Indian markets capable of absorbing shocks: SEBI chief

Volatility has shot up in the financial markets due to the ongoing West Asia conflict, but the Indian bourses have the capacity to “absorb different types of shocks”, SEBI Chairman Tuhin Kanta Pandey said on Monday.

When there is a crisis in one part of the world, it also impacts the rest of the globe, Pandey told reporters here on the sideline of the Regional Investors Seminar for Awareness.

“Due to the prevailing conflict in West Asia, the oil supply chain and its prices got affected in the rest of the world. All the economies have been affected by this and obviously, there are inflationary risks. Besides, the spillover effect and second-order effect will also come in,” he said.

“However, the advantages of a resilient Indian market are that it is able to absorb different types of shocks, and when these end, the market again resumes its normal trajectory,” Pandey said.

He also admitted that there have been some foreign portfolio investment outflows since September 2024, but domestic investors have “retained their confidence”.

Asked how SEBI is addressing threats from AI tools, Pandey said, “Most of the recent concerns around such tools are related to cybersecurity. As you know, markets rely heavily on software systems, and if cybersecurity is threatened or vulnerabilities are found in the software, there is a risk of attacks. If such attacks are successful, they can pose a serious threat to market integrity.”

“Therefore, we have to proactively ensure that all the software we deploy, including those provided by third-party vendors, is well protected. There has to be aggressive patch management and extensive use of conventional tools to identify vulnerabilities,” the SEBI chief said.

SEBI is using mechanism to ensure that the market, market ecosystem, and intermediaries are protected from any cyber risk, he asserted.

Pandey also said that ‘finfluencers’, who give financial and stock-related advice, must first register themselves with Sebi.

The market regulator has already removed 1.4 lakh such content from various social media platforms, he said.

“For creating awareness among people, Sebi has launched project ‘Jagruk’. Under this, we are going to make our engagement and investor awareness 360 degree; multilingual, multi-agency and multimedia,” Pandey said.

Addressing investors at the event, he said municipal bonds have been the cornerstone of city-level development, enabling urban local bodies (ULBs) to raise long-term funds for essential projects such as water supply, sanitation, transport and waste management.

“Odisha should look at municipal bonds immediately,” he stated.

Pandey also said that Sebi will open its office in Bhubaneswar soon.