NEW DELHI: Sebi Whole-time Member Ananth Narayan G underscored the robust performance of Indian equities, which have consistently delivered an impressive 15 per cent compound annual growth rate (CAGR) over the past five years.
In stark contrast, the Chinese markets have struggled, with returns hovering around zero, and in certain instances, even turning negative, particularly in Hong Kong. This disparity highlights the relative strength of Indian markets, which Narayan aptly described as “sone pe suhaga,” or a boon that combines high returns with lower risks.
Narayan’s observations come at a pivotal moment as he addressed investors during the launch of Investor Awareness Week at the National Stock Exchange (NSE). He noted that the fiscal year 2024 has been particularly remarkable for India, with benchmark indices soaring by 28 per cent and exhibiting only 10 per cent volatility.
The combination of high returns and low risk creates an appealing investment landscape. However, Narayan cautioned against complacency, emphasising the importance of recognizing potential risks associated with such favorable conditions.
Avoid reckless speculation
He drew an analogy to driving, suggesting that while investors should accelerate their engagement in the market to foster economic growth, they must also remain vigilant and ready to apply the brakes when necessary.
The metaphor serves to remind investors that while the current environment may seem advantageous, it is crucial to maintain a balanced perspective and avoid reckless speculation.
Narayan also highlighted the significant price increases in small and mid-cap stocks, where nearly 40 per cent have appreciated fivefold over the last five years. The surge can be attributed to an imbalance between the influx of investor capital and the availability of quality investment opportunities.
To address this, the capital markets regulator is striving to streamline fundraising processes, thereby ensuring a steady supply of quality securities in the market.
Looking ahead, Narayan expressed optimism regarding the long-term prospects of Indian markets, driven by the country’s robust economic growth.
He urged investors to seek guidance from reputable intermediaries rather than falling prey to unregistered influencers who may have ulterior motives. The importance of informed decision-making cannot be overstated, as it can significantly impact investment outcomes.
