Please find below the 5 charts that tell interesting stories on Markets and Investing.

 

1) What is Fuelling the Growth of Indian Stock Market?

 

USD 6.9 Billion is coming in the Indian Stock Market on a monthly basis from domestic investors.

 

The monthly inflows are broken down into four broad components:

1) Flows into Mutual Funds via SIPs at US$2.1 bn.

2) Discretionary flows into MFs (i.e., inflows into MFs ex-SIP) at US$1.4 bn.

3) Direct retail trading in the stock market at ~US$2.1 bn per month.

4) Flows via other sources such as Insurance, etc. at US$ 1.5 bn.

 

Due to huge domestic flows, negative news like Israel-Palestine War, weak BJP Government, etc. are not affecting the Indian stock market. 

 

 

2) Why Indian Investors are Flocking to Equities?

1) Aadhar Card has changed the digital landscape for Indian Equity Investing. 

2) Due to Aadhar Card, it has become very easy for Indian population to complete digital KYC through a Mobile App and open Bank account & Demat account. 

2) In Apr 2012, only 1.7% of the Indian population had Demat account. This percentage has increased to 8.6% by May 2023. 

3) Doing SIP investment in a Mutual Fund or buying shares through exchange havs become very easy for Indian investors. This is leading to huge flows into Indian stock market. 

4) Indian equity participation is still below global average and there is still a lot of catch up to happen. 

 

 

3) The Great Interest Rate Cut Cycle has begun:

1) Euro Zone, Switzerland, Brazil, Canada etc have started cutting Interest Rates due to fall in the inflation rate.

2) Most of the countries are still running positive real interest rate (Interest Rate - Inflation).

3) Longer period of positive real interest rate can lead to slowdown in the economy.

4) Emerging markets and Indian Stock Market are going to be big beneficiaries of this interest rate cut as FIIs will invest in equities for higher return.

 

 

4) Which is the Best Equity Index for Investment?

1) Selecting Equity Index is not easy due to huge gap in return between Indexes.

2) In the last 1 year, the Nifty 50 Index gave a return of 23% while the Nifty Microcap Index gave a return of 71% and the Nifty Midcap Momentum Index gave a return of 73%.

3) In the last 10 year, the Nifty 50 Index gave a return of 13% per annum while the Nifty Microcap Index gave a return of 24% and the Nifty Midcap Momentum Index gave a return of 28%.

 

 

5) Is Equity a Safe Investment?

1) The answer about the safety of the equity investment depends on the time horizon.

2) Since Jun 1999, in any 7 years period of the Nifty, minimum return delivered is 5% per annum.

3) In any 15 years period of the Nifty, minimum return is 9% per annum.

4) A conservative investor with 15 years of time horizon is expected to get better return in the Nifty than FD.

5) Its wrong to say that Equity is always risky.

 

 

Read more similar articles in our blog - https://alphacapital.in/blog/

 

Best Regards

 

Dr. Mukesh Jindal CFA, CFP, CAIA, Ph.D.

Alpha Research

 

Disclaimer

The above views are our expectations of the economy, market and investments. The views may or may not play out accordingly. You are requested to do your own due diligence before making any investment.