Nuvama Wealth shares tumble 11% after Sebi cracks down on Jane Street

Shares of Nuvama Wealth Management Ltd dropped 10.99 per cent in Friday's trade to hit a low of Rs 7,285 after Sebi took action against US-based trading firm Jane Street, which is Nuvama's trading partner in India. The stock witnessed heavy trading volume along with the price action as around 37,000 shares were last seen changing hands on BSE. The figure was more than thrice the two-week average volume of 10,000 shares. Turnover on the counter came at Rs 28.06 crore, commanding a market capitalisation (m-cap) of Rs 26,566.01 crore.

Sebi has accused Jane Street of manipulating index levels on expiry days to make huge profits in index derivatives, especially Nifty and Bank Nifty options. The alleged manipulation resulted in illegal gains of Rs 4,843.57 crore, which the market regulator has ordered to be fully impounded and deposited into an escrow account.

Jane Street's India footprint spans three registered foreign portfolio investors (FPIs): Jane Street Asia Trading Ltd (JSATL), Jane Street India Trading Pvt Ltd (JSITPL) and Jane Street Asia LLC (JSALLC). Though formally separate, Sebi's investigation found they operated in perfect sync -- buying and selling identical contracts simultaneously, a pattern not aligned with hedging or liquidity provision, but with market manipulation.

These so-called "synchronized trades" were most frequent during weekly and monthly expiry sessions, where Jane Street placed large last-minute trades to influence the closing index price, thereby benefiting their derivative positions. Many of these trades were reversed within 75 seconds, suggesting a deliberate strategy to alter settlement values without taking real market exposure.

In addition, Sebi found evidence of circular trading, where Jane Street entities conducted back-to-back trades between themselves. These created a misleading impression of market depth and activity, violating fair-market norms.

As a result, Sebi has barred all Jane Street-linked entities from accessing India's securities markets, frozen their bank accounts and instructed them to close open positions within three months. Withdrawal of funds from their accounts will now require Sebi's prior approval.