slowest pace in a decade. The hopes have sent sectors such as infrastructure and banks sharply higher.
Foreign investors have also bought in heavily, and now own a record 22% of companies listed on the NSE, according to Morgan Stanley data, after buying a net $20.1 billion last year and about $4.3 billion so far in 2014.
However, that high a level is raising concerns of possible destabilising foreign outflows that dent both the currency and shares.
A scenario of stock market volatility and huge volumes would mark the first major test for trading-system improvements made by Indian exchanges after a slew of “fat finger” incidents hurt confidence.
In a bid to prevent cases like a 2012 misplaced order that caused the NSE to plunge more than 15%, stock market regulator Sebi in September revised rules for circuit breakers. These allow for a more measured and more flexible response to sudden market movements.
An official of Sebi told Reuters last week that it asked exchanges to conduct stress tests to simulate a surge in trading volumes and volatility, including circuit breakers. “We need to ensure that the pay-in and pay-out obligations are met in such an event, and that the exchanges can handle a sudden surge in volumes,” said the official, who declined to be identified.
A spokeswoman for NSE declined to comment. A spokesman for BSE, the oldest exchange, said “I am not aware about any special communication from Sebi. I will check on that. But all systems are checked before market hours.”