The Hindu Business Line : Bull market

The foreign institutional investors (FII) inflows are one of the main reasons for the rally, but the quality and action of the flows should be put to scrutiny by the regulator. As the run seems to be distributed across the market, the scrips that have been idle for nearly a decade are on the move out. The small investors are happy in this regard. But is another trend like 1992, 1994 or 2000 in the offing?

Though SEBI and the Finance Ministry are repeatedly assuring investors that everything is fine, there should be no complacency.

The small investors who depended on interest income are now moving towards the stock market due to the continuous lowering of the interest on deposits. Such investors should not be allowed to perish by market fluctuations.

Mere upgradation of the valuations against the mounting liquidity can cause a huge fall in prices. SEBI should, therefore, keep a watchful eye on the present trend, especially to check if the "price levels are in tune with fundamentals." The FIIs and local institutional traders, with their large network and infrastructure, may withdraw from the market by booking profits.

C. P. Velayudhan Nair

Kochi

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