Expert Zone

Straight from the Specialists

National agenda to bring $100 billion of domestic household savings in capital markets in next five years

(Rajiv Deep Bajaj is the Vice Chairman and Managing Director of Bajaj Capital Ltd. The views expressed in this column are his own and do not represent those of Thomson Reuters)

Currency of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/FilesIndia is an attractive investment destination for foreign institutional investors, due to its vibrant economy, favourable demographics, high growth potential and well diversified capital markets. In fact, the benchmark Nifty has representation from 10 broad sectors, four with weightage in double digits.

One will find very few markets in the world with such diversity. Still, the irony is that our domestic retail investors don’t consider capital markets as an avenue for long-term wealth creation. The statistics speak for themselves. Household savings flowing in domestic equity markets is practically negligible.

In the last five years ending 2012/13, only 742 billion rupees of household savings has flown into capital markets, constituting only 1.5 percent of total household financial savings, 0.6 percent of gross domestic saving and a meagre 0.19 percent of GDP in this period.

Is gold a good investment once again?

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The increase in gold prices in the last two months has rekindled interest in the yellow metal as a vehicle for investment. It was after the 2008 global financial crisis that gold became the most preferred asset, with prices doubling in four years.

Why was gold preferred? It was not so much as a hedge against inflation but as an insurance against uncertainty. When the economy is faltering and the future looks bleak, gold becomes a preferred asset.

Bear market a golden opportunity to shore up coffers

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The recent run of the gold bears in financial markets has been positive for India’s current account balance. If this continues along with the persistent softness of oil prices, as many expect at least for the short term, it just might give the government the opportunity it needs to implement certain measures that have so far run against popular sentiment.

The plunge in the gold price since the start of the year, triggered by speculation and hints that the U.S. Federal Reserve may trim its bond-buying program sooner than markets had assumed, has helped the rupee hold up well against the dollar. This is good for India’s fiscal house, where the trade and current account deficits are more or less permanent fixtures.

Gold not a good investment for now

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Since November, the price of gold has been unstable but in April, its decline was precipitated. What is surprising is not the fall itself but its speed. In just two sessions, gold prices dropped 13 percent in the steepest fall in 33 years. It wasn’t gold alone that got caught in the bear grip. Prices of other commodities such as silver, crude oil, copper and so on also declined, but not as sharply.

What has happened to gold?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Gold has disappointed, down 4 pct over the last 4 weeks, despite the risk-related Brent crude oil advancing 3 pct. Gold appears to have become the victim of a steadily improving global macro environment, where the pressing problems and risks of 2011 appear to be easing, if not being resolved. Slowly the market appears to be building a consensus that the growth outlook for 2012 looks more positive. Consequently gold’s ‘safe-haven attraction’ is starting to lose out to more growth oriented investments.

The biggest shift in gold’s fortunes has come from the U.S. After the gold price advanced 7 pct in February on the back of the U.S. Fed Chairman’s January 25 hint of another round of quantitative easing (QE), the March 13 FOMC statement appears to have triggered gold’s fall. While the statement did not contain an overt change in sentiment, it did acknowledge a better growth profile despite the continuing risks. Its ‘less wary’ tone suggested that QE possibilities were minimal.

Gold prices: Bubble or fundamental

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Suddenly all eyes have turned to the yellow metal. Some say that it’s a bubble while others give a lot of demand-supply reasons. Fall of the dollar and other economic reasons suggest that it has miles to go.

The golden bubble?

(The views expressed in this column are the author’s own and do not represent those of Reuters)

The spot price of gold crossed $1500/oz on April 22 and confirmed the belief that gold and, even more so, silver, are the best investments. In the last one year, gold gave a return of more than 30 percent; equity (Sensex) a mere 10 percent.

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