The Hindu Business Line : Household mindset

This refers to `Households turn conservative' (Business Line, September 27). Retail investors seem to have reservations about the stock market from their bitter experiences in various scams and the UTI debacle. The mess in the ONGC issue made matters worse.

The hike in the opening of the demat accounts was highlighted presumably due to the preference of the investors to the attractive IPOs such as TCS. The household investment of Rs 5,847 crore in 2003-04, against Rs 18,199 crore in 1999-2000, brings out the diffidence of the retail sector. At the same time, the decrease in borrowing from 70 per cent to 24 per cent shows the household reservation in spending in areas other than housing.

The accretion of huge bank deposits from the personal segment shows that the depositors are not too unhappy with the low interest regime, but have reposed confidence in the banking industry. This is a good sign for the economy. SEBI and the stock exchanges have to evolve new strategies to attract retail investors by increasing confidence in the investment sector.

C. P. Velayudhan Nair

Kochi

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