Buyback famine

Buyback of shares means purchase of a company's shares by itself. Buybacks are financed from the company's reserves. Companies buy their stock back when they think that their shares are undervalued or they are very optimistic about their future prospects. Buyback is a kind of financial engineering done to reduce the number of shares outstanding, thus increasing the earnings per share and the market valuation per share. Managements sometimes intentionally buy back stocks to send out a positive signal to the market that they are confident about the future of their companies. Historically, we have seen that more buyback offers are made when market valuations are attractive. Therefore, in the current year companies have stayed away from buybacks. In the first eight months of this year the market has witnessed only three buyback offers, a record low in the last eight years. Year 2015 has so far seen buybacks worth only ₹157 crore. This could mean that companies themselves feel that t