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S Muralidhar & Partha Pratim Sinha
Mumbai, Aug 27: The Bombay Stock Exchange has retained 17 out of the 27 scrips which were promoted to the A group recently. At the end of a marathon meeting of the BSE governing board which lasted for over six hours on Friday, the exchange decided to exclude 10 scrips. As a result, the size of the A group stands reduced to 140, instead of 150.
The BSE had announced on August 14 the inclusion of 27 B1 group stocks in the A group. The selection process ran into a controversy raising eyebrows over the procedure and criteria of selection. BSE President Anand Rathi and executive director A N Joshi were not available for their comments.
A release issued by the exchange said that the governing board reviewed the A group revision proposed by the index committee and considering the reports of G S Patel and J K Verma Committees regarding liquidity, floating stock, profitability and a large capital base in respect of the proposed inclusions, the board unanimously approved the revised list.
Of the 27 scripsselected earlier the following scrips have been dropped: Aurobindo Pharma, BFL Software, CMC Ltd, Fujitsu ICIM, ITC Agro-Tech, Navneet Publications, PSI Data Systems, Tata Infotech, Vikas WSP and Visual Soft.
The following scrips have been retained: Amara Raja Batteries, Aptech Ltd, Bata India, Bausch & Lomb, Cipla Ltd, Global Telesystems, HCL Infosystems, Himachal Futuristic, Hoescht Marion Russel, India Cements, Indian Oil Company, McDowell & Co, Reliance Petroleum, Silverline Inds, Software Solutions, Tata Elxi and Wipro.
The BSE had reportedly not followed one of the main clauses of its internal directive on the revamp procedures. The internal directive, issued in 1998, had spelt out that the executive director (ED) of the exchange should have the privilege to select the parameters and the stocks which would be traded in the group A. The logic behind the directive was that the ED, who is appointed by the bourse, does not have any interest in the market whereas a number of members of the othercommittees of the bourse are the trading members who are elected by the member brokers.
During the index committee meeting of August 13, which took the decision to revamp the group A, out of the 23 members only 8 had attended the meeting and four of them were trading members.
At Friday's meeting, the governing board also decided to review the criteria comprehensively ``in the light of new developments in the markets by the end of December 1999 for future reviews. It may be clarified that changes in the list does not reflect upon the management, performance or any such aspects of the companies not included in the revised list.''
The BSE also said the revised list of A group will now have 140 securities. Thanks to the pruning of the A group, the market capitalisation of the A group will be relatively lower.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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