Capital Markets regulator SEBI on Friday, 20th February directed the stock exchanges including the BSE and the NSE, to keep markets open on Budget Day, following a series of requests made in this regard. Most of the market participants welcomed this decision that this decision will reduce volatility.
SEBI chief, U. K. Sinha was of a completely different view almost a month back. In response to a question whether the stock markets should be open on Budget day, SEBI chief said “I don’t think there is any correlation between the day on which the market is open and the day on which the Budget is presented. The market functions in its own way; it has its own momentum, its own calendar”. SEBI chief’s sudden shift in his stance on this matter has come as a surprise to many market forces.
Some of the market participants including some leading brokerage houses are of the view that if the markets were closed on Saturday, Monday would have witnessed a gap up or gap down opening with huge volatility. They feel that if markets remain open on Budget day, it will increase intra-day volatility but will ensure that investors and traders can react to Union Budget 2015-16 then and there. Some of them feel that Budget day being such an important day increase the turnover for the exchanges and in turns benefits the exchanges.
On the contrary, some feel that the biggest beneficiaries are the short term traders who take utmost use of intra-day volatility. The long term investor who claim to have a long term approach is not complaining, irrespective of whether the market is open or not on a Budget Day. In fact it also acts as a relief for fund managers and in turn MF investors who are saved from emotional knee-jerk reactions to budget proposals and are not forced to respond to minimise the impact on their fund’s NAV.
What is your opinion, is it essential for stock markets to be open on Saturday just because it is a Budget Day and What could have been the factors which prompted the SEBI chief to overturn his earlier statement?
Let us know your thoughts in the comment section below.