Business Daily from THE HINDU group of publications
Wednesday, Nov 14, 2007
ePaper | Mobile/PDA Version
Business Daily from THE HINDU group of publications Wednesday, Nov 14, 2007 ePaper | Mobile/PDA Version |
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Markets
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Stock Markets States - Kerala 
Mr Mahesh Kumar, Senior Executive at NSE, delivering a lecture on capital market at the BL Club meet at SCMS campus in Kochi on Tuesday. Our Bureau Kochi, Nov. 13 Despite 125 years of capital market experience of the country, 83.9 per cent of households in India still invest only in the safe and sound bank deposits, Mr Mahesh Kumar, Senior Executive of the National Stock Exchange, said. Addressing a Business Line Club programme at the SCMS Campus here today, he said that only 7.2 per cent of the households have taken to investing in the country’s capital markets. The programme was conducted in association with Geojit Financial Services Ltd. Radical transformations have occurred in India’s capital markets in the meanwhile. Two decade ago, investment in equities was more for the dividend returns that they promised and then only did the incremental value of the share come in. Annual return of 20-30 per cent through dividend were considered lucrative enough for investing in shares with a face value of Rs 10, as against investments in bank deposits which offered far lower returns. The major source for buying equity was also through IPOs, which were obliged to sell the shares at their face value. But the scenario has changed dramatically since then. Today, IPOs are undertaken through the book building price discovery mechanism and most issues are very high-priced. The annual returns through dividends are no longer lucrative to meet the high investments. And the focus has shifted to the growing share price. Mr Kumar advised a multi-pronged investment strategy, including investment in both physical assets like real estate and gold, as well as financial assets like securities, bank deposits, small savings, insurance and mutual funds to reduce the risk of the investment basket. This would also ensure that risk and returns are evenly matched with a certain component of the investment bearing greater risks and offering greater returns while some portion portions offer less risk and less return. He said that the retail investor should always a build a portfolio comprising of shares of several companies, which would again minimise risk. It is also safer for a retail investor to be a long-term investor rather than a day trader. Though the day trader creates the huge volumes at the bourses, the value of the portfolio are likely to grow steadily only in the long-run. Mr Kumar said that it was time that more retail investors entered the equity markets to reap the dividends of accelerated growth of the economy. The Indian capital markets are a true reflection of the accelerated pace of the economy and if the growth peters out, the growth in the capital markets would also be sharply curbed. More Stories on : Stock Markets | Investments | Kerala
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