Who's winning when Nifty is @12k?
Today nifty mounted 12000+ but what did that do to individual portfolios and wealth? Who's actually winning? This blog examines these questions in the light of domestic savings and shift in investment patterns! Domestic Savings Domestic savings in India comprises of 3 sectors - households, Private & Public sectors. Households make up the largest pie, making 60% of total domestic savings. Most of the household savings are stored in 2 forms - physical assets (home/land/gold) and financial assets (bank deposits, bonds, stocks & mutual funds). India's savings rate as a % of GDP has declined from 36% (2009) to 30% (2019). Between 2009 & 2019, in particular, households savings rate as a proportion of GDP (Gross Domestic Product) declined from 25.2% to 17%. While inflation was high at 9-11% between 2009-13, it was subsequently brought down by RBI's inflation-targeted monetary policy to sub-4% in 2019. This means, real interest rates (nominal rate minus inflation)...