Buy-back is the only magic mantra which can pull the market up especially when it is being rocked by a series of negative news.

The Companies Bill which has an enabling provision to allow companies to buy-back their shares is still in the Rajya Sabha. Whatever route the government takes, it will take at least a month for the introduction of the buy-back facility. Since the bill is in Parliament and the budget session is on, the government cannot issue an ordinance to introduce an amendment to the existing Companies Act.

The government is reportedly considering withdrawing the bill from the house, which will provide it with the option of introducing a separate bill with the specific purpose of providing thefacility in the existing act. Even if this is done, the government will have to get the nod of both the houses for the amendment during the remaining days of the current session.Alternatively, the government will have to wait for the budget session to conclude which will enable it to introduce the facility through an ordinance. In either case, it will take at least a month before the facility is introduced.

In the current state of the market, the government would not be in a position to go ahead with the disinvestment programme. Though the government would be offering the shares to both domestic as well as foreign investors, it will need the support of institutional giants like UTI, LIC, GIC etc. A market driven by buy-back can provide enough room for institutions to support the disinvestment.