SEBI chief UK Sinha has recommended for more investments in the stock market. Sinha said that the stocks have consistently given annual returns of more than 15% on a long term basis. In distinction gold has only given 5-6 percent annual return over a long period ranging 15-20 years. At the same time, the investment in equity market also helps in the economic growth of the Indian economy. The money which is invested in stock market is used for infrastructure-building and for the economic development and prosperity of the country.
The Securities and Exchange Board of India (SEBI) Chairman said a greater share of household savings has begun coming into the stock market and the ongoing retreat in gold prices and a long-continuing weakness in the real estate market will make equities much more appealing.
The falling gold prices and the weakness in the realty market would lead to a close re-balancing of household savings with greater allotment for financial market. People with excess funds do look for another investment channels, and gold has been an important one for years. But gold can be only a small portion and the entire amount should not go there.
Now gold prices are looking southwards. So, there are all the chances that people would look for other direction, and equity market has consistently given very good returns on a long-term basis. In the short period, Gold can be a very good investment and it can also give incredible returns. But Indian equity market, on a long-term basis, has given returns of more than 15 per cent compounded rate year after year.
Gold prices have fallen sharply in recent months and recently touched their lowest level in about four years in India. The fall in global prices has been even sharper and gold has touched its lowest level in six years. The data by World Gold Council also show that gold demand had fallen by 25% in the quarter 2 of 2015. The decline in the investment demand for gold has been even sharper at 30 per cent. In distinction Sensex has risen over 2000 points in last one year although the markets have been eruptive for past couple of quarters on weak corporate earnings and negative global sign. The Sensex had rallied as much as 30 per cent during 2014.