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Degree of returns, regularity of returns, and tax benefits are the significant factors influencing post-Covid investment decisions, according to a report on Monday. 

The report, jointly made by the PHD Research Bureau, PHD Chamber of Commerce and Industry, and Jagan Institute of Management Studies (JIIMS), Rohini, aims to analyse the factors influencing individual investments across various financial instruments and to compare the investor behaviours towards selected financial instruments in pre and post-Covid years.

“India’s capital market has witnessed a robust performance during the post-Covid years supported by the strong regulatory environment, high growth of the economy, and investors’ confidence in India’s growth story,” said Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry.

“Going ahead, our capital market is seen with outstanding performance in the coming years, as India is going to be the third largest economy soon and have a size of $7 trillion by 2030,” Agrawal added.

The period considered for the analysis includes two years of pre-pandemic (FY 2018-2020) and two years of post-pandemic (FY 2021-23).

A total of 6 financial instruments were considered to assess the changing investor preferences in pre- Covid and post-Covid pandemic years including mutual funds, bonds, stocks, derivatives, gold, and real estate.

The participants were also given a multiple-choice questionnaire based on five factors including the degree of risk, tax benefits, liquidity, degree of returns, and regularity of returns (from the Investment option).

The analysis showed that in pre-Covid times, the degree of returns and the regularity of returns guided the decision to diversify the portfolio.

Conversely, in the post-Covid pandemic years, tax benefits along with the degree of returns and regularity of returns influenced the investing decisions.

Investment in mutual funds was largely influenced by the degree of returns, regularity of returns, and degree of risk in the pre-Covid period.

But, the post-Covid period saw more influence of liquidity rather than the degree of risk involved along with the degree of returns and regularity of returns in the mutual fund investments, the report said.

Further, in the pre-Covid scenario, investors majorly preferred bonds due to the tax benefits offered by bonds. However, after the Covid pandemic, the preference to invest in bonds was found to be largely influenced by tax benefits along with liquidity and higher returns.

In the case of stocks, their preference for investment was primarily driven by the degree of returns that the stocks were anticipated to yield in addition to the liquidity.

But after Covid, the investors categorised stock investments as high-paying ones and were found to not look for any other advantage like tax benefits, liquidity, etc from them, said the report.

Tax benefits and regularity of returns governed the decision to invest in Gold bonds or Sovereign Gold Bonds (SGBs) in both pre and post-Covid times.

In pre-Covid times, while investing in real estate the investors considered its probability to be sold quickly as a major factor. In contrast, tax benefits and regularity of returns were important factors governing investment preferences in post-Covid times, said the report.