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After SEBI, RBI also expressed concern about the 'bubble' in the market, saying this is a big deal

The market has given tremendous returns in the past 3 months, with many companies in the small and midcap sector seeing record valuations. Because of this, the SEBI chief expressed the fear of a bubble in the market. At the same time, now RBI has also expressed concern about this.
2 Month ago

Recently, SEBI raised 'bubble' concerns about the rise in the stock market. The Sebi chief said that the market has given tremendous returns in the last 3 months, with many companies in the small and midcap sector seeing record valuations. Investors should be cautious in such a situation, after which the market has been falling for the last 2 weeks. After SEBI, now RBI has also expressed concern over the 'bubble' of small and midcap stocks in the stock market. Let us tell you what Reserve Bank said about the 'bubble' in the market…

In fact, the RBI in its monthly bulletin said that the market has gained a lot of momentum in the recent past, though with corrections from time to time, the stock market is running on a bullish pattern. Large caps are growing faster but mid and small-caps are growing faster.

What did RBI say in the bulletin?

The central reserve bank said in its monthly bulletin that FPI share in Indian equities fell to a decade low of 16.3 percent, reflecting increased buying by domestic institutions including mutual funds. According to the Reserve Bank, the rupee is one of the least volatile currencies and has been rising steadily. It said the Indian rupee strengthened due to an 11.4 percent year-on-year increase in foreign direct investment during the October-December 2023 period. The central bank said the inclusion of Indian sovereign bonds in global bond indices is driving strong demand for offshore rupee-denominated bonds. Let us tell you that the RBI bulletin contains views on the domestic and global economy. However, these are not the official views of the Reserve Bank.

Concerns about a stock market bubble

Recently, SEBI chairperson Madhabi Puri Buch said that the market regulator has found indications of manipulation in SME category share prices. According to him this manipulation is not only in IPO but also in buying and selling of shares in general. SEBI Chairperson Butch said - We are investigating the matter. If found incorrect then advisory can be issued. On the market 'bubble', SEBI hinted at creating a system to protect the interests of smallcap and midcap investors.

Circular of Mutual Fund Body

On February 27, the mutual fund industry body Association for Mutual Funds (AMFI) issued a circular based on an email received from SEBI. According to AMFI, SEBI has advised that given the surge in small and midcap stocks, mutual funds should formulate policies to protect investors in these schemes.

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