DEAR SEBI CHIEF: LET THE STOCK MARKETS HEAL

THIS IS AN OPEN LETTER TO TUHIN KANTA PANDEY: Ease rules that have disrupted and fractured investor sentiment and pause other significant moves proposed under Ms Madhabi Puri Buch. Markets need time to absorb all major changes announced in quick succession, writes Palak Shah

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CONGRATULATIONS on your appointment as the Securities and Exchange Board of India (SEBI) Chief. Welcome to Mumbai and its inherent chaos. Over the past year, Foreign Portfolio Investors (FPIs) have withdrawn more than $25 billion from the market, with nearly 50 per cent of that amount being pulled out in just the first two months of 2025. This occurred under the leadership of your predecessor, Madhabi Puri Buch, who presided over an overly stringent regulatory regime reminiscent of Indira Gandhi's “Licence Raj.” Ms Buch applied a carrot-and-stick policy to make SEBI officials work harder but ultimately fell prey to her ambition of balancing iron-fisted control with yielding to the chaos of righteous opinion.

In her attempt to correct what she perceived as inflated stock valuations - which she publicly acknowledged just days ahead of the 2024 national elections - the aggressive implementation of SEBI's rules under her tenure has led to a nearly 40 per cent decline in equity trading volumes compared to the previous year. Most investors, particularly in the smalland mid-cap sectors, suffered significant losses, and the government stands to lose substantially in tax revenue. Despite abundant liquidity, if both foreign and domestic investor sentiment is at its nadir, it is only due to SEBI's high handed approach under Ms Buch. For the record, India's stock markets are now cheaper than most global peers in terms of Price-to-Earnings multiple.

Your task is clear: Let the markets heal by easing the rules that have disrupted the current scenario and pause any other significant regulatory moves proposed under Ms Buch. Markets need time to absorb all the major changes announced in quick succession over the past few months.

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