Welcome the Move Towards Productive Assets

One notable feature of the recent stock market volatility was the enhanced buying done by domestic investors even as indices went down. Most of it was by financial institutions, but retail buyers were at it as well. Now, as global bourses brace for the impact of the US Federal Reserve’s latest policy stance, local buyers may get renewed opportunities to buy reasonably priced Indian shares to hold on to for longish periods of time.

Individuals have been displaying a new appetite for equity and other financial assets for the past year or more, as seen in the burst of new investment folios that have been set up and large sums of money going into mutual funds. Earlier, when inflation was high, households were opting for physical assets like gold and real estate. As price levels have stabilised, the trend appears to be shifting in favour of investment in assets that make funds available for productive uses. This is good for the Indian economy and is to be welcomed wholeheartedly.

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