Capital market stocks crashed on July 4, as investors' sentiment soured after market regulator Sebi issued an interim ban on US-based Jane Street from accessing the Indian market due to allegations of manipulative activity. Stocks of BSE, CDSL, Nuvama, Edelweiss Group, Angel One and other capital market stocks nosedived significantly.
Capital Market Stocks:
After market hours on July 4, BSE share price plunged by 6.4%, while CDSL stock dropped by 2.3% on NSE. Steepest decline was seen in Nuvama Wealth Management stock to the tune of 11.3%. While Angel One plunged by nearly 6%.
Also, stocks like Motilal Oswal, Nippon Life India, Edelweiss Financial, and Prudent Corporate Advisory dipped by 1% to 2%. Meanwhile, IIFL Capital Services slipped by over 3%. Geojit Financial Services and HDFC AMC also declined marginally.
Why Capital Market Stocks Were Down On July 4?
According to Gaurav Garg, Lemonn Markets Desk, investor sentiment was dented following SEBI's interim ban on U.S.-based Jane Street for alleged manipulation in equity derivatives. The action comes as global players like Citadel, IMC Trading, and Millennium show increasing interest in India's rapidly expanding derivatives market.
Why Sebi Ban Jane Street? Explained!
Jane Street Group came under Sebi's radar last year in April, when media reports referenced a egal dispute involving Jane Street Group for alleged unauthorised use of their proprietary trading strategies in Indian markets. Following this, the regulator asked NSE to examine the trading activity of JS Group and its entities.
When NSE submitted its examination report in November 2024, Sebi observed what appeared to be abnormally high or low volatility on weekly index options expiry days. Further, SEBI noted that there were certain entities consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on expiry days.
That led Sebi to constitute a team of officials to further examine the issue in a more detailed and comprehensive manner. During this time, Sebi had interacted with JS Group in July 2024, to which the US-based company had submitted a written explainer of their trading activity.
However, the secondary investigation of Sebi revealed that JS Group and its entities appeared to be engaging in activities in violation of SEBI PFUTP regulations.
In February 2025, while the investigation was still ongoing, with a view to ensure that JS Group desisted from undertaking trading patterns that were prima facie fraudulent and manipulative, on SEBI's instructions, NSE as a first line regulator issued a caution letter to Jane Street Singapore Pte Limited and its related entity, JSI Investments Pvt Ltd. advising them to refrain from taking large (cash-equivalent) positions and to refrain from undertaking certain trading patterns.
However, Sebi observed that JS Group continued to to run very large 'cashequivalent' positions in index options. This was observed in May 2025.
Sebi's Interim Order On Jane Street:
Ananth Narayan G, Whole Time Member Of SEBI, in the interim order on JS Group and entities, said, "Entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly."
Sebi reported that the unlawful gains earned by the JS Group from the alleged violations are to the tune of Rs 4,843.57 crore.
Accordingly, Sebi has asked JS entities to open an escrow account in a Scheduled Commercial Bank in India to deposit jointly and severally the aforesaid amount of unlawful gains with a lien marked in favour of SEBI and the amount kept therein shall not be released without permission from SEBI.
Sebi also directed banks where JS Group and its entities have accounts, to ensure that no debits are made, without permission. But, credits, if any, into the accounts may be allowed. Further, debits in the bank accounts may also be allowed for amounts available in the account in excess of the amount to be impounded.
Also, Sebi directed Registrar and Transfer Agents shall ensure that, they neither permit any transfer nor redemption of securities, including Mutual Fund units, held by Entities.
"If the Entities have any open position(s) in any exchange traded derivative contracts, as on the date of this Interim order, they can close out/square off such open positions within 3 months from the date of order or at the expiry of such contracts, whichever is earlier," it added.
Stock Exchanges are directed to closely monitor any future dealings and positions of JS Group on an ongoing basis, to ensure that Entities do not either directly or indirectly indulge in any kind of manipulative activity, including by dealing in securities using any of the patterns identified or alluded to in this order, till the completion of the investigation by SEBI and the consequent proceedings, if any.
JS Group and its entities are -- JSI Investments, JSI2 Investments, Jane Street Singapore, and Jane Street Asia Trading.
Jane Street Group LLC is a global proprietary trading firm in the financial services industry. Jane Street employs more than 2,600 people in five offices across the United States, Europe, and Asia and trades in 45 countries.
F&O Markets Explained:
According to Sebi's explainer, derivatives are instruments whose value is derived from underlying reference securities. There is a strong interrelationship between the prices of derivative instruments and the prices of their underlying stocks or indices.
During the F&O expiry, if the price of a stock futures or index futures contract were to be significantly higher than the underlying stock or index price, arbitrageurs can sell the futures at a high price, buy the stock or index components in cash markets at a low price, and lock into an assured profit on expiry of the futures contract.
Similarly, if the price of a stock futures or index futures contract were to be significantly lower than the underlying stock or index price, an opposite side arbitrage opportunity would arise.
Thereby, the price of a stock futures or index futures contract generally moves in tandem with the price of the underlying stock or index.
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