Overseas investors might have lent securities worth Rs 500-600 crore overseas to facilitate short selling in them. According to the latest data released by the Securities & Exchange Board of India (Sebi), the overseas investors lent around 1.11 crore shares between a period of October 10 to October 14, and 98 lakh shares from October 15 to 17.
The data released by 33 of the 34 participatory note issuing FIIs has Hindustan Unilever, ITC, NTPC and L&T being featured on the top of the list of securities lent for short selling purposes. Already the Sebi has issued a communication that it disapproves of this activity and wants the overseas investors to access the domestic stock lending and borrowing mechanism.
Already, a set of domestic institutions that have seen a lot of their value being eroded in the past few weeks, is said to have asked the regulator to look into the matter and proposed a ban on short sales made overseas. ?Incessant short selling creates a momentum of its own and many more people join the game,? said a senior fund manager. He reckons that this short selling game has brought a lot of retail shareholders to take bets. ?It seems to be paying off, at the cost of genuine investors,? he adds.
Speaking with FE, TC Nair, whole time member of the Sebi board, commented, ?We are looking at the data closely and analysing what it could interpret. It is too early to comment on any action at the moment.?
However, other sources close to the development reckon that the regulator has clearly offered a direct warning to FIIs to desist from such activities and to use the domestic platform instead.? This can, in other ways, be looked at a notice to them to unwind these positions,? the source added. A ban is what the market participants are looking at.