In a bid to debunk doomsayers, investment advisers have painted a rosy picture of the Indian economy’s prospects.
They have told NRIs to keep invested in the Indian markets for better returns.
NRI investors have steered clear of the markets due to the high volatility and the prospects of a recession with exponential rise in covid cases and long lockdowns.
But advisers say the economy is on an even keel and long-term investors stand to profit.
Handsome returns
“We are in very interesting times, as despite the pessimism in the market following the coronavirus pandemic and the lockdown in India from March onwards, the markets have bounced back significantly giving handsome returns,” said Rupesh Patel, senior fund manager at Tata Asset Management, who spoke during a webinar on ethical funds organised by Barjeel Geojit Financial Services in association with Tata Mutual Funds.
“Discussions have now changed and what’s in investors’ mind is how far the market will go, and should they book profit now and invest at lower level. It is a futile exercise to time the market. Instead, they should focus on underlying businesses of companies and buy stocks thus creating wealth in longer terms.”
The message from the webinar is that the economy is opening up and getting back on track.
Markets are always forward looking. There was correction in March. India is now better placed post-covid than what it was before.
In spite of the pandemic situation, foreign direct investment (FDI) flow in the past few months is $20bn (£15.71bn, €17.09bn), almost similar to what it was last year.
The confidence factor
Foreign investors are confident in the Indian economy and Indian companies. India is definitely in the forefront when it comes to investments by various global companies as they see bright future prospects. The country is seeing the highest number of covid cases, however the economy is recovering and getting back on track.
Energy consumption, both residential and commercial, is actually back to pre-covid figures and so are industries, while production levels and capacity utilisation are back to almost 90% to 100%.
One aspect that hit India very hard was the high unemployment rate during the lockdown, but it is now almost back to pre-lockdown levels.
Construction activity is picking up in real estate as well as industrial sectors. Agriculture employment has recovered meaningfully in the rural areas and in smaller towns, and in urban cities, economic activities have also risen.
Consumption, which accounts for almost 55% of India’s GDP, is growing and coming back to the pre-covid levels.
Many options for NRIs
“Equity markets are volatile, they have a higher risk profile, but if you remain invested for a longer term, you will definitely enjoy the benefits of it,” Tata’s Patel added. “Whenever you look at an equity product, have a longer investment horizon.”
Ennette Fernandes, assistant fund manager at Tata Asset Management, said: “NRIs have the option of investing in the market or keeping their money in fixed deposit instruments or instruments which give them risk-free return of 5-6%.
“But if they are ready to take risk, the return will be 11-12% from the equity market.”
Ethical funds
For investors keen on investing in ethical funds, there are multiple options.
Though they do not expect high returns, as the fund managers have limitations on instruments, they give investors some rewards.
KV Shamsudheen, managing director at Barjeel Geojit Financial Services, suggested that NRIs should do investments through SIP (systematic investment plan) for better returns as they are relatively risk-free.
