BADLA:
Badla Followed in the Indian stock exchanges, badla is of two types
viz., Seedha badla (Contango) and Undha badla (Backwardation).
When a
bull buys in the anticipation of an immediate rise in price, but finds at the end of the
accounting period that the price has not risen, he may either pay for the shares and take
delivery, or he may carry over his transaction to the next accounting period by paying
carry over charges or Seedha badla to the seller. On the contrary, when a bear sells in
anticipation of a fall in prices in the immediate future (so that he can pick up shares
later for delivery and make a profit), but the fall does not happen within the accounting
period, he has the option to borrow or buy the shares for delivery, or have his sales
carried over to the next accounting period on payment of Undha badla or backwardation
charges to the buyer.
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