Mid-cap, small-cap shares plunge; Sebi starts probe

About a dozen mid-cap and small-cap shares crashed today with a plunge of up to 62 per cent, prompting market regulator Sebi to initiate a probe into panic selling triggered by speculation that pledged shares are being sold by certain entities.
Sebi, along with the bourses which act as front-line regulators, are looking into possible links of a rogue trader who has been barred from the capital markets but could still be trading through front entities, a senior official said.
Suspecting a foul play, the authorities got into the act immediately after a massive sell-off was witnessed around the noon time in shares of over a dozen companies.

While the problems were initially limited to about 10-12 stocks, the panic selling spread to other companies from the sectors of affected stocks, the official said.
However, some of the affected shares managed to recover the lost ground, fully or partly, in the afternoon trade.
Sources said that most of these firms have a significant amount of pledged promoter shares and there are indications about margin-calls being triggered on these counters.

There is also a suspicion that deliberate attempts could have been made to pull down the shares through spread of wrong rumours among the traders about these stocks, the official said, while adding that the exact position would be known only after further investigations.

According to data available with the stock exchanges, shares of Core Projects tumbled 62 per cent and was the biggest loser on the entire BSE, while scrips of Aanjaneya Lifecare, Sudar Inds, Flexituff, ABG Shipyard, Welcorp and Gemini Comm crashed by 20 per cent each.
BSE Mid Cap index declined 1.20 per cent to close at 6,529.53 points while BSE Small Cap shed 1.36 per cent to end the day at 6,475.65 points. The benchmark 30-share Sensex ended flat at 19,331.69 points.