Date:29/04/2006 URL: http://www.thehindu.com/2006/04/29/stories/2006042906901500.htm

Business

Market shrugs off SEBI ban, Sensex up 17 points

Special Correspondent

Witnesses an intra-day swing of 533 points

MUMBAI: In a knee-jerk reaction to the interim order passed on Thursday by the capital market regulator banning some key depository participants, the benchmark stock market indicator, Sensex, crashed on Friday by 490.41 points initially but ended the day 16.91 points up compared to the previous closing, following certain clarifications from the Securities and Exchange Board of India that were reassuring to investors.

In panic stricken trading, in the initial hours, the market witnessed an intra-day swing of 532.71 points, the biggest since May 17, 2004. However, constant buying support extended by a large number of domestic institutions, mutual funds and foreign institutional investors (FIIs) helped the stocks to recover from lower levels.

The Bombay Stock Exchange 30-share sensitive index (Sensex) crumbled to a low of 11,344.61 before staging a sharp recovery to the intra-day high of 11,877.32 and ended the day at 11,851.93 against the previous close of 11,835.02, a gain of 16.91 points.

Market regulator, SEBI, on Thursday, by an interim order, banned 24 key operators, including Indiabulls Securities and Karvy Stock Broking, from operating in the stock markets and barred 12 depository participants (DPs).However, on Friday SEBI deferred its order banning Indiabulls Securities subject to verification of clients.

SEBI noted, pursuant to its order, "on the basis of oral and written submissions made by Sameer Gehlaut, Chairman, Indiabulls Securities Ltd, and having regard to the balance of convenience in the materiality of circumstances of the case, the ex-parte ad interim order dated April 27, 2006 in the matter of initial public offerings, insofar as it relates to Indiabulls Securities Ltd would be kept in abeyance subject to verification of clients and until further directions."

SEBI further clarified that the directions, "not to buy, sell or deal in the securities market including in IPOs, directly or indirectly, till further directions," in the interim order relating to IPOs, insofar as they relate to brokers who are SEBI registered intermediaries, would apply only in respect of transactions in the proprietary account of brokers and that the transactions on behalf of clients would remain unaffected. The same clarifications apply to DP operations wherever they are Depository Participants. SEBI also asked clients of the banned entities to switch over to other depository participants within 15 days.

"It is clarified that the DP transactions of clients would remain unaffected only for 15 days, by which time switchover to another DP should take place in respect of directions against Karvy DP and Pratik DP," SEBI stated. Probing the major scam involving public offers during 2003-05 period, SEBI in its 256-page interim order, also asked the Reserve Bank of India, Income Tax and other authorities to pursue the issue. HDFC Bank, IDBI Bank, Centurion Bank, ING Vysys Bank, IL&FS and Motilal Oswal Securities, among others, have been asked by the market regulator not to open fresh demat accounts till further directions.

Indiabulls denies

role in IPO scam

Indiabulls Securities Ltd on Friday denied any role in the recent IPO scam.

"Indiabulls Securities Ltd or any of its group companies had absolutely no role in either the IPO application of 559 clients or any economic interest or any other interest whatsoever in the sale proceeds arising out of the sale of 13,939 shares or any financing of any of the IPO applications of the 559 clients," Indiabulls stated.

Both BSE and NSE will conduct special live trading session on Saturday between 10.30 a.m. and 1.30 p.m.