Jefferies’s report highlights India’s long-term equity potential.
A recent Jefferies report has underlined India’s attractiveness for long-term growth-oriented investors despite current high valuations. It assessed Indian equities offer the best returns over five and ten-year horizons.
While acknowledging valuations in certain pockets, the report credited Indian markets for displaying resilience against the Budget’s recent capital gains tax hike. This demonstrated strong underlying investor sentiment and outlook.
India is still in the nascent stages of developing an equity culture, the report noted. Currently, only 5.8% of household assets are in equities compared to the dominant 13.3% in bank deposits.
However, mutual funds are emerging as a major force. Their assets have jumped 43% yearly to Rs. 67 trillion in August 2024. Equity MF assets surged even more at 60% to Rs. 38 trillion.
The growth has been fueled by robust equity fund inflows. Retail SIPs have proven particularly influential, gaining massive popularity with over 96.1 million active accounts. The monthly SIP book rose 49% to record Rs. 235 billion in August.
Despite short-term headwinds, India’s potential for expansion coupled with rising investor confidence makes it one of the world’s most promising long-term equity destinations, the report concluded. As financialization deepens, India’s outlook remains bright.
