Zee Business Exclusive: SEBI finds no manipulation in market on exit polls issue

Market regulator Securities and Exchange Board of India (SEBI) has not found any issues regarding market manipulation and insider trading alleged by a group of Members of Parliament. According to sources, “The regulator has completed its inquiry in the matter and no sign of manipulation has been found.” 

According to the sources, SEBI had already conducted its inquiry after the issue was raised in the first week of June. However, after the group of MPs met the top SEBI officials and submitted the complaint, the issue was taken up again. 

SEBI is likely to share a report with the Finance Ministry on the issue, as the matter may arise during the Budget session of Parliament, set to begin on July 22 and end on August 12.

TMC MP Saket Gokhle had alleged in the complaint that “exit poll companies had provided advanced information to their clients before the broadcast of exit polls, which allowed them an unfair and insider advantage on the stock market through non-public information”. 

In the exit polls, the projection given by most of the polls was around 350 seats, much more than the required 273 seats for the majority. It is alleged that because of these projections, the stock market rallied on June 3, but after the actual counting of votes on June 4, equity benchmarks Sensex and Nifty fell around 6 per cent. 

The market jumped on June 3, a day before the actual counting, based on exit poll numbers giving a thumping majority to the ruling alliance.

However, according to a regulatory source, “Data from all market infrastructure institutions was sought and analysed as per the complaint but nothing was found. If there is any specific point, SEBI can still look into the issue.”

According to a former regulatory official, any complaint received by SEBI is investigated by default, regardless of the status of the complainant. However, if specific inputs are given, it's easy to find and take suitable action.

After a post-board meeting press conference on June 27, SEBI Chairperson Madhabi Puri Buch responded to a query by Zee Business asking whether measures to deal with volatility were adequate on the vote counting day, by saying: “There was not a single default in settlement."

However, because of high volatility, there was a bit of panic among small investors. Market experts also suggest that the investors were in panic due to high volatility on the counting day, but as per data, losses to many small investors may not be correct. Those who participate in the market from a short-term perspective to earn quick money without understanding its behaviour may have lost money, but such investors can lose money on any given day.

As per NSE data, retail investors exited at a high and bought at a low on June 3 and June 4, respectively. Retail investors sold shares of Rs 8,588 crore on June 3, expecting the NDA government to return. Similarly, retail investors bought Rs 3,000 crore of shares on June 4, when the market fell around 6 per cent. 

FPIs bought shares worth Rs 3,073 crore on June 3 and sold shares worth Rs 22,511 crore in the next session. So, retail investors made gains at both ends, selling when the market went up at a higher value and again purchasing when it fell.

At the time of publishing this report, SEBI was yet to respond to Zee Business’s email queries on the matter.

Tarun Sharma contributed to the report