Ready to take any action as required, says SEBI amid steep stock market volatility
SEBI on Friday said the regulator and stock exchanges are prepared to 'take any action' as required to deal with market volatility, hours after trading was halted for 45 minutes
New Delhi: SEBI on Friday said the regulator and stock exchanges are prepared to "take any action" as required to deal with market volatility, hours after trading was halted for 45 minutes.
Over the last few days, the Indian stock market has been moving in tandem with other global markets due to concerns over coronavirus pandemic, resultant fear of economic slowdown and recent fall in global crude prices, among others, SEBI said in a statement.
"SEBI and stock exchanges are prepared to take suitable actions as may be required," the regulator said.
Further, it said the fall in the Indian indices has been significantly lower than the stock market in other countries.
It said SEBI and exchanges have a robust risk management framework in place, which automatically gets triggered in response to movements in the indices -- BSE Sensex and NSE Nifty-- as well as individual stocks (both in cash and derivatives market).
Equity benchmark Sensex plummeted over 3,200 points and the broader Nifty sank near 8,600 level, hitting their lower circuit limits, in opening session on Friday as coronavirus pandemic-led recession fears fuelled worldwide panic. Following this, stock exchanges halted trading for 45 minutes.
Later, the broader market recovered from the day's low and the BSE Sensex and the NSE Nifty were trading over 4 percent higher.
On Thursday, Indian equity benchmarks suffered their biggest ever one-day plunge to crash into bear territory. After nosediving over 3,204.30 points, BSE Sensex finally closed 2,919.26 points or 8.18 percent lower. Likewise, NSE Nifty slumped by 868.25 points or 8.30 percent.
Giving a comparative market movement of global indices, SEBI said Indian equity markets have fallen over 19 percent in February and March so far, while those in Russia, Brazil and France dived over 30 percent each. The UK's FTSE 100 index dropped by 28 percent, the US' Nasdaq plunged 21 percent and Dow Jones by 25 percent.
According to SEBI, measures like action on the basis of surveillance inputs, regular follow up by the clearing corporations with the clearing members for collection of margin and pay-in obligations, are also in place.
"The positions of margin payments, margin utilization, adequacy of collaterals (securities deposited by the brokers with the clearing corporations) and the pay-in's obligations being met by the clearing members are being continuously monitored. Similarly, the settlement and clearance of trades are also being constantly monitored," SEBI said.
Other measures to check market volatility are value at risk margin with initial margin to cover 99 percent risk of a transaction, extreme loss margin to cover the residual risk of a transaction, collection of mark to market losses on daily basis, additional surveillance margins based on stress tests and circuit filters at index as well as stock levels, the regulator said.
Both the BSE Sensex and NSE Nifty50 closed modestly lower on Friday after investors offloaded banking, finance and metal stocks in the last hour of trade amid sluggish global cues
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At the clsoing bell, the BSE Sensex was up 209.36 points or 0.40 percent at 52,653.07 while the NSE Nifty50 gained 69.05 points or 0.44 percent to close at 15,778.45
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After plummeting over 700 points in intra-day trade, the 30-share BSE Sensex clawed back some lost ground to end 135.05 points lower at 52,443.71, while the NSE Nifty slipped 37.05 points to close at 15,709.40