NEW DELHI: The market regulator and stock exchanges are bracing for any possible shocks that could arise due to Raghuram Rajan’s decision to step down without a second term as the RBI governor on September 4. The Securities and Exchange Board of India and stock exchanges are expected to play a critical role in maintaining a balance and secure the capital markets from any excessive volatility on Monday.
Senior bank officials told Express that a special meeting was called over the weekend to prepare for any exigency in the markets. “The preparations were already on to meet the impact on Indian banks and stock market due to Brexit referendum this week, so the precautionary measures are already in,” said sources in the Finance Ministry. Foreign exchange dealers are expected to infuse any additional demand for the dollar, shortage of which could trigger capital outflows.
“Stock exchanges have systems and processes that can identify signals of probable volatility. Once the surveillance system picks up the disturbance, the system checks in to manage it,” said a leading stock broker in Mumbai.
A strict vigil has been put in place for manipulators, who could exploit the volatile trends on Monday. An advisory has been informally communicated to stock exchanges and banks. “Manipulation can happen in stocks and derivatives, especially those linked to the rupee’s movement against other currencies,” sources said.