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Journalism of Courage
Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi on Sunday cautioned investors against getting lured by unrealistic returns and promises that are “too good to be true”.
“Investors should be careful against getting carried away by the lure of unrealistic returns in the securities market,” Tyagi said while addressing the India International Trade Fair. Sebi is coming up with an Investor Charter for protection of investors’ interests in the Indian securities markets, he said.
Stock market valuations have already touched new peaks and companies are lining up with IPOs to raise funds from investors.
“Many a time, undesirable elements take advantage of the gullible investors by making promises that are ‘too good to be true’. Investors are advised to be cautious of such offerings,” the Sebi Chairman said.
According to him, the first thing the investors need to understand is that any financial investment comes with a set of risks. So, it is important that the investors are cognizant of the risks involved in the product they are investing in and of their risk-taking ability. If they are not able to assess the suitability of a particular financial product, it might be wiser to remain away from it than going the wrong way, he said.
In addition to the Investor Charter of Sebi, separate investor charters have been developed by registered intermediaries, regulated entities and asset management companies, he said. “These investor charters aim to create awareness among investors about different services being provided to them, timelines related to various services like investor grievance redressal mechanism, their rights and responsibilities and dos and don’ts of investing in securities market,” Tyagi said.
From around Rs 120 lakh crore at the end of 2016-17, market capitalisation has now almost doubled to Rs 230 lakh crore. Turnover in the equity cash market and derivatives market also witnessed a significant jump. Average monthly equity cash market turnover increased from Rs 8 lakh crore in FY2019-20 to more than Rs 15.5 lakh crore this FY till October 2021, he said.
On the equity derivatives side, the corresponding turnover figures based on premium value were Rs 19.0 lakh crore in FY2019-20, which increased to around Rs 28.4 lakh crore in this FY till October 2021. The AUM of mutual fund industry has almost doubled from Rs 21 lakh crore in 2017-18 to Rs 37 lakh crore as on October 31, 2021. Tyagi said participation of retail investors in securities markets has seen a significant rise, especially in the last two years, which is evident from the increase in number of demat accounts, mutual fund folios and number of SIPs. In 2019-20, on an average, 4 lakh new demat accounts were opened every month which increased to over 26 lakh per month in the current financial year, he said.
“If we look at number of mutual fund folios, in the beginning of FY 2019-20, total number of folios were 8.25 crore, which increased to 11.44 crore as on October 31, 2021,” he said. With regard to SIP, while on an average around 52 lakh SIPs were added during the last two financial years, already around 75 lakhs have been added during the first six months of this financial year.
