'I would leave markets to its wisdom': FM Nirmala Sitharaman on fears of 'froth' building

Finance Minister Nirmala Sitharaman said despite global fluctuations, Indian markets have maintained a certain level of sanity. "I would leave markets to its wisdom," the FM said at the India Today conclave. 

The minister was reacting to a question on froth in the small and mid-cap space. Sebi chief Madhabi Puri Buch had red-flagged the situation, saying the equity markets that has the potential to become a bubble and burst affecting investors. Buch said that it would not be appropriate to allow the bubble to build because they are liable to burst and impact investors adversely.

Buch said that Sebi has evidence, pointing to signs of "price manipulation" in the small and medium enterprises (SME) segment, and asked investors to be more cautious while investing in the risky segment. 

She added that the valuation parameters are "not supported by fundamentals at all" and it appears like "irrational exuberance". Since January 2023, small and mid-cap indices have significantly outperformed the broader equity indices, and many asset management companies have stopped accepting lumpsum amounts into schemes and also capped monthly investments in such schemes.

Since January 2023, small and mid-cap indices have significantly outperformed the broader equity indices, and many asset management companies have stopped accepting lumpsum amounts into schemes and also capped monthly investments in such schemes.