Profit’s been big for some small investors

New Delhi, Nov 18 (PTI) If the stock market boom has added billions to the kitties of the billionaires, the country's small investors too have woven some success stories.
"Even the small investor like an office peon who may not be earning more than Rs 5000 a month is investing in the equity market," says Pravin Poddar of Elite Stock Management Ltd.
Small investors, weary of losing money, used to put their savings in the mutual funds (MFs). The small investor has come out of the MFs and learnt to invest wisely in the equities, he says.
According to a RBI report, direct investments by households in shares has increased by 37 per cent, from Rs 8,034 crore in 2005-06 to Rs 10,953 crore in 2006-07. The investments in MFs by households saw a whopping growth of 74 per cent, from Rs 21,139 crore in 2005-06 to Rs 36,700 crore in 2006-07.
Dwij Seth, Assistant Vice-President, IndiaBulls, says that the time is ripe for small investors to make most of Diwali bonus out of stock market and even in coming days it will continue to show upward. The sensex will reach around 35,000 in next 4-5 years, he predicts.
"Investors these days are well informed and becoming more confident about the economy through television channels, brokerage houses and online facilities. Earlier they used to wait for the market to fall down for investment but now seeing long-term gains, they do not panic even if the market falls by 500 points," he adds.
Kirit Somaiya, President, Investors grievances Forum, a NGO based in Maharashtra dedicated to protect the rights of the small investors, cautions that not all the investors are making money but agrees that to a some extent small investors have been benefited by mutual funds.
"Small investors should know that heavy speculation is taking place in the market and considering the extreme volatility in the recent past they should stay away from speculation in the market. People who are investing on routine basis are benefiting in the secondary market but investing through primary market in IPOs is still risky because of its high price. This is not the market for small investors, for sure," adds Somaiya. Bharat Singh, 35, an attender, has learnt to know which companies are doing well. "I reach the office early and take a quick look at the headlines of the business papers meant for the bosses," he says.
"This gives me enough time to do the morning clearing work and decide if I should telephone the company that operates my DMAT account, says Singh, a matriculate, who relies on the dailies to find out whether the companies he has invested in are doing well.
Singh, who has learnt to live with the swings of the market like many other small investors, now plays informal advisor to his colleagues. After all he has gained from the market enough to build a house and more so he has lost only once.
Like Singh , Sunil, a clerk, has also tried his luck in the market and has raked in huge profits by investing in Initial Public Offers (IPOs) during the last 12 months. "I don't consult any expert but read about IPOs in newspapers. I invested Rs 15000 of my savings and now it has increased to Rs 40,000," he says.
Sensex crossed three milestones in October as it breached the 18K on October 9, 19K on October 15 and 20K on October 29.
Rising trends in the market caused decline in the investment of Indian households in small saving schemes such as PPF and Postal Saving Schemes, National Saving Schemes, monthly income schemes, National Saving Certificates, and Indira Vikas Patras. RBI report says, their share has fallen from Rs 72,778 crore in 2005-06 to Rs 37, 544 crore in 2006-07, a decrease of around 49 per cent. "Small investors have gained confidence and are now investing a big part of their saving in the market because of the booming economy, sustained bull-run at stock exchange and record inflow of Foreign Instititutional Investors (FIIs)," says Sunil Thacker, Relationship Manager, Kotak Securities.
For 24 year old Abhinav, a marketing executive, everyfall in the market is a good buying opportunity. "I keep on investing on the formula of risk-rate-ratio, higher the risk, greater the profit. I bought Reliance Petroleum shares for Rs 60 and have not sold it yet. I know that in longer peroid of time, net asset value of this share will touch record highs," he says.
Thacker adds, "With India's economy doing exceptionally well, every dip in the market is considered to be a great buying opportunity. Younger generations are now investing more and ready to take risks. And with markets showing intact bull run and unimaginable rate of returns, small investors are showing confidence in the market".
While some investors want to take a cautious approach and believe in wait and watch policy. "I invest only by consulting experts. Market keeps changing at a rapid pace and so it can crash anytime. I think it maybe because of the manipulation at the back-end by majorplayers. They can affect the upward swing of the market anytime," says Mohammed Gayasuddin Khan, a small investor.
"You can attribute the awareness among small investors to channels like NDTV Profit, 'Awaz' or CNBC among others," says Ravinder Seth of Elite Stock Exchange Ltd. "If 50 per cent of the housewives watch the saas-bahu soaps on the television, and youngsters watch cricket, there are 50 per cent watching the programme on the economy," he adds.
Seth further adds, "People now don't go by hearsay or what their neighbours are doing like older days. Now they either like to analyse the market themselves or consult brokerage houses." Thacker cautions all the small investors to stick to good quality stocks and always act as an informed investors and do not get swayed away by the rumours. According to ASSOCHAM report, India has received FII flows worth USD 18.8 billion in the year 2007. The increase is more than 113 per cent when compared to USD 8.8 billion FII in previous calendar year 2006. The stocks markets witnessed huge buying pressure since mid-September as Sensex has risen by more than 4000 points and has touched 20,000 mark on account of FII buying.