Finance Minister Nirmala Sitharaman says policy, tax stability is a must for market stability

Finance Minister Nirmala Sitharaman said on Tuesday that policy- and tax-related stability is a must for ensuring market stability. The Union Minister also said that the government is confident that Prime Minister Narendra Modi will emerge victorious in the ongoing Lok Sabha elections to return to power for a third straight stint. A good financial market needs stability at the Centre, which will be provided by the imminent return of PM Modi, she said at an event at stock exchange BSE. 

The domestic stock market has staged a performance far better than everyone's imagination, given that it has rewarded investors with decent returns amid uncertainty across the globe, the finance minister pointed out.

Asserting that there is no place for anxiety in the market, the finance minister said the market works with policy stability, tax stability, and decisiveness. The BJP will undoubtedly return to power at the Centre with a strong mandate, she said. 

Her remarks come at a time when the headline Nifty50 index has delivered a return of about 21 per cent (up 3,903.1 points since May 12, 2023) in the past year, on the back of good growth estimates, low inflation, and foreign investors leaning towards India as an investment destination.

Today, the Indian market is making great use of technology. she said.

The 'T+0' system, for instance, has been implemented effectively on Dalal Street, one of the several examples of better technology supporting market efficiency, which is in stark contrast to several foreign markets, the minister pointed out.

The Union minister also said that India's share has more than doubled in the MSCI index, to about 14 per cent from 6.0 per cent. Effective use of technology has also aided the trend of savings in a demat form instead of the earlier post office mode. 

The finance minister pointed out that an explosion" in the riskier derivatives segment (comprising future and options contracts) by retail investors can create problems for household finances in the future. "Any unchecked explosion in retail trading of futures and options can create future challenges, not just for the markets, but for investor sentiment and household finances," she said.

Criticising the Indian National Congress party’s plans regarding wealth redistribution, the minister said that such a policy would make the economy poorer. 

Individuals, including businessmen, desire growth, and such plans can damage their confidence, she said.  

"Household finances have made a generational shift. We want to safeguard them," she said. A study undertaken by Sebi has revealed that nine out of every 10 retail investors suffer a loss on their bets in the futures and options market.

The Union Minister also appealed to the BSE to work closely with capital market regulator Sebi to support investor confidence by way of stringent compliances and robust regulatory standards.

With inputs from PTI

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