SEBI Chairman Tuhin Kanta Pandey Assures Investors Amid Market Volatility
In a recent address, SEBI Chairman Tuhin Kanta Pandey provided a comprehensive overview of the Indian stock market’s resilience amidst global volatility. His remarks come in the wake of significant market fluctuations triggered by international events, including the ongoing tariff and trade war initiated by US President Donald Trump. Pandey, who assumed his role in March, emphasized the strength and stability of the Indian financial system, aiming to reassure investors during these turbulent times.
Market Resilience and Investor Confidence
Pandey acknowledged the "headwinds" facing the stock market, primarily driven by external factors. However, he expressed confidence in the robustness of India’s financial infrastructure. "Our payment and settlement systems are very robust," he stated, assuring investors that the likelihood of defaults is minimal. He highlighted that contracts would be honored, allowing investors to enter and exit the market with ease.
The SEBI Chairman noted that the Indian market has shown remarkable resilience compared to global counterparts. From 2019 to 2024, India experienced a Compound Annual Growth Rate (CAGR) of 8.5% in dollar terms, while emerging markets faced stagnation and China saw a decline. This performance underscores the strength of India’s economic fundamentals, which are bolstered by supportive government policies and a favorable budget aimed at boosting domestic consumption.
Regulatory Measures for IPOs
Pandey also addressed concerns surrounding Initial Public Offerings (IPOs), particularly the excessive subscriptions seen in smaller public issues, including SME IPOs. He assured that SEBI has implemented regulatory measures to manage these concerns effectively. "There were some concerns around some of the small IPOs seeing massive subscriptions," he explained, noting that changes have been made to ensure a more balanced approach to IPOs.
India has witnessed a surge in IPO activity, boasting the largest number of IPOs globally, while many other markets have struggled to facilitate new listings. This trend reflects the growing confidence in the Indian market and its potential for future growth.
Foreign Institutional Investors and Direct Investment
In discussing Foreign Institutional Investors (FIIs), Pandey revealed ongoing discussions regarding the potential for foreign individuals to invest directly in Indian stock markets. The Department of Economic Affairs is reviewing FEMA rules, with proposals to increase the investment limit for Non-Resident Indians (NRIs) from 5% to 10%, and the overall cap to 24%.
While these changes are still under deliberation, they signify a move towards greater inclusivity in the Indian market. Currently, individual foreign investors must navigate through FIIs or funds to participate in the market, but the proposed changes could simplify this process.
Commitment to Market Stability
To maintain stability in the stock market, SEBI is employing a "24×7 surveillance" strategy in collaboration with exchanges. This constant vigilance aims to monitor market conditions and respond swiftly to any irregularities. Pandey emphasized that even during the most challenging days, India experienced relatively less impact compared to global markets, showcasing the effectiveness of SEBI’s regulatory framework.
Combating Misinformation and Cyber Fraud
In addition to market stability, Pandey highlighted SEBI’s commitment to combating misinformation and cyber fraud. The regulatory body has taken significant steps to remove fraudulent influencers from online platforms, including the removal of approximately 70,000 finfluencers from YouTube, in collaboration with tech giants like Meta and Google.
He stressed the importance of increasing investor awareness and promoting responsible investment practices, particularly for new retail investors. "We immediately get into areas where some false online platform is there and there are attempts to swindle money in the name of investment," he noted, underscoring the need for vigilance in the digital age.
Conclusion
Tuhin Kanta Pandey’s address serves as a reassuring message to investors navigating the complexities of the current market landscape. With a focus on regulatory measures, market resilience, and investor protection, SEBI is committed to fostering a transparent and robust financial environment. As global uncertainties continue to loom, the Indian stock market stands as a beacon of stability, promising opportunities for both domestic and foreign investors alike.