Readings: Short selling, Mutual fund entry loads, Mini Nifty vs. Chhota Sensex
The Reserve Bank of India (RBI) on Tuesday said it had given approval to foreign funds to short sell, lend and borrow shares of Indian companies, although domestic stock markets are yet to set a starting date for the new measures.
The central bank said borrowing of shares by FIIs would only be for delivery for short sales, and margins or collateral could only be held in cash.
. . . it has now been decided that no entry load shall be charged for direct applications received by the Asset Management Company (AMC) i.e. applications received through internet, submitted to AMC or collection centre/ Investor Service Centre that are not routed through any distributor/agent/broker.
Yay!
- Business Standard: Chhota-Sensex pitted against mini-Nifty
It’s going to be a battle between ‘Chhota-Sensex’ and mini-Nifty as the country’s two premier stock exchanges, the Bombay Stock Exchange and the National Stock Exchange, introduce mini-contracts on their key equity indices in the derivatives (futures & options) segment from Jan 1, 2008.
. . . at the current level of Nifty, the value of one contract (where the lot size is 50) is above Rs 3 lakh. On a mini-Nifty, it will be Rs 1.22 lakh as the minimum lot size on the new contract is set at 20 by NSE.
Similarly, an investor on the Sensex contract currently pays about Rs 40,000-45,000 as margin per contract (market lot is 25). For mini-Sensex, it will be about Rs 8,000-9,000 (market lot is 5).
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