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Sebi imposes additional margins on net sales

Indian stockmarkets partially recovered on Monday after the Securities and Exchange Board of India (Sebi) imposed additional deposit margins on net sales.

Indian stocks had tumbled in earlier trading in part on news that Sebi was investigating the market's plunge late last week.

The Bombay Stock Exchange's benchmark 30-issue Sensex fell 3.05 per cent to the day's low of 3,970.44 points before recovering to a high of 4,127.12, up 0.8 per cent on the day. It subsequently tumbled again to 3,965.71, down 3.16 per cent.

The temporary recovery came after both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) raised deposit margins on net outstanding sales by 10 per cent.

BSE deposit margins have been increased to rates ranging from 15 per cent 30 per cent from 5 to 20 per cent for all net outstanding sale positions.

NSE has introduced a deposit margin of 10 per cent on all net sales outstanding at the end of the day.

Both exchanges also lowered the threshold limit for application of a volatility margin to 60 per cent from 80 per cent.

This means that additional margins will have to be made on stocks which fluctuated 60 per cent or more in price over a six-week period.

Specific volatility margin rates were maintained by both exchanges.

NSE has a volatility margin requirement of 10 per cent, while the BSE has three rates -- 10, 15 and 20 per cent -- depending on the degree of volatility.

The Indian Express newspaper on Monday said that the operations of Credit Suisse First Boston, Morgan Stanley, C Mackertich, Radhakishan Damani, Nirmal Bang and First Global were "being probed for alleged bear hammering".

A Morgan Stanley spokeswoman said, "We do not comment on market rumours."

Radhakishan Damani said that officials from Sebi and the two exchanges -- BSE and NSE - visited his office but they did not find any irregularities in his records.

"We have stopped forward trading for the last one year and we have no outstanding positions," he said.

Another broker said his negative outlook for the technology sector was based on fundamental research and not on market position.

Shankar Sharma, a director with First Global Finance said his negative view of technology shares was based on the outlook for the sector indicated by research.

"On Saturday, Sebi officials inspected details of our Friday's trading activity and they found nothing unusual. They did not trace any substantial selling in technology stocks. On the contrary we bought shares of Global Telesystems for one of our clients on the said day," said Shankar Sharma, a director with First Global Finance.

"There is no collusion with any cartel and we do business as per our clients' requirement," he added.

Officials of the other investors were not available for comment.

The market regulator had begun a probe into last week's fall in Indian stock markets, particularly on Friday when the bellwether 30-issue Sensex tumbled 4.13 per cent, SEBI senior executive director L K Singhvi earlier said.

The Sensex had earlier surge 7.8 per cent between its close last Tuesday and its peak of 4,386.98 on Thursday following the unveiling on Wednesday of a market-friendly Union budget. But the index ended Friday at 4,095.16 points, down 0.65 per cent on the week.

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