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Markets watchdog SEBI on Friday said that institutional investors have to disclose upfront at the time of placing an order whether a proposed transaction is a short sale or not, a significant move aimed at curbing market volatility.

The Securities and Exchange Board of India (SEBI) has made certain changes concerning norms about short selling in the market.

Short selling refers to selling a stock that the seller does not own at the time of trade. Both retail and institutional investors are permitted to short-sell stocks.

Amending a circular relating to short selling issued last year, SEBI said, “The institutional investors shall disclose upfront at the time of placement of order whether the transaction is a short sale”.

However, retail investors would be permitted to make a similar disclosure by the end of the trading hours on the transaction day.

“The brokers shall be mandated to collect the details on scrip-wise short sell positions, collate the data, and upload it to the stock exchanges before the commencement of trading on the following trading day.

“The stock exchanges shall then consolidate such information and disseminate the same on their websites for the information of the public every week,” SEBI said in a circular on Friday.

The circular, issued to stock exchanges, clearing corporations, and depositories, also said the frequency of such disclosures may be reviewed from time to time with the approval of SEBI.

In recent times, there have been concerns about the practice of short selling and subsequent volatility in the securities market.

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Shares of Nestle India slipped 2 percent to Rs 2,644 on the BSE in Friday’s intra-day trade in an otherwise firm market on profit booking. The stock of the packaged foods company turned ex-date for a stock split in the ratio of 1:10, wherein 1 equity share of the face value of Rs 10 was divided into 10 equity shares of the face value of Rs 1 each.

Nestle India had fixed January 5, 2024, as the record date for determining the entitlement of equity shareholders for sub-division/ split of its equity shares.

Since October 19, 2023, the stock price of Nestle India outperformed the market and surged 19 percent after the company announced a stock split. The stock hit a record high of Rs 2,770.75 (adjusted to split) on January 1, 2024.

To enhance the liquidity of the company’s equity shares and to encourage the participation of retail investors by making equity shares of the company more affordable, the company decided on a stock split, Nestle India said.

A stock split is a corporate action in which a company issues additional shares to shareholders, increasing the total shares by the specified ratio based on the shares they held previously.

Companies often choose to split their stock to lower its trading price to a more comfortable range for most investors and to increase the liquidity of trading in its shares.

Meanwhile, Nestle India has seen one of the higher growth rates among fast-moving consumer goods (FMCG) companies as it continues to benefit from distribution expansion, especially in rural India. The revenue growth is broad-based across segments and geographies.

Further sustainability of growth is expected from innovation, higher capex plans coming on stream over the next couple of years, continued thrust on RURBAN (rural and urban) strategy, and higher media investments. Nestle India has also reported strong margin performance in the quarter and will continue to focus on profitability along with topline growth. Premiumization will also be an important driver of growth and profitability improvement, analysts at KRChoksey Shares & Securities said in the September quarter (Q3CY23) results update.

Nestle India’s strong portfolio of brands and well-spread distribution network will improve product penetration and continue to support performance. Consistent demand for packaged foods and increased focus on consumer engagement initiatives are expected to support performance in the long term. However, uncertain and deficit rain remains a key negative for the stock, analysts at Geojit Financial Services said in the result update.

On commodity outlook, Nestle India, announcing Q3 results on October 19, had said that uneven rain and rain deficit are expected to impact the production of maize, sugar, oilseeds, and spices which may adversely impact pricing. Coffee continues to be volatile because of the global supply deficit.

The weather during the harvest of the Indian Robusta crop may impact production. Upcoming winter weather may impact wheat production. A healthy milk flush is expected in winter which is expected to keep prices stable, the company said.

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The Securities and Exchange Board of India (Sebi) has appointed G Ram Mohan Rao as Executive Director (ED) for three years. Rao will be handling the investigation department and the internal inspection department. He has been with the markets regulator for over 25 years during which he has supervised diverse portfolios such as inspections, litigation, recovery, investor awareness, grievance redressal, etc. Before the appointment, Rao was the regional director of the Eastern Regional Office of Sebi.

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The average initial public offering (IPO) size in 2023 shrank to Rs 867 crore from Rs 1,483 crore in 2002 and Rs 1,884 in 2021, according to a report by Prime Database. The average IPO size declined as the year was dominated by smaller-sized issues.

“The average issue size is in line with the pre-pandemic figures. In between, some issuances from new-age companies came and skewed numbers. In the next year, we will have new-age companies coming back, and the average ticket size could go up,” said Ajay Saraf, executive director of ICICI Securities.

The report said 57 companies raised Rs 49,434 crore in 2023 through IPOs, 17 percent lower than the previous year’s Rs 59,302 crore raised by 40 IPOs. However, if one excludes the mega LIC IPO, which came out in 2022, IPO mobilization increased by 28 percent from last year. The public equity fundraising (IPOs+ OFS+INVITs+QIPs) rose 59 percent to Rs 1,44,283 core in 2023 from Rs 90,886 crore in 2022.  

The largest IPO in 2023 was from Mankind Pharma (Rs 4,326 crore). It was followed by Tata Technologies (Rs 3,043 crore) and JSW Infrastructure (Rs 2,800 crore). The smallest IPO was from Udayshivakumar Infra, raising Rs 66 crore, followed by Plaza Wires, Rs 71 crore.  

Forty of the 57 IPOs came in four months of the year. September had the highest number of IPOs, with 14 issues hitting the market, followed by 11 issues in December, eight in November, and seven in August.

Forty-one out of the 57 IPOs were subscribed more than ten times, 16 were subscribed more than 50 times, and nine IPOs were subscribed more than three times. The rest of the issues were subscribed to anywhere between 1 and 3 times. The number of applications from retail investors increased to 13.21 lakh in comparison to 5.6 lakh in the previous year. The highest number of retail applications was received by Tata Technologies (52.1 lakh), followed by DOMS Industries (41.3 lakh) and INOX India (37.3 lakh).

Pranav Haldea said the IPO response was further buoyed by strong performance post-listing.

“Of the 57 IPOs, 40 gave a return of over 10 percent. 53 of the 57 IPOs are trading above issue price,” said Haldea.

Twenty-one out of the 57 IPOs that hit the market had a prior private equity or venture capital (PE/VC) investor who sold shares in the IPO. Offers for sale by such PE/VC investors at  Rs 10,968 crore accounted for 22 percent of the total IPO amount. Offers for sale by private promoters at Rs 15,196 crore accounted for another 31 percent of the IPO amount.

The amount of fresh capital raised in the IPOs in 2023 was the highest in seven years at Rs 20,662 crore.

The year also saw 87 companies filing their offer document, while 40 companies decided to let their approvals lapse.

Regarding the outlook for next year, the report said 27 companies are proposing to raise Rs 28,500 crore and are holding Sebi approval, and another 36 companies looking to raise Rs 40,500 crore are awaiting the regulator’s nod.

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Shares of Adani group companies continued to hold gains in intra-day deals on Wednesday after the Supreme Court granted the market regulator, Sebi, three more months to complete its investigation. The Supreme Court, on Wednesday, said that there were no grounds for taking away the investigation of the Adani group of companies in the Hindenburg report from the markets regulator. It granted the Securities and Exchange Board of India (Sebi) three months to complete the investigation of two pending matters.

The Court also said that the Centre and Sebi will look into whether Hindenburg Research has violated the law on short-selling. Earlier in the day, shares of Adani group companies rallied up to 12 percent on the BSE in Wednesday’s intra-day trade as the Supreme Court is expected to announce its verdict in the Adani-Hindenburg case.  

Among individual stocks, Adani Energy Solutions surged 12 percent to Rs 1,193.05, while Adani Total Gas soared 10 percent to Rs 1,100, followed by Adani Green Energy (9 percent at Rs 1,740), New Delhi Television (9 percent at Rs 296), Adani Wilmar (7 percent at Rs 391), Adani Enterprises (6 percent at Rs 3,094.85), Adani Power (5 percent at Rs 544.65), Adani Ports And Special Economic Zone (4 percent at Rs 1,117.10), Ambuja Cements (2 percent at Rs 541.45) and ACC (2 percent at Rs 2,305). In comparison, the S&P BSE Sensex was down 0.23 percent at 71,723 at 09:311 AM.

Adani Enterprises in its FY23 annual report said that a US-based short seller report was a combination of targeted misinformation and outdated, discredited allegations aimed at damaging the reputation and generating profits through a deliberate drive-down of the group firms stock prices.

“Even though we promptly issued a comprehensive rebuttal, various vested interests tried to exploit the claims made by the short seller opportunistically. These entities engaged and encouraged false narratives across various news and social media platforms,” Adani group’s flagship company said.

Consequently, the Hon’ble Supreme Court of India constituted an Expert Committee to investigate this matter. It comprised individuals known for their independence and integrity. The report of the Expert Committee was made public in May 2023. The expert committee in its report had found no prima facie lapse on the part of the Securities and Exchange Board of India (SEBI) in the matter.

While reserving the verdict, the Supreme Court had said it has no reason to “discredit” SEBI, which probed allegations against the Adani group, as there was no material before it to doubt what the market regulator has done and the court does not have to treat what was set out in the Hindenburg report as a “true state of affairs”.

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