FinMin frowns upon short sales in public sector banks

The rout in public sector bank (PSB) stocks seems to have caught the attention of the government. Market sources say finance ministry officials recently spoke to senior officials of the Securities and Exchange Board of India to find a way to stop short-selling of PSBs' stocks. One of the solutions that has emerged from the discussions is that traders won't be allowed to sell without delivery.

"The sharp fall in PSBs is hurting their valuations and ability to raise money for their future expansion, a big worry for the government. But, instead of curbing short-selling, the government should focus on cleaning their books," says a market source.

Arbitrage opportunity in IDBI Bank benefits traders

Last Tuesday, traders suddenly got lucky on the IDBI Bank counter. The intra-day stock price was 10 per cent higher in the futures market compared to the cash market. Many traders, wanting to take advantage of the difference, borrowed shares through the stock lending and borrowing (SLB) mechanism, hedging their share sales in the futures market.

Lenders of shares in the SLB mechanism said, "It was a sudden bonanza. Many of us lent our stocks through the SLB mechanism at annualised returns of as much as 90 per cent."

Who is an outperformer, asks Sebi

The Securities and Exchange Board of India (Sebi) has expressed displeasure over how some fund houses have been projecting their schemes as outperformers.

"Fund houses, which have multiple schemes in single category, have been claiming sector-beating performance by projecting the performance of the only scheme which has done the best," said an industry player.

Sources say the market regulator wants asset managers to provide a transparent and complete picture of all the schemes and not only promote schemes that have done well.