The Story So Far
Extreme volatility occurred after the exit poll results and the Lok Sabha election results on June 4.
The Nifty and Sensex recovered their losses after the initial drop.
Congress accused Prime Minister Narendra Modi and Home Minister Amit Shah of manipulating the stock market to benefit certain investors.
Stocks of companies close to the government, like Adani Group, and public sector companies gained the most.
On June 4, both indices fell by almost 6%, the worst single-day fall since March 2020, wiping out about ₹30 lakh crore in investor wealth.
PM Modi and Amit Shah had encouraged investors to buy stocks before June 4.
Congress claimed PM and HM encouraged retail investors to buy stocks before election results to benefit certain foreign investors.
On May 31, the value of stocks traded for cash doubled to ₹2.3 lakh crore.
More than half the buying came from foreign investors.
Allegations that foreign investors had insider information about exit poll results.
Opposition parties called for a joint parliamentary committee (JPC) to investigate.
Market Regulator's Rules
SEBI Regulations: Planting false or misleading news to induce sale or purchase of securities is illegal.
Exceptions: General comments on market trends made via mass media are not considered illegal unless proven to be in collusion with certain investors.
Piyush Goyal Claimed foreign investors bought high and sold low, while Indian investors used market volatility to their advantage.
Retail investors were net sellers when the market rose and net buyers when the market crashed. FPIs were net buyers when the market rose and net sellers when it crashed.
Retail Investors Definition: Includes not just small retail investors but also NRIs, HUFs, and various firms.
A thorough investigation is necessary to determine if there was manipulation and to understand the trading patterns of individual investors.
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