FAQs

Question

Whether Short Selling is allowed as per Shariah norms

Answer

Short selling is borrowing a stock from the brokerage firm and selling it in anticipation that the stock price will further go down. Once the prices are a bit stabilized the stock is purchased back to square up the sale transaction. Thus, the investor as a “shorter” keeps the difference. This transaction involves huge risk that almost has no upper limits. Moreover, from Shariah point of view you cannot sell what you do not possess.



Allah Knows Best...