No merit in relaxing 10% cap on single stock investment: Sebi chief

Says cap is meant for diversification, and just because some scrip is outperforming is no reason to raise the ceiling

Markets regulator Secur­ities and Exchange Board of India (Sebi) sees no merit in relaxing the 10 per cent investment cap on a single stock for actively-managed mutual fund (MF) schemes, its chief said on Wednesday.

“The 10 per cent cap is meant for diversification. Just because some scrip is outperforming doesn’t mean you raise the ceiling. That will be self re-enforcing that a scrip has moved up and you are allowing higher investment in the same scrip. For the sake of diversification, the 10 per cent ceiling is something which stays,” said Ajay Tyagi, chairman of Sebi, while addressing the