The Securities and Exchange Board of India is probing whether brokers and investors conspired the sharp sell-off and subsequent recovery in financial shares
The Securities and Exchange Board of India (SEBI) is investigating whether brokers and investors conspired during Friday's sharp sell-off and subsequent recovery in shares such as Dewan Housing Finance Corporation (DHFL), Yes Bank and other lenders, according to a report in Bloomberg.
According to the report, the market regulator is reportedly reviewing data from BSE Sensex and NSE’s Nifty 50 to find which parties bought and sold shares as well as the sequence of the trades.
If SEBI finds any evidence of wrongdoings, it may launch a full investigation, the people told the news portal.
Moneycontrol could not independently verify the report.
The Reserve Bank of India on September 23 said it was closely monitoring the financial market along with SEBI.
"The Reserve Bank of India and the Securities and Exchange Board of India are closely monitoring recent developments in financial markets and are ready to take appropriate actions, if necessary," the central bank said in a statement.
The statement came after the Indian stocks turned volatile on September 21, primarily dragged by NBFCs and housing finance companies on reports the firms were facing a liquidity crunch.
The share price of DHFL plunged as much as 60 percent to hit a fresh 52-week low of Rs 246.25 amid high volumes before paring losses to end down 43 percent. Yes Bank slumped as much as 34 percent before recovering to close down 29 percent. Stocks of Indiabulls Housing Finance and LIC Housing Finance were also down by over 20 percent and 15 percent, respectively, at one point. Shares of Bajaj Finance and Bajaj Finserv too took a hit.
The market regulator believes that low trading volumes in financial stocks did not warrant the size of the share price swings, the report said.The market watchdog is said to be examining data to determine if trading took place based on the unpublished price-sensitive information. Some of the lenders have reportedly briefed the stock-exchange authorities on the September 21 crash.