The Hindu Business Line : Market rally

The editorial “Remarkable rally” (Business Line, September 20) cautions conservative investors and those playing the market with borrowed money to keep away from the stock market. The high volatility does indeed call for abundant caution by all retail investors.

Wednesday’s remarkable showing is attributed to net inflow of Rs 2457.6 crore from foreign institutional investors. The optimism of FIIs is a response to reduction of interest rate by Federal Reserve. Some months ago, as a fallout of sub-prime mortgage crisis in the US, there was a fall in stock prices though the Indian economy was fortunately insulated from US home-loan dealings.

With abundant availability of talent in the stock market, the regulatory authorities need to keep an eagle eye on our highly volatile stock markets to prevent frauds and scams if it is to promote the sustained and active participation of small investors in the equity market. This, in turn, will lead to rapid economic growth.

M.V. Nagavender Rao, Grand Ledge, US

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