India is one of the most investment savvy economies in Asia. Indian people tend to save more and invest the savings for gains rather than spending exuberantly. A report by Standard Chartered, British multinational bank, based on the study of 11,000 affluent people across Asia, Africa and the Middle East suggests that almost 68 percent of affluent Indians use investment to achieve future financial goals. The study considers fixed income investments, stocks, equities, mutual funds, unit trusts, investment-linked insurance, self-invested pension funds, real estate property funds as investment products. The primary reason behind savings by Indian people is to finance higher education of their children. It was found that financing higher education was the major reason for saving in India as well as other markets surveyed in the study.
“It is exciting to see that social mobility is booming among the emerging affluents, and that they are outstripping their parents’ success in education, careers and home ownership,” said Shyamal Saxena, Head Retail Banking, India, Standard Chartered Bank. “Digital financial products are enabling the emerging affluents to achieve their goals, and these tools will be crucial in helping them take their personal financial success to the next level,” Saxena further added. Majority of affluent investors choose mutual funds (31 %) as their medium of investment, 25 percent choose fixed income investment and 22 percent go for equity investment. The less educated investors are more likely to go for fixed income investment. Nowadays, mutual-fund investment has also become an attractive option for them as SIP eases the process of investment in MFs. The better educated investors choose both equity investment and MF investment.
The Indian economy has long been sustained due to the saving habits of the people of country. Indians are more likely to save unlike their western counterparts who spend exuberantly. The number of retail investors has also grown exponentially in the recent years. The number of registered investors at Bombay Stock Exchange (BSE), one of the two major stock exchanges in India has witnessed 14.22 percent growth last year. According to the data available with BSE, registered investors or clients (direct equity investors and mutual fund investors using BSE platform) has grown to 4.01 crore as of August 24, riding on 49,95,854 new investors added last year. This resulted in 21.2 per cent jump in sensex last year. This kind of rise in sensex especially backed by domestic investor is unforeseen in India. Maharashtra has experienced the sharpest rise in the number of retail investors. It added 10 lakh clients (13 per cent) while neighboring Gujarat added over 8 lakh investors.
States like Uttar Pradesh, West Bengal, Bihar, Odisha have traditionally been the states of lesser number of investors but that too has been done away. People coming from these states have also started investing in the stock market. Uttar Pradesh added 3.4 lakh new investors while Tamil Nadu and West Bengal 3.34 lakh and 3.01 lakh respectively. The national capital territory of Delhi added 2.64 lakh investors. Odisha saw a 21.8 per cent hike in new investors, Bihar and Haryana grew at 19.7 per cent and 16.1 per cent respectively. The introduction of Systematic Investment Plan (SIP) has made it very easy for investors to invest money in the stock market and being acquainted to the technical complexities is no longer required. The mutual funds made stock market investment accessible to common people in the country and democratized the system for small savers. The returns one gets in the Indian stock market is significantly high due to good performance of Indian companies and this is also one of the reasons behind positive investor sentiment.