The Hindu : Business : FM cautions investors

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Friday, Jul 20, 2007
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FM cautions investors

NEW DELHI: Dabbling in stock markets can cost investors dearly unless they understand what risks await them, although the markets are less mysterious than they were before, Finance Minister P Chidambaram cautioned on Thursday.

“I think people understand markets and more and more people prefer markets. They did in the 1990s but burnt their fingers. So they withdrew.

“They again came back in the late 1990s and again burnt their fingers,” he said at a function on Wednesday, while emphasising more awareness about financial markets and the role of regulators.

Two scams, widely known as the Harshad Mehta and Ketan Parekh scams, rocked the stock markets in the early 1990s and 2001, respectively.

The Securities and Exchange Board of India again unearthed scams in IPOs, beginning from public offers of Maruti to Suzlon during 2003-05, pointing out irregularities in allocating retail portions of shares.

However, the Indian markets were among the best regulated markets in the world, Mr. Chidambaram said at a function organised by CNBC-TV18 to launch an awareness booklet for first-time investors, called ‘Pehla Kadam’ (first step).

Over the years, much of the mystery about the markets has been removed ‘layer by layer,’ the Finance Minister said.

Highlighting the need for spreading financial awareness right from the school level, he said there were enough students at the 10+2 level who could absorb lessons in financial literacy.

“We have to tell the people what is the meaning of risk and how it could be mitigated,” he said. — PTI

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