Conscious FM Directs Regulators To Be “Watchful” Of The Market Volatility

The recent spurt in the capital market has come under the government radar and our conscious finance minister P Chidambaram has urged all the regulators to remain vigilant and watchful of the volatility and developments of the capital markets. During the tenth meeting, which was of the Financial And Development Council (FSDC) and perhaps the last of FM, in New Delhi yesterday, he directed all the regulators like SEBI, RBI, IRDA and ministry of finance to stay in a “state of readiness and take necessary action if the situation so warrants.”  

The meeting was attended by top officials including Raghuram Rajan- RBI Governor, Arvind Mayaram- Finance Secretary, UK Sinha- SEBI Chairman, TS Vijayan- IRDA Chairman, Ramesh Abhishek- FMC Chairman among others. As per the finance ministry, source meeting took stock of the current spurt in the market following the exit polls that have predicted Modi led NDA government at the centre. During last four sessions markets are in a kind of roller-coaster and since Friday (9 May, 2014) BSE Sensex has shown a volatility of whooping 1791 points as it has touched its all time high peak of 24068 points on May 13, while the lowest point of these four sessions was at 22277 points on May 8. Though both Rajan and UK Sinha seem quite confident about tackling any kind of volatility that may arise in coming days in the markets, the situation was discussed at a length in the meeting. 

The volatility seen after exit poll results on Tuesday (13 May, 2014) was quite in line with the expectations but many officials were disappointed with the volatility that was witnessed on Friday (9 May, 2014) and Monday (12 May, 2014) as Sensex gained 650 points and 557 points respectively. Following this, the regulators and finance ministry officials are on red alert and are keeping a close watch on every development. As per ministry sources, on one hand, SEBI and RBI are preparing themselves to tackle any kind of situation on May 16, day of election results, and on the other hand, regulators and finance ministry officials are busy in churning numbers of last one week market data. Market sources are also hinting towards some kind of suspicion regarding the exit polls outcome and the rally that took place before exit polls on Friday and Monday.