Feb. 12: The rumbles in the stock markets have finally reverberated through Raisina Hill.

After close to a month of turmoil on the bourses when investor wealth worth over Rs 16 trillion disappeared and the Reliance Power debacle on listing yesterday, the parliamentary standing committee on finance today demanded changes in the way initial public offers (IPOs) were priced.

The members also grilled market regulator M. Damodaran to determine what steps he intended to take to bring about a semblance of stability in the badly roiled stock markets.

Besides Damodaran, the committee asked Reserve Bank governor Y.V. Reddy, National Stock Exchange managing director Ravi Narayan and joint managing director Chitra Ramakrishnan to explain why the market had turned so volatile.

Several members wanted to know what steps the NSE, Sebi and other authorities had taken to control the prolonged volatility in the markets.

They expressed dissatisfaction with the current IPO pricing mechanism where companies decide on the price band in consultation with their issue managers.

The members wanted to know if the market regulator could devise a system of oversight to ensure fair pricing of stocks so that retail investors did not lose a great deal of money on their speculative bets.

The market turmoil has forced Emaar MGF, Wockhardt and SVEC Constructions to withdraw their IPOs, while Reliance Power closed below its issue price of Rs 450 a share on its debut yesterday. Today, it plunged to a low of Rs 339.10 before closing weaker at Rs 354.55, down 4.8 per cent over Monday’s close.

U.K. Sinha, chairman of UTI Mutual Fund, and BJP leader Kirit Somaiya, who is also the president of the Investor Grievances Forum, made presentations at the meeting, sources said. The committee, which is headed by BJP member Ananth Kumar, is expected to submit its report to Parliament later.

Most members were apparently satisfied with the reply of Sebi, which said Indian bourses were integrated with global markets and could not remain immune to volatility.

The market regulator said the sub-prime mortgage crisis in the US and the resulting liquidity crisis had impacted the Indian stock markets as well.

The members wanted compulsory grading of public offers and demanded steps to stop any cartelisation and high speculation in the market. Enam Securities chairman Vallabh Bhansali said the IPO market had been mauled because of the volatility in the secondary market.