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This refers to your editorial “Retail investors keep faith” (Business Line, September 30).

Notwithstanding the hiccups and lower valuations created by the stock market indices in the recent past, such schemes as systematic investment plans (SIPs) and the entry of pension funds and the proposal to enlarge its scope to encompass private citizens also should augur well for the growth of the stock market.

In a positive sense, the bearish phase may make the financial system depend more on indigenous funds rather than foreign inflows for development of industry and services.

Besides, the unnatural increase in the stock indices in 2007, followed by the equally sudden decrease since February will help investors understand better the importance of the fundamentals of companies rather than get carried away by the hype created to inflate prices.

The attractive valuations of stock prices currently are incentives for the retail investors as well as long-term investors such as insurance funds and mutual funds to reap benefits from equities in the years to come.

P. E. Muthu Mumbai

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