Why Indians are Equity averse

The Indian Economy has always been undervalued in terms of FII inflows and recognition and so does its Stock Market.The only option Indians have is domestic investors who have always been Equity averse due to reasons such as:

1.Indians have always thought of stock market as gambling.

2.Most of the Indians have lost money and discourage younger generation to go in this field.

3.Scams are the biggest reason of negligible retail participation.Our Indian stock market has seen one of the biggest stock scams of all time such as Harshad Mehta 1992 scam or Ketan Parekh’s K10 stocks also the recent Satyam scam has strengthen the view of retail investors of being equity averse.

4.People in India are financially not literate enough to invest in equities and most think that this is not their cup of tea.

5.Lack of proper resources also have acted a barrier in stock market participation.

6.One ancient reason I know is Gold. Yes, Gold has been a traditional favorite of Indians. As they think of gold not only for investment but also it act as tradition or custom so the money which should have been invested in stock market goes to the hot favorite gold.

7.One last reason I know is Savings deposits and Fixed deposits. I have found a lot of Indians to be of risk averse nature. They find stock market quite risky which is right but to the extent that they don’t even want to invest in mutual funds. So this type of mentality have pushed them into putting their money into savings a/c or fixed deposits.

All these reasons are enough for retail investors not to participate in stock market . Most of the points i have mentioned here includes mentality of urban Indians,let alone the rural guys now you know why India has so low penetration levels.

At last i can only tell is all the above reasons are quite obvious in retail investors mentality but they need to change their thinking for India’s growth story which can only be changed through good education and active participation of young generation.

I am a retail investor and truly believe in India growth story. When I was 18  i invested my pocket money of 5000 rupees and lost it all but then for the next 1.5 years i learned how it works and now my portfolio is up 175% in just 10 months. So,guys participate in equities help India in growing India.

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