“This is one of the lowest in the world as far as a developing economy like India is concerned,” he told students at the Sreenarayana Guru Institute of Science and Technology, North Paravur near here as part of delivering the Business Line Club lecture. “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 lamented that while India has over 75 crore mobile connections, the country has less than 1.5 crore depository accounts. This reflected the poor participation in the stock markets, and also reflected the tremendous growth potential the markets have.
According to Mr Agrawal, India has got the highest savings in the world with about 36 per cent. About 64 per cent of the savings in India goes to banks in fixed deposits while 6 per cent goes to capital markets. The ideal way to grow wealth is to invest in fixed assets such as properties and in other paper assets such as fixed income deposits, gold ETFs, equities and so on, he said.
The Managing Director of Acumen 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 a larger amount in assets that carry higher risk but also much better returns.
The presentation also gave students and the faculty members insights on the various factors that govern the movement of the stock markets and also how to avoid pitfalls and maximise returns.
He pointed out that the stock market witnessed five times growth from 2003-04 to 2008-09 as the Sensex went up from 3,500 to 21,000. In the last 30 years, the market was positive for 22 years and negative for eight years. It provided 60 per cent returns in five times, 40-60 per cent in five times, 20-40 per cent in four times and 0-20 per cent in 8 times.
Comparing the returns delivered by various assets like bank deposits, company deposits, equities, he said over the long terms equities have consistently delivered higher returns than all other assets.
Earlier Mr K.P. Narayanan, Assistant Regional General Manager, The Hindu, spoke about Business Line Club and its activities.