The consensus is out. Recent spate of scams like Satyam, 2G and coal allocation scam to name a few have robbed retail investors of the confidence to invest continually.
However, experts at a recent seminar on 'Impact of Scams on Investors' here, organised by Business Standard in association with Rajkot Saher Jilla Grahak Suraksha Mandal, had their own reasons to offer behind the impact. Among the panelists included Himanshu Raninga, Resource Person, Securities and Exchange Board of India (SEBI), RC Popat, director, Sandipani Institute, Rajkot, Mahesh Joshi, Head of Economics Department, Saurashtra University, Rajkot, and Vijay Chaturvedi, Head of Business Development, Monarch Projects and Finmarkets Ltd., Ahmedabad.
While some of the experts believed it was the lack of awareness among investors, others cited government's indifference as one of the reasons for impact. Offering his keynote address as the chief guest, Ashok Koyani, chief executive officer, Saurashtra Kutch Stock Exchange Ltd. said that to avoid being impacted by scams and volatility of market, investors should not only align their investments to their financial goals, but also read and do thorough research. "If you do not have skills and time to read and research then choose other investment option like mutual fund," he added.
Agreeing that retail participation had declined in stock market, Chaturvedi said that it was not only during corporate scams that result in loss of investments for retail investors but right from time of listing of shares of a particular company. "Investors start losing money right at the IPO listing stage. If retail investors take care of certain things and do proper research, much of their investments could be safeguarded."
According to Popat, capital market, India Inc as well as investors should reduce their dependence on foreign institutional investors (FIIs). "There will be a set back for a while when we reduce our dependence on FIIs. Yet checks should be maintained on FIIs before investing," Popat added.
Citing the US example where accountability on scams also lies with government, Samir Shah, president of Rajkot Chamber of Commerce and Industry (RCCI) said that the same should be implemented in India where the Indian government is also partly held accountable for corporate scams.
However, offering a counter-view, Raninga said, "We don't know who is at fault during corporate or other scams but we as investors have to be cautious on our part." He further stated that retail investors participation in stock market had also reduced due to higher exposure in other assets classes like gold.
Meanwhile, among other issues being discussed included IPO premium pricing, corporate governance, and steps to be taken by regulatory bodies and government to curb such irregularities.