SEBI Clamps Down

In today’s edition — Indian market regulator, the Securities and Exchange Board of India (SEBI)’s stringent steps on influencers; capital continues to flow out of markets; and India takes steps to attract and protect foreign investments.

DECODE THE NEWS

Finfluencer Frenzy Under Fire As SEBI Strikes Back

The What?

In an era where social media shapes our financial decisions, the rise of unregistered “finfluencers” has prompted SEBI to take unprecedented regulatory action. The latest in the line of fire is Asmita Jitesh Patel. 

A well-known influencer, Patel is often dubbed the ‘She-Wolf Of Stock Market’ and the ‘Options Queen’. The regulator has banned six entities connected to Patel — including her global educational programme — from operating in the capital markets. According to the new directive, SEBI has directed that over Rs 53 crore that these entities collected as course fees must be returned to the participants of the programme, while an additional Rs 104.63 crore in fees is now under scrutiny. Although these figures have been reworked from earlier reports, they highlight the severity of the penalties being imposed.

SEBI’s actions are not limited to this singular case. Following the post-COVID surge in financial influencers around 2021–2022, the watchdog began stringently monitoring content on platforms like YouTube, Instagram and X. Over time, thousands of posts have been flagged and numerous unregistered influencers have been fined.

The Why?

SEBI’s crackdown is driven by a simple, investor-focused rationale: protecting the retail investor from misleading, unregulated advice. Armaan Patkar, partner at Argus Partners, who has advised clients on securities and financial regulatory disputes with SEBI and India’s central bank, the Reserve Bank of India, told The Core, “If you’re giving stock-specific advice, you really should be an investment advisor or a research analyst,” highlighting that the essence of financial education should not be blurred with promotional activities.

As Patkar explains, “When someone is being paid secretly to promote a stock without disclosing it as a paid promotion, that crosses into the territory of marketing under the guise of financial education.” 

This is a fundamental issue because many influencers operate by sharing their personal strategies — often with a disclaimer that they are not offering a recommendation — yet they wield significant influence over their followers. By restricting access to recent market data, SEBI is taking a preventive approach similar to the blackout periods imposed on listed company employees around quarterly results. The idea is to ensure that any educational content remains just that — educational — and does not inadvertently drive impulsive trading decisions.

Does It Change My Life?

For you, the retail investor, these regulatory measures carry significant implications. On the one hand, SEBI’s actions are a welcome move towards ensuring that the advice you receive is not tainted by hidden commercial interests. By limiting the use of fresh market data, the risk of being swayed by impulsive, real-time recommendations diminishes. On the other hand, there is a legitimate concern over freedom of expression. Several macroeconomic content creators on YouTube—who merely explain market trends without giving direct stock advice—have had their videos removed under SEBI’s directive. If SEBI issues takedown notices without sufficient clarity or opportunity for the creators to respond, this could stifle legitimate financial commentary.

“Penalties can be large, especially in disgorgement cases, where people have to return illegal profits. But perhaps what’s needed now is for SEBI to issue clearer guidelines on what constitutes market manipulation in the context of influencers. That clarity would help influencers stay compliant instead of working in a grey area,” explained Patkar

In balancing investor protection with free speech, the outcome of any such legal battles will set important precedents for how financial education is regulated in the digital age.

In summary, while SEBI’s powers remain robust, the clarity of its guidelines is crucial. For now, the crackdown is a necessary step to safeguard the market — and ultimately, your investments — against unregulated influencers.

PODCAST

On Episode 523 of The Core Report, financial journalist Govindraj Ethiraj talks to Dr Arunabha Ghosh, CEO, Council on Energy, Environment and Water (CEEW).

1. Markets on standby as tariff bombs start dropping.

2. Oil prices are sliding down now even as gold prices look up.

3. Trump friendly WSJ calls tariffs the dumbest move for whacking friends not adversaries.

4. Warren Buffet says Trump moves against Canada and Mexico are act of war.

5. Amazon to invest in data centre in India.

6. How ready is India for extreme temperatures in March?

CORE NUMBER

$8.2 billion

American tech giant Amazon’s cloud services provider, Amazon Web Services, said it will invest $8.2 billion in Maharashtra over the next few years, according to Reuters. Cloud storage allows businesses to retrieve large amounts of data from anywhere, as long as they have an internet connection, thus removing the need for physical storage devices like hard drives. A 2024 International Data Corporation report predicted that the country’s cloud services market will grow from $8.3 billion in 2023 to $24.2 billion by 2028. That’s good news since India has been trying to implement digital-first policies, including promoting cloud storage. Already, Amazon runs two data centers in India — one in Mumbai and the other in Hyderabad — and this new move will also create a “significant growth in employment,” said Ashwini Vaishnaw, India’s Minister of Electronics and Information Technology

FROM THE PERIPHERY

—🔩 In the first nine months of the fiscal year 2024-25, India's steel imports shot up to 7.27 million metric tonnes, a 20.3% increase from last year, as per Reuters. On the flipside, India’s steel exports declined by 24.6% to 3.6 million metric tonnes, marking the lowest export volume in six years. Cheaper steel from China and South Korea is the culprit for this shift, and India is considering levying a 15-25% duty to protect indigenous steel manufacturers. Trump’s tariff threats add more fuel to the fire: Indian steel manufacturers worry that more US tariffs would compel China and South Korea to “dump” even more steel on India. Though cheaper foreign steel could be beneficial to businesses that use steel in the supply chain, importing more of it would likely cause further harm to domestic steel producers. 

—📃 India is revamping its bilateral investment treaty (BIT) framework to attract and protect foreign investments while safeguarding national interests, chief economic adviser V Anantha Nageswaran said. The 2015 model faced criticism for strict dispute resolution rules, Moneycontrol reported. The new BIT will align with global investment trends while preserving India’s regulatory space. Talks are ongoing with the UK, Saudi Arabia, Qatar, and the EU. Finance minister Nirmala Sitharaman highlighted stronger arbitration guidance and independent negotiations. The revised BIT aims to enhance investor confidence and support economic growth amid India’s current account deficit.

—💸 India’s capital outflows continued for the fifth straight month, though the pace has slowed. Business Standard reported a $177 million weekly outflow — the smallest since January. However, India-dedicated funds saw $370 million in redemptions, pushing current-year-to-date (CYTD) outflows to $2.9 billion. Exchange-traded funds (ETFs) lost $1.3 billion, while long-only funds saw $1.6 billion in outflows. The US accounts for 50% of redemptions ($1.45 billion), followed by Ireland, Luxembourg, Japan, and the UK. Meanwhile, US and European markets remain investor favourites, while China sees cautious inflows. India’s rupee remains under pressure amid dollar carry trade unwinds.

—⚖️ It’s a temporary relief for Madhabi Puri Buch, the SEBI former chairperson, as the Bombay High Court stayed a special court's order directing an FIR against her. The case is related to stock markets fraud and regulatory violations against Buch and five others. The high court has given four weeks for the complainant Sapan Shrivastava, a media reporter, to file an affidavit in reply to the petitions filed by Buch and others in the case, reported The Times of India. The high court said that the special court order for the FIR was “passed mechanically without going into details”.

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