MUMBAI: Unchecked explosion in the riskier futures & options market by retail investors can create problems for their household finances, warned the outgoing finance minister Nirmala Sitharaman who also assured Dalal Street about the stability and majority of the next Modi government.

Discounting the recent volatility in market and the heavy selloff by foreign investors, the minister, while addressing business editors here Tuesday said, “I inherently believe that the stock market and its conduct is on its wisdom. It has its own assessment of the situations.. The market watches the global situations and other stock market situations very closely and behaves on its own wisdom. But all I can assure you and everyone out there is that there is absolutely no need for investors to worry about the outcome of the ongoing polls.”

“Absolutely, there is no doubt that prime minister Modi and BJP will return with good numbers. There is no need for the volatility index to fluctuate the way it has been doing in recent days. There is no need for VIX to fluctuate at all,” she said.

“Unless you have predictable certainty, of course, I am not talking about certainty as a carved-in-stone certainty… The human nature is that, people prefer having a certain predictability, certain stability..”

It is significant to note that after the first phase of polling, the BJP, particularly Modi and Home Minister Amit Shah, have been silent on crossing the 400-mark, something the party went to town with in the run-up to the hustings.

As the polling progressed and each of the four phases saw voter apathy and resultant low voter turnout to the tune of 3-5 per cent on average, the markets especially foreign funds were getting jittery about Modi coming back with a much lower mandate. FPIs have sold off close to Rs 18,000 crore of equities this month alone.

“Any unchecked explosion retail trading in F&O segment can create future challenges not just for the markets but for investor sentiment as well as also for household finances,” Sitharaman later told, without elaborating, at an event at the BSE headquarters.

It can be noted that a recent study by the markets watchdog Sebi had found that as much as nine of the ten retail investors in the F&O markets have lost heavily.

Sitharaman also appealed to the BSE to work closely with Sebi to help build investor confidence by stringent compliances and robust regulatory standards, pointing out that both the BSE and NSE should mitigate systemic risks and ensure market stability.

Discounting the falling household savings rates, which hit a five year low in FY24, the minister said “household finances have made a generational shift and a good portion of that savings is coming into the stock market now, that shows their trust in the market. And we must safeguard them this is a trust we must protect.”

“Our middle-class families today realise that even if it is risk-laden, there are better returns from the stock markets,” Sitharaman said underscoring the rapidly evolving dynamic of household savings.