The regulator has sought details from stock exchanges on the LML scrip movement between mid-January and end-February. It is learnt that Sebi has approached the Bombay and National stock exchanges for details on the same.

Market sources feel there may have been some informed buying in the scrip which turned extremely volatile during the period under question.

Sources said that the possibility of insider trading may be likely as the company is not a closely-held entity. FII holding in the company is also below the 20 per cent mark, leaving enough scope for the FII punters to enter the scrip.

The scrip went up from Rs 96.75 on February 5 to trade in the band of Rs 103-115 during the second week of February. Theshares, which were traded in the non-specified category of the BSE till February 23, suddenly saw hectic activity when they entered the no-delivery phase, in turn logging over 7-10 per cent of the total turnover in the B group segment of the exchange.

On January 19, more than 2.16 lakh shares changed hands on the BSE, taking it to the top three list of most highly traded scrips in the B group of the exchange.

According to analysts, the promoters' decision to pump Rs 37.55 crore by way of a preferential issue priced at Rs 66 per share had left a positive impact on the market.

However, it all resulted in an equity dilution to the tune of Rs 5.69 crore.

Interestingly, during the no-delivery period the scrip recorded huge auction volumes, which were conducted at a premium of over 5 per cent to the official closing prices at the bourses.

According to market sources, auction volumes of over 2 lakh shares at the local bourses raised the eyebrows of the exchange officials and the regulator, as the counterotherwise witnessed thin trades. The exchange officials also took note of the premium at which the auction was conducted at the local bourses, more so by the NSE.