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BSE allows square-offs in Balaji, Mukta

The Bombay Stock Exchange said it has removed trading curbs in the shares of media companies Balaji Telefilms and Mukta Arts, following a court order and has allowed transactions to be squared-off.

The exchange imposed stiff restrictions on these shares from August 20, which brokers said was done to check excessive speculation.

The exchange said on its website www.bseindia.com, that trading in these stocks will be shifted to the normal five-day settlement cycle, reversing its earlier decision that all transactions will have to be settled on a trade-to-trade basis.

Trade-to-trade settlement means that all transactions must result in delivery of shares, and deals cannot be squared-off.

The BSE statement said it proposes to appeal against the court order in Gujarat, and will reimpose the curbs.

"Members are cautioned to note this fact, when trading in these scrips," the website notice said.

A BSE official told Reuters that an appeal had already been filed and a decision was likely soon.

Average traded volumes in Balaji Telefilms have surged to an two million shares a day and in Mukta Arts to 1.5 million shares -- from less than 200,000 shares in both three months ago.

Volumes in shares of some mid-cap companies -- or companies which are medium-sized by market capitalisation -- have soared as much as 20-fold over the past three months, with speculators shifting focus from frontline stocks due to tougher norms.

Market regulator Securities and Exchange Board of India banned carry-forward trading and expanded shares under a rolling settlement cycle from July 2 to curb excessive speculation, which caused a major crisis in March.

Among the new speculator-friendly counters were comparatively recent listings in the media and telecommunications sectors, which were not under the compulsory rolling settlement.

Carry-forward refers to a century-old facility known as "badla", which allowed traders to take larger positions by paying margin money, than they could otherwise afford.

It was abolished after being blamed for excessive market volatility and for allowing speculators to wield too much influence.

The facility at one point accounted for nearly 90 per cent of traded volume on India's 23 stock exchanges.

Average traded volumes at the Bombay Stock Exchange, the country's oldest, are down to a fourth from pre-March levels.

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