MUMBAI, JANUARY 6: With rampant price manipulation playing havoc on investor safety, the Bombay Stock Exchange, in a delayed move, has decided to introduce circuit breaker limits for stocks quoting below Rs 20."We have been receiving reports of unwarranted price increases. in several scrips. We are taking this proactive measure to safeguard investor interest," said Anand Rathi, president of the exchange. The BSE action follows price rigging in several dud stocks, especially those of finance companies.Rathi said an eight per cent daily price movement limit will be fixed for shares priced between Rs 10 and Rs 20. For shares quoting below Rs 10, the circuit breaker limit will be 25 per cent, he said. However, experts said the BSE should have imposed curbs on low-priced shares long ago. ``Because of the inaction of the BSE, share prices of several companies were rigged,'' said a market source.Currently, scrips priced above Rs 20 attract a daily price limit of eight per cent. As per the circuit filtersystem, stocks are not allowed to increase more than eight per cent or fall more than eight percent on any single day. It has also reduced the circuit filters in as many as 142 scrips mostly from B1 and B2 groups.The circuit filter is reduced by the exchange whenever there is a price rise without rise in volumes. ``The circuit filters are reduced to 4% and lower as a proactive measure,'' Rathi added.As a measure to contain volatility, the BSE has imposed special margins which are scrip specific. The minimum special margin that is levied is 25 per cent of the price of the scrip whereas the maximum special margin that is levied is 50 per cent of the price of the scrip. The special margins have been imposed on as many as 229 scrips.Additional volatility margin is applicable for 363 scrips for settlement commencing from January 3. In the case of finance and IT companies, the BSE has increased the special margin to 50 per cent in cases where the price is not in accordance with the fundamentals of thecompany or the corporate news emanating from such companies. The sustained rally in dud stocks of NBFCs in the last two months has raised many eyebrows. In spite of ``strict vigilance, investigation and hike in margins'' by stock exchanges, several NBFC stocks which were quoting below Rs five have shot up, raising fears of price manipulation.According to market sources, most of these NBFCs have stopped operations and many of them are yet to get registration of the RBI. Kirloskar Investment which was banned from taking fresh deposits shot up from Re 1 to Rs 22 before closing at Rs 13.20 on the BSE last week.
