| Short-selling back after 6 yrs |
| BS Reporter / Mumbai December 21, 2007 |
| Short-selling will be back after a gap of six years, with the Securities and Exchange Board of India (Sebi) on Thursday allowing all classes of investors, including institutional ones, to sell stocks that they do not own at the time of trade. |
| Sebi also proposes to introduce the Securities Lending & Borrowing (SLB) scheme along with short-selling, which will allow traders to borrow stocks and honour their sales. All classes of investors will be allowed to participate in the stock lending and borrowing programme. |
| Short-selling, which is an essential feature of all developed markets, refers to the sale of securities that an investor does not own. |
| Investors sell short when they feel that share prices are overvalued and that the prices of shares they have sold will come down. |
| "Shorting will provide liquidity and help price corrections in over-valued stocks," said an analyst with a foreign brokerage. Restrictions on short-selling, according to its votaries, distort efficient share price discovery. |
| At present, there is no prohibition on short-selling by retail investors. Institutional investors |
