stock Exchange (BSE) officials that no such problem was in sight. In fact, senior BSE officials reportedly held a series of meetings to find ways to wriggle out of such an eventuality.
Meanwhile, reports of the Group of 8 countries deciding to impose trade sanctions late last week further rattled the players.
In late evening kerb deals on Friday, the prices of key pivotals slipped anew and they were being quoted at Rs 4 to Rs 5 lower from their official close on the BSE.
The 30-share Bombay Stock Exchange Sensex dipped 70 points to end at 3347 from a close of 3417.89 registered on June 6.
The Sensex crashed by 157 points on Wednesday alone. With rupee touching a new low last week, foreign institutional investors preferred to dump stocks resulting in the plunge.
However, on Thursday, the Reserve Bank of India (RBI) decided to provide forward cover for incremental equity investments.
This arrested further slide of rupee and also inspired confidence among the foreign institutional investors.
Some of the scrips identified as 'Harshad stocks' came under severe selling pressure with a cartel of bear operators reportedly hammering these shares.
Software stocks continued to be pummelled early on but towards the close of the week foreign funds reportedly made selective buying at software counters.
NEW DELHI: Stocks continued their downward journey for yet another week as foreign institutional investors pressed a spell of panic selling once again largely due to weakening rupee amidst sagging conditions in other Asian markets.
Foreign funds reportedly sold shares worth Rs 482.2 crore in just five trading sessions in June, thus clobbering sentiment, traders said.
They said in view of sharp erosion in rupee and stock prices, foreign funds turned nervous and indulged in panic selling.
However, domestic funds led by Unit Trust of India and Life Insurance Corporation of India entered in a bid to stem the fall.
The Delhi Stock Exchange (DSE) authorities raised margin on short selling to 20 per cent from 10 per cent which forced short sellers to cover up their positions.
"The major impact of hefty margins imposed on short-sellers is yet to be seen in coming settlement," said a Delhi Stock Exchange broker.
The Delhi Stock Exchange index, after opening lower at 742.13 points, recovered temporarily to 753.43 points. Subsequently, it dipped to
718.51 points, by mid-week before recovering partially to close at 730.80 points, still showing a fall of 21.40 points or nearly 3 per cent.
Stocks of software computers, cements, automobiles, steels, banking, multinationals and electronics were distinctly weak spots on day-to-day increased selling by foreign funds and nervous bull operators.
"The selling in software company stocks was so strong, stock exchange applied a lower side circuit breaker," said a broker.
Satyam Computers after opening a shade higher at Rs 475 on speculative buying, succumbed to nervous selling by foreign funds amidst bear hammering and plunged to Rs 352.75 before settling at Rs 397, still Rs 72.50 below the previous close.
CALCUTTA: A slump that lingered on till almost the final session marked trading on the Calcutta Stock Exchange (CSE) during the week ended June 12 with share values suffering substantial losses from their previous week's level in the wake of relentless selling pressure.
Besides the disappointments caused by absence of expected benefits from the Union Budget for 1998-99, sentiment was adversely influenced by the sagging rupee against dollar in the forex market.
Apprehensions over the possible effects of sanctions resorted to by japan and the usa also left their impact on the market.
The sustained liquidation of holdings by foreign funds since the presentation of the budget had demoralised sentiment in the country's bourses releasing waves of speculative selling which pulled down values steadily to new lows.
But the final session of the week witnessed a change for the better assisted by improved sentiment following the news that the government has decided in favour of buyback of shares.
Restrictions on selling by the authorities also served to halt pressure.