Equities are a hot favourite among India’s super rich.
A survey by the Kotak Mahindra Bank, a private sector bank, last month analysed the spending pattern of 225 ultra net worth individuals (HNIs) in India. According to the bank, 45% of investments by ultra HNIs go into the stock markets.
The bank defines an ultra HNI as an individual with a minimum net worth of Rs25 crore ($3.75 million).
“Ultra HNIs have taken to the equity market with gusto and increased their exposure in anticipation of a stronger economy,” the bank said. The Indian equity markets have scaled new highs since the Narendra Modi government came into power in May 2014.
At the same time, the interest of India’s super rich in real estate has waned. Over the last few years, growth in the sector has stagnated, mainly due to stalled projects and poor financials of construction firms.
Here is where ultra HNIs invested in the 2015 financial year:
In Chandigarh, real estate still trumps equities. According to Kotak, Punjab has primarily been an agrarian economy and the rich prefer physical assets rather than financial ones.
Among equities, the super rich flocked to sectors like banking, infrastructure and information technology to park their money. But sectors like energy and consumer products were among the least favoured. The rout in global commodity prices does not make the energy sector attractive in terms of returns.
Here are the preferred sectors for equity investments in the 2015 financial year:
And here’s how much return they expect from their investments.
Meanwhile, Kotak estimates that the number of ultra high net worth households (HNHs) grew to 137,100 in the 2015 financial year, from 117,000 the year before. Together, these HNHs have an accumulated net worth of Rs1.28 lakh crore.
By 2020, according to the report, the number of ultra HNHs is estimated to go up to 348,000.