The Hindu Business Line : NSE slaps special margin on 16 stocks — BSE cautions investors on illiquid scrips

IN an effort to curtail risk in the rising stock market, the National Stock Exchange (NSE) has imposed additional margin of 10 per cent on 16 highly volatile stocks such as SAIL, Tata Steel, SBI, Divi's Laboratories and others. This margin is in addition to the usual margins.

Stock exchanges impose value at risk (VaR) margin and mark-to-market margin.

The NSE in a circular to its member said an additional margin of 10 per cent would be levied on 16 stocks from September 5. It said this is being done as a part of risk containment measure.

The stocks on which the 10 per cent additional margin has been imposed are SBI, Satyam Computer, SAIL, Digital GlobalSoft, Tata Steel, Essar Steel, Divi's Laboratories, Adani Exports, Hexaware Technologies, Aftek Infosys, Geometric Software, Hughes Software, Mastek, Havell's India, Champdany Industries and Rajesh Exports.

In most stocks, there has been a sharp rise in the price along with rising volumes over the last few days. Brokers said these stocks have seen sharp volatility and this has resulted the stock exchange to impose margins.

However, despite the imposition of the additional margins the stock price of most of these companies gained in today's trading. For instance, Divi's Laboratories touched its new high of Rs 908.95 on the BSE and closed at Rs 890.50. Similarly, SAIL and Tata Steel also closed higher from Thursday closing.

BSE warning: Meanwhile, the BSE on Friday warned the investors over the sharp rise in the stock price of illiquid stocks and stocks in the Z-category. The BSE in a statement said it has been observed that recently there has been a sudden spurt in the trading of the stocks, which were either not being traded at all previously or had very thin volumes. Most of these companies are listed in B2 and Z category. It is also been observed that the prices of such stocks have moved to higher level with small quantity being traded.

The BSE cautioned that while some of the companies may have improved fundamentally and financially, there may be companies, which may not have any such improvement in their business activity to support the significant price rise.

The statement said the investing public is requested to note the quality of companies especially the group in which the stock is placed at the exchange before dealing in such stocks. If a sudden spurt in the volume or price is noticed, please exercise caution while dealing in such stocks, the statement added.

The exchange has warned that it will take appropriate action including suspension of trading in the stocks, if the companies are found to be involved or acting in collusion with any person to defraud investors.

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