Retail investors look for safer options

Ahemdabad: Over 600-point crash in Sensex, triggered by RBI's move to increase CRR and repo rate, has left millions of retail investors in the lurch.

Retail investors, who have already witnessed erosion in their wealth, are now looking at safer investment product by reducing their exposure in the highly volatile stock markets.

"As the damage has been done to my portfolio, I have decided to pull out some of my investment and planning to park fund in safe products like fix deposits," Nirav Desai, one of the panicky investors, said.

As the interest rates continue to rise, fixed income instrument will become more attractive. Returns from equities will have to be that much higher now to compensate for the additional risk that one may be taking.

"While equities can still give higher return than fixed deposit, the quotient of risk has gone up substantially and this may tilt the balance in favour of fixed return," said Vinod Sharma, vice-president, Anagram Securities.

Chinubhai Shah, president, Gujarat Investors' and Shareholders' Association (GISA) said that RBI will continue to tighten its monetary policy till the inflation comes under control.

These measures will only lead to increased volatility in the market. "As retail investors have lost huge amounts in the recent volatile market, it is very difficult for them to sustain more losses," he added.

Shah pointed out that investors should move out from sensitive sectors like housing, banking, realty and other interest rate-sensitive sectors and should look to safe havens like fixed income instrument — which is currently giving more than 9.5 per cent return — at least for a short while.

(Courtesy: TOI)

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