Sebi asks for data on deals

The Securities and Exchange Board of India (Sebi) has asked for data from the National Stock exchange and the Bombay Stock exchange "" regarding the transactions on Wednesday and Thursday.

The market regulator's query follows the 1,700 point crash in the market on Wednesday within minutes of opening.

Sources close to the development said that the objective of the investigation is to find out trades done on behalf the foreign institutional investors, domestic institutions and on the proprietary accounts of the broking houses.

Incidentally, the Nifty futures (index based on the underlying of cash market in NSE) ended at a premium reflecting buying trend.

Dealers explained that on a day when markets crash, the Nifty ends with a discount. Sources said the crash on Thursday followed rumours that NSE may hike margins. The exchange should have issued a clarification immediately.

Banking stocks took a huge beating on Thursday since there was a huge unwinding of the derivatives positions built up in the form of P-notes by the FIIs.

Market source explained that as per the foreign investment guidelines, FIIs cannot pick up more than 20 per cent in banks from the cash market.

Therefore with limited floating stock in the cash market, most FIIs, which had built up huge positions in derivatives in the form of P- notes, had to wind up fast, triggering huge selling.