Securities & Exchange Board of India (SEBI) chairman, C B Bhave chilled out the worries of the US financial crisis disturbing Indian stock markets, saying that there was no fear as Stock market regulator was examining the condition very closely.

Within minutes of Bhave’s report, the bourses recovered early losses as the BSE Sensex was ruling at 12,397, down by 197 points.

“There is no need for panic in the market. Our market is resilient. Our clearing system has proved to its ability to deal with stock market fluctuation,” Mr. Bhave said.

Mr. Bhave also said that at present, the conditions regarding short sale are that institutions are permitted to short sell only if they have borrowed the stock on the stock markets.

“Institutions can short sell if they have borrowed in lend-borrowing facility. Our borrowing is negligible,” he added.

SEBI is keeping the market under observation and any confirmation that any institution has violated the short sale rule; it will take the most stringent action against such entity, if any.