NEW DELHI: Perturbed by the high volatility witnessed at the stock markets during the last two days and, in particular, the massive slide witnessed on Thursday, the Ministry of Company Affairs has advised small investors that their investment decisions should be guided by "strong fundamentals" of the company in the shares of which they wish to deal with.

In an official statement here, the Ministry said that the small investors "should not get misled by market rumours or tips. Their decision should be based upon proper analysis of the background of the company, the promoters and other relevant considerations."

The Ministry noted that while the economy was "doing very well," the quarterly results of companies, in general, reflected a very healthy growth rate. In such a situation, the rising Sensex (the 30-share sensitive index of Bombay Stock Exchange) in itself should not cause any concern.

Moreover, the SEBI (Securities and Exchange Board of India), which was the stock market regulator, was "keeping a close watch on the developments and taking steps necessary under the situation. Other Government agencies concerned with the subject matter are also alert," the statement said.

Meanwhile, in a bid to allay the apprehensions of investors, the Ministry of Finance has clarified that the searches conducted at few places in Gujarat were part of "normal investigations" carried out by the Income-Tax Department in the State. There was no basis for drawing "any general or speculative conclusions" from these searches, it said in a statement.

Denial

The Ministry has also denied that the Government had sent Joint Secretary (Capital Market), Department of Economic Affairs, to take stock of the market situation. It has clarified that the official's visit to Mumbai on Wednesday was to participate in the board meetings of the UTI AMC and the Central bank of India. After the meetings, he came back to the capital on Wednesday night itself, it said.

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