Capital Market Alert: Sebi Lacks Specific Information on Unfair Trading During Poll Results Day Stock Market Crash

The Securities and Exchange Board of India (Sebi) did not receive specific information about ‘unfair trading’ during the stock market crash on June 4, the day of the Lok Sabha election results. On Monday, Minister of State for Finance, Pankaj Chaudhary, informed Parliament about this in a written reply. He stated that stock market movements are influenced by investor perceptions and other factors.

Drop in Stock Prices

Chaudhary responded to a question about the significant drop in stock prices after the general elections in 2024, which reportedly caused a loss of Rs 30 lakh crore to investors. He mentioned that although Sebi received reports about the market movements, there was no specific information provided on any unfair trading activities.

BSE Sensex

On June 3, the BSE Sensex surged by 3.4% to a new peak after exit polls predicted a BJP victory. However, the next day, the market crashed with the Sensex dropping by 4,390 points, or nearly 6%, marking the worst single-day fall in four years. On June 4, the Sensex and NIFTY-50 both fell by around 5.7% and 5.9%, respectively. The indices recovered within three days and have since reached record levels, with increases of 12.9% and 13.3% by July 18, 2024.

Market Capitalisation

Chaudhary added that the market capitalisation loss of Rs 30 lakh crore on June 4 was recovered within five days, and has since increased by Rs 59 lakh crore by July 18. Sebi is responsible for ensuring stable operations and development of the securities markets through regulatory and surveillance frameworks. It regularly monitors market trends to protect investor interests and takes enforcement actions when necessary.

Chaudhary concluded that stock market movements are influenced by various factors, including global economic scenarios, domestic economic parameters, and overall corporate performance, alongside investor perceptions.