25 February, 2021

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The return of badla marks a new era for the Indian stock markets

Welcome Back

TWENTY-TWO months after the Securities and Exchange Board of India (SEBI) banned forward trading to curb undesirable speculation, its governing board approved a revised carry forward trading system last week. "The main problem with the ban on badla was reduced liquidity, "says SEBI chief D.R. Mehta. "There was no depth in the market. Any large selling by an institutional investor would immediately hit the sensex adversely."

The timing may have had a lot to do with the fact that a Rs 7,000-crore public sector unit (PSU) disinvestment process by the Government was beginning within a few days. But no one's complaining. "The road shows in Europe and the US to get customers could hardly have been called a big success," says a top Bombay broker who requested anonymity. "The Government realised that if carryforward was not re-introduced to bring in some liquidity into the market, the whole disinvestment programme might be a big flop." This, besides being embarrassing for the Government, would also have kept the deficit at its present...

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