Ordinary Indians rush into stocks, spurring a rally as well as risks

With red-and-white headphones draped around her neck, 22-year-old Indian IT security consultant Abdhija Sharma looks like she would be more at home discussing the latest music or Bollywood movies than compound returns on equity investments. But at an office in a Mumbai suburb one recent Saturday, surrounded by banners urging them to "Create Wealth", she and 60 others listened intently as finance professional Alpa Shah explained terms like "the power of compounding." Tens of thousands of Indians like Sharma are attending presentations promoting mutual funds, such as this one organised jointly by Suresh Rathi and Birla Sun Life, and investing in stocks for the first time, many through monthly plans.


Their investments have helped send indexes to record highs; the NSE index is the best performer in Asia this year with gains of around 14 percent. The rally is partly the result of a drive by Prime Minister Narendra Modi's government to wean people off property and gold and channel savings into stocks through mutual funds. The gains have led to soaring valuations, in particular in the telecoms sector, which some analysts believe are unsustainable and could lead to volatile price swings.

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