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Sebi, SEs want markets to remain open

Sangita Shah & Janaki Krishnan

Despite escalating war worries and sharp decline in stock prices, market participants want the markets to continue trading normally.

Even the Securities and Exchange Board of India ruled out any contingency plan of shutting down the markets or curtailing trading in case of war -- whether limited or full fledged.

"We are waiting for any unusual movement in the markets. The decision will be taken accordingly," Sebi official stated. On the other hand Bombay Stock Exchange spokes person also said: "Any decision will be taken in consultation with the regulator."

There were rumours that the markets will be temporarily closed down in case of war in line with the suspension of trading in the US markets following September 11 attacks on the World Trade Centre.

Though many other countries had also closed their markets at that time, India had not followed suit. However, since this time around the war tension is at home and the domestic markets vulnerable to adverse development, the rumours gained ground, dealers explained.

The talks also were accentuated by rumours that Pakistan authorities were contemplating suspension of trading in the markets till the war clouds were cleared. In fact, the Karachi Stock Exchange has already tightened the lower circuit filter at 5 per cent from 7.5 per cent.

However, market participants were of the view that closing down the market will only accentuate the decline once the markets open.

"Suspension of trading will deprive investors the right to exit if they want to," head of investments at a leading investment banking arm said.

"The markets generally tend to discount the prospective developments before they actually happen. Even at the time of Kargil war, the markets had bottomed out on the day before the actual attack materialised. The markets had started looking up the day the war started. So this time also in all likelihood the markets will bottom out before the actual war begins, so there would be no point in curtailing or suspending the trading in the stock markets," Rajiv Sampat, director, Parag Parikh Securities, said.

The stock markets have been witnessing a sharp decline in the past few days. The Sensex plunged from 3333.76 on Friday to 3175.49 points on Wednesday, a decline of about 5 per cent in just three trading days.

The tough talk by Prime Minister Atal Behari Vajpayee, urging Indian troops to be prepared for a decisive fight, kept the market in a weak mode with the Sensex closing 11 points down at 3175.49 points. The index has lost 7.8 per cent in the past seven trading sessions.

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