To Buy Mutual Funds This September

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RISING RETAIL INVESTORS IN INDIA

Indian equity markets may have entered into a consolidation phase currently after hitting record highs but the markets for sure are witnessing good amount of interest from retail investors in India. In fact, the domestic investors' participation has been the highlight of Indian equity markets since last couple of years.

It looks like equity culture in India is finally making inroads. For this, lot of credit should go to the mutual fund industry for spreading awareness on the asset class that has outperformed all the other asset classes in the long run.

The irony of Indian equity bull run has been the lack of participation from Indian retail investors, so far. Retail investor participation in India has not been impressive even as foreign investors were seen lapping up Indian equities since the dawn of liberalisation and economic reforms. Every nation has its own investing culture and it is a well-known fact that nations such as the Unites States and United Kingdom lead when it comes to equity investing.

The World Bank gives importance to the ratio of stock market capitalisation to gross domestic product (GDP) and includes it in one of the hundreds of parameters in judging the economic development of the nation. India’s stock market capitalisation to GDP ratio was 12 per cent in 1990 and now it stands at around 96 per cent (as on August 2017). The Indian stock market capitalisation rose from $13 billion in 1990 to $2.36 trillion (August 24, 2017); that is ~181.5-fold increase. What is interesting to note is that the rise

in the valuation of the Indian stock market was hitherto driven by foreign investors. Foreign investors alone invested a net amount of $183 billion in the stock market since April 2000 till December 2016. The retail investors' participation has been paltry in comparison.