15 May, 2021

Edge Of The Cliff

UTI rushes to the rescue as stock prices plummet sharply

Edge Of The Cliff

ARE these the dog days of summer, or the start of something much worse? The stock markets have swung wildly in the past week, as the Unit Trust of India (UTI) tried to prop up share prices in the face of a selling onslaught by foreign institutional investors (FIIs). The UTI also had to tackle widespread selling in the market following rumours (despite denials by BSE president J.C. Parekh) that a group of brokers close to Harshad Mehta were facing default.

Initially, UTI wilted under the pressure. With a 156-point free fall in the benchmark BSE Sensitive Index on Wednesday, the market did not seem to be responding. By Thursday, however, the drop seemed to have slowed. After a wild point roller-coaster ride, the market closed 24 points higher.

The same day, SEBI announced strong measures to curb the bears who had been driving share prices down through short sales—the practice of selling shares without actually owning them in the hope that they can be bought back from the market at a lower price. The difference in price is the...

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