Mumbai, India – Union Finance Minister Nirmala Sitharaman expressed concern over the increasing number of Indians investing in the stock market and emphasized the importance of protecting their household savings. Speaking at an event hosted by the Bombay Stock Exchange (BSE), Sitharaman highlighted the potential risks associated with the growing retail participation in the derivatives market.
Sitharaman cautioned against the unchecked expansion of retail trading in futures and options, warning that it could pose challenges for the market, investor sentiment, and household finances. She referenced a study conducted by the Securities and Exchange Board of India (Sebi) that revealed a high percentage of individual traders incurring losses in the equity derivatives segment.
In response to these concerns, BSE announced measures to address sudden spikes in options prices and enhance surveillance efforts. Sitharaman urged BSE to collaborate closely with SEBI to ensure strict compliance and robust regulatory standards, promoting investor confidence and upholding corporate governance in listed companies.
The finance minister acknowledged a shift in household savings from traditional instruments to equities, driven in part by the COVID-19 pandemic and online know-your-customer (KYC) procedures. This shift has led to a significant increase in demat accounts, mutual fund assets, and monthly Systematic Investment Plan (SIP) contributions, reflecting growing trust and participation in the stock market.
Sitharaman also recognized the role of retail investors as a counterbalance to Foreign Portfolio Investor (FPI) flows, attributing increased confidence in the Indian equity market to recent regulatory changes. She reassured investors about the stability of the upcoming government, dismissing concerns over market volatility and foreign sell-offs.
As investors continue to navigate the uncertainties of the market, Sitharaman emphasized the autonomy of stock markets in responding to global and domestic factors. While acknowledging the market’s ability to assess situations independently, she reiterated her confidence in the resilience of Indian equity markets amidst ongoing political developments.