Hindenburg-Sebi Saga: How Can Investors Protect Themselves From Panic Selling? Expert Shares 7-Point Toolkit

The market tried to brush away noises and allegations made by Hindenburg on Sebi Chief last week, taking positive cues from global markets.

New Delhi: The latest report published by US-based based short-seller Hindenburg last week alleging Sebi Chairperson Madhabi Puri Buch and her husband Dhaval Buch's involvement in offshore funds also used by the Adani group was watched keenly by the market investors, though there was no apparent panic selling. 

However, as investors continue to track the possible eventualities brought by the American short seller's report, is there a way to stay protected against sudden bouts of panic selling, should that happen?

The content of the Hindenburg has since been denied by both the Buches and the Adani Group, market experts say that investors should be mindful of a few things that will help them if a sudden-selling persists.

Eminent economist and author Professor Vikas Singh has shared a seven-point toolkit with WION that, if implemented, can save people from incurring major losses. Here are those seven points:

1. Early Warning Systems: Proactive monitoring of market anomalies and financial irregularities to identify potential red flags.

2. Enhanced Disclosure Requirements: Mandating more detailed and transparent financial reporting by listed companies.

3. Independent Audit Scrutiny: Strengthening the role of auditors and imposing stricter penalties for misconduct.

4. Investor Education and Awareness: Empowering investors with financial literacy to make informed decisions.

5. Investor Compensation Funds: Establishing a mechanism to compensate investors in cases of fraud or market manipulation.

6. Strengthened Regulatory Powers: Granting regulatory bodies wider authority to investigate and penalise market misconduct.

7. Crisis Management Protocols: Developing clear guidelines for handling market crises to minimise investor panic.

SEBI also issued a show-cause notice to the research firm for violating securities market rules. The new Hinderburg allegations against the SEBI Chairperson failed to impact the Indian stock markets which opened post the allegations (August 10) last Monday.

Several market experts have slammed the latest Hindenburg allegations, terming them as frivolous and cheap antics.

Sushil Kedia, Founder and CEO, Kedianomics said the US short-seller has nothing substantial to talk about even 18 months later. 

According to Vikram Kasat, Head-Advisory, PL Capital at Prabhudas Lilladher, Adani stocks showed resilience, with no significant impact from the recent Hindenburg allegations.

With Agency Inputs