The announcement came even as the stockmarket regulator, the Securities and Exchange Board of India (Sebi) put up a strong defence of its activities, saying it had taken several steps to check market manipulation both in the bull run and the bear market. Sebi also said it had even gone so far as to issue three general warnings to the public when the markets were soaring, saying that they should not buy stocks unless they had checked the fundamentals of the companies.

The two developments are also significant when seen against the background of finance minister Yashwant Sinha's recent statements on the scandal, promising a clean-up action and tough steps against those found guilty."The government is not averse to a probe by the JPC if the Opposition wants it and a consensus is created in Parliament," parliamentary affairs Minister Pramod Mahajan told reporters when asked to comment on the Congress demand for a JPC to investigate the broker-banker-politician link in the scam.He said a final decision would have to be taken after consultations with presiding officers of Lok Sabha and Rajya Sabha.

"JPC is not appointed by the government and it has to be set up by Parliament," he said adding, "As far as the basic idea of investigating the happenings in the stock market is concerned, the government is not opposed to it." Congress spokesman S Jaipal Reddy had demanded on Saturday that government should agree to the constitution of a JPC saying "nothing less than this will meet the needs of the occasion".

He had also criticised the government for ignoring the Congress' warning about arrested stock broker Ketan Parekh's market misdemeanours and consequent possibility of a major crisis for the economy.

Apart from talk of reshuffles in Sebi, it is also reliably learnt that the term of the two deputy governors in the Reserve Bank of India (RBI) SP Talwar and Jagdish Capoor, both of whom are slated to retire in June, would not be given extensions. Besides, while the market has been agog with talk that the Planning Commission member Dr Montek Singh Ahluwalia was all set to take over as chairman of Sebi. Dr Ahluwalia categorically denied that he was in the running or that he had been sounded out for the job.

Meanwhile, top-level Sebi sources told The Financial Express on Tuesday that among the several steps it had taken, one was to ask stock exchanges, which are the first-level regulators, to be watchful and take suitable action for any manipulation.

Apart from general directions to the stock exchanges, they were specifically asked by Sebi to analyse the position of 20 top brokers in volatile shares and report to it whether there was concentrated trading, circular trading, margin payment default, capital inadequacy etc. The exchanges, Sebi sources said, reported four times to Sebi that there was no abnormality and the situation was being watched properly. The NSE, which is managed by non-broker professionals, also gave similar reports, the regulator said.Sebi made these points in response to general allegations that it had not taken steps against arrested stockbroker Ketan Parekh and some companies when he was ramping prices of certain stocks.

The exchanges, Sebi sources said, on their own and also on Sebi's advice, imposed hefty margins going up to 50 or 60 per cent of the price on such volatile shares. On the other hand, if the brokers took delivery of the shares, they would have to make 100 per cent payment.

Sebi also said FIIs, mutual funds and FIs traded on technology shares on a large scale after adequate market research. "If they offered high prices it was because of the results of their research," Sebi sources said.

Besides, the regulator said, during the period October 1999 and February 2000, tech stocks all over the world showed a substantial increase in prices. The Nasdaq index went up to 5100 points. Later, the index slumped badly and now it is around 1800 points. "The reason for this is that the information technology shares and other tech stocks have lost their charm and values. The Indian market is greatly influenced by the Nasdaq index," the sources said. Sebi had recently taken several steps when the markets were crashing, officials said.