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Exercise of ESOP not insider trading: SEBI

In a statement, the SEBI said its board was apprised of the representations received from industry bodies/law firms and others on the subject matter and noted the guidance note under the insider trading regulations clarifies that exercise of ESOPs is not considered as "trading" for the purpose of the regulations, except provisions relating to disclosures

 

India's securities market regulator on Monday clarified that the exercise of employee stock options (ESOP) is not considered insider trading under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
 
The Securities and Exchange Board of India (SEBI) board, which met here, clarified on the issue of exercise of options/applicability of contra-trade norms in light of the insider trading regulations.
 
In a statement, the SEBI said its board was apprised of the representations received from industry bodies/law firms and others on the subject matter and noted the guidance note under the insider trading regulations clarifies that exercise of ESOPs is not considered as "trading" for the purpose of the regulations, except provisions relating to disclosures.
 
"This will remove the difficulties of the designated persons with regard to exercise of ESOPs and the sale of shares so acquired," it said.
 
The SEBI board also approved the removal of current restriction on the maximum number of anchor investors (currently 25) for anchor allocation of above Rs.250 crore public issue.
 
While the requirement of number of anchor investors for allocation of up to Rs.250 crore remains the same, in case of allocation beyond Rs.250 crore, there can be 10 additional investors for every additional allocation of Rs.250 crore, subject to minimum allotment of Rs.5 crore per anchor investor.
 
The SEBI board also decided to call for public comments on the recommendations of the Committee headed by K.V.Kamath on Clearing Corporations.
 
It also approved the draft amendment to the regulations to be notified on September 28 as the Forward Contracts Regulation Act, 1952 is proposed to be repealed, enabling the merger of Forward Market Commission with SEBI.
 
These regulations will enable functioning of the commodities derivatives market and its brokers under SEBI norms and integration of commodities derivatives and securities trading in an orderly manner.
 

User

Sensex down 5.94%; What to expect?
What does history tell about the Sensex behaviour after 5% decline in a day?
 
On 24 August 2015, the S&P BSE Sensex declined by 1,624 points or 5.94% to 25,741. On analysing data since January 1991, there have been as many as 40 occasions (excluding today) when the Sensex declined over 5% in a single trading day. On as many as 18 occasions, the decline was more severe than today. In the past decade there were 12 such occasions, most of which were during the period of the global financial crisis. The last time the 30-stock index fell over 5% was on 6 July 2009.
 
It is also important to note that each time the market has fallen over 5% or more, it has done so in three major periods. There were as many as 10 occasions between March 1992 and March 1993, another 10 occasions between February 2000 and September 2001 and 11 occasions between January 2008 and July 2009. Does today mark another day for future volatility? Or is it one of the rare few occasions seen in March 1991, January 1997, October 1998, May 2004 and May 2006? The only link to these periods is the market valuation which was extremely high at the beginning of each.
 
 
In March 1992, the Sensex price to earnings was quoting over 42 times. In February 2000, the PE was 23 times. In January 2008, the Sensex PE was over 22. In the remaining 9 periods, the PE ranged between 10-15 times, except for May 2006, when the PE was 20 times. As on 19 August 2015, the Sensex was quoting a PE of 22.16 times, a high valuation seen at the start of the major periods above.
 
How have sentiments played out on the day after the index declined over 5%? Moneylife analysed the returns 1-day, 1-week, 1-month and 3-months after such a decline.
 
 
1-day Later
On the day after a severe fall, there is a tie between the bulls and the bears. Out of the 40 occasions, on 50% of the occasions the bearish sentiment continued and the index closed in the negative. When the bullish sentiments prevailed, the index moved higher by an average of 3.64% over the 20 occasions. Even when the decline continued, the average fall was 3.57% on the next trading day.
 
However, if we look at the 5% or more declines of the past decade, of the 12 occasions, the Sensex declined further on eight occasions or 67% of the times. The average return on the next trading day works out to -0.85%. 
 
7-days Later
A week later, the index moves in favour of the bears, closing lower on 24 of the 40 occasions since January 1991. On the 16 instances the market moved higher, it did so by an average of 6.51%. However, the index averaged a return of -4.98% on the 24 occasions it continued the fall.
 
Even over the past decade, the index closed lower a week later, on nine out of the 12 occasions or 75% of the time. Over the 21 instances the Sensex moved lower by an average of 3% over the week.
 
A Month Later
Even after 30 days, the bears ruled. The index moved lower on 24 out of the 40 occasions or 60%. On 10 such occasions, the market moved lower by over 10% in 30 days. 
 
Out of the 12 occasions in the past decade, the index closed later on seven occasions. The index moved lower by an average of 2.64% over these 12 occasions.
 
3-months Later
Three-months post a major fall of 5% or more, on 22 occasions out of the 40, the markets closed lower. The index on most occasions struggled to move higher. But on the 18 occasions when it did, it moved up by an average of 11%. 
 
Even over the past 12 occasions, the index closed lower on seven occasions. On an average, the index moved lower by 3%.
 
As seen above, there is no clear indication where the market is headed over the short-term. But given the high market valuation, the bearishness may persist.
 

User

COMMENTS

Ralph Rau

1 year ago

The stock market is rising for clearly established reasons

1. Real Estate market is cold. There is a clear demand supply imbalance.

2. PE is high BUT "E" is "Expected" to rise thanks to Modi Magic

3. Interest rates are "Expected" to decline

"E" will grow as a multiple of GDP. If GDP grows at 5.5 (using the old methodology) then "E" should grow around 11.0%. If GDP grows at 7.5% then "E" should grow at 15.0%

Either way a forward PE in excess of 15x means the bulls are exposed to a higher risk of disappointment.

With BRICS, USA, EU and Japan GDP all limping along @ 1-2% GDP growth (even this is thanks to QE type jugglery) I am inclined to doubt that Indian GDP can be a solitary shining star and sustainably exceed 5.5%

REPLY

LALIT SHAH

In Reply to Ralph Rau 1 year ago

drear Ralph Raju

Modi magic fedup.Dont more bat on modi magic.
Latest CAG report on gujarat.If oppossiton use it properly
Patidar PAAS agitation arise some quation?
Patel's (patidars)are backboon of BJP and Modi's use and throw nature is ?????
opposition fails on what they have done for publin in last 6.5 decades to show public
Modi and BJP marketed what they done (Rather and actule)is ?????
But they succeed to make fool nation's Hindu's
in 2002 there was fight between Hindu and muslil's and on back of government and polis Hindu's float frustation on minority But
Now the same polish and other forces againest Patidar's ?????
Are patidar's of nation is not hindu ?
Are patidar religious fool ?
Or patidar M.P.'s and MLA'S are of that kind like historic jechand's and amichand's ?
All this will not give modi to RUN government for multiple eastindia companies in india and local millionier like TATA - AMBANI - ADANI
I AM CONFIRM AS AN EXPERIANCED MARKET MAN CLOSING OF AGAUST IS HEADING TOWORDS 21000-20000
ONLY MIRRECAL CAN SAVE MARKET
JUST ONLY MANTRA FOR HIGH PE FRONTLINE IS SELL ON RISE AND
SOME SELECTED STOCKS BUY ON DIPS
BE CAUTIOUS
SEPTEMBER IS NORMALY FOR SWEET SONGS OF LEGEND ELVIS PRESLY
BUT WE SEE IT WILL BE FOR SHORE SONG'S CALLED "MARASIYA"

LALIT SHAH

1 year ago

Market likely to test 23000-21000 sell on rise

REPLY

Gurudutt Mundkur

In Reply to LALIT SHAH 1 year ago

There goes another kite!
Nothing lost. But it is a safe prediction ... a range of 2000 points.

Gurudutt Mundkur

1 year ago

The tendency of the majority of us is to catch on to words and not on actions being taken.
For example, take "ache din". we have started using this as a stick to beat each and everyone about. Can we not forget about these two words and wait for a some months to see what is happening?

And a query for all those analysts... Did any one of you every predict such a fall in the Sensex/Nifty? and where are all the recommendations you guys made? You made your money only making the recommendations!

MG Warrier

1 year ago

Looks a studied analysis, which may help players in the market make more guesses. I am a cinique when it comes to market behavior, observations by international rating agencies and comments by analysts who are wiser after the event. I see this just as part of a correction and there could be more rises and falls during the current quarter as market reacts to hearsays and rumours about happenings in US and China and sometimes tiny countries like Greece. Next shock is likely when real estate prices fall. Rich people account only losses and forget past gains!

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