MUMBAI, APR 16: Indicating the onset of bearish sentiment, carry-forward (badla) rates plunged to six per cent on the Bombay Stock Exchange (BSE) from around 12 per cent last week. The plunge in badla rates signals an impending fall in share prices this week as a fallout of the Wall Street crash.At this level, badla rates are 50 per cent lower than the bank lending rates and even the inter-bank call money rates. Badla (interest) rates are paid by buyers (bulls) to sellers (bears) for carrying over the business to the next weekly settlement.When the market was bullish two months ago, badla rates had even exceeded 45 per cent. With stock prices falling, badla rates have also come down. This also indicates a drop in net outstanding positions as investors have decided not to continue positions uncovered. The 8 per cent circuit filter has prevented investors from reducing their stock positions. ``The current situation warrants a relaxation in the circuit filter mechanism,'' said a dealer.Marketmen are expecting a fall in share prices on Monday. Many sell orders which came on Friday were not executed as stocks hit the 8 per cent lower limit. ``I don't expect a big crash as made out by some quarters. The US market fell on Friday because of reasons like higher consumer spending and inflation in the US. This has nothing to do with India. But there will be some impact because of the globalisation of our markets, presence of foreign investors in India and listing of Indian companies in the US markets,'' said BSE broker Pawan Dharnidharka.According to him, several funds are likely to enter for bargain hunting at lower levels. With Indian companies - especially software companies - reporting higher earnings, the crash will be cushioned to some extent. While Indian markets generally followed the global trend, many a time India took a different direction. When the South-East Asian markets collapsed two years ago, Indian markets were virtually unaffected.Moreover, over 500 FIIs which are operating in India have invested nearly $ 11.5 billion in India. When equity markets face any turmoil, FIIs normally pull out money from stocks and invest in bonds and government securities where yield is stable and investment are safe.The BSE and the National Stock Exchange reported a steep fall in business volume last week. This means investors are not prepared to build up positions in view of the current global turmoil. Those who have already taken positions will find it tough to get out of their positions. Moreover, the 8 per cent circuit filter will come in the way of investors.Reliance and Infosys which led the 255-point fall in Sensex to 5172.13 on Friday are likely to lead the bear onslaught on Monday. Both these scrips were down by 8 per cent on Friday.The revamped Sensex is likely to remain volatile more than ever before. With the inclusion of ICE companies like Satyam and Zee Telefilms, Sensex is likely to take a roller-coaster ride in the coming days.
