Indian capital market-linked stocks came under heavy selling pressure, triggered by a flurry of regulatory chatter around the derivatives segment. Leading the selloff was Asia’s oldest stock exchange, BSE. Other regulatory plays like CDSL, capital market majors like Angel One also clocked sharp intra-day losses.
BSE shares tumbled as much as 7.53% to an intra-day low of Rs 2,437.70 on the National Stock Exchange (NSE) on Tuesday. Since last Friday, BSE’s stock has dropped over 11%.
Regulatory overhang: The SEBI link
According to a CNBC-TV18 report, the Securities and Exchange Board of India (SEBI) may be considering a proposal to link derivatives (options contracts) with corresponding positions in the cash market. This is seen as an effort to enhance liquidity in the cash segment while curbing excessive retail activity in the options space.
On the other hand, the NDTV profit in its latest report citing sources familiar with the matter, reported that SEBI is not considering any such linkage at present. The sources also stated that no proposal on this matter has reached SEBI’s Secondary Market Advisory Committee (SMAC).
Stock focus: Who lost what?
The confusion around regulatory intent, however, has already spooked investors. Apart from BSE, shares of Angel One plummeted 6%, while Nuvama Wealth, Motilal Oswal, 5Paisa Capital, and Dhani Services all slipped between 0.5% and 1.6%.
CDSL also saw a drop of over 2%. On the smallcap index, Angel One and MCX emerged among the top losers, while BSE led losses in the midcap space.
Backdrop: Jane Street fallout still lingers
This week’s volatility adds to the aftershocks of SEBI’s recent clampdown on Jane Street Group and its affiliates, who were barred from accessing Indian markets for allegedly employing manipulative strategies in index-based trading. That regulatory action had already sparked a wave of selling in market-linked stocks.
Retail losses in derivatives raise concern
Furthermore, the market regulator’s annual report which was released on July 7 also noted that the retail investors lost nearly Rs 1.10 lakh crore in derivatives trading in FY25. This is a 41% increase from FY24.
