[T.S.R:11071] did u know ??? must read

*India Strategy *

*Did you know? *

   - Among major countries, India's households have the highest savings rate
   (24%), with 60% of total household savings in financial assets.
   - Indian households have 10% of their total financial assets of US$1.3tn    in equities (you couldn't have, since this number is not published any    official source and was estimated by a rigorous analysis)

   - Proportion of India's household savings going into equities increased
   to 6.7% over the past three years, vs 1.7% over 2000-05. The highest
   proportion of household savings going into equities in any year was 9%
   during FY08. (Again you couldn't have, since this number is not published
   any official source)
   - Over the past five years, Indian households bought 3,500 tonnes of gold
   worth US$67bn, versus an estimated US$60bn investment in equities.

   - DII holdings are greater than FIIs' in 22 of the 50 Nifty stocks.

   - India's weight in the MSCI World Index has increased from 0.2% in 2002
   to almost 1% now.
   - Over FY04-09, domestic institutions (DIIs) invested US$50bn into Indian
   equities, 32% more than that invested by FIIs.
   -  If structural factors raise households' investment in equities to 15%
   of household savings, US$600bn - 150% of current market free capitalisation
   - will come into Indian equities over the next 10 years.

Indian retail investors have begun investing an increasing proportion of their savings into equities and with factors like favourable demographics, friendly regulation and improved access driving this process further, we see potential for Indian households to invest US$600bn in equities over the coming decade. *

*These inflows will increase the influence of domestic institutional
investors (DIIs) even as foreign institutional investor (FII) inflows
continue. *The divergent investment philosophies of DIIs and FIIs are
likely to provide stability to markets. ICICI, HDFC and Reliance Capital
would be direct beneficiaries.*

*Equity culture is making inroads in India*

·        Indians have a high savings rate of 24% and savings have started to
move into equities: 6.7% of gross savings over the past three years, vs 1.7%
over 2000-05.

·       These inflows have helped DIIs to invest US$50bn (over FY04-09) in
Indian equities - 30% more than FIIs.

·       Driven by favourable demographics, rising incomes and socioeconomic
changes, we forecast Indians to invest US$600bn in equities over the next
decade.

*Government policies have helped*

·       Aided by the liberalisation of the insurance sector, life insurance
companies' equity portfolios have quintupled to US$55bn over the past five
years.

·       Insurance companies should invest US$73bn in equities over the next
five years.

·       Tax benefits and online trading have increased retail participation
in equities.

·       Removal of tax benefits and lower agent commissions are key risks to
this trend.

*Inflows from FIIs will continue*

·       New listings and market outperformance have raised India's weight in
the MSCI World Index from 0.25% in 2002 to c.1% now, aiding incremental
flows.

·       FIIs own 16% of Indian equities (worth US$147bn) and account for
c.10% of equity volumes, making FII flows a key driver of short-term market
movements.

·       Fundraising by private and government companies should continue to
attract FIIs.

*FIIs and DIIs have different investment philosophies*

·       We find that FIIs like growth stocks, whereas DIIs prefer stable
businesses. The latter type of stock should benefit from greater domestic
flows.

·       Moreover, the differing investment philosophies of FIIs & DIIs
should provide depth and stability to the Indian equity markets.

·       ICICI, HDFC and Reliance Capital have direct exposure to asset
management and the insurance business through their subsidiaries and will be
direct beneficiaries.

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