(Adds background, investor comment)
By Himank Sharma and Abhishek Vishnoi
MUMBAI May 12 India's securities regulator is
keeping a close watch on markets after shares rallied to record
highs on speculation that exit polls would show the opposition
Bharatiya Janata Party and its allies winning a majority in the
election, a senior official with direct knowledge of the matter
Several traders attributed the gains in Indian shares, which
sent the broader NSE index to record highs on Friday and
Monday, to leaked results from exit polls.
Throughout the day, traders widely circulated numbers
purported to be from media organisations, although nobody could
confirm to Reuters their provenance or if they were genuine.
Media organisations were not allowed to release their exit
polls until 6.30 p.m. local time (1300 GMT) on Monday after the
conclusion of the country's five-week long election.
Four major exit polls forecast a victory for the opposition
coalition led by Hindu nationalist Narendra Modi, with results
ranging from 261 to 289 parliamentary seats.
Modi's BJP and its allies need to cross the 272-seat mark to
secure a majority in the lower house of parliament.
"To ensure market integrity SEBI and exchanges have been
keeping a close watch on the market movements and are making
necessary enquiries wherever the trades appear to be unusual," a
senior official at Securities and Exchange Board of India told
The SEBI official was responding to a Reuters inquiry about
whether the regulator was looking into the market speculation.
He declined to be identified because he was not authorised to
talk to the media about SEBI's actions on the matter.
SEBI did not respond to an emailed request for comment.
Indian stock markets have seen previous cases of sudden
sharp movements in indexes or company shares ahead of big
corporate announcements, raising suspicions about insider
trading that have damaged retail investor confidence.
In April, SEBI began a formal investigation into the surge
in the stock price of Ranbaxy Laboratories in the
run-up to its planned $3.2 billion merger with Sun
"Markets got wind of exit poll results showing a clear
majority for BJP-led allies," said Deven Choksey, managing
director at K R Choksey Securities.
A spokesman at BSE Ltd, India's oldest exchange, said: "The
surveillance department would keep a close watch on unusual
things. SEBI remains in touch with surveillance on (a) regular
"We can't comment on this," said a spokeswoman for National
Exchange, India's largest exchange.
(Additional reporting by Neha Dasgupta; Editing by Rafael Nam)