With Sensex and Nifty surging to new highs in pre-poll rallies, Finance Minister P Chidambaram has asked all financial sector regulators to be in a state of readiness and take necessary action ‘if the situation so warrants’.

In the last three trading sessions, the stock market has seen record-breaking rallies. On Tuesday, the Sensex breached the 24,000 level in intra-day trading while Nifty ended above 7,100, which is an all-time high.

After exit polls on Monday projected the formation of an NDA Government under the leadership of Narendra Modi, market players hoped that the Sensex would cross 25,000 and Nifty 7,500, if the final results on May 16 matched exit poll projections. Good fund inflow by foreign institutional investors also made the rupee stronger against the dollar.

It is in this backdrop that the Financial Stability and Development Council (FSDC), under the Chairmanship of Finance Minister P Chidambaram, met on Tuesday, which was attended by SEBI Chief UK Sinha; RBI Governor Raghuram Rajan; IRDA Chairman TS Vijayan; FMC Chairman Ramesh Abhishek; and PFRDA Chairman Anup Wadhawan, besides Finance Secretary Arvind Mayaram and Financial Services Secretary GS Sandhu.

Later, the SEBI chief Sinha said “All mechanisms are in place. We will take prompt action against any wrong-doing.” The capital market regulator has already tracked an individual who alone bought shares worth ₹2,000 crore on Friday and has issued a notice. Though the identity of that individual has not been disclosed, it has been said that his earlier deals were miniscule.

On his part, RBI Governor Rajan said, “We are prepared for any kind of volatility in the markets.” RBI is also keeping track of the rupee’s movement, which surged 37 paise on Tuesday to end at a nine-month high of 59.68 against the dollar on robust foreign capital inflows into equities.

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