India: A Great Place for Long-Term Investors, Says Jeffries Report
A recent report by Jeffries highlights that India offers the best long-term returns for growth-oriented investors. The report emphasizes that Indian equities are attractive over both five-year and ten-year investment horizons.
Despite high market valuations, the Indian stock market has shown remarkable resilience, especially after the recent capital gains tax hike. This resilience demonstrates strong long-term investor confidence.
Currently, only 5.8% of Indian household assets are in equities, compared to 13.3% in bank deposits. However, the equity investment culture in India is growing. Mutual funds have become a significant force, with assets totaling Rs 67 trillion and growing at 43% year-on-year. Equity fund assets have risen by 60% year-on-year, reaching Rs 38 trillion by August 2024.
A major driver of this growth is the popularity of Systematic Investment Plans (SIPs), where retail investors contribute a fixed portion of their monthly income into equities. There are 96.1 million active SIP accounts, and monthly SIP contributions rose by 49% year-on-year to a record Rs 235 billion in August.
The report concludes that despite challenges like high valuations, India’s growth potential and increasing investor confidence make it one of the most promising markets for long-term growth-oriented investment.
Doubts Revealed
Jeffries -: Jeffries is a company that provides financial services like investment banking and market research. They help people understand where to invest their money.
long-term investors -: Long-term investors are people who put their money into something, like stocks, and plan to keep it there for many years to make more money over time.
market valuations -: Market valuations are the prices of stocks in the market. High market valuations mean that the prices of stocks are high.
resilience -: Resilience means being strong and able to recover quickly. In this context, it means the Indian stock market can bounce back from problems.
equity investment culture -: Equity investment culture means how common and popular it is for people to invest in stocks in a country.
mutual funds -: Mutual funds are a way to invest money where many people pool their money together to buy a variety of stocks and bonds.
Systematic Investment Plans (SIPs) -: SIPs are a way to invest a fixed amount of money regularly, like every month, into mutual funds. It helps people invest without worrying about market ups and downs.
household assets -: Household assets are things that a family owns that have value, like money, property, or stocks.
equities -: Equities are another word for stocks, which are shares in a company that people can buy and sell.