SEBI’s rumour confirmation norms come into effect for top 100 listed entities

Amid the mayhem over exit poll prediction, market regulator SEBI has implemented the much awaited market rumour verification regulation on top 100 companies.

Under the SEBI’s rule, these companies will have to ‘confirm, deny, or clarify any reported event or information in the mainstream media that is not general in nature and that indicates that rumours of an impending specific material event’ are circulating among the investors in 24 hours from the reporting of the information.

SEBI has already established the norms for calculating the price movement impact on stock due to rumours. It has exempted the price movement due to certain corporate action such as buyback through reverse book building on stock exchange, qualified institutional placement, preferential allotment and takeovers effect on the price while calculating the impact of rumours on stock price move.

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After implement the rumour confirmation norms on next 250 top companies from December 1.

Makarand M Joshi, founder, MMJC and Associates – a corporate compliance firm said the initiative of SEBI would help strengthen the rumour verification framework and help in achieving fair market thereby making it a preferred market for investors all over the world.

The move would dissuade leaking of information that would affect the valuation in the given corporation action. The new regulation will exclude the price volatility in arriving at average market price for the purpose of corporate actions making it fair for all investors at large, he added.

Mahavir Lunawat, Managing Director, Pantomath Capital Advisors, a leading mid-market investment bank said markets have witnessed profit booking after strong break out last week ahead of general election results next week.

“We may see volatility in the market in short term ahead of election Results & surge in US 10 year treasury yields,” he said. Interestingly, none of the 12 exit polls have predicted defeat or even a slim majority for Modi-led NDA. The lowest number of seats predicted for NDA was 316 by Dainik Bhaskar, while the overall range was 281-351.

The victory of PM Narendra Modi augurs well for the economy and capital markets as it provides stability and continuity in policy-making with a single-party majority government while pushing its economic agenda.

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