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With the benchmark Sensex and Nifty stock indexes hitting new highs, stocks have beaten other asset classes such as gold, real estate and bank deposits to deliver the best returns to investors in 2021. Sensex has generated a return of 20% as the index fell by 47,868.9 points. on January 1 to 57,552.3 points on August 31. The yield is 50% in one year until the end of August. âThere aren’t a lot of yield opportunities in other asset classes. In contrast, the Nifty stock index has offered a return of 9% in the last month alone and 49% in the last twelve months. Only the stock market currently offers returns above inflation. level, âsaid Nilesh Kotak, an Ahmedabad-based stock analyst. âA huge influx of cash, new investors and investor euphoria have helped the equity market recover strongly,â Kotak added.
The market rally increases the net asset value of equity-linked funds
Investors also made a lot of money from investing in mutual funds (MFs) throughout 2021. The overall performance of equity-linked mutual funds has been good, small-cap mutual funds reaching up to 46.5% and mid-cap mutual funds offering 35% return between January and August. âThree factors that have helped stocks generate better returns include a robust vaccination campaign coupled with a decrease in Covid-19 cases after the second wave; no US Fed rate hike this year and the economy’s resilience. Market sentiment remained in place, particularly in the face of and after the second wave, pushing indices to new highs, âsaid Mumukshu Desai, director of a city-based financial advisory firm. Both retail and high net worth individuals (HNIs) have invested in MFs. In addition, institutional investors have also placed the excess money in debt funds, as capital spending has been halted since the pandemic, “Desai added. Driven by promising returns, retail investors turned to towards equity markets, increasing the overall assets under management. “The growing investor awareness was evident, prompting them to choose FMs,” said Jayesh Vithalani, a city-based financial adviser.
IPOs offer great rewards
It’s not just the secondary market, but investors have made a lot of money in the primary market as well, with most Initial Public Offerings (IPOs) listed at a premium. returns higher than their issue price. Only Nuvoco Vistas Corporation offered a negative return of 2% as of August 31. Companies such as GR Infraprojects Ltd and Tatva Chintan Pharma Chem Ltd each returned 90% of their issue price at the end of August. Other Gujarati companies such as Anupam Rasayan Ltd and Heranba Industries Ltd generated 37% and 29% returns, respectively.
Yields on term deposits remain low
Term deposit rates have remained low as banks have higher liquidity due to the rise in cash deposits. Investors received 4.9% returns on bank term deposits from January to August of this year. “With interest rates plunging to 4.9%, people have slowly started withdrawing money from term deposits as they mature and investing them in other classes of. active, âadded Vithalani.
Rising house prices translate into gains of 15%
With real estate developers raising house prices to pass on increased construction costs, consumers who have purchased residential properties under previous programs have received returns in the range of 10-15%.
âUnit prices in new residential programs have increased following a surge in the prices of steel, cement, sanitary ware, as well as increased transportation costs,â said Ashish Patel, President of CREDAI- Gujarat. âAs a result, the valuation of properties purchased under programs launched before the price hike has also increased by 15% in Ahmedabad, providing the same percentage of returns to those homebuyers,â Patel added. However, the commercial segment, according to real estate developers, has remained modest in terms of performance. âLand investors have received returns of around 30% this year,â Patel added.