UTI is rumoured to have sold heavily at this counter on the Bombay Stock Exchange and simultaneously bought on the National Stock Exchange during the post closing session, which was incidentally the last day of the trading cycle on the NSE.

The action, which reportedly took place on March 30 (Tuesday) saw about 2.5 lakh shares of ITC being sold on the BSE between 2.30-3.15 pm and later purchased on the NSE to the tune of over 50,000 shares between 3.30 and 3.40 pm. The arbitrage led to a sharp rise in the stock price from a low of Rs 950 to Rs 975. This last minute spurt led to a further difference of Rs 30 in the closing price of ITC on the two exchanges. While the weighted average price of ITC was pegged at a low of Rs 909.71, the closingat Rs 975 on account of the deals reported post-closing saw the stock register a net gain of 5.86 per cent over its close on March 26.

Interestingly, besides UTI, Morgan Broking was also rumoured to have resorted to this practise. Brokers hinted that during the compulsory no-delivery period which marks the beginning of compulsory demat trading for several pivotals including ITC, only financial institutions are equipped with the demat stocks and the money power to influence the price pattern and also avail of arbitrage benefits.

Although Sebi norms do not encourage arbitrage, brokers at large feel that such a practise is healthy for the market provided the players have the adequate stocks in hand.

However, brokers also highlighted the growing imperfections in the market which gave rise to this arbitrage opportunity, which was an unhealthy sign. According to market sources, in the absence of uniformity between the two exchanges in terms of closing timings and holidays has given rise to such and manyarbitrage opportunities.

An interesting example was that of Satyam Computers. The stock witnessed a difference of a little over Rs 100 between BSE, NSE and CSE, the three leading exchanges of the country which nearly account for over 90 per cent of the trading volumes. The announcement of the date for consideration of bonus led to different reactions and price adjustments on the three exchanges. While on the BSE the stock was immediately locked at the upper circuit of Rs 1,502, on NSE the stock continued to trade in the band of Rs 1,418 and Rs 1,500 till 2.45 pm. However, only during the last half an hour the stock recorded a sharp jump to be locked at Rs 1,519.60. On the Calcutta Stock Exchange, on the other hand, the stock was locked at Rs 1,584. While this happened on March 30, the subsequent day saw the stock being locked at Rs 1,622 on the BSE, at Rs 1,641 on the NSE and Rs 1,710 on the CSE.

Kotak Securities, SSKI, Morgan Broking and UTI Securities were the only broking outfits which according tomarket sources could avail of the arbitrage benefits. However, it could not be confirmed.

Among FII deals, the week saw over 7-8 top FII brokers reporting huge cross deals at the counters of Reliance Petroleum (TOCD), Bata India, Mahindra & Mahindra, Reliance Capital, Tisco, Telco, MTNL, Cipla, GNFC, HDFC, NIIT, Himachal Futuristic, Punjab Tractors and Visual Software. CSFB, James Capel, Jardine Fleming and SocGen Crosby were among the top FIIs who made their presence felt in the markets.