CHENNAI: The fireworks may be missing for long-term investors this Diwali. But short-sellers in futures in options (F&O) markets are definitely home to all the noise.
An analysis of all stocks present in the F&O segment (around 270 of them) shows that the downturn has the maximum damage on stocks which lacked strong delivery volumes in cash market. So, while the sensex and Nifty have fallen around 35% in the last one month, prices of stocks such as Reliance Capital, Adlabs, IFCI, Unitech and Essar Oil have taken a hit in the range of 50-60%. All these stocks have low delivery volumes of less than 20%, which means only 20 shares out of every 100 traded are actually recieved. In other words, the remaining 80% gets squared off by operators. This is how it works: Short sellers didn't have to give delivery of their stocks on the derivatives markets and covered this position in the cash markets, thereby pocketing the difference at the end of each session. Going short is selling without actually holding posession of the stock. This operation has may have resulted in more than one-third of the stocks traded in the F&O segment, witnessing sharp falls, according to marktmen. The worst hit are stocks from the construction, IT, engineering and power sectors. While the jury is out on short-selling, experts suggest that regulators could bring about a delivery settled F&O market. Many feel that the lack of delivery based system has allowed short-sellers to profit at the expense of genuine long-term investors. "Today short-sellers enjoy free ride in the market driven by marked-to-market (MTM) credits earned everyday. It is not the win over the long trader but killing of a genuine investor in the cash/equity market who is constantly facing erosion in values," brokerage house K R Choksey Shares and Securities said. The rally seen in Muhurat trading notwithstanding, many blue-chips are still available at cheaper valuations but the possibility of another fall dissuades investors from buying. "Even after seeing mouth-watering valuations, many of my clients who are essentially long term investors, continue to be wary. F&O market has been shown to encourage speculation, more than investment, in the past too," pointed out a Mumbai-based large broker. The recent fall in markets has wiped off over $170 billion in investor wealth for the stocks present in the F&O segment alone. http://timesofindia.indiatimes.com/Business/India_Business/Short-sellers_high_on_low-delivery_scrips/rssarticleshow/3649465.cms Sweet is the remembrance of troubles when you are in safety. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
<<inline: grey_loader.gif>>
