Jeffries, Investment banking company claimed in a report that growth-oriented investors will get the best long term return in India. The report highlights Indian equities remain attractive in the long term, both on a five-year and ten-year investment horizon. According to the reports, ‘This remains the best long-term opportunity for growth-oriented equity investors globally , both on a five-year view and a ten-year view’.
‘While valuations remain an issue in the small-cap and mid-cap space, the remarkable resilience of the stock market in the context of the recent hikes in the capital gains tax is proof of the extent to which Indian households now believe in the long-term equity story also’.
The report also pointed out that India is still in the early stages of cultivating an equity investment culture. It further added that presently, only 5.8% of Indian household assets are in equities, compared to 13.3% in bank deposits, which continue to grow at a rate of 10% annually.
‘India remains in the early days of building an equity culture’, said the report. Mutual funds have emerged as a force in the Indian investment landscape, with assets totaling Rs 67 trillion, growing at a rate of 43% year-on-year. Equity fund assets saw an even more dramatic rise of 60% year-on-year, reaching Rs 38 trillion by August 2024.
It further added, ‘The growth in Indian stock market is fueled by strong inflows into equity mutual funds. A major driver of these inflows has been the popularity of Systematic Investment Plans (SIPs), where retail investors contribute a fixed portion of their monthly oncome into equities. SIPs have gained traction, with 96.1 million active accounts.
The report said, ‘The latest data shows continuing strong inflows into equity funds, the most stable inflow comes from the retail Systematic Investment Plan (SIP), where ordinary people invest a fixed portion of their monthly salary into equities. Monthly SIP contributions increased by 49% YoY to a record Rs 235 bn in August’.
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