Ordinary Indians rushing into stocks, spurring rally as well as risks

[gzbkel]

MUMBAI (REUTERS) - With red-and-white headphones draped around her neck, 22-year-old Indian IT security consultant Abdhija Sharma looks like she would be more at home discussing the latest music or Bollywood movies than compound returns on equity investments.

But at an office in a Mumbai suburb one recent Saturday, surrounded by banners urging them to "Create Wealth", she and 60 others listened intently as finance professional Alpa Shah explained terms like "the power of compounding." Tens of thousands of Indians like Sharma are attending presentations promoting mutual funds, such as this one organised jointly by Suresh Rathi and Birla Sun Life, and investing in stocks for the first time, many through monthly plans.
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http://www.straitstimes.com/business/com...l-as-risks

New trend of dollar cost averaging indexing by Indian retail investors?

[Duskerdawn]

Quote: "There are risks in everything," she said. "Fund managers won't let millions of people lose money. They will protect our money."

Sounds like blind faith, my only hope her is that Fund manager is at the top 1% in terms of ethics and morality.

Recently, I asked an Indian colleague of mine working in Mumbai what are his general thoughts about investments in India. He says its tough and he would rather spend his money. This is just his one opinion but I generally think that there are more risks in investing in markets with low regulations as there is a higher tendency for frauds and over-valuation due to incentive-driven employees/directors. However, if one is careful in analyzing the company with extreme due diligence (you probably have to spend some time going to India to really get a grasp of what is the real business scenario), there are definitely very good investments in the Indian markets. Having said so, I would not recommend people to go in more so when there is a hype as the risks increases when price/demand/hype increases.