Sebi keeping close watch on stock markets

The Securities and Exchange Board of India is keeping a close watch on the movements in the stock prices at the Bombay Stock Exchange and the National Stock Exchange, which hit the upper circuit halting the trade for the day, a senior finance ministry official said.

"It was expected that markets will do well and that is what we saw in the morning. The Sebi is keeping a watch on the situation we will see how it plays out tomorrow," finance secretary Ashok Chawla said in New Delhi.

Trading at the Bombay Stock Exchange and National Stock Exchange was initially halted for two hours as the stock tracker indices -- BSE's Sensex and NSE's Nifty -- hit the upper circuit within a minute of the opening of the trade.

After the markets re-opened at 1155 hrs, the Nifty surged again hitting the 20 per cent upper circuit leading to suspension of trading at the two bourses for the day.

Terming the developments on the BSE and NSE as 'nothing unusual', Chawla said, "It is widely believed that the response in the market place is going to be favourable."

"That is what the market indicated in the morning. It is not surprising, nothing unusual," the finance secretary added.

On implications of the surge in the stock markets for the economy, currently reeling under the impact of the global financial meltdown, Chawla said, "It is a good sign, but we would of course have to watch that we don't have too much volatility (on the stock markets)."

The markets, which opened for the first day after announcement of election results for the 15th Lok Sabha, witnessed frenzied buying with BSE's 30-share Sensex zooming by 2,100 points to close 17 per cent higher at 14,272.63.

Echoing similar sentiments, the NSE's 50-share Nifty jumped by 20 per cent prompting the authorities to suspend trading for the day at both the exchanges.