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Sebi suspects price rigging by PSBs, examines stock trading pattern

Sources said the government raised the issue of declining share prices of top PSBs, despite providing capital to revive growth

Shrimi Choudhary  |  Mumbai 

sebi

The (Sebi) is examining the trading pattern in the stocks of state-run banks, following the announcement of the government’s recapitalisation programme on January 25.

According to sources, the market regulator suspects price rigging by a group of investors.

On January 25, the Bank index, a gauge of the (PSB) shares’ performance, had declined 6 per cent. Sources said the government raised the issue of declining share prices of top PSBs, despite providing capital to revive growth.

When the Centre had first announced the Rs 2.1 trillion recapitalisation plan, the Bank index had rallied 30 per cent on October 24. However, banking shares more or less remained flat between November and January.

“The finance ministry has discussed the matter with the regulator and some big brokers early this month to discover the reason behind such volatility,” a source said.

Sources added that the Centre had asked to probe the weakness in stocks and whether any cartel was behind the sluggishness.

Nifty bank graph

The decline in banking stocks caused a notional loss of Rs 427.99 billion to the government. Sources said had sought further trading details from stock exchanges.

On January 25, shares of large PSBs, such as Punjab National Bank, Bank of Baroda and State Bank of India, had declined over 5 per cent each. Shares of smaller banks, such as United Bank of India, Central Bank of India and Indian Overseas Bank, had remained flat.

Analysts said the shares of large banks had dropped as the recapitalisation programme was skewed in favour of smaller banks.

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First Published: Thu, February 15 2018. 21:48 IST
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