Here’s how the government could offer India’s stock market some relief
Live MintGone are those simpler times when a finance minister of the country could tell Parliament, as Manmohan Singh had in 1992, that he does not lose sleep over stock markets. While those who invest in shares directly or via mutual funds are still relatively few—India has some 180 million demat accounts and a little over 40 million mutual fund folios, with a considerable overlap between the two—the number of Indians with indirect exposure to stock prices via retirement savings and insurance policies would be about 350 million. This continues apace, even as foreign money either moves out—whether to China’s equity market or back to higher-yielding debt and equities in the US—or enters India with caution amid some signs of froth seen in share prices as a ratio of corporate earnings. While some local investors may also have turned cautious, mutual fund inflows have kept feeding shares with financial savings. While well-known private startups have been going public, too much money is still chasing too few shares in some segments, which inflates prices beyond levels warranted by realistic expectations of future performance.