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Hi there, this is ETMarkets’ Investors Guide, a show about asset classes, market trends and investment opportunities. I am Saloni Goel.

Financial markets want more retail participation. But now that it has come flooding, it’s causing worries. In May-June, retail volumes on Dalal Street hit a decade high of 70% and daily trading volumes rose from Rs 41,000-42,000 crore to Rs 60,000 crore. This money has gone mostly into risky trades, and that’s the worry.

The Sebi chief this week expressed his worry and said this class of investors should start their investing journey with risk-free govt securities. The US SEC chief is worried about the risks to retail investors, who are increasingly making short-term bets via low-cost trading platforms.

What’s contributing to this frenzy? Are many of this new class of investors going to end up with burnt fingers?

We caught up with Raj Gala, Fund Manager, Emkay Investment Managers, to try and understand the situation.

Welcome to the show, Mr Gala

One thing that has stood out in the market rally since March is the influx of new investors, who have mostly binged on ‘cheap’ or penny stocks, taking them higher. What kind of problem does this create in broader markets? What are risks involved for these investors?

Many fund managers are said to be sitting on cash because they find stocks valuations expensive. Some are making a case for booking profits. What are you doing these days?

If a 30-year old risk taker is sitting on Rs 1 lakh and has to deploy that money in the market now, where should she invest now and in what proportion? Or would you advise her not to enter the market at this juncture?

That’s it in this week’s edition of the special weekend podcast. Do come back next Saturday for this weekly special. You can check out our regular podcasts on the equity market twice every week day.