Stock market 'bubble' a matter of concern, after SEBI on bullish pattern now RBI's bulletin raises tension

After the Securities and Exchange Board of India i.e. SEBI, now the Reserve Bank has expressed concern over the 'bubble' of small and midcap stocks in the stock market. The Reserve Bank in its monthly bulletin said that despite corrections from time to time, the stock market is running on a bullish pattern.

Large caps are bullish but mid and small-caps are bullish. Let us tell you that SEBI Chairperson Madhabi Puri Buch also expressed concern over the 'bubble' of mid and small caps a few days ago. After this a soft phase was seen in the stock market.

What does the bulletin say about rupees and investments?

The Central Reserve Bank said 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 inclusion of Indian sovereign bonds in global bond indices is fueling strong demand for offshore rupee-denominated bonds, the central bank said. Let us tell you that RBI bulletins contain views on the domestic and global economy. However, these are not the official views of the Reserve Bank.

Worries 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 looking into the matter. If found incorrect then advisory can be issued”. On the market 'bubble', SEBI had hinted at creating a system to protect the interests of smallcap and midcap investors.

Circular of Mutual Fund Body

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