The Hindu : Kerala / Kochi News : Bearish market hits investors in State

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Friday, Oct 31, 2008
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Kerala

Kerala - Kochi

Bearish market hits investors in State

K.A. Martin

— Photo: Thulasi Kakkat

High and low: The fluctuating fortunes of the stock markets have affected investors in the city.

KOCHI: There is not even an educated guess as to how much investors in Kochi might have lost in the current stock market meltdown.

Wisdom among the stock markets folk is that retail investors come in at the fag end of a rally and exit at the lowest point.

But has the investors in Kerala in general and Kochi in particular become smarter?

Thanks to an investor culture, aided by spreading awareness about the possibilities of relatively high returns on reasonable risks, the number of investors in the stock market has increased significantly in Kerala.

12 lakh accounts

There are around 12 lakh demat accounts in Kerala.

According to market estimates, the number of active retail investors in the State is around four lakh.

They operate through about a dozen agencies.

Their combined holding value is estimated to be around Rs. 12,000 crore.

But in the current crisis the value is estimated to have dropped to between Rs. 7,000 crore and Rs. 8,000 crore, considering that holding values across the country has fallen drastically and between 60 and 70 per cent of the scrips have seen severe erosion in value.

According to Prince George, Chairman and Managing Director of Doha Brokerage and Financial Services, there were indications that a lot of investors wanted to sell off as the Sensex peaked.

It is true that some of them came back at the 14,000 point level.

But the losses might not be as dramatic as they are being made out, he says.

According to him, the investors here have become quite smart.

They might be able to sense trouble given that they have seen quite similar situations in the past.

Taking a knock

It is not always possible to say that investors sell off at the point they sense as a peak and withdraw from the scene altogether, says Jibi Mathew of JRG Capital.

Nobody was in a position to sense a recession when the stocks crashed in January this year, says Mr. Mathew pointing to the developments in the Indian stock market for about a year now.

While the stock market is one thing, investors in Kerala have taken another knock on their fortunes with erosion of the worth of the ULIP (Unit-Linked Insurance Policy) investments.

In the recent past, ULIP schemes have come with as much as 90 to 95 per cent investment option in stocks while the more traditional schemes have offered anywhere between 35 and 65 per cent investment options.

The drastic fall in Sensex has wiped out substantial quantities of the ULIP policy values held by investors across India, Kerala no exception.

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