Share Market News / Why did SEBI chief say, 'No need' to comment before retirement?

Share Market News: On Friday, the last trading day of the week, the Indian stock market witnessed a huge decline. The Bombay Stock Exchange (BSE) major index Sensex closed with a decline of more than 400 points. The special thing is that the Sensex has come down more than 12% from its record high. Experts believe that the main reason for this decline is the heavy selling in the shares of midcap and smallcap companies.

Huge decline in midcap and smallcap index

If we talk about midcap and smallcap stocks, they have come down by 19-21% from their record high. Retail investors usually have more participation in these stocks, due to which the impact of the decline also falls the most on them. When there is a decline in these stocks, retail investors suffer huge losses.

Statement of SEBI Chief Madhabi Puri Buch

In this context, the statement of SEBI Chairperson Madhabi Puri Buch is shocking. She refused to comment on the decline in mid and smallcap stocks. He said that the regulator had already expressed concern about this and now no new statement is needed. The question arises whether the earlier boom was unnecessary and is this boom now harming the market?

Previous warning and current situation

In March 2024, SEBI warned about high valuation. Buch had said that there is "foam" in the market, which would not be appropriate to allow to form. He had described the valuation of some companies as irrational. At that time also investors were advised to be cautious.

Figures of decline in the stock market

In September 2024, the Sensex was at its lifetime high with 85,978.25 points, which has now fallen to 75,311.06 points. That is, the Sensex has fallen by 12.40%. The midcap index was at 49,701.15 points on 24 September 2024, which has now fallen 18.77% to 40,374.02 points. The smallcap index was at a lifetime high of 57,827.69 points on 12 December 2024, which has now fallen 20.70% to 45,856 points.

Reaction on mutual funds and SIP

The SEBI chief denied any plan to make a minimum SIP (Systematic Investment Plan) of Rs 250 mandatory in mutual funds. However, he made it clear that action will be taken against any wrong scheme in the name of assured returns.

Conclusion

The current decline in the stock market is mainly due to midcap and smallcap stocks. SEBI had already expressed concern over their high valuation. Retail investors need to be cautious and carefully examine the fundamentals of the companies before investing.