SEBI Introduces ‘Unaffected Price’ to Stabilize Stock Markets, Countering Rumors

Home » News » SEBI Introduces ‘Unaffected Price’ to Stabilize Stock Markets, Countering Rumors

SEBI has introduced a new concept called the ‘unaffected price’ to reduce artificial fluctuations in stock prices. This move comes as part of SEBI’s efforts to shield stock prices from the impact of share market rumours. The introduction of this concept is significant as it aims to promote fairness and stability in the stock market, ultimately benefiting investors.

Let us understand this new ‘unaffected price’ concept.

Unaffected Price Concept| Key Highlights

  1. SEBI introduces the ‘unaffected price’ concept to stabilise stock prices amid market rumours.
  2. New guidelines aim to shield stock prices from artificial fluctuations caused by rumours.
  3. Listed entities to verify market rumours upon significant price movements, starting June 1, 2024.
  4. Calculation of ‘unaffected price’ involves adjusting volume-weighted average prices (VWAP) to exclude rumour effects.
  5. Applicability of ‘unaffected price’ extends for 60 or 180 days based on transaction stage, easing IPO procedures.
  6. Promoters with more than 5% post-offer equity share capital can contribute to shortfall without being identified as promoters, facilitating IPOs.

Latest Circular By SEBI| An Overview

SEBI introduced the framework under Regulation 30(11) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, amended by SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2024.

Unaffected Price Meaning

The concept of the unaffected price determines a price unaffected by market rumours. When a rumour causes a significant price change, the affected price should exclude this impact and the confirmed rumour’s effect on the equity shares’ price.

The unaffected price is crucial for various financial transactions and regulations.

The unaffected price is the price at which transactions are considered. This excludes the effect of material price movement and confirmed rumours.

Verification Process and Applicability

SEBI now requires the listed entities to verify market rumours following significant price movements.

  • SEBI’s verification process initially applies to the top 100 listed entities from June 1, 2024.
  • It will subsequently extend to include the top 250 entities by December 1, 2024.

Guidelines for Calculation

Calculating the ‘unaffected price’ is a careful process.

It involves excluding the price impact caused by the rumour and its confirmation from the volume-weighted average price (VWAP).

Volume Weighted Average Price (VWAP) is the average price a stock has traded at throughout the day. It is weighted by the volume of shares traded at each price level.

This adjustment happens from the day of material price movement until the trading day after confirmation.

The Calculation Method for Adjusted Volume Weighted Average Price (VWAP) involves several steps:

Firstly, the daily VWAP must be adjusted based on the variation caused by the material price movement and subsequent confirmation of the rumour.

Next, the WAP Variation needs to be determined. It represents the difference in the daily VWAP from the day of material price movement until the end of the next trading day after confirmation of the rumour.

Then, the Adjusted Daily WAP must be calculated by excluding the WAP variation from the daily VWAP in the look-back period from the day of material price movement onwards.

Finally, the Adjusted VWAP needs to be computed based on the adjusted daily WAP for the entire look-back period.

Applicability Period

As per the SEBI circular, the ‘unaffected price’ remains valid for either 60 or 180 days. However, this duration depends on the transaction stage. 

It starts from the rumour confirmation date and lasts until the ‘relevant date’ as per current rules.

Simplifying IPO Procedures

Sebi has also amended rules to make it easier for firms planning IPOs.

  1. Sebi stated that any change in the size of OFS will now be based on either the issue size in rupees or the number of shares, simplifying the process.
  2. Companies planning IPOs often face a minimum promoter contribution shortfall.
    Companies must hold the Equity shares for a year before filing the draft red herring prospectus (DRHP) to meet MPC requirements.
  3. Sebi has decreased the requirement for extending the bid closing date. It can now be extended by a minimum of one day for events like banking strikes, down from the previous requirement of three days.

These changes aim to streamline IPO procedures and provide more flexibility to companies.

What Does This Mean For Investors and Traders?

This circular from SEBI represents a step towards greater investor protection. Experts expect this initiative to result in more stable and predictable stock prices. Thus reducing the risk of artificial fluctuations stemming from share market rumours.


By mandating the exclusion of rumor-induced price movements, the unaffected price concep enhances market performance. Investors should stay updated about these regulatory changes for a better understanding of transaction pricing integrity.

Source- https:/


Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.