NewsIndiaTimes - page 2

f Prime Minister Narendra Modi has
delivered one thing in his first ten
months in office, it’s been electricity
to India’s stock markets. India’s
benchmark Bombay Stock Exchange
(BSE) Sensex recorded a 31 percent jump
in 2014. Only the insane runup in Shang-
hai’s bourse – up 90 percent in the past 12
months – has overshadowed the Indian
Unfortunately, very few actual Indians
stand to benefit from the boom. The pro-
portion of retail investors in India’s equi-
ties markets is strikingly low. Less than 1.5
percent of the population invests in secu-
rities, compared with almost 10 percent in
China and 18 percent in the U.S. Just 2
percent of India’s household savings are
exposed to equity; in the U.S., the long-
term average is 45 percent.
This is ultimately bad news for India’s
economy. The country desperately needs
to channel more household savings into
equities – which are a vital source of cor-
porate finance – and away from unpro-
ductive investments in gold and real
estate. India also needs more local funds if
it’s to sustain the strength in its equities
market while avoiding macroeconomic
imbalances. At the moment, around 70
percent of the market is dominated by for-
eign institutional investors.
Consider this statistic. Between Sep-
tember 2008 and October 2014, those for-
eign investors made net purchases of $45
billion. In the same period, domestic insti-
tutional investors (mostly funded by retail
investors) made net sales of $16 billion.
This imbalance creates serious side effects.
The billions of dollars flowing in produce
upward pressure on the rupee and a de-
cline in India’s competitiveness.When
they flow out, usually at short notice, mar-
kets collapse and the exchange rate grows
volatile. That scenario is almost certain to
play out in coming months when the U.S.
Fed tightens monetary policy.
At one level, the reluctance of retail in-
vestors doesn’t make sense. Despite quite
normal ups and downs, India’s markets
have done well over the last decade. The
Sensex gave a return of 17 percent com-
pounded annually between August 2004
and August 2014. That’s twice as much as
Indians earn from their most preferred
mode of financial savings: bank deposits.
Yet the proportion of retail turnover to
total turnover actually declined from over
80 percent in 2003 to under 35 percent in
What accounts for the disillusionment?
For one thing, retail investors may not
have earned the average rate of return.
Like mom-and-pop investors in other
countries, most notably China, India’s
punters don’t always make the best buy-
and-sell decisions. They usually sell high-
performing stock earlier than they should
and hold onto badly-performing ones too
long. They also tend to enter stock markets
near their peaks and quickly lose confi-
dence when they fall.
Also, the one market which usually at-
tracts retail investors in larger
numbers – the market for initial public of-
ferings – has performed poorly in India
over the last decade. An analysis of 394
IPOs between 2003 and 2014 found that
only 164 companies were trading over
their offer price. Thus, 60 percent of in-
vestors lost money over a decade.
There’s also a lingering perception that
India’s stock markets are manipulated by a
few big players; markets have been marred
by several high-profile scams in the last
two decades.
While India’s stock market regulator has
done a reasonable job of reining in mal-
practices, confidence still lags. Also, India’s
dominant family-run companies, as well
as listed public-sector companies, need to
offer more of their stock to the public to
add depth to what’s traded and to make
manipulation harder. Many have struggled
to comply with the requirement that at
least a quarter of shares be publicly held.
The development of a robust Indian eq-
uity market after 1991 represents one of
the great achievements of India’s liberal-
ization policies. To reap the full gains,
though, the government now needs to do
a better job of educating and enticing its
own citizens into taking part.
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India’sMissing Investors
India’s dominant family-run companies, as well as listed public-sector companies, need to offer
more of their stock to the public to add depth to what’s traded and to make manipulation harder
omen are generally not al-
lowed to venture too far from
their homes in Pakistan’s Khy-
ber Pukhtunkhwa province,
leave alone even distantly
thinking of employment. But Khalida Bibi’s
quest for empowerment has made her an
exception and a shining example for other
women in her village in Haripur district.
It wasn’t easy for the 52-year-old to face
harsh innuendos from her relatives and
communities for working with Sabah, an
organisation that empowers and enables
home-based women across the eight South
Asian countries to earn sustainable liveli-
hoods through crafts and enterprise, but
she dismissed their comments and fo-
cussed on honing her skills.
“A woman should never accept defeat.
She should fight against the circumstances
and petty mindsets to empower herself. My
husband and my children stood by me
throughout and that is why I have been able
to reach so far,” Khalida Bibi told IANS dur-
ing a visit to India.
“Earlier my relatives said that I have de-
famed the family by stepping out from the
house. But today those same people are
sending their girls with me for participating
in different cities in Pakistan,” she added.
Things have become easy for women like
Khalida Bibi because of Sabah that offers
young girls skill development programs at
their doorstep. As girls are not allowed to
step out for work, the organization ensures
they are skilled enough to work from home.
Kurtas, suits and shawls with hand em-
broidery are what Khalida Bibi brought to
the Indian capital to present at the annual
Lotus Bazaar that promotes handicrafts and
objects from South Asian countries and
highlights the work of NGOs and cultural
institutions that work closely with the arti-
Hafiza, a member of Sabah Afghanistan,
perceives this opportunity of working from
home as god-sent because of the perennial
conflict her country is embroiled in.
“Additional income is always a boon, es-
pecially if you are from a conflict zone
where one lives on the edge of unpre-
dictability. The organisation provides the fa-
cility of working from home and gives us
training and material,” Hafiza told IANS.
“In a way this opportunity has also re-
vived the craft because the traditional art is
able to reach the market, which sees a surge
in demand,” Hafiza said.
The Lotus Bazaar is a flagship market de-
velopment event of the Asian Heritage
Foundation, a cultural organization that
aims to promote the diversity of Asian her-
itage and culture through the arts, tradi-
tions and cuisines. The four-day bazar,
which beganMarch 28 on the lawns of the
state-run Ashok Hotel, offered space for di-
rect retail to those selected from the South
Asian countries and attempts to connect
themwith the global market.
For tourism-drivenMaldives, the market
is a profitable venture to reach out to a
larger audience and sell their woodwork.
“Being an island nation we have to ex-
port the rawmaterial. So what we are sell-
ing here are woodwork and shell jewellery.
The innovative designs are appealing and
affordable,” said a representative from the
Maldives stall.
For Savita Patel, CEO of Sewa Trade Facil-
itation Centre, a part of the Ahmedabad-
based Self EmployedWomen’s Association
and which facilitates market access and al-
ternative employment for rural artisans and
women, platforms like the Lotus Bazar have
revived craft and brought additional in-
come to the family. “In districts like Kutch
there is scarcity of water and rainfall. This
usually leads to migration but we offer to
teach these women in group, train them
and introduce them to the designers who
tell them about color combinations,” Patel
told IANS. “So women are empowered as
they are earning and at the same time you
are reviving the craft by creating opportuni-
ties for future generations,” she added.
Initiatives like this are making skill devel-
opment a lucrative job opportunity and
making handicrafts fashionable.
News India Times
April 17, 2015
By Shilpa Raina
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