Building trust in volatile times: The quiet power of strong market surveillance

Trust in capital markets increases when oversight, transparency, and price discovery develop together. Recent movements in RRP Semiconductor Ltd.'s shares highlighted this. From mid-2024 to late-2025, the stock soared from about Rs 15 to nearly Rs 11,000 — a gain of over 70,000 percent. This remarkable change occurred despite no indication of material shifts in the company's fundamentals in its public filings and disclosures during that period. Events like this emphasize the importance of India’s robust surveillance system continuing to evolve in tandem with the market.

India’s regulatory framework — governed by the PFUTP and LODR Regulations — already provides exchanges with a clear mandate to review unusual movements, seek clarifications, and promote stable trading conditions. These mechanisms lay a foundation of trust for both retail and institutional investors. In this case, the company confirmed that there were no significant developments linked to the unusual price action. Situations like this gently demonstrate how timely communication, supported by a responsive oversight system, can further strengthen investor confidence.

Adapting Surveillance Tools to Modern Market Conditions

Exchanges today rely on proven surveillance tools — ASM, GSM, and ESM — to spot unusual trading activity. In the RRP Semiconductor case, the stock was eventually moved into Enhanced Surveillance Measures, including a 2 percent circuit band and trade-for-trade settlement. These steps help reduce volatility and promote orderly trading. As markets become more active and retail participation grows, regularly updating surveillance thresholds, reviewing alert triggers, and quickly engaging with the issuers during unusual price movements can help ensure investors receive clear and timely updates. These enhancements would strengthen an already robust system for the future.

Putting the Trend in Context

More than 75 companies on SME platforms have delivered returns of over 1,000 percent in just two years. Such results often originate from microcaps with limited liquidity and concentrated participation. These performances highlight the enthusiasm in India’s equity market, but they also underscore the need to ensure valuation changes are based on clear information. By continually improving how unusual patterns are identified and communicated and developing an analyst community, the market can better support investors — especially first-time retail participants — who may lack the tools to interpret rapid price movements on their own.

Strengthening the Framework Through Constructive Learning

Observations from episodes like the RRP Semiconductor movement help shape the next phase of market-strengthening measures. A few suggestions aligned with India’s growth trajectory include:

• Evolving surveillance thresholds to match the pace of today’s markets;

• Encouraging more dynamic, real-time disclosures;

• Proactive verification of rumours;

• Enhancing early-warning analytics for low-float or fast-moving stocks;

• Reviewing how re-entry into normal trading regimes is calibrated.

These enhancements are not corrections to existing features but natural improvements that reflect the growth and complexity Indian markets have reached. They also support the goal of providing investors with information and protection alongside price discovery.

Looking Forward with an Eye on Stability

Market integrity strengthens with each thoughtful improvement. As investor participation grows and more smaller, fast-growing companies enter the listed universe, transparency and timely oversight become even more crucial. The RRP Semiconductor episode reminds us that rapid price movements — regardless of cause — can be an opportunity to refine frameworks that keep investors informed and markets orderly. Enhancing surveillance, improving disclosure standards, and encouraging early intervention where needed all help create a safer environment without restricting legitimate growth.

India’s capital markets are at a crucial phase in their development. Growth has never been stronger, participation has never been wider, and opportunities have never been more accessible. The way forward lies in embracing continuous refinement — focused, balanced, and future-oriented — so that every investor, from experienced professionals to first-time participants, feels secure and well-informed. When integrity, clarity, and opportunity come together, markets not only thrive — they endure.

(Views are personal; the author is Partner, MCQube)