A large number of traders and brokers, as well as some foreign investors and promoters of listed companies, have come under market watchdog Securities and Exchange Board of India’s (SEBI’s) scanner for ‘bear cartel’ like activities in the stock market.
These individuals and firms are over and above the 19 entities barred by SEBI from the market in an interim order last week, for their suspected role in pulling down the prices of four mid-cap stocks.
Sources close to the development said SEBI suspects possible manipulation in the share prices of many other mid-cap and small-cap stocks in the recent weeks and has widened its probe
As per initial investigations, share prices are suspected to have been hammered down by certain connected entities through persistent transaction at prices much lower than their prevailing quotes, to shore up the holdings at lower valuations.
The modus-operandi is similar to those adopted by bear cartels, who first pull down the share prices of the companies by trading among themselves at low prices and later buy the same stocks very cheap at their beaten-down valuations, an official said.
He said certain brokers or market analysts could also have been used to spread negative rumours about the companies to pull down their share prices, while promoters of rival companies were also under the scanner.