New Delhi: With exit polls predicting victory for the NDA in the elections, investors and market authorities are keeping a close watch on stock markets to guard against excessive volatility.
The BSE benchmark Sensex on Monday closed at a new high of 23,551 points while NSE Nifty closed at 7,014.25 points amid expectations that exit polls would show formation of a stable government at the Centre.
Sources said Securities and Exchange Board of India (Sebi), stock exchanges and market intermediaries are closely watching volatility in the stock market. Investors are also keeping a close tab on the stock market movements.
On Monday, during intra-day, the Sensex rallied to an all-time high of 23,572.88, surpassing previous high of 23,048.49 and the Nifty touched 7,020.75, breaking the earlier high of 6,871.35.
Market authorities are also working to ring-fence the systems and infrastructure from any sudden volatility on the results day as well as days close by. The movements in the stock market on May 16, when the election results would be out, and May 19 would be under special watch, sources said.
Meanwhile, brokerages are also taking steps to protect investors' interests from market volatility. "Considering the risk & protection of investor's interest on account of elections result volatility, Intraday exposure is reduced to 6 times and Delivery based trade exposure is limited to 2 times," Indiabulls Securities said in a communication to clients.
This would come into effect from May 13 till further communication, it added. The BJP-led NDA is projected to form the government at the Centre with exit polls tonight giving between 249 and 290 seats to the Narendra Modi-led grouping, which is close to the half-way mark in the 543-member Lok Sabha.
Meanwhile, the preparations by market authorities also take into account their experience during the result day of last Lok Sabha elections. On May 18, 2009 -- the day when results of last Lok Sabha polls were announced -- markets gained so much that trading had to be halted.
That date is still known as 'Magic Monday' in stock market as the benchmark index Sensex posted its biggest ever gain of over 2,100 points in just one-minute trade after investors were enthused by a decisive verdict in the then concluded general elections.
The experience was another extreme on May 17, 2004, soon after the announcement of 2004 Lok Sabha elections, the markets witnessed the worst-ever bloodbath on concerns of uncertainty over the economic reforms as the then NDA government was voted out of power.
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