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Domestic institutional investments at a peak
Jul 3, 2015

Now while real estate does not offer much comfort, the story with stocks is rather different. One of the biggest reasons why we believe that the equity markets in India are hardly in a bubble is not the current valuations. Instead it is the miniscule proportion of household wealth that is invested in stocks! Of the total US$ 6 trillion of household wealth in India, only 2.2% is invested in equities at this point. The penetration of retail investors is also very low. As per an article in Mint, even if the investment were to rise by 1% to 3.2%, it will amount to an addition of US$ 60 bn in equities! And with that the Indian markets will be very resilient to whether or not the FIIs stay in India. In fact buoyed by hopes of better earnings and higher growth in Indian companies, the investments of domestic institutional investors (read mutual funds and insurance companies) has reached a record high. And even now there is a lot more domestic investor money expected to come in. So as an investor all you need to worry about is investing in the most companies at the right valuations.

Data Source: Mint, BSE

This Chart Of The Day was published in The 5 Minute WrapUp - The real estate Ponzi scheme has started to unravel

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