Retail investors acting like shock absorbers in stock market: Nirmala Sitharaman

The Union Finance Minister was speaking at an event of the Corporate Affairs Ministry as part of the Azadi ka Amrit Mahotsav.

Amid continuing volatility in the stock market, Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman on Tuesday, June 7, 2022, said retail investors seem to act as shock absorbers even when foreign portfolio investors went away.

Ms. Sitharaman, who was speaking at the event to flag off Iconic Day celebrations of the Corporate Affairs Ministry as part of the Azadi ka Amrit Mahotsav (AKAM) said, that during the pandemic, there has been a very significant increase in retail investor numbers.

“Retail investors have come in a big way that they seem to act like shock absorbers... if FPIs went away, our markets did not really have to show their ups and downs in a very distinct way because small investors in the country have come in a big way,” she said.

In March, the Central Depository Services (India) Ltd said the number of active Demat accounts opened with it touched the six crore mark.

In recent months, the stock market has been witnessing significant volatility and foreign portfolio investors going on a selling spree amid tightening monetary policy actions to curb rising inflation and geopolitical tensions.

The Finance Minister further said regulators and other entities should be well advanced and ahead of the curve in understanding digitisation to ensure that there is no misuse of technologies.

Ms. Sitharaman also emphasised the need to have firewall mechanisms in the context of digitisation.