Share of stocks in total savings at record high

MUMBAI: Indians are investing in stocks like never before. The share of stocks in total savings by Indians is now at an all-time high of 4.8%, up from 4.3% in March 2021, a report by Jefferies said. Barring 2021 and 2022, the closest it had come in the last two decades was in 2008 when it was at 4.2%.

The preferred mode of savings, however, is still real estate, which stands at 49% of the total household savings, while gold is at 15% share. Among financial savings, bank deposits is at 15.1%, the report pointed out. The report also pointed out that over the last eight years, financial assets as a percentage of total assets has gained eight percentage points.

“Our proprietary analysis of Indian household asset holdings (since fiscal 2006) suggests that equities as a percentage of households’ net worth has risen to an all-time-high, though it is still below 5%,” analysts at Jefferies noted. Financial savings are about 36% of about $11 trillion balance sheet. The preferred mode of investments within financials remains bank deposits (15.1%). Physical assets, that is property and gold, are still dominant, though physical assets have lost about eight percentage points share to financial savings since the trend began in 2014, they wrote.

The report also noted that although Indians don’t earn much, it has a legacy of high savings rate. “A look at national accounts data for FY21 and savings trends for FY22 show that total household savings are trending above Rs 50 trillion/$700 billion for the past two years. While there was a three percentage points jump in savings versus trend, we estimate total household savings as a percentage of GDP in FY22 go back to the pre-Covid level of 23-24%.”

Analysts at Jefferies said that Indians invest in stocks through multiple means, of which the mutual funds are the primary vehicle.