'Who asked retail investors to act on every news?': Helios Capital's Samir Arora has a word of caution

Amid regulator worry over 'froth' in small and mid-cap sectors, Helios Capital founder Samir Arora has a word of caution for do-it-yourself (DIY) investors. 

"I don't understand why after every failed attempt at speculation people say " this has trapped retail investors etc etc ...".

"Who asked the retail investors to buy/sell stocks on every news/rumour/gossip without any attempt to analyse," Arora posted on X.

SEBI has issued a warning on the buildup of froth in the small and mid-cap space, urging investors and fund houses to exercise caution amidst growing concerns of overvaluation.

Mid and small-cap stocks have soared in value over the past six months as retail investors and mutual funds snap up shares in previously-troubled companies, sparking froth concerns. 

Retail investors betting directly have been instrumental in the rally, with WhatsApp, Telegram groups publishing tips becoming increasingly popular. 

Kotak Institutional Equities in a note said "irrational exuberance" was driving mid-cap and small-cap stocks higher as there was "no meaningful change in the fundamentals of most companies".

In response to SEBI's directive, fund managers have begun reallocating portfolios, raising cash reserves, and, in some cases, restricting inflows to mitigate risks.