Rs 735 crore in 1 day! Jane Street's most profitable day on Dalal Street was built on Nifty Bank's fall
ADVERTISEMENT The profit was part of a larger Rs 36,502.12 crore that Jane Street earned across segments in India between January 2023 and March 2025. But SEBI's forensic probe zeroes in on January 17, 2024, when the firm allegedly executed an elaborate "Intra-day Index Manipulation" strategy in the Bank Nifty index and its constituents, leading to a windfall in index options.
On January 17, 2024, the Bank Nifty index opened sharply lower at 46,573.95, compared to the previous close of 48,125.10. 'Media reports claimed that this fall may be attributed to the market's apparent disappointment with the results announced by HDFC Bank after market close on January 16, 2024,' SEBI noted.
What followed was a two-part strategy that SEBI said helped Jane Street generate a net profit of Rs 734.93 crore in a matter of hours.
In the morning session—'Patch I'—the firm aggressively bought Rs 4,370 crore worth of Bank Nifty constituent stocks and futures, a volume SEBI described as significant in relation to the trading volumes in these markets. The purchases pushed prices upward and misled market participants into believing a recovery was underway.
'At a time when participants in index options markets are misled by the above support for Nifty Bank, JS Group builds effectively Rs 32,114.96 crores of bearish positions in the much more liquid Nifty Bank index options by buying cheap Put options and selling expensive Call options,' the order said.
ADVERTISEMENT In the second leg—'Patch II'—Jane Street reversed nearly all of its long positions. 'The sales are aggressive, in a manner that pushes down prices in the component stocks and hence the index. JS Group books losses in intraday cash/ futures market trading,' the SEBI order stated.But the losses in equities were dwarfed by the gains from index options. As the Bank Nifty index fell from the morning highs, the put options soared in value while call options lost steam. 'Profits in index options more than compensate for the JS Group's losses in intraday cash/futures trading,' SEBI said.
This was not a one-off. SEBI's investigation found Jane Street used the same 'Intra-day Index Manipulation' strategy on 15 of the 18 days it examined in detail. On the other three, the firm deployed a separate 'Extended Marking the Close' strategy, which was again seen on three more days in May 2025, after SEBI had already issued a cautionary letter.
ADVERTISEMENT Despite a February 2025 warning issued through the National Stock Exchange, 'JS Group continued with similar trades, in disregard of the caution letter from the Exchange… and JS Group's own commitments,' the regulator said.While the NSE closed its own probe into the matter, SEBI opted for a more aggressive stance. On Friday, it barred Jane Street and four affiliated entities from accessing the Indian securities market and ordered banks to freeze withdrawals from their accounts. The regulator also moved to impound Rs 4,840 crore in alleged illegal gains.
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Also read | Explained: What is Jane Street and how it made Rs 36,500 crore profit by gaming Dalal Street
The findings further underline concerns about the structure of India's derivatives markets, where sophisticated global players deploy algorithmic and high-frequency strategies against a sea of retail options traders. SEBI said Jane Street was 'consistently running what appeared to be by far the largest risks in 'cash equivalent' terms in F&O particularly on index option expiry days.'The regulator noted the 'intensity and sheer scale' of Jane Street's interventions in cash and futures markets, adding that the firm 'was aware that Nifty Bank was almost certainly likely to fall again by the end of the day, given their intent to aggressively sell back all of their morning purchases (and more).'
ADVERTISEMENT Other traders, however, 'were unaware of all this, and were hence enticed to deal at a time that the Nifty Bank itself was being artificially and temporarily propped up,' SEBI said.
Also read | Sebi bars U.S. trading firm Jane Street from Indian markets, orders Rs 4,840 crore freeze over alleged Nifty manipulation
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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