Investing in India: Investment Market Analysis

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Objectives:

The analysis of the global and Indian car market is aimed at finding up-to-date information and analyzing the market size, consumers and competitors in the market under study, the changes that have occurred in 2020-2021, as well as the forecast and trends in the industry in the long term for the period up to 2024.

Content 

Part 1. Overview of the Indian investment market

1.1. Main characteristics of the market
1.2. Dynamics of the volume of the investment market in 2020-2021 Potential market capacity
1.3. Assessment of factors affecting the market
1.4. Stage of the life cycle of the investment market
1.5. Competition from substitute products

Part 2: Competitive Analysis in the Indian Investment Market 

2.1. Major players in the market 
2.2. Market shares of the largest competitors
2.3. Profiles of major players

Part 3. Overview of the investment market abroad

3.1. Main characteristics of the market
3.2. Dynamics of the volume of the investment market in 2020-2021 Potential market capacity
3.3. Assessment of factors affecting the market

Part 4. Competitive analysis of the investment market abroad

4.1. Major players in the market 
4.2. Market shares of the largest competitors
4.3. Profiles of major players

Part 5. Price Analysis in India

5.1. Average producer prices by union territories
5.2. Average consumer prices by states in India

Part 6. Forecast for the development of the investment market until 2025 in India 

Part 7. Recommendations and conclusions

Research excerpt

The concept of investment

An investment is an asset or item acquired for the purpose of generating income or adding value. Valuation refers to the increase in the value of an asset over time. When a person buys a commodity as an investment, the goal is not to consume that commodity, but to use it in the future to create wealth.

In finance, the benefit of investing is that you get a return on your investment. Profits may consist of gains or losses on the sale of real estate or investments, unrealized capital gains (or depreciation) or investment income such as dividends, interest, rental income. Or a combination of capital gains and income. The refund may also include foreign exchange gains or losses due to changes in foreign exchange rates.

How the investment market is developing in India

The investment market is a complex structure of constantly changing interaction processes. Thus, it is necessary to track the dynamics not only by years, but also by quarters.

Based on data for the second quarter of 2021, the total value of individuals' assets on brokerage services amounted to Rs 7,2 trillion. This figure includes securities, cash and claims less liabilities. Of this amount, about 6,1 trillion Rs. or 84,7% accounted for securities on brokerage

Diagram 1. Structure of the volume of exchange transactions in the stock market (%)

The growth rate in the number of individual investment accounts slowed to the lowest level since the beginning of 2015. In general, the volume of assets continues to grow, including through a positive revaluation of assets. The share of IIS among clients in brokerage services decreased from 27% to 25% over the quarter, while in trust management it remained at the level of 72%.

Starting in 2018, a steady growth in the share of the stock market among all exchange operations is noticeable. Thus, in the first quarter of 2021, the share market held a share of 75%, but in the second quarter, a decrease to 70% is already noticeable, which is still 2 times higher than the average for 2019 of 35%. 

Foreign investment 

Against the background of the appreciation of the rupee and the growth of the Indian stock index, resident individuals switched from foreign stocks to Indian stocks in the second quarter of 2021. At the same time, net purchases in the foreign exchange market were not accompanied by purchases of foreign assets, part of the currency remained on brokerage accounts, and part could be turned into cash. Against the backdrop of rising interest rates in the economy, net demand for classic bank bonds rose significantly, as evidenced by the strong growth in Indian equities. Indian equities turnover was Rs 141 billion in the second quarter of 2021, while foreign equities led the way in total transaction turnover in the first quarter with a net turnover of Rs 186 billion. The Foreign Equity segment posted a small net sale volume for the first time in two years, while the Depositary Receipts segment maintained net purchase volumes at the same quarter level.

Diagram 2. Net purchases of securities by individuals in the stock market (billion Rs.) and transaction turnover (trillion Rs.)

Market development prospects

In the Indian investment market, growth in the number of brokerage clients has begun to slow down. This is largely due to the significant increase in the penetration of such financial services in recent years, which makes it difficult to maintain high rates of organic growth. In the coming quarters, growth may slow down even more, due to a gradual increase in bank deposit rates following the increase in the key rate by the Bank of India. Against the backdrop of the stabilization of the rupee, investor interest has shifted from foreign stocks and bonds towards Indian instruments, as can be seen from the analysis of the charts above. 

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