Capital markets regulator Sebi and the stock exchanges have stepped up their surveillance systems to keep manipulative forces in check amid an extreme volatility expected on Tuesday due to the sudden resignation of RBI Governor Urjit Patel and the state assembly results. After a sharp plunge of over 700 points in the benchmark Sensex on Monday tracking the exit poll results for five states, analysts have warned that the final results showing declining votes for the ruling BJP and Patel's resignation could trigger even a bigger loss for the markets on Tuesday. Patel announced his resignation, effective immediately, after the market closing hours on Monday. Officials said that the exchanges and the regulator have beefed up their monitoring and surveillance mechanism for any eventuality, while applicable circuit limits are already in place for key indices and stocks. According to experts, Indian markets, bonds, currency and equities will see a negative reaction in the short term due to the resignation of Patel. Besides, given the impending state election results due Tuesday, markets would remain volatile depending on the outcome at the polls, they added. "The markets are already in a down trend. They have already discounted a 3-0 white wash. If even one state goes the BJP Way, it will result in short covering. As far as the RBI Governor's resignation is concerned, it alone has the ability to knock off 200 points from the Nifty," said V K Sharma, Head PCG and Capital Markets Strategy at HDFC Securities, said. The rupee could weaken further, he added. Mark Williams, chief Asia economist at Capital Economics, said Patel's resignation is effective immediately and, officially, for "personal reasons". But there can be little doubt that those reasons are primarily the insistence of the government that it set policy in areas that the RBI believed were its remit. These include regulation of struggling banks and the size of the dividend paid by the RBI to the finance ministry. Although, the press release mentions 'personal reasons' for the resignation, until there is clarity, markets will assume it to be due to the differences between the RBI and the government on various issues highlighted in the media, Arvind Chari, head of fixed income at Quantum Advisory, said. Geojit Financial Services Chief Investment Strategist V K Vijayakumar believes that "the resignation of the RBI Governor is a short-term sentimental negative and this is not likely to impact the economy".