We want to first pay homage to Mr. Ratan Tata, who left us yesterday. I think what I would like to say for a minute is that there are a lot of business folks, there are a lot of industrialists, but the kind of love he generated from everybody for himself and for his work is exceptional. People don’t remember him for the money or the wealth he generated, but for his contribution and for his moral compass being in the right direction throughout his reign at Tata Motors and Tata Investments. He was saluted by most Tata stocks today at 2:30 p.m. You can see Tata Investments up 8%, Tata Chemicals, Tata Coffee, and most others were also up in the morning, succumbing to some market pressure later on. There are a lot of inspirational messages that have come through his life, and I don’t think many view other industrialists or capitalists in the same light. He was truly exceptional, and my hats off to him, along with my condolences.
Today’s daily bite, as I mentioned, will cover market happenings until 12:30 and will address the question: Is India’s gamble in equity going to pay off?
Where is the market headed?
Market Overview
So far, you can see that the market is not really willing to go up. We are at 0.16% at 2:30 p.m., and the second shoulder that I was mentioning yesterday remains a possibility, which is a bit scary.
Nifty Next 50
Nifty Junior is also very flat at -0.16%
Nifty Mid and Small Cap
mid caps have given up morning gains at -0.15%, and small caps are near yesterday’s close at about 0.14%. There is no runaway movement happening; if at all, it will consolidate here and try to go up.
Nifty Bank Overview
Bank Nifty is the one that is actually up at 1.2%, which is encouraging, but it has yet to break out of even a two-day high. This is what we will look for going forward.
Advanced Declined Ratio Trends
Momentum trends are even but slightly towards the downside, with FIIs continuing to sell at 45 crores on the 9th of October, while DIIs bought 3,500 crores, so the tilt is slightly towards the sell side.
Nifty Heatmap
HDFC Bank, surprisingly along with Kotak Bank, jumped today by 1.9% and 4.1% respectively. Mahindra also gained, while Infosys, Titan, Trent, Adani Enterprise, and Hindustan Lever were among the stocks that were down today in Nifty. The next 50 showed a mixed bag with stocks like REC, Bajaj Holdings, HAL, Madarson, BHEL, and Gail seeing some public sector stocks coming up, while Torrent Pharmaceuticals, Solar Finance, and Loda gave up some ground.
Sectoral Overview
Sectoral trends indicate that private banks and Bank Nifty are leading the charts, while pharma got crushed today, down by 2%, and FMCG also declined. With all defensives down, this gives some confidence that the market is likely to rise further.
Private banks have essentially returned to the election day high and are taking support again, moving up from there. This is becoming a good base for most charts as Kotak, RBL, HDFC, Axis, and IndusInd also rise.
Sectors of the Day
Nifty Private Bank Index
Stock of the Day
Jaiprakash Power Ventures
In stock spotlight, you have Valor Estate, which bounced today from an earlier DB reality of Rs 192, up by 10%. After the RBI’s indication of potential interest rate cuts by December, there is some uplift in real estate stocks. This stock has been rallying from Rs 4 to Rs 200 in the last three to four years and is currently consolidating near the top.
Story of the Day : Can you index better than Nifty 50?
Now, regarding India’s gamble in equity, the money distribution infographic shows that half of India’s money is invested in real estate, with 51% in property and 15% in gold. This is encouraging, as 15% of our household wealth is in gold, which, as you know, has been giving a 12% CAGR. Even if a person is not financially educated, gold and property together make up about 66% of their holdings. Surprisingly, bank deposits are at 13%, much higher than equity, almost more than two and a half times at least. Another surprise is that insurance funds are almost equal to equity. These funds, which are often sold or mis-sold as insurance plus equity combined, do not yield returns close to what normal equity funds can deliver. The numbers stand at 13.3% for bank deposits and 5.7% for equity.
This 19% buffer shows that some of it could potentially shift towards equity over time. Pension funds and cash stand at five, while equity investing itself, at 5.8%, has been on the rise. Over the last four years, there has been a 300% increase in investor accounts, moving from four crore demat accounts to 16 crore. You might argue that the number of active accounts is less, but even assuming 30-50% are active, the growth is phenomenal. Investors are moving beyond property and gold, and there’s a growing cult on a regional basis, with significant changes evident—300% in North India and 296% in East India. Madhya Pradesh shows a remarkable 389% change over the past five years.
In terms of emerging markets, Indian equities are shining bright, with emerging market flows of $86 billion in 21 months, of which significant money is also directed towards India. Of course, FIIs have been on a selling spree in the last few months, but the net flows remain positive. The big question is how many of these new investors come with a long-term mindset. Is this short-term hot money? Five years is a reasonably long period where investors have witnessed some downturns but not a prolonged decline. The money that has come in for quick bets is being tested as rules are formulated to make speculative trading more difficult.
Equity investors are beginning to understand that with lower interest rates, as the economy matures, interest rates may not rise and could even fall. This, along with taxation on fixed incomes, is causing a gradual shift towards equity. If you have Rs 100, take a risk of ten; if you have 90 and ten, take a risk of 80, 20, and so on. Influencers and social media are reaching out to the bottom of the pyramid, inadvertently facilitating knowledge gain and exposure to various products in the market. While there is some misselling and potential harm, there is also positive growth, and some long-term investors are emerging from this mix.
A healthy mix between all asset classes is crucial for balanced outcomes. We already have a robust allocation to real estate and gold among most households. If equity can become more robust—perhaps moving from 5.8% to 10% over the next half-decade or decade—that would provide a balanced approach to household savings.
What do you think about the rise of equity interest in India? How do you foresee the next 5 to 10 years unfolding? Please share your thoughts in the comment section.
