Most Indians shy away from capital markets

Do the average middle class Indian have the guts to invest in share market?

Will his attitude change with investment in equity shares becoming a two-way boon to the society as it provides capital to raise money for the entrepreneurs and far better returns to investors?

A recent study conducted by business analyst and journalist Dheer Kothari points out though Indians by nature were thrifty and had the habit of saving, they were averse to taking risks in financial matters.

The study said 28 per cent of the GDP in the country was put into savings, which was highest in the world. Of this, only two per cent came into the market in the form of buying shares or investing in financial instruments.

The investments of the Indians in financial instruments was much lower compared to other Asian countries, where it was 11 per cent and even higher.

Kothari's study suggests the higher rate of interest offered by banks for long term fixed deposits or public instruments like Public Provident Fund had kept the Indians from investing in share markets.

Fellow member of the Institute of Charted Accountants Satish Agarwal, was of the opinion that the equity culture was yet to spread to the huge rural market rather than existing in a few urban pockets of India, notably in the Western belt of the country. People always had the option to park their funds in safer instruments where they get assured returns.

Agarwal, who is also associate member of the Institute of Company Secretaries, points out though the retail investor was not averse to investments in stock market, he was handicapped due to variety of factors.

The most critical reasons was the lack of knowledge and understanding of the stock markets, lack of interest on the part of the broker community and the mutual fund fraternity towards small retail investors, absence of any forum for interactive platform for the intending investor and fear of losing money due to misuse of the system.

Citing pitfalls in the present investment climate and the reasons that kept away small investors from the stock market,Agarwal said the growth of equity market was often coupled with industrial advancement of economy and well being of the people.

It was historically observed that "more mature the equity market of an economy, more is the prosperity of the people."

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