Short selling for Institutional investors from Feb 1 2008

Securities and Exchange Board of India (Sebi) today said it would allow institutional investors to start short selling, which was banned way back in 2001 in the aftermath of the Ketan Parekh scam, from February 1.

Reserve Bank of India (RBI) has given its nod to FIIs for short selling, and now Sebi will allow it for all institutional investors from February 1, Sebi chairman M Damodaran told reporters on the sidelines of a conference on corporate governance here.

It would be for all institutional investors - FIIs and domestic institutions like mutual funds, Damodaran said.

Damodaran's comments came a day after the Reserve Bank allowed foreign institutional investors and their sub-accounts to short sell shares.

Retailers are already allowed to short sell - selling shares they do not own and cover the trade at a later date.