The Hindu Business Line : `Investors need not be deterred by zooming Sensex'

THE zooming Sensex is not a deterrent for investing in capital markets but it is important that investors keep in mind what they are buying, how much they are investing, why they are buying, and when are they going to sell, according to Mr R. Jayaraman Iyer, Chairman and Managing Director, Stock Holding Corporation of India Ltd.

He also advised investors to allocate a small portion of their income for investment in equities and not to borrow heavily for making investments in capital market.

Speaking at an investors' education programme in Coimbatore, he said that one could make money from the capital market even if the Sensex were hovering at 2,000 or 3,000 levels.

Similarly, an investor need not be deterred by the mere fact that the Sensex has zoomed to 10,000 or 15,000, since even at this level the investors would find opportunities to make profitable investment.

He said that he found a lack of awareness among the ordinary investors about investing in stock markets and that there was a "herd mentality" in the selection of scrips for investing.

According to him, it is not possible for anybody to determine what direction the market would take.

Investors tend to follow the investment route highlighted in "success stories", little realising that the same investment strategies had also led to downfalls. It was important to change our attitudes in tune with the changing times, he said.

Mr Iyer also said that investors should have reasonable expectations about market returns and exit from shares once they have made 25 per cent gain.

Both profit booking and stop-loss are important concepts to be followed by investors. Mutual fund investment is a safe bet. While the returns might not be phenomenal, they would be in line with the market trend.

Mr A.K. Narayan, President of TN Investors Association, Chennai, said that it was baffling why retail investors in India are not putting their money into the stock markets when FIIs are pouring money into them and making huge profits.

The entry of Japanese investors into Indian markets is a good sign as they are long-term investors.

Mr Narayan advised investors to look for good IPOs that are fairly priced.

Mr B. Madhav Reddy, Vice-President of Multi Commodity Exchange of India Ltd, said that India was the largest producer and consumer of many commodities and had the potential to become the commodity hub in future.

Mr Jayant R. Pai, Vice-President (Business Development), Parag Parikh Financial Advisory Services Ltd, Mumbai, said that investors who have a large corpus but do not have the time to directly invest in equities or are not keen to take the mutual fund route could opt for portfolio management services that offer the benefit of professional money management with personal touch.

Mr K. Annamalai, Director of DJS Stock and Shares Ltd, organiser of the programme, said that it was time for stock taking as to why nearly 90 per cent of the retail investors have failed to make money despite the sustained bull run in the capital market.

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