Are investors moving from fixed deposits to equities amid rising stock market?

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Also Read: IRCTC, Piramal Ent among 6 stocks that can jump 8-23% in the next 3-4 weeks The Nifty 50, which represents the country’s top 50 blue-chip companies across various sectors, has notched up several record highs this month, posting a nearly 2% gain. The mid-and small-cap stocks, on the other hand, have continued their winning momentum in CY24, showing no significant signs of cooling off despite trading at elevated valuations.

Amid this, a compelling question emerges: Are investors reevaluating their traditional approach to wealth preservation? Historically, financial savings directed towards the Indian stock market have lagged compared to other major economies. However, this trend has been changing over the last decade as people are looking at the stock market as one of their investment avenues, allocating more funds to equities.

According to global brokerage firm BofA Securities, household savings are shifting from traditional bank deposits and non-bank deposits, to capital markets. Also Read: Q3FY24 Review: Nifty 500 firms deliver 25% growth; BFSI, oil & gas lead the pack In FY2001, conventional bank deposits accounted for 39% of total financial savings, while capital markets only captured 4%.

Fast forward to FY2023, and these figures stand at 37% and 8%, respectively, as per BofA Securities. India is now the 5th largest equity market, and its market capitalisation will likely touch $10 trillion by 2030, said Jefferies.

When asked about the potential shift from fixed deposits to equities amidst a robust rally in the equity market, Sreeram Ramdas, Vice President at Green Portfolio, said, "The data from banks has been weak when it comes to deposit growth. Much of the FD from risk-oriented investors has piled up