Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), expressed apprehensions regarding potential manipulation observed in the Small and Medium Enterprises (SME) segment within the capital markets.
During an event organized by AMFI on Monday, dedicated to honoring women fund managers, Buch drew attention to indications of market manipulation based on feedback received from market participants.
"We have taken note of the feedback from the market. We are diligently gathering substantial evidence and feedback to initiate appropriate actions," she remarked.
SEBI has been apprised of concerns suggesting that certain entities might be taking advantage of the provisions about SME listings.
Buch unveiled plans to introduce an optional T+0 settlement mechanism by the conclusion of March, enabling investors to settle their stock market transactions on the same day. This measure aims to deter any activities resembling those in the 'grey' market, thus preserving the market's competitiveness.
In response to apprehensions surrounding the Indian equity markets, Buch highlighted the potential presence of irrational exuberance, particularly concerning the elevated valuations of small- and mid-cap stocks. She cautioned against the unchecked proliferation of excessive speculation.
Given these concerns, SEBI has recommended mutual fund trustees to evaluate the suitability of lump sum investments in small- and mid-cap funds.
Furthermore, the market regulator has instructed mutual funds to disclose stress test results of small- and mid-cap funds, starting from March 15. This initiative aims to assess the duration required to liquidate positions during periods of market turmoil.
The Nifty small-cap 100 and mid-cap 100 indices have witnessed notable increases since the onset of 2023, surpassing the benchmark Nifty50 by a significant margin. This upsurge has raised alarms regarding potential market overheating, underscoring the necessity for regulatory vigilance.
