Addressing an interactive session under the aegis of Bangalore Chamber of Industry & Commerce (BCIC), Sebi Chairman C B Bhave said it was essential for investors to understand the true nature of markets before making their invest ment decisions.
Stating that by their very nature stock markets were dynamic and volatile, he said investors must understand that they are not traders to take undue risks. “As investors one must realise that we cannot buy at the lowest price and sell it at the highest price,” he said, adding it would be prudent to figure out a mid point with which the investor could be comfortable to trade. Stating that it would not be wise to borrow money and buy stocks being carried away by a buoyant market, Bhave counselled while the clock of interest is constantly ticking, the market may not behave the way one wishes it to. Investors must only invest that sum that they can spare and can afford to wait for a fair return, he added. In this regard, Bhave pointed out that Sebi is in talks with CBSE schools and other educational institutions to bring stock market education as part of their standard syllabus as a co-curricular subject of study.
Satyam fraud
Meanwhile, Bhave said a committee would be set up shortly to look into various aspects of takeover code.
Bhave said a gamut of policy framework was evolving and Sebi was in discussion whether to make changes or not. On Satyam fraud, he said Sebi was studying the various data of the investing agencies and would take a call on the matter whether the independent directors erred or failed to do their duty. Further, he said, vetting of these documents would also give us an answer whether our mechanisms worked or not to prevent Satyam type of fraud.
“Was it so clever that it happened despite the system. Our real test will be whether we bring the culprits to book at the earliest. The jury is still out there,” he said. Further, he said while 80 per cent of the exercise regarding peer review of audits on company’s account was over, there are still some issues to be sorted out after which the results would be announced.
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