India: Desist from well-intentioned intervention.

Volatility is often induced by forces within the stock market or outside based on mistaken perceptions. There cannot be a continuous boom in stock values. If the authorities try to check an underlying downward drift by policies such as cheap money, fiscal incentives, and so on, such a correction could be self-defeating. The authorities must not be influenced by interested lobbies which may want the market's course to be steered in a direction they think is in the national interest, says P. R. Brahmananda.

A WELL-FUNCTIONING stock market should not give any broker or speculator or investor the opportunity to make special gains because he knows more than the market does. All available information should be distributed among all the players in the market, and their significance fully absorbed. New information affecting the market directly or indirectly has to be very quickly diffused among all the persons connected. The theory is that perfect competitive conditions tend to prevail in the stock market. Hence, the course of prices the following day or even at a suitable discrete point of time in a day should not be capable of being predicted accurately.

This is the significance of the random-walk hypothesis. It follows that there are numerous operators, and no operator or group of operators can rig the market. By definition, in a perfect market, there has to be no scope for insider trading. All public transactions have to be …