In a global first, the Securities and Exchange Board of India (SEBI) is planning to issue regular risk factor disclosures on market trends, including surges and collapses, to help investors make right decisions by learning from the regulator’s insights, sources have said. 

The move, which is still in a preliminary stage of discussion, can help investors avoid a herd mentality that has been particularly witnessed during the last couple of years – starting with large-scale selloffs when the pandemic hit the world in early 2020, followed soon by a sharp surge in buying of stocks without understanding the fundamentals and largely on account of get-rich-quick stories and then subsequent losses. 

Particularly of significance has been the losses suffered by investors in a large number of IPOs in the recent past and in the highly-complicated futures and options segment of the capital market. 

“Though the investors have seen a fixed pattern play out in every single cycle – that is, everyone rushes to buy shares when the going is good, and then they indulge in panic-selling when a crisis strikes. The basics of capital market investments are always thrown out of the window, and one key reason for that is the lack of truly-independent insights,” a top official has said. 

The official further adds that most of the research material available in the market has been prepared by the market participants who have their own business interests in mind, and therefore, it could be a great idea if the regulator itself makes public its insights from upswings or downtrends in the market.