How Jane Street gained from stock market during operation sindoor

On May 8, 2025, India launched Operation Sindoor, targeting terror camps in Pakistan and PoK. Markets were rattled—Pakistan’s KSE-100 dropped 6%, but India’s Nifty fell just 0.6%. Behind the scenes, U.S. trading firm Jane Street allegedly took advantage of the chaos to manipulate the Nifty 50 index—earning significant gains in a short window. Here’s how they did it, according to SEBI’s findings covered by Mint.

The Key Move: Last‑Minute Momentum Shift

On expiry day for Nifty weekly options, Jane Street took aggressive long positions early, then swung the market in the last 45 minutes.
Their strategy: buy call options (bullish bets) and short put options (bearish safety), then push prices higher in futures and cash to influence expiry values in their favor.

How the Profit Worked

On May 8, Nifty slumped to ~24,150, but rallied to ~24,274 by close—only a small fall.
That late rally, fueled by massive futures buying, boosted call option deltas, inflating their value.
Even though the index ended lower, Jane Street netted ~₹3.1 crore in Nifty index options on that single day.

The Wider Scheme

SEBI’s interim order found this wasn’t a one-off:

Intraday manipulation: Buy early, push indexes up before expiry, profit on options.
Extended marking the close: Influence close-time prices for favorable settlements.
Multiple instances: 18 expiry days between Jan 2023–May 2025—turning tactical trades into ₹4,844 crore gains.

Why It Worked

Hedging with local entity: Jane Street used its arm, JSI Investments, to bypass FPI intraday restrictions.
Derivative-driven index settlement: Index closing values directly influence options payouts—prime targets for manipulation.

SEBI’s Response

Banned Jane Street and related entities from Indian markets.
Froze ₹4,843 crore of alleged “unlawful gains” in escrow.
SEBI highlighted the firm’s trades had “no standalone economic rationale”—only to tilt index levels.
Jane Street is contesting the charges and preparing for tribunal hearings.

What It Reveals

Regulatory breakthroughs: SEBI’s strong action sets a precedent against cross-border manipulation in derivatives-heavy markets.
Retail vulnerability: Manipulated expiry days hurt everyday investors, while sophisticated firms profit.
Global implications: Echoes concerns over dark-pool tactics and regulatory arbitrage, as seen in U.S. vs. Indian market norms .

Final Takeaway

During Operation Sindoor, Jane Street identified volatility and used expiry-linked strategies to engineer a secretly beneficial market move. Their actions earned them crores in minutes—but have now triggered a sweeping regulatory crackdown. This case marks a watershed moment for market integrity, signaling that even powerful global players have limits in India’s market.

For Future Ready readers: this isn’t just about Operation Sindoor—it’s a lesson in how derivatives and expiry mechanics can be weaponized, and why robust oversight is essential for protecting small investors and fair markets.

Read more on our website: Future Ready, your go‑to platform for the best educational content and latest updates.

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