Household ownership of equity surges to 21.5%

“If we harvester the nonstop and indirect vulnerability (mutual money investments) of the household sector, referred to arsenic equity & concern funds (E&IFs), it amounted to Rs 134 lakh crore (US $ 1.6 trillion) oregon 44 per cent of GDP successful the archetypal 4th of FY25,” the study said.

India’s equity marketplace capitalization jumped much than 50 per cent year-on-year to Rs 441 lakh crore arsenic of the 4th ended June 2024, portion the holdings of the household assemblage surged to 95 lakh crore during the play from Rs 60 lakh crore (or 20.6 per cent of the equity market) successful the aforesaid play past year, says the report.

The E&IF fig is again comparable to the 30-55 per cent scope observed successful astir precocious economies covered successful the study. However, it is little than fractional of 100 per cent of GDP successful Canada and 161 per cent of GDP successful the US. Further, the stock of E&IFs accrued to 28 per cent of GFAs of households successful India successful 1QFY25, compared to 17 per cent astatine the extremity of CY19, the Motilal study said.

Notwithstanding the unchangeable stock of the household assemblage successful listed equities, which has experienced occasional step-ups, the awesome surge successful equity marketplace capitalization implicit the past twelvemonth has propelled the marketplace worth of household gross fiscal assets (HHGFA).

Barring the US, the household assemblage owns betwixt 11 per cent and 18 per cent of the listed equity marketplace successful different large economies, which is little than 21-22 per cent stock successful India, Motilal study said. The share, notably, is overmuch higher astatine 40 per cent successful the US though. Further, the stock of the household assemblage successful the listed equity marketplace has accrued successful the post-pandemic play successful India, Germany (DE), and the US, portion it has declined lone successful Canada (CA), with a mostly unchangeable stock successful different economies.

Direct vulnerability to listed equities, however, constitutes lone a information of the full vulnerability of the household sector. “Mutual funds (MFs, oregon concern funds) besides play a precise important role, and thus, we combined some nonstop and indirect vulnerability (through MFs) to find the full vulnerability of the household assemblage to the securities market,” it said.

With investors pumping into equity schemes of communal funds, the full size (or the plus nether management, AUM) of India’s communal money manufacture reached Rs 61.2 lakh crore arsenic of June 2024, up 38 per cent from a twelvemonth ago. The household assemblage (including precocious nett worthy individuals and retail) owned astir 63 per cent of the MFs AUM, up from 55 per cent successful December 2019 and 50 per cent successful 2014-15, the study said.

Within this, equity instruments accounted for astir 70 per cent, portion non-equity constituted the remaining 30 per cent (almost the aforesaid arsenic successful December 2019 but overmuch little than 50 per cent a decennary ago), the study said.

The RBI precocious released its first-ever quarterly estimates of the household fiscal equilibrium expanse from 1QFY12 to 4QFY23. “We replicated the RBI’s methodology and achieved 96-97 per cent accuracy successful our result,” the study said.

“We extended these estimates to Q1 of FY25 based connected immoderate assumptions. One of the cardinal developments has been the rising prominence of the equity marketplace successful household gross fiscal assets during the past fewer years, peculiarly since the onset of the pandemic,” it said.

Overall, determination is nary uncertainty that the relation of the equity marketplace successful household fiscal equilibrium sheets and fiscal nett worthy has accrued importantly successful the post-pandemic period, peculiarly implicit the past 4-5 quarters.

This inclination whitethorn lend to the increasing wealthiness effect wrong the household sector. However, the declining level of household savings (flow, yearly data) and the accustomed attraction of fiscal wealthiness among a circumstantial radical (the apical of the pyramid) suggest that further probe and much granular information are necessary. “Further, 1 indispensable deliberation doubly earlier calling the Indian household assemblage blimpish successful presumption of its vulnerability to the equity markets,” it said.