The high fluctuation in share prices of a number of companies on the listing day has caught the attention of the Securities and Exchange Board of India (Sebi).

Sebi had initiated an enquiry into possible price manipulation in the stock price of some of the recently-listed companies, senior officials said. Sebi is looking into the subscription and trading details of these stocks.

An enquiry has been initiated. The idea is to find out if there is a trend of systematic manipulation by a set of players in the stock price, confirmed the official.

Senior officials said the market regulator would look into the subscription details and trading pattern. The subscription details would help it get cues about the names of investors who subscribed to these issues. If the same people had applied in most issues, there could be a trend.

Similarly, looking into the trading pattern would indicate if there was a concentration of volumes from a particular segment of brokers. The trading volumes in newly-listed companies were several times higher than the number of shares issued by companies in IPOs, indicating that there could also have been some circular trading in them.

Market experts say the modus operandi of IPO operators is similar to that used by now infamous trader Nirmal Kotecha, who rigged the share price of Pyramid Saimira through several benami accounts registered in the name of many individuals, including domestic helps and office boys.

Importantly, many of these stocks have seen little or negligible subscription from institutions. Yet, they were subscribed several times on the back of high subscriptions by retail and high net worth investors.

The reason, market players say, is that there are some dummy applicants who subscribe to an IPO for a small fee. There are allegations that many promoters pre-sell their issues at a 30-50 per cent discount to operators in Gujarat and Mumbai to get subscriptions. And, once the stock is listed, operators scramble to exit. This leads to wild fluctuations in the prices of these stocks.

The regulator is disturbed by this IPO trend, as high operator activity could hurt the genuine investors in these stocks. Also, regulating the IPO grey market has emerged as a serious challenge for Sebi.

Market players said there were some operators, nicknamed Barter and Rangeela Raju from Gujarat, and some Sebi-banned traders in Mumbai, who were active in the business of dummy investing.

The 2010-11 financial year has not been very good for small investors, as the stock prices of more than 70 per cent of companies that went for IPOs fell below their issue prices in the first few weeks of listing.

Among the recent IPOs, RDB Rasayana, Bharatiya Global, Servalakshmi Paper, Brooks Laboratory, Tijaria Poly Pipes and Sanghvi Forging & Engineering, among others, fell 70-80 per cent on either the day of listing or in two-three trading sessions after it.

The share price of RDB Rasayana was down 73 per cent on October 7, the listing day, and crashed to a low of Rs 14 on BSE from the issue price of Rs 79. All these IPOs were small, of Rs 30-80-crore size. Some, like Shekhawati Poly-Yarn and Omkar Speciality, are already under Sebi scanner.

RDB Rasayana saw retail subscriptions of 3.82 times. Similarly, Brooks Laboratories and Sanghvi Forging & Engineering saw subscription of 3.70 times and 2.88 times, respectively, from retail investors.

Stocks like Innoventive Industries, Paramount Printpack, VMS Industries, SRS Ltd, Timbhore and Readymade Steel fell 30-60 per cent from IPO prices. The key benchmark indices, including Sensex, Nifty and BSE small- and mid-cap, are down 15 per cent this year.