Mumbai, Dec 16: The recent move of the Bombay Stock Exchange to do away with the daily circuit band of 10 per cent on three dormant stocks has helped investors exit from these illiquid counters.

Market participants say that under existing bylaws, the exchange would have delisted these securities for having failed to record minimum trading levels over the trading cycles.

The exchange has removed the price band for the scrips of Maharashtra Explosives, Dredging Corporation and Indian Maize which were trading below their face value.

The price cap was first removed in Dredging Corporation in the second week of September, followed by Maharashtra Explosives in October and Indian Maize and Chemicals on November 28.

The move could be described as `novel' because the exchange implemented it even before the recommendations specified by Chandratre committee were made public.

As per the norms and procedures laid down by the committee which was approved by the Securities and Exchange Board of India (Sebi) on December 11, though the criteria of no trading can be considered for delisting any company's shares, the exchange has to introduce steps to attain a realistic price value with a minimum trading volume before resorting to such an extreme step.

BSE's attempt has been aimed at establishing a realistic price level at these counters.

In the case of Dredging Corporation, the removal of the cap on the share price helped the stock trade in the price band of Rs 54 to Rs 64.90 on September 12, with 3,500 shares changing hands.

``In such cases, the exchange maintains an online check on the movement of the stock,'' explained a BSE official. ``In the event of any sort of circular trading or the concession being used by the company circles to rig up the price, the exchange takes the necessary steps to immediately curb any such move,'' the official added.

After the removal of the band in November, Indian Maize has been recording a steep rise in volumes from a low of 200 shares to a high of 4,100 shares on December 11 at a price of Rs 0.30. In 1997, the scrip has touched a high of Rs 3.60.

In the case of Maharashtra Explosives, the scrip was traded at Rs 0.10 on September 25, 1997. The highest bid registered at the counter during the year was Rs 14.75.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.