BSE shares: In a 105-page interim order, SEBI alleged that Jane Street and its affiliates employed high-frequency trading strategies to manipulate key benchmark indices such as the Nifty 50 and Bank Nifty. The regulator claimed these actions misled retail investors and enabled the firm to earn substantial profits in India’s rapidly expanding options market.Shares of BSE slipped over 6% to Rs 2,647.30 in Friday’s trade amid market jitters following SEBI’s action against US-based trading firm Jane Street, which has been barred from Indian markets for alleged manipulation in equity derivatives.
In a 105-page interim order, SEBI accused Jane Street and its affiliates of using high-frequency trading strategies to distort benchmark indices like Nifty 50 and Bank Nifty. The regulator alleged that these tactics misled retail traders while allowing the firm to generate massive profits in India’s booming options market.
SEBI also ordered the impounding of Rs 4,840 crore, calling it “unlawful gains” from the alleged misconduct.
One strategy highlighted by SEBI was “Intra-day Index Manipulation.” On January 17, 2024, Jane Street allegedly bought Rs 4,370 crore worth of Bank Nifty stocks in the morning to push up the index, then reversed the trade later while holding bearish option positions — netting a profit of Rs 734.93 crore in a single day. SEBI said this tactic was deployed on 15 out of 18 trading days reviewed, while an “Extended Marking the Close” strategy was used on the remaining three.
The regulator noted that Jane Street continued these trades despite a caution letter from the exchange and its own prior commitments to refrain from such conduct.
According to Nuvama Research, Jane Street’s direct trading volumes on the BSE are minimal — under 1%. Foreign portfolio investors (FPIs) as a whole account for just 4% of BSE’s volumes, with around 300 active FPIs on the exchange.
Kunal Kamble, Senior Technical Research Analyst at Bonanza, said BSE had been trading in a narrow range for the past eight sessions, but Friday’s drop reflected profit-booking and a sharp reversal.
“The stock is now below the 9- and 21-day EMAs, indicating short-term weakness. It’s forming a Lower High, and the RSI slipping below 51 reflects loss of bullish momentum. Technically, it may correct further toward the 50 EMA around Rs 2,550. A sustained move above Rs 2,870 is needed to revive short-term buying interest,” Kamble said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
