Stock Market open for Budget
Investors feel closure may hinder stocks’ price discovery
By : DC Correspondent
Update: 2015-02-21 03:24 GMT
Mumbai: In a major relief to investors, both the Bombay Stock Exchange and the National Stock Exchange on Friday said that the equity markets would remain open for trading on the budget day, which falls on a Saturday when the markets are usually shut. Union finance minister Arun Jaitley is set to present the government’s first full year budget on February 28 which according to markets participants would contain important policy announcement to kick-start investment and revive economic growth.
The move comes after the stock broking industry made several representations to Sebi and stock exchanges stating that the price discovery process would get hampered if the markets remain closed on the budget day, as investors will not get the requisite opportunity to take informed decision on their portfolio. According to top exchange officials, only the equity and equity derivatives segment would remain open for trading on the budget day while the debt market and the currency futures market would remain closed as usual.
“It’s a very sensible decision as the budget is one of the most significant event for the stock markets. If the markets were to remain closed on the budget day, market participants would square-off their positions ahead of the budget announcement. The decision to keep open the markets on the budget day would allow investors to re-adjust their portfolio based on various budget proposals,” said Arun Kejriwal, director, Kejriwal Research and Investment Service. In its letter to Sebi, the Association of National Exchanges Members of India had said that in the absence of an operational market on Saturday (February 28), the price discovery proce-ss would get hampered and market participants, traders and investors will not get the requisite oppo-rtunity to take considered decision on their portfolio.