Mumbai, Mar 12: In a strategic attempt to infuse liquidity into the cash group stocks and revive the confidence of investors, the Unit Trust of India has decided to consider the setting up mutual funds for the illiquid stocks.The suggestion to this effect was made at a meeting organised by the Securities and Exchange Board of India (Sebi) on Thursday.
The move also brings to light the collective efforts made by Sebi to introduce further reforms in the secondary markets.
The team, which comprised top officials of leading financial institutions and stock exchange heads, discussed various measures to improve liquidity in the B1 and B2 group scrips.
It is learnt that the Bombay Stock Exchange's plea for the reintroduction of `renewals', as a means to improve liquidity in the B group, was set aside by the other group members.
Renewal is a hedging instrument offered in the cash group segment which provides the broker with about 21 days to offer delivery against the commitment made in the earlier settlement. The valan statement or the contract note is, however, deposited with the clearing house.
It is learnt that in view of the reasons which influenced Sebi's decision to ban renewals way back in 1993, the group has decided not to take up the issue again which could breed unhealthy speculation in the market.
Also, the BSE's request for a month-long settlement period for the cash group stocks was set aside as the group considered it to be a retrograde step.
Currently, the weekly settlement is applicable to the cash group as well, which, according to market sources, is affecting the revival of the non-specified group.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
