Sebi bans trade in suspected shell companies. Here is the full list

Exchanges have also been asked to conduct an audit of these listed companies

Market regulator Securities and Exchange Board of India (Sebi) has directed stock exchanges to initiate action against 331 firms that it suspects are shell companies and are listed on the bourses. 

Trading in all such listed securities, Sebi said, shall be placed in Stage VI of the Graded Surveillance Measure (GSM) with immediate effect. If any listed company out of the said list is already identified under any stage of GSM, it shall also be moved to GSM stage VI directly, the order says.

Under the stage VI of GSM framework, trading in these identified securities shall be permitted only once a month under trade to trade category. 

That apart, any upward price movement in these securities shall not be permitted beyond the last traded price and additional surveillance deposit of 200% of trade value shall be collected form the Buyers which shall be retained with Exchanges for a period for five months, the order says.

The exchanges have also been asked to appoint an independent auditor to conduct audit of these listed companies and if necessary, even conduct forensic audit of these companies to verify its credentials / fundamentals.

Meanwhile, markets tumbled in trade on Tuesday, with the benchmark indices – the S&P BSE Sensex and the Nifty50 – slipping nearly 1% each in intra-day deals to hit a low of 31,915 and 9,947 levels, respectively.

Analysts do not blame the Sebi circular alone for Tuesday’s fall. 

“Though I need to study the circular in detail, I don’t think the fall seen on Tuesday has been triggered by the Sebi circular. The market fall seems to have been triggered by profit booking in oil & gas and banking counters,” explains Deven Choksey, managing director and chief executive officer, K R ChokseyShares and Securities.

On technical parameters, too, analysts have been advising caution given the sharp rally seen thus far in calendar year 2017 (CY17).

“Momentum indicators are reversing from buy to sell, however, they haven’t still provided a sell crossover, hence we continue to maintain our short term bias sideways to positive. Last week was a fifth weekly positive close, hence there isn’t sign for reversal on weekly charts too,” says a note from Analnd Rathi Research.

“A breakout or breakdown from the range of 9,900-10,150 levels will set the trend ahead wither for a target of 9700 or 10400 levels. In yesterday’s trading session, it closed mildly in the negative territory, hence there is indecisiveness among the market participants,” it adds.

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