According to a SEBI member, Indian markets have given better returns than China in the last 5 years

Sebi’s whole-time member Ananth Narayan ji on Monday reminded investors that Indian equities have consistently returned 15 per cent over the last 5 years, while China’s has returned zero or even negative. Calling Indian markets “sone pe suhaga” for offering high returns for low risks, Narayan also flagged some areas of caution for investors and asked them to be aware of the risks.

“There’s been a lot of talk about Chinese markets in the past few days. But over the last five years, while Indian markets have consistently delivered 15 percent compound annual growth, Chinese markets are nowhere near that. It’s almost zero. In fact, in some cases, Hong Kong’s Like, it’s really negative,” Narayan said.

Speaking at an event to mark the launch of Investor Awareness Week at NSE, Narayan said FY24 was a “remarkable” year for India, with benchmark indices returning 28 per cent and volatility just 10 per cent.

“It’s like ‘sone pe suhaga’. It’s like the best of all worlds: low risk and very high returns,” Narayan said, adding that there are side effects.

Stating that it will not be the same going forward and investors should not consider it a one-way street, Narayan said such handsome returns can lead to complacency and many youngsters are opening demat accounts to join the bandwagon. .

Educating people about the dangers is very important, Narayan said, giving an analogy to driving a car. “There should be gentle pressure on the accelerator to get more investors to provide risk capital for economic growth, we should also be aware of the risks and use the brakes if needed.”

He said that 40 per cent of small and midcap scrips have increased 5-fold in the last five years, as there is an imbalance between the flow of investors’ money and the supply of new paper.

On its part, the capital market regulator is trying hard to ensure that funding is allowed at the earliest so that there is a steady flow of supply of quality paper in the market.

From a broader, long-term perspective, Indian markets will only go north from here, given the country’s economic growth prospects, Narayan said, offering a specific advice to investors.

Investors need proper intermediaries to take advantage of this opportunity presented by India, and not be approached by unregistered and fly-by-night ‘fininfluencers’ who may be motivated by vested interests, he said.

Using the oft-repeated idiom of “all roads lead to Rome”, Narayan commented that Rome was not a tourist-friendly destination and that fraud could also occur there. Therefore, it is important for investors to seek advice from the right people, he said.

He also said it is in investors’ interest to trade less and invest longer for higher returns, adding that studies prove the same.

Sebi, which has recently flagged some sectors like derivatives, is not against speculation or participants taking short-term trades, but wants investors to understand the risks, Narayan said.