The second round of data put out by the market regulator on its website reveal short selling of Rs 549 crore (Rs 5.49 billion) between October 15 and 17, while last week's data showed shares of nearly Rs 500 crore (Rs 5 billion) were shorted between October 10 and 14.

During this time, equity benchmarks crashed by nearly 12 per cent from 11,300 to touch a low of 9,911 on October 17. So far, 33 out of 34 participatory notes (PN)-issuing FIIs have shared their data.

Meanwhile, Sebi has decided to meet the top 10 FIIs on Wednesday to discuss the issue of short selling. The market regulator on Monday had warned FIIs of strong action for their overseas lending and borrowing activities, which, the market regulator felt, had been adding to the selling pressure in India.

Stockbrokers have expressed surprise over the delay shown by Sebi in acting against short selling. "It's all talk and no action. It's surprising that Sebi is only issuing threats to FIIs, assuming that they will disclose correct data," said a top stockbroker.

Brokers said it was possible that FIIs might not disclose the correct data all the time as Sebi currently had no powers to cross-check it since the transactions were done overseas.

Market players believe that short selling through overseas borrowed stocks would be in excess of $2 billion, or one-fifth of the entire FII selling so far in 2008. FIIs have sold around $11 billion worth of equities, bringing down the market by over 60 per cent and pushing frontline stocks to historical lows.

The leading FIIs who are active in this business are Goldman Sachs, UBS, Morgan Stanley, Deutsche Bank, JP Morgan and Merrill Lynch, according to market sources.

Now, however, short sellers are quickly covering their positions fearing a clampdown by Sebi.

Here it may be noted that, when a ban was imposed on short selling in the US, the big benefit that large financial Institutions such as Goldman Sachs, Wells Fargo and Morgan Stanley derived was that their stocks stabilised and they were able to collectively raise over $40 billion from investors. This fund gave them the much-needed capital to manage in a gridlocked credit market.

This week equity benchmarks Sensex and Nifty recovered over 5 per cent of their lost ground.