e  rit    ar et in ndia    14.21
        Short Selling                                       iPo
                                                            Initial Public Offer (IPO) is an event of share
     Sale of a share which is not owned. This is done by    issuing when a company comes up with its share/
     someone after borrowing shares from stockbrokers       securities issued for the first time.
     promising to replace them at a future date on
     the hope (speculation) that the price will fall by     Price bAnD
     then. He fetches profit if price of the share really   A process of public issue where the company gives
     fell down by the future date of replacement and        a price range (known as price band) and it is left
     sustains a loss if the price increased. Recently,      upon the share applicants to quote their prices on
     short selling has been allowed in India by SEBI.       it—the highest bidders getting the shares. This is
                                                            a variant of share issue at premium but considered
     beAr AnD bull                                          a safer choice.
     A person who speculates share prices to fall in
     future and so sells his shares and earns profit is     ecb Policy
     a bear. He earns profit out of a falling market.       A prospective borrower can access external
     Basically, here he is short selling the shares.        commercial borrowings (ECBs) under two routes,
          Opposite to bear, bull is a person who            namely the ‘automatic route’ and the ‘approval
     speculates share prices to go up in future so either   route’. ECBs not covered under the automatic
     stops selling the select group of shares for that time route are considered on case-by-case basis by the
     to be reached (he is basically taking long position    RBI under the approval route. The High Level
     on those shares) or starts purchasing that select      Committee on ECB took a number of decisions
     group of shares.                                       in September 2011 to expand the scope of ECBs
                                                            which include:
          Thus, a bear increases the number of shares
                                                                  (i) High networth individuals (HNIs) who
     in a stock market activating a general fall in the
                                                                      fulfil the criteria prescribed by SEBI can
     index—a bearish market. Opposite to it, a bull
                                                                      invest in IDFs.
     creates a scarcity of shares in the stock market
                                                                 (ii) IFCs have been included as eligible issuers
     activating a general rise in the share prices and the
                                                                      for FII investment in the corporate bonds
     index—a bullish market.
                                                                      long-term infra category.
          Brokers play as a bear for some stocks and as a
                                                               (iii) ECB would be permitted for refinancing
     bull for some other stocks. while a bear broker is a
                                                                      of rupee loans of infrastructure projects
     non-entity, a bull is remembered for long time to
                                                                      on the condition that at least 25 per
     come—Harshad Mehta was known as the Great                        cent of such ECBs shall be used for
     Bull.                                                            repayment of the said rupee loan and 75
                                                                      per cent invested in new projects in the
     book builDing                                                    infrastructure sector (but only under the
     A provision allowed by SEBI to all Initial Public                approval route).
     offers (IPOs) in which individual investors are            (iv) Refinancing of buyer’s/supplier’s credit
     reserved and allotted shares by the company. But                 through ECBs for the purchase of capital
     the issuer has to disclose the price (at which shares            goods by companies in the infrastructure
     have been allotted the size of the issue and the                 sector was approved. This would also be
     number of shares offered to the public).                         permitted only under the approval route.