Press Trust of India
Mumbai, August 16: Pitching for a greater share of household savings in equity market, regulator Sebi’s chief U K Sinha has said stocks have consistently given annual returns of more than 15 per cent on a long-term basis. In contrast, the returns on gold have not been more than 5-6 per cent over a longer time horizon of 15-20 years, Sinha said.
At the same time, the equity market also helps in the growth of the Indian economy as the money invested in equities is utilised for infrastructure-building and for the economic prosperity of the country, Sinha told PTI in an interview.
The Securities and Exchange Board of India (Sebi) Chairman also said a greater share of household savings has begun coming into the equity market and the ongoing rout in gold prices and a long-continuing weakness in the real estate
market will make equities much more attractive.
“It will happen for sure,” Sinha said when asked whether the falling gold prices and the weakness in the realty market would lead to an imminent re-balancing of household savings with greater allocation for financial market products. “People with surplus funds do look for alternative investment channels, and gold has been an important one for years. But gold can be only a small portion and the entire amount should not go there. “Especially now, when gold prices are not that optimistic, there are all the chances that people would look for other avenues, and equity market has consistently given very good returns on a long-term basis. That is the beauty of this market,” Sinha said.
Explaining the trends in gold and equity market, Sinha said, “If you look at gold, on a long-term basis, the returns would not be more than 5-6 per cent over a 15-20 years time period. “Yes, in a short period, it can be very volatile and it can also give un-imaginable returns. But Indian equity market, on a long-term basis, has given returns of more than 15 per cent compounded rate year after year.”