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SEBI meets Mutual Fund heads, stock exchange officials

It discussed the market situation with heads of prominent mutual funds and officials of stock exchanges.

india Updated: May 23, 2006 14:16 IST

The Securities and Exchange Board of India (SEBI) on Tuesday discussed the market situation with heads of prominent mutual funds and officials of stock exchanges, a day after panicky investors pushed the market to its largest intra-day fall.

Coming out of the meeting, Nimesh M Kampani, CMD of JP Morgan Stanley said he expected the volatility in the market to continue till the F&O settlement of margin accounts.

Technically, the market was weak while investors were psychologically down. However, fundamentally the market looked strong, he added.

"SEBI has done a great job and we are buying stocks for our clients. There is no payment crisis and investors should not panic", Kampani said.

According to him, the markets fell sharply due to the margin pressure with brokers requiring capital to maintain their capital adequacy.

He said a substantial correction has come and stocks were available at 20 to 30 per cent discount, he added.

Earlier, BSE CEO Rajnikant Patel said: "The crash was not a systemic issue and we are having a normal surveillance meeting as it could not have been done yesterday".

He also said the Indian equity markets are not isolated from global markets and margin pressures cannot be isolated as the only reason for stocks crash.

The stock market on Monday had plunged by 1111.70 points or 10 per cent, forcing the authorities to suspend trading for an hour following across-the-board panic selling, but it had partially recovered the losses at close.