Govt probes BSE fall and its link to false report of PM quitting

Asked if the Ministry suspected foul play,and whether it would investigate the crash to see if it was triggered by the news item,Chawla said,“Let’s see.” Finance Ministry sources said it was difficult to assume a malpractice based on one byte of information. It was also true though that the markets saw a volatile session with the Sensex closing 1.73 per cent lower at 19,585. In the last two weeks,the Sensex has lost 7 per cent (See detailed story on Page 19).

Top SEBI officials said the market regulator was aware of the news item that appeared on the website. “The item was quickly pulled out. We are collecting information about the trades immediately after the story appeared,” said an official. He added that SEBI routinely follows up on all unusual market movements to satisfy itself that there was no effort by interested parties to play the markets.

While markets were subdued in early trade Friday,they picked up momentum by noon. The Sensex opened at 19,982.75 and touched a low of 19,505,before trimming losses and closing at 19,585. The fall was sharp between 3 pm and 3.15 pm,when the news of the PM’s resignation was flashed on the website.

Chawla said the Ministry studied market movements daily. “Some correction was waiting to happen,” he said.