Indian Markets are falling and valuations of many mid/small cap are at levels never seen before. What is the reason? It is the stupid regulations of @SEBI_India who instead of protecting shareholders is ensuring massive destruction of wealth 1/n
3 key regulations, - Reclassification of MF schemes, Additional Surveillance Measures and physical settlement of delivery and all in a short time frame. I dont understand how you can classify stocks as mid or small or large cap based on their market cap rank 2/n
Stocks are not in school that they need to get a certain rank to qualify as large or mid or small cap. Whoever made this regulation in SEBI needs to be forever be banned from capital markets. 3/n
Think about it. Stock with market cap of x+1 cr will be large cap and stock with market cap of x cr will be mid cap and it could again change next quarter. India must be the only market with regulator defining classification for investors. 4/n
What business does regulator have in defining what qualifies as large/mid/small cap. Leave it to the fund managers to decide and investors take a call. SEBI should restrict itself to regulating and ensuring compliance with what is stated in the Offer document by the Fund. 5/n
Wonder why none of the Mutual Funds have protested against this? 6/n
Now come to ASM. Absolutely ridiculous to put stocks in ASM and kill the liquidity. SEBI should know that if you kill the liquidity, you are hurting the investors, not protecting them. And ASM is based not on evidence of market manipulation but based on factors like PE Ratio 7/n
Why does SEBI have to bother about PE ratio of a stock? It should worry if price discovery is fair and it is not rigged. Its failure (deliberate or otherwise) to detect rigging and insider trading is manifesting itself in such ridiculous regulations. 8/n
And then there is GSM, where effectively even though the stock is listed, no trading takes place. And companies cant do anything about this. Looks like SEBI chief and its Directors are out to inflict maximum damage to the markets. 9/n
And next is the physical settlement for certain stocks in F&O. Why selective application to only 45 stocks and not all the F&O stocks. Have they prepared the market, allowed it enough time to adjust to the new reality? 10/n
Allowd enough time for participants to unwind their positions? It is time that govt steps in to protect investors as SEBI's actions are damaging the markets.
There is a real risk that Indian Stock markets will become a market of few stocks (less than 50, from approx 2000) actually traded and having liquidity and there will be few large institutional investors with retail, HNI investors being driven away. 12/n
And this will happen not due to poor performance of economy or scam but due to actions of regulator. Instead of markets developing, they will start shrinking. 13/n
And maybe then some Bollywood director would make a movie "Honey, i shrunk the Markets" 14/n (The End)
