Securities and Exchange Board of India (Sebi) chairman CB Bhave on Saturday said there was no evidence of any bear cartel functioning or any kind of manipulation in the Indian equities markets. While leveraged foreign institutional investors were pulling out from the Indian markets, long-term investors like pension funds and university funds as well as some retail investors were actually buying stocks, Bhave said at function in the Capital on Saturday.
?We have not found anything in the market that would give us suspicion that something had seriously gone wrong with the market itself,? he said. Ruling out the possibility of any scam during the bull-run, Bhave said, ?So far we have not seen anything.?
The markets? regulator further said there was no indication of mutual funds holding bad assets in their portfolio and that the severe redemption pressure that these funds faced in the previous two months have started easing in November.
?When Sebi analysed (Fixed Maturity Plans), it was found that 90% of their assets have the highest rating of AAA and P1 (plus),? he said.
The liquidity pressure has come down as only Rs 4,000 crore of the special window of Rs 20,000 crore opened by the Reserve Bank is currently being used, he said.
While advising investors to diversify portfolios in order to minimize losses, Bhave said Sebi attempting to take financial products on the exchange traded platform. The Reserve Bank of India had said in its mid-term monetary policy that the over-the-counter currency swaps and derivatives would be moved towards the exchange traded platform. Apart from bringing in transparency, exchange traded platforms minimizes the counter-party risk by mediating the products through a clearing house.
An internal study by Sebi had shown that between Sep 1 and Nov 14, foreign funds and proprietary brokerage houses had sold Rs 22,000 crore and Rs 8,000 crore worth of shares, respectively. During the same time, mutual funds, domestic financial institutions and non-institutional investors had bought Rs1,000 crore, Rs16,000 crore and Rs 5,600 crore of shares, he said. ?This shows that markets are functioning normally and claims that every one is selling or that there is just all round selling is not borne out by facts,? Bhave said.
The regulator also said that retail investor should not leverage themselves at all. ?Leveraging is a very dangerous thing and while even institutional investors should not leverage themselves too much to invest, retail investors should never do it at all,? he said.
Arguing that the global crisis was impacting India, Bhave said India market will be the fastest to recover once things stabilize. ?Our markets are not decoupled from world markets and so we will feel the effects of the global crisis but when recovery starts we will recover faster than other global markets and we will emerge stronger,? he said.