How Jane Street made ₹735 crore in one day by manipulating Indian markets
US-based trading firm Jane Street has recently been at the center of controversy after the Securities and Exchange Board of India (SEBI) imposed a trading ban on them for alleged ‘intra-day index manipulation’ that led them to make a massive profit of ₹735 crore in a single trading day on 17 January 2024. SEBI’s investigation revealed that Jane Street had earned a whopping profit of ₹36,500 crore in Indian markets between January 2023 and March 2025, raising concerns about the extent of foreign influence and high-frequency trading in Indian derivatives.
The investigation focused on the trading activity of Jane Street in the Bank Nifty index and its constituent stocks. On the day in question, following a disappointing earnings report from HDFC Bank, the index opened significantly lower than the previous close. Jane Street allegedly implemented a two-phase strategy to manipulate the market and generate profits. In the first phase, the firm aggressively bought stocks and futures worth ₹4,370 crore, artificially inflating prices to create the illusion of a market recovery. Simultaneously, they built substantial bearish positions in index options by buying cheap puts and selling expensive calls, betting that the Bank Nifty would fall later in the day.
During the second phase, Jane Street liquidated its earlier long positions, triggering a sharp decline in prices as expected. The gains from put options offset the losses from the equity and futures trades, resulting in a profit of ₹734.93 crore in just one day. SEBI’s investigation revealed that similar tactics were used on 15 out of 18 days under scrutiny, while on the remaining days, a related strategy called “Extended Marking the Close” was employed.
Despite a warning from the National Stock Exchange in February 2025, Jane Street allegedly continued with its strategies, disregarding cautionary communications and their own promises. As a result, SEBI decided to ban Jane Street and four connected entities from trading in Indian markets on July 5. Additionally, banks have been instructed to freeze ₹4,840 crore of alleged illegal profits made through these trades.
The case has raised significant questions about the structure of India’s derivatives markets, where sophisticated global players using intricate algorithms coexist with uninformed retail investors. SEBI’s observations highlighted that Jane Street took the largest risks in India’s F&O segment in cash-equivalent terms and exploited their dominant position and high-speed systems to manipulate prices and mislead others in the market. This crackdown by SEBI is expected to reshape how institutional trading firms operate in India’s rapidly growing derivatives market as regulatory oversight tightens.