Sebi Whole-time Member Ananth Narayan G reminded investors on Monday that Indian equities have consistently delivered 15 per cent returns over the past five years, in stark contrast to the Chinese markets, which have seen either zero or negative returns.
Narayan, speaking at the start of Investor Awareness Week at NSE, called Indian markets "sone pe suhaga" for offering high returns with lower risk. However, he also urged investors to remain cautious, noting the potential pitfalls of complacency.
"There’s been a lot of talk about China markets recently, but while Indian markets have delivered around 15 per cent compound annual growth rate consistently over five years, Chinese markets haven't come close. In some cases, like Hong Kong, they've even returned negatively," he said.
He praised FY24 as a "remarkable" year for India, with benchmark indices returning 28 per cent and volatility at just 10 per cent, providing an ideal low-risk, high-reward environment. However, he warned that such performance shouldn’t be taken for granted, advising investors to remain alert to risks and avoid assuming that the upward trend will continue indefinitely.
Narayan expressed concern over a surge in new demat accounts, particularly among young investors joining the market frenzy, and emphasised the importance of understanding risks.
Comparing the market to driving a car, he said while a gentle push on the accelerator encourages investment and economic growth, it's equally important to be prepared to use the brakes if needed.
He highlighted that 40 per cent of small and midcap stocks have surged fivefold in the past five years due to a mismatch between investor inflows and the supply of new shares. To address this, Sebi is working to streamline fund-raising approvals to ensure a steady supply of quality stocks.
Narayan expressed optimism about Indian markets, attributing their future growth to the country's strong economic prospects. He advised investors to seek guidance from reputable sources rather than unregistered "finfluencers" who might have hidden agendas.
He likened the situation to the saying "all roads lead to Rome", cautioning that while the destination may seem promising, the journey can be risky without proper guidance. Narayan also encouraged long-term investments, noting that studies show higher returns come from staying invested rather than frequent trading.
While Sebi has raised concerns over certain areas like derivatives, Narayan clarified that the regulator isn’t against short-term trades or speculation but wants investors to fully understand the associated risks.
Follow us
