Money-Wise: How can Indian market investors be saved from sudden crises like Hindenburg-Adani case?

The Indian stock market suffered a setback in the past few days after Adani Group again came under the spotlight because of another sensational investigative report by Hindenburg Research, which even dragged the Securities and Exchange Board of India (SEBI) - the country's capital markets regulator in the muddle.

In its report, US-based short-seller Hindenburg Research accused SEBI chief Madhabi Puri Buch and her husband Dhaval Buch of holding stakes in offshore funds which were used by the Adani group.

Buch said that the allegations made in the report were baseless and SEBI issued a statement confirming the investigation into the Hindenburg Research's accusations against Adani Group.

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However, despite all statements and rebuttalof the allegations, the stock market plummeted and the Adani Group shares fell by 7 per cent on August 12 morning, making only marginalrecovery by the end of the day.

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As the market rattled, the jittery investors lost nearly Rs 530 billion (approx. $6.31 billion) and the 10 Adani stocks in total lost Rs 16.7 trillion (approx. $198.89 billion).

By the end of the trading day, Adani companies had lost amarket value of $2.43 billion.

Watch:Hindenburg vs Adani: Investors look past Hindeburg's allegations

In such a scenario where panic-selling becomes the obvious step for investors, can the regulatory body do something to secure investors?

Here's a toolkit to protect investors from suchshake-up in markets

To safeguard small investors from future crises similar to the Hindenburg-Adani episode, economist and author Professor Vikas Singh has given WION a toolkit that if implemented can save people from incurring major losses.

Here are its key components:

• Early Warning Systems: Proactive monitoring of market anomalies and financial irregularities to identify potential red flags.
• Enhanced Disclosure Requirements: Mandating more detailed and transparent financial reporting by listed companies.
• Independent Audit Scrutiny: Strengthening the role of auditors and imposing stricter penalties for misconduct.
• Investor Education and Awareness: Empowering investors with financial literacy to make informed decisions.
• Investor Compensation Funds: Establishing a mechanism to compensate investors in cases of fraud or market manipulation.
• Strengthened Regulatory Powers: Granting regulatory bodies wider authority to investigate and penalise market misconduct.
• Crisis Management Protocols: Developing clear guidelines for handling market crises to minimise investor panic.