"Introduction of buyback is unlikely to improve the stock market climate. It might even worsen the climate as buyback will facilitate more manipulation," Gupta has said in a letter to prime minister AB Vajpayee.

Gupta, who is also the director of the society for capital market research and development, said buyback would result in an abuse of the capital market.

Highlighting his concern, Gupta's letter says that several company promoters themselves actively indulge in market manipulation and once buyback is allowed, even a rumour before it will cause violent upheavals in the market.

"Company managements, in collusion with market operators, will make a killing at the cost of common investors," he says.

He said fear of misuse of buyback by promoters is real in local conditions, given the poor stateof corporate governance and weak regulatory system.

"Indian regulations have not yet been able to come to grips with the problem of market manipulation, causing heavy losses to investors," Gupta said. Gupta, a former member of the Securities and Exchange of Board of India, says there is need for reform o corporate governance before introduction of buyback.

"Buyback can wait. Reform of corporate governance is more urgent," he said.

At this juncture when confidence of the investing public is already shaken and investors are shying away from capital market, introduction of buyback provision may boomerang, causing further damage to investor confidence," Gupta stated.

Business houses through their associations have been lobbying for buyback with the purpose of strengthening their own voting control over companies at no cost to the promoters, he said.

"Is acquisition of voting control by promoters free of cost a worthy cause to support buyback?" he asked. He also said if government allows buyback ofshares just because some other countries allow it, it would ignore the ground realities here, where indulging in price manipulation in shares is very common.

Highlighting cases of price manipulation, Gupta cited the recent crisis in stock market due to manipulation in shares of Videocon International, BPL and Sterlite Industries.

He also highlighted the case of MS Shoes, which led to the closure of the Bombay Stock Exchange for three days in 1995.