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Below are Views On How can ETFs help investors participate in India`s growth story and rising SENSEX/NIFTY ? By Mr Nilesh Shah, CMD, Atlas Integrated Finance Ltd

Recently, the SENSEX crossed the 50,000 mark. This was majorly supported by the global liquidity and continued FII inflows due to rate cuts and expectations of a stronger GDP and corporate earnings going forward. However what’s the way forward and where should one invest further?

* Commenced on 1^st January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India has completed 34 years of being in operation.  The 30-share SENSEX today is very different from its launch in 1986. With constant reshuffling of the index only 7 out of the original 30 stocks have continued to remain in index. Today, most of the companies are not a part of the original SENSEX composition. The reason could be plenty ranging from poor performance, delisting or addition of companies from different industries. For example, there was hardly any IT industry or banking company in 1978 where the index was just dominated by the manufacturing sector stocks. However with credit boom, digitalization, liberalization policies we now see banking and IT stocks occupy a majority weightage in the SENSEX.

* The one thing that has not changed is the ability of the Sensex which represent the power of Indian equity as an asset class to consistently outperform other classes of investments.  From 100 in 1979 to 50,181 in 2021 the SENSEX has given a CAGR of 16.4% ( excluding dividends) thereby outperforming bond, bank deposits and also gold during this period and by a huge margin.

* Investors today are willing to invest in assets which give them cash flow opportunities. They are focusing their efforts on passive income investments instead of speculative assets that only offer capital appreciation opportunity.  By investing in  ETF, investors can take benefit of the ever increasing SENSEX/NIFTY. ETFs can be traded just like shares in the stock market. It saves the investors from the hassles of doing an independent fundamental research and continuously monitoring individual stocks as it can be passively managed.

*  At Atlas Integrated Finance Ltd, they have been advising investors to diversify and invest a chunk of their portfolio into ETF since they are passively managed, give great returns and are less expensive.

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