SEBI has ordered two firms, Copthall Mauritius and Mansi Share and Stock Broking, to pay Rs 3.68 crore for allegedly manipulating the Sensex closing price. This action, following an interim order, underscores the regulator's vigilance over the Closing Auction Session to protect the integrity of index-based derivatives.
The Securities and Exchange Board of India (SEBI) has taken strict action against suspected market manipulation, issuing an interim order to impound Rs 3.68 crore in alleged wrongful gains from two entities. The regulator identified Copthall Mauritius Investment Limited and Mansi Share and Stock Broking Private Limited as key players involved in manipulating the Sensex during its Closing Auction Session (CAS) on August 13, 2026.
In its findings, the regulator pointed to unusual activity between 3:20 pm and 3:30 pm, the window when the closing price of the index is determined. SEBI’s surveillance detected three rapid and significant swings in the Sensex's Indicative Equilibrium Price (IEP). The index closed at 78,080 on that day, a level SEBI noted was higher than what would have been expected based on the performance of the Nifty 50, which often moves in tandem.
How the Manipulation Allegedly Worked
SEBI’s interim order details two different strategies allegedly used to influence the index, which would have benefited derivative positions held by the entities. Copthall Mauritius was found to have placed a high volume of aggressive buy orders at the 3 percent ceiling above the reference price during the session. A significant portion of these orders was canceled shortly after the price movement, suggesting the intent was to push the index higher. Since Copthall held long call and short put options, a higher closing price would have increased the value of its holdings.
In contrast, Mansi Share and Stock Broking allegedly placed large sell orders well below the reference price, which served to suppress the index value for approximately five minutes before these orders were also canceled. This appeared to benefit the firm’s portfolio, which included put options that gain value as the index falls. SEBI clarified that while the entities acted differently, both appeared to be attempting to influence the index to favor their respective derivative bets.
Protecting Market Integrity
Market manipulation in the Closing Auction Session is a serious concern for regulators because it directly impacts the settlement price for futures and options contracts. Traders and investors, including retail participants, rely on the accuracy of this closing price to determine their profit or loss on expiry days. When artificial price spikes or dips occur, it distorts the value of these contracts and undermines the fairness of the market mechanism.
Following the discovery, SEBI has barred both firms from accessing the securities market and participating in the Closing Auction Session until a full investigation is completed. The regulator has also frozen their bank and demat accounts to prevent the disposal of assets, ensuring that any potential recovery of wrongful gains remains possible. Investors should note that SEBI is increasingly using advanced surveillance to monitor new market mechanisms like the CAS, signaling a firm stance against any activity that threatens the orderly functioning of the Indian stock market.