New Delhi, Jan. 6: The government today said it will only allow hedge funds from regulated markets to operate in India.

?Around three years ago, the country had experienced serious market misconduct. It is important for us to ensure that investments come from regulated markets. This will prevent any fallout later,? said U. K. Sinha, joint secretary, capital markets and pensions, ministry of finance, at a conference on financial sector reforms.

Hedge funds could help buoy the market, which has been slipping for the last two days, he added.

However, the government is cautious as hedge funds from unregulated markets could launder black money and drug or crime syndicate cash here.

Despite concerns over the ?market correction? on the Mumbai bourse, the Securities and Exchange Board of India (Sebi) today allayed apprehensions over Wednesday?s stock market slip, saying there is no cause for worry.

?Any unusual movement is a matter of concern for us. But the market is doing well today and there is no cause for worry,? Sebi chairman G. N. Bajpai said on the sidelines of a conference organised by IRADe and India Invest Economic Foundation.