Sebi, bourses gear up surveillance
To ring-fence the capital markets from any possible systemic issues and manipulations, regulator Sebi and the stock exchanges have beefed up their surveillance and risk management systems to tackle expected volatility in markets due to trouncing of BJP-led alliance in Bihar polls.
The Bihar Assembly election results showed Nitish Kumar-led Grand Alliance getting a huge majority after defeating the BJP-led National Democratic Alliance (NDA) in the politically important state. The results are being seen as having an impact on the future course of economic reforms of the Narendra Modi-led NDA government at the Centre.
With market analysts anticipating a significant impact of the Bihar poll results on stock markets, including a "knee-jerk reaction" tomorrow (Monday) morning, the regulator and the exchanges have put their risk management systems and surveillance measures on high alert to tackle the volatility and check any manipulative activity.
The manipulators typically tend to exploit such volatile situations in the stock market, which has led to the regulator and the exchanges being extra vigilant to tackle this scenario, a senior official said.
"The Securities and Exchange Board of India (Sebi) as well as the bourses and other market entities have prepared an elaborate vigil mechanism for tomorrow's (Monday’s) trading while the pre-market orders that might have been placed today (Sunday) or earlier will face extra scrutiny," he added.
The market authorities have been already monitoring stock movements very closely for the last few days, which saw markets seeing significant volatility on the back of exit polls and other predictions during and after the five-phase polls in Bihar.
However, they are now mainly focusing on tackling any possible shock tomorrow, the official added. When contacted, top exchange BSE's CEO Ashishkumar Chauhan told PTI: "BSE surveillance system and risk management systems as prescribed by Sebi are adequate to manage any price movement."
"The market was building on this outcome over the week gone by, with Nifty slipping below 8,000. We could see a knee-jerk reaction tomorrow and then a phase of recovery and consolidation in the Diwali-shortened week," Centrum Broking CEO K Sandeep Nayak said.
Brokerages and other market entities had also advised at that time to ensure there are no sudden spurts or falls in the market while investors are being discouraged from excessive margin exposure.
Incidentally, Sebi recently asked bourses and clearing corporations to enhance trading, clearing, settlement and risk management systems to at least 1.5 times of the projected peak load as trade volumes soar at stock exchanges.