The Wealth Effect of India’s Stock-Market Boom

Indian stock market hits new highs: ->BJP-led NDA leads pre-poll surveys ->Strong global cues,ECB rate cut expectations ->FII buying activity ->Anticipated RBI rate cuts ->Broad-based rally in small/mid-cap stocks

The present-day golden era of Indian billionaires has produced soaring income inequality in India—now among the highest in the world and starker than in the U.S., Brazil, and South Africa. The gap between India’s rich and poor is now so wide that by some measures, the distribution of income in India was more equitable under British colonial rule than it is now. Since the pandemic begun to Nov 2022, billionaires in India have seen their wealth surge by 121%, or INR 3608 Crore per day in real terms (Around INR 2.5 crore every minute).

- Indians flocking to stock market, pulling savings from banks - Bank deposit growth at lowest in over a year, alarming government - Deposits provide cheapest funding for investment, crucial for growth - Mutual fund accounts up 134% in 5 years as Sensex climbs 26% - Slower credit growth and higher loan costs pushing firms to bond market Source: [bloomberg](https://www.bloomberg.com/news/articles/2024-08-30/stock-mania-sucking-cash-from-banks-threatens-india-s-growth)

- The Indian government has increased the tax rate on equity derivatives trades and capital gains from equity investments, effective immediately for some changes and from October for others. - Taxes on stocks held for less than one year have been raised to 20% from 15%, and for those held over one year to 12.5% from 10%, which may hurt short-term market sentiment but incentivize long-term investment. - The securities transaction tax on futures has been nearly doubled to 0.02% from 0.0125%, and on options to 0.1% from 0.0625%, causing a temporary dip in major stock indexes. - Fund managers believe the tax changes will bring rationality to options trading and encourage better investment behavior, despite being a short-term negative for the market. - Additional tax adjustments include reduced taxes on listed bonds and unlisted shares held by foreign companies, and changes to the taxation of company share buybacks. Source: Reuters

We all know that majority of analysts and experts are optimistic of Indian Economy. It will be going to be the 10 trillion dollar economy by 2030 as per most. So we can make good amount of money in long term ( 15-20 years ). I am also investing in stock market ( majorly in index funds and self analysed stocks ). Also seeing current developments myself too optimistic about this. Prediction is if BJP wins this election will boost the market. But my concern is what if BJP have done huge scam internally which is unknown due to huge control over government currently. And what if that scam bubble break one day. Isn’t this going to make our long term investment to go negative and loose most investments. Even though I have soft corner on BJP, by seeing only ED raids on non-bjp politicians, if non-bjp person joins BJP his scams are waived off. I think this might have given huge advantage to some cunning MLAs and MPs of bjp and they might have done huge scams and one day it may break. It’s my thoughts. What all you think? Is there any scam bubble in progress?

🇺🇸 President Biden proposes a 44.6% capital gains tax, the highest in history. The proposal also includes a 25% tax on unrealized gains for high-net-worth individuals. Indian markets - be prepared for the biggest rally of the decade 🔥🔥🔥🔥 HUGE POSITIVE FOR INDIAN MARKET

- Home prices in India are set to rise steadily, driven by demand for luxury properties from wealthy individuals, according to a Reuters poll of housing experts. - Economic growth benefits are increasingly being funneled to a select few, leaving millions of job-seekers out of the growth story. - Aspiring first-time buyers are forced to keep renting as affordable homes dwindle and cash-rich individuals corner the property market. - National home prices in India are expected to rise 7.75% this year, with further increases of 6.0%-6.25% in the next two years. - Developers are focusing on luxury housing projects, aligning supply with prevailing demand, while affordable housing continues to suffer. Source: [Reuters](https://www.reuters.com/world/india/luxury-property-frenzy-set-drive-up-home-prices-india-2024-09-03/)

Both indexes began diverging sometime close to when Fed started to aggressively hike rates. It appears that the post-COVID rally was more favourable to the S&P but NIFTY is currently outperforming on absolute returns. My idea is fundamentally simple. Financial prudence during the raging recovery paid off for us, the economy appears resilient and poised to do well in the near to mid-term. It also reflects that markets are pricing recessionary risk very differently to both markets. Any ideas by others?

Liabilities and high interest loans rising, household savings falling. It's a very worrying statistic if people are borrowing money just to stay afloat.