Speaking at the BSE’s Viksit Bharat event on Tuesday, Sitharaman asked the BSE and the NSE to work with Sebi to ensure stringent compliance with robust regulatory standards to further investor confidence.”Any unchecked explosion in trading of retail futures & options can create future challenges, not just for the markets and investor sentiment but also for household savings that have made the generational shift,” she said.
On the issue of dollar appreciation, she said that govt is looking for countries in the region with whom we can trade in rupees or those that want to trade in their currency. “We are working on ways in which trade can be facilitated. But countries which no longer have any dollars cannot be left without trading. They also want to buy and sell goods. There are solutions we are working out,” Sitharaman added.
Sitharaman cautioned on the F&O segment after highlighting the shift that has taken place in household savings from the post office and bank deposits to mutual funds and capital markets. She said that these savings have provided a counterbalance to whimsical foreign portfolio flows.
Last year, Sebi had come out with a study which showed that nine of 10 individual traders in the equity F&O segment incur net losses. Following the study, Sebi chairman Madhabi Puri Buch had expressed surprise at the number of investors continuing to participate in the segment despite knowing the odds were not in their favour. F&Os are considered very risky because of the potential for significant losses as investors can take big bets with small upfront amounts.
“Stability of govt, policy (particularly taxation policy), predictability, and above all a soft touch regulatory framework… these are the high points with which markets become efficient… function without volatility. For a stable, vibrant, and deep Indian financial market, the prerequisites are a stable govt, a majority govt… and a govt with a visionary leader,” said Sitharaman.
In her speech, the finance minister said that there was no cause for volatility in the stock markets – as reflected in the India VIX or the volatility index – on account of political uncertainty. “I want to make it clear to you, we are confident that PM Modi will be forming govt in his third term… a stable govt with high governance and low govt,” she said, adding, “This govt’s route is to have an investment-led growth strategy, which includes policies for greater FDI flow, greater openness and transparency with technology infusion in the markets.”