Vijay Kedia, the veteran multi-bagger stock hunter, has joined former Infosys executive Mohandas Pai's appeal to regulators to allow companies conduct open market buybacks given current market conditions.
Drawing attention to the sharp correction in markets due to continuous selling by foreign portfolio funds and geopolitical tensions, Pai said the "biggest loser" of the downturn has been retail investors with their systematic investment plans.
"SEBI should urgently allow listed companies to do open market buybacks again. Time to Act," Pai said in a post on X, tagging Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal.
"Cash rich companies should buy back stocks to stabilize markets SEBI should act to protect small investors," he added.
Kedia reposted Pai's remark, saying retail investors have "quietly held the market together despite FII exits" and regulatory policy should "now carry their confidence forward". "After all, markets don't fall only when people sell, but when no one is willing to buy. Open market buybacks can help bridge that gap," he said.
Buyback is a process through which company can buy back its shares from existing shareholders. Currently, it can be done through tender offer or open market.
Buyback through open market is a process where the company appoints brokers to place buyback orders during the buyback period on behalf of company in the equity market. All the existing shareholders of the company are eligible to participate in the Buyback process through open market.
The company whose buyback is ongoing can place only buy orders through an appointed broker. The sell orders can be placed by the existing shareholders through the broker.
On the other hand, in a tender offer, companies acquire their shares from investors at a fixed buyback price that is generally above the current market price of shares. Tender buyback generally remains open for 10 days wherein investors can tender their shares.
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