STOCK MARKETS-Dancing to Speculators Tune

Dancing to Speculators' Tune THE Bombay Stock Exchange (BSE) authorities have permitted short sales without delivery being effected in all the 94 scrips of the so-called 'specified' group, though with a daily margin of 30 per cent and carryforward sales restricted to Rs 50 lakh in a single scrip and Rs 3 crore in all scrips together. This has been done ostensibly "in view of the steady trend in share prices in the last few days". The stock market is yet to recover from the upheaval caused by the bank-cum-stock market scam. Brokers are obviously anxious to boost market activity which has taken a beating in the wake of the scandal The average daily turnover of the BSE which had touched Rs 317,01 crore in April 1992 dipped to Rs 71.74 crore in December 1992; since then it has improved to Rs 170.70 crore in April 1993. The government is also apparently playing the bears against the bulls, to ensure that share prices remain attractive to foreign financial institutions. The central budget for 1993-94 did not, quite rightly, provide any large and direct incentives for the corporate sector and the capital market, but the government could not resist the pressure when equity prices in the secondary market slumped continuously and had to come up with some additional incentives for saving: an increase in the exemption limit for income-tax purposes and a higher limit for saving in specified media, raised from Rs 7,000 to Rs 10,000, for tax rebate purposes. This helped to perk up sentiment in the share market and the BSE sensitive index (1978-79=100) moved up from 2,037 on April 26 to 2,358 on May 21. The permission granted for short sale has encouraged bears to pull down prices, with the BSE index steadily declining to lower levels thereafter. Rampant speculation, it is reported, has resurfaced in the stock exchanges as a result of a number of companies entering the market to bolster up their own share prices in an attempt to counter the manipulations of bear operators.