The Securities and Exchange Board of India (Sebi) is conducting an inquiry into the stock market crash on October 24 and today. The equity benchmarks BSE Sensex and NSE Nifty fell nearly 20 per cent during these two trading sessions.
According to sources in the regulatory agency, trading pattern last Friday aroused suspicion. “Short sellers on Friday took extra care of not letting the markets fall by 10 per cent before 1 pm, which would have triggered the circuit filter and resulted in closure for an hour. Today also there were similar trends. It could be a coincidence but it needs to be looked into,” said a source.
After 1 pm, the circuit filter is triggered only if the markets fall by 15 per cent. Sources said apart from a few participatory note (PN) issuing FIIs, activities of some stock brokers is also being looked into.
Market players said short sellers are exploiting the cash settled derivative segment of the markets and bear operators are taking advantage of the situation by forming a cartel.
Stock brokers have mainly blamed the overseas lending of stocks by FIIs as the real reason behind the fall. Even while the finance ministry has informed that FIIs have been asked to cover their short positions through borrowed stocks, FIIs have not entirely covered positions.
Source... Business Standard...
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