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SEBI move on forward trades spurs rolling stocks: Reuters

Trading volumes of 15 Indian shares approved for a carryforward facility in the rolling settlement rose sharply on Monday, driven by speculative purchases, dealers said.

The shares which had been languishing with poor volumes since India's market regulator made it compulsory for transactions to be done in the T+5 rolling mode, perked up on news trades in these shares can be soon be carried forward.

Eleven of the 15 stocks ended in positive territory with sharp gains over the previous close.

The top 30-share Bombay Stock Exchange's Sensex closed 0.27 per cent lower at 3,728.67 points, after rising 5.11 per cent in morning trade.

"We welcome SEBI's move. But the effect seen on the shares could be temporary. It has more to do with sentiment," said Ajit Surana, managing director Dimensional Securities Pvt Ltd, said.

Under rolling settlement, transactions are settled on the fifth day after the trade. The carry forward facility gives more scope for speculation as it allows traders to carry positions from one settlement period to another by paying a charge.

India's market regulator, Securities and Exchange Board of

India, on Friday said it proposed to allow trades in 15 non-A group shares in the current rolling list to be carried forward, as a trial to see how stocks with carryforward fared in the rolling settlements.

'A' group shares are the most actively traded shares.

Currently only transactions in 'A' group shares are allowed to be carried forward.

Experience has shown that volumes drop sharply after shares are moved into the rolling settlements, and participants were wary liquidity would dry up if the 'A' group was also added to the rolling settlements.

Dealers said trading interest in the 15 stocks had risen on expectations of improved liquidity once the carry forward facility is made available.

SEBI has said carry forward can start in these stocks once the exchanges are ready with their software changes.

Reuters

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