Tarun Sharma Moneycontrol News
The National Stock Exchange is probing the trades in equity derivatives of Indiabulls Real Estate following the huge swings in price in the last couple of trading sessions, a source told Moneycontrol.
Another source said that the Securities and Exchange Board of India too had the stock on its radar.
Market has been abuzz with chatter that nearly the entire outstanding positions in the equity derivatives of Indiabulls Real Estate was concentrated among a dozen-odd trading members.
On Monday, the Indiabulls Real Estate stock surged 40 percent after the company announced that it was restructuring operations by separating the residential and commercial businesses.
The equity derivatives of Indiabulls Real Estate are in the ‘ban period’ as the market wide position limit has been hit. What this means is that no fresh positions can be taken up in futures or options contracts. However, traders with outstanding positions can unwind or square up their existing long and short positions, if they find a counterparty for the trade.
The equity derivatives of Indiabulls Real Estate has been in the ban period since April 6. Since then, the stock price has rallied nearly 50 per cent.
Some traders say it is possible for a cartel of brokers to get together and take up huge positions through circular trading in a way that the marketwide limit in a security is breached. That makes it impossible for new traders to sell the futures even if they feel the rise in a company’s stock price is unjustified. This helps keep the stock price firm. Also, traders with existing short positions in the derivatives segment will be forced to cover their positions at a higher price, pushing the stock price even higher.
Indiabulls Real Estate shares saw sharp swings on Tuesday as well, shedding around 9 percent to close at Rs 134.80 after hitting a high of Rs 155 earlier in the session.
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