Akshay Agrawal, managing director, Acumen Capital Market India Ltd., has stressed the need to create more awareness among the public to invest in capital markets, as India's exposure to stocks is only a meagre 1.25 per cent as against 35-40 per cent in developed economies. This is one of the lowest in the world.
Mr. Agrawal was delivering the Business Line Club lecture at the Sreenarayana Guru Institute of Science and Technology, North Paravur, near here. The stigma of scams and the general perception that investing in stocks is risky has kept Indians away from the capital markets, he said.
He said while India has over 75 crore mobile phone connections, the country has less than 1.5 crore depository accounts. While on the one hand, it reflected the poor participation in the stock markets, it also reflected the tremendous growth potential the markets have. According to Mr. Agrawal, India has got the highest percentage of savings in the world with about 36 per cent. About 64 per cent of the savings in India goes to banks in fixed deposits and 6 per cent to the capital markets. He said the ideal way to grow one's wealth is to invest in fixed assets like properties and in paper assets like fixed income deposits, gold ETF's and equities.
He suggested that a young person, by virtue of youth and the prospects of a bright career ahead, has a higher risk-taking capacity, and so can afford to invest larger amounts in assets that carry higher risk but much better returns. The presentation also gave the students and the faculty members of the institute insights into the various factors that govern the movement of the stock markets and also how to maximise returns and avoid pitfalls.
He said the stock market index grew five times in the period from 2003-04 to 2008-09, going up from 3,500 to 21,000. Compared with the returns from various assets like bank deposits and company deposits, over long terms, equities have consistently delivered higher returns, he said.
Earlier, K.P. Narayanan, Assistant Regional General Manager, The Hindu, spoke about the Business Line Club and its activities.