Market mania: Bankers fan out across India to sign up new clients

Both Indian indices, the BSE Sensex and Nifty 50, continued their record-breaking streak on Tuesday, marking the fourth straight session of all-time highs before closing flat. The current rally was fueled by the recent interest rate reduction in the United States last week, coupled with the strong performance of domestic commodity-related companies following China’s announcement of fresh stimulus measures.
The BSE Sensex surged over 200 points to cross 85,000-mark for the first time.It reached its record high of 85,163 during intraday session after climbing 234.62 points while Nifty reached its all time high of 26,011.55.
However, both the indices retreated from their peak and settled flat on BSE and NSE.
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Zoom in
India’s rally is being driven by a combination of foreign portfolio inflows and domestic retail enthusiasm. Local investors, including retail and institutional buyers, have purchased a net $51 billion in shares this year alone. This has pushed the markets into overbought territory, raising concerns about unsustainably high inflows, especially from smaller cities where investors are increasingly directing their savings into mutual funds and equities.
Domestic institutional investors have net purchased 3.23 trillion rupees in 2024, with mutual fund contributions hitting record highs for 14 months straight. However, analysts at Jefferies caution that inflows of $7.5 billion per month from domestic sources are “unsustainably high.”

The hinterland awakens
From Indore to Sagar to Kota, there is a newfound enthusiasm for stocks. As per a Bloomberg report, this stock mania has become a nationwide phenomenon that has caught the attention of global financial powerhouses. Standard Chartered Plc, Barclays Plc, Axis Bank Ltd, and 360 One WAM Ltd are among the firms scrambling to establish a presence in India’s second-tier cities.
At the heart of this financial revolution are people like Mukesh Nagar, an electrician in Kota, a city of one million people. Since 2021, Nagar has been investing a quarter of his modest monthly income in a stock mutual fund. “There is no better option,” Nagar told Bloomberg, embodying the optimism that has gripped small-town investors. “The market will go up eventually.”
“If you look at the younger Indians 20 years ago, their first investment was a bank deposit,” Radhika Gupta, chief executive officer of Edelweiss Asset Management Ltd told Bloomberg. “Today, their first investment is through a monthly mutual fund plan.”
This optimism is backed by impressive numbers. The net wealth of Indian adults has grown at an 8.7% annual rate this century, nearly double the global pace. In smaller cities and towns, where the growth rate is even higher, much of this new wealth is finding its way into mutual funds. According to the Association of Mutual Funds in India, people living beyond the 30 largest metropolitan areas now hold about 12 trillion rupees ($143 billion) in mutual funds, a 200% increase from five years ago, the Bloomberg report said.

Dark side of the boom

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(With inputs from agencies)