The BSE SME IPO index slipped 3.6% on Thursday after the Securities and Exchange Board of India (Sebi) issued an advisory to investors against misleading practices from some companies to inflate their stock prices.
The regulator cautioned investors about a pattern of stock manipulation in the SME market, where promoters paint unrealistic picture of their businesses, announce bonus shares and stock splits to create a positive sentiment, and offload their stake at inflated prices.
Interestingly, despite Thursday’s fall, the index is up 7.6% for the month and 119% in just the five months of FY25.
Even on the mainboard, prices of many smallcap and midcap stocks underwent a minor correction, while the benchmark indices registered fresh record highs.
The equity benchmarks, Sensex and Nifty, hit their all-time closing high levels on Thursday, driven by a fag-end rally in index majors Reliance Industries and Tata Motors. The Nifty recorded its longest winning streak since October 2007 as it rose 0.4% to close at 25,151.95 points. The Sensex rose 0.4% to close above 82,000-point-mark for the first time. The 30-stock index settled at 82,134.61 points at the close.
However, the market saw some volatility in the latter half of the session amid the expiry of monthly derivatives contracts.
The record gains on the stock markets will be supported by India’s rating being maintained globally on the back of a strong medium-term growth outlook and strengthening fiscal credibility, said Siddhartha Khemka, head of research, wealth management, at Motilal Oswal Financial Services.
On Thursday, Fitch reaffirmed India’s sovereign debt rating at ‘BBB-’ with a stable outlook.
Reliance Industries was the biggest contributor to Sensex and Nifty’s gains as it rose 1.6% following the announcement that its board would consider issuing a bonus share next month.
Among sectors, fast-moving consumer goods, automobile and information technology were the major gainers.
While the benchmark indices achieved fresh peaks, the broader market indices slipped. The BSE smallcap index fell 0.7% and the BSE midcap index ended 0.3% lower.
The regulator’s advisory on SME stocks is likely to have had a sentimental impact on the broader market, the research head from a domestic brokerage firm said.