After the second-largest fall of 564 points in a single day, the Securities and Exchange Board of India, had an emergency meeting with executive directors of both the Bombay Stock Exchange and the National Stock Exchange to take stock of the situation.

"The market has been placed on high alert and we are closely monitoring the developments, including the sharp drop in markets," said a Sebi official.

Sebi, the regulator for the stock markets, has been trying to closely monitor the developments on the stock markets since Thursday, when the polls threw up surprise results.

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In a briefing post the meeting, Sebi has said that there is no need to panic and the day's crash has been caused by 'sentiments.'

Sebi has also asked the directors of the stock exchange to keep a watch on the trades and look out for any unusual selling.

There have been rumors in the stock market over a possible payments crisis because of the huge beating the markets has taken on Monday.

Sources at the BSE said that the possibility was discussed at the Sebi meeting and that the stock exchanges have discounted the idea.

"We are making all the necessary arrangements to ensure that there is no payment crisis. We have also assured Sebi that the exchanges will try hard to see that it does not happen," said a BSE source.

Additional input: PTI