The Securities and Exchange Board of India said on Friday it is keeping a close watch on stock markets to ensure that everything is going well and to safeguard the interests of retail investors.
"Whenever there is large growth there are problems... Sebi is keeping a close watch on the (stock) markets," Sebi Whole Time Member T C Nair said.
The regulator was determined to ensure that "everything is going well" apart from robust governance measures at exchanges, he added.
The Bombay Stock Exchange benchmark Sensex crossed 21,000 point mark in January this year, but declined by over 5,500 points since then. Today, the 30-share index nosedived 489.43 points to end at 15,343.12 points.
"Markets will go up and down and I do not know about what will happen to a day-to-day investor, but chances of high returns for a long-term investor are quite good," Nair added.
The government and Sebi are in the process of making retail investors a partner in the growth of capital markets, he said, adding that despite strong volatility in the markets, interests of long-term investors were safe considering strong fundamentals of the economy.
During five years since October 15, 2002, the Sensex has grown by 536 per cent providing high returns to investors, he said.
Acknowledging huge investments made by mutual funds in the markets, the Sebi member said their investment was providing a relative stability to the markets despite reports of outflow of funds by foreign institutional investors.
At present, there are over 850 mutual fund schemes and around 87 proposals are lying with the regulator, Nair said, adding that investments in mutual funds have grown to about Rs 5,66,000 crore )Rs 5,660 billion) from Rs 3,60,000 crore (Rs 3,600 billion) a year ago.
"Although mutual funds have withdrawn about Rs 28,000 crore (Rs 280 billion) over the past one month, their large investments still provide stability and confidence in the markets," Nair said.
He further said growth of the capital market was 'only a tip of the iceberg' as at present only 5 per cent of the household savings were invested in the market.
"If 10 per cent of the household savings are invested in the market, one can only imagine what will be the scenario," he said, adding that no investor would repent if he makes long-term investment in the Indian stock markets.