Protect Indian Investors

BUOYED BY THE SURGING sentiments on India and the Indian economy, strong growth and updates of India Inc. and rising optimism over global cues and close on the heels of the glorious success of our Chandrayan-3 mission and global accolades on the spectacular G-20 meetings, Indian markets are touching new peaks.

- Dhanendra Kumar

The BSE Sensex has recorded its longest gaining streak since 2007, adding Rs 14 lakh crores in just 11 sessions. Even on days when foreign investors book profits and pull their money out, domestic investors and mutual funds keep the markets buoyant.

Famed US investor Peter Lynch in his celebrated ‘20 golden rules for investing’ opined that ‘you (investors) have to know what you own, and why you own it?’ True to this, investors rely on their perception and the public domain information to make investment decisions. At any point, a stock is awarded higher valuations if investors have confidence in the company and its management. A consistent year-on-year price growth is thus a strong indicator of the market’s trust. It can be reversed only due to a black swan event, economic meltdown, or a material event outside the company’s control. Similarly, a ploy, a concerted effort, or a criminal meddling may act as a reversing factor.

Value Erosion for Investors

Recent events concerning the Adani Group are an example of the above. The release of the Hindenburg Report in January and another one by the Organized Crime and Corruption Reporting Project had led to a significant value erosion for Indian investors. As per the report of the Hon’ble Supreme Court appointed Committee, the maximum loss for Indian investors between 24 January and 27 February was approximately Rs 29,200 crores. The committee submitted its first report while the SEBI is investigating other matters including the role of foreign portfolio investors. The SEBI informed the Hon’ble Court that it is awaiting information from five tax havens. The matter is fixed before the court on 13 October.