BSE SME IPO index tanks nearly 5% after SEBI raises concerns over price manipulation

SME IPOs were in the news throughout 2023 for attracting record-breaking investments

The BSE SME IPO index, which tracks the performance of recently listed small and medium enterprises stocks, extended the previous session’s losses to close 4.68 percent lower at 52,858.66on March 12.

Small and medium enterprises stocks came under pressure after SEBI chairperson Madhabi Puri Buch said on March 11 that the market regulator has noticed "signs of manipulation in the SME segment".

Comrade Appliances, Arrowhead Seperation Engineering, Shri Balaji Valve Components and Innovatus Entertainment Networks sank up to 12 percent.

Also Read: Activity in Pre-IPO trading grey market a valid concern but a “pechida” problem to solve, says Sebi Chairman Madhabhi Puri Buch

"We do see signs of manipulation in the SME (small and medium enterprises) segment," the Securities and Exchange Board of India chairperson said on the sidelines of an Association of Mutual Funds (AMFI) event.

Besides having the technology to identify patterns that suggest manipulation, the regulator has also received feedback from market participants on how such fraudulent activity can be identified and how they can be dealt with, she said

The regulator tried to provide a listing environment for SMEs that is more facilitative and thus less regulated than that for the mainboard. The regulator received feedback that some entities were misusing this facilitative framework, she said.

Also Read: 'We see signs of manipulation in the SME segment,' says SEBI chairperson

SME IPOs were in the news throughout 2023 for attracting record-breaking investments. A record 176 companies raised Rs 4,842 crore from the BSE SME and NSE Emerge platform during the previous year. While the companies intended to raise only Rs 4,842 crore, a record Rs 2.8 lakh crore worth of applications were submitted.

The BSE SME IPO index has jumped 116 percent in the last year and, so far, has gained 14 percent year-to-date. However, the market regulator received feedback of some entities misusing this facilitative framework.

The BSE SME IPO Index tracks the current primary market conditions in the Indian capital market and measures the growth in investors' wealth over a period of time. The index constitutes SMEs listed on the BSE SME platform.