The Securities and Exchange Board of India Chairman M Damodaran on Thursday said the market watchdog will set up an integrated market surveillance system in the Bombay Stock Exchange and the National Stock Exchange to keep an eye on any abnormal movement in share prices during market hours.
He said the Sensex topping 8,000 appears to be orderly and there is no cause of concern. "We have placed orders for real-time integrated market surveillance system with an Australian firm in July and hope to install it in BSE and NSE by March-April. The system will help us keep a watch on any abnormal movement in any particular stock during the market hours," Damodaran said.
He said the Sebi is currently getting information on stock movement at the end of a day's trading. "Even after installing the system, stock exchanges will continue to be first level regulators," he said.
Damodaran was talking to reporters on the sidelines of a seminar on 'India's Capital Market Challenges & Prospects' that was organised by the Indian Chamber of Commerce.
Asked whether the Sensex topping 8,000 is a cause of concern, Damodaran said: "I don't think there is any concern related to the Sensex level. Our job is to see whether any upward movement or downward movement in index is orderly or not."
"What the market watchdog tries is look is why the index has moved up or down and whether it is in order or not," he said.
Damodaran said the current index level is due to increased confidence of domestic as well as foreign investors. "Overseas investors have come in a very large number as they see India a better opportunity at this point of time," he said.
He said the Sebi is planning to bring in more number of stocks in the derivatives category. "There are very few stocks in the derivatives category at present and we have to increase the number. We will look at various issues and then ask stock exchanges to increase the number," he said.
Earlier, while addressing the seminar, Damodaran said there is a feeling that the Sebi is not doing enough for retail investors, but in recent times it had taken a number of steps to increase retail participation in the capital market and will continue to do so.
"We have initiated steps to make the process of allotment of shares to retail investors simpler. We will ensure that an average Indian investor get a legitimate chance to invest in a safe market and build capital on which a strong nation will be based," he said.
He said the Sebi is awaiting the Reserve Bank in India's approval for introducing a system wherein refunds to investors for non-allotment of shares could be done through the electronic clearing system.
The Sebi is also looking at reviving stock invest scheme wherein investors' account would be debited on the day allotment process is done on the day of application, he said.
The Sebi chief said given the appetite of the market for good stocks, there is need to attract more good companies. "With disinvestments of public sector undertaking companies unlikely to take place at least in the next few months, we need good stocks to attract investors," he said.
On the fate of regional stock exchanges, Damodaran said: "In one year, we should see regional stock exchanges complete corporatisation and demutualisation. These exchanges will have to think in terms of viable business model because in the last two years only two exchanges - BSE and NSE - are doing all the business."
Regional stock exchanges must think of opting out of the fray or think for a viable business model to survive, he said. "Worldwide, we are looking at merger and takeovers of stock exchanges," he said.
