‘The regulators should be congratulated for having managed the system well’

Font Size

Print

Feedback

Email

Discuss

Related Articles

Gold the most preferred investment

: for the last few months, say from January, was mostly by overseas players rather than domestic players. So even in this huge market crash, where some of the stocks have crashed by 70-80% in a matter of days, there has been no payment crisis and no stress on the financial system. Primarily because the regulators have ensured that people don’t come into such a situation. The systems and the margins are very strong and they ensure that a payment crisis situation does not come up. Also, the retail investor’s participation in speculative activity was very low, especially in the past six months. Moreover, retail investors are going through the mutual fund route rather than coming into the market directly.

Now, if there were a couple of things that you would want the regulator and the policy makers to change in order to strengthen the market further, what would they be?

One thing that the regulator has already done is to curb overseas speculation and I think this is healthy. I support this move completely. And the abnormalities have to be removed and the data continuation has to happen here. On the reform front, clearly some amounts of sops are required here, especially in the area of taxes. These could either be on the capital gains tax area or in the service tax area. Moreover, people don’t invest in the market due to reduced taxation, they invest because they want to make money and grow their wealth. Now, the policy makers can make this happen through the initial public offer market. They can offer strong government-owned companies at attractive valuations to the Indian public and no overseas offer. This way, the government can raise money, the investors get a chance to participate in extremely strong investment avenues and more importantly, the ownership of these companies stays in India. This will bring back retail investors to the market. So, along with tax cuts, IPO, the government could also look at relaxing restriction on banks for stock market lending.

Now, coming back to the market, when do you see an improvement happening? Are we completely dependent on the overseas inflow to see the market recover?