Home > News Analysis > Only 11% of Indian Middle Class Invested In Equities!

Only 11% of Indian Middle Class Invested In Equities!

Friday, September 7, 2007 Leave a comment Go to comments

Read this interesting survey by CLSA aptly named Mr. and Mrs. India.

Some of the interesting findings:

  • 91% of middle class owns mobile phones while 100% owns TVs
  • 70% own homes
  • 51% of investments in land(not surprising!)
  • 11% in equities
  • 30% in cash and fixed deposits
  • 84% have NOT taken loans

I think they describe a “middle class home” as the one with annual income less than 10 lakhs.(though not mentioned in the news story).

Does it mean there is still lots of growth still left for our banks and mutual funds? Most of the growth in telecom sector is now coming from “rural areas”.

Can we say that in coming years our markets shall be more driven by “domestic money” than the “FII money”?

Categories: News Analysis
  1. sagecapital
    Sunday, September 9, 2007 at 2:24 pm

    Its a well known fact that emerging markets are high risk high gain play. My observation is that all the global equity markets from US,Korea, UK,Taiwan,Brazil etc. Greece to Hang Seng, all of them have been in an uptrend since 2003. Also important to note that all of them went down in the 2001-2002 period (including India).Also all of these were in an uptrend in the 1999-2000 period. I do not see anything “special” that is happening in India. The moment, the secular uptrend in the world equity reverses, India shall follow suit. Now whether this uptrend lasts for few years or few months, that is anybody’s guess. I am riding it till it reverses.

  2. hart
    Sunday, September 9, 2007 at 1:46 pm

    I would recommend you to read my previous post again for the answer. Strong developed countries already going slow when India is moving fast!

    Yes in scenarios like Oct 29th 1929, all will go down – no doubt – but, like you saw in August, you will continue to see strong resilience in Indian market vis-a-vis rest of dev. nations.

    Enjoy this multi-year bull run and mint money. However, if you prefer to keep looking for “right” entry levels – then it’s entirely your call. Happy Sunday for now!

  3. sagecapital
    Sunday, September 9, 2007 at 1:27 pm

    I am talking about correlation! Do you see a correlation or not?Do you feel India will go at 30%+ while the rest of the world goes at -15%?

  4. hart
    Sunday, September 9, 2007 at 1:10 pm

    Global equity bull run since 2003? Check out index returns since 2003 of developed countries such as US (~13%), UK (~19%), Japan (~15%), Switzerland (~22%) etc. and compare them with that of India. Europian union is no where close to India. Only Brazil, China, Russia, Indonasia, Mexico etc. are handful of “50%” gang with whom you can draw any parallal …

  5. sagecapital
    Sunday, September 9, 2007 at 12:02 pm

    Do you feel this growth is because of “economic reforms”?Is it a coincidence that global equity markets have been in a bull run since 2003? Is India non correlated to “global growth” cycle?

  6. hart
    Sunday, September 9, 2007 at 10:19 am

    Yes I’m bullish. And why not when the country is witnessing highest growth rate in past 18 years? If this is not attractive, what is the factor driving so much foreign fund inflow? You talk about weak rupee … but when you look at large picture you can’t see factors like these denting india growth at all (so far). GDP figures, last checked still doing good.
    Yeah, interest sensitive sectors are surely affected but the overall figure! Domestic market, as you already discussed, is yet to be tapped. Need I say more over this? Many sectors such as pharmaceuticals, biotechnology, telecommunication, power etc. are yet to the peak. You might think IT is in dumps, but keep an eye on IT Product sector. This sector will be in lot of news for next decade.

    What will my turn optimism in pessimism? Change in current economic reforms!

  7. sagecapital
    Sunday, September 9, 2007 at 12:35 am

    Hart-Its the same way I take financial media. I may not find “value” in it but it helps me get an idea about “mass psychology”.Same way you might not find much value here but may be it gives you a different perspective while investing.
    I am neither optimistic nor pessimistic about Indian growth story.There are too many “unknowns” which I do not comprehend- US slowdown, Rupee appreciation, Infrastructure bottlenecks, young educated population, politics, govt. policy etc etc.
    I’d be interested in knowing the specific reasons for being “mega optimistic”!What are the hard facts on which you are basing your optimism? What do you think will make that “optimism” turn into “pessimism”? The intention is to try to understand the underlying assumptions of a “fundamental investor”.

  8. hart
    Saturday, September 8, 2007 at 8:40 pm

    Yeah, next growth cycle is to be ridden by Indian market. Already talked about this in some thread where we discussed the need to telecom/ IT companies to tap local market. TCS already is process of bidding multi-million railway project for Railways. I like this much better than scenario where Indian opts for foreign vendors.

    I’m still optimistic, call it mega optimistic if you want to ;-), over Indian growth story for at least next 4-5 years. I was speaking the same tone a month back too when entire media, TV, newspaper were talking about Global recession etc. and I’m still sticking to it. People who listen media & acted lasted month lost opportunity of making money, but those who didn’t – are smiling right now rather than looking for right entry levels. :o)

    And yeah, I noticed someone saying in sarcastic tone that I’m a fan of Sage now, well no big deal about it, I come here means I like something here. I mostly don’t agree with SC, but still I do find few things which are strong enough to get me here once a day.

  9. rp
    Friday, September 7, 2007 at 10:42 pm

    I agree with the fact that next growth engine will be domestic money. Fii may not with draw money till domestic money comes in

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