Shares of Nuvama Wealth Management Ltd nosedived 10.25 per cent to Rs 7,337.50 on the NSE on Friday after the Securities and Exchange Board of India (SEBI) barred U.S.-based trading firm Jane Street Group from Indian markets. The action, centered around alleged manipulation of benchmark indices like Nifty 50 and Bank Nifty, sent shockwaves across the financial services sector — especially wealth management and NBFC stocks.

SEBI Crackdown on Jane Street Triggers Selloff in Capital Market Stocks

In a strongly worded 105-page interim order, SEBI accused Jane Street and its affiliates of using high-frequency algorithmic trading strategies to artificially influence index levels and make derivatives profits. The regulator ordered the impounding of Rs 4,840 crore in unlawful gains and directed banks to freeze all debit transactions linked to Jane Street entities, including JSI Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd.

Nuvama in Focus Despite No Direct Allegations

Although SEBI's order does not name Nuvama Wealth Management directly in the alleged market misconduct, the company’s historic role as an on-ground execution partner for Jane Street in India raised investor concerns. Sources said Nuvama had previously responded to the National Stock Exchange's internal probe, which was closed in May 2025. SEBI, however, launched its own parallel investigation, taking a much tougher regulatory position.

The result: Nuvama stock plunged Rs 838.00 in a single session.

Capital Markets Index Weakens; Angel One, BSE, CDSL Also Fall

The ripple effect hit the broader market. The Nifty Capital Markets index fell 2 per cent, led by:

Angel One: Down 7 per cent to Rs 2,740

BSE Ltd: Down 6 per cent

CDSL: Down over 2 per cent

Inside the Jane Street Trades: Rs 734.93 Crore in One Day

SEBI’s order spotlights a trading method called “Intra-day Index Manipulation.” On January 17, 2024, Jane Street allegedly bought Rs 4,370 crore worth of Bank Nifty stocks in the morning to inflate the index, then reversed positions later in the day while holding bearish options. The profit? Rs 734.93 crore — in just one session.

SEBI claims this strategy was used on 15 of 18 trading days it reviewed, while a similar approach called “Extended Marking the Close” was employed on the other three.

Retail Traders Hurt, Institutions Profit

The bigger concern? Retail traders, who make up the bulk of options volume on Indian exchanges, were left on the losing end. SEBI estimates that foreign and proprietary firms earned over Rs 61,000 crore in FY24 from such tactics — while retail investors suffered corresponding losses.

Jane Street’s profits in India have drawn global attention. In a U.S. lawsuit, rival firm Millennium Management revealed that Jane Street made $1 billion from Indian options in 2023. Bloomberg later reported the figure rose to $2.3 billion in 2024, with most of it from index options.

A Regulatory Wake-Up Call

With this ban, SEBI has sent a strong signal to global high-frequency trading firms and their Indian counterparts. For now, Nuvama Wealth Management, though not formally charged, has become a cautionary example of the reputational risks in outsourcing or enabling aggressive quant trading strategies.