Police in India have arrested two more people in connection with a big stock market scandal.

One of them, Karthek Parekh is a relative of Bombay-based broker Ketan Parekh, who was arrested on Friday on charges of defrauding a public-sector bank.

The other, Jagdish Pandya, is an official with the Madhapura bank based in the state of Gujarat, and said to be involved in the alleged scam.

Stockbroker Ketan Parekh - who is widely known as the Big Bull - is accused of fraud totalling more than $28m.

A court in Bombay has refused him bail and remanded him into the custody of police investigating the alleged fraud.

Parekh is notorious in market circles for wielding a heavy influence over the prices of volatile technology and media stocks.

Indian shares fell sharply on Friday, following news that such a key player was about to be arrested.

Insider trading

Eight directors of the Calcutta Stock Exchange (CSE) also resigned as the crisis deepened.

The CSE has been under a cloud since three brokers defaulted on payment obligations, forcing the exchange to draw 380m rupees ($9m) from an emergency fund.

The defaults followed a slump in Indian shares over allegations of insider trading and price manipulation at the Bombay exchange, India's biggest stock market.

The three brokers owe the exchange 450m rupees and the settlement guarantee fund has covered 130m rupees of the shortfall.

Earlier this month, the Securities and Exchange Board of India suspended all the broker member directors of the governing board of the Bombay exchange.

Some brokers have been accused of insider dealing, trying to profit from privileged knowledge of company dealings - which is a criminal offence.