The board of directors of Bombay Stock Exchange Limited has approved a proposal to buy back its shares worth `166 crore within a year of its listing at a price not exceeding `1,100/stock. Asia’s oldest exchange founded in 1875 plans to buy back up to 15.09 lakh or 9.99 per cent of the aggregate of its paid- up capital and free reserves.
According to BSE CEO Ashish Chauhan, the exchange wants to start its own commodity exchange, where derivatives in commodities would be traded. Mock trading in commodities would start in a few weeks and the proposed exchange would be fully functional by October 2018, said Chauhan.
BSE, which lags behind NSE in futures and options derivatives trade, apparently now wants to make up for the delay in initiating F&O trade by diversifying in commodity and other exchange related activities.
Last year, BSE stock made a strong debut on NSE closing 33 per cent up in its very first trade at `1,070.55. BSE IPO of `1,234.4 crore was a big success. Significantly BSE piped NSE in going public last year while the state-run NSE’s IPO is yet to be cleared by Securities and Exchange Board of India. However, BSE share on Tuesday slipped nearly five per cent after its board’s announced buyback plan after market hours on Monday.
Meanwhile, the 30-scrip Sensitive Index of BSE and 50-stock Nifty of NSE turned choppy after Kotak Mahindra Bank’s vice-chairman Uday Kotak stirred a debate on “liquidity induces bubble” forming in main exchanges across the continents.
Most analysts on Tuesday said they do agree with the private banker saying the equity benchmarks have rallied ahead of macros or economic fundamentals. It is purely liquidity driven rally for which brokerages point fingers at central banks in developed countries since these monetary regulators had pumped in excess liquidity in the aftermath of 2008 global economic crisis in their attempt to revive their respective economies.
Kotak has warned against abnormal jump in prices of shares in mid-cap and small-cap categories which could be a cause of serious worry since there is no clarity in governance of these entities. Besides, household savings are being invested in many of these entities.
The Sensex after hitting yet another fresh high of 34,936.03 (+92.46) points turned volatile shifting from positive to negative terrain to end the day at 34,771.05 (-72.46) points down 0.21 per cent. Nifty dropped from day’s 10,762.35 (+20.80) points high to end at 10,700.45 (-41.10) points, down 0.38 pc.