Rural Kerala turning bullish on equity market


Kozhikode : A strengthening rupee, rising crude prices and takeovers and mergers are now keenly watched in the hinterlands of Kerala. The villages now wake up to the 'Morning Call' in CNBC-TV 18. Families that were hitherto confined to investing their life in agriculture have now become alive to the vagaries of Sensex or Nifty.

Support TwoCircles

With the country's stock markets showing remarkable growth, an equity culture is catching up in rural Kerala. People in many small towns in the hilly region, nestled among rubber plantations and miles away from urban centres, are now into online share trading with brokerage firms setting up shop.

With their investment avenues for long limited to bank and post office deposits, people of the middle class in these areas are now turning to stock markets and mutual funds in large numbers.

"The interest on post office and bank deposits is meagre compared to the prospective returns from investment in equity and mutual funds. There is an element of risk, but it is worth taking," says A.S. Dominic, a retired teacher, now into farming at Thiruvambadi, a small town 35 km east of Kozhikode (formerly Calicut).

Brokerage firms, keen to tap the investment potential in rural areas, are also widening their network. The phenomenal rise in the price of natural rubber in the last one year, which substantially boosted the income in the rubber plantation belts, is also providing an impetus to the new investment culture.

Kozhikode, the district headquarters and a city of half a million people, is now a hub for around a dozen brokerage firms, which are keen to ensure their presence in all the potential rural settlements around.

"We are planning to open branches through the franchisee route in far-flung areas like Nadapuram, Perambra and Kallachi," G. Sajiv, manager of the Kozhikode branch of IL&FS Investsmart Securities Limited, , told IANS.

All these small towns were among the most undeveloped areas in the region and remained poorly connected until two decades ago . Nadapuram is 60 km east of Kozhikode. The agrarian economy here is in bad shape as the price of coconut fell drastically.

"We still find good potential in these areas. It's not only farmers but also returnees from Gulf and other countries, with fat bank accounts, who are keen to enter the equity market," says Sajiv.

There are no towns in this region which don't have a sizeable number of people working abroad, especially in the Gulf, European countries and the US.

Penetration of cell phone services, availability of TV channels through cable and DTH platforms and access to the Internet even in the remotest rural settings are also playing a vital role in spawning this new culture. It's not rare to see people in these villages keeping tab on stock prices on TV channels and instructing their brokers over the phone to go 'long' or 'short' in the market.

According to Bipin, a dealer at the Motilal Oswal Securities Ltd, most of the investors are intra-day traders or short-term investors who are keen to make quick money. "There is a big element of risk involved in intra-day trading and those who have burned their fingers are cautious about dealing in the market," he adds.

Along with equity market trading, commodity trading is also getting popular attention now. It is paradoxical that Wayanad district, some 60 km east of Kozhikode, which was in the news for a spate of farmer suicides, hosts many brokerage firms dealing in commodity futures.