(The Australian News) - As I write this article, the Sensex would have probably reached another milestone of 18000 from the time it started its journey in 1979, thereby giving a compounded annual return (CAR) of around 16%. Very few investors must be running this endless marathon from the beginning, while others would have joined the race at different entry points on this Indian superhighway.
India is beginning to build its economic superhighway on sound infrastructure at a much faster pace and at a much larger scale. Hence, the ride hereafter can be smooth if it is maintained and overhauled from time to time.
The beginning of the 21st century saw India being recognised as a global IT outsourcing hub. International investors started considering India as a global socio-economic power driven by its young demographic profile, with higher disposable incomes offering a big domestic market for products and services. During the same phase, the decadal gross domestic product (GDP) grew from a meagre 4% to the current 8% and the stock market indices reflected this change.
The financial market in India has also metamorphosed into a more mature, well-regulated sector of the economy. The acceptance of derivatives products is evident in the huge volumes seen in this segment. Our market has emerged as one of the largest stock options and futures markets in the world. This reflects the maturity level and understanding of various market players.
On the one hand, retail volumes are surging and on the other hand, institutional participation through mutual funds, insurance companies and foreign institutional investors ( FIIs ) is increasing. This augurs well for investors as a class since there's no domination by any single class of market participants.
With raising of capital no longer being an issue, and the government acting as a catalyst for investment and more visibility of demand for goods and services, the corporate growth story across sectors is set to unfold over the next few decades against the backdrop of double-digit GDP growth. Globalisation will also have an impact on corporate competitiveness, which will open up other geographies for Indian products and services.