Friday, 28 August 2015

Institutionalisation of Indian Market

Money moves the market and that comes from individuals and institutions. When money comes from the institutions then it is called as institutionalisation of market. This seems to be the case happening in India. 

Recently after the stock market crash mainly due to Chinese Economy Crash and its ripple affects, the foreign investors in India were quick to take out money fearing huge losses in stocks. But Indian investors remained invested. Infact for them the fall in market was like a 'discount period'. This is specially true for institutions like LIC which have generated huge profits  by investing during these periods of 'discount'.

Further, institutions like Employees’ Provident Fund Organisation are also now investing money in stock market. 

Institutionalisation is happening because the institutions firmly and rightly believe in the strong economic fundamentals, re-confirmed also recently by RBI Governor in his statement stating that 

"...India is in a good position..."


Such institutional investments would play a great role in protecting the domestic investor from fluctuations as they would infuse money in the market and thereby keeping the growth rate high. Moreover Indians have traditionally been long term investor and this makes institutionalisation of market easier. 

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