This is for the first time in the history of the BSE that it was forced to drop scrips which were selected for inclusion in the A group. ``The whole episode shows that there was manipulation in the selection procedure. The SEBI should investigate the entire process and take action against the culprits,'' said a market source. With the deletion of 10 scrips, the new list will contain only 17 scrips.

The BSE had announced on August 14 the inclusion of 27 B1 group stocks in the A group and dropping of 26 scrips from A group to the B1 group. The selection process ran into acontroversy following eyebrows raised over the procedure and the criteria involved. There was widespread criticism over the inclusion of several illiquid scrips in the prestigious A group (where carry-forward transaction or badla is allowed).

As a result, the market regulator SEBI had informally asked the BSE board to review of the selection of 27 scrips for the A group. SEBI officials and brokers were surprised over the inclusion of some thinly traded shares in the A group. The regulator was concerned over lack of transparency in the selection process, it is learnt.

``The question is why 27 new scrips were admitted in the first place. What is more important, however, is that the selection criteria are made as objective as possible, instead of the broad guidelines now in place. Further, once changes in the A group list are made, the rationale for each change should be disclosed immediately to the public,'' said an analyst.

According to an NSE dealer, the BSE has once again showed that it is not botheredabout investors. ``It is only looking after the interests of speculators. It cares two hoots about small investors. What else can one make out from the BSE selecting questionable scrips and then dropping them later,'' said an official of an investor association.

BSE president Anand Rathi had last week defended the selection of 27 scrips saying that a committee had selected these scrips. ``The BSE board reviewed the selection after a hue and cry was made and the SEBI asked the board to review the selection process again. A SEBI investigation had last year found that reshuffle of shares was a reason for price manipulation,'' said a market source.

``The exchange will have to be careful while putting thinly traded scrips in the A group. Once carry-forward trading (badla) starts in these scrips, there is a big risk of rampant manipulation in the prices which can endanger the safety of the market,'' said a broker. Although badla trading in the 27 scrips upgraded by the BSE was to start only on September 14,manipulators moved in the very next day of the BSE announcement last week and 18 of them hit the upper band of the circuit filter (trading was stopped after their prices exceeded the 8 per cent permissible limit).

Many of these companies are not only thinly traded, their equity capital is also small. In BFL Software, the public shareholding amounts to only 17.8 per cent of the total equity capital. ``The exchange should have considered various parameters like the floating stocks, size of the capital, turnover, profitability and market capitalisation and corporate governance while putting shares in the A group,'' said a fund manager with a leading brokerage.