How long term Investing has changed in India?

November 14, 2014 Smart Investment Tips 3 min read

Investment is basically an outlook on the future. On where we expect the next growth phase is going to happen? The assumptions are sometimes based on technical analysis, sometimes on fundamental analysis. More so on insider news, gossips, hear-say, current events or sometimes just plain gut-feel. The historical trend in our country over centuries has been Gold, Gold and Gold. Over the last few decades, Real Estate has become a major pick for most of the affluent class.

How long term investing has changed in share market

As per the report from World Gold Council, for Q1,2014, the gold demand has literally remained unchanged year-on-year at 1,074.5 tonnes (t). Jewellery based demand made slight gains of around 3% largely due to lower gold prices compared with Q1 2013.

How long term Investment has changedSimilarly, even the real estate market has remained quite a drag over the last one year, the prices of most of the posh localities in major metros like Mumbai, Bangalore and Delhi has remained more or less unchanged. There has been over supply of units in major centres, which has not been bagged by enough demand. Technically, lower demand has to decrease the price. But the law of Economics falls flat in India. Major reasons, being the vested interest of Realtors, Bankers and Speculators, who hold the price upwards.

How long term Investment has changed

Let’s look at the price movement of major parts of Mumbai in the chart above (courtesy: The prices at Bandra West, Lower Parel and Wadala have all remained range bound and almost at the same level y-o-y basis. The bottom line, which is the overall price for properties in Mumbai has remained almost completely flat for the entire year.

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The next major investment option for the masses is Bank Fixed Deposits. Theoretically, Fixed Deposit is a savings product. But the kind of interest rates offered in the current market has made it the most lucrative. With banks providing a guaranteed rate of over 9%pa (pre-tax) for deposits over 365 days, all other investment products are standing still to beat this option.

Insurance products have forayed big time in markets now. LIC still leading, the private players have also started find foothold, with “over aggressive” marketing tactics, the penetration of the Insurance product has started gaining extra mileage. Again, traditionally Insurance is also a savings product, but with the “Add-ons” provided by the Insurance companies, many flock to these products now, with a hope of assured tax-free return.

Sab ka Market – STOCK MARKET

Over the last one year, the stock markets have been very kind to most of the long term investors. Investors have started looking at the stock market now, with both the Sensex and the Nifty growing by 34% (from 1st August 2013 to 31st July 2014). The Modi factor has played a major role in boosting the sentiments.

How long term Investment has changed

Bond Market

With the 10 Year GOI Bond Yields hovering between 8.50 to 8.60 levels, retail participation is negligible (which has been the case infact for almost forever, since this market is predominantly run by large corporates and treasury houses). The basis for however understanding this segment is crucial, when the retail investor or common man, invests in Mutual Funds. Bond Funds (which invests in Corporate Bonds and Government and State bonds) offers returns in lines with the Bond market.

The Mutual Fund industry in India has grown from Rs 8,43,523 crores to 9,86,028 crores with a 14% growth rate from June 2013 to June 2014. (Source: The Indian investing community has been making a major shift from traditional investing into Gold and real estate, to much more informed and analyzed markets.

How long term Investment has changed
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