How does India's $11.1 trillion household savings into equities stack up

Jefferies estimates the structural flows from retail to the equity markets at around $30-35 billion per annum

Despite the stock markets ruling at record high levels, the inflows into equities as an asset class by Indian households remains in single digit, suggests a recent note by Jefferies. Investment into property / real estate, gold and bank deposits are still among the top draws for savers.

Equities, as a percentage of the Indian household assets, valued at $11.1 trillion in March 2023, according to a Jefferies note co-authored by Mahesh Nandurkar, their managing director along with Abhinav Sinha and Nishant Poddar, stood at 4.7 per cent in March 2023. However, this proportion has grown over the years – from around 2.7 per cent in March 2020.

"We estimate the structural flows from retail to the equity markets at around $30-35 billion per annum. The participation of retail via MFs has seen the monthly investing (SIP) accounts rise 19 per cent YoY to 65 million and monthly flows at $1.8 billion, up 20 per cent YoY. The SIP flows account for nearly 60 per cent of the structural domestic equity flows. Insurance, and pension fund (EPFO + NPS) inflows are also large (over $10 billion/annum) and rising. The government mandates that 15 per cent of the annual gross inflows in the pension scheme (EPFO) must invest in equity markets, drawing net inflows of around $5 billion/annum. The equity allocation by insurance cos adds another nearly $5 billion," the note said.