The Securities and Exchange Board of India (SEBI) is likely to prepare the market for the Budget 2017 day which is scheduled to be revealed on February 1, 2017. The two closed sources including a senior official said that SEBI is taking charge to carry out stricter market rules on Budget to conflict possible unpredictability.
The Union Budget is expected to be revealed on February 1. As we know, Stock Markets will become unstable on Budget day. From the Past seven years, we saw the Sensex’s budget day close change less than 2% of the previous day. For example, Pranab Mukherjee’s 2019-10 Budget showed Sensex closed 5.83% lower or Yashwant Sinha’s 2000-01 budgets when it fell 5.12%.
To diminish possible liquidity risks arising out of any possible large-scale recovery in mutual funds on Budget Day, SeEBI is talking with Reserve Bank of India (RBI) to set up a special liquidity window. The information was said by the two persons mentioned above.
The First Person said, “We just prepare ourselves for any news that may have an effect on the market on the budget day. The main problem is about risk management why because if the market falls, defaults may occur.”
Sebi is suggesting to shift margin trades to square-off mode at 80-85% of their eligible limit rather than 90-95% at present. Margin orders placed during the Budget day are adjusted either at the end of the day or once the trading entity reaches a fixed eligible limit during the trading hours as a containment measure.
Sanjay Sinha, founder of Citrus Advisors and a veteran fund manager, said SEBI should be careful in commanding strict rules for margin trades and putting norms.