Market regulator Security Exchange Board of India (Sebi) is looking into complaints that some bear cartels may be at play in beating down the share prices of some blue-chip companies through manipulations in the futures and options segment of the stock markets.
The regulator is analysing the trading pattern of many such stocks to ascertain whether any manipulation has taken place, while data is also being collected for the brokers and traders having traded heavily on these counters, sources said.
According to a senior official, the bear cartels generally resort to such manipulations whenever there is a sustained downtrend in the markets, as they seek to maximise their profits by taking huge short positions in derivatives market on stocks and indices expected to witness a fall.
'Going short' typically refers to a trader taking a position that the prices would fall going ahead and the returns are determined by the quantum of the decline.
While taking a short position is a permissible trade, the bear cartels try to maximise their profits through this route by manipulating the future movement of stocks or indices through methods like fraudulent placement of orders, manipulating the trade execution and at time by spreading false rumours in the market.
Sources said that Sebi is also looking into the possibility of any collusion of such bear cartels with some brokers, company promoters and other entities for any manipulative activities.
In some cases, the companies have themselves requested the regulator to probe the role of any bear cartels in plunge in their respective share prices. Besides, the stock exchanges and the Integrated Market Surveillance System of Sebi have also generated some alerts for possible manipulation in the futures and options (F&O) segment.
The regulator as such allows only a small number of stocks and indices for F&O trading and these securities are selected from among the best and largest stocks available for trading in the market.