In the last few months, equity markets have seen a sharp correction. Amid global uncertainties and worries over the impact US President Donald Trump’s import tariffs will have on global trade and economy, foreign institutional investors have been relentlessly selling from the equity market.
Investors who only saw huge gains in stocks and mutual funds last 3-4 years are suddenly seeing some losses.
Addressing mutual fund industry executives and distributors on Saturday, Union Commerce and Industry Minister Piyush Goyal
said the scenario has been a wake-up call for everyone. While celebrating any super profits made, one also needs to be conscious of responsibilities towards stakeholders, the minister said.
“I do believe that a lot happened in the last few years. A lot of, I would say, misinformation, a lot of calculations and a lot of publicity or communication or information flow about the unending ability of the market to go on a one-way street,” stated Goyal.
He was signalling the super normal gains that some companies saw over the last couple of years and valuations reached sky-high in some cases amid the investment frenzy.
“It’s been a wake-up call for some of us who have probably got small investors interested in the market, but may not have necessarily taken care of their interests as diligently as was expected of market intermediaries like the mutual fund industry,” Goyal stressed.
He blamed global turbulence for causing disturbances in organised markets over the last few months. Goyal feels the benchmark Nifty50 index still reflects decent valuations. He also feels some small corrections may still happen.
Goyal lauded the mutual fund industry for the immense work it had done in terms of wealth creation for millions of people in the country. Particularly, post-COVID, Indian investors came out in large numbers and value to replace the influence of foreign institutional investors, he said.
The latest GDP growth numbers released on Friday, which showed the economy grew 6.2 per cent in the October-December quarter, reflected what the government had said earlier that the lag effect of the elections on the growth was an outlier, Goyal noted and was hopeful the growth momentum would sustain.
Both, public spending and private capex was showing signs of a comeback, said Goel.
He is confident the vast population of under-30-year-olds will be a demographic dividend for India for the next 30 years. The power of compounding, the power of demand 1.4 billion people would generate over 30 years would add at least $30 trillion, he felt.
“It’s a compulsive growth story,” according to Goyal.
But, he also pointed out that the industry participants had a lot of responsibility towards investors.
“Your duties and responsibilities to the market, to small investors, is probably larger than just the number or the percentage of return that you are able to give in a competitive world for one or two years,” Goyal said.