Sebi, exchanges tighten vigil for Budget day trading

Surveillance systems on high alert on fears of manipulation; huge market turnover likely, including by foreign entities

Anticipating huge volatility during the special stock market trading on Budget day tomorrow, regulator Sebi and stock exchanges have enhanced vigil to keep manipulators at bay and ensure smooth operations.

The surveillance systems have been put on high alert, fearing attempts by manipulators to take advantage of high anticipations associated with the Budget, top officials said, adding that markets are expected to witness a huge turnover, including by foreign entities.

Various market entities have also been asked to ring-fence their systems and infrastructure from any sudden volatility.

Many brokers have informed their customers that they are anticipating high market volatility during the period of Budget announcement and therefore they have increased the trading margin requirements for the clients.

The day, being a Saturday, may add to trading volumes and volatility as overseas markets, including Singapore where many foreign investors take position before trading begins in India on normal days, would be closed and the foreign investors are expected to trade directly on Indian bourses.

Similar arrangements were made last year on the day of the exit poll results as well as the final results of the Lok Sabha elections.

At that time, the movements in stock markets were under special watch on May 12, the last day of polling and the day of exit polls, as also on May 16 when final results were announced and then on May 19, the first full trading day after announcement of all results.

Last week, Sebi had decided to keep the markets open on the Budget day, despite it being a Saturday, and asked the stock exchanges to put in place necessary systems to conduct trading during normal market hours from 9 AM to 3.30 PM.

The decision was taken after requests were made by various market entities and others to keep markets open on the Budget day to allow the various proposals to be priced in naturally in the share prices and to avoid any sudden rush on Monday morning when markets would have otherwise opened after a gap of two days.

In that case, it was also anticipated that overseas investors in Singapore could have got an early-bird advantage to take positions because of time zone difference.

This is probably the first time in many years that the Union Budget is being presented on a Saturday. The stock markets are generally closed on Saturdays and Sundays, except for special circumstances.

As the Budget contains several market-moving announcements, trading participants, including stock exchanges, had requested Sebi and the government to keep bourses open when Finance Minister Arun Jaitley presents his first full-fledged Budget.

Stock markets have always been open during Budget presentations ever since the government changed the timing of Budget announcement to 11 AM in 2001, from 5 PM earlier.