The Securities and Exchange Board of India (Sebi) is probing the massive fall in the shares of Financial Technologies (India) and Multi Commodity Exchange of India (MCX) to check if a bear cartel was taking positions in the counter based on information related to National Spot Exchange (NSEL).
According to sources, the regulator is looking at traces of unusual trading activity between connected entities that could have led to the fall in the stock, which is down over 83% in the current calendar year. Trading activity of certain brokerages, who are believed to have an exposure with NSEL are especially being monitored to check if there was an unusual move just ahead of the announcements.
Sources also add that a well-known operator, whose name figured in the bear cartel allegedly involved in stocks related to the Reliance group is also believed to be under the regulatory scanner. Sources said Sebi began looking into the matter a few days ago as the stocks of two companies had been falling for quite some time with unusual volumes.
Meanwhile, Thursday saw FTIL registering its biggest single-day loss of 64.59%, or R349.80 to close at a new 52-week low of R191.75. The counter also saw 62.54 lakh shares changing hands on BSE, compared to the two-week average of 1.61 lakh. Similarly, MCX shares were locked at their lower circuit of 20% to close at a new low of R512.05, with nearly five times the average volume.
The FTIL stock has been under pressure for nearly a month as traders also mulled the effect of a 0.01% commodity transaction tax (CTT) to be levied on futures trading on the profitability of MCX — an FTIL group company.. FTIL dropped 27% in July taking its year to date fall to 83.02%. The relevant data is being collected from the stock exchanges as also from Sebi's internal Integrated Market Surveillance System. Besides, information might be sought from the brokerages and the companies involved. Senior officials of the capital market regulator also met with representatives of the Finance Ministry and the Consumer Affairs Ministry since NSEL does not come under the purview of the market watchdog.
Since July 11, shares of FTIL have been on a downtrend except for one day (July 29) when the stock ended in the green ahead of its quarterly earnings announcements. MCX has fallen to a level that is one-third of its 52-week high of R1,617, touched