July 4 market crash: No specific information on unfair trading on Lok Sabha polls results day, govt informs parliament

The government informed Parliament on Monday that the Securities and Exchange Board of India (Sebi) received representations over the market fall on June 4—the day the Lok Sabha election results were announced. However, the market regulator has no specific information on any 'unfair trading' that took place in the stock market on that day, which wiped out ₹30 lakh crores of investors' wealth.

In a written reply to a question related to the moves registered on the Sensex and the Nifty on June 4, Minister of State for Finance Pankaj Chaudhary said, “Though SEBI has received representations on the above stock market movements, no specific information on any unfair trading has been provided.”

It is important to note that on July 4, the benchmark BSE Sensex had shot up 3.4% to settle at a new closing peak on June 3 after exit polls predicted a resounding BJP victory in general polls.

However, on July 4, equity markets witnessed a bloodbath, with Nifty and Sensex declining nearly 6%, while the Midcap and Smallcap indices slipped as much as 8%. This was the worst single-day fall in four years.

"On 4th June 2024, the date of announcement of results of the general elections, Sensex and NIFTY-50 decreased by 5.7% and 5.9% respectively. The indices recovered within three days and have reached record levels since 4th June 2024, registering an increase of 12.9% and 13.3% respectively as on 18th July, 2024," Chaudhary said.

However, the minister said that the ₹30 lakh crore investor wealth lost on June 4, was recovered in a matter of five days and has increased by around ₹59 lakh crore since that day as of July 18, 2024.

"The decrease of around ₹30 lakh crore in market capitalisation of companies listed on NSE and BSE on June 4, 2024, was recovered within a period of five days and it has increased by around ₹59 lakh crore since then as on July 18," the MoS finance added.

"Stock market movements are a function of investor perceptions along with other factors which may include, inter-alia, global economic scenarios affecting foreign capital flows, domestic macro-economic parameters and overall corporate performance," the Minister said.

The Sebi, as the statutory regulator of securities markets, is mandated to put in place regulatory and surveillance frameworks to effect stable operations and development of the securities markets. It conducts regular surveillance of trends in the securities markets to enhance market integrity and safeguard the interests of investors.