Sebi launches probe into market crash

Sebi launches probe into market crash
ENS ECONOMIC BUREAU

MUMBAI, MAR 3: Concerned over the "abnormal" fall in share prices on Friday, the Securities and Exchange Board of India (SEBI) has launched an investigation into suspected manipulation of prices by a group of foreign institutional investors and brokers. Senior Finance Ministry officials are also unhappy over the way the Bombay Stock Exchange Sensex was hammered down by 176 points on Friday, thereby wiping out the 177-point gain on Wednesday.

Said a senior BSE official, "our team will also join the SEBI team to investigate whether any brokers or FIIs have hammered down share prices using price-sensitive information." A SEBI official confirmed that its team would probe whether there was any leakage of information about trade details of top brokers and manipulation of infotech share prices.

BSE sources said a group of brokers and FIIs hammered down infotech share prices when they came to know that top bull operator Ketan Parekh was facing payment problems. The Finance Ministry, it is learnt, is also perturbed by the way the market is being manipulated by bear operators acting in concert with some powerful FIIs. "The market is back to square one even after presenting a growth-oriented and pro-market and pro-industry budget. It's plain manipulation," ministry sources said.

The ministry is also toying with the idea of bringing in professional management to run stock exchanges. Currently, only the National Stock Exchange is run by professional managers while others like the Bombay Stock Exchange and exchanges in Delhi, Kolkata and Chennai are managed by elected brokers.

Meanwhile, a section of brokers have sought the direct intervention of the Finance Ministry to loosen the grip of cartel which has created undue panic in the bourses particularly in new economy stocks. "These brokers have expressed their view to the senior officials of the North Block that the `mission panic' in the market has been artificially created and it has been launched with the only intention to tarnish the ministry's image to revive the confidence of the retail investors in the stock market," sources said.

On Friday, investors wealth -- or market capitalisation -- plunged by a whopping Rs 35,000 crore in the market crash.