Only One-Third Of Bse Listed Stocks Active
While the Bombay Stock Exchange (BSE) announces major plans to expand in various parts of the country, the number of stocks that are being traded is less than a third of the total scrips listed on the bourse.
The bourse witnessed trading in 1,911 of the total 6,676 stocks listed on the bourse which is merely 28.62 per cent.
Brokers say the BSE On Line Trading (BOLT) system is expected to infuse some activity in stocks that are currently not traded on the bourse.
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While a section of brokers are optimistic that the upcountry business will push up turnovers, some feel that untraded stocks will continue to languish on the bourse due to non-participation of small investors.
Says Sanjay Agarwal, chief executive officer, Lloyds Securities, "The investor is looking today only at some 100-odd stocks for trading.
Stocks which are not traded on the bourse, mostly belong to non-functioning companies. However, it is not possible for the stock exchange to delist all of such non-functioning irms sc rips as the small investor will not get any exit route. There are no sellers in the market for such stocks as they are traded much below their issue price."
He added that the expansion of BOLT will not guarantee trading in all 6500-odd stocks listed on the bourse.
However, Ashith Kampani, head of equity sales at JM Share & Stock Broker is very optimistic.
He told Business Standard, "After expansion there will be an interest in stocks that belong to small companies. Investors used to contact brokers in Mumbai earlier. When the BSE on-line trading expansion takes place, they can just approach their local dealer.
For example, the investor base of companies that are listed on the Cochin Stock Exchange is local. These brokers will get an opportunity for taking up arbitrage activity in these small cap stocks."
He feels that with expansion of BOLT, the awareness about companies listed on BSE will spread and slowly people will start trading in these untraded stocks.
The large number of dud stocks makes the case of BOLT expansion a necessity.
Milind Karmarkar, head, research at Dalal Broacha, feels that dud stocks will be pushed out of market. He feels that the profile of the investor has changed.
"The profile of the investor in the equity market has changed. The major investor having purchasing power today are the foreign institutional investors. This implies that efficient management of a company is very important for these lot of investors to show an interest in this stock. Junk stocks will have a slow death as some of these stocks may be good but are out of flavour," he says.
He emphasised on the fact that with the absence of the retail investor, BOLT expansion will not have any significant impact on the trading culture on the bourse.