Mumbai, Nov. 27: The Securities and Exchange Board of India (Sebi) is pulling out all stops to ensure that the current market boom does not go bust the way it did in the past, leaving behind a trail of multi-crore swindles.
The sheer pace of the stock surge has made it sit up. The sensex has vaulted from 3080.95 on April 1 to a dizzy 5000.
A report sent to the finance ministry says the watchdog’s weekly surveillance meetings have focused on 12 entities investing Rs 15,133 crore and the outstanding participatory notes of Rs 15,528 crore. The top executives of leading FIIs have been asked to submit information on the final investors in their funds.
Citigroup Global Markets Mauritius, Copthall Mauritius Ltd, HSBC Financial Services and Goldman Sachs are among those that have been asked to clear the air, though Sebi says the exercise will just uncover one layer. “The next information will be from other FII sub-accounts.”
The regulator says it has reined in excessive speculation in shares that zoomed 200 per cent or more in three months and came down heavily on misleading, price-sensitive statements that fuelled a spurt in trade and values.
A show-cause was slapped on one such company, and exchanges were advised to take action for violation of listing norms. A business television channel was asked to exercise caution in its reporting. Unlike the past, Sebi has also acted to curb the rise in penny stocks — which was the bane of earlier bull rallies.
Unlike in the past, when ICE stocks led the surge, and then sunk the market along with them, this time the regulator is taking no chances. Witness the way it clamped down on hardening shares of steel firms.
“The sudden price rise in steel stocks was taken note of, and a probe was ordered,” Sebi told the finance ministry.
Private financing has been made tougher, by laying down a rule that makes receipts and payments with clients mandatory; dabba trading has almost been bottled up.
Sebi has even seen red in signs Ketan Parekh was regrouping, and resurrecting his favourite “K-10” stocks.
It put nine shares in the trade-for-trade segment. These were Global Trust, Global Telefilm, Aftek Infosys, HFCL, Lupin, Pentamedia, Silverline, SSI and Kopran.
The bourses have done the same: NSE shifted 135 shares to the trade-for-trade segment, with effect from September 10 2003, while BSE moved 578 scrips in the same slot.
The information received from the top FIIs so far is not enough. Sebi itself said as much: “It was also noticed that this information was generally given by them only up to the next layer. What lies beyond this level is not known”.
Sebi said FIIs contribute about 6 per cent to the total market turnover in the cash segment, putting a proper perspective on the role of these funds in this rally.