close

Short selling and activism don't go together

Contrary to the rationale of short selling, third-party investigative reports from activist short sellers violate Sebi regulations

C K G Nair & M S Sahoo
File photo: PTI
Premium

File photo: PTI

The Adani-Hindenburg saga has created volatility and waves of uncertainty in the markets. While the media has been proactively covering the story, this article explores the propriety of investigative disclosures by a short seller, leaving the jurisdictional question aside. The commentary is not on the merits of the “investigation findings” covered in the Hindenburg report.
 
The underpinning theoretical support for short selling is premised on its ability to correct market distortions such as overvaluation (bubbles) of securities. Therefore, the regulatory and market justification for allowing short selling is founded on the play of the market forces. Some investors may short sell a security based on their assessment of a bubble, over-pricing, or overvaluation. In order to remove information asymmetry and help other market participants to take informed decisions, aggregate short position in a security is disclosed by the exchanges, usually as s
Or
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www-business-standard-com-nalsar.knimbus.com or the Business Standard newspaper

Also Read

Hindenburg vs Adani: Short selling not shareholder activism, says InGovern

Six Adani Group stocks locked in 5% lower circuit; ACC hits 52-week low

Fresh bout of selling sees Adani m-cap go down by Rs 25,000 crore

Adani saga: The elephant in the room

Adani-Hindenburg saga: Over dozen involved in short-selling under Sebi lens

It's financial sector greed again

Where in the world is the IMF?

Bank runs and resolutions

India's start-up story remains robust

Consumer sentiments improve

First Published: Mar 29 2023 | 10:00 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on business-standard.com are available only to BS Premium subscribers. Already a BS Premium subscriber?LOGIN NOW

Register to read more on Business-Standard.com