Despite all the talk about educating investors and understanding their behaviour, the main motivation for investors still boils down to chasing returns, according to market experts.
On Wednesday, the Securities and Exchange Board of India asked mutual funds to proactively protect investor interest amid "froth" building up in the broader end of the Indian equity market. This is the first time the market regulator has taken such a step.
Mutual fund trustees have also been asked to put steps in place to ensure that investors are protected from the impact of the first-mover advantage of redeeming investors.
Here is what experts have to say
'Risk Assessment Is Not Entirely Wrong'
Aashish P. Somaiya, chief executive officer, White Oak Capital Management
The reality is that despite discussions about investor behaviour and education, the primary driving force remains the pursuit of returns. Looking at the market performance over the past year, small- and mid-cap investments have emerged as the best performers in the market.
"Whenever something becomes a theme, a story or a go-to move, it is prone to risk. So, the risk assessment is not entirely wrong," he said.
This Happened For The First Time
Dhirendra Kumar, founder and chief executive officer, Value Research
This has happened for the first time and this is not SEBI's job. It is doing this out of concern, said Kumar.
The reality in the market has changed. Lots of money from investors is flowing into small-cap stocks, and people are investing reasonably and for the long term through systematic investment plans. "And for the first time, this is happening so steadily."
'Hint To People That Just Be Cautious Here'
Nimesh Chandan, chief investment officer of Bajaj Finserv Asset
"A lot of experts have been talking about it and I think SEBI also wants to just hint to people to be cautious here," Nimesh Chandan, chief investment officer of Bajaj Finserv Asset, told NDTV Profit.
Chandan said that it's not that there are no good businesses in small caps or that companies are not worth investing in, but just that investors have to be cautious about liquidity and volatility. "I think that is the main message," Chandan said.
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