Price manipulation in SME IPOs: SEBI chief

Mumbai, March 11

Sebi chairperson Madhabi Puri Buch on Monday said there are pockets of “froth” in small and mid-cap stocks which appear like “irrational exuberance” to the capital markets regulator.

Buch also said 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.

When asked about the small and mid-cap space, which has seen a fast-paced rise in valuations over the last few months, on the sidelines of an event here, Buch admitted that there are “pockets of froth in the market” which are like bubbles.

“It may not be appropriate to allow the bubble to keep building, because when it bursts, they impact the investors adversely. That is not a good thing,” Buch said. 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. She said the investors need to understand that the SME segment is different from the main board and it is necessary for Sebi to push the companies to make the necessary disclosures. — PTI 

Smallcaps down 2%

• Market sentiments dampened after SEBI chief Madhabi Puri Buch highlighted irrational run-ups and expensive valuations in small and midcaps
• In the selloff in broader markets, smallcaps bore the maximum brunt and were down 2 per cent. Midcap index dipped 0.24 per cent

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