Outstandings Drop 90%, Post Budget

Going into the last few days of badla, which is set to be euthanised on Monday, July 2, it is worthwhile to recall that the net outstanding positions have dropped 90 per cent from levels of Rs 6,000 crore-plus in February on both the exchanges to less than Rs 600 crore in the latest week.

In strong contrast, the Sensex has fallen only 20 per cent between February and June: The Sensex was ruling at 4,286 on February 1, 2001 and slipped to 3,404.86 today.

The numbers are a source of comfort to the market, which had initially recoiled in horror after the Securities and Exchange Board of India (Sebi) banned short positions immediately after the five-day bloodbath following the Budget on February 28.

Following up on its March 7 measures, Sebi went on to ban badla and all its variants on May 15, but the ban was to become effective July 2.

The Union finance minister had hinted the ban on badla and introduction of rolling settlement in the first week of March 2001.

Brokers had expected that the forced liquidation of massive outstanding positions would decimate the indices and lead to a virtual seizure in the domestic equity markets.

Instead, there has been careful unwinding of positions over the period, which is to lead the market to turn buoyant now on the post-badla phase.

"The markets have nowhere to go from here but up," market dealers told Business Standard.

Brokers said the maximum damage was done in March and April, when brokers sensed that Sebi would follow the Yashwant Sinha lead to ban badla.

The key ICE stocks, where operators had major positions, declined sharply with most of them declining to their 52-week lows during April.

Though the combined outstanding position on ALBM and BLESS declined by 75.6 per cent to Rs 581 crore since the mid-March, the market as indicated by the BSE Sensex dipped 129 points or 3.64 per cent.

As a result, dealers said, "since all the price jitters have been felt already, the net outstanding position of Rs 581 crore, a week before the ban, is unlikely to create any more damage in the market."

Himachal Futuristic Communication (HFCL) bore the brunt of the ban with the stock falling by a hefty 93.1 per cent since February 2001.

HFCL was cruising around Rs 1,000 with combined net outstandings of Rs 536 crore in February.

The market could not suck such high liquidity of the scrip and the counter started falling with the offloading of long positions.

With long positions of Rs 26 crore today, the stock is available at Rs 75, almost back to the levels where it started its upward journey.

The Zee Telefilms stock had an outstanding of Rs 365 crore in February with price ranging at over Rs 250. With net outstandings falling to Rs 25 crore, the stock hovers around Rs 100.

Infosys Technologies was quoting over Rs 6,200 with outstanding of Rs 280 crore, the stock fell to Rs 2800 in the middle of April when outstanding was down to Rs 63 crore. Infosys Technologies is hovering around Rs 3,500-3,600 with an outstanding of Rs 25 crore.