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Journalism of Courage
The government has cautioned against high volatility in the stock markets. Pointing out that Indian markets are more uncertain than their counterparts in developed economies like the US and South Korea, the Economic Survey 2006-07 called for regulatory and other necessary steps to further facilitate enhanced institutional investment in equity markets to cushion the impact of swings in stock prices.
The survey said the recent trend of investors’ growing preference for mutual funds will enhance institutional investment in the equity market. However, it said sustained investor interest will keep alive the buoyancy in stock market, which peaked to 14,724 points this month, helping India catch up with mature markets in terms of market capitalisation to GDP ratio.
The benchmark Sensex lost another 171 points to 13,478.83 on Tuesday. Market capitalisation declined by another Rs 84,000 crore to Rs 35.63 lakh crore amidst sustained selling pressure. With surging inflation and interest rates hitting the market sentiment, investors have lost over Rs 2.34 lakh crore in the last eight sessions.
“The results in Punjab and Uttarakhand are being seen as a barometer of voters’ concerns about inflation and economic reforms,” said a broker. Sensex has lost 1,245 points since February 1 following various measures taken by the government and the RBI. According to fund managers, various signals from the pre-budget Economic Survey are also not very promising for the capital market.
