Astronomical gains in penny stocks under Sebi lens
Subscribe to enjoy similar stories. India’s markets regulator has stepped up its surveillance of penny stocks and micro-cap companies that have returned exponential gains in a short period, according to a senior official aware of the development, as the watchdog continues to increase scrutiny to protect small investors. Astronomical share price rises could signal speculative trading, posing risks to retail investors, particularly those new to the stock market, the official said on the condition of anonymity.
The Securities and Exchange Board of India (Sebi), the official said, aims to protect investors through targeted enforcement. But as the regulator cannot monitor every small company or suspicious activity, it also aims to protect investors through education, the official said. “The regulator is doing its best to ensure investors are protected.
The orders of the regulator carry a message for investors, but they should check these orders." Sebi is looking to ringfence investors at a time the ongoing volatility has wiped out ₹60 trillion from investor wealth in the past three-and-a-half months. Millions of new retail investors drawn by the pandemic-driven stock frenzy--demat accounts surged about fourfold since March 2020 to 185.30 million--would be among the worst hit. Also read | Sebi to enhance risk metrics in F&O to curb manipulation fears in cash, derivative markets: Ananth Narayan G The regulator’s concerns stem from the surge in the prices of penny stocks and micro-caps even though their earnings have not kept pace.
The Nifty Microcap Index surged 21.7% over the past year through 10 January. But its price-to-equity ratio, a measure of share price relative to profit, fell from 32.27 to 29.75. Some penny stocks and
. Read more on livemint.com
