Sebi Whole-time Member Ananth Narayan G on Monday reminded investors that Indian equities have consistently delivered 15 per cent returns over the last 5 years, whereas the same has been zero or even negative in China.
Terming the Indian markets "sone pe suhaga" for delivering higher returns for lower risks, Narayan also flagged a few areas of caution for investors and asked them to be conscious of the risks.
"There is a lot of discussion on China markets in the past few days. However, if one looks at India over the last five years, while Indian markets have given around 15 percent compound annual growth rate consistently, Chinese markets are nowhere close to that. That too has been almost zero. In fact, in some cases, like in Hong Kong, it's actually negative," Narayan said.
Addressing the event marking the beginning of the Investor Awareness Week at NSE, Narayan said that FY24 was a "remarkable year" for India, with the benchmark indices returning 28 per cent and the volatility just 10 per cent.
"That's like 'sone pe suhaga'. It's like the best of all worlds: low risk and very high return," said Narayan, underlining that there are side effects of this as well.
Making it clear that it would not be the same going forward and investors should not assume it to be a one-way street, Narayan said such handsome returns can lead to complacency and pointed to a lot of youngsters opening up demat accounts to join the bandwagon.
Educating people about risks is very important, Narayan said, giving the analogy of driving a car. "There has to be a light push on the accelerator to get more investors to provide risk capital for the economic growth, we also need to be aware of risks and use the brakes if need be."
He said that 40 percent of the small and midcap scrips have shot up five-fold in the last five years, as the inflow of investor money is remaining ahead of the supply of new paper.
The capital markets regulator is trying their best to ensure that clearances for fund raising happen in advance, so there's a constant quality paper supply in the market.
From a broader, longer-term perspective, Indian markets will only go north from here, considering the economic growth prospects in the country, Narayan said, issuing specific advice to investors.
Investors need the right intermediaries to capitalize on this opportunity presented by India and not fall for the unregistered and fly-by-night 'finfluencers' who might be driven by vested interests, he said.
All roads lead to Rome", Narayan quipped, adding that Rome is no traveler-friendly place and one can be duped there as well. It is hence important that investors get advice from the right people and seek the right guidance, he said.
He said it was in the interests of investors to trade less and stay in for a long time for much better returns and added that studies prove the same.
Sebi, which has flagged certain areas like derivatives recently, is not against speculation or participants taking short-term trades, but it would want investors to understand the risks, Narayan said.
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