A:

In March, 2001, the Securities and Exchange Board of India (SEBI) banned short selling in the Indian stock market. The ban was instituted partly because of a crash in stock prices and allegations that Anand Rathi, the then-president of the Bombay Stock Exchange (BSE) used confidential information acquired by BSE's surveillance department to make gains and contribute to volatility (Rathi was later absolved of any wrongdoing by the Securities and Exchange Board of India).

Shortly after the ban, only retail investors were allowed to short sell in the marketplace. In 2005, the Securities and Exchange Board of India (SEBI) recommended that institutional investors such as mutual funds be allowed to short-sell shares in the market, as well. In July, 2007, SEBI issued short selling guidelines for institutional investors and in early 2008, institutional investors were allowed to start short selling shares again. (For more on short selling, read our in-depth tutorial on Short Selling.)

This question was answered by Chizoba Morah.

RELATED FAQS

  1. Why would a country's gross domestic product (GDP) and gross national income (GNI) ...

    Understand the economic metrics, gross domestic product, or GDP, and gross national income, or GNI, and why the two evaluations ...
  2. What types of companies benefit from reporting results utilizing constant currencies ...

    Understand constant currency figures, and explore some of the reasons why a company is likely to benefit from reporting using ...
  3. What are the differences between B-shares and H-shares traded on Chinese stock exchanges?

    Learn about B shares and H shares of publicly listed companies in mainland China and Hong Kong stock exchanges, and the differences ...
  4. What are the differences between H-shares and A-shares on Chinese and Hong Kong stock ...

    Learn about A-shares and H-shares of publicly listed companies in mainland Chinese and Hong Kong stock exchanges, and the ...
RELATED TERMS
  1. Bear Closing

    Purchasing a security, currency, or commodity in order to close ...
  2. Crowded Short

    A trade on the short side with an overwhelmingly large number ...
  3. Gross Exposure

    The absolute level of a fund's investments.
  4. David Einhorn

    Known for his short selling strategy, activist investor David ...
  5. Welfare Capitalism

    Definition of welfare capitalism.
  6. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, ...

You May Also Like

Related Articles
  1. Stock Analysis

    Should You Short These Debt-Laden Stocks?

  2. Professionals

    The Coming Stock Market Decline: What ...

  3. Stock Analysis

    Is Now the Time for Emerging Market ...

  4. Economics

    10 Most Influential Chinese Companies

  5. Active Trading Fundamentals

    How To Short Amazon Stock

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!