Technology, SEBI has made stock market a level playing field: Shankar Sharma

Earlier, most companies in the stock market used to be from Mumbai and Delhi, but they are now coming from smaller towns, said veteran investor Shankar Sharma, comparing the situation to the Indian cricket team of 70s when most cricketers were from Mumbai.

“Just like (today) small towns producing cricketers, they are producing entrepreneurs as well. (The companies managed by them have) fantastic growth model, fantastic business and great thinking – which was unthinkable 30-40 years back,” said Sharma while speaking at an event in Nagpur.

Sharma was highlighting the changing dynamics of the Indian business sphere where centres of economic activity are shifting gradually to Tier II and Tier III cities. A similar trend has been seen in the demography of investors.

The same phenomenon is happening in the stock markets. Investors are not just Bombay-centric now,” said Sharma, who continued code switching between Hindi and English during the address. “Playing field has become very levelled, all thanks to technology and SEBI.”

He appreciated the market regulator for making the rules transparent for investors which has reduced the role of “privileged information” in making money in stock markets. Sharma also said the role of meeting with management is no longer paramount in making money.

According to Sharma, with the proliferation of technology, the stock market has also won the confidence of investors from smaller towns. “Now they realise that it is not a rigged game where investors in Bombay would rig the game,” he added.

Also read: Shankar Sharma likens investing in smallcap stocks to betting on a marathon race

SEBI has created multiple laws and regulations in the last one decade to protect the interest of retail investors. It has also cracked its whip on stock price manipulation, illegal insider trading and spread of Unpublished Price Sensitive Information (UPSI) to a select group of people.

Sharma also said luck plays a vital role to make money in stock markets. He cited examples of Rakesh Jhunjhunwala, who made most of his money in three stocks despite investing in several hundred of them during his career. He also cited Warren Buffett who famously said that if you take out certain highly successful investments such as Apple, his lifetime returns from investments will be mediocre.