India is one of the best performing stock markets in Asia so far this year; both the 30-share BSE Sensex and 50-share NSE Nifty have gained over 15 percent since January.
BSE has been a big beneficiary. Its benchmark Sensex index crossed the 31,500-mark to hit a record intraday high last week, its positive momentum largely driven by plentiful domestic liquidity.
“India’s time in the sun has come,” said Chauhan, and those currently are not invested in the markets could well take a second look, especially with the lackluster gains in precious metals and real estate over the past few years.
“The stock market has given very good returns, and with the tremendous inflows, the IPOs (initial public offers) will come in,” he said.
According to Chauhan, foreigners own only 20 percent of the stocks listed on the BSE by value.
The big driver for BSE’s performance is still the huge influx of retail investors coming into the markets.
“India actually saves a lot. On a GDP of around $2.5 trillion dollars, India saves close to 30 percent, that’s $750 billion dollars a year. On a scale of 7 percent growth for the next 10 years, India will end up saving close to $10 trillion dollars,” he estimated.
Chauhan said new equity, bond and real estate investment trusts are largely being subscribed by Indian investors. “Foreign capital is also coming in but that’s like icing on the cake,” he said.