The Hindu Business Line : Investors, are you listening to Govt advisory?

Chennai/Delhi, Jan. 2 Shooting stock prices have resulted in higher decibel levels being used by the Government and stock exchanges to create awareness and also warn investors about the risks involved in stock markets.

Listeners enjoying AIR’s commentary on the cricket series being played Down Under are treated to lively overs and during a commercial break, hear a father warning the son about the perils of investing without verifying fundamentals of the company.

A few weeks back, the BSE and the NSE came out with advertisements alerting investors to exercise caution and also warned them not to get swayed by misleading tips and advertisements about stocks.

Are these warning signals a bad omen? Not really, says market participants.

According to a dealer in a Mumbai brokerage, it is quite natural for the authorities to warn and caution investors with the kind of activity taking place, particularly on low-priced stocks. The number of stocks hitting the upper ceiling on the BSE has been more than 40 per cent in the last few days, which signals excessive speculation taking place, he says.

It may be mentioned here that an expert group constituted by the committee on Investor Education & Protection Fund (IE&PF) had recommended that an investor awareness month be observed through coordinated efforts of professional institutes such as ICAI and ICSI, SEBI, NSE, BSE, RBI and others.

The committee had constituted the expert group to examine the issues relating to investors, vanishing companies, co-ordination between different regulators in taking up investor awareness and grievance redressal activities.

Speaking to Business Line, Mr Prem Chand Gupta, Minister for Corporate Affairs, said, “We are committed to the healthy growth of our corporate sector while protecting the interests of the investors, particularly small investors. These initiatives are a step in that direction.”

Measures taken

Based on the recommendations of the expert group, various events and activities have been undertaken to provide information regarding grievances redressal mechanism available with the Ministry and other regulators. Two Web sites sponsored by the IE&PF — www.watchoutinvestors.com and www.investorhelpline.in — and financial literature on various aspects of the capital market, mutual funds, and safeguards to be observed before making investments are some of the measures taken.

During the course of the campaign, ICSI has organised 25 programmes across the country and ICAI has organised 36. The underlying theme of the programmes was to reach out to the general public as well as investors to impart financial literacy, spread awareness about grievances redressal mechanism, and related issues.

To create awareness, publicity through local print and electronic media is also being undertaken.

Another Mumbai-based broker, who did not wish to be named, said IE&PF is sitting on huge piles of funds and is being put to good use probably prompted by the frenzied activity at the bourses.