NEW DELHI: Sebi whole-time member Ananth Narayan G on Monday said that Indian equities have consistently delivered 15 per cent returns, in contrast to China, which has given zero or negative returns.
Calling out the Indian markets “sone pe suhaga” for delivering higher returns for lower risks, Narayan cautioned the investors about a few areas and asked them to be conscious of the risks.
Addressing the Investor Awareness Week at NSE Narayan said, “It’s like the best of all worlds: low risk and very high return.” He underlined that there are side effects of this as well.
“There’s a lot of talk about China markets over the last few days. But over the last five years, while Indian markets have given around 15 per cent compound annual growth rate consistently, Chinese markets are nowhere close to that. It’s almost zero. In fact, in some cases, like in Hong Kong, it’s actually negative,” he said.
He further added that FY24 was a “remarkable” year for India, with the benchmark indices returning 28 per cent and the volatility just 10 per cent.
However, Narayan made it clear that investors should not assume it to be a one-way street and it might not be the same in the future. He highlighted that such attractive returns can foster complacency and currently there is a trend of many young people opening demat accounts to jump on the bandwagon.
Citing the example of driving a car, the Sebi member emphasized on educating people about risks, “There has to be a light push on the accelerator to get more investors to provide risk capital for the economic growth, we also need to be aware of risks and use the brakes if need be.”
Due to an imbalance between inflow of investor money and supply of new paper, he said, in the last 5 years, 40 per cent of the small and midcap scripts have shot up by 5 times.
The market regulator is making efforts to ensure that fund-raising approvals are done on time, so there’s a steady supply of quality investments in the market.
Advising investors, Narayan said that in a broader, longer-term perspective, Indian markets are expected to soar further North prompted by economic growth prospects in the country.
Investors should not pay heed or fall for unregistered self proclaimed influencers, who might be driven by vested interests, instead they need to have the right intermediaries to capitalize on this opportunity presented by India.
Drawing on the well-known saying “all roads lead to Rome,” Narayan pointed out that Rome isn’t a very welcoming place for travelers and that scams can occur there as well. He stressed the need for investors to seek guidance from trustworthy sources.
He said that studies prove that in order to gain higher returns investors should trade less and stay invested for longer.
Talking about Sebi’s recent action on certain trading areas like derivatives, he said that the market regulator is not against speculation of participants taking short-term trades, but it would want investors to understand the risks.