Selling Stocks in Short

The ratice of selling a stock that you do not own and making profit when the price falls is not the new idea in india.

However, there were no proper procedures to execute and regulate transactions. Not any more though. a new set of guidelines and procedures for both institutional and retail investors., has been put in lace with the SEBI.

So far, the retail investors had to cover the share they sold short by the end of the same day.The new system provides for borrowing the shares for a seven day period and using them to settle the the sale of the shares within two days trades. The stock exchanges will give an automated platform for an hour everyday to facilitate borrowing and lending of shares and you will be allowed to seel short only after you enter into the deal to borrow the share. Till now the proper system to borrow shares was a big impediment for short selling.Short sellers are not very popular and often accused of causing huge market fluctuations. But, they are also credited as the ones who ring the warning belles, they trade on expecting negative news.

In short selling only 227 stocks would be allowed to trade in. where the deals can be entered into for making transactions at furture date.Stock exchange may decide extend short selling to larger universe of stocks.