The Hindu : Opinion / Letters to the Editor : Sensex crash

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Friday, Oct 19, 2007
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Opinion - Letters to the Editor

Sensex crash

This refers to the editorial “Knowing the investor” (Oct. 18). Finance Minister P. Chidambaram has now and then given expression to his discomfort over the growing inflow of FII investments in the Indian capital market. The restrictions proposed by SEBI in regulating participatory notes in a sudden announcement wrought havoc in the operations of the share market causing a fall of over 1,700 points in the Sensex on Wednesday. SEBI should have used some pragmatic caution by avoiding the announcement and introducing regulatory steps in a phased manner. The share market is extremely vulnerable to the sentiments created by the utterances of those in regulatory authority.

T.R. Anandan,

Coimbatore

* * *

The Indian stock market is so fragile that even a cloud can affect its mood. Indian investors, as a class, resort to nervous selling based on rumours. It is a fact that the funds routed through PNs account for almost 42 per cent of the fund invested by the FIIs in the Indian securities market. So any ban on them will affect the overall market sentiment.

The average Indian investor has always been concerned about the unhealthy practices of the FIIs. With SEBI or the government doing nothing to address his concerns, he has always been a loser. There should be a lock-in period of at least three years for all FII investment in India.

K.A. Solaman Kaithakkal,

Alappuzha

* * *

The sudden crash of the Sensex has jolted many small time investors. It is doubtful whether the rise and fall of the Sensex is being closely monitored by SEBI to ensure that small investors are not taken for a ride by scamsters and manipulators as in the early 1990s.

V. Padmanabhan,

Bangalore

* * *

Foreign investors have found a safe haven to place their funds through their agents in India without much hassle. Wednesday’s crash and recovery are not new to institutions involved in speculation. Talk of regulation and making foreign investment more transparent is welcome. But looking for quality and quantity in investment will affect the inflow to a large extent. It would be ideal to look up to major stock exchanges to get a clue on how to manage foreign inflow. The introduction of checks and balances is not a recommended corrective for economic crises.

E. Sivasankaran,

Coimbatore

* * *

Foreign investment is like sulpha drug. Planners should administer it in the right dose and apply at the right time the ‘B’ complex of regulations to neutralise the evils of excess inflow. Wednesday’s happenings in the stock market expose the absence of an effective mechanism to regulate reckless investment by the FIIs. The interests of small investors are at risk in the face of an impending economic disaster.

The stock market should not be allowed to become a veritable place for economic gambling at the cost of integrity and people’s confidence. The economist Prime Minister and the Finance Minister should save the country from another economic cataclysm.

B.R. Geetha,

Salem

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