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Is Short selling a trend

Created by : Hitesh Moghe, Associate, Barclays  | 10 28 2008 18:50:45 +0000
Industry : Equity Research/AnalyticsFunctional Area : Equities(Markets)
Keywords : Trend Short Selling
Activity:  168 views;  last activity : 07 06 2010 20:18:09 +0000
Is short selling a major trend in the market that is being followed?
  
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The only problem is that selling in India is not liberalised. What is the problem of lending and borrowing? However it effects because in India the period is just of 7 days, which should be of at least of a month or three.
By Pravin Patil, Associate, Kotak Mahindra  | 10 28 2008 18:57:26 +0000
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I too don’t think that ban on short selling is the cause of the current meltdown in the Indian markets. It is just that the short selling is taken as a scapegoat for current turmoil.
By Surender Singh, Associate, HDFC Bank  | 10 28 2008 18:54:13 +0000
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Yes I think major trend in the market is of short selling and it is more effectively seen in FII's. In last 4 month they have withdrawn more than $10Bn from the market due to obvious reason i.e. credit crisis and US Recession. These markets have even proven the theory of decoupling wrong.
By Hitesh Moghe, Associate, Barclays  | 10 28 2008 18:50:45 +0000
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What I could say is Short selling can never be the cause of market falling to that much amount. An important point that you missed out in your explanation was that every brokerage firm charge the trader a heavy interest rate on its open position for short selling. This makes sure that traders can only short sell particular stock for an average of 4-5 days only. After that they have to cover their open positions by buying back the stock.
By Sandip Gunjal, Sr. Associate, Irevna  | 10 28 2008 18:53:28 +0000
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