Outgoing Securities Exchange Board of India (Sebi) chief Meleveethil Damodaran thinks the Indian investor has matured in the last few years and is happy to see the level of investor maturity.
Emphasising that withdrawals of IPOs like the Emaar-MGF showed signs of investors maturing, Damodaran told
The Indian Express Editor-in-Chief Shekhar Gupta on NDTV?s Walk the Talk that investors were sending out a message saying they wouldn?t buy anything at any price.
The pricing has to meet investor evaluations, he said. ?It was a message to the lead managers and the issuer saying if they didn?t get the price right, there was a danger that investors would not come with their chequebooks.?
Emaar-MGF, which planned to sell 102.6 million shares, was India?s second-biggest IPO by a real estate company. However, twice after reducing its price band and pushing back the closing date by five days, the company finally decided to withdraw its IPO as the subscriptions fell from 83% to 43% of the shares offered.
?Investors should ask questions but I am afraid they are asking the wrong questions. They are asking why did Sebi clear an issue at x price. Sebi doesn?t clear prices, doesn?t clear issues. Sebi gives its observations on documents filed before it,? he said.
On the issue of Reliance Power IPO and how the common investor reacted to it, he said, ?I think investors need to ask themselves?did I ask the right questions before I put my money there? Were you taken away by the hype??
Damodaran said it wasn?t particularly the Sensex?s jump from 5,000 to 21,000 points that worried him but the fast pace at which it happened, casting doubts over the meteoric rise.
?The four days when it rose a 1,000 points, you did tend to ask whether there was irrational exuberance in the market. You don?t ask this publicly, but ask yourself. We certainly looked around everyday to see if there was any misconduct in the market. We didn?t find anything prima facie at that point ? some things of course are continuously being looked at,? Damodaran said.
Taking a tough stand on the media being responsible for ?talking up? and ?talking down? a stock, Damodaran noted that there was an urgent need for far more open and strict disclosure norms than the routine ones being currently followed.
On being enquired whether he had any evidence that some of the media people were actively playing the market, Damodaran said, ?Certainly, it was not a question of playing the market. Is somebody benefiting because you or I are taking, given our position, a public stand on something? Basically, it?s a question of am I talking up something, am I talking down something. That?s the letter I got from the investor that was sent to a TV person, addressed to a few media houses, with a copy to me. I think there?s considerable merit in it ? how is it that suddenly on listing, all the virtues that you thought resided in some particular issue disappeared??