Mumbai: India’s stock market regulator, the Securities and Exchange Board of India (Sebi) said on Monday that companies holding 55% and above but below 75% would be allowed to purchase up to a 5% stake through buybacks, without seeking its approval.

Positive measure: Sebi chairman C.B. Bhave. Abhijit Bhatlekar / Mint

“It has now been decided to automatically exempt increase/consolidation up to 5% per annum as a result of buy back by a company," said a statement from the stock market regulator.

The measure is expected to boost market sentiment as promoters will be tempted to resort to creeping acquisition given the current depressed prices of their shares.

The Bombay Stock Exchange’s benchmark Sensex index has lost 57% of its value so far in 2008, and 53.56% since the previous Diwali.

Companies have so far been required to seek exemption under Sebi regulations relating to so-called substantial acquisition of shares and takeovers.

Earlier, creeping acquisition, the process through which promoters could increase their stake in the company by buying up to 5% of the equity in a year, was allowed only till the promoters holding reached 55% of the equity of the company.

However, consolidation via bulk, block or negotiated deals, or through preferential allotment would not be permitted. Besides, the market regulator has also said that henceforth promoters would not require permission if their holding in the company were to increase by 5% in the event of a buyback of shares.

(PTI contributed to this story.)