The Hindu Business Line : Concerted effort to guide investors is need of the hour

CHANCES are that you will never meet Mr Jayanta Ghosh. He is recently retired, has strong views on subjects that range from politics to medical science, and lives in an airy suburban house. The man is also very baffled. His bafflement stems from soaring stock prices, which have buoyed the NAVs of equity funds he has invested in.

Should he sell now and get out before it is too late? Should he hang on for some more time? Or should he simply move over to debt schemes for the time being? These are posers that, he says, are disturbing him day and night.

Mr Ghosh needs to be told that he is not alone; he has for company many others. They, like him, have gained from the advancing stock market. Who are these people that have seen positive returns? As distributors indicate, they include college students who have saved enough to invest in a Templeton Bluechip or an HSBC Equity. And retired folks who, faced with a shortage of other options, have parked their money in balanced funds. Or middle-level executives, who have read a personal finance book or two, have worked out SIPs.

At the end, however, they are all ordinary investors. A handful of fundamental issues drive each of their actions. However, each individual has a very unique risk profile. Mutual funds can help such people become better savers - more disciplined in their approach, more methodical in their style and a lot smarter than what they are at the moment.

This, however, calls for a certain re-orientation on the part of our fund houses. Why? The answer is clear-cut. Today, industry-wide efforts to guide investors are a few and far between. Each playeris busy minding its own turf. Not that this is bad in any way, but a concerted attempt will not hurt anybody.

It is true that some players have taken important steps to interact with small investors. Simply put, that is not enough. And AMFI, the industry body formed by asset management companies, needs to take up the case immediately. After all, a lot is at stake.

As for the investors themselves, they can take comfort in the fact that the local market has been doing well with big-time support from foreign institutions. This, all said and done, need not be seen as an isolated phenomenon.

Other emerging markets too are in the news because of similar reasons.

Indian stocks, some feel, will be in vogue for some more time because of factors that are playing an extremely positive role. The economic fundamentals are good and companies continue to perform well. The last quarterly results prove the point.

Incidentally, as a fund manager put it recently, our market has not been disturbed much by the London bomb blasts, the fire at Bombay High and the inundation of the country's No. 1 financial hub.

Oil, of course, could play the spoilsport. Investors have been happily ignoring soaring oil prices... one wonders, for how long? They should remember that this could well turn out into a major problem in the months ahead. In fact, the market's biggest risk in the short-term can originate on this front. A sharp decline in FII inflows will only compound the problem.

Feedback may be sent to nilanjan@thehindu.co.in

Liquidity has increased in the system due to the Government spending and RBI intervention in the forex market to control the rupee appreciation. The long end of the curve may see some rally.

Tata Mutual Fund

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