Stock Market

Sensex, Nifty hit lower circuit: Sebi, stock exchanges ready measures to control volatility

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The Securities and Exchange Board of India (Sebi) and stock exchanges have a robust risk management framework in place which automatically gets triggered in response to movement in the indices as well as stocks in the cash and derivatives market, the market regulator said in a statement following drastic fall in Sensex and Nifty. The market regulator added that some of these measures include Value at Risk (VaR) margin with initial margin to cover 99 per cent risk of a transaction and extreme loss margin to cover the residual risk of a transaction. The benchmark equity index Sensex tanked over 3,200 points and the broader Nifty sank near 8,600 level, hitting their lower circuit limits, in early trade on Friday as coronavirus pandemic-led recession fears fuelled worldwide panic. Collection of market to market losses on daily basis, additional surveillance margins based on stress tests, circuit filters at index levels and circuit filters at stock levels, action on the basis of surveillance inputs and regular follow up by the clearing corporations with the clearing members for collection of margin and pay in obligations are the other measures. Sebi also highlighted that Indian equity indices have fallen significantly than the stock market in other countries. “Over the last few days, the Indian stock market has been moving in tandem with other global markets owing to concerns related to Covid-19 pandemic, resultant fear of economic slowdown, recent fall in global crude oil price, and so on,” Sebi said. It said that positions of margin payments, margin utilization, adequacy of collaterals and the pay-in’s obligations being met by the clearing members are being continuously monitored. “Sebi and stock exchanges are prepared to take suitable actions as may be required,” it added.




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Category: Stock Market


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