IndusInd Bank shares rise 2% following significant update from insider trading investigation

Shares of IndusInd Bank Ltd. experienced a boost of 2.22% to reach ₹857.05 following the Securities and Exchange Board of India’s (Sebi) decision to clear its former top executives, CEO Sumant Kathpalia and deputy CEO Arun Khurana, of any misconduct in an internal trading investigation. Sources from CNBC-TV 18 suggested that SEBI did not find any indications of insider trading by the executives at IndusInd Bank.

The investigation by Sebi aimed to determine if the executives had breached regulations while selling shares obtained through the bank’s Employee Stock Ownership Plan (ESOP). Nevertheless, an individual familiar with the situation affirmed that all required disclosures were properly made, and the transactions were executed post-vesting and in adherence to regulatory standards.

This exoneration comes after a turbulent period for the bank. In March, IndusInd faced a ₹1,960 crore forex derivative accounting error, leading to pressure on its stocks, an audit by PwC and Grant Thornton, and the resignation of the said executives.

Despite these adversities, the bank demonstrated resilience during Thursday’s session, reaching a peak of ₹863.50. Presently, IndusInd Bank holds a market capitalization of ₹667.49 billion, with more than 11.7 million shares exchanged thus far in the session. It boasts a P/E ratio of 9.21 and offers a 1.93% dividend yield.

Market analysts highlighted that while the forensic audit brought to light an awareness of the accounting discrepancy, there was no evidence of insider trading, offering provisional regulatory clarity to the institution.

Further developments may unfold as the RBI and the board review the audit outcomes, but investors seem optimistic regarding a mitigation of regulatory challenges at the moment.

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