Retail Investors Are Bulwark Of Indian Market During Volatility, Says Prime Securities' N Jayakumar
What retail investors are doing holds more significance than following the moves of FIIs who often mirror global trends, he says.
In the current volatile macroeconomic landscape, it has been the Indian retail investor who has been a bulwark of the market, according to N Jayakumar of Prime Securities.
These are the investors who consistently buy stocks during market downturns, invest through systematic investment plans and remain steadfast in the face of significant outflows by foreign institutional investors due to global interest rate changes, Jayakumar, managing director of Prime Securities Ltd., told BQ Prime.
About five to seven years ago, only 2.5–3% of Indian savings found its way into the stock market. However, in recent years, this percentage has increased substantially, possibly reaching 4.5–5% now, he said.
According to Jayakumar, this substantial shift is closely tied to the country's economic growth and the increasing amount of savings.
The real driving force behind this bullish trend in the market are the retail investors, high-net-worth individuals and family offices. These groups are leading the way as more money flows into the market due to the growing confidence in the Indian economy, he said.
Where Does India Stand?
The flows in most markets have been negative as people have been moving out of their investments. For most markets, equities have not made money and debt has actually lost money because yields kept going up and gold has not performed well, according to Jayakumar.
He highlighted that people have invested in various assets but most markets have not been profitable. However, India stood out like an "oasis in a desert", he said. Many positive developments are happening in the country which people sometimes tend to "take for granted or ignore".
What retail investors are doing holds more significance than following the moves of foreign institutional investors who often mirror global trends, Jayakumar said. While many asset categories worldwide have been returning negative results, understanding the strategies and choices of Indian investors becomes crucial in navigating the market, according to him.
Pockets Of Opportunities
The Indian pharmaceutical business has performed well and the peers of domestic pharma companies have been reasonably attractive, according to Jayakumar.
Media is a "seriously underinvested and ignored space" and it could make a lot of money like it does in the rest of the world, Jayakumar said. "The space which has been largely ignored and which has been adopting and adapting to technology should be compared with the kind of valuation that some of the big boys, like the international majors, get."