Amid the influx of retail investors into the stock markets and benchmarks surging to record highs in the past year, the capital markets regulator is closely monitoring stock market recommendations released on professional television channels for “unfair business practices” by hosts.
Sources familiar with the matter told The Indian Express that the Securities and Exchange Board of India (Sebi) has deployed sophisticated monitoring tools to help it link recommendations made by hosts during show and illicit profits, if any – including image processing and machine learning models to capture stock recommendations on shows.
Action will be taken in cases where unfair practices are established. A source said the regulator closely monitors all trade channels, in all languages, that issue stock buy / hold / sell recommendations with price targets.
“Videos from these shows are captured and converted into a readable format to capture the details of the recommendations. The recommendations are then checked against the price movement of the particular script and the trading activity in the script, to detect if anyone has made significant profits, ”a source said.
Sebi used software and tools to analyze data from call records, publicly available social media posts, as well as bank statements, etc. to make connections between suspicious entities.
Under the leadership of current Sebi chairman Ajay Tyagi and full-time member Madhabi Puri Buch (who heads both Sebi’s oversight and information technology departments), the regulator has strengthened these years its surveillance capabilities through various technological tools.
The aim has been to augment the market surveillance systems in Sebi with advanced analytics (like pattern recognition, text mining, predictive analytics, artificial intelligence and machine learning, etc. ).
Monitoring stock market recommendations broadcast on television channels is another area where Sebi has now deployed new technological tools. In January, the watchdog issued an interim order against the host of a show on a leading commercial channel for engaging in “unfair business practices”.
According to the confirmation order adopted by the market regulator last month, buy positions were created in the trading accounts of the wife and mother of the host of the TV show in the respective scripts. one day before the recommendations given in the show.
These buy positions were liquidated by selling said shares on the day of the recommendation, at a higher price than the shares were bought the day before, thus generating significant profits.