Sebi allows Short Selling by FII & MF, IPO Grading

Sebi authorises FII's and MF to short sell

In a significant decision which was being considered for some time now, Sebi has decided to allow FII's , FI's and Mutual Funds to Short sell in the Stock Markets. Currently, only the retail investor can do an intra-day short selling in the spot market. However, an institution cannot sell shares unless it owns the stock. Sebi's move allows to borrow the stock (from a depository), sell it in the market and buy it back before the market closes to return to the lender. Once the borrowing mechanism is implemented, the institution can carry forward this short position as long as regulation permits.

Till date, institutions took positions in the futures and options (F&O) market to go short. Once the new guidelines are in place, they will be in a position to short sell even in the spot or cash market Sebi's move is expected to bring liquidity in the markets and to certain extent help reduce the volatility.

Grading of IPO's Mandatory now
In another significant move, SEBI has made it mandatory for all companies to get their initial public offerings graded. Earlier it was optional for a company to get a grading for its IPO. This will help the investors to make a basic check on the quality of the issue and hence take a more informed decision.

Realty Firms get a bitter pil from Sebi
Sebi has made mandatory for the real estate sector companies to disclose their land bank details, accompanied by the ownership and agreement status in the offer document. The land bank should be the real bank where there is a complete disclosure of details. All the agreements must be made available in case of any kind of scrutiny. The regulator said that the real estate companies will make continuous disclosures in the post IPO period. The projection of the value of the land should be made on the present value instead of the future valuation. This move is a welcome move giuven the fact that even RBI has been cautioning against possible asset bubble in the real estate market.

Stocks in News

Amtek to Acquire Intermet

Component manufacturer Amtek Auto is in negotiations to acquire a 100% stake in Germany-based Intermet — the European arm of Intermet, US — for Rs 900 crore. This acquisition will give Amtek a strong foothold in the casting industry. It would also give the company scale to meet the needs of major original equipment manufacturers (OEMs) in Europe. (Financial Express)

ICRA IPO oversubscribed 75.04 times

Qualified institutional investors portion was oversubscribed 90.65 times, non-institutional investor`s portion was oversubscribed 72.12 times and retail investors portion was oversubscribed 53.99 times. The shares were offered at a price band of Rs 275 - Rs 330 per share.

Orbit Corp`s IPO oversubscribed 3.85 times

Qualified institutional investors portion was oversubscribed 5.7 times, non-institutional investor`s portion was oversubscribed 4.6 times and retail investors portion was subscribed just 0.88 times. The shares were offered at a price band of Rs 108 - Rs 117 per share.

Norma for FDI in telecom upto 74%

Govt. has approved a revised set of guidelines for telecom companies to qualify for raising foreign direct investment up to 74%. The approval allows telecom companies to appoint foreign citizens in senior managerial positions like chairman, managing director, chief executive officer and chief financial officer.