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Teji Mandi: Three things investors should know on February 25, 2021

05:19 PM Feb 25, 2021 | Teji Mandi

Rising interest in India :

On a day when NSE hogs the limelight over its technical outage, the humongous buying from FIIs went almost unnoticed. When retail investors struggled to execute their orders, Foreign institutional investors (FIIs) sneaked in, purchasing shares worth a whopping Rs 28,739.17 crore intraday. The number is extraordinary in the sense that most of the time, even the monthly investment amount is not as high as this.

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The FIIs have been fairly active in the Indian market since November. During the Nov-Feb period, they have invested ~1.72 lakh crore in Indian equities. With an investment of Rs 50,000 crore in February, FII activity continues to remain buoyant.

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India has been a hot destination even for FPIs. SEBI Chairman recently revealed that FPIs have made investments worth over $35 billion this year. It is the highest among equity markets this year.

Not just foreign investors, even the retail interest is at unprecedented levels. Total 1 crore new demand accounts are added in the last 10 months, taking the number to five crores. In comparison, the preceding one crore accounts had taken 28 months.

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Concerns over cryptocurrency :

The RBI governor has expressed fear that cryptocurrencies are likely to impact financial stability in the economy. As per a CNBC TV-18 report, RBI has shared its concerns with the government.

Several government agencies have time and again made their opposition clear against cryptocurrencies. Back in 2018, RBI had restricted banks from dealing in cryptocurrencies. It was later on overruled by the Supreme Court. Despite that, RBI is not convinced about it.

Recently SEBI has also guided promoters to sell all their cryptocurrency to be able to launch IPOs. Similar communication is sent to merchant bankers, securities lawyers and even company executives involved with the IPO process.

Any investment derives its value from an underlying asset. But, in the case of cryptocurrency, there is no clarity about its derivative or usage. It is a major factor working against it.

Besides, issuing currency is a right protected by a sovereign. And, no government would be willing to let any other source to emerge that can undermine their authority.

RBI has major concerns about cryptocurrencies, says RBI governor Shaktikanta Das

Rising count of millionaires :

As per a Knight Frank report, India is churning out millionaires at a very fast pace. In the next five years, the country is expected to outperform the global average as well as its Asian peers.

India’s ultra-high-net-worth individuals (UHNIs) population, with assets worth over $30 million, is expected to grow by 63% over the next five years. It will outpace the global average growth of 24% and Asia average of 38% during the period.

At present, India is home to 6,884 UHNIs and 113 billionaires. The Indian billionaires club is expected to increase significantly by 43% to 162 by 2025.

Currently, if your net asset (Total assets-liability) is ~Rs 44,00,000, you are in the wealthiest 1% club in India. But, this threshold is also expected to double in the next five years.

These numbers would keep going up as India continues to attain economic milestones. India is expected to be a USD 5 trillion economy in the next five years and USD 10 trillion by 2030-2032. India also appears set to overtake Japan as the third-largest economy around that time.

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